Federal Court of Australia

Martin & Pleasance Pty Ltd v A Nelson & Co Ltd [2021] FCAFC 80

ORDERS

THE COURT ORDERS THAT:

1.    Leave to appeal be granted.

2.    The appeal be dismissed.

3.    The appellants pay the respondents’ costs of and in connection with the leave application and the appeal as agreed or taxed.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

THE COURT:

1    These reasons concern an application for leave to appeal and consequential appeal concerning alleged passing off, misleading or deceptive conduct and trade mark infringement. The appellants (and applicants) are Martin & Pleasance Pty Ltd and related companies, and the respondents are A Nelson & Co Ltd and related companies.

2    On 17 March 2021, the primary judge granted an injunction which restrained the appellants from marketing, promoting and/or supplying their “RestQ” range of complementary medicines. On 4 May 2021, we heard the application for leave to appeal and full argument on the appeal. At the end of the hearing we made orders granting leave to appeal and dismissing the appeal. These are our reasons for those orders.

Background

3    The respondents are a group of companies based in the United Kingdom. For many years they have manufactured a “Rescue” range of complementary medicines (the “Rescue” products). For over 30 years, the appellants acted as the distributor of those products in Australia. The “Rescue” products were sold to consumers through a range of retail channels including pharmacists and supermarkets.

4    The products were marketed as “flower remedies” which had been devised in the 1920s and 1930s by a medical doctor called Edward Bach who had particular research interests in homeopathy. They were: oral drops for the relief of stress called “Rescue Remedy”; oral drops and an oral spray for the relief of sleeplessness called “Rescue Sleep” and “Rescue Sleep Spray”; several varieties of “Rescue Pastilles” for stress relief; and “Rescue Plus” lozenges for “clarity and composure”. It was common ground that the respondents had built up a substantial goodwill and reputation in Australia in relation to the products. One respondent company is the owner of Australian registered trade marks “Rescue” and “Rescue Sleep” in the relevant category of goods.

5    In October 2020, the respondents gave notice to the appellants that the distribution agreement for the “Rescue” products would be terminated. The appellants planned to launch their own range of products made using methods associated with Dr Bach. Those products were launched to the market on 15 February 2021. They were: oral drops and an oral spray for sleeplessness marketed as “RestQ Sleep Formula”; oral drops, an oral spray and pastilles marketed as “RestQ Calm Formula”; and an oral spray known as “RestQ Focus Formula” (the “RestQ” products). It is convenient to illustrate the similarities and differences in the respective get ups by reproducing side by side pictures of the products with the closest correspondence, namely the sleep products.

6    The respondents commenced proceedings against the appellants on 2 March 2021. The statement of claim alleged infringement of the registered trade marks, passing off, and conduct in breach of ss 18 and 29 of the Australian Consumer Law (ACL). The originating application sought interlocutory relief restraining the appellants from offering, marketing, promoting and/or supplying products or participating in any of those activities using the words “RestQ” or “Bach” or using the packaging depicted in the statement of claim (from which the above picture of the appellants’ sleep products is taken). The interlocutory relief also sought orders requiring the deactivation of a website, and Facebook and Instagram accounts, used to market the “RestQ” products.

The primary judgment

7    The primary judge heard the application for interlocutory relief on 10 March 2021 and, as has been indicated, substantially granted it one week later. His Honour found that the respondents had made out a prima facie case of passing off and misleading or deceptive conduct. He declined to base his decision on trade mark infringement because the appellants had raised a defence to that under s 122(1)(b) of the Trade Marks Act 1995 (Cth), known as the good faith defence, and determining the strength or weakness of that defence might lead to an inquiry into the good faith or lack thereof of the appellants’ Managing Director, Richard Holyman. Since the application could be disposed of on other grounds, it was not necessary to consider that issue at the interlocutory stage.

8    On the question of balance of convenience, the primary judge summarised his conclusion at [55] as follows:

At a very superficial level, but at an important level, the facts fell in favour of the Applicant [the present respondents] by reason of the fact that:

•    it had been in the homeopathic market for some time, having held (for example) exclusive rights to the supply of the ingredients the subject of the ‘RESCUE’ products since late 1993; and

•    it had established a reputation and goodwill in that market.

By way of contrast, the Respondents [appellants]:

•    had only entered the market in mid-February 2021; and

•    had a less well-established market presence, albeit a presence which was growing at some pace.

9    The substantive order the primary judge made was that:

(a)    [the appellants] be restrained from marketing, promoting and/or supplying products (or offering to supply products) or participating in any such marketing, promotion or supply:

(i)    using the word ‘RestQ’; and/or

(ii)    using the packaging the subject of the photograph comprising annexure B to the Statement of Claim filed on 2 March 2021 (‘RestQ Packaging’); and

(b)    the First and/or Third Respondent [appellants] to deactivate the Facebook account with the handle RestQMP, the Instagram account with the handle RestQ_MP and remove the website www.restqcalm.com.au within 24 hours of the making of this order.

10    The primary judge granted a relatively short stay of his orders, which was subsequently extended by a different judge to expire on the afternoon of the hearing of the application for leave to appeal.

Leave to appeal

11    The appellants’ draft notice of appeal contained 14 numbered grounds, five relating to the prima facie case, eight relating to the balance of convenience and the adequacy of damages, and one relating to the lack of any security for the undertaking as to damages. But in both written and oral submissions the parties made little reference to the particular grounds, organising their argument instead by reference to the broad topics of prima facie case and balance of convenience, as well as the merits of this Court’s re-exercise of the discretion, should it conclude that the primary judge had erred in his own exercise of the discretion. We will take the same approach.

12    The parties did not submit that his Honour made any error in his exposition of the principles which govern the tort of passing off and the similar causes of action under ss 18 and 29 of the ACL. Nor did they claim that his Honour erred in his statement of the principles to be applied to applications for interlocutory injunctions. We therefore adopt his Honour’s discussion of those principles as our own, and do not need to set them out here (although we will refer to some of the relevant authorities later). As will appear from the reasons below, the matter before this Court ultimately turned on whether the appellants had established that the primary judge had committed any error in the exercise of his discretion in relation to the key topics of prima facie case and balance of convenience.

13    Nor need we set out the well-known principles governing leave to appeal. In relation to whether there would be substantial injustice to the appellants if the primary judge’s decision was wrong, the respondents accepted that it would cause commercial hardship to the appellants, although the respondents’ submissions sought to minimise that hardship. The question of whether there was sufficient doubt about the correctness of his Honour’s decision was more finely balanced. In broad terms, the errors which were the subject of substantial argument before us were either alleged failures to engage in the balancing exercise necessary on an application for an interlocutory injunction, or failures to have regard to relevant matters. As will appear from our discussion of the merits of the appeal below, we considered that only one of these arguments was strong enough to raise sufficient doubt so as to merit the grant of leave to appeal. That was the submission that his Honour failed to address the fact, relevant to the balance of convenience, that the respondents were unable to supply their products in Australia at the time of the interlocutory hearing and it was not clear when they would be able to do so. However for reasons we will explain, we ultimately do not accept that his Honour erred in that way. We will also address the other arguments below without distinguishing between the grant of leave to appeal and the appeal proper.

14    The respondents filed a notice of contention claiming that the primary judge ought to have granted the injunction on the basis of the alleged trade mark infringement. In view of the conclusion we reached on the appeal, we do not need to deal with that contention.

Prima facie case

15    As we have noted, the primary judge found that the respondents had made out a prima facie case of passing off and of misleading or deceptive conduct. His Honour commenced his consideration of both causes of action by stating his finding that the respondents had established a substantial goodwill in their products. There is no challenge to that finding in this appeal.

16    His Honour then turned to his evaluation of the get up of the “Rescue” products compared to the get up of the “RestQ” products, concluding that there was a serious question to be tried as to whether, based on that comparison:

(a)    the appellants were passing off their products as those of the respondents; and

(b)    given the manner in which they were presenting their goods for consumption, the appellants had engaged in conduct which, at least, created a misleading and deceptive representation that their goods were the respondents’ goods or affiliated with the respondents.

17    Having noted various similarities and dissimilarities in the packaging of the competing product lines, and having acknowledged that the task of evaluation is one in which different minds could reach different conclusions, the primary judge assessed the case against the appellants, on both causes of action, as “persuasive”.

18    The appellants’ principal contention is that the primary judge erred in his comparison of the appearance and packaging of the competing product lines. In submissions, this was said to involve “a mistaking of the facts and a failure to take into account a material consideration”, in an attempt to show error of the kind addressed in House v The King (1936) 55 CLR 499 at 504-505. However, on proper analysis, the appellants’ submissions on this score rise no higher than an attempt to advance a different analysis to the one undertaken by the primary judge, so as to give precedence to the dissimilarities in the packaging of the competing product lines over their similarities, for the purpose of propounding a different conclusion to the one reached by the primary judge. In his reasons, the primary judge noted, at [50], a similar attempt, below, by the appellants to “down play” similarities while emphasising differences in the way the competing product lines were packaged (with the respondents adopting the opposite stance).

19    In a non-exhaustive way, the primary judge referred to a number of packaging similarities. However, he drew particular attention to the similarity in the respondents’ product name “Rescue” and the appellants’ product name “RestQ”. Earlier in his reasons, when considering the case advanced by the respondents for infringement of the registered trade marks “Rescue” (Trade Mark Nos. 1243409 and 205267) and “Rescue Sleep” (Trade Mark No 1127540), the primary judge reflected on the aural comparison of “Rescue” with “RestQ”. His Honour noted that, had it been necessary for him to make a finding in respect of trade mark infringement, the appellants’ submission on the phonetic difference between “Rescue” and “RestQ” would most likely have been rejected. Whilst acknowledging that the letter “t’ in “RestQ” could make a difference in pronunciation, his Honour said at [32]:

... There, nevertheless, would have remained a concern as to whether people would have articulated the two words in a sufficiently clear manner as to avoid confusion. This concern remains notwithstanding the fact that the word “rescue” is obviously an ordinary English word, whereas the term “RestQ” is a made-up word which would have the potential to evoke different ideas to consumers. So, too, must care be taken to not place undue weight upon any aural comparison of terms but to also take into account the visual appearance, place and the context in which they are made available for sale ...

20    Thus, it can be seen that the primary judge was persuaded that a serious question had been raised concerning the appellants’ adoption and use, for their products, of a name that was, arguably, at least deceptively similar to the respondents’ name for their products, in respect of which a substantial goodwill has been established.

21    The aural similarity between the names “Rescue” and “RestQ” no doubt informed the primary judge’s finding at [48], when dealing with the passing off and misleading or deceptive conduct cases, that:

... there is a serious question to be tried as to whether in the mind of the consumer (or in questions being asked of retailers) that there is such a sufficient difference as to separate the origins of the two lines of products ...

22    Apart from the aural similarity in the product name that the appellants had adopted, the primary judge also drew attention to the fact that on some (but not on all) of the respondents’ products the words “Traditionally used to relieve sleeplessness” appear and that, on the appellants’ products, the words “Traditionally used to calm the mind & relieve sleeplessness” appear. The primary judge also observed that the packaging of the competing product lines referred to Dr Bach – the person who, his Honour said, “developed the original ingredients”.

23    The appellants criticised the primary judge’s reliance on these particular similarities. They argued that his Honour failed to appreciate that their products were “traditional remedies” (a class of complementary medicines under the Therapeutic Goods Regulations 1990 (Cth)) and that, having made claims of efficacy for those products, they were obliged under s 23 of the Therapeutic Goods Advertising Code (No 2) 2018 (Cth) (the Advertising Code) to prominently disclose their reliance, for those claims, on traditional use.

24    There are a number of things to be said about that submission.

25    First, in the proceeding below, the appellants did not advance any submission about the requirements of the Advertising Code. It is little wonder, therefore, that the primary judge did not refer to those requirements in his reasons.

26    Second, in the proceeding below, the appellants did acknowledge that the packaging of the competing product lines used words like “traditionally used to”, and the words “relieve”, “sleeplessness” and “stress”. They did so in the context of submitting that these were common features of packaging that “would not cause anybody to think that these products were, in any way, related” (meaning, related to the respondents’ products).

27    By this, we understand the appellants to have submitted that the use of such words were common to the trade. We were not taken, however, to any evidence that would make good the proposition that the relevant packaging elements, as used by the appellants, were in common use, either as to the wording used by the appellants for their “traditional use” claims or the positioning of such wording on product packaging.

28    The respondents pointed out that there is nothing in the applicable regulatory regime that mandates the specific “traditional use” wording used by the appellants. The respondents also submitted that the wording used by the appellants on the packaging of their products is strikingly similar to the wording used by the respondents on the packaging of their products.

29    Whether the appellants’ wording is “strikingly” similar to the respondents’ wording, and whether the appellants’ wording is common to the trade, are questions for trial. For present purposes, it is sufficient for us to state that, on the evidence to which we were taken, we see no error in the primary judge addressing the wording of the appellants’ “traditional use” claims as a similarity in the packaging of the competing product lines that is relevant to the assessment of whether the respondents had established a prima facie case for passing off and for misleading or deceptive conduct.

30    Third, it is clear that, in this part of his reasons, the primary judge was alluding to the depictions of the packaging he had used to illustrate the get up of the competing product lines at [11] of his reasons. We have used the same depictions at [5] of these reasons. The wording to which his Honour referred shows a similarity in the get up of the competing product lines. But the significance of that similarity is that it aligns the use and function of the two product lines in the minds of consumers, in circumstances where the appellants also use the aurally similar product name “RestQ”. In other words, the wording of the “traditional use” claims, as used by the appellants on the packaging of their products, is an important contextual matter in which also to assess the significance of the appellants’ use of the “RestQ” product name.

31    Other than for one matter, which we consider below, the appellants’ remaining submissions were directed to establishing, consistently with the approach we have noted above, that the “overall effect of the differences between the packaging of the relevant products was too great for there to be any likelihood of deception or confusion”. According to the appellants, the primary judge erred in finding that the similarities in packaging were sufficient to give rise to a prima facie case. Alternatively, the appellants submitted that the primary judge erred in failing to find that any prima facie case was, at best, a weak case.

32    Sitting as an appeal court, we are conscious of the fact that, in cases such as the present, which involve questions of evaluation and impression, we should exercise caution in reversing the primary judge’s findings. This is not to say that the primary judge’s findings are immune from appellate intervention: S&I Publishing Pty Ltd v Australian Surf Life Saver Pty Ltd [1998] FCA 1463; (1998) 88 FCR 354 at 361. But, in order to supplant the primary judge’s finding that a prima facie case of passing off and of misleading or deceptive conduct was established, we would have to be persuaded, firstly, that this finding was, indeed, affected by error.

33    We are not persuaded that, in reaching his finding that a prima facie case had been established, the primary judge erred in weighing the similarities and dissimilarities in the competing packaging. The primary judge’s finding that a prima facie case had been established was plainly open to him, and we would not interfere with it. Moreover, the primary judge did not err in assessing the prima facie case as “persuasive” against the appellants.

34    The remaining matter on this aspect of the appeal is the appellants’ submission that the primary judge erred in remarking, at [52] of his reasons, that a finding may be open that the first appellant’s Managing Director, Mr Holyman, may have “borrowed a number of aspects of the get up of the respondents’ products”. The appellants’ criticism of this part of the primary judge’s reasons is without substance. It does not bespeak appealable error. As his Honour’s reasons make clear, he placed this possibility to one side in reaching his finding that a prima facie case of passing off and of misleading or deceptive conduct had been established. As his Honour explained at [52], any finding of “borrowing”:

... would not assume much relevance for the purposes of the passing off claim or that founded upon the Australian Consumer Law, to make a finding as to whether there was any intention on the part of the [appellants] to pass their own goods off as those of the [respondents] or to make misleading or deceptive comments.

35    For these reasons, this aspect of the appeal fails.

Balance of convenience

36    The appellants’ principal contention in relation to the balance of convenience is that the primary judge did not weigh the harm to the appellants, third parties and the public interest from granting the interlocutory injunction against the harm to the respondents if no interlocutory injunction were granted. The appellants submitted that this failure involves an error of principle of the kind required for appellate intervention in respect of a discretionary decision as specified in House v The King at 504-505.

37    The appellants identified the weighing or balancing exercise as the essence of the discretionary function. In Samsung Electronics Co. Limited v Apple Inc. [2011] FCAFC 156; (2011) 217 FCR 238 the Full Court said:

    “[t]he assessment of harm to the plaintiff, if there is no injunction, and the assessment of prejudice or harm to the defendant, if an injunction is granted, is at the heart of the basket of discretionary considerations which must be addressed and weighed as part of the Court’s consideration of the balance of convenience and justice”: [62]; and

    “[i]n exercising that discretion, the Court is required to assess and compare the prejudice and hardship likely to be suffered by the defendant, third persons and the public generally if an injunction is granted, with that which is likely to be suffered by the plaintiff if no injunction is granted”: [66].

38    The contention that the primary judge did not perform this function is untenable.

39    First, the application came before the primary judge as the duty judge: [6]. His Honour heard it on an urgent basis and gave judgment with reasons in a week. In so doing the primary judge recorded at [9] that given the time constraints, his Honour could give only brief reasons to support his conclusion that the interlocutory injunction should be granted.

40    In Silktone Pty Ltd v Devreal Capital Pty Ltd (1990) 21 NSWLR 317 at 321 Kirby P explained:

…it is undesirable, as a matter of policy, that an appellate court should scrutinise over-zealously the language of the reasons given for the grant of an interlocutory injunction. Typically such reasons must be given ex tempore. They often follow immediately upon the close of evidence and argument. If they fail to repeat all of the arguments that may be because they are then fresh in mind … The reasons must frequently be provided in circumstances of great urgency. Quite often they must be given by a duty judge with other parties waiting for attention to their equally urgent problems.

41    While the primary judge did not give reasons ex tempore these considerations apply to the appeal, particularly given his Honour’s reference to the constraints of time in [9] of his reasons.

42    Second, the appellant’s search for the primary judge expressly saying that, having “compare[d] the prejudice and hardship likely to be suffered by the defendant, third persons and the public generally if an injunction is granted, with that which is likely to be suffered by the plaintiff if no injunction is granted” he considered that the interlocutory injunction should be granted, is misconceived. A judge does not have to use any formula of words to discharge the required function. Given that the weighing exercise is at the heart of the discretion, that the primary judge in fact exercised the discretion, and that in so doing the primary judge repeatedly referred to the balance of convenience, an inference that his Honour in fact failed to balance the competing interests before him would be startling.

43    Third, there are ample indications in his Honour’s reasons that he performed the weighing or balancing function precisely as required. In particular, in his reasons the primary judge said:

    “… the balance of convenience lies in favour of granting relief” ...: [9];

    under the heading “the balance of convenience” – “At a very superficial level, but at an important level, the facts fell in favour of the Applicant by …”: [55];

    under the same heading “By way of contrast, the Respondents …”: [55];

    “[b]elow that level of analysis, however, Counsel for the Respondents relied upon a number of further factors. The touch-stone to which he repeatedly returned was that the purpose of an interlocutory injunction to only make such orders as to create ‘the least risk of injustice … Each of the factors relied upon should be briefly addressed ...”: [56];

    “[t]he loss and prejudice to a party against whom interlocutory relief cannot be ignored; it is obviously a matter that has to be seriously taken into account when assessing where the balance of convenience truly lies ...”: [61];

    “[a]lthough these matters should be taken into account when exercising the discretion to grant or refuse interlocutory relief, they do not – with respect – weigh the balance in favour of refusing relief …”: [66];

    “[t]he competing financial impacts upon the parties have to be taken into account”: [72]; and

    “[t]he balance of convenience lies in favour of granting such relief”: [84].

44    Fourth, there is no disparity in the primary judge’s treatment of the alleged harm to the appellant and to the respondents, third parties and the public interest. All are considered in a concise and summary fashion by his Honour, which is appropriate given the application was one for interlocutory relief, a decision about the application was urgently sought and required, and the reasons had to be and were provided with considerable expedition.

45    For these reasons, the appellants’ arguments of a fundamental failure by the primary judge to perform the discretionary function required cannot be accepted.

46    The appellants’ other contentions expose that which the untenable nature of the principal appeal ground suggests—that these are complaints about the conclusion his Honour reached which are presented as alleged errors of principle.

47    The appellants next contended that the primary judge did not properly assess the strength of the prima facie case, and did not recognise that the strength of the prima facie case and the balance of convenience are related concepts. The first aspect of this contention has been rejected above. The second aspect cannot withstand any fair review of the primary judge’s reasons. The primary judge:

    in the context of reaching conclusions about the prima facie case, said “To the extent that some authorities seek to characterise the serious questions to be tried as ‘weak’ as opposed to ‘strong’, if it were necessary to make such a characterisation, it is considered that the Applicants [the present respondents] have certainly made out a prima facie case and made out a persuasive case as against the Respondents – albeit on an interlocutory basis”: [53];

    referred to Samsung as concluding that “there had been a failure at first instance to assess the strength of the Respondents’ case and that there was a ‘real and substantial’ prospect that the claim would not succeed”: [58];

    in the context of assessing the balance of convenience, at [61], referred to Boyd v Wild Hibiscus Flower Company Pty Ltd (No 2) [2012] FCA 74 in which Foster J said at [69]:

Finally, it is important to remember that, when one comes to consider the question of the balance of convenience and justice, to some extent it is appropriate and necessary to consider the strength of the case that is being put by the applicants.

    in the context of assessing the balance of convenience, said “The serious questions to be tried, moreover, cannot be characterised as ‘weak’”: [61]; and

    in the context of assessing the balance of convenience, said “The fact forever remains that there is at least a prima facie case that the Respondents [the appellants] are passing off their products as those of the Applicants [the present respondents] and the prima facie case that consumers are likely to be misled or deceived as to the product they are purchasing”: [66].

48    In Samsung, the Full Court said that the degree of likelihood of success if the matter goes to trial is to be considered as part of the weighing of the competing harm: the judge is required to assess whether there has been made out “a prima facie case of sufficient strength to justify the grant of an interlocutory injunction”, and where interlocutory relief is tantamount to final relief the applicant’s case must be “relatively strong”: Samsung at [73] and [87]. Samsung does not suggest that a primary judge, in giving reasons for granting an interlocutory injunction, must ritualistically record their satisfaction that the prima facie case is of “sufficient strength” or “relatively strong”. Nor does Sportsbet Pty Ltd v Crownbet Pty Ltd [2018] FCA 1045 at [107].

49    It is clear that his Honour was aware of the principles in Samsung relating to interlocutory relief being tantamount to final relief. At [59], his Honour explained in detail why he considered there was a risk that interlocutory relief might be tantamount to final relief in this case, saying:

On the facts of the present case, there are some uncertainties that surround the second of the arguments [that interlocutory relief would be tantamount to final relief] presently being relied upon. It is, for example, unknown whether the docket Judge would be able to accommodate an expedited final hearing which, to some extent, would alleviate the present concern of the Respondents [the appellants]. Nor is it known whether any expedited hearing would be appropriate, taking into account the uncertainty as to legal and factual issues that could arise. Nor is it known with certainty whether the Respondents would in fact opt to re-brand their products. But the submission has been made and it is to be assumed that that remains a real prospect. However these uncertainties may be resolved, the fact remains that the Respondents are correct to urge upon the Court the harm that the Respondents would suffer if interlocutory relief is granted.

50    Having so concluded, the notion that the primary judge did not then consider the principles in Samsung to which he had referred immediately before [59] is unsustainable.

51    From those parts of the primary judge’s reasons discussed above, it is apparent that his Honour implicitly concluded that the respondents’ prima facie case was “sufficiently strong” or “relatively strong” in all of the circumstances, such as to justify the conclusion that the balance of convenience favoured the grant of the interlocutory injunction. This is apparent from his observation, at [53], that the respondents had made out a persuasive case for interlocutory relief, which his Honour then repeated in his conclusions at [83]. Having correctly identified the relevant context, it is clear that in concluding that the respondents’ case was “persuasive” the primary judge was satisfied that the prima facie case was of sufficient strength or relatively strong, such as to justify the grant of the interlocutory injunction. The primary judge did not fail to assess the strength of the prima facie case against the consideration that there was a real risk that interlocutory relief in this case might be tantamount to final relief. Nor did he fail to consider the strength of the prima facie case as part of the balance of convenience.

52    The appellants then contended that the primary judge failed to consider a relevant matter we have already mentioned as the basis for granting leave to appeal, namely that the respondents, according to the appellants, could not supply their products in Australia. This, said the appellants, significantly reduced the nature and extent of any harm the respondents may otherwise have suffered.

53    This contention must also be rejected.

54    The primary judge referred to the issue about the respondents’ capacity to supply their products: [65]. It is not the case, accordingly, that the primary judge failed to consider the matter at all. The appellants’ complaint, properly understood, is that the primary judge failed to consider that matter in the context of the potential for the respondents to suffer harm (that is, the potential harm to the respondents was allegedly ameliorated to a significant extent).

55    The appellants’ complaint is misconceived.

56    First, the primary judge recognised that the capacity for the respondents to continue supply in Australia was an issue because of the lack of a current Australian sponsor, but was correct to note, at [65], that the inability to supply had not been proved. Rather, there were “serious questions as to the ability of the Applicants [the present respondents] to continue to supply products”. While the primary judge did not refer to it (and nor was he required to) there was evidence that there were existing stocks of the respondents’ products in stores in Australia. Accordingly, the alleged difficulty in supply by the respondents was not an undisputed fact. The primary judge was not bound to resolve that dispute in the context of the interlocutory application unless it was material to the resolution of that application.

57    Second, the only potential harm that the respondents’ inability to supply its products could ameliorate to any extent was loss of sales. The primary judge, however, did not attempt to identify the relative magnitude of the competing losses. Nor could he on the evidence. The harm to the respondents on which the primary judge focused was injury to the respondents’ goodwill and reputation. This is apparent from his Honour’s reasons at [18], [19], [20], [45], [51], [55] and [69].

58    Third, any hiatus in the respondents’ capacity to supply its products in Australia, due to the lack of an Australian sponsor, was immaterial to the injury to the respondents’ goodwill and reputation. As the respondents submitted:

    the primary judge was satisfied that the respondents had an established reputation and substantial goodwill: [45];

    the evidence did not suggest, and it was not submitted, that the regulatory hurdle to the respondents recommencing supply using a different supplier was likely to be permanent or long-lasting;

    a temporary pause in supply while the respondents obtained the required regulatory approvals would have no effect on its established reputation and substantial goodwill; and

    the primary judge was satisfied that the supply of the appellants’ products would cause, in the mind of the consumer, real confusion or the likelihood of real confusion as to whether those products are the goods of the respondents: [45].

59    In these circumstances, there was no reason for the primary judge to weigh up any temporary hiatus in supply as a relevant factor in ameliorating the potential harm to the respondents. The relevant harm remained unaffected by any temporary hiatus.

60    The appellants argued that [55] of the primary judge’s reasons discloses a logical error, in that it does not follow from the length of time the respondents’ products had been on the market (since 1993), compared to the length of time the appellants’ products had been on the market (since mid-February 2021, two weeks before the respondents filed an application for interlocutory relief), that, in granting the interlocutory injunction: (a) there would be any harm to the respondents, and (b) the harm to the respondents from the failure to grant the interlocutory injunction would be greater than that to the appellants, third parties and the public interest from the grant of the injunction.

61    We have already quoted [55] of the primary judge’s reasons. It does not reveal any illogical reasoning. The relative length of time the competing products had been on the market was an important consideration. It founded the primary judge’s conclusion that the respondents had an established reputation and substantial goodwill: [45]. In contrast, the appellants did not have an established reputation and substantial goodwill, which is why the primary judge considered the fact of recent entry by the appellants to be a factor of “considerable weight”: [62]; see also [70].

62    The appellants contended that the primary judge misidentified the status quo and thus erred in principle. This too is untenable. In the circumstances of the present case, the primary judge was not bound to proceed on the basis that the status quo was the state of affairs immediately before the respondents commenced their proceeding. In Garden Cottage Foods Ltd v Milk Marketing Board [1984] AC 130 at 140B-E Lord Diplock explained:

The relevant status quo … is the state of affairs existing during the period immediately preceding the issue of the writ claiming the permanent injunction or, if there be unreasonable delay between the issue of the writ and the motion for an interlocutory injunction, the period immediately preceding the motion. The duration of that period since the state of affairs last changed must be more than minimal, having regard to the total length of the relationship between the parties in respect of which the injunction is granted; otherwise the state of affairs before the last change would be the relevant status quo.

63    In the present case there is no dispute that:

    the respondents’ products had been in the market since late 1993 (the appellants being the respondents’ Australian distributors); and

    the appellants’ products had only been on the market for two weeks before the application for the interlocutory injunction was filed.

64    In these circumstances, it is clear that the relevant status quo was the state of affairs before the appellants entered the market with their products. That was the primary judge’s conclusion at [57].

65    The appellants contended that, in reaching this conclusion, the primary judge’s reasoning process miscarried because his Honour said, at [57]:

Given the finding that there is a serious question to be tried as to whether the Respondents were passing off their products as those of the Applicants [the present respondents] or were engaging in conduct that was misleading or likely to mislead or deceive consumers, it is less than persuasive to submit that their existing market position was the status quo …

The appellants contended that the existence of the prima facie case was irrelevant to the identification of the status quo.

66    We do not accept that any error of principle arises. For one thing, the primary judge meant only that where there is a prima facie case, a very recent entry into the market by way of the very conduct complained of will not make the circumstances after that entry the relevant status quo. This must be correct. If there were no prima facie case, the application for interlocutory relief would necessarily fail. For another, even if his Honour meant something else (but it is not clear what) any error in reasoning would be immaterial. The conclusion is plainly correct and unaffected by any asserted error.

67    The appellant contended that the primary judge failed to consider other relevant matters, namely: (a) redundancy of employees of the appellants, (b) wasted expenditure by the appellants on marketing, (c) the appellants losing shelf space for their products, (d) the matters at [60] occurring or being likely to occur rather than that they “may” occur, and (e) the matters set out at [65].

68    The primary judge did not need to refer to every contention the appellants made to support their case to prove that he had taken those contentions into consideration. The primary judge recognised the appellants’ evidence and contentions to the effect that it, third parties and the public would suffer various kinds of harm if the interlocutory injunction were granted including: (a) the need to rebrand the products and inability to sell remaining stock: [58] and [59], (b) an inability to meet and satisfy future orders by retailers to restock their products: [60], (c) the other matters at [60], and (d) the matters at [65].

69    As to the wasted expenditure on marketing, this is inherent within the primary judge’s recognition of the potential requirement to rebrand the stock considered at [59] and [60]. It is also a species of financial loss which the primary judge weighed in the balance, as recorded in [72] (“[t]he competing financial impacts upon the parties have to be taken into account”).

70    As to the loss of shelf space, this is inherent within the primary judge’s recognition that the appellants could not restock suppliers with their products. Beyond being mentioned in the appellants’ written and oral submissions, the point was not developed. In these circumstances, the primary judge was not bound to give any more specific consideration to this factor than it may be inferred he gave it in acknowledging that the appellants would be unable to restock suppliers “at least for a period of time”: [60].

71    As to the matters at [60], the primary judge was not bound to accept that these impacts would, or were likely to, occur merely because Mr Holyman is said to have given evidence to that effect and was not cross-examined. In any event, his Honour accepted that some effects would occur, being: (a) inability to restock, and (b) loss of profits and revenue. The matters his Honour accepted may occur were: (a) reputational damage, (b) damage to relationships with distributors, and (c) damage to customers’ perceptions of the appellants’ products. Mr Holyman’s evidence concerned his fear of such damage occurring. It did not and could not prove that such damage would occur or was even likely.

72    As to the matters at [65], the primary judge considered these matters, as is apparent from his statement at [66] that:

Although these matters should be taken into account when exercising the discretion to grant or refuse interlocutory relief, they do not – with respect – weigh the balance in favour of refusing relief.

73    It is difficult to know what more the primary judge should have said to make it plain that he weighed the factors at [65] in the balance.

74    This leaves only the asserted redundancy of employees of the appellants. The primary judge did not refer to the appellants’ contentions about the impact on employees of the grant of the interlocutory relief. However, his Honour did refer to: (a) Mr Holyman’s evidence which contains the reference to employees, (b) the fact that the appellants would suffer a “substantial loss by the potential for existing stock to be no longer suitable for possible future distribution given the ‘shelf-life’ of the products” if the interlocutory injunction were granted: [60], and (c) the temporary nature of the interlocutory orders, albeit with the prospect that an expedited final hearing may not be possible: [59] and [60].

75    It is also relevant that the written submissions of the appellants before the primary judge identified the impacts on employees as a factor involving the public interest and the rights of third parties. At [65] the primary judge said:

Aspects of the public interest or the rights of third parties seized upon by the Respondents (without being exhaustive) were:

…

76    The primary judge then mentioned, in dot point form, the other issues the appellants had identified as relevant to the public interest and rights of third parties. While the impact on employees is not mentioned in the list of matters it is clear that the primary judge had the appellants’ written submissions in mind. This is reinforced by the following matters:

    At [63], the primary judge said “[a] further plank in the resistance on the part of the Respondents [the appellants] to the granting of interlocutory relief was their submission that the granting of such relief would be contrary to the public interest or (at least) not in the public interest and/or that the granting of such relief would prejudicially affect third parties”; and

    At [56], the primary judge said “[e]ach of the factors relied upon should be briefly addressed, albeit not necessarily in the same order as set forth in the written Outline of Submissions”.

77    In these circumstances, no inference should be drawn that the primary judge failed to consider the potential impact on employees by reason of the grant of the interlocutory relief. His Honour plainly considered the written submissions, including that part of those submissions which concerned the public interest and the rights of third parties. That entire section is only four paragraphs long. The primary judge referred to the submissions in the paragraphs before and after the paragraph mentioning the redundancy of employees. The inference that his Honour failed to consider the intervening paragraph merely because he did not refer to it in his reasons is implausible.

78    Further, at the time the primary judgment was given no-one knew when the final hearing would be. Mr Holyman’s evidence was that if the appellants could not sell their products for three months or more, then he expected certain employees would be made redundant. He also expected that if the final judgment would not be available for five months or more, then the cost of not rebranding would be greater than the cost of rebranding.

79    As such, the effect of Mr Holyman’s evidence was that, on the one hand, the appellants could avoid redundancies if they rebranded, and they recognised they would need to rebrand if a final judgment was not available within five months. On the other hand, if a final judgment would be available within three months then the appellants could avoid redundancies as a result of the interlocutory injunction. This may explain why the alleged failure of the primary judge to consider the impacts of the interlocutory injunction on employees was not referred to in the appellants’ written submissions and was mentioned in passing only in the appellants’ oral submissions.

80    The appellants contended that the primary judge erred in concluding that damages would not be an adequate remedy because there was an established reputation and goodwill in respect of the respondents’ products, without considering whether damages could adequately compensate the respondents for any harm to goodwill. The primary judge was not bound to find that damages were an adequate remedy merely because other judges in other cases had reached that conclusion in respect of lost goodwill. Each case turns on its own facts. The primary judge’s analysis, at [69], was that in the circumstances of this case, damages would not be an adequate remedy because “the Applicants [the present respondents] have an established reputation and goodwill developed over a considerable period of time in respect to the sale of their products, and it would be unjust to permit the Respondents [appellants], even for a short period of time in advance of any possible expedited hearing, to continue to pass off their products as those of the Applicants [the present respondents] and unjust to continue to allow consumers to be exposed to misleading representations or the likelihood of being misled or deceived”. There is no error of any kind apparent in this reasoning.

81    Contrary to a submission of the appellants, Campbell v Sutherland [2020] FCA 765 at [9] does not purport to establish any general principle that in comparing the direct monetary costs imposed on a respondent by an interlocutory injunction to the diminution in the value of a trade mark, the balance necessarily falls in favour of the respondent. This is not what Greenwood J said at all in Campbell. It is clear that Greenwood J considered that it was the facts in that case which made it fair to decline interlocutory relief in favour of an expedited final hearing.

82    The appellants contended that the primary judge erred in granting interlocutory relief without requiring security for the undertaking as to damages from the respondents, which are foreign corporations. No purported error of principle is identified. No reasoned argument is put in support of this fact giving rise to an error of principle.

83    For these reasons none of the alleged errors of principle by the primary judge in assessing the balance of convenience are sustainable.

Conclusions

84    For the reasons given above, we made orders on 4 May 2021 granting leave to appeal and dismissing the appeal, as well as the usual order for costs.

Associate:

Dated:    27 May 2021