Woodroofe Bottlers Pty Ltd v Beecham (Australia) Pty Ltd

[1984] FCA 491

IN THE FEDERAL COURT OF AUSTRALIA )

SOUTH AUSTRALIA DISTRICT REGISTRY ) NO. SA G44 of 1984

GENERAL DIVISION ) NO. VG 310 of 1984

BETWEEN: WOODROOFE BOTTLERS PTY.

LIMITED & ORS.

Applicants

7 AND: BEECHAM (AUSTRALIA) PTY.

LIMITED

Respondent

BETWEEN: BEECHAM (AUSTRALIA) PTY.

LIMITED

Applicant

AND: WOODROOFE BOTTLERS PTY.

LIMITED t O R S .

Respondents

CORAM :	Mr. Justice	Jenkinson
PLACE :	Adelaide

DATE	:	18 December,	1984
EX TEMPORE JUDGMENT

Claims for interlocutory injunctions in each of two

proceedings. The claims were heard together and the

affidavits read in each were by consent of the parties

evidence in the other. Beecham Australia Pty. Limited (which

I will call "Beecham") is and at material times was a

,.

corporation within the meaning of that word in the Trade

Practices Act 1974, as also was each of the other companies

parties to the proceedings. Beecham has since August 1983

been the beneficial owner of three trade marks. Since 4

April 1984, Beecham has been registered under the Trade Marks

2.

Act 1955 as the proprietor of the three trade marks. The

registered trade marks are:

(a) No. B 286987 consisting of a Pub Squash

label as of 6 May 1975 in Part B of the

register in class 32 in respect of 'Lemon drinks of all descriptions included in this

class ' :

(b) No. A 301625 consisting of a pub doors

device registered as of 27 October 1977 in Part A of the register in class 32 in respect of 'Non-alcoholic beverages of all descriptions included in this class'; and

(c) No. B 308303 consisting of the words 'Pub

Squash' registered as of 20 June 1977 in

Part B of the register in class 32 in

respect of 'Squash beverages	and squash-type
included in class 32.'

Beecham claims further that the word "Pub" is a

trade mark under which since 1975 its predecessors, and since

August 1983 it, has manufactured and sold soft drinks. It

makes a like claim in respect of a get-up which includes the

words "Pub" and "Squash" or the word "Pub" with the pub doors

device.

Beecham acquired the trade marks with, and upon the

sale to it by Glaxo Australia Pty. Limited of, a soft drinks

manufacturing business. The latter company (which I will

call "Glaxo") had acquired the trade marks from The Pub

.. S .

Squash Company Pty. Limited in ox about May 1981.

In October 1980, a company now named Greenslades

Natural Foods Pty. Limited bought the plant, equipment and stock of a soft drink manufacturing business which The Pub

3 .

Squash Company P t y . Limited had car r ied on i n South

Australia. A t the same time The Pub Squash Company P t y .

Limited granted t o Greenslades Natural Foods Pty. Limited the

sole r i g h t , w i t h i n South Australia and w i t h i n a certain

radius of Broken H i l l and of Alice Spr ings , t o manufacture

cer ta in beverages i n accordance w i t h formulae and recipes of

the grantor ''and to bo t t l e , can and t o market i n bott le or

cans or through pre-mix or post-mix equipment the beverages

so manufactured under or u s i n g the trade names of any of

them". The "trade names" to which reference i s made include

the trade marks of which Beecham i s now the registered

proprietor. The agreement i n w r i t i n g for the grant of those

r igh t s was varied i n January 1981 by an agreement i n w r i t i n g

en t i t l ed "Franchise Amendmeent Agreement .'I The pr imary agreement provided that it should be deemed to have come into

operation on 1 7 October 1980 and should, unless previously

and lawfully determined by either party, remain i n force for

a period of 10 years. Greenslades Natural Foods P t y . has

been a t a l l ma te r i a l times associated i n a group w i t h other

companies, Woodroofe Bot t le rs P t y . Limited, Woodroofe

Distributors P t y . Limited, Woodroofe Limited and Har Har Pty .

Limited. The group i s well known i n South Australia under

the name "Woodroofell. The name s i g n i f i e s the manufacturer of

so f t d r i n k s .	Since	1980 that group	of	companies	has	sold by
I .

wholesale sof t d r i n k s which it has manufactured i n accordance

w i t h the formulae and recipes of The Pub Squash Company Pty.

Limited. That trade the group carried on under the

registered trade marks. I t paid royalties, calculated i n accordance w i t h the terms of the agreement w i t h The Pub

4.

Squash Company P ty . Limited, f irst to the l a t te r company and

then t o Glaxo and f ina l ly to Beecham.

I t i s the contention of the Woodroofe group tha t

from the conduct of Glaxo and members of the group an

agreement between Glaxo and one or more members of the group

was t o be inferred, the terns whereof were, mutatis mutandis,

those of the written agreement which had been s u b s i s t i n g

between The Pub Squash Company Pty. L t d . and Greenslades

Natural Foods P t y . Limited when Glaxo acquired the trade

marks from the Pub Squash Company P t y . Limited.

Glaxo continued to exercise over the manufacture of

the beverages sold under the trade marks the control which had been exercised by The Pub Squash Company Pty . Limited by arranging for supply to the Woodroofe group of beverage

ingredients, the exact composition of which w a s not disclosed

t o t h e Woodroofe group. Beecham' S acquisition of the trade

marks from Glaxo was effected i n performance of an agreement

i n w r i t i n g dated 15 J u l y 1983 for the sale of Glaxo's so f t

drink manufacturing business. Included i n the sale was:

""Glaxo's r igh t , t i t l e and in t e re s t t o and under

the leases and agreements, particulars of which

are contained i n schedule 3 . "

I .

.,

Schedule 3 has for a heading the words:

"Pa r t i cu la r s of t he l ea ses and agreements i n

respect of which Glaxo' s r igh t , t i t l e and in te res t

thereunder are sold t o Beecham."

5 .

Then follows a list serially numbered of agreements. Between that which is numbered 9 and that which is numbered 10 are the words:

"B. Particulars of agreements to be novated or in

respect of which	fresh agreements are	to be
obtained.:

The agreement numbered 17 is described thus:

"Agreement dated 17 October 1980 between Palakras

Fruitgrowers Pty. Limited and the Pub Squash

Company Pty. Limited receiver and manager

appointed. I'

Palakras Fruitgrowers Pty. Limited was in October 1980 the name of Greenslades Natural Foods Pty. Limited.

Clause 18 of the agreement provides:

"Until 31 October 1983 Glaxo shall, on Beecham' S

reasonable request from time to time, assist

Beecham to novate the agreement, or obtain fresh

agreements instead of each of the agreements

listed in Part B of schedule 3 as Beecham shall

elect. ''

Clause 20 provides:

2.

..

"Beecham shall indemnify and keep indemnified

Glaxo in respect of all claims arising in respect

of any Of the leases and agreements referred to in

schedule 3, which shall have been assigned to

Beecham or novated insofar as such claims relate

to any time after such assignment or novation."

By l e t t e r dated 14 October 1983 Beecham i n d i c a t e d ,

i n my op in ion , i t s c o n t e n t i o n t h a t the use by the Woodroofe

group of the t r a d e marks had b e e n i n p u r s u a n c e of "an

informal a r rangement w i t h Glaxo" which might be " t e rmina ted

by either p a r t y a t any time". The Woodroofe group paid, and

Beecham accepted, roya l ty paymen t s , the g roup r ega rd ing them

as payments under an agreement of which a l l the te rms of the

o r i g i n a l w r i t t e n a g r e e m e n t w i t h The Pub Squash Company P ty .

Limited were, m u t a t i s mutandis , terms, i n c l u d i n g the term as

t o t e n y e a r s ' d u r a t i o n , a n d Beecham rega rd ing the payments as

made p u r s u a n t t o a n i n f o r m a l a g r e e m e n t t e r m i n a b l e o n

r e a s o n a b l e n o t i c e b y i tsel f or by the Woodroofe group.

Beecham purpor t ed to t e r m i n a t e i t s agreement w i t h

the Woodroofe	group	by	a l e t t e r dated 7 August 1984 i n these
terms :

" M r . Michael Harbison, Woodroofe Bot t lers P ty .

L i m i t e d , 2 1 Theresa S t r ee t , Norwood, S o u t h

A u s t r a l i a , 5067 . . . . . . . . I t i s m y b e l i e f

t h a t it w o u l d h a v e b e e n i n o u r j o i n t i n t e r e s t s t o

have concluded an arrangement . I'

Beecham has commenced to s e l l soft d r i n k s i n S o u t h

A u s t r a l i a u n d e r the t r ade marks. The Woodroofe g roup *.

c o n t i n u e s t o sell the so f t d r i n k s u n d e r the t rade marks. The

Woodroofe group contends t h a t Beecham, hav ing acqu i r ed the

trade marks w i t h n o t i c e of the r i g h t s which the g r o u p d e r i v e d

w i t h respect t o those trade marks, should be r e s t r a i n e d b y

i n j u n c t i o n from u s i n g the trade marks i n S o u t h A u s t r a l i a t o

7 .

the material damage of the group, in opposition to the agreement between the group and Glaxo, and in a manner in which Glaxo could not, without breach of that agreement, have used the trade marks. The entitlement to that protective injunctive relief is declared, according to the submissions

of counsel for the Woodroofe group, in the reasons for the

decision of the Privy Council in Lord Strathcona Steamship

Company Limited v. Dominion Coal Company	Limited (1926) A.C.
108.

The principle of law laid down in that case is, in

my opinion, inapplicable to the species of property here in

question. A trade mark has for its use the indication of a

connection in the course of trade between goods or services -

in this case goods - and the owner of the trade mark. The

trade mark signifies that the goods are put upon the market

as vendible goods under the aegis of the proprietor. When

the ownership of that species of property has passed from one

to another, an agreement fox the use of the mark between the

first proprietor and a licensee cannot in my opinion be

protected by the application of the principle expounded in

the Lord Strathcona Case, because it is no longer true, as it

was before the property passed, that the goods are put upon the market as vendible goods under the aegis of that first ..

proprietor and, unless and until the second proprietor

sanctions use by the licensee, use of the trade mark is

misleading and deceptive, in my opinion. The use which was

,sanctioned by Beecham is no longer sanctioned. The Woodroofe

group's use is, in my opinion, deceptive and a breach of

8 .

section 52 of the Trade Practices Act 1974.

~ r . Angel, Q.C. who appeared with Mr. Dunne for the

Woodroofe group, framed his submissions in several ways. He suggested that the group had an equity which would be protected by injunctive order and that Beecham held the trade

marks subject to a constructive trust in favour of the

Woodroofe group, or one or other of the members of the group.

But, notwithstanding Mr. Angel's candid and careful arguments, I can find no basis on which I can conclude that there is a serious question to be tried, the resolution of which would justify any relief at the suit of his clients against Beecham.

On the other hand, I find a strong prima facie case

of misleading conduct on the part of members of the Woodroofe

group. The use of the trade marks by the group without the sanction of the proprietor of the marks amounts to a

representation which is false : that there is a connection in

the course of trade between the goods so marked and the

proprietor who has the right to use the marks.

Either Beecham on the one side or the respondents to its application on the other will be disadvantaged by the 4 .

refusal or the grant, respectively, of interlocutoey

injunctive relief in Beecham' S proceeding. In the time

available for the hearing of these claims during the court's

vacation I have not been able to determine with any

confidence that one side would suffer a 6UbStantially greater

9.

disadvantage or a disadvantage irreparable by curial remedy.

Exercising the discretionary power conferred by section

8 0 ( 2 ) of the Trade Practices A c t 1974, I attribute substantial

weight tu the protect.ion of the public from deception.

There will be in t.he proceeding VG310 of 1584 in which

beecham Australia Pty. Limited is the applicant, an injunctive

order upon the usual undertaking as tcr damages. In the proceeding

SA G44 of 1584, the application	for interlocutory relief will	be
dismissed.

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