Visa International Service Association v Beiser Corporation Pty Ltd

[1983] FCA 153

Re: VISA INTERNATIONAL SERVICE ASSOCIATION
And: BEISER CORPORATION PTY. LIMITED; MARK BEISER; JACK BEISER (1983) 77 FLR
234 No. G167 of 1983
Trade Practices

COURT

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION
Beaumont J.(1)

CATCHWORDS

Trade Practices - Misleading and deceptive conduct - Application for interlocutory injunction to restrain alleged contravention of s.52 - Use of word "Visa" in respondents' business name and their choice of logo alleged to show marked similarity to name and design of applicant's credit card - Whether such conduct prima facie contravention of s.52 within established principles for granting interlocutory relief.

Trade Practices Act 1974 (Cth.) ss.52, 80.

Trade Practices - Consumer protection - Misleading or deceptive conduct - Use of word "Visa" in business name - Interlocutory relief - Balance of convenience - Trade Practices Act 1974 (Cth), ss 52, 80.

HEADNOTE

The applicant's business, which was world-wide, was known to merchants, financial institutions and the general public as that of the provision of charge card and other facilities for the purchase of goods and services during travel, particularly international or world travel. In 1979 the applicant commenced business in Australia, and the card was promoted by Australian banks as their overseas travel card because Bankcard was not accepted overseas. However, in 1982, all the banks (except the Australian Bank) withdrew from the scheme and cancelled the cards issued to Visa cardholders. Nevertheless, overseas visitors to Australia were still able to use their Visa cards in Australia through a large number of retail outlets and travel agents which accepted the cards. In addition, plans were well advanced for the issue of Visa cards to large groups of people resident in Australia.

The respondent registered the business name of "World Visa Travel Service" in February 1983, and carried on the business of travel agent under that name. The respondent claimed that, at the time the name was chosen, it was its belief that whatever entity was responsible for using "Visa" as a name for credit cards had ceased business two years earlier, when the Visa cards were recalled and cancelled. It further claimed that the choice of the word "Visa" in its business name was motivated solely by a desire to use a travel-oriented name, and had nothing to do with the applicant's prior use of the name. The applicant sought an interlocutory injunction, restraining the respondent from using the word "Visa" as part of its business name, on the grounds that members of the general public who were actual or potential travellers or merchants were likely to be deceived or misled into believing that the respondent's business was connected with that of the applicant. The respondent thus alleged a contravention of s 52 of the Trade Practices Act 1974.

Held: (1) A contravention of s 52 will occur when there is a misrepresentation as to a supposed connection between traders operating in the same or similar fields of activity.

Hornsby Building Information Centre Pty Ltd v Sydney Building Information Centre Ltd (1978) 140 CLR 216, per Stephen J at 227, referred to.

McWilliam's Wines Pty Ltd v McDonald's System of Australia Pty Ltd (1980) 49 FLR 455, distinguished.

(2) Although there is no real evidence of deception in this case, the conduct of the respondent must be viewed as a whole, and it is for the court to decide whether the conduct is or is likely to be misleading.

Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd (1982) 149 CLR 191, referred to.

(3) A most significant factor in weighing the balance of convenience is the fact that when choosing its business name and the design features of its decal, the respondent was well aware of the applicant's existence, its reputation and the design of its decal, at least in the sphere of international travel. Further, if the respondent had made proper inquiries it would have discovered that the applicant still had substantial Australian connections as well. To this extent, the problem now confronting the respondent may be attributed to its own actions.

(4) The applicant has made out a prima facie case of breach of s 52, and is entitled, on the balance of convenience in this case, to the injunction.

HEARING

Sydney, 1983, July 8, 14, 25. #DATE 25:7:1983

APPLICATION

Application for an interlocutory injunction to restrain an alleged contravention of s 52 of the Trade Practices Act 1974 (Cth) said to arise from the use of a certain word as part of the respondent's business name.

J Garnsey, for the applicant.

R Gelski, for the respondent.

Cur adv vult

Solicitors for the applicant: Baker & McKenzie.

Solicitors for the respondent: Marcel Kalfus & Co.

FPC

ORDER

1. Upon the applicant by its counsel giving the usual undertaking as to damages, order that, pending the final hearing of the proceedings, the respondents and each of them be restrained from, by themselves their servants and agents, using the word "Visa" in or in connection with their business name without the consent of the applicant or the leave of the Court, such order to take effect on and from 12 August, 1983.

2. Order that the proceedings and the final hearing thereof be expedited.

3. Order that:
(a) the applicant file and serve affidavits on which it will rely at the final hearing on or before 15 August, 1983;

(b) the respondents file and serve affidavits on which they will rely at the final hearing on or before 5 September, 1983;

(c) the parties file and serve interrogatories on or before 15 August, 1983;

(d) the parties file and serve verified answers to interrogatories on or before 2 September, 1983;

(e) 13 September, 1983 be fixed for the final hearing of the proceedings.

4. Order that the costs of the application for inter-locutory relief be costs in the proceedings.

5. Reserve to any party general liberty to apply on two days' notice and further reserve to the respondents specific liberty to apply in respect of the suspension for a further period of order 1 on two days' notice.

6. The matter shall be listed for mention on 29 August, 1983 at 9.30 a.m.

Orders accordingly

JUDGE1

This is an application for an interlocutory injunction seeking to restrain an alleged contravention of s.52 of the Trade Practices Act, 1974. The contravention is said to arise from the use of the word "Visa" as part of the first respondent's business name "World Visa Travel Service". The second and third respondents are concerned in the management of the first respondent.

The applicant is a corporation incorporated in the State of Delaware, United States of America with its principal place of business in San Francisco. It is registered as a foreign company in Victoria with a registered address in Melbourne. It is registered in all other States of Australia and in the Australian Capital and Northern Territories. The applicant is a mutual for-profit corporation similar to a company limited by guarantee. It commenced business in 1977 and, inter alia, took over the Bank of America card business from the Bank of America. It is now owned by approximately 14,000 member organisations, mostly banks. Approximately 3,600,000 merchants accept the card in 156 countries. There are approximately 97 million holders of Visa cards throughout the world. The volume of transactions carried out with a Visa card during 1982 was the equivalent of US$62 billion.

The applicant is a service organisation which holds certain trademarks and other industrial property rights which it licences to its members. These marks are used on the Visa Credit and Debit cards and on Visa Travellers Cheques, all issued by its members. The applicant also owns substantial computer equipment in California and other parts of the world including Australia. It is, apparently, acknowledged as a leader in the technology of worldwide electronic transfer of funds.

The applicant first entered into business in Australia when it granted membership and licensed its trademarks to, the major Australian banks in 1979. By 30 September, 1981 the Australian bank members had issued 65,585 cards to Australian residents and had signed approximately 21,000 merchants to accept Visa cards in Australia. It was marketed by the Australian banks as their overseas travel card because Bankcard was not accepted overseas. Australian Visa Card holders used the applicant's card in overseas transactions totalling over $13.6 million during the period from 1 July, 1981 to 30 September, 1981. Visa cards issued by overseas member banks to non-residents of Australia were accepted by Australian merchants when those tourists or businessmen travelled to Australia. Approximately A$26 million was spent in 1982 by tourists and overseas businessmen in Australia using their Visa cards.

In May, 1982, after giving six months'notice of their intention to do so, most of the Australian banks withdrew from membership of the applicant and cancelled the cards issued to Visa cardholders. All agreements which the Australian banks had made with merchants to accept Visa cards were also terminated. Australia Bank Limited was then the only Australian bank to remain a member.

In about May, 1982, the applicant sought to negotiate with Australian merchants with the object of ensuring that the Visa card would be accepted in Australia when tourists and overseas businessmen travelled to Australia and wished to use their Visa Card. At the time merchants sign an agreement with the applicant, they receive a Visa decal which they undertake to display on their shop window. Some 16,000 merchants have agreed to accept Visa cards in Australia.

Since the termination of the relationship with the Australian banks, the following members have been admitted to membership of Visa and have or intend shortly to issue Visa cards to certain of their depositors: Bendigo Building Society, based in the Bendigo and Ballarat areas of Victoria; Tasmanian Teachers Credit Union, the largest credit union in Tasmania; Statewide Building Society, the largest building society in Victoria; Perth Building Society, the largest building society in Western Australia; Hotham Building Society, one of the larger Victorian building societies; Metropolitan Building Society, the largest building society in Queensland; SGIO Building Society, the second largest building society in Queensland; N.S.W. Teachers Credit Union Limited, and Communications Credit Union Limited of New South Wales, two of the largest credit unions in New South Wales sponsored by the Association of N.S.W. Credit Unions Limited.

Australia Bank Limited remains a member of the applicant. Generally speaking, there will be no restriction on Visa card-holders on the use of their Visa card in Australia under the arrangements or proposed arrangements of the above members of the applicant.

The applicant also has agreements with various retail travel agents throughout Australia whereby such travel agents agree to accept Visa cards and have been provided with Visa decals to affix to their shop windows. Ansett Airlines of Australia and Trans Australia Airlines also accept Visa cards and have been provided with Visa decals to affix to their outlet windows. There are 188 travel agencies throughout Australia which accept Visa card. There are currently 85 TAA outlets and 131 Ansett outlets in Australia.

On 12 July, 1983 the applicant and the ANZ Banking Group Limited ("the ANZ") announced that the ANZ will offer the Visa card as a worldwide credit card, subject to approval by the Reserve Bank and also as a domestic credit card which can be used for domestic purchases and in the ANZ automated teller machines. The parties contemplate that the ANZ will commence to issue Visa cards as from 1 November, 1983.

The applicant is the registered proprietor of, inter alia, the following trademarks which are registered under the Trade Marks Act, 1955: registered trademark number A290,420(16) for the word "Visa" in respect of printed publications and stationery; registered trademark number 318,370(16) for the word "Visa" in respect of traveller's cheques; registered trade-mark number A228,047(16) for the blue, white and gold band design in respect of printed publications; registered trade-mark number A322,953(16) for the blue, white and gold band design in respect of travellers cheques. The applicant tendered a deal of material advertising the services it offers. Much of the material emphasises the benefit of those services to travellers. For example, exhibit "A" is a pamphlet distributed by the applicant entitled:
"INTERNATIONAL TRAVEL"

followed by:

"HOW VISA CAN HELP"

Below this on the front page of the pamphlet, the applicant's decal appears. That decal is well indicated by exhibit "D", in the form of a bankcard:

(design omitted)

On this material, the applicant has made out a strong case that the applicant's business is distinguished in the minds of merchants, financial institutions and the general public in Australia by the mark "Visa" with or without the word "Card" and with the colours blue, white and gold used by it. The applicant has also made out a strong case that the applicant's business is known to merchants, financial institutions and the general public as a provider of charge card and other facilities for the purchase of goods and services during travel, particularly international or world travel. In this connection, there is a distinct emphasis on the world-wide or international aspect of the services provided by Visa. For example, financial services in the form of travellers' cheques for use "worldwide" are referred to in advertisements. The applicant has also established that the charge card and other facilities provided by the applicant are believed by merchants, financial institutions and the general public to be supported or backed by banks and financial institutions of similar standing.

In February, 1983, the first respondent completed the purchase of the travel business conducted under the name of "Union Travel" by Union Travel Australia Pty. Limited in the States of New South Wales, Victoria, South Australia and Queensland. The said business is conducted from eight outlets, three of which are located in Sydney, three in Melbourne, one in Adelaide and one in Brisbane. It is a term of the agreement that the first respondent not use the name "Union" or the Union logo. By 23 February, 1983, the first respondent had registered the name "World Visa" as a business name in each of the States mentioned.

The second respondent was the person responsible for choosing the name "World Visa Travel Service" as a business name. He said that at the time he chose the name, it was his belief that whatever entity was responsible for using "Visa" as a name for credit cards had ceased operations in Australia some two years previously. He had personally been issued with a Visa/Bankcard but, apparently, was required to return it in approximately 1981 by reason of the termination of the association between Visa and Bankcard. Although challenged, he said that his thoughts in selecting the name "World Visa Travel Service" had nothing to do with the applicant's prior use of its name "Visa". His sole motive was to choose a travel-oriented name. Having selected the name for the business, he turned his attention to the choice of a logo. At that time it occurred to him that using the colours used for the Visa credit card "could do no harm".

Exhibit "L" shows that the name and design chosen by the second respondent exhibited a marked similarity, indeed, to the name and design used by the applicant (the colours are identical or virtually so):

(design omitted)

By letter to the first respondent dated 25 March, 1983, the applicant's solicitors complained of the use of the blue, white and gold bands design and the word "Visa". Reference was made to the applicant's trademarks and assurances and other action were sought; in default, legal proceedings were foreshadowed. By letter dated 7 April, 1983, the respondents' solicitors replied:
"We act for World Visa Travel Service.

We have had referred to us for reply your letter of the 25th March, 1983.

Without admission we are able to assure you that we will furnish you with a detailed reply within fourteen (14) days from the date hereof.

Mr. Kalfus, who has the conduct of the affairs of World Visa Travel Service, will be away in Melbourne until the 14th April, 1983 where he has gone inter alia, to take detailed instructions from Mr. Mark Beiser of World Visa Travel Service which may give rise to the type of undertakings you are seeking.

We trust that you will take no further action until we have had the opportunity of responding fully to your letter dated 23rd March, 1983."

Further correspondence then took place between the solicitors to which reference need not be made. By letter dated 26 May, 1983, the respondents' solicitors responded as follows:
"We thank you for your letter of the 17th instant and advise that we have inspected the copies of your client's trade mark registrations enclosed therewith.

It would appear that our client has not infringed any of your client's registered trade marks. As to the marks registered in Class 16, we submit that no infringement has occurred as our client is not involved in the sale of any of the goods for which registration has been obtained. Our client's use of stationery, printed matter, signs and displays are ancillary to and restricted in their use to support functions for the travel services provided by our client.

Similarly, in relation to your client's Class 36 trade marks, no infringement has occurred within the meaning of Section 62 of the Trade Marks Act as our client is not involved in the sale or provision of the services for which registration has been obtained.

We point out that our client which operates travel agencies in a number of States of Australia has registered the business name 'World Visa' with the Corporate Affairs Commission in the various States."

By letter dated 3 June, 1983, the applicant's solicitors renewed their complaints about infringement of their client's trademarks and also alleged passing off and a breach of s.52 of the Trade Practices Act. The respondents' solicitors then replied in these terms (inter alia);
"We are instructed that our client will, subject to the next paragraph, henceforth cease all use of your client's blue, white and gold band design whatsoever in connection with its business wherever conducted in Australia.

It will, no doubt, be appreciated that our client will encounter some logistical problems in complying with this undertaking as the said design appears on a great variety of materials used by it in its various retail outlets and offices throughout Australia. A reasonable period of time ought therefore be allowed to our client to replace such materials and signs with those bearing a new logo which will in no way infringe or breach any of your client's proprietary rights.

As to the use of the words 'World Visa', we point out that the same are always used in conjunction with the words 'Travel Service' on our client's promotional and other materials and signs. We do not consider the use of this combination of words to be false, misleading or deceptive or constituting a passing-off. We note that in your letter under reply you have described your client's business as being a credit card company. Our client, as your client is aware, operates a chain of travel agencies providing retail travel services and no other business. The word 'Visa' as used by our client as a part of its business name or trade and/or service marks is intended to be descriptive only of our client's business and not otherwise . . .

We, . . . advise that any attempt on your client's part to restrain or prevent our client from trading under the name 'World Visa Travel Service' or any combination of those words will be most strenuously defended."

By letter dated 7 June, 1983, the applicant's solicitors repeated their claim that the use of the word "Visa" by the first respondent would be misleading. The respondents replied by letter dated 8 June, 1983 saying (inter alia):
" . . . By the use of the word 'Visa' in its name, our client does not seek to exploit the goodwill (if any) enjoyed by your client nor does our client intend by such use to mislead and confuse the public. Accordingly, our client is prepared in all use of its name to disassociate itself from your client by adding after its name the words 'not connected with Visa credit card' or words to that effect.

Hence, on all our client's stationery, brochures, signs and other materials bearing our client's name the above mentioned words of disassociation will appear. As stated in our letter to you of the 6th instant, our client is proposing to use a new design as a trade mark which will bear no resemblance to the one currently in use.

We respectfully submit that the above offer of dis-association represents the maximum rights that your client, under the circumstances, would be entitled under the law to assert. If this offer is not acceptable, we can only conclude that your client wishes for a monopoly in the use of the word 'Visa' and this we respectfully submit, the law will not permit . . . "

In seeking interim relief under s.52, the applicant submits that members of the general public who are actual or potential travellers or merchants are likely to be deceived or misled into the belief that the first respondent's business is or is connected with or is as soundly backed as that of the applicant. It says that the respondents abandoned the Visa blue and gold colours with an alacrity that shows there was no bona fide use by them and which admits deception or the likelihood of deception of the public were they to continue to use of those colours, the logo, and their name.

The applicant then says that there is no material difference, so far as the likelihood of deception of the public is concerned, between the applicant's name "Visa International", and the trademark "Visa", as used, and the first respondent's name, "World Visa Travel": the distinctive element is Visa, inevitably associated in the public mind, so it says, with use in relation to travel internationally, or worldwide.

The applicant argues that it has established a prima facie case of contravention of s.52 within the established principles for granting interlocutory relief on the footing that there is a probability that at the trial, if the facts remain as they are, the applicant will be entitled to relief. A fortiori, there is a serious question to be tried (see Australian Coarse Grain Pool Pty. Ltd. v. Barley Marketing Board of Queensland (1982) 46 A.L.R. 398). It submits that the conduct of the respondents involves a misrepresentation as to a connection between the first respondent's business and the applicant's business of the type considered in cases such as Taco Company of Australia Inc. v. Taco Bell Pty. Ltd. (1982) 42 A.L.R. 177 at 201-2; World Series Cricket Pty. Ltd. v. Parish (1977) 16 A.L.R. 181; and Bradmill Industries Ltd. v. B. & S. Products Pty. Ltd. (1980) ATPR 40-191.

The applicant further contends that there has been an intentional adoption by the respondents of the applicant's name and logo, at the least, to obtain any "residual attractive" force; so that the Court should not be astute to find the respondents not likely to succeed in their design, which necessarily involves the likelihood of public deception. Reference is made to Midland County Dairy Ltd. v. Midland Dairies Ltd. (1948) 65 RPC 429 at p.435.

The respondents, on the other hand, in denying any breach of s.52, point to the circumstances that the word "Visa" is an ordinary English word and that it is quite apposite for use in the travel industry since, in its ordinary meaning, it can refer to an endorsement on a passport. Reliance is placed upon Hornsby Building Information Centre Pty. Ltd. v. Sydney Building Information Centre Ltd. (1978) 140 C.L.R. 216. The respondents further rely upon the absence of any reliable evidence of actual deception. They also call in aid the use of the word "Visa" by others, albeit on a limited basis. The respondents also submit that s.52 can have no application here because the applicant is not, in any strict sense, a travel agent and thus, it is said, there is no common field of activity (c.f. Lego Australia Pty. Ltd. v. Paul's (Merchants) Pty. Ltd (1982) 42 A.L.R. 344). In any event, they say, even if one accepts the difficulties of correcting first impressions in the present context, the applicant should be content to accept the assurance proffered in the respondent's solicitors' letter dated 8 June, 1983 (see p.11, above).

In my opinion, the applicant has made out a prima facie case of a contravention of s.529 In this connection, I accept that a trader adopting descriptive words does not thereby secure an unfair monopoly in those words (see Parkdale Custom Built Furniture Pty. Ltd. v. Puxu Pty. Ltd. (1982) 42 A.L.R. 1 at p.10). Here, however, the word "Visa" is not descriptive of the business of either party: neither carries on the business activity of the procuration of visas in any specialist sense.

The authorities in this area relied on by the applicant establish that a contravention of s.52 will occur when there is a misrepresentation as to a supposed connection between traders operating in the same or similar fields of activity. In the Hornsby case, Stephen, J. said (at p.227):
"No doubt the meaning of the statutory prohibition which s.52(1) enunciates must be gained from the terms of the sub-section itself; but nothing in those terms suggests that a statement made which is literally true, i.e., that the centre at Hornsby is conducted by Hornsby Building Information Centre Pty. Ltd. may not at the same time be misleading and deceptive. It clearly may be. To announce an opera as one in which a named and famous prima donna will appear and then to produce an unknown young lady bearing by chance that name will clearly be to mislead and deceive. The announcement would be literally true but none the less deceptive, and this because it conveyed to others something more than the literal meaning which the words spelled out. Thus, in passing off, a newly incorporated defendant company may not use, in its newly established business, its true corporate name if it be deceptively similar to that of a plaintiff with an established reputation (Fine Cotton Spinners and Doublers' Association Ltd. v. Harwood Cash & Co. Ltd.) What has been said of passing off actions applies equally in the present case; as Buckley L.J. remarked in John Brinsmead & Sons Ltd. v. Brinsmead, a statement which is literally true and accurate may nevertheless carry with it a false representation. Lord Morris expressed much the same notion in Parker-Knoll Ltd. v. Knoll International Ltd. The same will apply in relation to s.52(1)."

Further, in my view, there is not present in this case the special circumstances found in McWilliam's Wines Pty. Ltd. v. McDonald's System of Australia Pty. Ltd. (1980) 33 A.L.R. 394, where confusion as to the source of two very different products arose essentially by reason of the actions of McDonald's in advertising their hamburgers so widely. In that sense, the problem was thought to be self-induced; (see the discussion in Puxu at p.10). That unusual feature is not present here which, in any event, is not a case of diverse products but of common or, at the least, overlapping business activities. In my opinion, the more appropriate analogy, for present purposes, is provided by the passing off cases to which Stephen, J. referred in the Hornsby case. Further, although there is no real evidence of actual deception in this case, it is now well established that, in the end, it is for the Court to decide whether the conduct is misleading or likely to do so (see Puxu at p.6). In this context, the conduct of the respondents must be viewed as a whole (see Puxu at p.7). So viewed, I find that, prima facie, the applicant has made out a case for interlocutory relief.

On the balance of convenience, the applicant points to the following circumstances: the applicant has a long established, valuable and substantial goodwill; public confidence in the applicant and its member/licencees is an essential element in the goodwill; the respondents' name is not a proper name, or their "own" name, has only been recently adopted, and there is no evidence of any substantial investment of moneys in the name; the respondents can easily change the name, as have been shown by their actions to date in relation to the logo; in the light of the standing of the applicant and its member/licencees, any misleading or deception of the public would be inherently serious so far as the public is concerned.

On the other hand, the respondents urge that, in all the circumstances the status quo ought to be maintained because: there is no evidence of any real interference with the goodwill of the applicant; there is no evidence of damage at all, not even confusion; by contrast, there would be substantial inconvenience to the first respondent if it were forced to change its business name Australia wide. Also, since 1980, the applicant has apparently been aware of the use of the name "VISA EXPRESS", yet there is no evidence of legal action taken in respect of that or any other names in use now for some years.

I have found this aspect of the case particularly difficult. The considerations are finely balanced but, on the whole, I think that an interim injunction should be granted, but that relief should be made conditional upon the suspension of the operation of the injunction for a period of three weeks and upon the fixing of a date for a final hearing in about seven weeks' time.

In my view, a most significant factor in weighing the balance of convenience is the fact that when choosing their name and the design features of their advertising, the respondents were well aware of the existence of the applicant, its reputation and the design of its decal. They sought to excuse the appropriation of at least the design features upon the ground that most of the Australian banks had, at about that time, terminated their relationship with Visa. However, if the respondents had chosen to make proper inquiries in that behalf, they would have been informed that Visa still had some Australian connections and, of course, still does. In any event, Visa has always maintained its international travel connection. To this extent, the problem now confronting the respondents may be attributed to their own actions in this regard.

For these reasons I propose to grant an interim injunction in the matter. I propose to order, pending the final hearing, that the respondents be restrained from using the word "Visa" in or in connection with their business name without the consent of the applicant or the leave of the court. However, I propose to suspend the operation of that injunction for a period of three weeks so that the respondents may have the opportunity to reorganise their affairs or, no doubt, to take such other steps as they see fit. I note that the applicant proffers the usual undertaking as to damages and I note that in the course of argument it was conceded on behalf of the applicant that certain costs at least would be comprehended within the undertaking. I propose to order that the final hearing of the matter be expedited and I indicate that I would intend to fix a date for hearing in about seven weeks' time. I propose to order that costs be costs in the proceedings. I direct the applicant to bring in short minutes of order to give effect to these reasons.