CATCHWORDS
Passing off - ingredients - questions of fact - relevance of "fraud" in the form of an intention to misappropriate rival trader's reputation as evidence from which an intention to deceive others and the likelihood of that deception may be inferred - distinguished from "fraud" in a remedial context.
Reckitt & Colman Products Ltd v Borden Inc (1990) 17 IPR 1 - cons.
Conagra Inc v McCain Foods (Aust) Pty Ltd (1992) 33 FCR 302 - cons.
Trade Practices - consumer protection - Trade Practices Act 1974 ss 52 and 53 - passing off context - likelihood of deception - questions of fact.
Injunction quia timet injunction - persistence in assertion of the right to do a thing properly objected to as a ground for the grant of a quia timet injunction.
Myers v Casey (1913) 17 CLR 90 - cons.
VIERIGHT PTY LIMITED v MYER STORES LIMITED
No G 961 of 1993
Beaumont, Branson and Lindgren JJ
Sydney
31 March 1995
IN THE FEDERAL COURT OF AUSTRALIA )
)
NEW SOUTH WALES DISTRICT REGISTRY ) No G 961 of 1993
)
GENERAL DIVISION )
ON APPEAL FROM A JUDGE OF THE FEDERAL COURT
OF AUSTRALIA
BETWEEN: VIERIGHT PTY LIMITED
Appellant
AND: MYER STORES LIMITED
Respondent
CORAM: BEAUMONT, BRANSON AND LINDGREN JJ.
PLACE: SYDNEY
DATE: 31 MARCH 1995
MINUTE OF ORDERS
THE COURT ORDERS THAT:
1. The appeal be allowed in part.
2. The order made at first instance dismissing the application be set aside in so far as that order refused the claim for a quia timet injunction in respect of the respondent's proposed use of the mark "FIRST" on women's wear; and in lieu thereof, such claim be remitted to a single Judge of the Court to make such order, including such order as to costs, on that claim in accordance with law and as the justice of the case may require.
3. The order for costs made at first instance be set aside, and in lieu thereof, there be no order for the costs at first instance.
4. Otherwise the appeal be dismissed.
5. There be no order for the costs of the appeal.
NOTE: Settlement and entry of orders is dealt with in Order 36 of the Federal Court rules.
IN THE FEDERAL COURT OF AUSTRALIA )
)
NEW SOUTH WALES DISTRICT REGISTRY ) No G 961 of 1993
)
GENERAL DIVISION )
ON APPEAL FROM A JUDGE OF THE FEDERAL COURT
OF AUSTRALIA
BETWEEN: VIERIGHT PTY LIMITED
Appellant
AND: MYER STORES LIMITED
Respondent
CORAM: BEAUMONT, BRANSON AND LINDGREN JJ.
PLACE: SYDNEY
DATE: 31 MARCH 1995
REASONS FOR JUDGMENT
THE COURT
INTRODUCTION:
The appellant commenced proceedings against the respondent claiming that the respondent, by offering for sale clothing bearing the trade mark "FIRST", had passed off its clothing as that of the appellant. The appellant also claimed that the respondent's conduct contravened ss.52 and 53 of the Trade Practices Act 1974. Injunctive and other relief were sought. A Judge of the Court (Neaves J.) dismissed the proceedings. The appellant now appeals from that judgment.
In order to understand the findings and conclusions of the learned primary Judge, it will first be necessary to describe the nature of the case pleaded by the appellant.
THE CASE PLEADED BY THE APPELLANT
By its amended statement of claim, the appellant made, inter alia, the following allegations: (1) since 1986, the appellant had designed, manufactured and sold clothing under its trade mark "FIRST" ("the trade mark"); (2) since 1986, the appellant had operated clothing stores in the Sydney metropolitan area from which it retailed its clothing bearing the trade mark; (3) each of the appellant's stores had been prominently got up in a distinctive style featuring the trade mark on distinctive labels and swing tickets; (4) the appellant had advertised both its clothing sold under the trade mark and its stores in magazines and trade journals circulating throughout Australia; (5) from about mid-1991, the appellant had sold articles of clothing throughout Australia bearing the trade mark; (6) the trade mark and the appellant's stores had become known to the trade and the members of the Australian public as signifying exclusively the appellant's clothing; (7) the appellant had acquired a large and valuable reputation amongst the trade and the members of the Australian public in its clothing, the trade mark and stores; (8) the appellant's clothing had acquired a large and valuable reputation among the trade and public throughout Australia for high quality of manufacture and for being designed and manufactured in Australia; (9) members of the public who purchased clothing bearing the trade mark, expected and intended to purchase the appellant's clothing and no other, and expected and intended to purchase clothing manufactured in Australia; (10) since August 1992, the respondent had sold clothing, not being clothing of the appellant's design or manufacture, under the trade mark, but without the licence or approval of the appellant, well knowing that this would constitute a passing off; (11) the respondent's conduct was fraudulent in that, since the respondent knew at the time that the appellant was retailing its clothing under the trade mark, the respondent also knew that its own activities would constitute a passing off.
THE FINDINGS OF FACT MADE BY THE TRIAL JUDGE
His Honour's findings of fact can be summarised as follows:
(a) The appellant's business activities
(i) From June 1986, the appellant carried on the business of designing, manufacturing and selling women's clothing, primarily casual wear. Prior to 1986, the appellant had sold by retail, but had not manufactured, casual women's clothing from a shop at Rockdale, a suburb of Sydney, under the business name "Verniece". In June 1986, the appellant purchased the goodwill of a retail clothing shop at Centrepoint, in Sydney's central business district, together with whatever rights the vendor had in the unregistered trade mark "FIRST". The appellant then traded under the business name "First Clothing Co.".
(ii)From 1986, the appellant manufactured women's casual clothing at its factory, first at Marrickville, later at Peakhurst and later still at Arncliffe. It retailed the clothing which it manufactured through its shops. At first these were at Rockdale and Centrepoint. Further shops in Sydney suburbs, at Chatswood (1988), at Caringbah (1989) and at Randwick (1990), were opened, although the Chatswood shop was closed in 1989 and the Rockdale shop was closed in 1992. Each of the continuing three shops (at Centrepoint, Caringbah and Randwick) was comparatively small in area.
(iii) The appellant had 10 full-time staff members - six in its factory (including a designer) and four in its shops.
(iv)The clothing sold at the appellant's shops was sold almost exclusively under the trade mark which appeared on its products in the following form:
[AB 2126]
The mark was used on a woven label sewn into each garment and on a cardboard label (a "swing ticket") flexibly attached to the garment.
(v) The word "FIRST", in the style illustrated above, was displayed prominently at the appellant's shops.
(vi) The garments manufactured by the appellant were of good quality and were designed to appeal to "middle market" purchasers, mainly in the age group 18-40 years. The range extended to ski or stirrup pants, designer outfits, dresses, suits, jackets, skirts, tops, jeans, body suits, knits, co-ordinates and accessories.
(vii) In addition to its retail operations, from late 1990 or early 1991, the appellant made wholesaling arrangements with fashion agencies in each of the States.
(viii) The numbers of garments manufactured by the appellant in the period 1989-92 were as follows:
Year ended 30 June Units
1989 3,890
1990 8,164
1991 7,270
1992 20,171
In the years 1988 to 1990, retail sales were $485,595, $419,697 and $362,580, respectively. In the 1991 year, retail and wholesale sales were $364,527 and $54,075, respectively and in the 1992 year, $420,000 and $193,026, respectively.
(ix) Between 1986 and 1992, the appellant spent about $70,000 on promotion and advertising. Some of the advertising, which was not extensive, was in the print media, including a large advertisement for stirrup pants in "Cosmopolitan" magazine in July 1991. Other advertisements were placed in trade journals.
(b) The respondent's conduct
(i) The respondent operated a large number of retail department stores throughout Australia, trading in New South Wales and The Australian Capital Territory under the business name "Grace Bros", and in the other States under the name "Myer".
(ii) In February 1991, Gregory John Royans, then the respondent's Divisional General Manager, Men's Apparel and Children's Apparel, discussed with his staff whether the respondent should introduce, with some local adaptations, an American marketing concept known as "The Gap". The concept involved a common packaging theme of both men's and women's basic clothing items, selected because they were regarded as the best selling types of clothing items around the world. In the middle of 1991, the respondent's staff decided that there was a need for a new range of "men's casual contemporary fashion clothing". In about September 1991, a concept based on "The Gap" was adopted for a range of men's wear.
(iii) In November 1991, the respondent placed orders for the manufacture of garments within the new range. The respondent's advertising agency provided a list of about 100 suggested names under which the products might be marketed. Some additional names were suggested by the respondent's staff. Andrew Wong, Fashion Co-ordinator, Menswear and Sporting Apparel, added the name "FIRST" to the list. In December 1991, a short list of eight names, including "FIRST", was submitted to the respondent's attorneys who were instructed to carry out trade mark searches.
(iv)By memorandum to the respondent dated 2 January 1992, the attorneys stated:
"...
4. A search of the Trade Marks Office records may not reveal any common law trade marks used in commerce but not registered or the subject of a pending application in Australia. You are advised to look for marks in use in the relevant trade and be careful to avoid conflict. In some cases it may be helpful for us to conduct a search of business name registers in the Australian States and Territories."
(v) By a further memorandum to the respondent dated 8 January 1992, the attorneys stated:
"It is the opinion of our trade mark attorneys that use of the trade mark FIRST by Myer as a house brand and destination mark in relation to men's apparel would not infringe any of the trade mark registrations located in the search. However, in view of the large number of trade marks incorporating the word FIRST, it would be extremely difficult to obtain registration."
(vi)A decision was then made to proceed with use of
a trade mark incorporating the word "FIRST".
(vii) The mark, or logo, then adopted by the respondent was as follows:
[AB 2145
(viii) Instructions were given by the respondent to a labelling firm to print sample labels featuring the word "FIRST". In March 1992, a member of that firm's staff informed one of the respondent's staff that the firm had recently completed labels featuring the word "FIRST" for a ladies' wear manufacturer. At the respondent's request, but without the appellant's authority, the firm provided the respondent with details of the appellant's labels.
(ix) On 8 April 1992, applications for registration of the word "FIRST" in the stylised forms adopted by the respondent were lodged on its behalf.
(x) By memorandum dated 10 April 1992, a member of the respondent's legal department wrote to the respondent's Divisional General Manager, Men's Apparel and Children's Apparel, as follows:
"I understand that the 'FIRST' Clothing Store of Shop C04 Castlereagh Street Level, Centrepoint, Sydney, 2000, uses the label FIRST as a mark in relation to its goods. I advise you to determine to what extent this clothing company uses the mark before proceeding with development of the mark at Myer.
Depending on the extent of use by another company in the marketplace, Myer may risk a common law action being brought against it for 'passing off'. An unfavourable result in an action of this nature could require an account of profits.
Please let me know if you have any further questions in this regard."
(xi) Later in April 1992, after the "issue of labelling in the sense of differentiating the label" and the steps to be taken to identify the existing user of the label "FIRST" had been discussed with the respondent's trademark attorneys and its own legal department, the respondent's staff decided "to visit and evaluate" the appellant's stores. An inspection of the stores took place at the end of April. The respondent then became aware that the appellant was operating a number of stores in Sydney which retailed women's clothing to which labels bearing the mark "FIRST" were attached. But no substantive inquiries were made by the respondent as to the extent of the appellant's trading activities.
(xii) The respondent's use of the label "FIRST" in relation to men's wear was discussed at a meeting of the respondent's Management Committee in May 1992. Mr. Royans propounded the view that, if that use was successful, the label could be used across all divisions of the respondent's merchandising business.
(xiii) On 27 May 1992, the respondent instructed its attorneys to open negotiations with the appellant to purchase all its interest in the name or label "FIRST" and any associated trade marks. The steps, if any, subsequently taken were not in evidence.
(xiv) After extensive and expensive (at a cost of more than $1 million) promotion and advertising, the respondent launched the new range of men's wear in August 1992. Although the clothing was for men, the advertising campaign targeted both men and women, reflecting the fact that women play important roles in connection with the purchase of men's clothing. The advertising referred to the clothing as being available exclusively at the respondent's stores. (Almost immediately, by letter dated 24 August 1992, the appellant's attorneys threatened legal action, which, in the form of this matter, was commenced on 17 September 1992.)
(xv) In September 1992 (although the matter had been discussed earlier - in May 1992), swing tickets bearing the mark "FIRST" with the word "MENSWEAR" in small upper case lettering were circulated to the respondent's stores with instructions that those labels be substituted for those bearing only the word "FIRST". The substituted form of label was as follows:
The trial judge was satisfied that the word "MENSWEAR" was added to distinguish the respondent's label from the appellant's, but thought that the word added little to the impact of the label.
(xvi) Between May and September 1992, the respondent's Fashion Studio developed proposals for the introduction, under the "FIRST" label, of a range of women's wear of similar quality to the men's range. Although the institution of this proceeding intervened so that the proposal could not proceed, the respondent had proposed, subject to being satisfied as to the success of the label "FIRST" in relation to men's wear, that the women's wear range also be marketed under the "FIRST" label.
THE PRIMARY JUDGE'S CONCLUSIONS
His Honour's process of reasoning was, in essence, as follows:
(a) Passing off
Neaves J. identified the following as the essential ingredients of this cause of action in the context of the facts of the present case: (i) that, by the appellant's use of the mark on its goods, the public, or a significant section of it, had come to identify the mark as distinguishing its goods from those of other traders; (ii) that the respondent, by its use of the mark on its goods, is to be taken as having misrepresented to members of the public who might purchase its goods, that its goods were the goods of the appellant; and (iii) that it was a reasonably foreseeable consequence of the respondent's conduct that injury to the appellant's business, or business reputation, would result.
The use which the appellant made of the mark was exclusively in relation to women's wear, primarily casual apparel. Its reputation within the trade had "not been shown to be extensive"; a number of witnesses who were prominent in the industry were "unaware" of the appellant.
While the appellant had established a reputation amongst its customers and some members of the trade by trading under the mark "FIRST", the reputation was clearly limited, both geographically and in respect of the classes of goods to which it related. It did not extend beyond casual women's wear; and in States other than New South Wales, it was limited to ski or stirrup pants. There was no suggestion that the appellant intended to enter the men's wear market. The appellant had not established a reputation extending beyond the classes of goods in which it traded. The circumstance that others in the industry might use the same label as they use both for both men's and for women's wear was immaterial.
His Honour took into account (in the appellant's favour) (i) the substantial role women play in the purchase of men's clothing; and (ii) his perception that if used on the same class of goods, the respondent's label would be deceptively similar to the appellant's label, notwithstanding differences in printing styles and colour combinations.
Having regard to "the nature of the [respondent's] goods ... and the manner in which ... [they were] ... advertised and marketed", the learned trial Judge was "not convinced that the public, or a significant section of [it], would be deceived, by the use of the label, into believing that the [respondent's] goods ... are goods manufactured by the appellant or that there is some other connection between [their] businesses".
The respondent did "not set out to take advantage of any [of the appellant's] anterior reputation", even though (i) it became aware, some months before the men's wear range was launched, that the appellant was marketing women's wear under the label "FIRST", and (ii) it "paid scant regard to any possible impact which its activities might have upon the [appellant's] business".
There was no evidence of actual deception, even if the respondent's use of the mark "caused some [of the appellant's] customers ... to wonder" whether the appellant had expanded its manufacturing activities into men's casual clothing.
The appellant had not shown any diversion of custom from the appellant to the respondent. Having regard to their respective kinds of clothing, it would be "fanciful" to expect it.
Accordingly the claims of passing off failed, although his Honour said that a different conclusion "might well be reached" if the respondent were to use the mark on women's wear, "as it clearly contemplated doing".
(b) Claims under the Trade Practices Act
The foregoing considerations led his Honour to conclude that the s.52 and s.53 claims also failed.
THE GROUNDS OF APPEAL
With respect to its passing off claim, the appellant contends that the geographic and other limitations on its reputation found by his Honour should not have led to the conclusion that its claim, not only in terms of a general restraint, but in the alternative, in respect of the respondent's threat to trade in women's wear, could not succeed. It further says that it did not have to show a common field of activity in any strict sense; and that, in any event, the evidence demonstrated that his Honour should not have concluded that the parties were trading in different classes of goods. It submits that his Honour failed to have regard to evidence from industry witnesses (a) that a significant number of labels which, although initially restricted to men's or women's clothing, had successfully "crossed over" or extended their range to the other gender; and (b) of a trend, particularly in casual and leisure clothing, of a "unisex" look.
The appellant further contends that his Honour overlooked the significance of the evidence of several witnesses to the effect that they had been misled by the respondent's activities.
Then it is said that the primary Judge should have taken into account, in the appellant's favour, equitable fraud on the part of the respondent by its persistence in using the appellant's mark after receiving notice of its existence.
The appellant also challenges, on similar grounds, the conclusion at first instance that no claim under the Trade Practices Act had been made out. But, in addition, the appellant argues that, to establish this liability, it is not necessary to demonstrate, as his Honour appeared to hold, the existence of the ingredients of the general law cause of action in passing off. The appellant contends that, in all the circumstances, the respondent's activities should have been held to be likely to mislead.
CONCLUSIONS ON THE APPEAL
(a) The claim in passing off
(i) The legal principles
The relevant principles are well established.
In a frequently cited passage (see, e.g., Lockhart J. in Conagra Inc. v McGain Foods (Aust) Pty. Ltd. (1992) 33 FCR 302 ("Conagra") at 327; Gummow J. at 355), Lord Oliver, in Reckitt & Colman Products Ltd. v Borden Inc. (1990) 17 IPR 1 ("Reckitt & Colman") pointed out (at 7) that, in this area, the questions which arise are, in general, questions of fact. In establishing that a trader has passed off goods as those of another, Lord Oliver considered that three elements have to be demonstrated: (1) that the trader's get-up, including any brand name, is recognised by the public as distinctive specifically of the plaintiff's goods; (2) that there has been a misrepresentation by the defendant to the public (whether or not intentional) leading or likely to lead the public to believe that the goods offered by the defendant are the plaintiff's goods (whether the public is aware of the plaintiff's identity as the manufacturer or supplier of the goods is immaterial, provided they are identified with a particular source, e.g. by means of a brand name which is in fact the plaintiff's); (3) that the plaintiff suffers or, in a quia timet action is likely to suffer, damage by reason of the erroneous belief engendered by the defendant's misrepresentation that the source of the defendant's goods is the same as the source of those offered by the plaintiff.
As Gummow J. noted in Conagra (at 355), attempts to produce a concise definition of the tort have encountered difficulties. But the instant case does not appear to raise any novel question of law (cf. Moorgate Tobacco Co. Ltd. v Phillip Morris Ltd. [No. 2] (1984) 156 CLR 414 per Deane J. at 445-6). In our opinion, Lord Oliver's description of the cause of action, which is similar to the statement of the principles made here by the learned primary Judge, is a workable test for present purposes, subject to one matter, that is, the question of fraud, an issue which Lord Oliver noted (at 7) was not material in the appeal in Reckitt & Colman.
The place of fraud in passing off was fully considered in Conagra. That case raised the question, which does not arise here, of the standing of a plaintiff carrying on business activities outside the jurisdiction seeking to restrain a passing off within the jurisdiction. But reference should be made to some of the general observations in Conagra which make clear the distinction between the impact which fraud, in the sense of deceit, may have on the issue of liability, on the one hand; and the impact which fraud, in the sense of persistence in conduct after notice, may have on the scope of the remedies granted for a particular passing off, on the other hand.
Lockhart J. said (at 343-344) that proof of fraud of the defendant is a well-established means of assisting the plaintiff to prove a case on the ground that the infringer would not have bothered to copy the plaintiff's goods unless it was thought worth doing so for the infringer's advantage. Gummow J. (at 364-5) described (in addition to the class of case where there is some evidentiary assistance to be derived from "fraud" in the above sense) several categories of cases in which it will be significant if the defendant embarked upon activities "fraudulently" in the common law sense of "deceitfully". None of those special categories has any application here.
Lockhart J. (at 345) also mentioned the distinct question, going to remedy, of the extent to which proof of fraud may assist in obtaining wider relief than would otherwise be available, whether by way of damages or an account of profits for innocent passing off. Gummow J. also discussed this aspect, concluding (at 364) that in a passing off suit, a successful plaintiff may elect for his pecuniary remedy between an account of profits and an inquiry as to damages; that if the defendant embarked upon its activities fraudulently, these remedies run as from that time; but that even if the defendant was at that stage innocent, pecuniary remedies would be available for the period of the defendant's persistence after notice of the plaintiff's rights. At least this is so where the defendant shuts its eyes to the reasonable consequences (upon facts known to it) of what it is doing, so that there would be grounds upon which a jury might make a finding of fraud in the full sense (at 363). See also Apand Pty. Limited v The Kettle Chip Company Pty. Limited (1994) ATPR 41-353 at 42,604-5.
(ii) The application of the relevant principles to the issue of liability
In our opinion, on the issue of liability, no fraud on the part of the respondent was demonstrated in the present case. As Lockhart J. noted in Conagra (at 345), even deliberate copying of the plaintiff's goods does not always evidence an intention to deceive; it may indicate nothing more than a realisation that the plaintiff has a useful idea which the defendant can turn to its own advantage, without any intention of passing off its goods as those of the plaintiff. In the present case, there could be no suggestion of deliberate copying. It does not appear that when Mr.Wong added the ordinary English word "FIRST" to the list of possible names to be used by the respondent, he knew anything of the appellant or its brand name. It is true that later, and certainly by the time it launched its product, the respondent was well aware of the appellant and its brand name. But the evidence and his Honour's findings do not suggest that at any stage the respondent saw any advantage in seeking to appropriate the appellant's name for itself.
The importance, if any, of these considerations for remedial purposes may be put to one side for the moment. On the separate issue of liability, the facts found by his Honour do not, in our opinion, provide any foundation for an evidentiary inference of a likelihood of deception of the kind discussed in the authorities as cases where it is reasonable to assume that the defendant has not failed in its "nefarious design" (cf. Conagra at 345).
It follows, in our view, that Neaves J. was correct in his conclusion that the respondent did "not set out to take advantage [of the appellant's] anterior reputation", notwithstanding that later, but before its launch, the respondent became aware that the appellant was marketing women's wear and paid "scant regard" to the impact which its activities might have upon the appellant. It further follows that on the issue of liability the primary Judge was right not to take these matters into account in the appellant's favour.
In Reckitt & Colman, above, Lord Oliver (at 7-8) observed that leaving aside the issue of fraud (which was there no longer material), the three issues for resolution were (with adaptations for our purposes) as follows:
"(1)Ha[s] the [appellant] proved that the get-up under which [its clothing has] been sold since [1986] become associated in the minds of substantial numbers of the purchasing public specifically and exclusively with the [appellant's clothing]?
(2) If the answer to that question is in the affirmative, does the get-up under which the [respondent markets or] propose[s] to market [its clothing] amount to a representation by the [respondent] that the [clothing] which [it] sell[s] is [the appellant's clothing]?
(3) If the answer to that question is in the affirmative, is it, on a balance of probabilities, likely that, if the [respondent is] not restrained ..., a substantial number of members of the public will be misled into purchasing the [respondent's clothing] in the belief that it is [appellant's clothing]?"
In our opinion, these were the relevant questions to be addressed here and the primary Judge correctly so identified them. As has been noted, they involve, in the main, issues of a factual kind.
With respect to the first question, Neaves J. found that, in respect of men's wear, the appellant had not established the requisite association. In our opinion, that finding, one of fact, was clearly open to his Honour, and no real basis for interfering with it has been made out given the nature of the appellant's business. It must follow, in our view, that, insofar as men's wear is concerned, no foundation for a claim in passing off was established and his Honour was right in dismissing that claim. To this extent, the appeal should fail.
But the position in respect of casual women's wear was different. Taking the appropriate questions in turn, the position is as follows:
(1) The primary Judge found that, in respect of casual women's wear, there was a "reputation" in the appellant, although it was limited geographically. We interpret this finding to express a conclusion that, to this limited extent, the appellant had proved that its get-up had become associated in the minds of substantial numbers of the purchasing public specifically and exclusively with the appellant's product. Again, this finding was clearly open to his Honour. Given the advantages he had as the trial Judge, we are not persuaded that we should now interfere with it. It follows that, in respect of women's wear, the first question should be answered in the affirmative.
(2) The primary Judge found that, but for the institution of these proceedings, the respondent would have used the mark "FIRST" on its women's wear. Although, at a late stage, the respondent added, as part of its get-up, the word "MENSWEAR" to the mark "FIRST", that distinguishing feature is, of course, immaterial here. It must follow that if, as it contemplated, the respondent had used the mark "FIRST" on women's wear, this would have amounted to a misrepresentation of the source of the goods: the same field of activity would have been involved and the same mark would have been applied.
(3) It would further follow that, unless the respondent had been restrained, a substantial number of members of the public would probably have been misled into purchasing the respondent's goods in the belief that they were the appellant's, unless the respondent had clearly distinguished its products from the appellant's.
In other words, in our view, at first instance the appellant was entitled to a quia timet order enjoining the respondent from using the mark "FIRST" in connection with the sale of women's wear without clearly distinguishing its products from the appellant's. But in dismissing the application in its entirety, the trial Judge appeared to treat, as the sole issue before him, the question whether the respondent had passed off its goods as those of the appellant in respect of the respondent's men's wear only. With respect, his Honour was mistaken in this regard. The appellant's pleadings, as has been noted, spoke of the "clothing" of both parties, without restricting the claim to men's or women's apparel. Nor does it appear that, in its conduct of the trial, the appellant abandoned any claim to a quia timet injunction in respect of the respondent's use of the mark on women's wear. Certainly no amendment of the pleadings along these lines was made or sought by the appellant. Moreover, his Honour found that the respondent would have used the mark on its women's wear later in 1993 but for the pendency of this litigation. There is no reason to disturb that finding.
To this extent, we would allow the appeal and, in this respect, set aside the dismissal of the application. The orders to be made in lieu thereof will be discussed below.
(iii) Challenges to rulings on evidence
For completeness, it should be noted that, although neither party sought a new trial on the issue of liability, both parties sought to challenge a number of rulings on evidence made by his Honour in the course of the trial. Upon examination, many of the objections went only to weight or adjectival relevance; matters in which the trial Judge, after a relatively long hearing, enjoyed a considerable advantage. In our view, no basis has been demonstrated for setting aside his Honour's conclusions and substituting a different judgment by reason of these rulings.
However, objection was also taken by the respondent at the trial, unsuccessfully, to the form of certain evidence on the ground that it was inadmissible hearsay. The evidence took the form of the description by a witness of statements, made at the time of the respondent's launch, by a person familiar with the appellant and its brand name. The witness,usually a member of the appellant's staff, said that the other person made a statement, in effect, questioning whether the appellant had decided to move into men's wear. The evidence would appear to have had a dual aspect. On the one hand, it may have been admissible, in terms of both form and relevance, as evidence of the other person's state of mind as to the distinctiveness of the appellant's mark in relation to its goods. On the other hand, the evidence may also have been, to an extent, an impermissible attempt, in terms of its form, to give a hearsay account of the events and circumstances in which the other person may have become confused as to the source of the goods advertised by the respondent.
In our opinion, there is force in the respondent's argument that, insofar as the evidence was tendered by the appellant on the latter basis, it was hearsay as to those events and circumstances and should have been rejected. But it is not necessary, for our purposes, to express a concluded view on the point, since there was other evidence before his Honour to the same or similar effect which was not hearsay. As has been said, neither party seeks a new trial on the issue of liability; nor could it be said that the rejection of the (arguably) hearsay material would, or could, have led the primary Judge to a different conclusion on this aspect of the matter.
(iv) Orders proposed in connection with the passing off claim
In the result, we would allow the appeal in part, by setting aside the orders at first instance insofar as they dismissed the quia timet claim of passing off in respect of the proposed use by the respondent of the mark "FIRST" on women's wear. It is true that the appellant had to satisfy the trial Judge that there was a reasonable certainty that the respondent would use the mark in that connection. But as Isaacs J. remarked in Meyers v Casey (1913) 17 CLR 90 (at 123), it is trite law that insistence on the right to do that which is properly objected to is ground for the injunction (see also Barlow v Neville Jeffress Advertising Pty Ltd Supreme Court of Tasmania (Full Court), 21 December 1994, unreported, per Cox J. at p.7). There can be no doubt that, unless restrained, the respondent asserted, and has continued throughout to assert, the right to use the word "FIRST" in connection with women's wear. However, given the lapse of time since the trial, we propose to order that the matter be remitted to a single Judge for a fresh hearing on the question whether an injunction should now be granted. No question of any consequential relief, for instance, damages, arises. We would otherwise dismiss the appeal in respect of the passing off claim. Since each party has had a measure of success on the passing off claim, we would make no order for the costs of this issue at first instance or on the appeal.
(b) The Trade Practices Act claims
The settled course of authority holds that, as in the passing off claim, the essential question here is largely one of fact: is, in all the circumstances, the respondent's conduct likely to mislead? In the present kind of case, it will usually be the situation that if a passing off claim is established, it will be so by reason of a finding of a misrepresentation of the type discussed in the authorities. Such a misrepresentation will usually constitute a contravention of s.52, and possibly s.53, of the Trade Practices Act. Conversely, if no misrepresentation is found, it will usually follow that the Trade Practices Act claim will also fail. The present case is of the usual kind.
There was here an intention by the respondent to engage in conduct which would constitute such a contravention. Accordingly, the discretion given by s 80 of the Act is enlivened. In regard to the Trade Practices Act claims also, we would allow the appeal in part, for the reasons enunciated in relation to the passing off claim, but otherwise dismiss the appeal and make no order for costs.
(c) Orders proposed
We make the following orders on the appeal:
(1) Appeal allowed in part; order that the order made at first instance dismissing the application be set aside insofar as that order refused the claim for a quia timet injunction in respect of the respondent's proposed use of the mark "FIRST" on women's wear; in lieu thereof, order that such claim be remitted to a single Judge of the Court to make such order, including such order as to costs, on that claim in accordance with law as the justice of the case may require; further order that the order for costs made at first instance be set aside, and that, in lieu thereof, there be no order for costs at first instance.
(2) Otherwise, appeal dismissed.
(3) Make no order for the costs of the appeal.
I certify that this and the preceding 27 pages are a true copy of the Reasons for Judgment of the Court.
Associate:
Dated: 31 March 1995
Heard: 27, 28 February, 1 March 1995
Place: Sydney
Decision: 31 March 1995
Appearances: Mr T K Tobin QC and Mr T J Golding of counsel instructed by Maurice Freidman & Co appeared for the appellant.
Dr J McL Emmerson QC and Miss J Baird of counsel instructed by Barker Gosling appeared for the respondent.
