FEDERAL COURT OF AUSTRALIA
Mark Foys Pty Ltd v TVSN (Pacific) Ltd [2000] FCA 1626
TRADE PRACTICES – misleading and deceptive conduct – whether the respondent represented it was associated with Mark Foys, a respected Sydney retailer – whether the respondent’s representations were only that they ascribed to similar commercial values as Mark Foys
TRADE PRACTICES – misleading and deceptive conduct – whether the respondent represented it was associated, in connection with the supply of goods and services, with Mark Foys, a respected Sydney retailer – where Mark Foys had ceased trading and held no good will – where the public knew Mark Foys was no longer trading – whether such goodwill, was a necessary element of misleading and deceptive conduct – whether, in the absence of present commercial goodwill the public may be misled by representations of an association
TRADE PRACTICES – whether conduct contravened subs 53(c) or (d) – whether goods or services were represented to have a sponsorship, approval or affiliation they did not have
TRADE MARKS – whether the Court should, as a matter of discretion, make declarations and orders in relation to a trade mark application – where other remedies under the Trade Marks Act 1995 had not been utilised before the recourse to court action
Trade Marks Act 1995 s 191
Trade Practices Act 1974 ss 52, 53(c) & 53(d)
S & I Publishing Pty Ltd v Australian Surf Life Saving Pty Ltd (1998) 80 FCR 354 cited
Campomar Sociedad, Limitada v Nike International Ltd (2000) 169 ALR 677 followed
Star Industrial Co Ltd v Yap Kwee Kor [1976] 2 FSR 256 distinguished
Pink v J A Sharwood & Co Ltd (1913) 30 RPC 725 distinguished
Thai World Import & Export Co Ltd v Shuey Shing Pty Ltd (1989) 17 IPR 289 distinguished
Conagra Inc v McCain Foods (Aust) Pty Ltd (1992) 33 FCR 302 distinguished
ACI Australia Ltd v Glamour Glaze Pty Limited (1988) 11 IPR 269 followed
Pacific Dunlop Ltd v Hogan (1989) 23 FCR 553 followed
Australian Woollen Mills Ltd v F S Walton & Ltd (1937) 58 CLR 641 cited
Bridge Stockbrokers Ltd v Bridges (1984) 57 ALR 401 cited
MARK FOYS PTY LTD v
TVSN (PACIFIC) LIMITED
N 635 OF 2000
BEAUMONT, TAMBERLIN AND EMMETT JJ
SYDNEY
15 NOVEMBER 2000
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IN THE FEDERAL COURT OF AUSTRALIA |
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ON APPEAL FROM A SINGLE JUDGE
OF THE FEDERAL COURT OF AUSTRALIA
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BETWEEN: |
MARK FOYS PTY LIMITED (ACN 052 917 183) (APPELLANT)
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AND: |
TVSN (PACIFIC) LIMITED (ACN 066 139 991) RESPONDENT
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DATE OF ORDER: |
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WHERE MADE: |
THE COURT ORDERS THAT:
1. That the appeal be allowed in part.
2. That the orders made at first instance be set aside, except so far as the claims under the Trade Marks Act 1995 (Cth) were dismissed; and that, in lieu thereof, it be ordered that the respondent by itself, or any of its related corporations, its agents, servants, employees or representatives be restrained permanently from, in trade or commerce, providing retail services or selling, offering for sale, advertising or promoting goods or services by any means including by broadcast on television or via the internet under or by reference to:
(a) The name, trade mark or words MARK FOYS;
(b) The name, trade mark or words THE MARK FOYS SHOPPING NETWORK;
(c) The name, trade mark or words THE HOUSE OF MARK FOYS;
(d) Any name or trade mark including the words MARK FOYS;
(e) A representation of the Piazza Store referred to in paragraphs 8 and 9 of the Amended Statement of Claim ;
(f) The logo depicting the letters MF and a silhouette of the Piazza Store.
3. That any question of damages is referred to a single judge for determination in accordance with these reasons.
4. That the respondent pay ninety percent of the costs of the appellant in respect of the trial and of this appeal.
Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
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IN THE FEDERAL COURT OF AUSTRALIA |
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ON APPEAL FROM A SINGLE JUDGE
OF THE FEDERAL COURT OF AUSTRALIA
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BETWEEN: |
(ACN 052 917 183) APPELLANT
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AND: |
(ACN 066 139 991) RESPONDENT
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JUDGE: |
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DATE: |
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PLACE: |
REASONS FOR JUDGMENT
THE COURT:
1 This is an appeal from a judgment dismissing an application by the appellant (“New Mark Foys”) to restrain the respondent (“TVSN”) from using in its business the name “Mark Foys”, any depiction of a Sydney landmark building that up to 1980 housed the well-known Mark Foy’s Department store (“the Piazza Store”), or a logo said to represent that building. The issue for determination is whether TVSN has engaged in conduct in contravention of ss 52, 53(c) or 53(d) of the Trade Practices Act 1974 (“the Act”) in relation to the use of the name “Mark Foys” and the depiction of the Piazza Store.
2 In addition to an injunction, damages were also sought but an order was made by the trial Judge that any assessment of damages should be determined separately after the other claims in the proceedings. There was also a claim seeking a declaration in relation to the Trade Marks Act 1995 (“the Trade Marks Act”).
Background
3 This background is substantially taken from the reasons of the trial Judge since the factual background was not in dispute on appeal. Mark Foy’s Limited (“Old Mark Foys”) was incorporated in New South Wales on 12 November 1909 in order to carry on a retail business that had been established under that name in Sydney in 1885. That business moved in September 1909 to a large department store building located in Liverpool Street, Sydney, between Elizabeth and Castlereagh Streets. The building was known as “The Piazza” on account of the open space area which extended across its frontage. It underwent extensive alterations in the years 1920-1930 when its height was increased to eight stories but the open piazza was retained. The retail business under the name “Mark Foys” was conducted there until 1980 when another well-known retailer, Grace Bros, commenced trading on the site. Grace Bros continued trading there until 1983. On 19 May 1981 Old Mark Foys became a proprietary company and at that time the whole of the issued capital was held beneficially by Richards Clothing Pty Limited. Receivers and Managers of the property of Old Mark Foys were appointed on 30 June 1993.
4 New Mark Foys came into existence on 10 July 1991. It was registered under the name Bartex Furnishings Pty Limited and the day after registration Phillip Bart became one of its directors. Phillip Bart wrote to the Receivers and Managers of Old Mark Foys on 4 August 1993 about the name “Mark Foys” and, after some negotiations, on 1 November 1993 the Receivers and Managers agreed that upon receipt of a cheque for $5,000 they would arrange to change the name of Old Mark Foys and execute a “Consent to Register the name Mark Foys”.
5 New Mark Foys retained a solicitor who requested the Receivers and Managers sell any trade marks and other intellectual property rights relating to the name “Mark Foys”. The Receivers and Managers were only prepared to sell the name. The arrangement was that Old Mark Foys would change its name, and transfer the business name “Mark Foys” to New Mark Foys. The solicitor prepared an agreement to this effect which was executed on behalf of Old Mark Foys by two directors. The agreement expressly provided that Old Mark Foys was not selling goodwill or any other assets.
6 On 7 February 1994 Old Mark Foys resolved to change its name to Bloomfield Clothing Pty Limited and on 8 February it applied for registration of the name “Mark Foys” in respect of its retail business then carried on at 4 Smith Street, Artarmon, New South Wales. On 17 February the name change was effected, and on 18 February the business name was registered to Old Mark Foys.
7 In March 1994 agreements between the Old and New Mark Foys were exchanged. The Receivers and Managers retired on 22 March and the completion of the sale took place on 25 March when New Mark Foys paid the balance, $4,000, in exchange for a notice by Old Mark Foys of ceasing to carry on business under the name “Mark Foys”. On 31 March 1994 New Mark Foys was registered as the proprietor of the business at 4 Smith Road, Artarmon. On 25 October 1994 New Mark Foys changed its name from Bartex Furnishings Pty Limited to Mark Foys Pty Limited and its registration of the business name “Mark Foys” was cancelled. As his Honour pointed out New Mark Foys has never traded or carried on any business under the name “Mark Foys”.
8 On 18 November 1994 a liquidator of Old Mark Foys was appointed and an order was made for its winding up. In due course, on 9 October 1995, its registration was cancelled and Old Mark Foys was dissolved.
9 TVSN was founded for the purpose of selling goods via television. The sales are promoted in television programs that are broadcast all day by TVSN and which are carried by Australia’s three major pay television networks. The initials “TVSN” stand for TV Shopping Network. The merchandise sold by TVSN includes jewellery, skin care products, fashion accessories, and “collectable” products such as dolls, bears and die-cast models. The material in evidence indicates that the retail price of these items ranges between around $50 and $250. In about mid-1998 there was a change in the ownership and management of TVSN and a Mr McNabb was appointed as Chief Executive Officer and a director. Not long after these changes a “concept paper” on TVSN’s brand identity was prepared for the Board of Directors. The “concept paper’ is divided into four headings: Summary, TVSN Current Positioning, Desired Positioning, and Proposed Brand Strategy. The relevant parts read as follows:
“1 Summary
This paper considers the much [sic] of the re-positioning the TVSN channel in Australia via re-branding of the network identity. The objective of this exercise is to broaden the base of consumer appeal to include the participation of more affluent consumer segments who currently do not find the TVSN ‘home shopping’ positioning a relevant retail offer.
This ‘white paper’ draws on the research conducted with TVSN consumers by Frank Small in September 1998, as well as on the company’s recent experimentation with new program formats.
If successful the re-branding will significant [sic] enhance shareholder value through the creation of a brand which combines the values which consumers traditionally associate with premium retailers (David Jones, Grace Bros, Bloomingdales, etc) and the convenience and service levels offered by emerging retail models such as Amazon, C&M or TVSN. As will be noted, no company has yet successfully merged these elements into a single retail brand. To do so would create a ‘power’ retail concept which had several distinct advantages:
a) The brand dimensions associated with ‘traditional’ retail would serve as re-assurance for consumers who are still reluctant to purchase via internet or television shopping;
b) A more ‘traditional’ retail positioning would allow the company to offer higher priced premium goods, such as cosmetics or branded fashion accessories from smaller luxury goods retailers;
c) A more premium retail positioning will allow the company to move into ‘own’ branded or house products, an option which is unavailable in many important product categories given the current imagery;
d) Finally, a broader positioning will allow the company to diversity [sic] into internet and catalogue retailing, an option which is unavailable with our current ‘TVSN’ branding.
A more premium position for the company is difficult to achieve given the legacy which ‘TV Shopping’ or ‘home stopping’ [sic] carriers [sic]. We will never be able to move the consumer’s perception of vegematics, ab-crunchers, power walkers and more recently personal improvement programs.
In summary our objective is to create a retail identity which blends those elements which consumers associate with premium retail concepts, while allowing the company to utilize television, internet and catalogue as the primary channels of retail distribution.
Our view is that this is a much more powerful business model than the ‘home shopping’ model which we are currently pursuing and one which will command a significantly higher valuation from the investment community.
. . .
IV Proposed Brand Strategy
The proposed brand strategy is to re-brand the channel so as to move the brand image closer to the ‘desired’ positioning.
Specifically, the strategy encompasses using the identity of a department store retailer that had been established in Melbourne or Sydney, but has since ceased trading.
We have researched a number of identities that have been merged into the David Jones or Coles merger groups during the retail consolidation that occurred in the 1970’s and 1980’s.
The benefits of trading under a previously established retail brand rather than creating a new identity are several. Foremost among these are the ability to leverage the long histories which may [sic] of these retailers enjoyed, as well as the residual recognition which their names possess. Furthermore, strong brands are always anchored in a specific time and place. It is these specific historical references which give these brands their identities. The acquisition of a previously established identity will facilitate the development of an upscale retail identity in the shortest possible time.
Our research into previously established retailers has identified several possible retail identities that would meet our objectives. Foremost among these is ‘Mark Foys’ which was Australia’s leading premium retailer in the 1950’s and 1960’s. Other retail identities that have been researched include Curzons, Anthony Horder [sic], Marcos [sic] Clarke and Waltons.
Before proceeding with a trademark search on the availability of these marks, we wish to have the Board’s comments on the strategy as presented herein.”
10 The author of the paper is not identified but a copy was issued to Mr George Frame who was involved with the corporate development of TVSN. In November 1998 Mr Frame had a discussion with the Secretary of New Mark Foys with respect to either licensing or purchasing the name “Mark Foys”. Negotiations ensued. On 16 December 1998, during the course of the negotiations, TVSN filed a trade mark application in respect of the name “The House of Mark Foys”. On 18 December New Mark Foys itself filed an application to register the trade mark “Mark Foys” for nineteen classes of goods and services. On 17 January 1999 the Trade Marks Office informed New Mark Foys’ solicitors that the application could not be accepted because of TVSN’s pending application.
11 In early December 1998 Mr Remati, later the General Manager of “markfoys.com”, was asked to investigate the possibilities of a web site for TVSN and to design a logo for “The House of Mark Foys”. He was told that the directors were “thinking of repositioning TVSN as something more than merely a television shopping channel, more along the lines of a department store metaphor” and that “the logo must have a sense of establishment and style from a yesteryear era”. At that time Mr Remati was aware that TVSN had applied for registration of the domain name “markfoys” on the Internet, but he was not involved in making that application. His first task was to design the logo and he conceived of using elements of the Piazza Store in it. He designed a logo inspired by the design of the Piazza Store. His evidence was that the logo was meant to be “inherently symbolic of a bygone era type of department store”. He used a type-face that he had seen in magazines published in the period of 1940-1960. The letters “H” and “M” were super-imposed over the letter “F” which was placed in an oval shape with a graphic element designed to look like a “tower or turret with a building underneath it”. In January 1999 the logo was approved. In February 1999 Mr Remati was appointed General Manager of the new on-line division to use the Mark Foys brand for the promotion of TVSN’s Internet retail business.
12 TVSN broadcast a program entitled “The House of Mark Foys” on its television channel during February and March 1999. On 21 March 1999 a Sydney newspaper reported that a relative of the late Diana, Princess of Wales, was going to launch “the Mark Foys shopping network” for TVSN. Correspondence then took place between solicitors for the parties and TVSN disclosed that it had registered the domain name “markfoys” and that it was planning a launch function for its web site on 29 March 1999. TVSN subsequently issued a media release announcing that it would launch its new web site from 1 June 1999 in the following terms:
“The launch of MARKFOYS.COM is a strategic move to capitalise on the development of broadband cable and high speed access to the internet.
The Mark Foys name was chosen for the web site in honour of the stylish and well-loved Australian department store of the same name. From 1885 to 1980 Mark Foys played an important role in the cultural evolution of Sydney revolutionising the shopping and retail habits of Australian consumers.
The new MARKFOYS.COM is similarly at the forefront of the retail revolution. More and more people are connecting to cable TV and the internet and home shopping, or electronic retailing, is the way of the future.
Electronic commerce is the single biggest change for businesses of all sizes worldwide. To be successful in E-commerce, it is essential to move beyond the conventional methods of conducting business in both the physical and virtual worlds. MARKFOYS.COM aims to be among the first retailers to use bi-lateral convergence technology. The media convergence of TV and the internet takes the stress out of shopping by allowing consumers to order goods directly off the internet.
By combining the priorities and values of the old fashioned department store with the most up to date electronic retailing technology, MARKFOYS.COM is essentially a virtual department store which acts as a shopfront to over 10,000 product lines ranging from jewellery, collectables, electronics, computers, fashion, home entertainment, health and beauty, kitchenware and homeware.”
13 On 15 April 1999 TVSN applied to register the “www.markfoys.com” name, that incorporated its logo, for electronic services as a trade mark. The present proceedings were commenced by New Mark Foys on 29 April 1999.
14 In May 1999 the television programs entitled “Mark Foys Gift Selection” and “Mark Foys Linen Collection” were broadcast on TVSN’s channel and TVSN continued to investigate re-branding their channel as the “Mark Foys Shopping Network”. On 20 May 1999 TVSN applied for registration of the trade mark “Mark Foys Shopping Network” for electronic retail services.
15 A prototype of the web site was also made available in May 1999 in order to assess the useability of the site and the capacity of the database to support on-line sales. This development phase lasted until November 1999 when the web site was restructured.
16 During the period May-November 1999 the number of web site users was relatively small, less than 250 per month. The evidence of Mr Remati as to the mode of usage of the site between May and November 1999 was described by him as follows:
“From watching users using the prototype website from time to time over a period of 4 months, I am able to say that the majority of users I observed:
(a) started at the home page;
(b) clicked on a product category;
(c) clicked on a product;
(d) if the user intended to purchase the item, he or she added it to a shopping bag;
(e) when the user had selected all the items that he or she desired, the user would click on ‘checkout’ (to complete an order online) or click on ‘phone order’ (to retrieve instructions for ordering by phone) – most users I observed would click on checkout;
(f) if a user clicked on ‘checkout’, the user proceeded to enter his or her contact details and credit card details;
(g) following the completion of this information, the user completed their order by clicking on a button with the words “submit your order now”; and
(h) the user received an online confirmation. The confirmation message follows several different formats depending upon the type of user.”
17 In the prototype web site in operation prior to mid-November 1999, the Piazza Store was depicted on the left hand side. Included on the home page was a heading “About Us” which permitted a user to access information entitled “The Story of Mark Foys” including a picture of the Piazza Store and a detailed history of Old Mark Foys. This history extended over several pages, describing the founder, the company and the building. At the conclusion of this text there is a note that the Piazza Store today houses the New South Wales District Court and is known as the Downing Centre. This note makes it evident that the building is not presently used as a retail store. The prototype web site described to the public the way in which orders were processed as follows:
“Your order will be fulfilled by TVSN Limited. TVSN is Australia’s leading electronic retailer. TVSN provides markfoys.com with the services of their highly reputable fulfillment division which has a long established history of excellence. Billing is also reconciled through TVSN Limited. In addition TVSN Limited processes orders and is responsible for quality control of all product.”
18 In June 1999 TVSN broadcast an advertisement for “Mark Foys.Com The Place for Gifts” on its television channel. This depicted the Piazza Store with the stylised letters “H”, “M” and “F” in the logo superimposed over one of the building’s distinctive towers. This was the only promotion of the web site until November 1999. During June 1999 TVSN broadcasted various programs in relation to home décor, craft and jewellery. The jewellery program involved the showing of the name “Mark Foys” in the title at the beginning, and reference to it is made throughout a monologue by a female presenter. The TVSN logo was also prominent throughout the program and was displayed near the telephone number for use by buyers, and the presenter refers to herself as being TVSN. In July 1999 TVSN broadcast a gift selection program adopting a similar format and following that there were several similar types of programs broadcast referring to Mark Foys in the titles and body of the presentation. The programs were scheduled with varying frequency during the months up to and including October.
19 In mid-November 1999 TVSN ceased to use its prototype web site and launched its new web site “markfoys.com” which was promoted with an extensive advertising campaign. The home page was changed and now describes the site as “the place for gifts”. There were no pictures of the Piazza Store on the home page and no access to the type of historical information contained in the prototype. The “Information” pages describe markfoys.com, which appears in large bold lower case type, as an on-line department store dedicated to gift selection. On each page of the site there is a note:
“For more information call TVSN Customer Service on 13 23 10
© TVSN Ltd 1999 (ACN 066 139 991)”
20 There are subsequent pages described as “Shop Assistant” pages which give information including the way in which orders are processed. These include statements that:
“All fulfilment is provided by TVSN, including payment, processing and delivery. Because of this, markfoys.com deliveries will have TVSN branding on the packaging, receipt and returns advice slip.
Credit card payments will be collected by TVSN on behalf of markfoys.com, therefore a TVSN charge will appear on your credit card statement for your markfoys.com purchase or refund.”
21 In his judgment his Honour referred to evidence of a Ms Jean Strachan, who he described as “a very experienced market researcher”, called by New Mark Foys to give expert evidence about branding. Ms Strachan referred to all department stores’ names as being brands which function in a similar way to a brand name of a product. Her evidence was to the effect that brands offer functional and emotional reassurance and that research showed that, for example, some consumers would rather buy a Sony television set from a well-known reputable department store than from another store even where functionally there was no logic supporting that preference. According to Ms Strachan, in this example the brand value of the department store superseded the product brand.
Reasoning below
22 His Honour referred to the allegations that TVSN engaged in conduct in contravention of ss 52 and 53(c) & (d) of the Act. He considered that although the Amended Statement of Claim did not clearly identify the precise conduct, it was “plain enough” that it was the use of the name “Mark Foys” in connection with the retail sale of products on television and the Internet. His Honour referred to the representations pleaded that:
“ (i) [TVSN] has the licence, sponsorship or approval of the former Mark Foys;
(ii) the retail services provided and the goods sold or offered for sale, advertised or promoted by [TVSN] have the licence, sponsorship or approval of the [Old] Mark Foys.”
23 His Honour referred to the fact that Old Mark Foys had “been dead” for a number of years and had not traded at the Piazza Store for twenty years.
24 Essentially the reasoning of his Honour is encapsulated in the following paragraphs:
“40 Taken by themselves, I do not see how it can be contended that the television programs broadcast by TVSN contain a representation of any “licence, sponsorship or approval” of the defunct company. Such a representation is not conveyed by the words Marks Foys in their titles or the use of those words in two programs shown in evidence. Nor can such a representation be inferred from the mention of TVSN in that context. The studio sets in the television programs look like display counters in any store, not specifically a department store. The screening during one of these programs in June 1999 of the “filler” promoting the website would also make no difference because it does not suggest sponsorship or approval of the television program.
41 Mr Frame bluntly acknowledged that TVSN wanted its online business identified with Mark Foys, not TVSN. The references on the website to order fulfilment by TVSN have no doubt been inserted for contractual reasons. Mr Remati was slow to acknowledge the possible implication in such statements that markfoys.com was a separate entity. However, no matter what slyness may be present in the minds of TVSN’s executives, the alleged representation in respect of the website is the same, namely that it has the “licence sponsorship or approval” of the defunct company.
42 The depiction of the Piazza store in the prototype website may have been intended to convey a sense of romance or nostalgia for the days of the grand department store. Taken with the history pages, Mark Foy’s department store was clearly being held up as an example of such an era. (This transparent purpose had been made explicit in the press release the previous March.) However, those same pages convey the information that that store closed at the Piazza building in 1980 and that the building is now used as a courthouse. Again, no suggestion of “licence, sponsorship or approval” is implicit in either the image or the text, even if one were to assume the continuing existence of an entity that carried on the old department store business at the site.
43 The website launched on the Internet in November 1999 is substantially different. The Piazza store is no longer depicted and the history of Mark Foy’s is not mentioned. There has been a slight shift in emphasis to a place for gifts from the more comprehensive notion of a department store. Some of the “virtual” department store references remain such as a virtual shop assistant and the shopping bag icon. However, the changes in content make it even easier to arrive at the same conclusions in respect of this website, namely that it contains no representation of “licence, sponsorship or approval” by the defunct company.
44 The ingredients of an action based on s 52 of the Trade Practices Act were recently explained by the High Court in Campomar Sociedad, Limitada v Nike International Ltd (2000) 74 ALJR 573. In a case such as the present involving alleged representations to the public, the High Court said (at 593): “The initial question which must be determined is whether the misconceptions, or deceptions, alleged to arise or to be likely to arise are properly to be attributed to the ordinary or reasonable members of the classes of prospective purchasers.” Their Honours went on to approve (at 594) the reasoning of Deane and Fitzgerald JJ in Taco Co of Australia Inc v Taco Bell Pty Ltd (1982) 42 ALR 177 at 201 that the “question whether particular conduct causes confusion or wonderment cannot be substituted for the question whether the conduct answers the statutory description contained in s 52.”
45 In the present case the prospective purchasers are users of the Internet. I am satisfied that neither the prototype nor the current website is likely to mislead or deceive such persons into thinking that TVSN or its website has the “licence, sponsorship or approval” of the defunct company. Some users might wonder whether there is a connexion, but that is not sufficient. Any user of the Internet able to recall the Mark Foy’s department store at the Piazza building would have to know that the Internet did not exist in 1980. The launch by TVSN of a new online business under the name markfoys.com in 1999 would not of itself warrant the conclusion that it had done so with the approval of the defunct company. The claimed contraventions of Pt V of the Trade Practices Act are, in my opinion, not established.
25 Finally, his Honour noted that he had been asked to make declarations concerning the trade mark applications in respect of the name “Mark Foys” and the “House of Mark Foys”. His Honour declined to deal with these questions on the basis that the questions raised were more properly and effectively dealt with pursuant to the procedures prescribed under the Trade Marks Act.
26 His Honour dismissed the application with costs.
submissions for NEW MARK FOYS
27 New Mark Foys submits that there is evidence of the continued importance in the late 1990’s and currently of the “Mark Foys” name to the effect that the name signified to a substantial number of Australians a link with Old Mark Foys, including the possession of similar attributes. Old Mark Foys, so it is said, was Australia’s leading premium retailer in the 1950s and 1960s and the name continues to attract recognition. TVSN’s conduct is said to be misleading because in fact there was no “‘link’ between it and the well-known high quality retailer Mark Foys”.
28 New Mark Foys pointed out that Old Mark Foys operated for many decades as a successful retailing business, particularly during between 1908 and 1980, the period of the Piazza Store. In addition, it is said that the respondent’s documents, press releases, research projects and newspaper articles provide testimony of the strength and endurance of the “Mark Foys” name. In particular, the detailed promotional marketing research and advice which TVSN acted upon emphasised the benefits of trading under a previously established brand to up-grade the somewhat down-market perception of television retailing. These benefits included the ability to exploit the long history which many old established retailers possessed as well as the residual recognition inherent in their names. New Mark Foys also refers to the prototype web site containing, at the click of a mouse, a comprehensive history of Old Mark Foys. It was submitted that this makes it apparent that the target of the promotional material was to draw attention to the qualities of the Old Mark Foys business as it previously existed and was recalled by that section of the public over 35 likely to recall it, and to allow TVSN to “piggy back” on that good name.
29 The detailed TVSN re-branding research material commissioned by TVSN especially in relation to use of the “Mark Foys Shopping Network Positioning” indicated that the association with the name “Mark Foys” was effective in restructuring the public perception of TVSN. The use of the name was perceived to have the potential to add value to the TVSN corporation in terms of high service values, friendly, knowledgeable and helpful staff, quality products and recognised brands, together with reliability and support for Australian manufacturers thereby engendering confidence and trust.
30 New Mark Foys pointed to evidence of Mr Frame, the Director of Corporate Development for TVSN, who agreed in cross-examination that there was a perception within TVSN that the direct selling of products on the television medium was seen as somewhat untrustworthy and that by using the name “Mark Foys”, or another reputable department store name, it would be able to acquire an enhanced reputation. He agreed that the strategy was to rebrand the TVSC broadcasts so as to move the branding image closer to the desired position of reputability combined with the heritage of traditional shopping.
31 New Mark Foys also referred to evidence in relation to the web site that the Mark Foys name was chosen for the web site in honour of the stylish and well loved department store.
32 New Mark Foys says that although the second web site released in November 1999, to replace the earlier prototype, had removed the detailed history of Mark Foys from the site it was intended to continue the association in the mind of a consumer accessing the site with a department store and was done in the nature of a virtual department store. This second site continued to invoke the style which had been a feature of the first web site by consistent use of the name. Moreover, in considering the effect of the changes to the prototype contained in the second phase of the web site promotion, it must be borne in mind that an initial impression had been conveyed over some months in relation to the history and operations of Mark Foys.
Submissions for TVSN
33 TVSN submits that to find a breach of ss 52 or 53 it essential to determine the misconception alleged to have arisen and then to undertake an inquiry as to whether there is a sufficient nexus between the respondent’s conduct and any misconception. TVSN says that no misconception has arisen from its conduct, nor is there a sufficient nexus between its conduct and any supposed misconception. Instead, if there was any misconception or deception this arose entirely from the erroneous assumption on the part of prospective purchasers. By erroneous assumption TVSN means an assumption which is not a reasonable assumption in the circumstances. TVSN submits that for a customer to be misled in the circumstances of this case some persisting goodwill will have to remain attached to the Old Mark Foys.
34 TVSN characterises its conduct as simply invoking “an old fashioned feeling” or “the heritage of that period of time”. It says that as a matter of principle there can be no restraint upon the adoption by a business of a remembrance of a bygone era or entity, or the inducement of a perception as to the existence of those recollections whether by advertising or otherwise provided consumers are not misled. TVSN submits that the effect of its conduct can only be taken to represent that it subscribes to similar values and principles as the former department store. This is conveyed by the image or logo of the building and by the references to the words “Mark Foys” in oral and visual presentations together with the expression “markfoys.com” as the domain name for the web site.
35 As to the television channel it is said that nothing stated by the presenters could lead the viewers to conclude that the programs they were viewing were associated with anyone other than TVSN. TVSN pointed to the fact that its channel was exclusively a shopping channel, and that the TVSN logo appears on the screen. The procedure for making a purchase requires a purchaser to make a telephone call to TVSN. It has submitted that this meant potential customers were fully informed they were dealing with TVSN and not with Old Mark Foys.
36 In relation to the web site it is suggested that consumers using it were “sophisticated” having regard to their ability to use the Internet, and again that if a decision is made to purchase, this type of consumer would be likely to be aware that he or she was dealing with TVSN. Further it is said that the historical material on the site made it clear that Old Mark Foys had ceased trading and that purchasers were not dealing with Old Mark Foys.
The Court’s role on appeal
37 It is well-settled that it is open to this Court sitting on an appeal from a trial Judge to come to a different view from that of the trial judge as to whether the conduct of TVSN is misleading or deceptive : see S & I Publishing Pty Ltd v Australian Surf Life Saving Pty Ltd (1998) 80 FCR 354 at 361 where the Full Court said:
“We propose therefore to consider for ourselves the question whether S & I engaged in conduct which was misleading or deceptive while giving respectful weight to the conclusion of which the learned trial judge came.”
Relevant law
38 Sections 52 and 53 appear in the Act in “Part V - Consumer Protection”. This emphasises that the provisions are designed to protect the members of the public who are consumers of goods and services from unfair trading practices: see Hornsby Building Information Centre Pty Ltd v Sydney Building Information Centre Ltd (1978) 140 CLR 216. They are not specifically designed to protect traders, although the operation of those sections may incidentally have that effect: see per Barwick CJ at 220 in that case. Relevantly the sections provide:
“52 Misleading or deceptive conduct
(1) A corporation shall not, in a trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive.
(2) Nothing in the succeeding provisions of this Division shall be taken as limiting by implication the generality of subsection (1).
53 False or misleading representations
A corporation shall not, in trade or commerce, in connexion with the supply or possible supply of goods or services or in connexion with the promotion by an means of the supply or use of goods or services;
…
(c) represent that goods or services have sponsorship, approval,
… uses or benefits they do not have;
(d) represent that the corporation has a sponsorship, approval or affiliation it does not have;
…”
39 The conduct and representations at issue in this case are in substance directed to the retail services undertaken by TVSN rather than to the origin of the goods themselves which are offered for sale. At the same time, the representations alleged are said to be made “in connexion with … the possible supply of goods.” (Emphasis added)
40 The principles relating to the application of s 52 were recently considered by the High Court in Campomar Sociedad, Limitada v Nike International Ltd (2000) 169 ALR 677. That case concerned alleged misrepresentations arising from the promotion of a fragrance with the name “Nike Sport Fragrance”. The Court held that the use of the well-known brand was likely to mislead or deceive members of the public into thinking that the “Nike Sport Fragrance” was “in some way promoted or distributed by Nike International itself or with its consent or approval” (emphasis added) when in fact it was not. The Court accepted the proposition that s 52 is not restricted by common law principles relating to passing-off but provided an additional remedy.
41 The Court referred to the distinction between cases which involved representations made to the public at large or a section thereof, such as retail purchasers, and those which involved representations made to identified individuals. In relation to the former type of case (such as that before us), and the nexus which must be shown between the conduct in question and the misconception or deception of prospective retail purchasers the Court said, at 705:
“Nevertheless, in an assessment of the reactions or likely reactions of the ‘ordinary’ or ‘reasonable’ members of the class of prospective purchasers of a mass-marketed product for general use, such as athletic sportswear or perfumery products, the court may well decline to regard as controlling the application of s 52 those assumptions by persons whose reactions are extreme or fanciful. For example, the evidence of one witness in the present case, a pharmacist, was that he assumed that ‘Australian brand name laws would have restricted anybody else from putting the NIKE name on a product other than that endorsed by the [Nike sportswear company]’. Further, the assumption made by this witness extended to the marketing of pet food and toilet cleaner. Such assumptions were not only erroneous but extreme and fanciful. They would not be attributed to the ‘ordinary’ or ‘reasonable’ members of the classes of prospective purchasers of pet food and toilet cleaners. The initial question which must be determined is whether the misconceptions, or deceptions, alleged to arise or to be likely to arise are properly to be attributed to the ordinary or reasonable members of the classes of prospective purchasers.” (Emphasis added)
42 In support of its position that its conduct was not misleading TVSN referred to a number of authorities to the effect that where a business which has goodwill as one of its assets ceases to exist the goodwill which it previously attracted also ceases to exist. It then submits that there cannot be the necessary nexus between the misleading or deceptive conduct and the false impression created in the perception of the public where the goodwill of the business no longer exists. Reference was made to Star Industrial Co Ltd v Yap Kwee Kor [1976] 2 FSR 256, a passing off and trade mark case, where Lord Diplock said at 209:
“…A passing-off action is a remedy for the invasion of a right of property not in the mark, name or get-up improperly used, but in the business or goodwill likely to be injured by the misrepresentations made by passing-off one person’s goods as the goods of another. Goodwill, as the subject of proprietary rights, is incapable of subsisting by itself. It has no independent existence apart from the business to which it is attached. It is local in character and divisible; if the business is carried on in several countries a separate goodwill attaches to it in each.” (Emphasis added)
43 TVSN also referred to the decision of Eve J in Pink v J A Sharwood & Co Ltd (1913) 30 RPC 725. Again, this case, was an action for infringement of trade mark and passing off in which, at 739-740, his Honour said:
“But the outstanding fact is that there are no goods of the Plaintiff for which the goods of the Defendants can be mistaken, and there were none when the action was launched. That fact, in my opinion, disposes of what has been referred to as the passing off part of this action.
… I do not believe that they ever thought that in refusing to sell the name, they were retaining, or that they ever intended to retain, the right to resume the use of it should the plaintiff be restored to health. But even if they had that intention, I do not think it is one to which any effect can be given. The goodwill of this business came to an end when the premises were, so to speak, gutted and handed over for the purpose of another business, and when this business was in fact abandoned. If, hereafter, the plaintiff should recover and resume business, he will resume with the benefit of his former reputation, but the goodwill which he will then assume will be a goodwill he will then start to create, and not the goodwill of the old business revived and resuscitated. …
That being so, it is common ground that the Trade Mark, which could only exist by virtue of its attachment to the goodwill, went with it, and in these circumstances the Plaintiff, in my opinion, cannot maintain this action for an alleged infringement of the Trade Mark.” (Emphasis added)
44 Reliance was also placed on the decision of Gummow J in Thai World Import & Export Co Ltd v Shuey Shing Pty Ltd (1989) 17 IPR 289, at 302, where his Honour said:
“… these authorities proceed on the footing that the complainants trade under the mark in question continues thereafter, the point being that the complainant’s goodwill is not to be taken as eroded by the wrongful trading of the other party in the period before the institution of and the resolution of proceedings between them. The complainant cannot preserve its position in this way if, in the meantime, it allows its own trade to fall away. It must be a question of fact and degree at what point of time a trader, who ceases the relevant operations, should be treated as no longer having the benefit of the goodwill that accrued therefrom. When this point has been reached the question will not merely be one of the effect of delay upon entitlement of the plaintiff to equitable relief. If the plaintiff has relinquished its trading goodwill, it has lost that which underpinned its standing to complain of passing off and of contravention of s 52 of the TP Act. ” (Emphasis added and citations omitted)
45 This extract does not assist TVSN in the present case because it goes to standing and there is no question of standing raised in this case concerning injunctive relief. The question in the present case is properly raised in the public interest of the consumer and the issue is whether there has been conduct which is misleading or deceptive. The extract does not provide support for the proposition that if a business and its associated goodwill ceases to exist a representation such as that alleged in this case cannot give rise to contravention of ss 52 or 53 of the Act.
46 TVSN sought support from a statement of Lockhart J in Conagra Inc v McCain Foods (Aust) Pty Ltd (1992) 33 FCR 302 where his Honour said, in relation to claims of passing off and misleading conduct, at 353:
“In my opinion, the failure of the appellant to establish a relevant reputation in Australia for the purposes of the law of passing off must cause it to fail also in its case of contravention of Part V of the Trade Practices Act as there is not a sufficiently substantial number of people in Australia aware of the appellant’s products. …
…I do not find it necessary to decide whether there is a difference between the tort of passing off and contravention of Part V of the Trade Practices Act in the nature or numeracy or the relevant persons likely to be misled or deceived because … on the facts the appellant failed to pass even the lower threshold.” (Emphasis added)
47 His Honour’s conclusion in that case was based on a finding of fact as to the number of persons who may be aware of the products. Such a factual issue does not arise in the present case because the evidence indicates that there is a significant awareness in a section of the community of Old Mark Foys and this awareness is precisely what is exploited by TVSN’s promotion.
48 The statements relied on in the cases cited by TVSN were made in the context of passing off or trade marks actions and are not relevant to an application under the Act for breach of ss 52 or 53. These authorities cannot be taken to establish any general proposition that in order to show sufficient connection between the conduct and the deception, so as amount to a contravention of the Act, it is necessary to prove that there is a continuing goodwill which attaches to the business of any particular person or entity. The task of the Court is simply to give effect to the language of ss 52 and 53 without any such preconceived limitation.
49 This case is unusual in that Mark Foys ceased to trade at the Piazza Store premises for more than twenty years and the previous entity has been wound up. Despite this both the name and the store image, as the marketing advice demonstrates, still carry a strong resonance of quality and respectability. The Court has not been referred to any authority directly in point.
50 The trial Judge was referred to the decision of ACI Australia Ltd v Glamour Glaze Pty Limited (1988) 11 IPR 269 where Lockhart J found a contravention of ss 52 and 53 of the Act and granted injunctive relief in favour of ACI. In that case ACI had acquired the business of a competitor in the glass making industry (“the acquired business”) however the agreement for sale specifically excluded goodwill. The respondents subsequently registered the business name of the acquired business and traded as a glass manufacturer under that name. ACI sought an injunction restraining the respondent from representing in any way that it was associated or connected with the acquired business. ACI had not used the name of the acquired business in the two year period since acquisition. The misleading conduct found by his Honour was the deception of the public likely to arise from the association of the respondent with the acquired business. However, the trial Judge distinguished this case on the basis that, notwithstanding the provision in the agreement as to non-sale of goodwill, Lockhart J found ACI had lawfully acquired the goodwill of the acquired business. His Honour also gave weight to the fact that the period of non-use by ACI was only two years. In our view the decision of Lockhart J in relation to ss 52 and 53 did not turn on the view that goodwill had passed. Determination of the issue raised in the present case, as in ACI, turns on the likely deception of the public as the basis for relief rather than on the existence of any proprietary interest of New Mark Foys in goodwill. The decision of Lockhart J affords support for the case presently advanced by New Mark Foys.
51 The nature and effect of conduct and representations which evoke an association between a product or corporation and another person, product or corporation were considered by Burchett J in Pacific Dunlop Ltd v Hogan (1989) 23 FCR 553 (the Crocodile Dundee Case) in the context of the impressions conveyed by character merchandising which is based on an association of products or services with well-known persons. The exact impression created need not be identifiable with precision. Indeed, in many cases as his Honour points out it will be difficult to pinpoint the exact nature of the impression conveyed. Sometimes the association arises in the form of a generalised favourable impression evoked by the personality or entity with which a product or service is sought to be associated. At 584 of his judgment Burchett J said:
“The whole importance of character merchandising is the creation of an association of the product with the character; not the making of precise representations. Precision would only weaken an impression which is unrelated to logic, and would in general be logically indefensible. Yet the impression must be powerful to be effective. The only medium likely to convey the vague message of character merchandising, while giving it the force and immediacy of an exciting visual impact, is television. That is why the technique has grown in importance with the rise of the television industry. Its implications have hardly yet been explored in the courts. Their exploration involves the application of established principles in an unfamiliar setting, where a pervasive feature is not so much the making of statements that may mislead the mind directly, as suggestions that may inveigle the emotions into false responses.”
52 The above extract is pertinent to the present case where the strategy was to evoke an aura of respectability and tradition by association with the retail services formerly offered by Old Mark Foys, when in fact there was no association with either the building, the entity, the goods or services provided by that retailer. The High Court judgment in Nike accepts as sufficient the fact that the conduct was likely to mislead members of the public into thinking that the Nike fragrance was “in some way promoted or distributed by Nike International”.
REASONING
53 In the present case the strategy of TVSN was to upgrade its image so as to create an impression or perception to potential customers of tradition, quality and service which was not previously perceived as attaching to television marketing of the type engaged in by TVSN. This was to be achieved by association with Mark Foys arising from the use of images of the Piazza Store the use of the words “Mark Foys” in oral television presentations, and by the web site address of “markfoys.com” and the e-mail address “markfoys@markfoys.com”.
54 In deciding whether this strategy was likely to create that deception it is permissible to take into account the overall campaign and promotion mounted by TVSN to achieve this re-positioning by perceived association: see Australian Woollen Mills Ltd v F S Walton & Ltd (1937) 58 CLR 641 at 657. The course of conduct must be looked at as a whole and it is not appropriate to analyse separate aspects of it in isolation. In Australian Woollen Mills the Court had regard to the purpose and judgment of traders as providing an expert opinion whether the conduct in question was likely to deceive. The promotion of the association in the present case was based on this expert market opinion as to what was likely to be achieved, namely a commercially beneficial indication of association. This association was inherently likely to occur as a consequence of the promotion campaign. In the present case the deception lies in the fact that some form of association is conveyed between TVSN and the quality and tradition of services previously provided by Mark Foys when in fact there is no such association whatsoever.
55 Once the nature of the deception is determined it is necessary to consider whether the deception came about as the result of an erroneous assumption on the part of potential customers which could not be considered to be attributable to the conduct of TVSN. This issue discussed in detail in Nike at 702-706.
56 The trial judge approached the matter on the basis that there was no ongoing goodwill and that the company had not traded at the Piazza Store since 1980 and that, having regard to the fact it was widely known that Old Mark Foys had ceased to trade, there was not likely to be any deception. The reasons for decision focus on whether the conduct represented that there was a licence, sponsorship or approval by Mark Foys of the operations of TVSN. His Honour did not specifically direct attention to the broader question of whether there was conduct which was misleading or deceptive although that is clearly a question which he raised when he referred to the issue as being whether TVSN engaged in conduct in contravention of ss 52 and 53 of the Act.
57 In the present case, having regard to the numerous, repeated, and prominent uses of the name “Mark Foys” and the graphic depiction of the Piazza Store, we consider that a reasonable member of the relevant class of the public, potential purchasers, would be likely to form the false opinion that there was an association of some kind between TVSN and Mark Foys. In considering whether a member of the public has been misled it is appropriate to determine the matter in a practical way: per Lockhart J in Bridge Stockbrokers Ltd v Bridges (1984) 57 ALR 401 at 414-415.
58 A submission was made for TVSN that the only representation made was to the effect that TVSN subscribed to similar values as those which historically Old Mark Foys had subscribed to and may represent. Such an approach in our view is too sophisticated and does not reflect a sufficiently practical approach to the question whether there has been a misrepresentation.
59 Although the exact nature of the association between the characteristics of Old Mark Foys and the goods marketed by TVSN is not spelled out by the conduct or representations, the evidence supports the conclusion that in some way the retailing service provided by TVSN has the approval of Old Mark Foys. The verb “approved” can convey as a primary meaning the notion of being considered good or worthy or being regarded favourably. “Approval” conveys the notion of permission: see Macquarie Dictionary 2nd ed. 1991 at 81. In the present context a member of the public familiar with the Old Mark Foys could reasonably be led to consider that the goods and services retailed by TVSN were permitted to be sold under the Old Mark Foys name or that they were in some way considered favourably or approved of by the Old Mark Foys.
60 We also consider that the representations made in the present case cause more than mere wonderment or confusion and travel into the areas of positive misrepresentation. A reasonable prospective purchaser, looking at the material placed before the Court, would not simply wonder or be confused as to whether there was an association between Old Mark Foys and TVSN but rather he or she would be likely to infer that in fact an association existed.
61 In relation to the submission by TVSN that the material on the web site makes it clear that customers will be dealing with TVSN and not “Mark Foys” we are not persuaded that considered as a whole the web site dissociates the services and goods offered by TVSN from the name “Mark Foys”. The words “markfoys.com” appear prominently at the top of the pages of the web site as launched in November 1999. These words are emphasised in bold type face which is two to three times the size of the type face which refers to TVSN. The reference to the TVSN details and the mode of ordering through TVSN would not be likely, in our view, to disabuse a customer of a wrong belief in an association between the entities.
RELIEF AND Detriment
62 In the present case, which turns on the protection of the purchasing public from deception, it is not necessary to establish that any specific damage has been suffered. In our view, the circumstance that a substantial number of members of the public are likely to be misled into considering the purchase of goods on the false premise that there is an association, is sufficient to warrant the grant of injunctive relief to restrain further deception. It is inherently likely that a deceived purchaser would consider and compare the products of TVSN in relation to other products with a view to buying from TVSN where, but for the association with Old Mark Foys such a customer would not have been attracted to spend time and effort in considering such a purchase.
Trade Marks
63 New Mark Foys also sought relief in respect of a trade mark application lodged by TVSN. On 16 December 1998, TVSN lodged trade mark application number 781059 for the mark “The House of Mark Foys”. In its application New Mark Foy claims, inter alia, the following relief.
· a declaration that on 16 December 1998 TVSN had no intention in good faith to use the trade mark “The House of Mark Foys” in Australia; and
· an order that TVSN immediately withdraw or alternatively transfer to New Mark Foy trade mark application 781059.
64 New Mark Foys claims such relief pursuant to s 191 of the Trade Marks Act, which provides as follows:
“191 (1) The Federal Court has jurisdiction with respect to matters arising under this Act.
(2) The jurisdiction of the Federal Court to hear and determine appeals against decisions, directions or orders of the Registrar is exclusive of the jurisdiction of any other court except the jurisdiction of the High Court under section 75 of the Constitution.
(3) A prosecution for an offence against this Act may not be started in the Federal Court.”
65 The Trade Marks Act lays down a regime dealing, inter alia, with:
· Applications for registration of trade marks;
· Opposition to registration;
· Registration of trade marks; and
· Amendment and cancellation of registration.
66 Where rights of appeal exist under the regime, and an appeal is instituted, this Court or any other court vested with jurisdiction must deal with the subject matter of the appeal. Adequate remedies are available to New Mark Foys under the Trade Marks Act in respect of any application made by TVSN. It is inappropriate to make orders of the nature sought at this stage of the application for registration. Whether or not the Court has jurisdiction under s 191 to do so, the Court should exercise its discretion against intervening in the process under the Trade Marks Act.
Costs
67 Because the appellant did not succeed on the application with respect to its claim for a declaration under the Trade Marks Act we consider that it should not recover all its costs. Ninety percent is, in our view, an appropriate allocation, both at trial and on the appeal.
Conclusion
68 For the above reasons we consider that the appeal should be allowed in part and the orders of the trial Judge be set aside except for the dismissal of the claim under the Trade Marks Act. The orders of the Court are attached to these reasons.
|
I certify that the preceding sixty-eight (68) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Court. |
Associate:
Dated: 15 November 2000
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Counsel for the Appellant: |
F Douglas QC and S Goddard |
|
Solicitor for the Appellant: |
Pricewaterhouse Coopers Legal |
|
Counsel for the Respondent: |
A Archibald QC & M Green |
|
Solicitor for the Respondent: |
The Bruce & Stewart Commercial Practice |
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Date of Hearing: |
26 October 2000 |
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Date of Judgment: |
15 November 2000 |
