Woodtree Pty Lty v Zheng
[2007] FMCA 457
•17 May 2007
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| Woodtree Pty Ltd v Zheng & Anor | [2007] FMCA 457 |
| COPYRIGHT – Artistic work – drawing – whether a composite photographic and written work is a drawing. MISLEADING AND DECEPTIVE CONDUCT – PASSING OFF – Whether “memento” is a descriptive word – whether applicant had a reputation in the name “memento” and in the layout of its packaging – whether layout of respondents’ packaging deceptively similar to applicant’s packaging – whether applicant’s loss caused by respondents’ layout being likely to mislead or deceive. |
| Copyright Act 1968, ss.10, 32(1), Fair Trading Act 1999 (Vic), ss.9, 12(e), 12(f) Trade Practices Act 1974, ss.52, 53(c), 53(d) |
| Applied Business Technology v Grand Master Computers Pty Ltd (1999) 161 ALR 31 Australian Concise Oxford Dictionary (third edition) Ricketson, The Law of Intellectual Property: Copyright, Designs and Confidential Information (Looseleaf, Thompson Lawbook Company) |
| Applicant: | WOODTREE PTY LTD aCn 007 221 963 |
| First Respondent: | HARRY ZHENG |
| Second Respondent: | BLUE BOSS PTY LTD ACN 096 217 748 |
| File number: | MLG457 of 2006 |
| Judgment of: | Riley FM |
| Hearing dates: | 12 & 13 December 2006 |
| Date of last submission: | 21 February 2007 |
| Delivered at: | Melbourne |
| Delivered on: | 17 May 2007 |
REPRESENTATION
| Counsel for the Applicant: | Ian Horak |
| Solicitors for the Applicant: | Middletons |
| Counsel for the Respondents: | SJ Minahan |
| Solicitors for the Respondents: | Francis Abourizk Lightowlers |
ORDERS
The application filed on 31 March 2006, as amended, be dismissed.
Any written submissions by the parties in relation to costs be filed and served by 31 May 2007.
Notation: The respondents undertake to the court not to make use of the packaging artwork the subject of this proceeding or apply to any of its goods as a trade mark any trade mark of the applicant.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT MELBOURNE |
MLG 457 of 2006
| WOODTREE PTY LTD ACN 007 221 963 |
Applicant
And
| HARRY ZHENG |
First Respondent
And
| BLUE BOSS PTY LTD aCn 096 217 748 |
Second Respondent
REASONS FOR JUDGMENT
Introduction
This is an action for declarations, injunctions, delivery up and damages, or alternatively, an account of profits, under the Copyright Act 1968, the Trade Practices Act 1974, the Fair Trading Act1999 (Vic), the common law and equity in relation to certain packaging and certain products. The packaging in question is the packaging for three products, being small, medium and large photo boxes. The claim alleges infringement of copyright in the packaging and misleading and deceptive conduct and passing off in relation to the photo boxes and the packaging.
The applicant is an importer and wholesaler of gift ware including photo boxes. The first respondent is the sole director and shareholder of the second respondent, which is an importer, retailer and wholesaler of gift ware, including photo boxes.
Photo boxes in general are a means of storing photographs. They are made in a number of different styles but, typically, they are rectangular wooden boxes with hinged lids. Inside, there are a number of wooden rods each of which has attached to it a number of plastic sleeves. Each sleeve is intended to hold one or two photographs. Each wooden rod with the attached plastic sleeves is referred to as an album. The wooden rods rest on ledges near the top of the opposite sides of the inside of the box. The plastic sleeves containing the photographs hang down from the wooden rods.
The outside of the photo boxes also typically has one or more windows into which photographs can be inserted for display. For the purposes of sale, these windows generally contain a face paper, with a decorative picture of some sort and an indication of the brand.
The rights in photo boxes as such are not in issue in this proceeding. Neither the applicant nor the respondents claims to own any intellectual property in the photo boxes. If any one does own any intellectual property in the photo boxes, that person is not a party to these proceedings.
Photographs of the applicant’s and respondents’ photo boxes, face papers and packaging are contained in the appendices to this decision as follows:
a)appendix 1: applicant’s five album photo box;
b)appendix 2: respondents’ five album photo box;
c)appendix 3: applicant’s face paper;
d)appendix 4: respondents’ face paper;
e)appendix 5: applicant’s packaging for the six album photo box; and
f)appendix 6: respondents’ packaging for the six album photo box with a white sticker over the word memento.
The applicant’s packaging
The packaging for the applicant’s six album photo box (“the medium photo box”) is a reasonably good quality cardboard carton. It has six faces and is about 28cm wide, 22.5cm high and 23.5cm deep. The front, rear, side and top panels are all printed. The carton has a glossy finish.
The front panel is the same as the rear panel. It has the word “unigift” in orange and white in the top left corner. There is a black diamond around the word “gift” and the letters “TM” next to the end of the word. Under that, there is a line of writing going from one side of the carton to the other which reads “memento wooden photo box with 6 albums”. The word “memento” is in bold. The typeface is simple and modern looking and entirely in lower case. In the bottom left corner in the same typeface but in a smaller font, are the words “holds 120 photos” and under that there is written in the same typeface, “10x15cm (4"x6")”.
On the right side and under the words “memento wooden photo box with 6 albums” and occupying about half the available space is a colour photograph of a wooden photo box with seed pods scattered to the right side and front of it. The lid and foot of the photo box have mouldings on them. The lid of the photo box is open. The angle of the camera is such that the inside of the photo box can be seen with five wooden rods resting on the internal ledges. One of the albums has been removed from the photo box and is displayed on the left side of the photo box.
Additionally, the front and left faces of the photo box can be seen. Each of these faces of the photo box has a window into which a photograph, or face paper, may be inserted. In the photograph on the applicant’s packaging, a face paper in the front face can be discerned. The face paper is a black and white photograph of a contemporary wedding scene. The face paper also has printed on it prominently the unigift trade mark.
The side panels of the applicant’s carton are a pale mushroom pink colour. They have the unigift trademark in the top left corner. The words, “memento wooden photo box with 6 albums” are beneath that, in the same typeface as on the front, although the words are spread over two lines. In the bottom left corner are the words, in the same typeface:
“This stylish and functional
wooden photo box will store
4 of your favourites on the
side of the box. The pull out
photo folders are hidden
within the box and can hold
up to 120 extra photos.”
In the lower right corner of the side panels is a photograph of a photo box. It has the lid closed. The lid and front and side faces have windows for face papers to be inserted. The face paper in the lid and front face is the same as the face paper shown on the front panel of the carton. The face paper in the side face cannot be discerned in the photograph on the side panels of the applicant’s packaging.
The top panel of the applicant’s carton is chocolate brown and has the word “memento” in the same typeface as used throughout in a lighter brown and in a very large font. Over that word are the words, in the same typeface but in a smaller font and in white, “memento wooden photo box with 6 albums”.
The bottom panel of the applicant’s packaging is plain white, except that it has a barcode, the words “Made in China” in a small font, and the “unigift” trademark, followed by the writing, “ distributed by Universal Gift Traders Melbourne Australia”.
The carton for the applicant’s small photo box is the same except that the writing indicates that it holds five albums and the writing in the lower left corner of each of the front, rear and side faces reads, “holds 100 photos” rather than 120. Additionally, the photo box is positioned in such a way that the right side face appears in the photograph rather than the left. Also, the lid and foot of the small photo box have no mouldings on them.
In the case of the large photo box, the carton says it has 13 albums and “holds 260 photos” and on the next line “160–10x15cm (4"x6")”, and below that “100–13x18cm (5"x7")”. The photograph of the photo box displays it with the lid open. It has no windows in the front and side panels for the display of photographs, and no mouldings. The album that is displayed contains a black and white photograph of a woman and two photographers. The seed pods are in a slightly different arrangement to those on the packaging of the six album photo box. The side panels have a photograph of the photo box with the lid closed. It can be seen that there are windows in the lid that allow one large and four small face papers to be inserted. The face papers are photographs. The writing in the left corner of the side panel reads:
“This stylish and functional
wooden photo box will store
5 of your favourites on the
top of the box. The pull out
photo folders are hidden
within the box and can hold
up to 260 extra photos.”
The source of the design
The design of the applicant’s packaging was done by Etondale Holdings Pty Ltd trading as Omega Advertising. Gerard Young, an employee and director of that company, swore an affidavit on
14 September 2006 in which he said that he is a graphic designer and photographer specialising in packaging. He said further that:
In or about December 2005, I was briefed by Universal Gift Traders to create a packaging design for a wooden photo box … . I was provided with a sample of the product and I went to work creating the design for packaging. My brief was to create a packaging design which would best promote the product as a stylish gift or personal keepsake.
I took several photographs of the box from different angles and in different positions and with different other items I chose to enhance its features. I ultimately spent some time arranging the leaves to give the impression to the purchaser that this was a product in which a purchaser could store special memories.
I ultimately settled on one image, which universal gift traders approved as the final photograph to be used on the box.
Universal Gift Traders chose the wording on the packaging and we arranged the words, photography and graphics to enhance the product and make the pack appealing to the consumer.
At the hearing, Mr Young corrected his evidence by saying that he was actually briefed in about July 2005 rather than December 2005. He also said that other people in his company helped him in the creation of the artwork for the packaging. He said that it took a total of three or four hours to do the artwork for each carton. Omega charged about $600 for the artwork on each carton. I accept Mr Young’s evidence, as corrected by him. Other evidence in the proceeding established that photo boxes in the packaging designed by Etondale Holdings Pty Ltd for the applicant arrived in Australia on 26 October 2005. Accordingly, the December date could not have been correct.
Whether the packaging is an artistic work
The first question which arises in this case is whether the packaging used by the applicant is an artistic work within the meaning of the Copyright Act 1968. The applicant argues that the front and rear panels of the applicant’s packaging consist of a drawing. The respondents say that the front and rear panels are not drawings.
Section 32(1) of the Copyright Act provides that copyright subsists in an original literary, dramatic, musical or artistic work. Section 10 of the Copyright Act provides that:
artistic work means
(a)a painting, sculpture, drawing, engraving or photograph, whether the work is of artistic quality or not;
(b)a building or a model of a building, whether the building or model is of artistic quality or not; or
(c)a work of artistic craftsmanship whether or not mentioned in paragraph (a) or (b);
but does not include a circuit layout within the meaning of the Circuit Layouts Act 1989.
…
drawing includes a diagram, map, chart or plan.
The applicant in its amended statement of claim says that the artistic work on its medium sized carton consists of various things set out on the front panel of the carton, being:
a)the word unigift in the top left corner;
b)the memento unregistered trademark written in lower case lettering in a bold, black font;
c)the words “wooden photo box with 6 albums” in grey font next to the memento mark;
d)the words “holds 100 photos”, “10x15cm (4"x6")” at the bottom left hand corner; and
e)the photograph of the photo box in the lower right side.
The applicant says in its amended statement of claim that the artistic work in the packaging for the small and large photo boxes is the same except for the detail of the words and numbers and the photograph in each case being of the relevantly sized photo box.
The applicant submits firstly that “there is copyright in the substance of a label attaching to an article or its packaging” and cites R & A Bailey & Co Ltd v Boccaccio Pty Ltd & Anor (1986) 177 ALR 177 in support of that proposition. However, Bailey v Boccaccio does not state the position so broadly. Rather, Young J noted in that case that it was not disputed that the plaintiff had copyright in the label that was attached to bottles of Bailey’s Original Irish Cream and that the content of that label was an original work. The question in Bailey v Boccaccio was whether the label attached to bottles of Bailey’s Original Irish Cream was excluded from registration under the Designs Act 1906. The case does not stand for the proposition that there is copyright in any label regardless of its appearance.
The applicant then submits that the artwork on each of the applicant’s cartons is a drawing within the meaning of artistic work. The applicant says:
The law has long recognised such works, as created by a graphic designer, are drawings and therefore artistic works. It does not matter that the drawing also includes words or letters. In Lott v JBW & Friends Pty Ltd (2000) 76 SASR 105, the Court held a graphic bar in an advertising brochure with the words “Opera in the Outback” was an artistic work, being a drawing. The work in this decision took only half an hour to one hour to create.
In Lott v JBW & Friends Pty Ltd (2000) 76 SASR 105, Mullighan J considered whether a graphic bar was a drawing. The graphic bar contained the words “Opera in the Outback” and had been designed and crafted by a graphic designer:
… using the words supplied by choosing the typefaces and font … the distances between the letters, the angle of the curves above and below the words “in the” and the setting of all the words in a light colour against a dark colour.
Mullighan J held that the graphic bar was a drawing within the meaning of the Copyright Act. His Honour relied in part on the decision in Millar & Lang Limitedv Polak [1908] 1 Ch 433. In Millar, the plaintiff was the author of certain original drawings of designs for decorating Christmas cards. Dies of the drawings were engraved and from those dies, copies of the drawings were struck off or stamped, generally in gold leaf, and were then attached to Christmas cards. There were three classes of drawings: firstly, pictorial; secondly, pictorial with words added such as “Greetings”, “Friends ever”, “Good luck”; and, thirdly, words by themselves or the capital letters of the alphabet in a distinctive form within an ornamental oval or circular scroll. It was held that the drawings of the words and letters were the proper subject matter for registration as drawings under the Fine Arts Copyright Act 1862.
Mullighan J in Lott v JBW also referred to Roland Corporation & Anor v Lorenzo & Sons Pty Ltd (1991) 33 FCR 111 in which the court considered two logos which each consisted of a single letter but which were designed in a certain way. It was held in that case that the letters had been drawn with care and to obtain a particular effect and so were eligible for copyright protection as drawings.
In Lott v JWB, evidence was given that the design could have been created in half an hour to one hour. There was also evidence that the typeface used in the graphic bar was readily available in computer programs and the graphic bar itself was an example of a wood cut ornament that could simply be selected from a computer program. Mullighan J concluded that:
The graphic designer had to create a design and make choices about the layout, font, colour and dimensions of each part of the design. Having perused the graphic bar, I do not regard it as so simple as to deny copyright. As was the case in Roland Corporation, the graphic bar was designed and drawn with care to obtain effect. The selection of the font from a computer programme is no less creative than manual drawing and, in any event, … copyright should not be denied merely because the design was completed in a very short time.
In Millar, there was no doubt that the original designs for the lettering, and, indeed, the pictorial work, were drawings. Obviously, letters and words may be drawn rather than written. Letters may be drawn in an elaborate and decorative way that requires a good many lines for each letter, or, for example, depicts the letters three dimensionally. However, that does not mean that all letters and words are drawings.
It may be readily accepted that computers may be used to prepare drawings, and that such drawings may include words or letters. It may also be accepted that graphic designers may use computers to prepare drawings containing words and letters. However, contrary to the applicant’s suggestion, Lott v JWB is not authority for the proposition that anything a graphic designer prepares is a drawing. Lott v JWB concerned a particular graphic. It was that graphic that was held to be a drawing. The works of graphic designers in general were not held to be drawings. It is a matter of common knowledge that some works prepared by graphic designers consist largely of photographs. Others might be properly described as paintings or engravings.
In Ricketson, The Law of Intellectual Property: Copyright, Designs and Confidential Information (Looseleaf, Thompson Lawbook Company) at paragraph [7.365], it is stated that:
Essentially, a drawing is a two-dimensional work in which shapes and images are depicted by lines, often without colouring.
That description would certainly apply to the letters under consideration in Millar and in Roland Corporation. The case of Lott v JBW is perhaps a modern example of the same idea, namely, that words and letters can be drawn, albeit with the aid of a computer.
However, in this case, in addition to words and numbers, the front and rear panels of each of the applicant’s cartons also contain very prominently a sizeable photograph. The photograph is clearly not a drawing, in which shapes and images are depicted by lines, often without colouring. The applicant does not claim that there has been any infringement of copyright in the photograph itself, nor could that claim be sustained. The three allegedly infringing cartons bear stickers which have a similar overall layout to the front panel of the applicant’s cartons, but quite different photographs.
The applicant notes that there is no need to consider the artistic merit of a drawing before concluding that copyright subsists in it. That is no doubt correct. The applicant cites Ricketson at 7.365 as saying:
The fact that artistic quality is not required, indicates that a wide range of subject matter may come within the concept of a “drawing” and this will include productions of a prosaic and factual nature.
The applicant submits that the drawings on its packaging are therefore an artistic work within the meaning of the Copyright Act 1968.
I accept that drawings may be productions of a prosaic and factual nature. However, that does not mean that a photograph is a drawing or that a work which consists substantially of a photograph is a drawing.
There was a suggestion that the front panel of the applicant’s packaging might be a literary and artistic compilation. The Copyright Act 1968 does deal with compilations but only in relation to literary works. The definition in section 10 of the Copyright Act of literary work is an inclusive definition and provides that a literary work includes:
(a)a table, or compilation, expressed in words, figures or symbols; and
(b)a computer program or compilation of computer programs.
Ricketson, at paragraph [7.155], says the following about compilations of literary and artistic material:
It will be apparent from the preceding discussion on catalogues that earlier courts, in according protection to these as compilations, being literary works, have nonetheless taken account of the selection, inclusion and arrangement of artistic as well as literary material. The overall compilation was protected, and it even appears that compilations comprising mainly artistic material were protected as “books” and then as “literary works” under the pre-1911 and post-1911 law. So far as the Copyright Act 1968 (Cth) is concerned, this matter was specifically considered by Thomas J of the Queensland Supreme Court in Kalamazoo (Australia) Pty Ltd v Compact Business Systems Pty Ltd (1985) 5 IPR 213 at 232, where his Honour held that there was no requirement that a compilation should be of components that are “exclusively literary”. However, this holding was in relation to the pre-1984 definition of “literary work”, which referred to “compilations” unqualified by any requirement that they be “written”, as in the case of “tables”. It now seems that the post-1984 definition no longer includes compilations of literary and artistic material because of the requirement, in relation to both tables and compilations, that they be “expressed in words, figures or symbols”. It is possible that some artistic works may satisfy the requirement of expression in the form of figures and symbols, but this would not apply to the great majority of artistic works such as paintings, drawings and photographs. It is also arguable that compilations of both literary and artistic material could still be protected overall, but that courts in assessing the questions of originality and the scope of protection, could only properly have regard to the literary elements of the compilation. The consequence is that compilations of artistic components do not come within the present definition of literary work, although previously this was probably the case. There is therefore a lacuna in the law which needs to be corrected, if it is thought that the quantum and quality of skill and labour involved in literary and artistic compilation are indistinguishable from each other. Such a change seems desirable, both as a matter of policy and in the interests of consistency.
Ricketston is of the view that a compilation of literary and artistic material would no longer fall within the notion of literary work because the whole of the compilation needs to be “expressed in words, figures or symbols” except where those words, figures or symbols were, in themselves, artistic works. However, as the definition of literary work is inclusive, it may be that Ricketson has overstated the case.
However, the applicant did not submit that the front and rear panels of the applicant’s packaging were literary works. Accordingly, I take that matter no further. Similarly, the applicant did not claim that the front panels on the applicant’s packaging were works of artistic craftsmanship. Accordingly, I take that matter no further either. The applicant argued its case on the basis that the front and rear panels of the applicant’s packaging were drawings and nothing else.
The applicant submits that:
The case of Lott directly contradicts the respondents’ assertion that there is some sort of admitted lacuna in relation to works having a combined graphic and literary (or photographic) element.
The case of Lott does not deal with a work which consists substantially of a photograph. Nor does it in reality deal with a literary work. The question in that case was whether the design and presentation of the words “Opera in the Outback” attracted copyright. It was held that it did on the basis that it was a drawing, not on the basis that it was a combined graphic and literary work, or a combined photographic and literary work. The graphic bar in Lott was held to be a drawing notwithstanding that it consisted largely of written words because those words were drawn, albeit with the aid of a computer and a computer program which contained letters in various typefaces and woodcut ornaments which could be easily selected and arranged by a graphic designer.
The applicant points out that the definition of drawing is broad and inclusive. However, what is included in the definition of drawing is “a diagram, map, chart or plan”. All of those things fall within the ordinary understanding of the word “drawing”. A photograph does not. The Australian Concise Oxford Dictionary (third edition) defines drawing as follows:
1a. the art of representing by line, b. delineation without colour or a single colour. c. the art of representing with pencils, pens, crayons etc rather than paint. 2a. a picture produced in this way.
The Macquarie Dictionary (revised third edition) defines drawing as follows:
1. the act of a person or thing that draws. 2. representation by lines; delineation of form without reference to colour. 3. a sketch, plan or design, especially one made with pen, pencil or crayon. 4. the art of making these.
The Oxford English Dictionary (second edition, Clarendon press) relevantly defines drawing as follows:
2.a. The formation of a line by drawing some tracing instrument from point to point of a surface; representation by lines, delineation; hence, ‘any mode of representation in which the delineation of form predominates over considerations of colour’; the draughtsman’s art. …
b .transf. The arrangement of lines which determine form.
3. That which is drawn; a delineation by pen, pencil or crayon; a representation in black and white, or in monochrome; a sketch.
The dictionary definitions of drawing refer to a process of making lines on a page. It may be readily accepted that a drawing may be made with or without colour, and with or without mechanical or electronic assistance. However, the process of creating a photograph is quite different.
Additionally, photographs are a separate head under the definition of “artistic works” in s.10 of the Copyright Act 1968. That section also defines "photograph" to mean:
a product of photography or of a process similar to photography, other than an article or thing in which visual images forming part of a cinematograph film have been embodied, and includes a product of xerography, and photographic has a corresponding meaning.
The applicant also referred to Ricketson at [7.320] in which it is said, under the heading of “exhaustive definition of artistic works”:
It was suggested in [7.120] that artistic works are productions that comprise visual images which are intended to be comprehended by the human eye in a graphic sense, rather than read, as in the case of words, figures or other forms of notation. This is borne out by the definition of “artistic work” which appears in s 10(1) of the Copyright Act 1968. Unlike the other categories of works protected under Pt III, this is an exhaustive definition …
Ricketson referred to the English decision of Electronic Techniques (Anglia) Ltd v Critchley Components Ltd [1997] FSR 401 at 413 where Laddie J said:
A person creating a new electrical circuit has a number of ways of recording his design and communicating it to others. He may choose pictures, he may choose words. Although they serve the same function, they do so by different means. The former is by graphic means, the latter by literary means. They do not fit in the same category for copyright purposes. The former is an artistic work, the latter is better regarded as a literary work.
The applicant says that the Electronic Techniques decision is not in accordance with Australian authority without elaborating on that submission. In any event, the applicant says that the work in question “should be appreciated by the eye” and is therefore an artistic work that is also a drawing. However, it does not follow that because the work was intended to be appreciated by the eye, it is necessarily a drawing. Other types of artistic work, such as sculptures and engravings, are also intended to be appreciated by the eye.
Moreover, the words and numbers on the front and rear panels of the applicant’s packaging are intended to convey information. The words and numbers might be presented in an appealing way, but they are nevertheless on the packaging to inform anyone looking at the carton that the item inside it is a wooden photo box with a particular holding capacity. The words and numbers are not on the front and rear panels of the applicant’s packaging for decorative purposes or for the substantial purpose of being appreciated by the eye.
The applicant then relies on paragraph [7.365] of Ricketson which gives various examples of works that have been held to be drawings. However, the applicant has not pointed to any case that includes a sizeable photograph in the notion of a drawing.
The applicant also refers to the situation where copyright in a label is used to prevent parallel importation of products bearing those labels. The applicant submits that “there seems little doubt that such labels include words, figures and even photographs”. That may be true, but it simply begs the question of whether those labels would attract copyright. Labels per se do not necessarily attract copyright. Labels attract copyright if they are artistic works as defined.
All in all, I am not satisfied that the front and rear panels of the applicant’s cartons for the small, medium or large photo boxes are drawings within the ordinary meaning of that term or within the meaning of the Copyright Act 1968. While the definition of drawing in the Copyright Act 1968 is an inclusive definition, the items listed in that inclusive definition, being a diagram, map or chart, are all things that fall easily within the ordinary meaning of a drawing. I do not accept that the definition of drawing in the Copyright Act 1968 extends to a work which consists substantially of a photograph. My view is reinforced by the fact that the definition of artistic work includes both drawings and photographs as separate heads. As a result, the applicant’s claims based on copyright cannot succeed.
In reaching this conclusion, I have been mindful of the need to avoid pedantry, but also of the need to refrain from encroaching on the legislative function by giving the words of legislation a meaning that they will not reasonably bear. While it may sometimes be proper to give the words of legislation a meaning that the Parliament would not have envisaged when enacting the legislation, it is also a matter of common knowledge that words and photographs have been used in combination in advertising and packaging for a very long time. If the Parliament had wished to include such combinations in the definition of artistic work in the Copyright Act 1968, it has had ample opportunity to do so.
Passing off and misleading and deceptive conduct
In addition to the copyright claims, the applicant in its amended statement of claim says that the respondents engaged in misleading and deceptive conduct within the meaning of s.52 and s.53(c) and (d) of the Trade Practices Act 1974 and s.9 and 12(c) and (d) of the Fair Trading Act 1999 (Vic) (though it was probably intended to rely on s.12(e) and (f) of that Act) in that the respondents are alleged to have represented that:
(a)the Copy Products are imported, manufactured and/or supplied by the applicant;
(b)the Copy Products are manufactured and/or supplied with the authorisation, licence or approval of the applicant;
(c)the Infringing Product Packaging is imported, manufactured and/or supplied by the applicant;
(d)the Infringing Product Packaging is manufactured and/or supplied with the authorisation, licence or approval of the applicant;
(e)the first and/or second respondent is authorised or licensed by the applicant;
(f)the first and/or second respondent’s use of the Memento Mark is authorised, licensed or approved by the applicant;
(g)the first and/or second respondent’s use of the Infringing Product Packaging is authorised, licensed or approved by the applicant;
(h)the Copy Product is identical to or of the same standard and quality as the Product; and
(i)Products sold in the Infringing Product Packaging are identical to or of the same standard and quality as the Product.
Alternatively, the applicant claims that the second respondent has wrongfully sold and passed off:
(a)The Copy Products and the Infringing Product Packaging as and for the Product and the Product Packaging made or distributed by the applicant or as having a sponsorship, approval or connection, affiliation or association in the course of trade with the applicant which they do not have; and/or
(b)its business, goods or services as being that of the applicant or as having the sponsorship, approval or connection, affiliation or association in the course of trade with the applicant which it does not have.
The applicant says further that:
The said acts and conduct of the second respondent were at all material times and are calculated to deceive and mislead the trade and the general public into the belief that the Copy Product and the Infringing Product Packaging are those of the applicant or that the Copy Product and the Infringing Product Packaging and/or that the business, goods or services of the second respondent have a sponsorship, approval, connection, affiliation or association with the applicant.
The applicant claimed that it had a significant reputation in its photo boxes, the word memento and the applicant’s packaging as at March 2006. The respondents admitted that the applicant sold its photo boxes under the registered trade mark unigift and the unregistered memento mark, but disputed that the applicant had developed a substantial reputation in the photo boxes or in the memento mark or in the packaging.
Sections 52 and 53(c) and (d) of the Trade Practices Act 1974, which are substantially the same as s.9 and s.12 (e) and (f) of the Fair Trading Act 1999 (Vic), provide as follows:
52(1) A corporation shall not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive.
(2) Nothing in the succeeding provisions of this Division shall be taken as limiting by implication the generality of subsection (1).
53A corporation shall not, in trade or commerce, in connexion with the supply or possible supply of goods or services or in connexion with the promotion by any means of the supply or use of goods or services:
…
(c) represent that goods or services have sponsorship, approval, performance characteristics, accessories, uses or benefits they do not have;
(d) represent that the corporation has a sponsorship, approval or affiliation it does not have … .
The respondents’ packaging
The respondents’ packaging for each of its small, medium and large photo boxes consists of plain white cartons with a number of stickers, being one small sticker and two large stickers that were placed on each carton. The small sticker bears the words Better Homeware and is about 5cm x 6cm. It also has a photograph of a yacht and a bar code. The small sticker is attached to the front, side or bottom panels of each of the respondents’ cartons. The same small sticker is attached to the small, medium and large cartons.
A large sticker is attached to each of the front and rear panels of the respondent’s cartons and occupies about two thirds of the front and rear panels. There is a different sticker for each of the small, medium and large cartons. The large sticker for the medium carton has the words “memento wooden photo box with six albums” across the top of the sticker. The word memento is in bold. The words and numbers “holds 120 photos 10x 15 cm (4”x6”)” are in the bottom left corner of the sticker, spread over two lines. The sticker also has a photograph of a wooden photo box. It has mouldings similar to those shown on the applicant’s medium carton. The large sticker does not have the unigift mark. The line of writing beginning with “memento” starts where the unigift sign is positioned on the applicant’s packaging.
The photograph of the photo box on the respondents’ medium carton shows the photo box at a different angle to the photo box on the applicant’s medium carton. On the respondents’ carton, only the top and front panels of the photo box can be seen. Those panels have windows into which face papers have been inserted. The face paper contains a drawing of a woman in what looks like a 1940’s evening gown sitting on a chaise longue and five lines of writing which include the words Better Homeware. The respondents’ face paper with the picture of the woman and the writing was referred to at the hearing as the sofa lady face paper. The respondents’ face paper does not include the words unigift or memento.
In the photograph on the respondents’ packaging, one of the albums is shown to the front and left of the photo box. It contains another copy of the sofa lady face paper. There are no seed pods or other objects scattered about in the photographs on the respondents’ packaging.
The large sticker on the packaging for the respondents’ small photo box is basically the same as the sticker on the respondents’ medium photo box except that the writing says that it has five albums and holds 100 photographs and the photograph is of a photo box without mouldings. The large sticker on the respondents’ large photo box is basically the same as the sticker on the medium photo box except for the detail about the number of photographs it holds and the photograph is of the respondents’ large photo box. The sofa lady face paper was used throughout the respondents’ packaging.
The writing on the applicants’ cartons is in almost the same typeface as the writing on the stickers on the respondents’ cartons. One difference is that the writing on the applicant’s cartons has a hook on the bottom of the “l” whereas the writing on the respondents’ carton does not. However, without close scrutiny, it looks as though the same typeface has been used.
The layout of the front panel of the applicant’s cartons is strikingly similar to the layout of the respondents’ large stickers. The writing and the photographs are in basically the same positions, except that the respondents’ stickers do not have the word unigift at the top left, and the line beginning memento has been moved up a little. Also, the photograph of the photo boxes on the respondents’ packaging shows the photo boxes at a slightly different angle to the photo boxes on the applicant’s packaging.
However, the overall impression is different. The respondents’ cartons just have stickers covering about two thirds of the front and rear panels of the plain white cartons, whereas the applicant’s cartons are glossy and the top, front, side and rear panels of the cartons have all been printed.
The face papers that have been put inside the windows on the photo boxes depicted on the applicant’s and the respondents’ cartons also give a different overall impression. In the case of the applicant’s packaging, the impression is modern, whereas in the case of the respondents’ packaging, the impression is old fashioned. Overall, the respondents’ cartons look low-cost, whereas the applicant’s look polished and professional.
When removed from the cartons, the applicant’s and the respondents’ photo boxes look virtually identical, the only discernible difference in the examples provided to the court being the colour of the wood. However, the face papers inserted in the windows give the respective photo boxes a different overall appearance. The face papers in the windows of the applicant’s photo boxes clearly show the unigift trade mark and have the contemporary wedding scene. The face papers inserted in the windows of the respondents’ photo boxes have the old fashioned sofa lady with the five lines of numbers and writing, one of which is Better Homewares. Neither the applicant’s nor the respondents’ face papers bears the word memento.
Oral and written evidence
Mr Leo Norich, one of the applicant’s directors, said the following in an affidavit sworn on 28 March 2006. The applicant’s photo boxes are sold in 500 retail stores throughout Australia and New Zealand including Priceline, the Reject Shop and the Warehouse. On about
20 February 2006, Mr Norich met with the first respondent who said that he had a container of photo boxes on the way. Nothing was said about the packaging for the respondents’ photo boxes at that stage. Mr Norich said that, on 11 March 2006, he was in a warehouse in China when he saw for sale medium sized photo boxes with packaging like the respondents’ packaging and bearing the Better Homeware label. Mr Norich returned to Australia on about 12 March and telephoned the first respondent, who said that his photo boxes had not yet arrived in Australia but were expected soon.
In an affidavit sworn on 22 September 2006, Mr Norich said the applicant has been selling the photo boxes in Australia for 18 months and had sold 27,000 units.
Mr Norich, gave oral evidence as follows. The applicant first imported photo boxes in July 2005. At that stage, the photo boxes were sold in plain white cartons that had a unigift sticker on them as well as a bar code, item number and identification of the country of origin. The photo boxes sold well. Photo boxes in the packaging under consideration in this proceeding were first imported by the applicant on 26 October 2005. They reached retail outlets in Melbourne four or five days after reaching the applicant’s warehouse and interstate outlets within a week. Between 26 October 2005 and 29 March 2006, two days before these proceedings were commenced, the applicant had sold 7,116 medium photo boxes, 8,760 small photo boxes and 2,860 large photo boxes in the packaging in issue in this proceeding.
In relation to whether photo boxes in retail outlets are displayed in their cartons or outside their cartons, the following was said in Mr Norich’s evidence in chief:
The evidence I understand from Mr Zheng, which I think my friend has discussed before this court, is that the product is displayed and sold without the packaging. What do you say to that?---As far as I know and as far as I have personally seen - and I can mention stores' names, not that I personally think that would be relevant. But for example, this item here if we've sold it to the Reject Shop Australia, there's no way known that each store would have enough room to put out - they would give their largest stores perhaps, they would deliver 36 to 48 pieces, the smallest stores would get 12 pieces. They wouldn't take an item out of the box. I've visited Reject Shop often on my way around and this item would be left - which is not the correct way of selling but in a discount variety store they don't have room to put out every item, out of its box. There would be one - I should say lying around or kicking around, but there would be one somewhere. But the idea of the item, if they're going to advertise it - which they have, they would advertise it in a brochure which goes out every month and that would be stacked up at the end of a gondola if it was an ad line. If you go to a smaller store, that is, a gift and house ware store, that have the fancy front table perhaps with a tablecloth over it and the store wants to present the product, you know, in its entirety then it would either be taken out of the gift box and the item would actually sit either on top of the gift box or on the side of the gift box and that's the way it is out there in general retail, whether it's in Bendigo, Balaclava or far north Queensland.
In cross examination, on the question of how the photo boxes are displayed, Mr Norich said:
That is in a retail, like, a $2 store. For space requirements there might be one on display, but basically you just stack your shelves with boxes?---Yes.
Then in a display situation in a smaller gift shop they are likely to be out and perhaps ordinarily on top or beside the box?---Correct.
Mr Norich agreed in cross examination that the applicant operated in the medium to discount end of the market. He agreed it was a very price-driven market where price is crucial in the success or otherwise of the product. He said that, when buying photo boxes, people were influenced in their choice of photo box by product, price and packaging, in that order.
Mr Norich’s attention was drawn to the face papers in the photo boxes. He agreed that when the applicant’s small photo box and the respondents’ small photo box were removed from their cartons and looked at side by side, with their face papers in place, they looked different to him.
Mr Norich agreed that the applicant was not the exclusive supplier in Australia of the applicant’s medium photo boxes and was not the only seller in Australia of that type of photo box. There was a challenge to whether the applicant had actually started selling the photo boxes in the packaging in question as early as 26 October 2005 but Mr Norich and his fellow director, Mr Braham Zilberman, were not shaken in their evidence.
Mr Zilberman gave evidence by affidavit sworn on 22 September 2006 that the second respondent was a customer of the applicant in 2004 and 2005 and had bought photo boxes and numerous other items from the applicant. Invoices exhibited by Mr Zilberman indicated that the second respondent had bought 54 photo boxes of the types in issue from the applicant in late 2005.
Mr Zilberman said that he had attended a shop called Stuff and Nonsense in the Victoria Gardens shopping centre on 3 May 2006 and saw the respondents’ photo boxes being sold for $10 or $20 less than the applicant’s, that is, for $20, $30, and $50 for the small, medium and large photo boxes respectively rather than $30, $40 and $60 or $70 respectively. He also said that he saw the applicant’s and the respondents’ photo boxes being sold side by side in Stuff and Nonsense as well as in the respondents’ store in Eastland on 3 May 2006.
Mr Zilberman exhibited photographs that he had taken at Stuff and Nonsense and the respondents’ shop in Eastland on 3 May 2006. The photographs show:
a)one of the respondents’ photo boxes displayed on top of its carton;
b)one of the applicant’s cartons with nothing in it;
c)some of the respondents’ cartons stacked with no sign of a photo box being displayed out of its carton;
d)a number of the respondents’ photo box cartons with the word memento covered; and
e)a number of the respondents’ photo box cartons with indications that the white or black covering page (referred to below) had been torn off.
I accept the evidence of Mr Norich and Mr Zilberman as set out above, except to an extent in relation to how photo boxes are displayed. This issue is discussed further below.
The first respondent gave evidence by affidavit sworn on 16 November 2006 that he first bought a line of photo boxes from the applicant in October 2005. The photo boxes were supplied by the applicant in a carton bearing the words “mirage wooden photo box” and the unigift trade mark. A carton of the type in question was put into evidence. It has a similar overall layout to the applicant’s memento cartons described above, except that it has no writing in the lower left corner and photographs of three photo boxes on the front and rear panels rather than one. The first respondent said numerous other companies were selling photo boxes of various shapes and designs in mid 2005 in Australia.
The first respondent also said the following. He decided to import photo boxes himself rather than going through a wholesaler, such as the applicant. His Chinese supplier asked him to provide an example of exactly the type of photo box he wanted, as many different types were available. The first respondent complied with this request by providing a copy of the applicant’s memento packaging. The first respondent told the supplier to prepare packaging for the respondents and take photographs for that purpose. The first respondent told the supplier to ensure the respondents’ packaging was different to the applicant’s packaging. He told the supplier to include the words “a wooden photo box with six albums and 120 photos 10 x 15 cms (4” x 6”)”. The word memento was mistakenly included on the respondents’ packaging. The first respondent did not ask for it to be included. The first respondent ordered a total of 3000 photo boxes from his supplier.
When the photo boxes arrived in Australia, the first respondent instructed his staff to put plain white stickers over the word memento on each of his cartons. The respondents did not offer for sale any photo boxes with the word memento uncovered, and all of their photo boxes bore the Better Homeware brand rather than the unigift brand. Later, in response to demands from the applicant, the respondents covered the whole of the large stickers on their packaging with white paper. Later still, when the applicant complained that the large stickers could still be seen through the white paper, the large stickers were covered with black paper.
The exhibits before the court show that the white sticker over the word memento did not completely conceal that word. Similarly, the white paper did not completely obscure the labels underneath. However, the black paper is completely opaque.
The respondents sold 676 units with the word memento covered and 222 with white paper over the large stickers. The respondents still had 1700 units in their warehouse. That suggests that 402 were sold with the black paper over the large stickers. When the proceeding was commenced, the respondents had ceased selling the photo boxes with only the word memento covered. All of the photo boxes sold by the respondents had the Better Homeware brand on them.
The first respondent exhibited a bundle of photographs taken by him on 1 October 2006 of photo boxes on display in various retail outlets around Melbourne. He said that the photo boxes are displayed out of their cartons to enable customers to inspect the photo boxes and look inside. He said that the photo boxes are displayed without the packaging being visible at all. In the vast majority of cases, the photographs show the photo boxes being displayed out of their cartons. The photo boxes appear to be the applicant’s, the respondents’ and at least one other person’s. In some cases, photo boxes in cartons are stacked behind, below or beside those that have been removed from their cartons. In one case, the applicant’s carton is on a shelf near the ceiling of the shop. In some cases, the cartons are not in the vicinity of the photo boxes at all.
In an affidavit sworn on 11 December 2006, the first respondent said that there is a business operating in Australia by the name of Memento Gifts which, among other things, sells photo frames. The first respondent exhibited extracts from the Memento Gifts website which were obtained on 18 December 2006. I accept that, as of that date, a business by the name of Memento Gifts was operating in Australia and sold photo frames.
In oral evidence, the first respondent said that the sofa lady face paper is used on all of the respondents’ photo frame products. He said that a factory in China gave him the picture years ago and he has used it ever since.
The first respondent conceded in cross examination that the respondents shared some customers with the applicant and that in some retail outlets, their products were sold side by side. He also conceded that he thought it was important to have a nice-looking package for the photo boxes.
There was some cross examination directed to the precise instructions that were given by the first respondent to his supplier in relation to the packaging. The first respondent said that he had photocopied the front panel of each of the applicant’s cartons for the small, medium and large memento photo boxes to show his supplier what sort of photo box he wanted. He said that he had faxed the photocopies to his supplier. The supplier said the quality of the photocopies was inadequate so the first respondent took an example of each of the applicant’s cartons with him to China next time he went. The cartons were flattened out. It was put to the first respondent that the fax he sent to his supplier would have had a cover sheet which would have included the instructions for the packaging. The first respondent denied that he had sent a coversheet with the fax.
The first respondent agreed in cross examination that he could have asked his supplier to email to him the artwork for his packaging if he had wanted to check it before the packaging was produced. He said he had not asked for a preview of the artwork for his approval before it went into production. He denied that he did not ask to check the artwork for the reason that he knew what it would look like, namely, the applicant’s. The first respondent said he had not discovered the contract for the photo boxes he bought because no one had asked him for it.
I accept the first respondent’s evidence, except in relation to the instructions that he gave his supplier for the packaging and, to an extent, in relation to how photo boxes are displayed. I do not accept that the first respondent did not have a fax coversheet recording the instructions he gave his supplier in relation to the packaging. I find that there was a fax coversheet that contained instructions for the supplier in relation to the design of the photo boxes themselves and the packaging. I infer from the first respondent’s failure to discover the fax coversheet and the contract that those documents would not have assisted the respondents’ case.
I do not accept that the first respondent asked his supplier to make the packaging very different to the applicant’s. In these times of world-wide instantaneous electronic communication, the first respondent could easily have asked his supplier to give him a proof of the design for the packaging to enable him to check it before it went into production. If he had done so, it would have been obvious to him that the design was very similar to the applicant’s, and included the word memento. He could have asked for the packaging to be redesigned, if he had genuinely wished to avoid using the word memento and a design similar to the applicant’s.
I would have thought that the first respondent would have obtained a copy of the design before the packaging went into production and that he approved it. However, the parties seem to be in agreement that the first respondent did not obtain a copy of the design for checking. In the circumstances, I find that the first respondent chose not to ask for a preview of the packaging because he had given precise instructions about it and knew exactly how it would look. I find that the first respondent did not instruct his supplier not to use the word memento. The first respondent produced no written instructions in support of that claim. The supplier obviously understood that he was not to use the word unigift and complied with that instruction. I consider it implausible that the supplier would not have acted in accordance with an instruction not to use the word memento if that instruction had been given.
I find that at least one example of each type of photo box is displayed out of its cartons in retail outlets. I draw this conclusion based on the photographic and affidavit evidence of the first respondent, which was supported to an extent by the oral evidence of Mr Norich and the photographic evidence of Mr Zilberman. Mr Norich’s evidence was not entirely clear, but he conceded, as I understand it, that even in reject shops, there would be at least one photo box on display outside its carton. I take that to mean that one example of each type of photo box would be displayed outside its carton. Additionally, Mr Zilberman’s photographic evidence showed at least one photo box displayed out of its carton.
The first respondent’s evidence that photo boxes are displayed out of their cartons seems to me to accord with what consumers would want, that is, to see the actual photo box before buying it, and to look inside and see how the albums can be removed and how the photo box actually works. I doubt that anyone would buy a photo box without undertaking that examination, whether in a discount store or otherwise. Accordingly, I would expect retailers to display an example of each photo box in a way that would facilitate the consumer’s inspection of the product, namely, out of the carton. If, exceptionally, an example of a photo box were not displayed outside its carton, I expect that the consumer would ask the retailer if the photo box could be removed from its carton for examination.
In addition, contrary to the first respondent’s evidence, I find that almost invariably there will be photo boxes inside their cartons, or, indeed, empty cartons, stored on the shelves or tables of retail outlets, near the examples on display, primarily for the purposes of storage and to be readily accessible for purchase. Those cartons would be visible to consumers at the time of making their choice of photo box. That conclusion is supported by the photographic evidence provided by the first respondent as well as the applicant. It is also supported by the questions asked of Mr Norich in cross examination reproduced above.
When removed from their cartons, neither the applicant’s photo boxes nor the respondents’ photo boxes bore the memento mark. On the contrary, the applicant’s photo boxes bore the unigift trade mark displayed prominently in the applicant’s face papers and the respondents’ photo boxes bore the Better Homeware brand on their face papers. The face papers were in place in the windows of all the photo boxes sold.
As noted above, the face papers of the applicant and the respondents are very distinctive. In themselves, and without the face papers, the applicant’s and the respondents’ photo boxes are virtually indistinguishable. However, with the face papers in place, the overall impression is different and the branding is clearly different.
I accept Mr Norich’s evidence that the packaging is the third factor in the consumer’s process of choosing a photo box, after the features of the photo box itself and the price. I note that Mr Norich did not mention brand as a factor. I consider that the packaging, which would have been visible to consumers when making their choice, would have been a factor in the selection process. I expect that some consumers would chose the applicant’s photo boxes, with their better packaging, and their greater cost, because they wanted to buy an attractively presented gift. Others, who were buying for their own use, or who were not so concerned about the niceties, would have chosen the respondents’ product because of its cheaper price. Either way, I consider that consumers would have factored into their choice of photo box the packaging that it would come in.
Consideration
Although the applicant relied formally on s.52 and s.53 of the Trade Practices Act 1974, and the equivalent provisions in the Fair Trading Act 1999 (Vic), all of the parties’ submissions were directed to the common law tort of passing off. The essential features of a passing off action are described as the classic trinity of reputation in the relevant trade mark or get-up, misrepresentation and damage to goodwill: Reckett & Colman Products Ltd v Borden Inc (1990) 17 IPR 1.
a. Reputation
It is necessary for the applicant to establish that it had the relevant reputation as at the date of the commencement of the conduct complained of: Cadbury-Schweppes Pty Ltd v Pub Squash Co Pty Ltd (1980) 55 ALJR 333 at 338. The applicant says that the conduct complained of began in March 2006 while the respondents say that the conduct complained of began in November and December 2005. I take it that the respondents’ say that the conduct complained of began in November or December 2005 on the basis that that is when the respondents first began to organise their own importation of photo boxes. However, Katz J addressed this matter in Applied Business Technology v Grand Master Computers Pty Ltd (1999) 161 ALR 31, where his Honour said at 33:
the date as of which an applicant must establish for the purpose of a subs 52(1) case of the passing off type that the acronym (or name or get-up, as the case may be) is distinctive of the applicant's business or products in a particular country or geographic area is the date upon which the respondent first began to use it in the manner complained of by the applicant: see Thai World Import v Shuey Shing (1989) 17 IPR 289, 302 (Gummow J).
I accept that that is the correct statement of principle. Accordingly, the relevant date is the date when the respondents began to use their get-up in the marketplace. The respondents began to sell their photo boxes in the relevant get-up in about March 2006. Accordingly, March 2006 is the date of the commencement of the conduct complained of.
To succeed in a passing off claim, the applicant’s reputation must have existed at the date of the commencement of the conduct complained of amongst a sufficiently substantial number of persons. Lockhart J said in Conagra Inc v McCain Foods (Aust) Pty Ltd (1992) 33 FCR 302 at 346 that:
In my opinion the plaintiff must prove that there are within the jurisdiction in which the defendant is carrying on business a substantial number of persons who are aware of the plaintiff's product …
The reason for the requirement of a substantial number of persons is in my opinion that the reputation of a plaintiff in the forum is the source of his potential business there; his goods are known to people there who are his potential customers. For him to have in a practical and business sense a sufficient reputation in the forum requires something more than a reputation among a small number of persons, although the size and extent of the class may vary according to the circumstances of the case. Also, the law seeks to promote local competition and innovation and does not extend its protection to persons whose goods are not sufficiently known in the forum.
In Shanahan’s Australian Law of Trade Marks and Passing Off, Thomson Law Book, 3rd Edition, 2003, at [20.75], it is said that:
The test is one of commercial relevance. For example, if the price of the goods is high, fewer people need have knowledge of the plaintiff’s indicium than if they are low cost consumer items. … but the plaintiff might well succeed on the basis of a relatively slight reputation if the parties are in direct competition in a specialised field or are neighbouring businesses.
The applicant claimed that it had a significant reputation in the word memento and its packaging as at March 2006. In support of that claim, the applicant relied on the fact that it had sold, in the packaging in question, between November 2005 and March 2006, 7,116 medium photo boxes, 8,760 small photo boxes and 2,860 large photo boxes. That makes a total of 18,736 photo boxes. The applicant argued all those sales, and the associated display in retail stores, generated consumer recognition and a reputation in the word memento and the applicant’s packaging.
I note that the applicant also gave evidence that its photo boxes were sold in 500 retail outlets Australia wide. There was no evidence that the sales were concentrated in any particular area. On average, the applicant would have had about 38 photo boxes for sale in each retail outlet around Australia.
There was no evidence that there had been any advertising campaign in respect of the applicant’s photo boxes in either the print or electronic media. There was a mention in the evidence of retailers including photo boxes in their catalogues, but no such catalogue was put into evidence. Accordingly, the court does not know whether the photo boxes in any such catalogues were the applicant’s and, if so, whether they were shown with the memento mark or the applicant’s packaging.
The applicant also relied on a passage in paragraph 20.75 of Shanahan where it is stated that:
The cases show that the level of reputation required will depend upon the nature of the plaintiff’s indicium and business, the similarity between the plaintiff’s indicium and that of the defendant, the degree to which the parties are in competition and the proximity of the two businesses.
The applicant pointed out that the applicant and the respondents had formerly been in a relationship of wholesaler and retailer but were now competitors. The first respondent agreed in cross examination that he shared some customers with the applicant. It was common ground that the applicant’s and respondents’ products in some stores were sold side by side. That is, they were competing in the same market, both as retailers and as wholesalers.
The applicant’s indicium, or get-up, is completely different to the respondents’, if one looks at the photo boxes outside their cartons. The face papers make the entire article look different and they show different brand names. When the cartons are compared, however, there is a striking similarity between the front panel of the applicant’s cartons and the respondents’ large stickers. However, the overall impression is very different, as the applicant’s cartons look significantly more polished and professional.
The respondents argued that Hornsby Building Information Centre Pty Ltd v Sydney Building Information Centre Ltd (1978) 140 CLR 216 stands for the proposition that where the mark in issue is descriptive, the applicant faces a high hurdle in satisfying the court that the applicant has the reputation sufficient to sustain the claim. The respondents identified the word memento and perhaps the packaging as the descriptive marks. Stephen J said at 229 of Hornsby that:
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 43, 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. (emphasis added)
Hornsby was concerned with descriptive trade names, and the effect of the small or large differences between them. It was not concerned with how high the hurdle is in establishing a reputation where one party uses a descriptive name, such as, arguably, memento, and the other uses that name but partially conceals it and also uses a get-up with some striking similarities.
In any event, the applicant argued that memento is not descriptive, in the relevant sense, although it does have a meaning. That meaning is, according to the Australian Concise Oxford Dictionary 3rd Edition, “an object kept as a reminder or souvenir of a person or an event”. The word memento is particularly apt to use in connection with a means of storing photographs, which, by their very nature, are mementos.
In Visa International Service Association v Beiser Corporation Pty Ltd (1983) 77 FLR 234, Beaumont J said:
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.
Similarly, in the present case, “memento” is not descriptive of the business of any of the parties or of the product. A photograph might be a memento, but a photo box would not usually be a memento.
Toohey J, in the Federal Court, also considered this issue in Motorcharge Pty Ltd v Motorcard Pty Ltd (1982) 64 FLR 153 where his Honour said at pages 159 to 160:
Mr. French, counsel for the applicant, submitted that the word “Motorcharge", though possessing a descriptive element, cannot be readily characterised as purely descriptive of the system. He distinguished the Hornsby Building Information Centre case on the ground that each of the competing names there under consideration did no more than describe the nature of the business, (a building information centre) and indicate its locality (in one case Hornsby, and in the other Sydney). Mr. French referred to Rolls Royce Motors Ltd. v. D.I.A. (Engineering) Pty. Ltd. (1981) ATPR 40-209 where Lockhart J. restrained the use of the name "Phantom" in connection with a motor vehicle. His Honour did so in a suit brought by Rolls-Royce Motors Ltd. which showed that "Phantom" was a word "which, in motor car circles has been associated with Rolls-Royce motor cars for over 50 years" (at p.42, 898). It is apparent from a reading of the judgment that it was not the name alone that lead to the granting of the injunction, but rather the name coupled with the emblem and grille on the offending motor vehicle. That is not to say that the use of the word "Phantom" alone might not have lead to the granting of an injunction, only that in the circumstances it was the overall "get up" that was complained of.
…
In my view the name "Motorcharge" is not simply descriptive. No doubt it gives a clue as to the nature of the business with which it is connected, suggesting some method of credit in connection with the motor industry. But it says little more than that; particularly when used as a composite term, it is capable of acquiring a reputation distinctive of the applicant's business activity. The real questions are whether "Motorcharge" has become distinctive of the applicant's business and whether the use of the name "Motor Card" is likely to mislead or deceive. See B.M. Auto Sales Pty. Ltd. v. Budget Rent A Car System Pty. Ltd. (1977) 51 ALJR 254.
In my view, the present case is analogous. The word memento is apt to be used in conjunction with a means of storing photographs but it is not simply descriptive, and certainly not in the way the words Hornsby Building Information Centre are descriptive. The real question is whether, as of March 2006, the word memento had become distinctive of the applicant’s product and whether the applicant’s packaging had become distinctive. This question is addressed below.
The respondents then say that photo boxes are displayed out of their cartons in retail stores, so consumers would not necessarily be aware of their brands. As discussed above, I accept that photo boxes are displayed out of their cartons. The face papers on each photo box show either the unigift brand or the Better Homeware barnd. However, the fact remains that the cartons are also visible to consumers prior to purchase and are certainly visible to consumers after purchase. All of the consumers who bought the applicant’s photo boxes between November 2005 and March 2006 bought them in a carton and no doubt took the carton home with them where it may also have been seen by family and friends, particularly in circumstances where the photo box was bought as a gift.
Having said that, I accept that the branding on the applicant’s cartons, being unigift and memento, would not have left a lasting impression on any consumers. I daresay that within days of removing the photo box from its packaging and disposing of the carton, consumers would have been hard pressed to name either the unigift or memento brand. While these names are both fairly prominent on the cartons, I do not believe, in the absence of advertising, that they would have penetrated the consciousness of consumers simply as a result of exposure to the cartons.
The respondents then say that there is nothing to indicate that consumers were aware of or influenced by packaging to a significant degree in this market. I cannot accept that consumers were not aware of the packaging in which they bought their photo boxes. The packaging of the applicant’s product is designed to be noticed and to be appealing, while the respondents’ cartons are obviously cheaper and less attractive. I find that consumers would have noticed the cartons, both before and after purchase. I consider that consumers would have been influenced by packaging, as the first respondent himself admitted. He agreed it is important to have nice-looking packaging. I accept Mr Norich’s evidence that consumers would purchase photo boxes based on product, price and packaging in that order.
In my view, consumers looking for a means of storing photographs would compare photo boxes in general with photo albums. Those who were interested in photo boxes would then look at the different styles, and choose one based on how they looked out of their cartons. If they had chosen a style which the applicant and the respondents offered, they would then compare price. As the respondents’ product was cheaper, consumers would choose the respondents’ product. However, attention would then turn to the packaging. Those who wanted to buy a gift, or who were particularly concerned about the niceties, would often choose the applicant’s product and pay the extra $10 or $20. Others, and those on a strictly limited budget, would choose the respondents’.
I do not consider that consumers in undertaking the selection process would pay attention to brand. Mr Norich did not specify brand as being a factor in the selection of photo boxes, and that accords with my expectations of consumer behaviour in this area.
The respondents then argue that there was nothing to indicate that the consumers were aware of the applicant’s current packaging, as the applicant had sold the product in a plain box between July 2005 and November 2005 and the plain box did not contain the word memento. However, I accept that, between November 2005 and March 2006, in which time the applicant sold over 18,000 photo boxes in the current packaging to retailers, some consumers would have had some awareness of the applicant’s current packaging. I understand the evidence of the applicant’s sales to mean that not all of the 18,000 or so photo boxes sold by the applicant to retailers would necessarily have been sold to consumers or even been put on display by retailers as at March 2006. As noted above, it seems that, on average, each retailer had bought 38 of the applicant’s photo boxes in the current packaging. For the reasons given above, I consider that, at least at the time of purchase, consumers would have been aware of the packaging.
The respondents referred to Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd (1982) 149 CLR 191 and said that consumers in the discount end of the market are less likely to be deliberate in their purchases and are less concerned about branding. In Parkdale, Gibbs CJ said at 199:
Section 52 does not expressly state what persons or class of persons should be considered as the possible victims for the purpose of deciding whether conduct is misleading or deceptive or likely to mislead or deceive. It seems clear enough that consideration must be given to the class of consumers likely to be affected by the conduct. Although it is true, as has often been said, that ordinarily a class of consumers may include the inexperienced as well as the experienced, and the gullible as well as the astute, the section must in my opinion by regarded as contemplating the effect of the conduct on reasonable members of the class. The heavy burdens which the section creates cannot have been intended to be imposed for the benefit of persons who fail to take reasonable care of their own interests. What is reasonable will or (sic) course depend on all the circumstances. The persons likely to be affected in the present case, the potential purchasers of a suite of furniture costing about $1,500, would, if acting reasonably, look for a label, brand or mark if they were concerned to buy a suite of particular manufacture.
The evidence was that the applicant operated in the medium to discount end of the gift ware market. I consider that reasonable consumers in that market buying a gift or product for themselves of between $20 and $70 would be looking for a good buy, that is, a good product at a good price, and would not be particularly concerned about buying a product of a particular brand. This conclusion accords with the evidence of Mr Norich, who said that consumers would buy a photo box based on the product, the price and the packaging, in that order. He did not mention the brand.
The respondents then say that the evidence is that any number of parties import and distribute identical products through the same retail outlets. There was certainly among the exhibits a photo box of the Casauno brand that was virtually identical to the applicant’s six album photo box. There is no doubt that there are various other brands of photo box on the market. However, this does not necessarily mean that the applicant had not established a reputation in the word memento or its packaging at the relevant time.
The respondents also say that the trading name Memento Gifts was used by rival traders in the gift ware market possibly before the applicant used the word memento. The evidence was that Memento Gifts was trading under that name as of October 2006. That was well after the time at which the existence of the applicant’s reputation needed to have been established. In any event, the applicant also claims a reputation in the get-up of the photo boxes.
The respondents then say that the applicant’s principal brand was unigift, which was not taken. The respondents say that the photo boxes all bore the parties’ respective brands, being unigift and Better Homeware, and these brands were apparent whether the products were inside their cartons or not. The respondents also say that the face papers of the applicant and the respondents were very distinctive and displayed their respective brands. All of this is true. However, none of it necessarily means that the applicant had not acquired a reputation in the word memento or its packaging as of March 2006.
All in all, on the evidence, I am not satisfied that the applicant had a reputation in the word memento or in its current packaging as of March 2006 amongst a substantial number of consumers who shop in Australia in the medium to discount end of the gift ware market. While the applicant had sold over 18,000 photo boxes in the memento packaging to retailers as of March 2006, it is by no means clear how many of them had been sold to consumers by that time. In any event, the sales appear to have been thinly spread across Australia. There was no evidence of any advertising campaign and no evidence from any consumers or retailers about the level of any actual reputation. While there was no necessity for any such evidence, the evidence that has been provided does not persuade me that the applicant did have the relevant reputation at the relevant time.
While I accept that consumers would have an awareness of the applicant’s packaging and the word memento at the time of purchase, I consider that any such awareness would be transient. I do not consider that the word memento or the applicant’s packaging would have stayed in the minds of a substantial number of consumers for long enough to form anything that could be described as a reputation.
It was claimed by the applicant that a purchaser of one of the applicant’s photo boxes might recommend them to a friend. I accept that a person might recommend photo boxes in general to a friend. However, I do not accept that any consumer would specifically recommend a memento photo box or a unigift photo box to a friend. I do not accept that the applicant’s photo boxes are sufficiently outstanding from the general range of photo boxes for them to have achieved any appreciable reputation as at March 2006.
b. Misrepresentation
The applicant says that the respondents’ misrepresentation occurred when they offered their product for sale with their packaging having the word memento ineffectually obscured and bearing stickers with substantially similar typefaces, designations, pictures and placements to those used by the applicant. The applicant referred to the well-known passage from Australian Woollen Mills Ltd v FS Walton and Co Ltd (1937) 58 CLR 641 at 657 per Dixon and McTiernan:
The rule that if a mark or get-up for goods is adopted for the purpose of appropriating part of the trade or reputation of a rival, it should be presumed to be fitted for the purpose and therefore likely to deceive or confuse, no doubt, is as just in principle as it is wholesome in tendency. In a question how possible or prospective buyers will be impressed by a given picture, word or appearance, the instinct and judgment of traders is not to be lightly rejected, and when a dishonest trader fashions an implement or weapon for the purpose of misleading potential customers he at least provides a reliable and expert opinion on the question whether what he has done is in fact likely to deceive.
The respondents say that no product went to retail without the word memento being covered, and the very existence of the covering highlighted the distinction between the applicant’s products and the respondents’. The respondents say further that the distinctiveness is heightened by the overwhelmingly different visual effect of the applicant’s and the respondents’ cartons, the applicant’s being, in summary, of a visibly superior quality, and the fact that the photo boxes are commonly displayed out of their cartons. The respondents say that consumers are not to be regarded as stupid, and that merely confusing them is not sufficient to sustain the claim: Conagra Inc.
In reply, the applicant said that it is for the court to decide whether conduct is misleading or deceptive or likely to mislead or deceive: Taco Co of Australia v Taco Bell Pty Ltd (1982) 42 ALR 177. In Global Sportsman Pty Ltd v Mirror Newspapers Ltd (1984) 2 FCR 82 at 87, the Court said that:
Conduct is likely to mislead or deceive if that is a "real or not remote chance or possibility regardless of whether it is less or more than fifty per cent": cf. Tillmanns Butcheries Pty Ltd v. Australasian Meat Industry Employees' Union (1979) 42 FLR 331, per Deane J. at p 346; Sheen v. Fields Pty Ltd (1984) 58 ALJR 93.
Nevertheless, conduct that merely causes wonderment or confusion without actually misleading or deceiving, and without being likely to mislead or deceive, is insufficient to make out the claim. In Taco Bell, Deane and Fitzgerald JJ in the Full Federal Court said at 201 that:
‘Confusion
In McWilliam’s v McDonald’s ((1980) 33 ALR 394), the Full Court held that, although the conduct of McWilliam’s was likely to have caused confusion or wonderment, it did not appear that in the particular circumstances of that case the conduct was misleading or deceptive or likely to mislead or deceive. As we read their Honours’ judgments, that was a factual conclusion. Their Honours were not suggesting that there is, for the purposes of s 52 of the Act, a necessary dichotomy between "confusion" on the one hand and "misleading or deception" on the other.
Conduct which produces or contributes to confusion or uncertainty may or may not be misleading or deceptive for the purposes of s 52. In some circumstances, conduct could conceivably be properly categorized as misleading or deceptive for the very reason that it represents that confusion or uncertainty exists where, in truth, there is no proper room for either. Ordinarily, however, a tendency to cause confusion or uncertainty will not suffice to establish that conduct is of the type described in s 52. The question whether particular conduct causes confusion or wonderment cannot be substituted for the question whether the conduct answers the statutory description contained in s 52.’(Emphasis added)That passage from Taco Bell was approved by the High Court in CampomarSociedad, Limitada v Nike International Ltd (2000) 202 CLR 45 at [106].
There are, as the applicant submitted, an almost infinite number of ways of designing a label or carton for a photo box. The respondents’ use of substantially the same typeface and letter colour as the applicant, and identical wording and a similar placement of photographs, would be noticed by anyone who compared the two cartons.
However, photo boxes are generally displayed outside their cartons. When seen without their cartons, the applicant’s and the respondents’ photo boxes are very different. Their face papers give a different overall impression and show different branding. Consumers would see the unigift brand in the case of the applicant’s photo boxes and the Better Homeware brand in the case of the respondents’ photo boxes before they turned their attention to the cartons. At that point, consumers might wonder whether there might be a connection between the respondents’ product and the applicant’s.
However, I consider that consumers at that stage would mostly be concentrating on the price and deciding whether it was worth paying the extra $10 or $20 for the more polished and professional cartons offered by the applicant. I do not think that consumers would have any significant interest in the brand or origin of photo boxes. Both the applicant’s and the respondents’ photo boxes were made in China. There was nothing to indicate that the applicant’s product, as opposed to its cartons, was superior to the respondents’.
In my view, the attempted concealment of the word memento would signal to consumers that there had been some sort of printing error and that the respondents’ product was not a memento version of a photo box. I do not consider that the partial concealment of the word memento would be interpreted by any consumers as meaning that the respondents’ photo boxes were actually the applicant’s photo boxes or that there was a link between the applicant and the respondents.
I do not consider that the statement cited above from Australian Woollen Mills has a direct application to this case. The memento mark was partially obscured and only a part of the applicant’s get-up was copied. The overall impression given by the applicant’s cartons was polished and professional, in part because all of the sides and the top of the carton were printed with a glossy finish and with an appealing design. The respondents’ cartons, on the other hand, were merely plain white cartons with stickers placed on the front and rear panels. The respondents’ cartons were such poor quality in comparison with the applicant’s that I do not believe any consumer would be likely to be deceived by them or even confused by them for more than a few moments.
I consider that, when the white paper was placed over the entire large sticker on the respondents’ cartons, consumers would not have thought there was any connection at all between the applicant’s products and the respondents’, even though the white paper did not entirely conceal the sticker. I consider that consumers may have wondered why the sticker had been concealed, but I do not accept that they would have thought that the respondents’ products were the applicant’s or that there was any connection between the applicant and the respondents. This conclusion is even stronger in the case of the black paper obscuring the respondents’ large stickers.
All in all, I consider that there is not even a remote chance that the reasonable consumer of photo boxes and gift ware in the medium to discount sector of the market might be led to believe by the design of the respondents’ packaging that the respondents had any sort of affiliation with the applicant, in breach of s.53(d) of the Trade Practices Act 1974, or that the respondents’ products were actually the applicant’s.
I consider that relevant consumers would not think much at all about the branding of photo boxes. As Mr Norich said, consumers choose their photo boxes on the basis of product, price and packaging, in that order. To the extent that the packaging of photo boxes is significant to consumers, it is because, in the applicant’s case, it looks polished and professional, not because it is associated with any particular brand.
c. Damages
The applicant claims damages for passing off of $3,684.20. That figure was calculated on the basis that the respondents sold 676 photo boxes with the word memento only covered. The applicant said that its lowest profit margin was on the small photo boxes and was $5.45 per photo box. Multiplying 676 by $5.45 gives $3,684.20.
Shanahan says at [20.250] that in cases akin to passing off, the plaintiff must establish that its loss or damage was caused by the offending conduct and that the measure of damages is the amount required to put the plaintiff in the position it would have been in if the tort had not happened. The test for damages in a misleading and deceptive conduct case is substantially the same.
However, in the present case, I am not satisfied that the applicant has suffered a loss caused by the respondents’ conduct. Because the applicant did not have an appreciable reputation in photo boxes at the relevant time, and because the conduct of the respondents was not misleading or deceptive or likely to mislead or deceive, I do not believe that any consumer would have bought one of the respondents’ photo boxes because he or she thought it was one of the applicant’s photo boxes.
In my view, consumers would buy the respondents’ product because it was the style they wanted and it was $10 or $20 cheaper than the applicant’s. Those who were concerned about packaging would have bought the applicant’s product, if the extra cost was not prohibitive for them. This conclusion accords with the evidence of Mr Norich, that consumers buy photo boxes based on product, price and packaging in that order. Mr Norich did not mention brand as a factor and I do not consider that brand would be a factor in a purchase of this sort.
Accordingly, I do not consider that the applicant incurred any loss because of the packaging used by the respondents. No damages are therefore payable.
d. Injunction
In view of my findings, there is no occasion to grant an injunction. However, I note that the respondents offered to the court an undertaking in the following form:
not to make use of the packaging Artwork the subject of this proceeding or apply to any of its goods as a trade mark any trade mark of the applicant.
I will accept the respondents’ offer. It seems to me that the undertaking would be a comfort to the applicant and not a significant detriment to the respondents.
Conclusion
In view of my findings, the application must be dismissed.
I certify that the preceding one hundred and fifty (150) paragraphs are a true copy of the reasons for judgment of Riley FM
Associate: Melissa Gangemi
Date: 17 May 2007
Appendix 1: Applicant’s five album photo box.
Appendix 2: Respondents’ five album photo box.
Appendix 3: Applicant’s face paper.
Appendix 4: Respondents’ face paper.
Appendix 5: Applicant’s packaging for the six album box.
Appendix 6: Respondents’ packaging for the six album box with a white sticker over the word memento.
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