Volt Australia Ltd v Directories (Australia) Pty Ltd

Re: VOLT AUSTRALIA LIMITED
And: DIRECTORIES (AUST.) PTY. LTD. (1985) 7 FCR 333
No. VG101 of 1985
Trade Practices - Trade Marks (1985) AIPC para 90 - 228 / (1985) ATPR para 40
- 573

COURT

IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY
GENERAL DIVISION
Jenkinson J.(1)

CATCHWORDS

Trade Practices - Misleading or deceptive conduct - passing off - Similarity of name under which applicant intends to trade name under which respondent has traded in similar business over long period - Similarity of name under which respondent has sought to incorporate a company to name under which applicant intends to trade in similar business - Interlocutory injunctive relief - Serious question to be tried.

Trade Marks - descriptive expressions - Entitlement to use - Interlocutory restraint of use.

Trade Practices Act 1974 - ss. 52, 80

Trade Marks Act 1955

Office Cleaning Services Ltd. v. Westminster Window and General Cleaners Ltd. (1946) 63 R.P.C. 39

Hornsby Building Information Centre v. Sydney Building Information Centre (1978) 140 C.L.R. 216

Australian Mortgage Land and Finance Company v. Australian and New Zealand Mortgage Company (1880) W.N. 6

Kerley's Law of Trade Marks and Trade Names (11th Ed.)

Epitoma Pty. Ltd. v. Australian Meat Industry Employees Union and Ors. (No. 2) (1984) 54 A.L.R. 730

Trade Practices - Misleading or deceptive conduct - Passing off - Similarity of name under which applicant intends to trade to trade name under which respondent has long traded in similar business - Eloquently descriptive naming - Similarity of name under which respondent has sought to incorporate company to name under which applicant intends to trade in similar business - Interlocutory injunctive relief - Serious question to be tried - Trade Practices Act 1974 (Cth), ss 52(1), 80.

Trade Marks - Descriptive expressions - Entitlement to use - Interlocutory restraint of use - Trade Marks Act 1955 (Cth).

HEADNOTE

In an application for relief pursuant to ss 52(1) and 80 of the Trade Practices Act 1974 (Cth) the applicants sought an interim injunction to restrain the respondent from registering a company in the name of "Australian Directories Services Pty Ltd", which the respondent proposed to use as a vehicle for "general credit services". The applicants had formerly registered the business name "Australian Directory Services", to be used in the exercise of a commercial monopoly respecting advertising in the "Yellow Pages" - a monopoly theretofore long enjoyed by the respondent. The respondent cross-claimed and sought an interim injunction to restrain the applicants from using that business name on the grounds that it was too similar to the trade name "Directories(Aust) Pty Ltd", under which the respondent had long traded in respect of the monopoly.

The applicants had a good chance of success at trial; the respondent, little. If the interim injunction sought by the respondent were not granted the respondent's damage, if any, to time of trial, would be easily proved, while the applicants', in part, would be very difficult to quantify. If the interim injunction sought by the applicants were not granted their damage to time of trial would be substantial but difficult to quantify, while the respondent's would be easily quantified.

The respondent also sought an interim injunction to restrain the applicants from using the expression "Yellow Pages" or the so-called "walking fingers logo". The respondent was the registered proprietor of two registered marks consisting of the "logo". There was evidence of much association of the "logo" with the "Yellow Pages", but none showing the "logo" or the "Yellow Pages" to be associated with the respondent.

Held, granting the applicants' and dismissing the respondent's applications for interlocutory relief:

(1) The balance of convenience would have lain in withholding interlocutory relief from the respondent even if there were a serious question to be tried.

Epitoma Pty Ltd v. Australasian Meat Industry Employees Union, (1984) 3 FCR 55, applied.

Hornsby Building Information Centre Pty Ltd v. Sydney Building Information Centre Ltd (1978) 140 CLR 216; Australian Mortgage Land and Finance Company v. Australian and New Zealand Mortgage Company, (1880) WN 6, considered.

(2) No case has been shown to warrant interim restraint on the applicants' use of the "logo" or the words "Yellow Pages".

Observations on use of eloquently descriptive trade name.

Office Cleaning Services Ltd v. Westminster Window and General Cleaners Ltd (1946) 63 RPC 39, referred to.

HEARING

Melbourne, 1985, May 2, 6-7, 16. #DATE 16:5:1985
APPLICATION AND CROSS-APPLICATION

Application and cross-application for orders as recited above.

R Merkel QC and R A Finkelstein, for the applicants.

B J Shaw QC and C N Jessup, for the first-named respondent.

Cur adv vult

Solicitors for the applicants:Freehill, Hollingdale & Page.

Solicitors for the first-named respondent: Mallesons.

WSFLB

JUDGE1

Claims by applicants and a cross-claimant for interlocutory injunctive relief.

The Australian Telecommunications Commission ("Telecom") regularly publishes directories of those who rent from it a telephone service, who are called subscribers. The directory in respect of a geographical area records the name and address and telephone number or numbers of each subscriber in that area. In respect of each area there is also published, either bound in the same volume or in a separate volume, a directory of the name and address and telephone number or numbers of each subscriber in the area who desires his business or professional occupation to be thus advertised. This is called a Yellow Pages directory. In it a subscriber may at no cost to himself be the subject of a standard entry or may for a price have published by way of advertisement more than his name and address, or have published name and address in larger type than that of the standard entry.
The first-named respondent Directories (Aust.) Pty. Ltd., which is the cross-claimant, has for many years carried on the business of procuring, in pursuance of contracts with Telecom, advertisements by subscribers in Yellow Pages directories. The cross-claimant is presently, and has for some years been, the sole contractor for that work throughout the whole of Australia except in the State of New South Wales and the Australian Capital Territory. But late in 1984 a company associated with the applicants was chosen by Telecom to succeed the cross-claimant as the sole contractor in all those parts of Australia for a period of five years from 1 July 1986. The former company assigned its rights to the applicants who have entered into the contracts with Telecom as the members of a partnership ("the partners"). The contracts with Telecom under which the cross-claimant procures advertisements relate to directories to be issued on or before 30 June 1986 and the contracts with Telecom under which the partners will procure advertisements relate to directories to be issued on or after 1 July 1986. A period of months elapses between the date after which advertisements cannot be accepted for publication in a directory and the date of issue of the directory. The cross-claimant will not be procuring advertisements after February 1986, nor advertisements for a capital city directory after July 1985. There is a date, towards the end of 1985, before which the partners may not accept advertisements for publication in a directory to be published after 30 June 1986.
The partners commenced in early December 1984 to use the name "Australian Directory Services", of which they sought registration under the provisions of the Business Names Act 1962 (Vic.) in February 1985. The application was granted. Instructions were given in November 1984 by Monroe Earl Wilcox (who deposed that he is "the President" of the second-named applicant, which is, like the other applicant, a company incorporated in the State of Delaware in the United States of America) to the partners' solicitors to cause the name to be registered as the firm's business name in all the States and Territories of the Commonwealth. Those instructions were not carried out immediately because neither of the partners had then established an office outside Victoria.
Early in February 1985 the cross-claimant's managing director, Mr. Van Ry, learnt that the firm which was to succeed the cross-claimant as advertising contractor for Yellow Pages directories would trade under the name "Australian Directory Services". About a month later he instructed the cross-claimant's solicitors to apply on behalf of that company under s.40 of the relevant Companies Code for the reservation, in each State and Territory, of the name "Australian Directories Services Pty. Ltd." as the name of an intended company. These instructions were promptly carried out. Knowledge of one of those applications reached the partners in about the third week of April. The originating application by which the applicants' proceeding was commenced was filed on 26 April.
It is convenient to deal first with the proceeding by way of cross-claim against the applicants. That claim is, in part that the use by the partners anywhere in Australia of the name "Australian Directory Services" in the only trade in which the partners presently prpose to engage - as the advertising conractors for Yellow Pages directories - constitutes conduct likely to mislead or deceive, in contravention of s.52(1) of the Trade Practices Act 1974, and constitutes the tort of passing off their business as that of the cross-claimant or as associated with the business of the cross-claimant. The similarity of the business name which the partners are using and the name of the cross-claimant is such, according to the cross-claimant's submission, that in the field of commerce in which both the partners and that respondent are presently engaged members of the public will be led into the mistaken belief that the entity which calls itself "Australian Directory Services" is, or is associated with the entity which has for many years called itself "Directories (Aust.) Pty. Ltd." or "Directories Australia" or "Directories of Australia". As to the latter two names, the evidence was that, although the proper name of the cross-claimant Directories (Aust.) Pty. Ltd. was habitually used in written reference to that company, spoken reference was commonly made to it as "Directories Australia", and spoken reference was sometimes made to it as "Directories of Australia".
The use by the partners of the name they have chosen is all the more likely, it was submitted, to mislead members of the public into a mistaken belief that their business is the business which the cross-claimant has been carrying on because the partners are succeeding to the commercial monopoly which the cross-claimant has long enjoyed. If that be so, it is also true that the withdrawal of the cross-claimant from Yellow Pages directory advertising in Australia will tend to minimise the risk of such a mistaken belief.
The word "directory" and its plural form are descriptive of the kind of book with which the business of the cross-claimant has been concerned and with which the business of the partners will be concerned. The word "Australia" is apt, if not quite accurate, to identify the area within which the partners will be, and the cross-claimant has been, trading. "There is a price to be paid for the advantages flowing from the possession of an eloquently descriptive trade name. Because it is descriptive it is equally applicable to any business of a like kind, its very descriptiveness ensures that it is not distinctive of any particular business and hence its application to other like businesses will not ordinarily mislead the public. In cases of passing off, where it is the wrongful appropriation of the reputation of another or that of his goods that is in question, a plaintiff which uses descriptive words in its trade name will find that quite small differences in a competitor's trade name will render the latter immune from action (Office Cleaning Services Ltd. v. Westminster Window and General Cleaners Ltd. (1946) 63 RPC 39, at p 42, per Lord Simonds). As his Lordship said ((1946) 63 RPC at p 43) the possibility of blunders by members of the public will always be present when names consist of descriptive words - 'So long as descriptive words are used by two traders as part of their respective trade names, it is possible that some members of the public will be confused whatever the differentiating words may be.' The risk of confusion must be accepted, to do otherwise is to give to one who appropriates to himself descriptive words an unfair monopoly in those words and might even deter others from pursuing the occupation which the words describe. If this be so in the case of passing off actions the case of s.52(1), concerned only with the interests of third parties, is a fortiori. To allow this section of the Trade Practices Act to be used as an instrument for the creation of any monopoly in descriptive names would be to mock the manifest intent of the legislation. Given that a name is no more than merely descriptive of a particular type of business, its use by others who carry on that same type of business does not deceive or mislead as to the nature of the business described". (per Stephen J. in Hornsby Building Information Centre v. Sydney Building Information Centre (1978) 140 CLR 216 at 229-230. In Australian Mortgage Land and Finance Company v. Australian and New Zealand Mortgage Company (1880) WN 6 James L.J. observed that "while the business name of another could not be appropriated, a man could not, on the other hand, give himself any monopoly in a name which, as in this case, merely described the nature of the business or the locality of its operations". (See also Kerly's Law of Trade Marks and Trade Names (11th ed.) pp. 360-363.)
Evidence of confusion between the two business entities under consideration was adduced. It could be inferred that in some instances confusion arose out of an assertion by a person associated with the partners that he was "with the Yellow Pages", thus leading his interlocutor to the conclusion that he was associated with the cross-claimant. In those instances there is no basis for an inference that the name "Australian Directory Services" had been used, or for an inference that, if it had been used, its use contributed to cause the mistaken conclusion. There is very little evidence of mistake shown to be attributable to the use of the name "Australian Directory Services".
There seems to me to be no reason to anticipate much confusion between the two business entities by reason of similarity between the written words "Australian Directory Services" and the written name of the cross-claimant. Turning to confusion deriving from speech, I cannot think it likely to occur often. Not only is the order inverted of the two words which, if the distinction between noun and adjective be ignored, may be said to be common to both names, but also the partners' name includes a third, distinctive word, "Services", the sibilants of which give some assurance of its audibleness in conversation. Such small risk of confusion and mistake as may be involved in the use of the partners' name is in my opinion no greater than a trader whose name is composed of descriptive words must bear without remedy at common law. Nor do I consider that the partners' use of the name has or will constitute conduct likely to mislead or deceive, contrary to s.52(1) of the Trade Practices Act 1974. The class of persons likely to advert to the existence, or to the present activities in commerce, of the partners and the cross-claimants will not include many whose alertness to discriminate between traders' names is at the lower levels of the range to be found within the community, for nearly all in that class will be persons engaged in trade or commerce, either on their own account or in responsible employment. Transient doubt or confusion may be caused by the similarity of names, but not, I think, a mistaken belief, except in a rare case.
I do not consider that the cross-claimant has a real prospect of succeeding at trial upon either of the causes of action under consideration. (See Epitoma Pty. Ltd. v. Australasian Meat Industry Employees' Union and Ors. (No. 2) (1984) 54 ALR 730 at 734.) Nor do I think that any significant damage will be caused to the cross-claimant by the partners' use of the name they have adopted. The contending entities are not, and will not be, in competition in trade or commerce, except competition for a contract of the kind each has at different times made with Telecom, unless one of them changes its present intention. It is quite unlikely that in the period before trial the partners will commence any other business. The damage which the cross-claimant presently fears may be caused by a mistaken belief that the two entities are identical or are associated is impairment of its own good reputation in consequence of dissatisfaction with the business conduct of the partners. There is no evidence to justify a fear that any significant dissatisfaction will occur before trial. If, on the other hand, the partners were enjoined from using their business name until trial, they would suffer substantial economic loss in procuring the substitution of some other name on stationery and premises, and in the records of persons with whom they have been dealing. That loss could no doubt be calculated, but there would also be a substantial impairment of the reputation of the partners' recently launched business by reason of the loss of its name, even if that loss were in the event only temporary. The estimation in money of damage of the latter kind would be virtually impossible. The balance of convenience would have lain, in my opinion, in withholding from the cross-claimant the interlocutory relief it claims, if I had been of the opinion that a serious question to be tried arose in respect of etiher cause of action.
One of the causes of action alleged by the applicants against the cross-claimant is that which s.80 of the Trade Practices Act 1974 affords in respect of conduct which would contravene s.52(1) of that Act. That conduct is the carrying on in Australia of the business of "general credit services", by the company intended to be registered in the name "Australian Directories Services Pty. Ltd.", under that name. The evidence justifies a conclusion that the cross-claimant proposes to induce that company, when it has been incorporated, to engage in that conduct. It is conduct which would in my opinion be likely to deceive or mislead members of the public in Victoria, where the partners will be carrying on business under the name "Australian Directory Services", and in any other part of Australia where the partners might carry on business, into the mistaken belief that the two entities are one entity.
The applicants alleged that the same conduct would constitute the tort of passing off. In respect of both causes of action it was submitted on behalf of the cross-claimant that no reputation or goodwill had attached to the name under which the partners carry on businss. There was evidence that the manager of Telecom's Directory Services Division had informed Mr. Wilcox that Telecom "wished to avoid much publicity in relation to the awarding of the contract to Australian Directory Services until late 1985 when Telecom intended to publicize the fact that Australian Directory Services was the contractor for the 'Yellow Pages'". Mr. Wilcox deposed that in consequence of what that manager had said the partners had refrained from "widespread advertising". But there was evidence that since December 1984 the partners have been dealing under the firm name with a substantial number of persons for the purpose of procuring a wide range of goods and services and interests in land for their use in business and for the use of some of their employees and business associates. Business cards identifying the firm by its name have been distributed to persons dealing with "executives" of the firm in Australia, both within and outside Victoria. The statement, "Australian Directory Services will become the Official Advertising Contractor to Telecom Australia commencing January, 1986 in Australia except N.S.W. and A.C.T.", was published in "The Age" and "The Financial Review" newspapers on 13 and 10 April respectively. It is unnecessary that I express an opinion concerning the submission on behalf of the cross-claimant in its application to the cause of action for passing off. It is sufficient that the activities of the partners and their servants and agents involving the dissemination of the firm's business name as the name of a firm to be concerned in procuring Yellow Pages directory advertising have been, as I would find, such as to make it very likely that the use of the name "Australian Directories Services Pty. Ltd." in the provision of "general credit services" would induce in the minds of a number of persons in Victoria and elsewhere in Australia a mistaken belief that the firm and that company were one business entity. If that finding be correct, use of that name would in my opinion constitute a contravention of s.52(1) of the Trade Practices Act 1974.

Mr. Shaw Q.C., who appeared with Dr. Jessup for the cross-claimant, submitted that even if, contrary to their primary submissions, the partners were considered to have shown a serious question to be tried in respect of the cause of action alleged by them to arise under the Trade Practices Act 1974, no case was shown for interlocutory injunctive relief against the cross-claimant. The partners would suffer no serious damage, it was submitted, by being prevented until trial from lawfully carrying on business outside Victoria in the name they desire to have registered under the legislation of other States and the Territories with respect to business names, because those partners are not authorised to procure Yellow Pages directory advertisements until the end of 1985. The cross-claimant, it was submitted, should not be enjoined from proceeding with the incorporation of the intended company under the name already reserved, for the delaying of that process would delay commencement of the business which it was proposed that the new company should carry on.
If the incorporation of the intended company be delayed by injunctive order now, the damage sustained by loss of the profits that company would have earned if the order had not been made ought to be readily calculable by reference to the profits which the company does earn hereafter. The damage to be sustained by the partners in consequence of their inabiliy lawfully to use their firm's name in carrying on business in the States and Territories where the intended company's name has been reserved would probably be substantial, but difficult to quantify. Inability to use the name without restriction in Australia would be likely to cause delay, confusion and loss of the goodwill which the partners might otherwise have been able to build up in connection with the business name before the commencement of canvassing for advrtisements. Further, the prospects of success are in my opinion good for the applicant's cause of action alleged to arise under the Trade Practices Act. I think that the cross-claimant should be restrained until the trial of the proceeding or further order from attempting by any means to procure registration of a company anywhere in Australia under the name "Australian Directories Services Pty. Ltd.", and from attempting to reserve or to maintain or renew the reservation of the said name anywhere in Australia, and from using or causing to be used in trade or commerce the name "Australian Directories Services". As a condition of the grant of that interlocutory relief an undertaking, additional to the usual undertaking as to damages is required of each applicant that it will forthwith upon the request of the Court or a judge do all such things as may achieve as speedily as possible the removal of the name "Australian Directory Services" from any register of business names which is kept under the legislation of any State or Territory of the Commonwealth except the State of Victoria and on which the said name was placed on the application or with the consent of that applicant.
The expressions "Yellow Pages" and "Yellow Pages Directory" were alleged by the cross-claimant to be associated in the public mind not only with what is published either in a separate book or at the back of a telephone directory, but also with the advertising contractor for those publications. It was submitted that the use of those expressions by the partners in connection with their firm's business activities would be likely to mislead members of the public into the mistaken belief that the firm was, or was associated with, the entity which had for long been the advertising contractor for those publications, and into the mistaken belief that the firm was presently engaged in procuring and accepting advertisements in Yellow Pages directories. Interlocutory restraint of the partners from using those expressions in association with the firm's name was sought.
The same allegations were made, and similar relief was sought, in respect of a trade mark, consisting of a diagrammatic representation in silhouette of a human hand of which the first two fingers are extended to form an inverted V, which was called in evidence "the walking fingers logo". It was proved that the cross-claimant is the registered proprietor under the Trade Marks Act 1955 of two registered marks, each of which consists of the walking fingers logo. There was no evidence as to the class of goods or services in respect of which either mark was registered. The evidence showed very extensive use of the mark in relation to Yellow Pages directories, but the evidence did not suggest that the mark, or either of the expressions "Yellow Pages" and "Yellow Pages Directory" was otherwise associated with the cross-claimant. Nor did the evidence suggest that the partners had done anything, whether by use of the mark or either of those expressions or otherwise, to suggest that their firm was or would be in any way concerned with advertising in a directory to be issued before July 1986. The applicants on the one hand and the first-named respondent on the other hand have used the mark and the two expressions, the evidence showed, only to make clear their commercial relationships with the publications with which the mark and the expressions are strongly identified in the public mind. No case is shown, in my opinion, for interlocutory restraint of such use of the expressions and the mark as the evidence shows the partners to have been making.
Mr. Merkel Q.C., who appeared with Mr. Finkelstein for the applicants, suggested other causes of action as justifying the grant of interlocutory relief. But no more effective relief than I am prepared, for the foregoing reasons, to grant would be available if a serious question to be tried were shown in respect of those causes of action. It is therefore unnecessary to consider those suggested causes of action.
The parties are agreed that there should be directions for pleadings. I will hear counsel generally concerning directions.

[1985] FCA 231

16 MAY 1985