Vieright P/L v Myer Stores Ltd

[1993] FCA 817

l 97

JUDGMENT No. ........ ........ ........ ......

CATCHWORDS

PASSING OFF - Applicant engaged in manufacture and sale of women's casual clothmg - Goods marketed under the unregistered trade mark "FIRST" - Sales by retall in shops operated by applicant in Sydney suburbs - Limited range of goods sold by wholesale in all States - Respondent large retailer of clothing and other goods - Range of men's wear marketed by respondent under the mark "FIRST" differently styled from applicant's mark - Whether applicant entitled to relief

TRADE PRACTICES - Whether use by respondent of mark "FIRST" on men's wear misrepresents that its goods are manufactured by the applicant or that a connection exists between businesses of the applicant and respondent - Whether conduct likely to mislead or deceive

T r a d e P r a c t i c e s A c t 1974 (Cth), ss.52, 53

VIERIGHT PTY LIMITED v MYER STORES LIMITED

No. N G 678 of 1992

Neaves J.

REGISTRV

Sydney

16 November 1993

16NOV 1993
FEDERAL COURT OF

AUSTRALIA PRINCIPAL

IN THE FEDERAL COURT OF AUSTRALIA	)
1
NEW SOUTH WALES DISTRICT REGISTRY )	NO. N G 678 of 1992
GENERAL DIVISION	)

BETWEEN: VIERIGHT PTY LIllITED

Appllcsnt

AND: MYER STORES LIMITED

Respondent

MINUTE OF ORDER

JUDGE MAKING ORDER :	Neaves J.
DATE OF ORDER	16 November 1993
WHERE MADE	Sydney
THE COURT ORDERS THAT:

1.    The application be dismissed

2.   The applicant pay the respondent's costs of the application including any reserved costs.

Note:  Settlement and entry of orders is dealt with in Order 36

of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA	)
)
NEW SOUTH WALES DISTRICT REGISTRY )	No. N G 678 of 1992
GENERAL DIVISION	)

BETWEEN: VIERIGHT PTY LIMITED

Applicant

AND: MYER STORES LIMITED

Respondent

: M A - Neaves J.

U: 16 November 1993

REASONS FOR JUDGMENT

Vieright PtyLimited ("the applicant") seeks injunctive

and other relief against Myer Stores Limited ("the respondent") arlsing out of the use by the respondent as a trade mark in connection wlth its business of retailing wearing apparel of

certain marks consisting of, or including, the word "FIRST". It	is alleged that the respondent's conduct amounts to passing off
and ~nvolves contraventions of ss.52 and 53 of the Trade
Practices Act 1974 (Cth).
The au~licant's business activities

Since 1 June 1986 the applicant has carried on the .

business of designing, manufacturing and selling women's clothing, primarily casual wear as distinct from formal wear. Prior to that date its business activltles had been llmited to conducting a shop situate at King Street, Rockdale, a suburb of Sydney, where it sold by retail casual women's clothing not of its own manufacture. That busmess was conducted under the name "Verniece". On or about 1 June 1986, the applicant purchased from one James Calpis the goodwill of a retail clothing shop situate at Centrepoint in the central business district of Sydney together with whatever rights M r Calpis had in the (unregistered) trade mark consisting of the word "FIRST" which he had been using in connection with the operation of the business carried on at that address. The applicant trades under the business name "First Clothing Co.".

Following that purchase, the applicant commenced to manufacture women's casual clothing at a factory at 1 Buckley Street, Marrickville and retailed that clothingthrough lts shops at Rockdale and Centrepoint. In order to accommodate the expansion of the applicant's busmess, the location of the factory was subsequently moved to premises at Unit 5, 17/35

Lorraine Street, Peakhurst and, later still, to premlses at 9	Edward Street, Arncliffe, both southern suburbs of Sydney. The
designing work for the clothing was originally done by freelance clothing designers under contract to the applicant. Since 1990,
the applicant has employed its own "~n-house" designer.
The applicant subsequently operated other retail outlets in suburbs of Sydney selling women's casual clothing of its own manufacture. In March 1988 a shop was opened at Anderson Street, Chatswood. That venture was not successful and the shop was closed in March 1989. Shops were opened at The Kingsway, Carlngbah Ln November 1989 and at Randwick Village, Belmore Road, Randwlck in November 1990. The Rockdale shop was closed on 5 June 1992. At the time of the hearlng, the applicant was operating the shops at Centrepoint, Caringbah and Randwick. The Caringbah and Randwick shops are situated in suburban shopplng centres. Each of the three shops is comparatively small in area. The largest of the shops was that at Rockdale with an area of approxrmately 80 square metres. The shops at Caringbah and Randwick are marginally smaller in area. The smallest is the shop at Centrepoint, having an area of 31 square metres.
The shops operated by the applicant sell women's clothing by retail. Almost exclusively, that clothing is sold under the trade mark (unregistered) consisting of the word "FIRST" represented in a particular style. In the mark used by the applicant, each of the letters in the word "FIRST" is in a large bold lower case. The letter "S" is in serif font while the
the letter "f" is extended to join the right-hand side of the other letters are in a sanserif font. The horizontal curve of
circumference of the dot forming part of the letter "i" . The horizontal curve of the letter "r" is extended to form within the horizontal curve a circle of similar proportion to the dot forming part of the letter "in. The dot forming part of the letter "in and the circle formed within the horrzontal curve of the letter "r" are accentuated by being in a contrasting colour.
The form of the mark used by the applicant is depicted in the following illustration:
The following colour combinations have been used, namely

black lettering on a red background with the accent

colour white

white lettering on a red background with the accent

colour black

black lettering on a white background with the accent

colour red

black lettering on a beige background with the accent
colour red.

Prior to 1987 a pink colour was used instead of red. The references to the accent colour are references to the colour of the dot forming part of the letter "I" and the circle within the

paper or cardboard, the label being referred to as an	a beige background is apparently the natural colour of recycled horizontal curve of the letter "r". What I have referred to as	"environmental friendly" label.
The mark has been, and is, used on a woven label sewn into each garment and on a cardboard label that has been referred to as a "swing ticket" flexibly attached to the garment. On the back of the swing ticket are the words -

"Thls garment is deslgned exclusively for you by First

Sydney Australia".

Provision is also made on the back of the swlng tlcket for the

insertion of details of the style, slze and prlce of the garment.

The word "FIRST", represented in the style illustrated above, is also prominently displayed, both internally and externally, at the applicant's shops at Centrepolnt, Caringbah and Randwick. It was also prominently displayed at the Chatswood shop whlle that shop operated. The external signs at the Caringbah and Randwick premises use the words "Clothing CO" in combination with the word "FIRST".

The applicant carries on its business activities as the trustee of the Efthimiou Family Trust. The principal participants in the applicant's busmess activities are Dimitrios (James) Efthlmlou, Kondl (Connie) Efthimiou (hls wife), Chrlstine tilataganelils (their elaer daugnter), Kather~ne Eithlmlou (their younger daughter) and, since 1990, Steven Nicholas Giataganellis

(the husband of Christine). Some of the documents refer to Mr

Giataganellis as Steve Ganellis. There are six people employed full time at the factory, an increase of two over the number employed in previous years. There are four persons employed full-time at the clothing shops. In addition the applicant has, from time to time, engaged part-time employees.

In each year the applicant has released a summer range
and a wlnter range of clothing. The first deliveries to the

applicant's shops of garments in the summer range are usually

made in late August or early September. Those deliveries (referred to in the evidence as Summer 1 or spring deliveries)

will comprise only some of the styles in the summer range.

Deliveries of other styles (referred to as Summer 2 deliveries)

are made in late October or early November, the styles reflecting the expected warmer climate of summer. Similarly, the first deliveries to the applicant's shops of garments in the winter range are usually made in late February or early March. Again, only some of the styles in the wlnter range are released at that time, deliveries of other styles being made in later months.

The garments manufactured by the applicant cover a broad range. They are described in the evldence as ski or stirrup pants, designer outfits, dresses, suits, jackets, skirts, tops, jeans, body suits, knits, co-ordinates and accessories. Garments are manufactured from a number of dlfferent fabrics, including cotton, polyester, rayon, sllk and wool. Each style

of garment 1s produced in a number of dlfferent sizes and

quality designed to appeal to what has been referred to as	colours. I accept that the applicant's clothing is of good	"middle market" purchasers mainly in the age group 18 - 40 years.
In late 1990 or early 1991, because of the difficulties being experienced in the marketing of its clothing by retail . through its own shops, the applicant decided that it needed to expand its customer base by having its clothing sold by other stores. In addition to approaching a number of stores direct, the applicant made arrangements wlth a number of fashion agencies throughout Australia, being agencies engaged in the marketing and sale of women's wear to retailers of such clothing. Under those arrangements samples of the applicant's clothlng are included in the clothing offered by those agencies to potential customers in the retall trade. The services of agents in New South Wales, Victoria, Queensland, South Australia and Western Australia are used, the names of the agencies and their respective areas of operation being as follows:

Name of Agent Area

Falox Pty Limited trading as Dowland New South Wales

Velonas Fashion Marketing

Blll Barnes Agency Pty Limlted New South Wales

Vivien Humphrey Fashion Marketing New South Wales Westbrook Fashion Marketing Pty Limited South Australia

NSFA Pty Limited trading as Nlna Western Australia

Summers Fashion Agencles

Caxton Street Agencles Pty Limlted	Queensland
Stan Berkoff Agencres Pty Llmited	Victoria and

Tasmania

The sale of clothing to other retailers has been referred to as the applicant's wholesaling activities. The expansion of the applicant's business activities into wholesaling

x ~ ~ . ~ i r a i , r l ~ ~ t s W L U L ~ L i > b s ~ . wlnter 1992 ranges of ski or ~ d

stirrup pants being sold by a number of other stores. The following table shows the number of wholesale customers in each State who, according to the evidence, have purchased the applicant's clothlng elther dlrectly from the applicant or through the fashion agencies:

New South Wales	5 2
Victoria	2 2
South Australia	1 2
Western Australia	2 5

Tasmania 3

A dissection by State of the wholesale sales of the applicant's ski or stirrup pants in the years ended 3 0 June 1 9 9 1 and 3 0 June 1 9 9 2 is as follows:

1 9 9 0 - 9 1 1 9 9 1 - 9 2

State

Units Value Units Value

New South Wales 9 1 0 $31 ,850 3 ,035 $102,040

.- = ^ a - * S t -

, V i r t r - 7 s	?@!!	,	: n , l	2	.,	&
'

- -

Queensland

2 1 0 8 ,295

South Australia	1 3 0	4,550	4 5 5	19 ,391
Western Australia	2 1 5	7 ,525	7 9 6	3 4 , 8 5 0
Totals	1 ,545	$54,075	5 ,148	$193,026

Some details of the results of the trading activities

of the applicant during the years ended 3 0 June 1 9 8 6 to 3 0 June

1 9 9 1 inclusive are set out in the following table:

The results of its trading activities during the year ended 30 June 1992 are not in evidence. The figure for wholesale sales (those sales being of ski or stirrup pants) in the year ended 30 June 1992 is shown by the evidence to have been $193,026. An estimate of the total retail sales for that year was glven of approximately $420,000.

The number of garments manufactured by the applicant during each of the years ended 30 June 1989 to 30 June 1992

inclusive I S 3s follows:

Year ended

30 June Units

1989         3,890

1.150	8,164
1991	7,270

1992        20,171

The evidence shows that the applicant has not embarked
on extensive advertising campaigns. It has from time to time

placed advertisements in issues of a publication described as "Australia's Womenswear Industry Newspaper" and known as "Ragtrader". That is a newspaper published twice monthly and circulating malnly in the clothing trade. It is not available to the public generally. Advertlsements for the applicant's general range of clothing appeared in a number of issues of that newspaper in 1989. A large pictorial advertisement for the applicant's ski pants appeared in the issue of that newspaper dated 30 November 1990. A full page advertisement for stirrup pants appeared in the issue of that newspaper dated 15 April 1992.

A large advertisement for the applicant's stirrup pants appeared in an issue of the magazine "Cosmopolitan" in or about July 1991. That magazrne is directed to consumers. A two page advertisement for the applicant's clothing appeared in the Summer 1992-93 issue of "Australian Collections Quarterly", a magazine concerning women's fashions published by Buying Systems Pty Llmited trading as Studio Magazines. That magazine is sold by

newsagents throughout Australia. It has a circulation of	approximately 45,000 copies per issue. The applicant's name and
a reference to the label "FIRST" appeared in the section relating to women's wear in the "Ragtrader 1992 Label Directory" published in December 1991. Its name also appeared in the Australian Fashion Directory, New South Wales Edition 1990-1993, a directory produced for the retail fashion trade by the Fashion Sales and Marketing Association of New South Wales. That entry referred to "various style ski pants". References to the applicant under the name "Flrst Clothlng Store" appear in the White and Yellow Pages of the Sydney Telephone Directory. Other modes of advertising adopted by the applicant are by the reproduction of the label "FIRST" on carry bags supplled to customers and on business cards and by the dlstributlon, essentially in the suburban areas where the shops are located, of leaflets and posters.
The evidence shows that the total expenditure on promotion and advertising incurred by the applicant during the calendar years 1986 to 1992 inclusive did not exceed $70,000.
The applicant proposed to market by wholesale some 20- 30 garments from its summer 1992-93 range of clothing that was to be marketed by retail. The evidence establishes that the fashion agents to which reference has already been made were prepared to receive samples of the applicant's summer 1992-93 collection and to solicit orders for such clothlng from retailers inspecting the clothing at then premises, that the applicant
necessary fabrics, produced samples of the clothing and placed chose the styles to be marketed in that way, ordered the
the two-page advertisement in the publication "Australian Collections Quarterly" to whlch I have referred. In the event, no samples were forwarded to the fashion agents and the applicant did not proceed with the marketing by wholesale of any part of its summer 1992-93 range. M r Efthimlou asserted that that result was the direct consequence of the conduct of the respondent in nlarketlng its men's wear range of clothing under a label
consisting of, or incorporating, the word "FIRST".

While I accept that the respondent's marketing

activities were a factor in the applicant's decision not to

proceed with sales of its summer clothing by wholesale, I am satisfled that a number of other factors influenced that decision. Clearly, the applicant was experiencing financial difficulties which were accentuated by the circumstance that the material purchased for the manufacture of the clothing to be marketed by wholesale was found to be faulty. A replacement by the manufacturer of that material was also found to be faulty and a different kind of material had to be purchased. The resultant delay, with its attendant cost, must have had a significant impact on the applicant's capacity to carry to fruition the course on which it had embarked.

Early in 1989 the applicant applied under the Trade

Marks Act 1955 (Cth) by applications numbered 476204 and 476205

42 respectively in Schedule 4 to the Trade Marks Regulations.	for the registration of the trade mark "FIRST" in classes 25 and
On 21 March 1989, an examiner in the Australian Patent, Trade Marks and Designs Offices reported what were referred to in the correspondence as two serious objections to the applications. The applicant was advised that, to overcome the objections, it would be necessary for it to lodge evidence of prior use of the trade mark. The applicant did not lodge such evidence and the applications lapsed in 1990. Mr Efthimiou gave evidence that he received advice from the applicant's patent and trade mark attorneys, advice which he understood to be to the effect that it was not necessary to secure regrstration because, by reason of its use of the mark, the applrcant had "protection under the common law".
The reswondent's conduct
The respondent operates a large number of retail department stores throughout Australia. The stores in New South Wales and the Australian Capital Territory operate under the business name "Grace Bros". The stores in each of the States other than New South Wales operate under the business name "Myer".
The merchandising arm of the respondent's business is hierarchical in structure. At its head, and reporting directly to the Managing Director of the respondent, is the Group General Manager (Merchandising). Under his control are Divisional General Managers, each heading a Division. The Divisions include
Apparel Drvision, the Accessories Division, the Housewares the Men's Apparel and Children's Apparel Dlvrsion, the Women's
Division and the Leisure and Entertainment Division. A Division known as the Fashion Studio also reports to the Group General Manager (Merchandising). The function of that Division is to give advice and assistance to the other Divisrons, particularly in the forecast of fashion trends. However, in more recent times, it has had an active role in designing and developing ranges of garments to be marketed under house-brand labels. Within the Men's Apparel and Children's Applrel Divislon there are Category Managers who supervise the buying staff within that category. The categories of men's wear are formal wear, casuals and collections, accessories, and men's footwear.
During the earlier part of the perlod to which it will be necessary to refer, Michael Howell held the position of Group General Manager (Merchandising). During the latter part of that period, Richard Waite heldthat position. From August 1988 until late March 1992, Gregory John Royans held the position of Divisional General Manager, Men's Apparel and Children's Apparel. However, in the early part of that period the position held by
Mr Royans related only to Myer stores and not to Grace Bros
stores, the buylng operations of the two groups not having been merged until August 1989. From late March 1992, Mr Royans held the position of Divisional General Manager, Women's Apparel, Lawrence Jesudason becoming the Divisional General Manager, Men's Appareland Children's Apparel. Of these senlor executives, only Mr Royans gave evidence. There was no suggestion that the others
were not available.
It may be convenient, before proceeding further, to say that I found Mr Royans a witness who was less than frank and forthcoming. Many of hls answers were evasive. On a number of occasions he initially soughtto avold answeringthe question put to him although it subsequently transpired that he was in a .
position to, and did in fact, albeit reluctantly, provide an answer, an answer which more often than not agreed with the proposltlon that had been put to him. I should particularly mentlon his continued insistence that he was unable to give details of decisions made, or actlon taken, in relation to the labelling to be used in relatlon to the men's wear range under the name "FIRST" after he had moved to the Women's Apparel Dlvision in late March 1992. Mr Royans would have the Court accept that, although after March 1992 he continued to have a real interest in, albeit no responsibility for, the continued development of the proposed men's wear range and, in furtherance of that interest, made enquiries "every few weeks" as to how the project was progressing with particular reference to what he called the "hiccup" caused by the use of the mark "FIRST" by the applicant, he was given no information as to what course the respondent was proposing to adopt and no information as to any decisions made in that regard. I was, however, left with the distinct impression that he knew much more than he was prepared to acknowledge. While I have accepted a good deal of his evidence, I have not accepted the whole of it. In some instances the evidence of other employees of the respondent differs from
their evidence. his, and in such circumstances I have, in the main, preferred
It should also be said that the evldence given by the employees of the respondent as to the timing of events in the marketing of the range of men's wear with which this case is concerned is not always consistent. The narrative of events that follows reflects what I find to have been the order in which the various steps in the process took place.
In February 1991, Mr Royans sought to interest varlous men's wear category managers who worked under him in a new marketing concept based upon what had been done in the Unlted States of America by a business which operated under the name "The Gap". According to the evidence, "The Gap" marketed both men's and women's clothing and did so under a common packaging theme, a range of clothing consist~ng solely of basic clothing items selected because they were the best selling types of clothing items around the world. Mr Royans believed that, although the concept required some adaptation to suit Australian conditions, it would be advantageous for the respondent to use a similar marketing concept. At that time, Mr Royans was unable to persuade the men's wear category managers that the concept would be successful.
About the middle of 1991 after further investigation of the concept, employees of the respondent responsible for the selection of the ranges of clothing stocked in the men's wear departments of the Myer and Grace Bros stores decided that there
was a need for a new range of "men's casual contemporary fash~on
clothing". At a strategy meeting in about August or September 1991, a concept based on the marketing strategy used by "The Gap" was adopted for that men's wear range.
By October 1991, Mr Andrew Wong, who described himself as Fashion Co-ordinator, Menswear and Sportlng Apparel, and who worked under the Fashion Studio General Manager, Mr Christopher McDonnell, had createddesigns, illustrations, packaging concepts
and specification sheets relatlng to such matters as fabric types, button types and stitching for each item in the proposed range. This material was sent to the respondent's manufacturing and buying agent in Hong Kong, Cardex.
A decision was taken to use the trade mark "OAKLAND" in relation to the proposed new range of men's wear. However, that name was being used by another clothing business and consent for its use by the respondent could not be obtained.
At about this time, Stephen Lionel Beach, who described himself as "Menswear Selector", was appointed as the Buyer for the proposed new range of men's clothing. According to Mr Beach, it was intended that "the new range should be a complete range of contemporary basic clothing (that is, 'every-day' type clothing without fancy designs, buttons or stitching) at an affordable (though not cheap) price". As Buyer for the whole range, Mr Beach worked with other employees of the respondent,
including Samantha Jerome Parker, the men's wear marketing
specialist, and Mr Wong.
A document described as a "Preliminary Marketing Plan" was prepared by MS Parker. The aim of the plan was expressed to be "to fill a market niche not serviced by retailers in Australia by providing basic fashion merchandise in volume at value prices". It was proposed that the range be "located on the menswear floor in a full concept area with special fixturing". Attached to the Preliminary Marketing Plan was a document headed
"Mission Statement" which had been prepared by Mr Beach. That document stated that the proposed men's wear range would be "marketed to (become and) remain a well known and respected brand capable of consistent utilisation in corresponding market position across all Divisions in the D.S.G.". The initials
"D.S.G." denoted "Department Stores Group" and referred to the
Myer and Grace Bros stores as a group.
On or about 14 November 1991, a document headed "Housebrand Definitiono and signed by Mr Royans was prepared describing the required range of clothing. In particular, it referred to the target customer (although I would think the intention was to refer to the target consumer) as a male, 25 - 45 years of age, in the middle socio-economic bracket. The document also stated, under the sub-heading "Brand strategy", that the objective was "the creatlon of a brand related to a lifestyle not just a label (e.g. able to be used in other divisions, not just Menswear)".
Also in November 1991, orders were placed with Cardex for the manufacture of various quantities of each garment within the new range. Cardex contracted out the work to different manufacturers in the Peoples' Republic of China. Samples of the garments were received by the respondent in January or February 1992. Flnal production of the garments commenced in February
The respondent's advertisrng agency, Mattingly and Partners Advertising Pty Limited, provlded the respondent with a lrst of approximately 100 suggested names under which the proposed range of clothrng mlght be marketed. Some additional names were added by employees of the respondent, the name "FIRST" being added by Mr Wong. A short list of 8 names was prepared and Phillips Ormonde & Fitzpatrick, Patent and Trade Mark Attorneys, were instructed by letter dated 13 December 1991 and signed by Mr Kenneth A. Lark of the respondent's legal services department to carry out trade mark searches in respect of those names. One of the names included in the short list was the name "FIRST".
Following the search, Phillips Ormonde & Fitzpatrick, in a memorandum dated 2 January 1992 addressed to the respondent, referred to a number of registered trade marks and pending applications. The applications numbered 476204 and 476205 which had been lodged by the applicant in respect of the word "FIRST" were not lncluded as those applications had lapsed a considerable time before the search was made. The memorandum contained the
following paragraph:

"4. A search of the Trade Marks Office records may not

reveal any common law trade marks used in commerce but not registered or the subject of a pending application in Australia. You are advised to look for marks in use in the relevant trade and be careful to avoid conflict. In some cases it may be helpful for us to conduct a search of busmess name registers in the Australian States and Territories."

2 0

On 8 January 1992, Mr Lark sent to MS Parker (copied to Mr Beach) a memorandum settlng out the results of the trade mark search. In relation to "FIRST", the memorandum said:

"It is the opinion of our trade mark attorneys that use of the trade mark FIRST by Myer as a house brand and destrnation mark in relatlon to men's apparel would not infringe any of the trade mark registratrons located in the search. However, in view of the large number of trade marks incorporating the word FIRST, it would be extremely difficult to obtain registration."

After considering the information provided by Phillips Ormonde & Fitzpatrick, a decision was made to proceed with the use of a trade mark incorporating the word "FIRST". It is not entirely clear who made that decision. The position probably is, and I so find, that the decision was made by Mr Royans on the unanimous recommendation of Mr Beach, MS Parker and Mr Wong. I think it also very likely that Mr Howell as Group General Manager (Merchandising) approvedthe decislon even if he was not actively involved in the decision-maklng process.

I drgress to say that, as early as March 1989, the respondent had been made aware that applications for the registration as a trade mark of the word "FIRST" in Classes 2 5 and 4 2 in Schedule 4 to the Trade Marks Regulations were pending. This came about in the following circumstances. In or about February 1989, employees responsible for the girls' clothing department of the respondent, those employees being responsible to Mr Royans, decided to commission a new range of girls' clothing for sale in the respondent's stores under the trade mark

2 1

"FIRST ISSUE". A trade mark search was conducted by Phillips Ormonde & Fitzpatrick, Patent and Trade Mark Attorneys, at the request of the respondent. The search report, dated 16 March 1989 and made available to the respondent, referred to a number of relevant trade marks including the applications numbered 476204 (Class 25) and 476205 (Class 42) in respect of the word "FIRST". Those applications had, in fact, been lodged by the applicant. Although the name of the present applicant as the company applying for registration of the trade mark "FIRST" in those classes did not appear in the search report dated 16 March 1989, rt did appear in the Examiner's Report No. l dated 4 July 1990. That report stated that objection was raised to the registration of the mark "FIRST ISSUE" as it so closely resembled the mark the subject of the applicant's applications numbered 476204 and 476205 as to be likely to dece~ve or cause confusion. Application (No.507031) for the registration of the trade mark "FIRST ISSUE" had been made by the respondent on 17 March 1989. The Examiner's Report No.2 dated 17 September 1990 disclosedthat the applications numbered 476204 and 476205 had lapsed and the

applications had been withdrawn. It should be added that the	objection to the registration of "FIRST ISSUE" based on those
respondent has made extensive use of the mark "FIRST ISSUE" as an unregistered trade mark in respect of children's clothing.
The evidence does not establish that the information contained in the documents to which I have referred was brought to the attention of any of the respondent's employees who were involved in the decisions to market, or to continue to market, the range of men's wear under the name "FIRST" or who were concerned in the procedures that preceded the making of those decisions. It may, however, be of some significance that, on 4 September 1992, that is to say after the launch of the new range of men's wear under the label "FIRST" and after the present dispute between the parties arose, the respondent made an application (numbered 585800) for registrat~on as a trade mark of the word "FIRST" in Class 2 5 . That application was based on the application numbered 507031 and was made under the provisions of s.43 of the Trade Marks Act 1955 (Cth) . It claimed a priority date of 17 March 1989, the date of the application numbered 507031. The application numbered 507031 was accepted on or about 23 September 1992. The mark had not been registered when this matter was heard.
To return to the narrative, steps had been taken towards the end of 1991 or early in 1992 to have Harris Grubb Nominees Pty Limited trading as Grubb & Grubb, graphlc designers, begin work on the preparation of labels for the proposed range
to be done on speckled recycled paper. All other design of men's wear. The respondent specified that the labelling was features, however, were left to the graphic designer's judgment.
Samples of the word "FIRST" depicted in a variety of styles were submitted to the respondent. In the result, one of the styles suggested by Grubb & Grubb was adopted. In that style, the letters "F", "R", "S" and "T" are printed in a bold upper case sanser~f typeface while the letter "in is printed in
a lower case bold italic serif font. The letter "in is in a contrasting colour to the colour used for the other letters. In addition, it was decided to have the word " F I R S T " depicted in the same manner but on what has been descr~bed as a reversed background. The form of the styles so adopted are depicted in the following illustrations:
In the first of the above styles, the letters other than the letter "i" usually appear in black on a neutral background with the letter "i" in red. In the reversed style, the lettering is housed within a block which is either royal or navy blue in colour. The letters other than the letter "i" thus
with the letter "i" again being in red. appear in the colour of the paper on which the label is printed
Grubb & Grubb had also produced a labelling design manual providing specific instructions for the labelling of garments within the proposed new range. The first version of the manual showing various labels using the word "FIRST" in its stylised form was completed in January 1992. It was amended in February 1992 af ter variations to the specifications, though not

2 4

to the style of the mark, were requested by M-chael Jack French, the Quality Assurance Manager within the respondent's Fashion Studlo.

The labels were to be printed in Hong Kong. However, it was considered desirable to have accurate samples prepared to send to the Hong Kong printer. Mr French requested J & J Cash (a division of Jones Stroud (Australia) Pty Limited), a labelling firm carrying on business at Rlchmond in the State of Victoria, to print sample labels featuring the word "FIRST". At the end of March 1992, Charles Xerri, an employee of J & J Cash, informed Kate Walker, an employee of the respondent, that his firm had recently completed for a ladies' wear manufacturer a batch of labels featuring the word "FIRST". MS Walker informed Mr French of what Mr Xerri had said. Mr French informed Mr Kenneth Lark of the respondent's legal services department of what he had been told. Mr Lark asked whether it would be possible to obtain copies of the labels. At Mr French's request, J & J Cash, somewhat surprisingly one might think as it did not have the

certain documents giving details of the applicant and copies of	applicant's authority to do so, supplied the respondent wlth
the labels produced by J & J Cash for that company. Mr French ascertained from the documents that the applicant was a Sydney manufacturer. The material produced was made available by Mr French to the respondent's kgai services department. He also informed Mr Beach of the existence of the applicant's label using the word "FIRST".

On 8 Apr~l 1992, applications numuered 576112 (Class

25) and 576113 (Class 42) for registration as a trade mark of the word "FIRST" in the stylised forms adopted by the respondent were lodged on its behalf. On 10 Aprll 1992, Mr Lark addressed a memorandum to Mr Jesudason relatlng to the registration of the trade mark "FIRST". The memorandum read:

"I understand that the 'FIRST' Clothing Store of Shop C04 Castlereagh Street Level, Centrepoint, Sydney, 2000, uses the label FIRST as a mark in relation to its goods. I advise you to determine to what extent this clothing company uses the mark before proceeding with development of the mark at Myer.

Depending on the extent of use by another company in the marketplace, Myer may risk a common law action being brought against it for 'passing off'. An unfavourable result in an action of this nature could require an account of profits.

Please let me know if you have any further questions in this regard."

In the latter part of April 1992, there was a meeting
attended by Mr Waite, Mr Jesudason, Mr Stephen Rott (who was the

secretary of the respondent and the general manager of the legal

Malcolm Royal from Phillips Ormonde & Fitzpatrick. The meeting	services department) and Mr Royans from the respondent and Mr
discussed "the issue of labelling in the sense of differentiating the label" and the steps that should be taken to try to find out the identity of the company using the label "FIRST".
Shortly thereafter, Mr Beach and MS Parker, on the instructions of Mr Jesudason, went from Melbourne to Sydney "to
view and evaluate" the stores operated by the applicant. On 27
April 1992, they made a jolnt report on the v;slt and sent it to
Mr: Lark in the legal services department. Two or three weeks
thereafter, M r Beach was told by Mr Jesudason that the project was to continue under the mark "FIRST". Mr French then set about arranging for labels using the mark "FIRST" to be printed in Hong Kong. The evidence does not establish who made the decision conveyed to Mr Beach by Mr Jesudason nor does it establish the basis upon which that decision was made.
Thus, the respondent became aware, at least by the end of April 1992, that the applicant was operating a number of stores in Sydney which retailed women's clothing to which labels bearing the mark "FIRST" were attached.

I am satisfied that, apart from the vls~t to the

applicant's stores by M r Beach and MS Parker, no substantive enquiries were made by the respondent as to the extent of the applicant's trading activities and, in particular, its wholesale trade using the mark "FIRST". This statement must be qualified

report on the applicant and Mr Beach made a desultory enquiry of	to the extent that MS Parker arranged for a Dunn & Bradstreet	an employee in the Women's Apparel Division as a result of which he was referred to the applicant's name and mark appearing in "Ragtrader" magazine. The respondent's attitude at the time is,
I think, accurately reflected in MS Parker's evidence that,
according to her understanding, there was no impediment to the . respondent using the mark "FIRST" unless that mark was already registered as a trade mark under the Trade Marks Act 1955 (Cth).

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That this should have been the respondent's attitude is surprising in view of the express reference in Mr Lark's memorandum dated 10 April 1992 to the possible existence of a common law right in the applicant. I am fortified in the conclusion I have expressed by the fact that no senior executive of the respondent gave evidence to the contrary.

A meeting of the Management Committee of the respondent, a group consisting of the most senior executives in the company responsible for various functional areas, was held in May 1992. According to Mr Royans -

"[tlhe primary agenda of that management meeting was to sell the concept internally across a broad spectrum of functions, to solicit support of those various functions to ensure that the company was doing everything they posslbly could to enhance the success of this project, yet to be proved at that point of time."

Although he was no longer responsible for men's wear, Mr Royans attended the meeting and made a presentation. During the course of that presentation, Mr Royans referred not only to the use of

view that, if that use of the label was successful, the label	the label "FIRST" in relation to men's wear, but propounded the
could be successfully used across all divisions of the respondent's merchandising business. The management committee, according to Mr Royans, endorsed that approach. In particular, decisions were taken at the meeting "to get behind the brand and have every function support it". The meeting was not told that '
the mark "FIRST" was already being used as a label on clothing by another company. Mr Royans said that, although he was then aware of that fact, he did not tell the meeting as the implications of that circumstance upon the respondent's plans was being dealt with by Mr Waite, Mr Bott and Mr Jesudason.
On 27 May 1992, Phillips Ormonde & Fitzpatrick were requestedto open negotiations with the present applicant forthe purchase of all its interest in the name or label "FIRST" and any associated marks. The evidence does not disclose what, if any, steps were subsequently taken. Clearly, if such negotiations took place, they were not successful.
After extensive planning and preparation, including very extensive and very expensive advertising of the range of clothing both on television and in the print media throughout Australia, the new range of men's clothing was launched in August 1992. The respondent's advertising campalgn targeted both men and women. This reflected the fact that women play an important role both in purchasing men's clothing for their partners, male relatives and friends and in accompanying, advising or
influencing the male where he is, in fact, the purchaser. Over
$1 million was expended by the respondent in promoting the new range of men's wear. Almost universally the respondent's advertisements refer to the men's wear as being available exclusively at the respondent's stores.
It appears that, in April or May 1992 but prior to the management committee meeting to which reference has been made, consideration was given to adding the word "MENSWEAR" to the

2 9

label to be used by the respondent. Mr Royans said that Mr Waite had informed him at some time prior to 30 September 1 9 9 2 that the respondent was "taking a different labelling course of action in New South Wales", that course being to use on at least some garments offered for sale in that State labels bearing the word "MENSWEAR" in association with the word "FIRST".

The labelling deslgn manual prepared by Grubb & Grubb
was up-dated in May/June 1 9 9 2 and, again, in November/December

1 9 9 2 . The manual is in the nature of a loose leaf publication, amended and replacement pages being inserted from time to time as the provisions are revised or expanded. It is difficult from the material before the Court to determine the state of the manual at any part~cular date. Four versions of the manual are exhibited to the affidavit of Courtney Willlam Grubb sworn on 28 January 1 9 9 3 . The version of the manual as at May/June 1 9 9 2 so exhibited shows that the word "MENSWEAR" in quite small upper case was used, in conjunction with the word "FIRST", on one of the labels, being a swing ticket for a chambray work shirt. I

am not convinced that that folio of the manual properly appears

in the version up-dated in May/June 1992. In the later version of the manual exhibited to Mr Grubb's affidavit, the word "MENSWEAR", again printed in quite small upper case, appears on a number, though not all, of the labels.

Swing tickets bearing the mark "FIRST" with the word "MENSWEAR" in small upper case were circulated to the various stores on or about 17 September 1992 with instructions to

substitute those labels for any swing tlckets attached to the clothing that bore only the word "FIRST". There is no doubt that the respondent has used "FIRST" labels on which the word "MENSWEAR" does appear as well as labels on which it does not. The form of the label incorporating the word "MENSWEAR" is depicted in the following illustration:

M E N S W E A R

I am satisfied that the decision to add the word "MENSWEAR" was taken in an attempt to distinguish the respondent's label from that of the applicant. I am also satisfied that the word adds little, if anything, to the impact of the label. The focus of the label is, and is intended to be, the word "FIRST".

Between May and September 1992, the Fashion Studio of the respondent initiated and developed proposals for the introduction, under the label "FIRST", of a range of women's wear of similar quality to the men's wear range marketed under that label. The proposals as then developed were the subject of a strategy meeting on 30 September 1992 attended by the category managers within the Women's Apparel Division and representatives from the Fashion Studio and the Men's Apparel and Children's Apparel Division. Mr Royans chaired the meeting. Orders were

3 1

placed in January 1993 for the manufacture of samples of garments
in the range.

Despite the protestations of Mr Royans and other witnesses that "FIRST" was used in relatlon to the proposed women's wear range only as "a working label", I am satisfied that the respondent proposed, subject only to being satisfied as to the success of the label "FIRST" in relation to men's wear, to market the women's wear range under the same label. That course was consistent with "The Gap" concept, namely that a mark adopted as a house-brand in respect of one kind of merchandise should be capable of being applied across the ranges of merchandise marketed by the particular trader. That the respondent intended to apply the mark "FIRST" to other than men's wear is also consistent with the internal documentary material to which reference has been made earlier in these reasons and with what Mr Royans proposed at the presentation to the Management Committee in May 1992.

In the result, a decision was taken early in February

1993 to market the range of women's wear later in the year under

the label "RESERVE" rather than "FIRST". I have no doubt that the decision to use a label other than "FIRST" was conditioned by the fact that the present proceeding was pending.

Passina off

A perception that a trading giant is acting in a way that will adversely affect a neighbouring pygmy trader is more likely than not to evoke a sympathet~c or other emotional response. The present is such a case. However, before relief may properly be granted to the pygmy, it is necessary that the evidence establish the infringement of a legally enforceable right enjoyed by the pygmy. I have, somewhat reluctantly, concluded that the evidence in this case falls short of establishing the necessary elements to enable the applicant to succeed.

To succeed, the applicant must show that, by its use of the mark "FIRST" on goods of its manufacture, the public, or a significant section of the public, has come to identify the mark as distinguishing the applicant's goods from those of other traders. Thus, the allegation is made in par.11 of the amended statement of claim filed on behalf of the applicant that members of the publlc who purchase clothing bearing the mark "FIRST" expect and intend to purchase the applicant's clothing and no other. Further, the applicant must show that, by its use in respect of goods in which it is trading of the mark "FIRST",

albeit represented in a different style from that used by the	applicant, the respondent is to be taken as misrepresenting to
the members of the public who purchase or may purchase the
respondent's goods that those goods are the goods of the
applicant. A further element to be established by the applicant
is that it was a reasonably foreseeable consequence of the
respondent's conduct that injury to the applicant's business or .
business reputation would result.

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The use which the applicant has made of the mark

"FIRST" is exclusively in relation to women's wear, primarily

casual apparel as distinct from formal apparel. The applicant's clothing is designed to appeal to a particular part of the women's wear market. The total range of clothing which the applicant manufactures has been sold only by retail through the stores which it operates, and has operated, one in the central business district of Sydney and the others in the metropolitan area of that clty. It has, in more recent times, also sold women's wear on what has been termed the wholesale market, sales taking place in all the mainland States of the Commonwealth. Those sales have, however, been confined to sales of ski or stirrup pants. The attempt to market by wholesale a substantial part of its summer 1992-93 range of clothing did not come to fruition for reasons which I have outlined. Advertising of the applicant's goods has been on a small scale and, again, has been largely confined to advertising ski or stirrup pants.

The applicant's reputation within the clothingtrade has not been shown to be extensive. Indeed, a number of witnesses who	are prominent in the clothing lndustry gave evidence that, until
asked to swear an affidavit in the matter, they were unaware of the applicant's business activities. I see no reason to disbelieve that evidence.

While I am prepared to find, and do find, that the .

applicant has established a reputation amongst its customers and some members of the wholesale clothing trade by trading under the

3 4

mark "FIRST" in goods of its manufacture, that reputation is clearly limited both geographically and in respect of the classes of goods to which it relates. It is not necessary, in the present case, to be more specific than to say that the reputation does not extend beyond casual women's wear and is, in States other than New South Wales, limited to a reputation in relation to ski or stirrup pants. The applicant has not marketed men's wear and there is no suggestion in the evidence that it intends to enter that particular market. Nor is this a case where it can properly be concluded that the applicant has established a reputation extending beyond the classes of goods in which it trades. The circumstance that other manufacturers and traders in the clothing industry use the same label in respect of both men's wear and women's wear is not to the point and does not advance the applicant's case.

Notwithstanding that the respondent has used the label
"FIRST" exclusively in relation to men's wear, I have taken into

account, in considering the likelihood of deception, the

clothing and that it is they, rather than the male customers of	substantial role which women play in the purchase of men's
the respondent, who would be likely to have knowledge of the use by the applicant of the mark "FIRST". I have also taken into account my perception that, if used on the same class of goods, the label "FIRST" as used by the respondent would be regarded as deceptively similar to the applicant's label. The differences in printing styles and the fact that the applicant has, over time, used different colour combinations for its label do not, I think, require a different conclusion.
However, having regard to the nature of the goods marketed by the respondent and the manner in which those goods are advertised and marketed, I am not convinced that the public, or a significant section of the public, would be deceived, by the use of the label, into believing that the goods being offered for sale by the respondent are goods manufactured by the applicant or that there is some other connection between the respective businesses of the applicant and the respondent. It is clearly not a case in which the respondent set out to take advantage of any anterior reputation that the applicant may have had. This must, I think be so even though the respondent became aware, some months before the men's wear range was launched, that the applicant was marketing women's wear under the label "FIRST" and that, in deciding to proceed with the use of the label "FIRST", the respondent paid scant regard to any possible impact which its activities might have upon the applicant's business. Those
matters would be of significance only if a findlng were first made that the respondent's conduct amounted to an infringement
of a right enjoyed by the applicant.
There is, moreover, no evidence that any member of the public, male or female, has been actually misled or deceived into purchasing men's wear from the respondent on the basis that, .
because it bore the label "FIRST", it was a product of the applicant's manufacturing process or, indeed, had any other business connection with the applicant. The most that can be said is that the use by the respondent of the mark "FIRST" caused some customers of the applicant to wonder whether the applicant had expanded its manufacturing activities to include the manufacture of men's casual clothing and to inquire of the applicant whether that was so. I should add that the applicant has not shown any diversion of custom from the applicant to the respondent. Indeed, having regard to the kinds of clothing being marketed by each of the parties, it would be fanciful to expect that any such diversion could have occurred.
For these reasons, I am of oplnion that the claim, in so far as it is based on the tort of passing off, fails. A different conclusionmight well be reached if the respondent were to use the mark "FIRST" in relation to women's wear, as it clearly contemplated doing. That, however, is not the issue in the present proceeding.
Trade Practices Act
The considerations to which I have referred in dealing with the claim based on the tort of passing off also lead me to conclude that the claim, in so far as it is based on ss.52 and 53 of the Trade Practices Act, also fails.
Conclusion

The application is, therefore, dismissed. The

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applicant must pay the respondent's costs of the application,

including any reserved costs.

I certify that this and the preceding 36

pages are a true copy of the Reasons for Judgment herein of the Honourable Mr Justice Neaves .

Associate

Dated: 16 November 1993

Counsel for the applicant : Mr T.K. Tobin QC and

Mr T.J. Golding

Solicitors for the applicant : Maurice Freidman & Company

Counsel for the respondent : Dr J.McL. Emmerson QC and

Mr D.M. Yates

Solicitors for the respondent : Barker Gosling

Dates of hear~ng : 1, 2, 3, 4, 5 and 26 February
1993 and 8, 9, 10, 11, 12, 22

and 23 March 1993