Seekers Nominees Pty Ltd & Anor v Target Australia Pty Ltd & Anor [1995] FCA 560

CATCHWORDS

EQUITY - equitable remedies - injunctions - misleading and deceptive conduct - passing off - swimsuits sold in different markets - identity discernible from product labels - previously protected by registered design - whether serious issues to be tried - strength of applicants' case for balance of convenience - whether settlement agreement binding.

Trade Practices Act 1974 (Cth), s52

Castlemaine Tooheys Limited v South Australia (1986) 161 CLR 148

Australian Coarse Grain Pool Pty Ltd v Barley Marketing Board of Queensland (1983) 46 ALR 398

American Cyanamid Co v Ethicon Ltd [1975] AC 396

Sabre Corporation Pty Ltd v Laboratories Pharm-A-Care Pty Ltd (1995) ATPR 40,378

Cayne v Global Natural Resources Plc (1984) 1 All ER 225

NWL Limited v Woods [1979] 3 All ER 614

Kolback Securities Ltd v Epoch Mining NL (1987) 8 NSWLR 533 Cash Converters Pty Ltd v Hila Pty Ltd (1993) 9 WAR 471 Gilltrap & Anor v Autopromos Pty Ltd (1995) ATPR 40,371

Codelfa Construction Pty Ltd v State Rail Authority of New South Wales (1982) 149 CLR 337

Australian Broadcasting Commission v Australasian Performing Right Association Ltd (1973) 129 CLR 99

Australian Woollen Mills Pty Ltd v Commonwealth (1954) 92 CLR 424

Hutchence v South Seas Bubble Co Pty Ltd (1986) 64 ALR 330

Australian Woollen Mills Ltd v F S Walton & Co Ltd (1937) 58 CLR 641

Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd (1981) 149 CLR 191

J B Williams Co v H Bronnley & Co Ltd (1909) 26 RPC 765

W Edge & Sons Ltd v Niccolls & Sons Ltd [1911] 1 Ch 5

Miki Shoko Co Ltd v Merv Brown Pty Ltd (1989) 73 ALR 504

McWilliam's Wines Pty Ltd v McDonald's System of Australia Pty Ltd (1980) 33 ALR 394

Flamingo Park Pty Ltd v Dolly Dolly Creation Pty Ltd (1986) 65 ALR 500

Vieright Pty Ltd v Myer Stores Limited (1995) ATPR 40,486

Reckitt & Colman Products Ltd v Borden Inc (1990) 17 IPR 1

Turner v General Motors (Australia) Pty Ltd (1929 42 CLR 352

B M Auto Sales Pty Ltd v Budget Rent A Car System Pty Ltd (1976) 12 ALR 363

Telmak Teleproducts v Coles Myer Ltd (1988) 84 ALR 437

King & Co Ltd v Gillard & Co Ltd (1905) 22 RPC 327

Nicholas v Borg (1986) 7 IPR 1

Ricegrowers' Co-operative Mills Limited v Howling Success Australia Pty Limited (1987) ATPR 40-778

Perrey v Mordiesel Co Pty Ltd [1976] VR 569

Beecham Group Limited v Bristol Laboratories Pty Ltd (1968) 118 CLR 618

Martin Engineering Co v Trison Holdings Pty Ltd (1988)81 ALR 543

Shepherd Homes Ltd v Sandham [1971] Ch 340

Films Rover International Ltd v Canon Film Sales Limited [1987] 1 WLR 670

World Series Cricket Pty Ltd v Parish (1977) 16 ALR 181

SEEKERS NOMINEES PTY LTD and SEEKERS AUSTRALIA LIMITED v TARGET AUSTRALIA PTY LTD and TRACKERJACK PTY LTD

NO WAG 78 OF 1995

R D NICHOLSON J

PERTH

1 AUGUST 1995

IN THE FEDERAL COURT OF AUSTRALIA )

GENERAL DIVISION ) NO WAG 78 OF 1995

WESTERN AUSTRALIA DISTRICT REGISTRY)

B E T W E E N: SEEKERS NOMINEES LIMITED

(ACN 008 769 060)

First Applicant

and

SEEKERS AUSTRALIA LIMITED

(ACN 009 159 531)

Second Applicant

and

TARGET AUSTRALIA PTY LTD

(ACN 004 250 944)

First Respondent

and

TRACKERJACK PTY LTD

(ACN 005 488 095)

Second Respondent

MINUTE OF ORDER

JUDGE MAKING ORDER: R D NICHOLSON J

DATE OF ORDER: 1 AUGUST 1995

WHERE MADE: PERTH

THE COURT ORDERS THAT:

1. The applicants' motion dated 13 July 1995 for an interlocutory injunction against the respondents be refused.

2. The costs of the application be in the cause.

Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA )

GENERAL DIVISION ) NO WAG 78 OF 1995

WESTERN AUSTRALIA DISTRICT REGISTRY)

B E T W E E N: SEEKERS NOMINEES LIMITED

(ACN 008 769 060)

First Applicant

and

SEEKERS AUSTRALIA LIMITED

(ACN 009 159 531)

Second Applicant

and

TARGET AUSTRALIA PTY LTD

(ACN 004 250 944)

First Respondent

and

TRACKERJACK PTY LTD

(ACN 005 488 095)

Second Respondent

CORAM: R D NICHOLSON J

DATE: 1 AUGUST 1995

PLACE: PERTH

REASONS FOR JUDGMENT

R D NICHOLSON J:

The applicants seek an interlocutory injunction to restrain the respondents from manufacturing, distributing, offering for sale, supplying or selling :

"(a)any swimsuit sold under the name "Target" and identified on a tag attached to the swimsuit marked:

(i) "Ladies Active Wear 7338 One Piece Swimsuit Navy"; and/or

(ii)"Ladies Active Wear 7338 Quilted Navy One Piece";

(b) any other women's fashion swimsuit substantially identical or deceptively similar to the Second Applicant's:

(i) Swimsuit 92103; and/or

(ii) Banded Swimsuits or any of them"

and from other specified dealings with those items. Orders are also sought requiring the respondents to deliver up certain swimsuits and to disclose the identity and addresses of all premises in which any of the swimsuits have been or are manufactured, held or offered for sale.

Applicants' claims

The statement of claim pleads the following. The first applicant is the registered owner of the trademark "Sunseeker" ("the Trademark") which is registered with respect to Class 25 goods under the Trademarks Act 1955 (Cth). The second applicant conducts a business ("the Business") of the manufacture, distribution and wholesale of high quality fashion swimwear and associated clothing and accessories under the Trademark and is licensed by the first applicant on an exclusive basis to use the Trademark and other registered trademarks in the Business. The second applicant designs and produces a range of women's fashion swimsuits which includes a particular range which features a distinctive stitched and quilted white band approximately three centimetres wide which, in most of the styles within the range, is positioned across the top of and forms part of such swimsuits ("the Banded Swimsuits"). These include a one piece women's swimsuit in navy blue with white banding across the top of the front of the swimsuit known as "Swimsuit 92103".

The second applicant claims to have sold the Banded Swimsuits, including Swimsuit 92103, to various retailers in Australia since 1992, specifically to all leading department stores, retail chains and boutiques of which the largest purchasers are Myers, David Jones, Sunburn and Aherns, for sale to the public. It further claims to have become widely and favourably known for this and to have developed an extensive and valuable Australian wide commercial reputation and goodwill in the Banded Swimsuits as high quality women's fashion swimwear. In doing so it claims to have ensured that the Banded Swimsuits retain the stitched and quilted white banding as a distinctive, visually discernible feature.

It is further claimed, and the evidence before the Court on this application supports the claim, that in July 1994 the first respondent offered for sale a women's fashion swimsuit identified by a tag attached and marked "Target" ("the Target Swimsuit") and to have done so without the license or permission of the applicants. The evidence is that the Target Swimsuit is manufactured by the second respondent. It is claimed that it is substantially identical and/or deceptively similar to Swimsuit 92103 in respect of the visually discernible design features and the method of manufacture. This claim is particularised as follows:

"both Swimsuit 92103 and the Target Swimsuit:

(i) have virtually identical white banding across and which forms part of the top of the garment, save that the banding on the Target Swimsuit is split and not continuous;

(ii) are navy blue in colour, except for the white banding (which is common to both);

(iii) are one piece swimsuits which are substantially identical in shape and design; and

(iv) are made from the same cotton lycra material below the banding."

It is then claimed that the Target Swimsuit is of a lower standard and quality than Swimsuit 92103 in a number of respects, namely:

"The Target Swimsuit is of a lower standard and quality than Swimsuit 92103.

(a) (i) Swimsuit 92103 has a shelf bra incorporated into the swimsuit for additional support to provide a better fit.

(ii) The Target Swimsuit does not have a shelf bra.

(b) (i) Swimsuit 92103 has a centre back seam to improve shape and fit.

(ii) The Target Swimsuit does not have a centre back seam.

(ii) In contrast, the Target Swimsuit utilises cotton lycra banding.

(d) (i) Swimsuit 92103 has six rows of quilted stitching.

(ii) The Target Swimsuit has four rows.

(iii) Additional stitching on Swimsuit 92103 provides a better appearance, and requires more machining and therefore more manufacturing time and, hence, cost.

(e) (i) The top inside edge of the band on Swimsuit 92103 is "Bagged out", ie the edge is enclosed.

(ii) The banding on the Target Swimsuit has a raw edge with the binding superimposed.

(iii) the bagged out edge on Swimsuit 92103 requires more work and manufacturing time, hence, cost, but provides a better appearance.

(f) (i) The band on Swimsuit 92103 is continuous.

(ii) In contrast the band on the Target Swimsuit is split, utilising a cheaper and less difficult method of manufacturing."

Items (c), (d), (e) and (f) all relate to the white quilted banding which the applicants claim as the distinctive quilted white band.

By the conduct which it is alleged the respondents have engaged in it is claimed that they have:

(1) acted in a manner which was misleading or deceptive or likely to mislead or deceive in contravention of s52 of the Trade Practices Act 1974 ("the TPA");

(2) acted in contravention of s53 of the TPA by engaging in false representations;

(3) passed off the Target Swimsuit and the businesses of the respondents;

(4) acted in breach of a settlement agreement ("the Agreement") made on or about 8 August 1994 between the applicants and the respondents.

The case for the applicants is supported by affidavit evidence of Mr J D McKinney, Company Secretary and Finance Manager of each of the applicants; Mr W McKinney, Managing Director of each of the applicants; Mrs V M McKinney, a director of each of the applicants; Ms J J McEwan, registered patent attorney and articled clerk; and Mr J R Sinclair, Merchandise Manager in the Women's Clothing Department of Aherns. The case for the respondents relies upon affidavits from Mr G N Peterson, a director of the second respondent and authorised to depose on behalf of the first respondent; Mr M Munzer, Manager of the sole Australian and New Zealand agents and distributors of Gottex ladies fashion swimwear and resort wear; Ms S J E Papp, the Ladies Active Wear Buyer for the first respondent and Mr W D King, a partner in the solicitors for the respondents.

Applicable principles

The starting principles for the grant of an interlocutory injunction are accepted on behalf of both parties: the applicant must show a serious issue to be tried and that the balance of convenience favours the grant of the injunction - Castlemaine Tooheys Limited v South Australia (1986) 161 CLR 148 at 153; Australian Coarse Grain Pool Pty Ltd v Barley Marketing Board of Queensland (1983) 46 ALR 398. This requires the applicant to show that, if no injunction issues, it will suffer irreparable harm for which an award of damages will not be adequate compensation.

The contentions for the parties differ in relation to the circumstances in which it is appropriate for the Court to evaluate the strength of the applicant's case. For the applicants it is contended that it is enough that the Court finds a serious case to be tried and, having reached that point, it is not appropriate for the Court to go further and evaluate the strength or weakness of the applicant's case on the balance of convenience. In this regard reliance is placed upon what was said by Lord Diplock in American Cyanamid Co v Ethicon Ltd [1975] AC 396 at 409. The point has been addressed in the reasons for judgment of Beazley J in Sabre Corporation Pty Ltd v Laboratories Pharm-A-Care Pty Ltd (1995) ATPR 40,378 at 40,382-4. I agree with what is there said to the effect that the authorities direct special attention to the strength of the case of an applicant where the practical effect of an interlocutory injunction would be to finally determine the issue and where mandatory interlocutory injunctions are sought. Hence, the assessment of the strength or weakness of the applicants' case is a factor relevant to the balance of convenience.

In this application both parties contend that the grant or refusal of the interlocutory relief will have the consequence for them respectively of putting an end to the action. In the case of the applicants it is contended that, because the sale of the Banded Swimsuits constitutes 40% of "Sunseeker" sales by the first applicant (of which the best selling is swimsuit 92103), the impact of continued sales by the respondents would occasion the standing down of staff and the possible closure of the business. For the second respondent it is contended that, because a receiver and manager was appointed to its business in June 1995 by a creditor bank, its ability to repay the creditor and avoid liquidation is contingent upon the ability to continue to trade. That being the case, this is an application in which the strength of the applicant's case is a factor to be brought to account: Cayne v Global Natural Resources Plc (1984) 1 All ER 225 at 233; NWL Limited v Woods [1979] 3 All ER 614 at 626; Kolback Securities Ltd v Epoch Mining NL (1987) 8 NSWLR 533 at 536; Cash Converters Pty Ltd v Hila Pty Ltd (1993) 9 WAR 471; Gilltrap & Anor v Autopromos Pty Ltd (1995) ATPR 40,371 at 40,376.

Serious issue to be tried

With these principles in mind it is appropriate to examine each of the above mentioned bases of claim.

(1) Contract

The Agreement relied upon for the applicants is said to be constituted by the letter of the applicants' patent attorney dated 22 July 1994 to the first respondent's general manager; a further letter from that attorney dated 5 August 1994 to the respondents' solicitors; and the letter in response from the respondents' solicitors dated 8 August 1994.

In the first letter the patent attorney asserted, as was the case, that the first applicant was the proprietor of a number of registered designs directed to swimwear incorporating a stitched band usually positioned around the neckline. The letter then claimed that the sale of the Target Swimsuit was an infringement of at least design registration no 118725. This design protected style 92103. Undertakings were sought from the respondents that they would desist from infringing the registered design or passing off the applicants' swimwear or contravening ss52 or 53 of the TPA.

In the second letter the patent attorney proposed the following terms of settlement:

"Our clients have reviewed your clients' offer and propose a few minor changes as follows:

(i) Target Australia Pty Ltd ("Target") will, by no later than Sunday 14 August 1994, sell or destroy all of all its existing stock of the swimsuits which allegedly infringe Design Registration No 118725, namely 200 units;

(ii) Trackerjack Pty Ltd ("Trackerjack") will immediately cease and desist from manufacturing, selling, supplying, causing the manufacture, sale or supply of any garment which is an obvious or fraudulent imitation of Design Registration Nos 118725, 118727, 118728 and/or 118729, including swimsuits referred to in (i) above, and will in any event destroy any such swimsuits currently in its possession, custody or control;

(iii) Target will immediately cease and desist from placing any order for and/or causing the manufacture of any garment which is an obvious or fraudulent imitation of Design Registration Nos 118725, 118727, 118728 and/or 118729, including swimsuits referred to in (i) above;

(iv) after 14 August 1994, Target and its related and/or associated companies and their directors, servants, and desist from offering for sale, selling and/or advertising for sale any garment which is obvious or fraudulent imitation of Design Registration Nos 118725, 118727, 118728 and/or 118729 including swimsuits referred in (i) above;

(v) in consideration of the above, Seekers Nominees Pty Ltd ("Seekers") and Seekers Australia Ltd ("Seekers Australia") will unconditionally and irrevocably release and forever discharge Target and Trackerjack from all actions, suits, causes of action, claims, demands, proceedings, costs and expenses which Seekers and Seekers Australia had, now
have or at any time hereafter could have had against Target and Trackerjack in any way arising from or connected with any of the allegations contained in the letter dated 22 July 1994 from Wray & Associates to Target;

(vi) all parties bear their own costs incurred in relation to this matter; and

(vii) these terms of settlement will be kept confidential to the parties."

In the third letter the respondents' solicitors accepted the terms of settlement.

Registered design 118725 expired in November 1994 and has not been renewed. It is this design which is relevantly the one for the purposes of Swimsuit 92103.

For the applicants it is contended that, notwithstanding the expiration and non-renewal of the registered design, the respondents are obliged by the terms of settlement to cease and desist from manufacturing the Target Swimsuit in the style which is an obvious or fraudulent imitation of design registration 118725. This is supported by reference to the scope of the release given by the applicants in clause (v) of the Agreement. For the respondents it is contended that the true construction of the Agreement is that they are only obliged to desist from such manufacture while the design was in force. There is clearly a serious issue to be tried.

Evidence of surrounding circumstances is admissible to assist in the interpretation of a contract if the language is ambiguous or susceptible of more than one meaning but it is not admissible to contradict the language of the contract when it has a plain meaning: Codelfa Construction Pty Ltd v State Rail Authority of New South Wales (1982) 149 CLR 337 at 353. Generally speaking, facts existing when the contract was made will not be receivable as part of the surrounding circumstances as an aid to construction, unless they were known to both parties. Although, if the facts are notorious, knowledge of them will be presumed: ibid.

In my opinion the Agreement has a plain meaning. The respondents covenant only to cease manufacture of the garment so long as it infringes (relevantly) the registered design 118725. That design having expired, the covenant ceases to restrict the respondents. This is not an unreasonable result - See Australian Broadcasting Commission v Australasian Performing Right Association Ltd (1973) 129 CLR 99 at 109. It is not the case that the obligations assumed by the applicants under the Agreement determine the obligations of the respondents: Australian Woollen Mills Pty Ltd v Commonwealth (1954) 92 CLR 424 at 457.

There is in any event correspondence from the solicitors for the respondents to the applicants' patent attorney proposing settlement in terms which closely resemble those in the Agreement and which expressly confine the obligation of the respondents in the terms agreed. There is also evidence of the solicitor for the respondents which, if regard may be had to it in accordance with the principles in Codelfa (supra), supports the contention for the respondents that the intention was not to cast the obligation upon the respondents in the terms contended for on behalf of the applicants and that the confinement of that obligation to avoidance of infringement of the registered design was because the respondents were aware there were numerous examples of swimsuits in the market place with white quilted bands around the neckline.

I accept that there is a serious issue to be tried in respect of the Agreement. However, for the purpose of weighing the balance of convenience I am of the opinion that the applicants' claim in contract is not strong and that, assessing the case for the applicants as it is presently made, the likelihood is that the proper construction of the
Agreement is to be construed in the manner contended for on behalf of the respondents.

(2) The nature of the interest to be protected

The essence of the applicants' case is that, independently of contract, the law provides protection for design by recognising distinguishing physical characteristics of a product and get-up generally. The design which is said to be protected is Swimsuit 92103 in all its features, but particularly the white quilted neckline. In my opinion the interest which the applicants seek to protect is open to having a reputation attaching to it in respect of which protection may apply. That much appears from the range of authorities to which counsel for the applicants took the Court. It is, however, important to observe the qualifications that are made in the passages so relied upon.

In Hutchence v South Seas Bubble Co Pty Ltd (1986) 64 ALR 330 at 338 reliance was placed on the statement in Australian Woollen Mills Ltd v F S Walton & Co Ltd (1937) 58 CLR 641 at 657 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..." That dicta requires evidence of the purpose of adoption of the get-up being to appropriate the trade or reputation of the rival.

In Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd (1981) 149 CLR 191, Brennan J distinguished the design of an article and its get-up, the latter being "a capricious addition to the article itself, - the colour, or shape, it may be, of the wrapper or anything of that kind": applying J B Williams Co v H Bronnley & Co Ltd (1909) 26 RPC 765 at 773-4. While similarity in get-up may evidence passing off, that cannot be the case where what is alleged, as in Parkdale (supra), is substantial similarity in the goods themselves.

In my opinion, the decision in W Edge & Sons Ltd v Niccolls & Sons Ltd [1911] 1 Ch 5, upon which particular reliance was placed for the applicants, is to be distinguished as a decision relating to get-up whereas the applicants' case is one which relates to design. The distinctiveness upon which that case relies is the white quilted band. That is part of the Swimsuit 92103 and of the Target Swimsuit: it is not part of a capricious addition to the goods.

A court may be prepared to infer that the very close resemblance of the goods of the plaintiff and the defendant could lead a person who had previously seen the latter's goods mistakenly to think on seeing the plaintiff's goods that they were the defendant's: Parkdale (supra) at 210 per Mason J. However, in Parkdale (supra) Brennan J said at 219 that "the protection afforded by the common law stops short of according to a manufacturer a monopoly right to the manufacture and sale of goods of a particular design unless he is the owner of a design validly registered under the Designs Act 1906 (Cth) in respect of goods of that kind." At 220 he said that when the registration of a design ceases to be in force, the public is free to apply the design which is thereafter in the public domain: applying Edge (supra) at 10, unaffected on this point by the decision on appeal reported in [1911] AC 698.

Applying that dicta to the facts of the present case it seems that to grant protection over the design of the swimsuit after the expiry of rights under the Design Act 1906 (Cth) would be akin to granting a monopoly right to the manufacture and sale of swimsuits of a particular design.

(3) Section 52

In determining whether conduct contravenes s52, regard is to be had to the section of the public exposed to the respondents' conduct: Sabre Corporation (supra) at 40,384. In that case it was said that it was relevant to the balance of convenience that the two products were sold in two quite distinct outlets and possibly in two distinct markets. There the applicant's products were sold essentially through hair salons and were at least twice as expensive as the respondent's product, which was sold in supermarkets. That is the position here. On the evidence in the applicants' case their product is sold exclusively to the major department store retail outlets and recognized specialised outlets, as opposed to outlets which sell cheaper products. The applicants claim they have attained a market awareness and recognition amongst consumers that their products are high quality and obtainable only from major department store retail outlets and quality boutiques. The evidence of W McKinney is that there are three separate markets for womens' swimsuits: the high quality market; the middle range market; and the low end of the market. The evidence is that the applicant's product is sold in the middle range whereas the Target Swimsuit is sold in the lower end. The separateness of the relevant markets is also supported by evidence for the respondents from Papp and Peterson.

Where the circumstances alleged to have given rise to a cause of action under s52 which is one of passing off by the adoption of an identical or similar design the person alleging the contravention of the section claims is distinctive, the claimant must establish that it or its goods possess such a reputation that the design is distinctive of it or its goods: Miki Shoko Co Ltd v Merv Brown Pty Ltd (1989) 73 ALR 504 at 512; McWilliam's Wines Pty Ltd v McDonald's System of Australia Pty Ltd (1980) 33 ALR 394 at 400, 411-2 and 414-6. That proposition is not contested for the applicants.

The evidence as it presently appears shows weaknesses in the applicants' case on this aspect.

There is abundant evidence that white banded swimsuits have been in the market place for a number of decades. There is also evidence that swimsuits with a distinctive stitched and quilted white band are common in the marketplace and are manufactured or sold by many and were sold prior to the applicant's product. There is strong evidence to support a finding that white stitched and quilted bands do not serve to identify or distinguish the applicant's product from other swimsuits so that they cannot establish their banded swimsuits have a reputation or serve to identify them.

In addition, there is evidence that the reputation of any manufacturer of swimsuits is tied to the brand of that manufacturer and not to its design or style.

There are also significant dissimilarities between the products: (1) Each of the swimsuits bears its own distinctive label. The label on Swimsuit 92103 contains the Trademark in bold letters. The labels on the Target Swimsuit clearly bear the word Target. (2) The Target Swimsuit is sold for approximately $45.00 whereas the Banded Swimsuit is sold for $60-$80. (3) The band on the former is broken and features an overlap in the front of the "V" neckline whereas the latter is continuous. (4) The Trademark appears on the lower front left side of Swimsuit 92103. (5) There is an apparent difference in quality between the two goods in that the Target Swimsuit appears to be of lesser quality.

In Flamingo Park Pty Ltd v Dolly Dolly Creation Pty Ltd (1986) 65 ALR 500 at 517, Wilcox J said:

"There is, in the present case, no doubt that, to the extent to which they are apparently associated with Ms Kee, garments distributed upon the mass market, being of inferior cut and finish to those of the applicant, are likely to cause confusion adversely affecting the goodwill of the applicant and appropriating its name and reputation. It is no answer to say...that inferior garments will not be attractive to Flamingo Park's usual clientele. That circumstance does not remove the confusion; rather, by causing people to think that Ms Kee has lowered her standards, it exacerbates the damage."

Wilcox J was there speaking of goods distributed upon the same mass market. The evidence here is that the markets are distinctive so that there is not here present the same potential for confusion.

I also have in mind that the evidence of W McKinney is that the real risk arising from the availability of the Target Swimsuit is that purchasers of the Banded Swimsuit will be diverted to it, not as the consequence of being materially mislead and deceived, but because of the price differential.

In these circumstances where there is evidence of the products being sold in different markets, of them being distinguished in the ways enumerated, of reputation relevantly attaching to the manufacturer rather than the design and of the design not being unique, I consider that for the purposes of the weighing of the balance of convenience it must be concluded that the applicants' claim of misleading and deceptive conduct based on s52 is not strong.

(4) False representation

Although pleaded, this claim is unsupported by affidavit material. The absence of strength in the applicants' case on s52 results in the same conduct being unable to qualify as a contravention of s53. In any event, I do not apprehend the applicants' case as having pressed this claim in oral argument on the interlocutory application.

(5) Passing off

For the applicants to make out the claim of passing off it is necessary that they establish that (1) the trader's get-up, including any brand name, is recognised by the public as distinctive specifically of the applicants' goods; (2) there has been a misrepresentation by the respondents to the public (whether or not intentional) leading or likely to lead the public to believe that the goods offered by the respondents are the applicants' goods (whether the public is aware of the plaintiff's identity as the manufacturer or supplier of the goods being immaterial provided they are identified with a particular source, for example by a brand name of the applicants); (3) the applicants suffer or are likely to suffer damage by reason of the erroneous belief engendered by the respondents' misrepresentation that the source of it's goods is the same as the source of those offered by the applicants: Vieright Pty Ltd v Myer Stores Limited (1995) ATPR 40,486 at 40,491 following Reckitt & Colman Products Ltd v Borden Inc (1990) 17 IPR 1 at 7 per Lord Oliver.

Additionally, considerations of fraud or deceit will be relevant: ibid. For the purposes of passing off, fraud may be constituted by persistence after notice - Turner v General Motors (Australia) Pty Ltd (1929) 42 CLR 352 at 362. In B M Auto Sales Pty Ltd v Budget Rent A Car System Pty Ltd (1976) 12 ALR 363 at 372, Gibbs J said of the evidence in that case that it left no doubt that the appellants persisted in the use of the name with full knowledge that it had become distinctive of the respondent's business and that the use of the name was calculated to deceive. Here it is contended for the applicants that it is unarguable that the respondents, by entering into the Agreement, had notice that the design was distinctive of the Business. In the light of what was said by Brennan J in Parkdale (supra) at 220-1, previously referred to, the lapse of the registration of the design brought an end to any right to claim it as distinctive of the Business.

It is the case that, at least in the case of a name or mark, evidence that a defendant has acted to take advantage for itself of the plaintiff's goodwill may incline a court to finding a closeness between the subjects in issue for the reason that such motivation shows an expectation of derivation of benefit from the plaintiff's business reputation: Telmak Teleproducts v Coles Myer Ltd (1988) 84 ALR 437 at 445. In the present proceeding there is evidence in the Papp affidavit that the first respondent does not seek to establish "style trends" but to follow "trends" that have been successful in the market place. In my view that evidence falls well short of supporting an inference that the respondents acted fraudulently in the sense that they designed the Target Swimsuit in the hope or expectation of deriving a benefit from its resemblance to Swimsuit 92103. A particular design may be characteristic of a particular trade and reflect the fashion of the market and be open to be adopted by all in the trade provided care is taken to distinguish the trade source or the product in question: King & Co Ltd v Gillard & Co Ltd (1905) 22 RPC 327 at 335. In any event, as the reasons of Gummow J in Telmak (supra) make apparent, the primary requirement remains that a plaintiff show the necessary distinctiveness or reputation in respect of the subject for which protection is sought.

On that element, the evidence has been considered in relation to s52. Significantly nothing in that evidence discloses that the design of the Banded Swimsuit is recognised by the public as distinctive specifically of the applicants' goods. The evidence of the production of other swimsuits with white quilted bands previously referred to is wholly destructive of any claim of reputation.

It is in any event the evidence that the reputation of upmarket swimsuit producers is confined to the particular market comprised of major department stores and speciality outlets and does not extend to discount stores such as that of the first respondent. It is not therefore apparently the case that the applicants have a reputation in the geographical area and in respect of the class of purchaser to which any representation made by the respondents is likely to be addressed. However, there is no necessity for a common field of activity between the plaintiff and the defendant provided that there is a misrepresentation by the defendant concerning the defendant's name or product resulting in a likelihood of damage to the plaintiff, as for example confusion adversely affecting goodwill, or wrongful appropriation of the plaintiff's name and reputation: Hutchence (supra) at 340.

There is no evidence that there was any misrepresentation made by the respondents concerning the Target Swimsuits, that is that they were being passed off as the applicants' goods. In Parkdale (supra) at 222 Brennan J said that Parkdale was not free to pass off the "Rawhide" suite as a "Contour" suite but, where it used its own trade name and affixed its own distinguishing label, there was no evidence that it had done so. That is the position as it appears here.

The issue of passing off is a serious issue to be tried in the sense that it is arguable. I do not, however, assess this claim of the applicants to be a strong one.

Balance of convenience

The applicants rely principally upon the contention that there is a real risk that they will suffer irreparable harm unless the respondents are restrained. The evidence of J McKinney in support is that sales of Swimsuit 92103 form a substantial and increasing proportion of the second applicant's sales of Banded Swimsuits and, in a market where the total number of units of men's and women's fashion swimwear lines sold by the second applicant have for each year decreased, any substantial inroads into its sales of Banded Swimsuits and Swimsuit 92103 will have a substantial and adverse financial impact on the second applicant. In these circumstances it is contended that damages could not be an adequate remedy because there is likely to be irreparable and immeasurable damage to the applicants' goodwill: Nicholas v Borg (1986) 7 IPR 1 at 10; Ricegrowers' Co-operative Mills Limited v Howling Success Australia Pty Limited (1987) ATPR 40-778 at 48,494.

In the event of the occurrence of loss of sales and loss of goodwill there are likely impacts on third parties (a factor which may be considered: Perrey v Mordiesel Co Pty Ltd [1976] VR 569 at 574-6) in that staff retrenchments would follow and, depending upon the extent of those losses, the continued viability of the business of the applicants could be in issue. In addition, there is evidence in the Sinclair affidavit that sales of deceptively similar copies of Swimsuit 92103 at outlets of the first respondent for a price of around $45.00 leads to an expectation that sales by Aherns of Swimsuit 92103 would be substantially reduced. A further factor contended for is that the respondents chose to come into the market so that any damage to the second respondent from an injunction being granted is a risk it took with its eyes open: Beecham Group Limited v Bristol Laboratories Pty Ltd (1968) 118 CLR 618 at 626 applied in Martin Engineering Co v Trison Holdings Pty Ltd (1988) 81 ALR 543 at 554.

These submissions have merit if the premises on which they are based is shown to be the case. Those premises, however, fall to be weighed in the light of the assessment previously made of the strength of the applicants' case for final relief. The evidence that the applicants and the respondents operate in different markets weighs against the evidence that continued sales by both parties must result in loss of sales to the applicants. The evidence is also against the likelihood of the applicants succeeding in establishing an exclusive reputation to the white quilted bands as seen in Swimsuit 92103. In those circumstances the posited losses of sales and goodwill with resultant effects on third parties can only be seen as speculative.

Other matters weighing against the applicants are that they seek a number of mandatory orders for which a high degree of assurance is required that at the trial it would appear that the injunction was rightly granted: Shepherd Homes Ltd v Sandham [1971] Ch 340 at 350 and 352; Films Rover International Ltd v Canon Film Sales Limited [1987] 1 WLR 670 at 680-1; Cash Converters (supra) at 483-4. Further, the
customers of the first respondent, being a large section of the public, would suffer if unable to purchase the Target Swimsuit, the damage to consumers being a relevant consideration: World Series Cricket Pty Ltd v Parish (1977) 16 ALR 181 at 190, 191 and Rice Growers (supra) at 48,491 and 48,492. The viability of the second respondent would be in issue. The second respondent has had a receiver and manager appointed to it by a creditor bank and the contract for the manufacture and supply of the Target Swimsuit to the first respondent is its one present hope of trading out of its indebtedness. However, as asserted for the applicants and undisputed for the respondents, the first respondent is a major trading corporation which would be unaffected in any significant sense by the granting of an injunction.

Conclusion

This is a case where the matters upon which the applicant relies to support its submission that the balance of convenience lies in favour of the grant of an interlocutory injunction are matters which in their essentials seek to derive their force from the strength of the applicants' case. I have formed the view that the case lacks strength. On the other hand, if an injunction were granted the respondents would suffer damage, in the case of the second respondent to the point of threatening its continued existence. Having regard to all these matters, I am of the opinion that the applicants have not established that the balance of convenience or the "balance of the risk of doing an injustice" (Cayne, supra, at 237 per May LJ) lies in favour of a grant of interlocutory relief. I therefore dismiss the application for the grant of an interlocutory injunction.

I certify that this and the preceding 19 pages are a true copy of the Reasons for Judgment of his Honour Justice R D Nicholson.

Associate:

Date:

APPEARANCES

Counsel for the Applicant: Mr R J L McCormack

Solicitors for the Applicant: Corser & Corser

Counsel for the Respondent: Mr S K Dharmananda

Solicitors for the Respondent: Corrs Chambers Westgarth

Date of Hearing: 21 July 1995

Date of Judgment: 1 August 1995

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