FEDERAL COURT OF AUSTRALIA

N.V. Sumatra Tobacco Trading Company v British American Tobacco Services Limited [2011] FCA 1051

THE COURT ORDERS THAT:

1.    The decision of the delegate of the Registrar of Trade Marks made on 31 July 2008 is varied such that the trade marks of the applicant appellant, LUCKY DRAW and LUCKY DREAM be registered in respect of goods described as ashtrays (not made of precious metal), lighters, matches and smokers’ articles.

2.    The application is otherwise dismissed.

3.    The application of the respondent by way of cross-appeal is upheld as to the ground reliant upon section 60 of the Trade Marks Act 1995 (Cth) by reason of the deceptive similarity of the trade marks LUCKY DRAW and LUCKY DREAM to the respondent’s registered trade mark LUCKIES, subject to the registration of LUCKY DRAW and LUCKY DREAM in respect of the goods described in Order 1.

4.    The application by way of cross-appeal is otherwise dismissed.

5.    The costs of and incidental to the application and cross-application are reserved.

6.    The parties file and serve written submissions in relation to the question of the costs of the appeal and cross-appeal within 21 days.

7.    The parties indicate by their written submissions in relation to costs whether they wish to be heard orally in relation to costs in which event the Court will nominate a date for hearing oral submissions otherwise costs will be determined on the papers.

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

REASONS FOR JUDGMENT

Background

1    These proceedings concern an application in the original jurisdiction by way of an appeal under s 56 of the Trade Marks Act 1995 (Cth) (“the Act”) brought by N.V. Sumatra Tobacco Trading Company (“NVS”) from a decision of the delegate of the Registrar of Trade Marks, made under s 55 of the Act, to refuse to register two trade marks of NVS namely, LUCKY DRAW (Application No. 963426) and LUCKY DREAM (Application No. 963428).

2    Each application was filed on 25 July 2003 in respect of goods in Class 34 of the Register described as “cigarettes, cigarette filters, kretek cigarettes, cigarette papers, white cigarettes, ashtrays (not made of precious metal), cigars, tobacco, lighters, matches, smokers’ articles”. LUCKY DREAM was accepted on 20 November 2003 and LUCKY DRAW was accepted on 1 December 2003.

3    The registration of each NVS trade mark was opposed by the respondent, British American Tobacco Australia Services Limited (“BAT”) on the footing that at the priority date of 25 July 2003 each NVS trade mark was deceptively similar to BAT’s registered trade marks LUCKIES (Trade Mark 81923) registered 31 July 1944 and LUCKY STRIKE (Trade Mark 151409) registered on 5 November 1958, both of which are registered in respect of Class 34 goods described as “manufactured tobacco”: the s 44(1) ground of opposition.

4    BAT also contended that by the priority date each registered trade mark had acquired a reputation in Australia and because of that reputation the use by NVS of each of its trade marks, said to be deceptively similar to BAT’s registered trade marks, would be likely to deceive or cause confusion: the s 60 ground of opposition.

5    BAT also contended that each NVS trade mark contained a particular connotation such that use of each trade mark in relation to the field of goods for which registration was sought would be likely to deceive or cause confusion: the s 43 ground of opposition.

6    Although it will be necessary to consider the precise findings of the Registrar’s delegate, it is sufficient for present purposes to note these matters. The delegate concluded that no apparent basis had been established “… for any potential customer to entertain a reasonable doubt that LUCKY DREAM or LUCKY DRAW was a deliberate variation of either LUCKY STRIKE or LUCKIES and intended to indicate a common trade source” (para 26 of the delegate’s decision) and thus deceptive similarity had not been established. However, the delegate concluded that having regard to the opponent’s evidence, each of NVS’s trade marks proposed for registration were deceptively similar to BAT’s LUCKIES trade mark (para 28). The delegate found at para 27 that the “prospect of outright mistake” by some salespersons becomes significant, as a request for “a packet of Luckies” would mean LUCKY STRIKE or the product sold under the trade marks LUCKY DRAW or LUCKY DREAM.

7    The delegate found it unnecessary to consider the extent of BAT’s reputation for the purposes of s 60 of the Act (para 29).

8    The delegate understood the s 43 argument to be that the word “LUCKY” is singular, unusual and entirely fanciful in the context of cigarettes and tobacco products and thus “has connotations of being a product of [BAT]” and inferentially the trade mark LUCKY STRIKE was said to have that connotation at the priority date. The delegate concluded that use of the trade mark would not be likely to deceive or cause confusion because only a “particularly credulous consumer would speculate that [LUCKY DRAW or LUCKY DREAM], implicitly or explicitly, indicated a connection with [BAT]” (paras 31 and 32 of the delegate’s decision).

9    Accordingly, the delegate refused to register either trade mark having found the s 44 ground of opposition established in relation to BAT’s LUCKIES registered trade mark.

The Notice of Appeal

10    By its Notice of Appeal, NVS seeks orders that the decision of the delegate (so far as BAT’s opposition was upheld), be set aside; the opposition be dismissed; and each trade mark be registered. The grounds of appeal are these:

3.1    The Delegate erred in finding at para [28] that [NVS’s] Trade Marks LUCKY DRAW and LUCKY DREAM (“the Opposed Marks”) were deceptively similar to [BAT’s] Trade Mark 81923 LUCKIES.

3.2    The Delegate erred in concluding at para [27] that the Opposed Marks would be shortened or abbreviated to or mistaken for LUCKIES.

3.3    The Delegate erred in applying Section 44 in:

    (a)    Failing to have regard to the Opposed Marks in the form applied for; and

    (b)    Having regard to the trade reputation claimed by [BAT] to subsist in [its] trade marks 81923 LUCKIES and 151409 LUCKY STRIKE rather than the marks as registered.

3.4    The Delegate erred in finding at para [27] that the Opposed Marks were deceptively similar to [BAT’s] Trade Mark 81923 having regard to his findings:

    (a)    At para [17] that the Opposed Marks would not ordinarily be shortened to “Luckies”;

    (b)    At para [18] that buyers of tobacco products in Australia are not “uninvolved consumers”;

    (c)    At paras [21, 22, 26 and 32] that the Opposed Marks look and sound different to [BAT’s] Trade Marks, have different meanings and are not likely to be considered by consumers to be connected with [BAT’s] Trade Marks.

The Notice of Cross-Appeal

11    By its Notice of Cross-Appeal, BAT seeks orders that the delegate’s decision be varied such that the grounds of opposition under ss 43 and 60 are found to be established. Having regard to all of the subparagraphs within some of the grounds, there are 33 grounds of cross-appeal relied upon by BAT.

12    As to the s 60 grounds, BAT says that the delegate ought to have considered s 60; a finding ought to have been made that each opposed trade mark is deceptively similar to the LUCKY STRIKE trade mark; each of BAT’s trade marks had acquired a reputation in Australia before the priority date; because of that reputation, use of the opposed marks would be likely to deceive or cause confusion; and, having regard to findings of fact that ought to have been made, s 60 required consideration (grounds 5(a) to (e)).

13    As to s 43, BAT says that s 43 was made out because both opposed marks are deceptively similar to the LUCKIES trade mark (as found) and also to the LUCKY STRIKE trade mark; the delegate failed to have regard to the reputation subsisting in LUCKIES and LUCKY STRIKE in rejecting the notion that a consumer would implicitly or explicitly find a connection between LUCKY DREAM, LUCKY DRAW and BAT; and, having regard to findings of fact that ought to have been made, s 43 has been established (grounds 6(a) to (e)).

14    The remaining grounds recite a series of matters that BAT contends ought to have been the subject of findings of fact. It is not necessary to set out all of those matters in these reasons particularly since an appeal under s 56 is a hearing de novo: Blount Inc. v Registrar of Trade Marks (1998) 83 FCR 50 per Branson J at 59; (1998) 40 IPR 498 at 506; Registrar of Trade Marks v Woolworths Ltd (1999) 93 FCR 365 per French J at [32] and [33]; (1999) 45 IPR 411.

15    However, a synthesis of the grounds of cross-appeal is this: the delegate wrongly found that LUCKY DRAW and LUCKY DREAM would not ordinarily be shortened to Luckies (for the reasons recited at ground 7(a) to (e)); LUCKY DRAW and LUCKY DREAM would ordinarily be abbreviated to Luckies (ground 8); uncommitted casual smokers and third party purchasers of cigarettes are likely to be more error-prone in the purchase transaction than other smokers (grounds 9 and 10); even though some people know LUCKIES is an abbreviation for LUCKY STRIKE, those people will nevertheless be deceived or confused by use of LUCKY DRAW or LUCKY DREAM (grounds 11 and 12); LUCKY DRAW and LUCKY DREAM sound and look like LUCKY STRIKE (ground 14); each of LUCKY DRAW, LUCKY DREAM and LUCKY STRIKE have comparable meanings and all three connote “good fortune” and “chance” (grounds 15, 16, 17, 18 and 19); a likelihood of confusion between LUCKY STRIKE and LUCKY DREAM would arise out of the use of LUCKY DREAM by NVS (grounds 20 and 21); because the meanings are not distinctly different, a suggestion of sub-branding by BAT arises (grounds 22 and 23); and, because the meanings of LUCKY DRAW, LUCKY DREAM and LUCKY STRIKE are comparable, potential consumers may think that LUCKY DRAW and LUCKY DREAM are a deliberate variation of LUCKY STRIKE or LUCKIES thus suggestive of a common trade origin within BAT’s broader family of “LUCKY” trade marks.

The standard of proof in an application (appeal) under s 56 of the Act

16    Section 33(1) of the Act casts an obligation upon the Registrar to accept (after examination) an application unless he or she is satisfied that there are grounds for rejecting it or the application is not properly made. If so satisfied, the application must be rejected: s 31(3). The applicant may appeal to this Court under s 35 of the Act against a rejection decision or a conditional or limited acceptance decision. Such is the first stage of ensuring the integrity of the Register: Health World Ltd v Shin-Sun Australia Pty Ltd (2010) 240 CLR 590 per French CJ, Gummow, Heydon and Bell JJ at [22] – [26].

17    Once accepted, a person may oppose the registration of an accepted trade mark by invoking proceedings under Division 1 of Part 5 of the Act. Section 54 opposition hearing proceedings are conducted in accordance with the Regulations made under the Act and the proceeding must, at its end, result in a decision made in accordance with s 55 which, relevantly, is in these terms:

55    Decision

    (1)    Unless the proceedings are discontinued or dismissed, the Registrar must, at the end, decide:

        (a)    to refuse to register the trade mark; or

        (b)    to register the trade mark (with or without conditions or limitations) in respect of the goods and/or services then specified in the application

        having regard to the extent (if any) to which any ground on which the application was opposed has been established.

18    An applicant or opponent may appeal to this Court under s 56 of the Act from a decision of the Registrar under s 55.

19    Because the determination of the s 56 application is by way of re-hearing conducted as a hearing de novo (according respect and weight to the delegate’s opinion as an experienced and skilled administrative decision-maker), the Court is required to determine on the merits the same question that was before the decision-maker, namely, whether or not the trade mark should be registered, and in doing so the Court applies the same legal criteria that the Registrar was required to apply: Registrar of Trade Marks v Woolworths Ltd (1999) 93 FCR 365 per French J at [33]; Chocolaterie Guylian NV v Registrar of Trade Marks (2009) 180 FCR 60 per Sundberg J at [14]. No presumption of correctness in the delegate’s decision arises under the Act.

20    Under s 55, the Registrar must make a decision. He or she has two equally weighted options (so far as the words qualifying those options are expressed), either to refuse to register the trade mark, or to register it with or without conditions or limitations, in respect of the relevant goods or services. The statutory consideration that informs the decision as to either outcome is the extent (if any) to which any ground on which the application was opposed (ss 43, 44 and 60) has been established.

21    The opposition proceedings under Division 1 of Part 5 and the resolution of those proceedings by a decision under s 55 represents a second stage procedure for ensuring the integrity of the Register: Health World Ltd v Shin-Sun Australia Pty Ltd (2010) 240 CLR 590 per French CJ, Gummow, Heydon and Bell JJ at [22] – [26].

22    Section 55 unlike s 33, does not start from the position that the Registrar must take the relevant administrative step unless satisfied of statutory matters. Under s 55, the Registrar must in the end “decide” and he or she will do so having regard to whether any ground of opposition has been established. Nothing in s 55 suggests that the standard to be applied by the Registrar in deciding whether any ground of opposition has been established in the course of opposition proceedings is anything other than on the balance of probabilities. Nothing in ss 55, 56 or 197 of the Act suggests either in their terms or in the context of the Act overall that in quelling the controversy raised by an appeal, as an exercise of original jurisdiction, the Court ought to apply a dispositive standard of proof of the relevant matters other than on the balance of probabilities.

23    Plainly enough, the opponent bears the onus and the relevant matters must be established at the priority date of 25 July 2003: Southern Cross Refrigerating Co. v Toowoomba Foundry Pty Ltd (1954) 91 CLR 592 per Kitto J at 594 (at proposition (i)); Food Channel Network Pty Ltd v Television Food Network GP (2010) 185 FCR 9 per Keane CJ, Stone and Jagot JJ at [28], [32] and [34].

24    Notwithstanding the terms of ss 55, 56 and 197 of the Act and the nature of the appeal proceedings, NVS contends that in determining whether a ground of opposition has been made good by BAT, the Court must be satisfied that the opposed trade marks “should clearly not be registered”. That standard of proof is said to arise out of the observations of Cooper, Kiefel and Emmett JJ in Lomas v Winton Shire Council [2002] FCAFC 413; [2003] AIPC 91-839 per the Court at [17] to [19] and [36]; [2003] AIPC 91-839, as applied either as a matter of principle (in terms of construction) or as a matter of comity, in a number of single judge decisions. However, according to other single judge decisions, their Honours’ opinion in Lomas as to the standard to be applied might be regarded as obiter and may place an impermissible gloss upon the clear text of s 55.

25    The decisions that apply the Lomas or “higher” standard of proof in an s 56 appeal include these: Torpedoes Sportswear Pty Ltd v Thorpedo Enterprises Pty Ltd (2003) 132 FCR 326 per Bennett J at [22]; Austereo Pty Ltd v DMG Radio (Australia) Pty Ltd (2004) 209 ALR 93 per Finn J at [4]; Health World Ltd v Shin-Sun Australia Pty Ltd (2005) 64 IPR 495 per Cooper J at [6]. Although the question of standard of proof was alive for the purposes of leave to appeal from the judgment of Finkelstein J in BP plc v Woolworths Ltd (2004) 62 IPR 545, the question was ultimately not required to be resolved by the Full Court in Woolworths Ltd v BP plc (No. 2) (2006) 154 FCR 97.

26    In Lomas, on an application under s 195(2) of the Act for leave to appeal from orders of the primary judge (and the determination of the substantive appeal itself), the Full Court observed at [17] (in the absence of any controversy on the point between the parties or submissions on the point) that the standard of proof to be applied in considering an appeal under s 56 is whether the trade mark should clearly not be registered, and at [36], the opponents would be required to discharge their onus “at least on the balance of probabilities” and “on one view” they “may be required” to establish [the ground] on the should clearly not be registered formulation.

27    As it turned out, the Full Court was not persuaded (at [45]) on the balance of probabilities and was “certainly not persuaded” (also at [45]) that the opposed application should “clearly be registered”. Although the observations at [17] to [19] seem to be expressed in unqualified affirmative terms, the observation at [36] suggests some degree of equivocation as to the standard. In any event, the Full Court in Lomas did not receive submissions on the point and was not satisfied on either basis.

28    In Clinique Laboratories Inc v Luxury Skin Care Brands Pty Ltd (2003) 61 IPR 130, Gyles J at [13] observed that his Honour found it difficult to see how s 55 could be read in a manner which imported a higher standard although his Honour found that it was not necessary to form a view about that matter in order to determine the matter before him. In Pfizer Products Inc v Karam (2006) 237 ALR 787, Gyles J at [6] to [26] analysed the authorities and concluded at [26] that Lomas did not represent a binding authority of the Full Court and having regard to the clear words of the statute, “the opponent has to establish a ground of opposition, although not clearly establish such a ground”. In Chocolaterie Guylian NV v Registrar of Trade Marks (2009) 180 FCR 60, Sundberg J observed at [26] that “[i]n my view, there is nothing in the relevant provisions that supports the imposition of a higher standard, even at the acceptance stage”.

29    In McCorquodale and Others v Masterson (2004) 63 IPR 582, Kenny J at [24] notes the observations of Bennett J in Torpedoes Sportswear as to the standard of proof at [15] – [22]. At [24], Kenny J also notes the observations in Lomas at [36] (which seem to me to be equivocal) and no reference is made to [17] in Lomas. At [24], Kenny J observes that the opposition is to be “upheld only if the court is satisfied that the trade mark should not be registered because it is satisfied that a ground of opposition is made out”. At [63], Kenny J was satisfied that the “s 43 ground of opposition is made out”. There is no suggestion that her Honour is disposing of the controversy on the footing that the opponent must demonstrate a higher standard of proof than that actually applied by her Honour. In BP plc v Woolworths Ltd (2004) 62 IPR 545, Finkelstein J at [8], although discussing a different topic, simply notes the comments of the Full Court in Lomas at [17] to [19] and notes Torpedoes Sportswear at p 330 of the Federal Court Report (132 FCR 326) which contains [22] as to the standard adopted by Bennett J, and observes that his own approach may be inconsistent with the views expressed in those authorities, largely on the footing that the analysis “may have impermissibly borrowed from patent law”.

30    In Kowa Company Ltd v NV Organon (2005) 66 IPR 131, Lander J reviewed the authorities and concluded at [140] that his Honour ought to follow the Full Court decisions in Lomas (and also Registrar of Trade Marks v Woolworths Ltd (1999) 93 FCR 365) and as a matter of comity follow the decision of Bennett J in Torpedoes Sportswear even though his Honour doubted the correctness of those decisions for the reasons expressed by Gyles J and Finkelstein J. Lander J also noted in Hills Industries Limited v Bitek Pty Ltd (2011) 90 IPR 337 at [52] that Gyles J had further considered the matter in Pfizer and Gyles J and expressed the view that Lander J was in error in applying the decision in Lomas and Torpedoes Sportswear, in Kowa Company Ltd v NV Organon.

31    My own view is this.

32    There is nothing in the language of s 55 of the Act either by its terms or in the context of the Act generally having regard to the nature of opposition proceedings and ss 56 and 197 of the Act that suggests a standard of proof other than on the balance of probabilities. I accept that in construing the relevant provisions of the Trade Marks Act there is ultimately no persuasive utility in seeking to achieve symmetrical reconciliation with processes and procedures that prevail under a different Commonwealth Act, namely, the Patents Act 1990 (Cth). The provisions of the Trade Marks Act must be construed consistent with the well known approach to construction adopted by the High Court: Project Blue Sky Inc. v Australian Broadcasting Authority (1998) 194 CLR 355 at [69] to [71] and [78] per McHugh, Gummow, Kirby and Hayne JJ; Astley v Austrust Ltd (1999) 197 CLR 1 at [49] per Gleeson CJ, McHugh, Gummow and Hayne JJ; Network Ten Pty Ltd v TCN Channel Nine (2004) 218 CLR 273 at 280-281 per McHugh A-CJ and Gummow and Hayne JJ (Kirby J in dissent at 305-306 although not as to the principle of construction); and Alcan (NT) Alumina Pty Ltd v Commissioner of Territory Revenue (Northern Territory) (2009) 239 CLR 27 at [47] per Hayne, Heydon, Crennan and Kiefel JJ.

33    Although it seems to me as a question of construction that the standard of proof to be applied in s 56 proceedings requires the opponent to establish the relevant ground on the balance of probabilities, four considerations suggest to me that the disposition of these proceedings requires the imposition of the “higher” standard.

34    First, an intermediate Court of Appeal in Lomas has expressed an affirmative view as to the standard at [17] notwithstanding the apparent equivocation at [36]. Although it may well be (and probably is) the position that the observations in Lomas at [17] are obiter, the remarks nevertheless represent an expression of opinion by an intermediate Court of Appeal that ought not to be put to one side lightly.

35    Secondly, the Full Court in Food Channel Network Pty Ltd v Television Food Network GP (2010) 185 FCR 9 per Keane CJ, Stone and Jagot JJ had occasion to consider Lomas in the context of which party bears the onus in the proceedings (in the course of dealing with the heterodoxy advanced in that case by the opponent that the applicant for registration of the trade mark bears the onus), and although on the question of the standard of proof, the Full Court at [32] found that it was not necessary to determine whether the standard of proof required of an objector is higher than proof on the balance of probabilities, the Full Court did not cast doubt upon the observations in Lomas on that issue. Although, plainly enough, the observations at [32] are not an affirmation of the correctness of the comments in Lomas on the standard of proof, it is not irrelevant that the Full Court in the context of a discussion of Lomas did not expressly elect to cast doubt on that aspect of those observations.

36    Thirdly, the observations in Lomas as to the standard of proof have been applied in single judge decisions of this Court and although it is true, of course, that a different view has also been expressed, there is nevertheless a body of authority which expressly applies the observations in Lomas.

37    Fourthly, even though the observations in Lomas as to the standard of proof may be obiter, the expression of opinion ought to be given considerable weight as an expression of opinion of an intermediate Court of Appeal: Australian Securities Commission v Marlborough Gold Mines Ltd (1993) 177 CLR 485 per Mason CJ, Brennan, Dawson, Toohey and Gaudron JJ at 492; Farah Constructions Pty Limited v Say-Dee Pty Limited (2007) 230 CLR 89 per the Court (Gleeson CJ, Gummow, Callinan, Heydon and Crennan JJ) at [135]; and Tay v Minister for Immigration and Citizenship (2010) 183 FCR 163 per the Court (Dowsett, Stone and Bennett JJ) at [13].

38    Accordingly, in determining the questions alive in the present proceedings I propose to determine whether BAT has established a ground of opposition on the footing that it must be shown that the NVS trade marks should clearly not be registered rather than whether the particular ground of opposition has been established on the balance of probabilities. The question of whether a higher or lower standard is to be applied in s 56 proceedings is a matter that must be determined by the Full Court of this Court.

The statutory provisions

39    Section 52(1) of the Act at the priority date provided that if the Registrar has accepted an application for the registration of a trade mark, any person may oppose the registration by filing a notice of opposition and s 52(4) provided that the registration of a trade mark may be opposed on any of the grounds specified in Division 2 of Part 5 and on no other grounds. Those grounds included any ground upon which the application might be rejected (s 43 and s 44 grounds) and on the further ground described in s 60.

40    Sections 43, 44 and 60 of the Act were, so far as relevant in these proceedings at the priority date, in the following terms:

43    Trade mark likely to deceive or cause confusion

An application for the registration of a trade mark in respect of particular goods or services must be rejected if, because of some connotation that the trade mark or a sign contained in the trade mark has, the use of the trade mark in relation to those goods or services would be likely to deceive or cause confusion.

                            [emphasis added]

44    Identical etc. trade marks

(1)    Subject to subsections (3) and (4), an application for the registration of a trade mark (applicant’s trade mark) in respect of goods (applicant’s goods) must be rejected if:

(a)    the applicant’s trade mark is substantially identical with, or deceptively similar to:

(i)    a trade mark registered by another person in respect of similar goods or closely related services; or [emphasis added]

(ii)    a trade mark whose registration in respect of similar goods or closely related services is being sought by another person; and

(b)    the priority date for the registration of the applicant’s trade mark in respect of the applicant’s goods is not earlier than the priority date for the registration of the other trade mark in respect of the similar goods or closely related services.

Note 1:    For deceptively similar see section 10.

Note 2:     For similar goods see subsection 14(1).

Note 3:    For priority date see section 12.

Note 4:     The regulations may provide that an application must also be rejected if the trade mark is substantially identical with, or deceptively similar to, a protected international trade mark or a trade mark for which there is a request to extend international registration to Australia: see Part 17A.

                        [emphasis as to italics added]

…

60    Trade mark similar to trade mark that has acquired a reputation in Australia

The registration of a trade mark in respect of particular goods or services may be opposed on the ground that:

(a)    it is substantially identical with, or deceptively similar to, a trade mark that, before the priority date for the registration of the first-mentioned trade mark in respect of those goods or services, had acquired a reputation in Australia; and

(b)    because of the reputation of that other trade mark, the use of the first-mentioned trade mark would be likely to deceive or cause confusion. [emphasis added]

Note 1:    For deceptively similar see section 10.

Note 2:        For priority date see section 12.

41    The reference in s 44(1) to the operation of that subsection being subject to subsections (3) and (4) of s 44 does not raise any matter for consideration in these proceedings.

42    By s 10, the term deceptively similar has the following meaning:

10    Definition of deceptively similar

For the purposes of this Act, a trade mark is taken to be deceptively similar to another trade mark if it so nearly resembles that other trade mark that it is likely to deceive or cause confusion. [emphasis added]

43    By s 14, the notion of similar goods has the following meaning:

14    Definition of similar goods and similar services

(1)    For the purposes of this Act, goods are similar to other goods:

(a)    if they are the same as the other goods; or

(b)    if they are of the same description as that of the other goods. [emphasis added]

(2)    For the purposes of this Act, services are similar to other services:

(a)    if they are the same as the other services; or

(b)    if they are of the same description as that of the other services.

The framework principles guiding the application of these sections of the Act

44    Although the proceedings in Australian Woollen Mills Limited v F.S. Walton and Company Limited (1937) 58 CLR 641 concerned a suit for infringement, Dixon and McTiernan JJ observed at 658 that “in the end, it becomes a question of fact for the court to decide whether in fact there is such a reasonable probability of deception or confusion that the use of the new mark and title should be restrained”. In deciding that question of fact, their Honours also said this in the well-known passage at 658:

In deciding this question, the marks ought not, of course, to be compared side by side. An attempt should be made to estimate the effect or impression produced on the mind of potential customers by the mark or device for which the protection of an injunction is sought. The impression or recollection which is carried away and retained is necessarily the basis of any mistaken belief that the challenged mark or device is the same. The effect of spoken description must be considered. If a mark is in fact or from its nature likely to be the source of some name or verbal description by which buyers will express their desire to have the goods, then similarities both of sound and of meaning may play an important part. The usual manner in which ordinary people behave must be the test of what confusion or deception may be expected. Potential buyers of goods are not to be credited with any high perception or habitual caution. On the other hand, exceptional carelessness or stupidity may be disregarded. The course of business and the way in which the particular class of goods are sold gives, it may be said, the setting, and the habits and observation of men considered in the mass affords the standard. Evidence of actual cases of deception, if forthcoming, is of great weight.

                                [emphasis added]

45    At 659, their Honours also said this:

The main issue in the present case is a question never susceptible of much discussion. It depends on a combination of visual estimation and judicial estimation of the likely effect to be produced in the course of the ordinary conduct of affairs.

                                [emphasis added]

46    In Cooper Engineering Co. Pty Ltd v Sigmund Pumps Ltd (1952) 86 CLR 536, the question concerned an appeal by Cooper Engineering from a decision of the Registrar dismissing its opposition to the granting of an application by Sigmund Pumps for registration of the trade mark “Rainmaster” in respect of water spraying installations for horticultural and agricultural purposes on the footing that the applicant’s mark so nearly resembled the opponent’s trade mark “Rain King” as to be likely to deceive or alternatively the use of the applicant’s mark would be likely to deceive. The sole question (at 538) to be determined by Dixon, Williams and Kitto JJ was whether the word “Rainmaster” so resembled “Rain King” as to be likely to deceive.

47    In determining that question, their Honours said this in a passage which is also well-known, at 538:

The proper approach to the answer to this question is well settled. It was summed up by Lord Parker in [the Pianotist Company Application], “You must take the two words. You must judge of them, both by their look and by their sound. You must consider the goods to which they are to be applied. You must consider the nature and kind of customer who would be likely to buy those goods. In fact, you must consider all the surrounding circumstances; and you must further consider what is likely to happen if each of those trade marks is used in a normal way as a trade mark for the goods of the respective owners of the marks. If, considering all those circumstances, you come to the conclusion that there will be confusion – that is to say, not necessarily that one man will be injured and the other will gain elicit benefit, but that there will be a confusion in the mind of the public which will lead to confusion in the goods, then you … must refuse the registration in that case. …

It is sufficient if persons who only know one of the marks and have perhaps an imperfect recollection of it are likely to be deceived.

                                [emphasis added]

48    The two marks in contest must be considered and judged “as a whole” to determine the measure of their distinction (at 538): see also Food Channel Network Pty Ltd v Television Food Network GP (2010) 185 FCR 9 at [92]. In the comparison of the marks as a whole, their Honours in Cooper Engineering concluded that “Rainmaster” does not look like nor sound like “Rain King” with the result that reliance was placed by the opponent upon the notion that deception arose out of the two marks “conveying the same idea”. As to that, their Honours observed at 539:

But it is obvious that trade marks, especially word marks, could be quite unlike and yet convey the same idea of the superiority or some particular suitability of an article for the work it was intended to do. To refuse an application for registration on this ground would be to give the proprietor of a registered trade mark a complete monopoly of all words conveying the same idea as his trade mark. The fact that two marks convey the same idea is not sufficient in itself to create a deceptive resemblance between them, although this fact could be taken into account in deciding whether two marks which really looked alike or sounded alike were likely to deceive.

                                [emphasis added]

49    It follows that although words conveying the same idea cannot enable a de facto monopoly to arise, the fact the two marks convey the same idea can be taken into account in deciding whether the two marks which look and sound alike are likely to deceive or cause confusion. The presence of a common idea may be more likely to be recalled in connection with the relevant transaction than the precise details of the mark: Jafferjee v Scarlett (1937) 57 CLR 115 at 121 and 122. However, everything depends upon context as the suggestion of differing ideas may also serve to reduce the risk of confusion: Johnson & Johnson v Kalnin (1993) 114 ALR 215 at 219.

50    The deceptiveness that is contemplated must result from similarity but the likelihood of deception must be judged not by the degree of similarity alone but by the effect of that similarity in all the circumstances: Shell Co. of Australia Ltd v Esso Standard Oil (Aust) Ltd (1963) 109 CLR 407 at 416 per Windeyer J; C A Henschke & Co v Rosemount Estates Pty Ltd (2000) 52 IPR 42 per Ryan, Branson and Lehane JJ at [42].

51    Two other considerations emerge from Cooper Engineering. Their Honours noted that a purchaser of spray nozzles and sprinklers would not be likely to be lacking in “discernment”. He would not be “in a hurry to buy”. He would not be likely to “pay any attention to the presence of a common word like rain in the combination”. Secondly, the prefix “rain” appeared in other trade marks for goods of the same description. The examples were Rainwell, Rainmaker, Rain Queen and Rainbow.

52    In Southern Cross Refrigerating Co. v Toowoomba Foundry Pty Ltd (1954) 91 CLR 592, Kitto J considered the principles to be applied in determining whether the use of the mark “Southern Cross” in respect of gas absorption refrigerators, electric refrigerators and component parts would be likely to deceive (or cause confusion) by reason of the pre-existing registration of the opponent’s “Southern Cross” trade mark in respect of a range of particular goods. As to the principles, Kitto J said this in another well-known passage at 595:

It is not necessary, in order to find that a trade mark offends against the section, to prove that there is an actual probability of deception leading to a passing off. While a mere possibility of confusion is not enough – for there must be a real, tangible danger of its occurring … - it is sufficient if the result of the user of the mark will be that a number of persons will be caused to wonder whether it might not be the case that the two products come from the same source. It is enough if the ordinary person entertains a reasonable doubt. … In considering the probability of deception, all the surrounding circumstances have to be taken into consideration. (This includes the circumstances in which the marks will be used, the circumstances in which the goods will be bought and sold, and the character of the probable purchasers of the goods: …) … In applications for registration, the rights of the parties are to be determined as at the date of the application. … The onus must be discharged … in respect of all goods coming within the specification in the application … of the goods or class of goods in respect of which registration is desired, and not only in respect of those goods on which [the applicant] is proposing to use the mark immediately. And the onus is not discharged by proof only that a particular method of user will not give rise to confusion. The test is, what can the applicant do if he obtains registration?

…

Of course, it is in relation to commercial dealings with goods that the question of confusion has to be considered, and the persons whose state of mind is material are the prospective or potential purchasers of goods of the kind to which the applicant may apply his mark. References to these persons as purchasers or customers, and to buying and selling, in the Reckitt & Coleman case … indicate nothing more than a recognition of this fact.

                                [emphasis added]

53    In Registrar of Trade Marks v Woolworths Ltd (1999) 93 FCR 365 at [50], French J interpolated that Kitto J’s observations as to persons caused to wonder results in the proposition that the trade mark is likely to cause confusion if there is a real likelihood that some people will wonder or be left in doubt about whether the two sets of products in question come from the same source and at [47] his Honour explained that the trade mark law concept of confusion in the sense of mere wonderment as to common origin or connection might be regarded as effecting a prophylactic support for commercial distinctiveness. It would be enough, whether prophylactic or not, having regard to all the surrounding circumstances, if the ordinary person entertained a reasonable doubt as to the source or origin of the goods: Campomar Sociedad Limited v Nike International Ltd (2000) 202 CLR 45 per Gleeson CJ, Gaudron, McHugh, Gummow, Kirby, Hayne and Callinan JJ at [83].

54    In Berlei Hestia Industries Ltd v Bali Co. Inc (1973) 129 CLR 353, Mason J (Stephen J agreeing) considered (for expungement purposes) whether the respondent’s use of the trade mark “BALI-BRA” in connection with brassieres would be likely to deceive or cause confusion having regard to the appellant’s longstanding registration and use of the trade mark “Berlei” for its brassieres and in doing so considered the likelihood of confusion arising out of the phonetic similarity between Burley (appellant) and Barley (respondent) for similar goods otherwise distinguishable by quality of manufacture. Mason J at 362 reaffirmed the principle in Cooper Engineering and Southern Cross that a likelihood of confusion is to be answered not by past use but by reference to the use to which the mark can properly be put. His Honour observed that the issue is whether that use will give rise to a “real danger of confusion”. Although, of course, the evidence in every case is different, the evidential factors remain relevant and worthy of consideration. At 362 and 363, Mason J said this of those factors:

The evidence indicates that, in general, brassieres are bought and sold after a fitting or over the counter when the article is inspected by the customer, thereby reducing the likelihood of confusion arising from phonetic similarity. But the risk is not eliminated. … And in considering the likely reaction of a customer it is important to take into account, not the person whose knowledge of the two marks and the goods sold under them enables her to distinguish between them, but the person who lacks that knowledge. As Luxmoore L.J. said in Rysta Ltd’s Application; … “It is the person who only knows the one word, and has perhaps an imperfect recollection of it, who is likely to be deceived or confused”.

A factor to be taken into account is that no case of actual deception was established. Its significance is diminished by the circumstance that there has been a marked difference in the price and character of the goods manufactured by the parties.

55    Allowance must be made for imperfect recollection. As to aural or phonetic similarities, first impressions upon hearing references to the registered trade mark compared with the sound of the opposed trade marks in the context of the uses to which the opposed trade marks can be put, may be significant: Re Rysta Ltd’s Application [1943] 1 All ER 400 at 407 per Luxmoore LJ, adopted by Viscount Maugham (Lords Thankerton and Wright agreeing), Aristoc Ltd v Rysta Ltd [1945] AC 68.

56    In the context of the sound of the registered trade marks as compared with the sound of the opposed trade marks in hypothetical use in transactions for the oral sale and purchase of cigarette products and other goods the subject of the Class 34 applications, the notion of an “essential feature” of the registered trade mark may be important. In de Cordova v Vick Chemical Co. (1951) 68 RPC 103 (an infringement case) the Privy Council (Lord Radcliffe) addressed the significance of the word “VapoRub” in the registered proprietor’s trade mark “Vicks VapoRub Salve” (together with a triangular device) and the word mark “VapoRub” in the context of the use by the contended infringer of the description “Karsote Vapour Rub”. Lord Radcliffe observed at 106 that a trader infringes another’s trade mark if:

… he uses one or more of its essential features. The identification of an essential feature depends partly on the Court’s own judgment and partly on the burden of the evidence that is placed before it. A trade mark is undoubtedly a visual device; but it is well-established law that the ascertainment of an essential feature is not to be by ocular test alone. Since words can form part, or indeed the whole, of a mark, it is impossible to exclude consideration of the sound or significance of those words. Thus it has been long accepted that, if a word forming of a mark has come in trade to be used to identify the goods of the owner of the mark, it is an infringement of the mark itself to use that word as the mark or part of the mark of another trader, for confusion is likely to result. … [After having discussed the circumstances or conditions in which orders might be placed] – It is more useful to observe that in most persons the eye is not an accurate recorder of visual detail, and that marks are remembered rather by general impressions or by some significant detail than by any photographic recollection of the whole.

                                [emphasis added]

57    In the result, “VapoRub” was regarded as an essential feature of the mark.

58    The question of imperfect recollection therefore is likely to be informed by, in part at least, the extent to which phonetic similarities arise and whether some part of the registered trade mark reflects an essential feature adopted by the applicant for the new mark. Two things inform imperfect recollection in transactions in which goods are bought and sold in oral transactions apart from broader contextual considerations. First, the degree of phonetic similarity is important. For example, in Berlei, the phonetic similarity was very significant as the phonetic pronunciation of the two marks exhibited the sounds Burley and Barley and in Rysta Ltd’s Application, the similarity was between Rysta and Aristocrat, with Viscount Maugham accepting Luxmoore LJ’s view of a tendency in speech to slur a word beginning with “a” resulting in a phonetic similarity of Rysta and Ristoc. Secondly, a part of the registered trade mark may be shown to be such an essential feature that it dominates the immediacy of recollection and may give rise to confusion. NVS contends that “LUCKY” is an essential feature of the mark LUCKY STRIKE.

59    Deceptive similarity by s 10 has at its centre the notion of resemblance. A trade mark is by that section taken to be deceptively similar to another mark if it so nearly resembles that mark that it is likely to deceive or cause confusion. The notion of resemblance involves an assessment by the Court of the visual and aural impressions made by the two marks but the likelihood of deception or confusion involves an assessment of what would be the probable visual and aural impressions on customers and potential customers which would arise if the marks were being used properly and within the scope of the registration: Shell Co. of Australia Ltd v Esso Standard Oil (Aust) Ltd (1963) 109 CLR 407 at 416 per Windeyer J; C A Henschke & Co v Rosemount Estates Pty Ltd (2000) 52 IPR 42 per Ryan, Branson and Lehane JJ at [42]; Gardenia Overseas Pty Ltd v Garden Co. Ltd (No. 2) (1994) 29 IPR 485 at 493; and Coca-Cola Co. v All-Fect Distributors Ltd (1999) 96 FCR 107 at 122. In Gardenia, the differentiating circumstances in the aural reception of the words “garden” and “gardenia” involved the syllable structure of the words and the emphasis in pronunciation of the words.

60    Although a person might be caused to wonder about the source or origin of goods in the course of aural references to a word or mark in the course of a transaction, the question ultimately is whether there is a real and tangible risk of confusion occurring. In considering aural comparisons the Court has regard to the natural and ordinary pronunciation of the words in question although evidence is admissible to establish a pronunciation that departs from the orthodox pronunciation. Such evidence might be called from participants in the relevant trade, or consumers: Wingate Marketing Pty Ltd v Levi Strauss & Co. (1994) 49 FCR 89 at 129 per Gummow J; and Pacific Publications Pty Ltd v IPC Media Pty Ltd (2003) 57 IPR 28 at 56 per Bennett J.

61    One further matter should be mentioned in relation to reputation in the registered trade marks against which the application for the opposed marks is considered. At [44], the Full Court in C A Henschke & Co. v Rosemount Estates Pty Ltd (2000) 52 IPR 42 observed that what is required is, essentially, a comparison between the mark of the registered owner and that of the alleged infringer or, alternatively, the applicant for registration. A wider enquiry of the kind that might be undertaken in a passing off action is not appropriate. See also New South Wales Dairy Corp. v Murray Goldburn Co-operative Co. Ltd (1989) 14 IPR 26 at 67 per Gummow J emphasising that deceptiveness flows not only from the degree of similarity itself between the marks but also the effect of that similarity considered in relation to the circumstances of the goods, prospective purchasers and the market relevant to the monopoly attached to the registered trade mark. Thus, the Court is not looking to the totality of the conduct in the same way as in a passing off suit. Here, of course, the question of deceptiveness involves a consideration of the degree of similarity between the registered marks and the trade marks proposed for registration assuming the natural use of NVS’s trade marks across the full field of goods for which registration is sought having regard to the effect of that similarity taking account, particularly, of all of the considerations mentioned in the passages quoted at [44], [45], [47], [48] and [52] of these reasons and [44] to [65] generally.

62    As to the considerations more generally, I note the observations of the Full Court (Moore, Sackville and Emmett JJ) in Crazy Ron’s Communications Pty Ltd v Mobileworld Communications Pty Ltd (2004) 61 IPR 212 at [72] to [90] and the review of the authorities by Bennett J in Torpedoes Sportswear at [72] to [80] which I adopt.

63    Finally, although, as I have already said, the facts of each case are different especially having regard to the evidence called in each controversy, some reference should be made to illustrative examples of the application of the accepted factors, in cases dealing particularly with trade in cigarettes and manufactured tobacco. In Companhia Souza Cruz Industria E Comercio v Rothmans of Pall Mall (Australia) Ltd (1998) 41 IPR 497, Wilcox J considered an opposition by Rothmans to an application for registration of Companhia’s trade mark “FREE” on the footing that the mark was said to be deceptively similar to Rothman’s registered trade mark “FREEDOM” in respect of the same class of goods. As to the importance of the sound of the marks, Wilcox J observed that sound remained important. The name would normally be spoken by the purchaser to the sales assistant. Cigarettes were often retailed in places of entertainment such as hotels, clubs and the like where considerable ambient noise occurred. Any substantial similarity between the sound of the brand names was likely to cause confusion. Further, any substantial similarity between the sounds of the trade marks was not negated by any differences in underlying ideas as the names communicated, in that case, the same idea. The second syllable in “freedom” was found to be a weak syllable that could be lost in speech in the circumstances of the sale transactions. As to the evidence of a linguistic expert, Wilcox J said this at 504:

Each party filed an affidavit made by a linguistic expert as to the similarities and dissimilarities between the words “free” and “freedom”. Without any disrespect to these experts, their evidence was unnecessary. It does no more than spell out the detail of what any reasonably well-informed non-expert already knows. I think judges may be allowed (and expected) to know the meaning of ordinary English words and their methods of pronunciation. It would be unfortunate if the notion got about that it was necessary for parties to go to the trouble and expense of retaining a linguistic expert in order to present an argument that a particular trade mark is, or is not, deceptively similar to another mark. The courts have proved well able to reach conclusions about that question without the assistance of linguists.

64    See also In the Matter of an Application by the United Kingdom Tobacco Company Ltd 29 RPC 489 per Parker J as to the likelihood of deception or confusion not because the trade marks “Stateroom” and “State Express” were not distinctly different but because of the tendency, on a substantial body of evidence, of the public to abbreviate and to use the abbreviation of a brand as the ordinary designation in common parlance of that brand.

65    See also the observations of the New Zealand Court of Appeal in N.V. Sumatra Tobacco Trading Company v British American Tobacco (Brands) Incorporated (2010) 86 IPR 206 although, of course, it must be remembered that every case turns upon the particular evidence adduced in the proceedings.

The decision of the Registrar’s delegate

66    At [17], the delegate observed that “LUCKY” is an adjective and a natural function of the word is to shift focus on to the word which it would ordinarily qualify. Hence, in the delegate’s view, a “lucky shot is not a lucky star, nor is a lucky day a lucky guess”. The delegate, at [17], said that he did not believe that either LUCKY DREAM or LUCKY DRAW would ordinarily be shortened to “Luckies”. At [18], the delegate said this:

Smoking is, in Australia, a habit or pastime that is restricted by law … The availability of tobacco products is carefully regulated, as is their advertising. It is not a field populated by what was called, in Henschke, “uninvolved consumers”. The purchase of cigarettes is not at all analogous to the purchase of a bag of sweets on impulse at a service station. The buyer takes the purchase of a packet of cigarettes a little more seriously than that, as would befit the fact that smoking is a habit that is entirely personal to, and for the gratification of, the smoker. Nor is a packet of cigarettes a cheap throw-away item, at least until it is empty.

67    At [19], the delegate observed that he was not convinced that casual smokers not committed to any particular brand are necessarily any more error-prone that any other smokers. On the evidence before the delegate, the delegate concluded at [19] that the third party purchase of cigarettes on behalf of others was not a “significant part of the market”. At [19], the delegate accepted that the packaging of tobacco products may often not be readily seen or inspected by customers at places like service stations and supermarkets. The delegate also accepted at [19] that “there is no other trade mark in use in respect of tobacco in Australia that incorporates the word LUCKY”. The delegate regarded these matters as setting the “context of the comparison”.

68    At [21], the delegate “fully accept[ed] that LUCKIES can be an abbreviation for LUCKY STRIKE”. The delegate at [21] considered that “those who know that LUCKIES is an abbreviation of LUCKY STRIKE will simply not be deceived or confused by LUCKY DREAM or LUCKY DRAW”. The delegate found at [21] that neither of those trade marks “look like LUCKY STRIKE, nor do they sound like them”.

69    As to meaning, the delegate found at [22] that “[n]or is the meaning of either of the applicant’s trade marks at all comparable to either of the opponent’s trade marks”. At [22], the delegate said this:

LUCKIES, aside from being an abbreviation for LUCKY STRIKE, is an apparently meaningless word, at least in Australia. It is conceptually a long step from either a “lucky dream” or a “lucky draw”. The meanings of those things are themselves perhaps obscure, and perhaps many people would have slightly differing views on that question. But whatever a lucky dream or lucky draw may be, those things are not a lucky strike. LUCKY STRIKE has … a single, fairly clear meaning, to do with a strike in a mining context, as in “to strike oil”. To those who might be unfamiliar with that usage, a strike might be indicative of a union dispute, or might mean a blow, or the action of hitting. Again, those are, in my view, far removed from a lucky dream or a lucky draw.

70    Although the delegate accepted that there are no other trade marks in Australia in respect of tobacco products incorporating the word LUCKY, the delegate considered that the normal function of the word lucky is as an adjective qualifying the noun that follows it, in the case of the applicant’s trade marks, DREAM or DRAW. At [22], the delegate said this:

Thus, the matter is not directly comparable to the element “Hill of” in Henschke. It might, however, be said that the first element in Henschke carried reduced weight because it was common to the trade whereas, in the present instance, I have already explained why I reduced the weight because of the likely effect that the word “lucky” would have on the recollection of the user.

71    Having regard to the evidence, the delegate concluded at [25] that within the niche market of smokers, particularly if both products are present for selection, the delegate did not believe that there is “any particular risk of the confusion of a packet of LUCKY STRIKE with one of LUCKY DREAM”. Further, at [26], the delegate concluded that the meanings of the words LUCKY DREAM, LUCKY DRAW and LUCKY STRIKE are clearly different and any suggestion of sub-branding seems unsupportable and “[t]here is no evidence at all of sub-branding of tobacco products involving the variation, in a primary brand, of words that are distinctive”. The delegate at [26] concluded that there was no evidence before him that BAT or any other tobacco manufacturer was “known to make fundamental changes to its trade marks by the variation of a strong and memorable element”. Thus, it followed for the delegate that:

… there is no apparent basis for any potential customer to entertain a reasonable doubt that LUCKY DREAM or LUCKY DRAW was a deliberate variation of either LUCKY STRIKE or LUCKIES and intended to indicate a common trade source.

72    At [27], the delegate addressed the question of deceptive similarity in relation to BAT’s LUCKIES trade mark and said this:

Deceptive similarity is a notional comparison but it must be approached in the light of the evidence and all of the surrounding circumstances of the case. From the evidence, LUCKY is unusual, even singular, in terms of the trade marks in use for tobacco products. In my own view it is not an obvious word to apply to them. LUCKIES is a word by which the opponent’s products are, at least internationally, identified, and is, moreover, a registered trade mark in its own right. When I allow for the possibility that many sales staff will be non-smokers, almost certainly unaware that LUCKIES means, to the cognoscenti, LUCKY STRIKE, the prospect of outright mistake becomes significant. To a non-smoking salesperson, who might typically be an ordinary cashier at the tobacco counter of a busy supermarket or a service station, “a packet of Luckies” can mean either of two products, with no guarantee at all that both will be present for inspection. Mistakes may well be made and, in the rushed transactions of such a venue, may go undetected. This is particularly likely since cigarette packets are “busy”, … and given over, in significant part, to compulsory and very graphic health warnings that vary between packets but may be in common between brands.

73    In the result, the delegate concluded at [28] that both of the applicant’s trade marks are deceptively similar to BAT’s LUCKIES trade mark. At [29], the delegate found it unnecessary to consider s 60 of the Act.

74    At [32], the delegate concluded that the s 43 ground could not be established and found that “[w]hen the applicant’s trade marks are considered as wholes, I think it would be a particularly credulous consumer who would speculate that the trade mark [exhibiting the singular, unusual and fanciful word LUCKY in the context of cigarettes and other tobacco products], implicitly or explicitly, indicated a connection with the opponent.

75    Both applications were refused on the footing that the delegate was satisfied that the s 44 ground had been established having regard to BAT’s prior registered LUCKIES trade mark.

The evidence relied upon by BAT

76    BAT relied upon a series of affidavits from industry participants, personnel from BAT, a report of an expert Professor John Hajek who is Professor and Reader in the School of Linguistics at the University of Melbourne and Director of the Research Unit for Multiculturalism and Cross-cultural Communication within the School of Languages and Linguistics of the University of Melbourne, and affidavits from lawyers within the firm of solicitors representing BAT as to particular matters.

The evidence of Mr Gary Irwin Mack

77    Mr Mack’s first affidavit is dated 28 April 2009.

78    Mr Mack is the principal BAT witness as to the history of the marketing and sale of cigarette products under and by reference to the trade marks LUCKY STRIKE and LUCKIES.

79    He is a former employee of BAT. He ceased to work for BAT in 2007. Prior to his retirement, he worked in the Australian tobacco industry for approximately 30 years. He first began work in the tobacco industry on 1 March 1976 working at Leo Hemmingway and Picket (“LHP”). LHP was at that time a distributor of tobacco products including the products of WD & HO Wills and a range of “Phillip Morris” tobacco products. The WD &HO Wills products sold by LHP included what Mr Mack described as the “‘Lucky Strike’ range of cigarettes”.

80    Mr Mack’s role at LHP between 1976 and 1982 was that of a “cash van salesperson”. He worked in the company’s vans visiting tobacco retailers on a daily basis, taking orders and delivering tobacco products. He says that the LHP vans carried a range of cigarette brands including “Lucky Strike cigarettes”. His role involved a level of “salesmanship” in promoting and selling tobacco products to retailers serviced by the vans. Mr Mack worked either as a salesperson operating his allocated van or as a relief driver for other drivers. Mr Mack first became acquainted with the “Lucky Strike” brand of cigarettes when performing this role. He says he personally sold Lucky Strike cigarettes to retail outlets.

81    During the period 1976 to 1982, Mr Mack was aware from his employment at LHP that LHP had approximately 95 to 100 vans on the road in Victoria. Each cash van salesperson had a designated geographical error they serviced. Mr Mack serviced an area described as the “Northern suburbs of Melbourne” including Fawkner, Broadmeadows and Craigieburn.

82    In his role as a relief driver which he performed regularly in the period between 1979 to 1982, Mr Mack relieved approximately 30 to 40 drivers in their designated areas in Victoria including Wangaratta, Shepparton, Alexandra and Gippsland. Mr Mack says that at least once a day, on average, as a cash van salesperson, he visited retailers who displayed and sold “‘Lucky Strike’ cigarettes”. He says that during his time as a cash van salesperson including when relieving other drivers, “Lucky Strike” non-filter variety of cigarettes was the best selling variant of “‘Lucky Strike’ cigarettes”. He says that on average during this period, he sold approximately 10 to 15 cartons of “Lucky Strike” cigarettes per week to a variety of retailers throughout Victoria.

83    He says that in 1982 his role at LHP changed to that of Training and Development Manager. He performed this role until 1985. The new role involved travelling with new cash van salespersons to provide field training to them. Between 1982 and 1985 LHP vans continued to stock and sell “Lucky Strike” cigarettes. He says that he observed that the level of sales of these cigarettes to retailers was about the same as it had been when he had been a cash van salesperson (that is, 10 to 15 cartons per week sold to retailers).

84    In the training and development role, Mr Mack says he visited retailers displaying and offering for sale “Lucky Strike” cigarettes on almost a weekly basis throughout Victoria and southern New South Wales.

85    In 1985, Mr Mack commenced work for WD & HO Wills in Papua New Guinea as a Regional Manager and continued in that role until 1988. Mr Mack trained sales representatives on various selling and operational techniques.

86    In 1988, Mr Mack resumed the role of Training and Development Manager in Australia with LHP based in Mulgrave, Victoria, where WD & HO Wills located its Head Office. This role was not unlike the earlier role although more “classroom” style training was undertaken. Nevertheless, Mr Mack says that he went out on the road with cash van salespersons on average one week every month. In doing so, he says he saw “Lucky Strike” cigarettes being displayed, offered for sale and sold by a large number of retailers throughout Victoria which he visited in the course of his training role.

87    In 1990, Mr Mack was appointed as a Distribution Area Manager for LHP. He held this position until 1995. This role involved training and developing cash van salespersons who reported to him about their selling activities within each geographical territory. A large part of his role involved “in-field training” which required him to visit tobacco retailers within the various geographical areas within Victoria. He says that at many tobacco retailer sites that he visited in undertaking in-field training (that is in the period 1990 to 1995), he saw “Lucky Strike” cigarettes being displayed and offered for sale. He says that he also saw retailers selling “Lucky Strike” cigarettes. He says that he also saw replacement stock of “Lucky Strike” cigarettes being sold to tobacco retailers by cash van salesperson.

88    In 1995, Mr Mack was appointed an Area Manager for WD & HO Wills and in this role he was responsible for managing a number of his employer’s trade marketing representatives who marketed the company’s cigarette products and who undertook the distribution and merchandising of those products including “Lucky Strike” cigarettes.

89    He says that in about late 1996, WD & HO Wills focused upon a “channel structure” whereby it attempted to sell products through specific classes of retailing activity. He says that segments of the market were identified. These segments involved what he describes as “geographical-type channels” and “channels according to vendor type”. The classes of vendor were these: Convenience Independent which was comprised of independently owned convenience stores such as corner shops and newsagents; Grocery Organised which was comprised of the supermarket chains such as Woolworths, Coles, Franklins, and Bi-Lo which had centralised management control; Convenience Organised which was comprised of convenience stores within chains such as Shell, BP, Mobil, Caltex, Ampol and 7 Eleven (these convenience organised stores were often, but not always, attached to petrol outlets and in some cases included liquor outlets); Grocery Independent which was comprised of independently owned supermarkets such as IGA Stores many of which were located in rural locations; Independent Price Cutters (Specialists) which was comprised of specialist tobacconists sometimes described as “IPCs”; and the HORECA channel which was comprised of hotels, restaurants and cafes and hence the acronym HORECA.

90    At the time of the adoption of the channel structure, Mr Mack’s title changed from Area Manager to Convenience Channel Manager with the result that Mr Mack managed convenience stores in Melbourne, Adelaide and the Perth metropolitan areas including 7 Eleven stores, service stations and mixed businesses.

91    Mr Mack says that in the period in which he was the Convenience Channel Manager (from 1996 to 2000) he continued to visit tobacco retailers one week in each month. He says that during these visits he saw “Lucky Strike” cigarettes being “promoted, displayed, offered for sale and sold” by tobacco retailers across Melbourne, Adelaide and Perth. He says he visited retail premises in each of these cities accompanied by sales representatives and area managers in the course of their visits to the particular retail premises in each city. He says he observed the sales representatives performing their duties and, during this time, he “often saw and heard sales representatives and Area Managers talking about ‘Lucky Strike’ cigarettes with these retailers”.

92    Mr Mack says that in these exchanges the “sales representatives, Area Managers and retailers sometimes referred to ‘Lucky Strike’ cigarettes as ‘Luckies’ in these discussions”.

93    In 2000, Mr Mack became State Manager for BAT for both Victoria and Tasmania. He was responsible for overseeing all sales-related matters within those States.

94    At the end of January 2002, Mr Mack was promoted to the position of National Field Manager for BAT based in Sydney. In this role he was responsible for managing State managers who in turn were responsible for managing a large number of sales representatives. Mr Mack was responsible for all brands sold by BAT in Australia. In that role, Mr Mack prepared and oversaw the marketing, promotion, distribution and presentation of “Lucky Strike” cigarettes from 2002 until 2007. This particular role involved responsibility for promotional activities and the implementation of various marketing campaigns.

95    Mr Mack says that he estimates visiting in the period from 1976 when he commenced with LHP to 2007 when he retired from BAT, thousands of retail outlets around Australia of “an extraordinarily wide and diverse nature in terms of size, type, geographical location, and style, which outlets were displaying, offering for sale and selling ‘Lucky Strike’ cigarettes”.

96    Mr Mack says that in nearly “all retail outlets” that he saw where “Lucky Strike” cigarettes were offered for sale, the packets were displayed in retail display units which allowed consumers to clearly see the name LUCKY STRIKE on the packet.

97    He says that, in addition, BAT operated and owned many thousands of vending machines and in his position as State Manager, he was aware that there were approximately 3,000 vending machines in various locations in New South Wales and about 1,200 vending machines throughout Victoria. He was aware, when State Manager, that there were vending machines operated by BAT throughout the rest of Australia although he cannot recall the numbers of machines in other States or Territories.

98    He says that when he assumed the role of National Field Manager at the end of January 2002, he was responsible for managing the vending division of BAT throughout Australia and he received monthly reports from each State and Territory. He also assisted in deciding in what manner the machines would be branded. He says that one form of branding adopted by BAT involved endorsing the “LUCKY STRIKE” emblem, colours and words on the outside of the machine. This method of branding had been adopted by WD & HO Wills and then by BAT from about 1995. A photograph of one such machine so branded is in evidence.

99    Mr Mack says that he is aware from his various roles including that of National Field Manager that “LUCKY STRIKE” cigarettes and tobacco products have been sold in Australia in a variety of packet sizes, shapes and forms, including filtered and unfiltered soft packets of 20 cigarettes; hard flip-top packets of 20 filtered cigarettes, “Lights” cigarettes and “Menthol Lights” cigarettes; and in cartons, tins of 20 cigarettes; a limited edition silver coloured packets of 20 cigarettes; further tins; and loose roll-your-own tobacco. Each of these variants bore the names “LUCKY STRIKE” and “LUCKIES” on the packaging. He says that some of these variants were sold by him in 1976 when he first started in the tobacco industry.

100    Mr Mack says that during the course of his career in the Australian tobacco industry (1976 to 2007), he observed that “the name LUCKIES always appeared on packets of ‘Lucky Strike’ cigarettes, whether in the ‘fine print’ on the side, on the back of the packet or on the top front lid of each hard flip top packet”. He says that in 1994, health warnings took the place of the name “LUCKIES” on the top front lid. He says that packets of “LUCKY STRIKE” cigarettes bearing the name LUCKIES on the top front of the lid were nonetheless displayed and sold by retailers throughout 1995 in what was known as the “sell-out period”.

101    Mr Mack says that in the late 1990s, WD & HO Wills devoted significant advertising and promotional expenditure to the promotion of the “Lucky Strike” brand. He says that as a general rule, brand campaigns extended over an eight to 12 week period. One significant campaign for “Lucky Strike” cigarettes occurred in the first quarter of 1999. It represented a brand re-launch on a national scale. As a part of that re-launch, new promotional messages for the Lucky Strike brand were devised and a full advertising campaign was introduced. It was a national campaign. Mr Mack was responsible for overseeing the arrangements sales representatives made with tobacco retailers for “Lucky Strike” cigarettes to be positioned in dispenses on counters within tobacco retailers. Mr Mack says that this made the name Lucky Strike more visible. Photographs taken in a retail store; an IGA supermarket; a Shell service station, a BP service station and in other tobacco specialists are attached as Annexure C to Mr Mack’s affidavit. Mr Mack says that these photographs illustrate the way in which “Lucky Strike” cigarettes were typically displayed to members of the public as part of the 1999 sales campaign. Mr Mack also says that these photographs are substantially reflective of displays that he oversaw throughout Victoria and Tasmania in the grocery and convenience channels during “this time” (being the 1999 re-launch campaign).

102    Mr Mack says that in addition to these steps, more prominent “Lucky Strike” signage was introduced for cigarette dispensers and packet counter units in stores.

103    Mr Mack also says that the 1999 re-launch campaign included other point of sale material devised in order to promote “Lucky Strike” cigarettes including various sized posters bearing the names “Lucky Strike” and “Luckies”; signage; mobiles hung from the ceiling; and signs for shelving within retail sites. Mr Mack says that all of these promotional devices bore prominent images of the names “Lucky Strike” and often “Luckies”. Mr Mack says that as part of the campaign, it was intended that material of this kind be distributed to every retailer selling “Lucky Strike” cigarettes around Australia during the period of the re-launch. He says that he saw various retailers in the States under his control display at that time the point of sale material described above including cigarette dispensers. He says that the image of the “Lucky Strike” name and red emblem was the key or centrepiece of the advertising campaign.

104    One example of a poster distributed as a part of that campaign and referred to by a number of the witnesses is a poster depicting an American pit bull terrier and depicting a flip-top packet of “Lucky Strike” cigarettes with the flip-top showing the word “Luckies”. The poster is endorsed “I choose an American original”.

105    Mr Mack says that in his role in 1999 and in his territories including Victoria and Tasmania, he approved the installation of such promotional signage.

106    He says that another image used extensively in point of sale material at that time featured a martini glass and the words “I choose”. The image displays a packet of cigarettes bearing both the names Lucky Strike and Luckies. Mr Mack says that he recalls seeing this image on various point of sale material displayed in HORECA outlets such as pubs and clubs and in selected tobacconists from time to time after 1999. An example of that poster is Annexure E to Mr Mack’s affidavit.

107    As to price, Mr Mack says that during the 1999 campaign the “Lucky Strike” brand was “re-positioned from a price perspective by reducing the price by approximately $1 per packet within the Grocery Organised Channel and the Specialists Channel”.

108    During the 1999 re-launch, Mr Mack says that he visited in excess of 100 different retailers in Victoria and Tasmania over a 12 week period. He says he accompanied the sales representatives for at least two to three days per week during the campaign and visited on average eight to 12 retailers per day. Mr Mack says that during these visits he assisted retailers and sales representatives to “position” Lucky Strike cigarette packets in the tobacco retail outlets in order for them to obtain maximum exposure to customers. Mr Mack says he spent time with the sales representatives explaining and helping to display the point of sale material he described in his evidence. He says he assisted sales representatives in handing out brochures to retailers which focused solely on the “Lucky Strike” brand of cigarettes. He says that during the 1999 campaign he saw “hundreds of these brochures being handed out by sales representatives”. Examples of two types of brochures that Mr Mack saw handed out by sales representatives when he accompanied them in their visits to retail premises in Victoria and Tasmania in 1999 are contained at Annexure F to Mr Mack’s affidavit.

109    Apart from the 1999 national campaign a further promotional campaign was undertaken, according to Mr Mack, in 2001.

110    Mr Mack says that in 2000 tobacco legislation in various States and Territories restricted the promotion of tobacco products requiring retailers to remove promotional posters for Lucky Strike cigarettes. In 2001, Mr Mack attended a conference in Sydney attended by all State and Territory managers of BAT and senior management. The conference focused upon the “Lucky Strike” cigarette brand, its consumers, its history and the future for the brand. The conference was run by the “Lucky Strike” brand manager at that time and Mr Mack attended as State Manager of Victoria and Tasmania.

111    In 2001, BAT launched a new “brand campaign” for “Lucky Strike” cigarettes to intensify the promotion of Lucky Strike cigarettes to retailers. This campaign centred upon a particular identified target market determined by reference to particular demographic features of the target audience and features derived from an assessment described as “psychographics”. Mr Mack says that as State Manager for Victoria and Tasmania and then as National Field Manager, he was heavily involved in implementing the 2001 strategy. He says that he worked directly with teams in Queensland, New South Wales and Victoria to identify suburbs where the identified target consumers lived or worked. Mr Mack and sales representatives visited tobacco retailers in those suburbs and promoted “Lucky Strike” cigarettes to those retailers and assisted them by allocating additional space within cigarette dispensers for the “Lucky Strike” cigarette packets. Mr Mack says that he recalls visiting “many hundreds of such outlets in 2002 and 2003”.

112    As one illustration, Mr Mack says that BAT concentrated on the geographical area of Kings Cross in Sydney which contains many bars, restaurants, retail outlets and other premises where cigarettes were commonly sold. Mr Mack says that he estimates that there were at least 10 retail outlets displaying what he describes as “packet highlighters” (which are devices attached to display units to highlight particular brands of cigarettes) displaying Lucky Strike cigarettes in a conspicuous way in the main street of Kings Cross in this period. An example of such a “packet highlighter” is Annexure G to Mr Mack’s affidavit.

113    Mr Mack says that BAT identified approximately 60 other suburbs throughout Australia and targeted these suburbs in the same way. They included Darlinghurst, Woolloomooloo, Surry Hills, The Rocks, Melbourne CBD, St Kilda, Fitzroy, Carlton, Prahran, Brisbane CBD, Adelaide CBD and Perth CBD and areas described by reference to streets such as Fitzroy Street, Brunswick Street, Lygon Street and Chapel Street.

114    Mr Mack says that between 1998 and 2006, WD & HO Wills and then BAT targeted particular events thought to attract consumers of the relevant profile. Mr Mack says that such events included the Gay Mardi Gras in Sydney, the Midsummer Festival in Melbourne and the Formula One Grand Prix event. The promotional activities involved placing several temporary dispensers containing “Lucky Strike” cigarettes (that is, containing no other brand of cigarettes) in retail locations on high traffic flow streets in areas where the events took place. Mr Mack says that sometimes he assisted sales representatives in setting up these dispensers. He says he saw dozens of such displays. The dispensers bore the Lucky Strike trade mark and the point of sale materials also displayed the Lucky Strike trade mark (at least while it was lawful to do so having regard to the progressive introduction of legislative restrictions). In later years, when point of sale material promoting cigarettes was prohibited by that legislation, packet highlighters were used presumably on the basis that it remained lawful to promote cigarettes by that method.

115    Mr Mack says that in each of 2001, 2002 and 2003 BAT sought out particular classes of consumer by arranging for a diverse range of retailers not ordinarily regarded as retailers of tobacco products to place prominent counter displays of cigarettes bearing the Lucky Strike trade mark on those sites. They included hairdressers, clothing shops and music outlets. These displays generally included not only point of sale material while legal but also packets of Lucky Strike cigarettes which were offered for sale. Mr Mack estimates that in each of Sydney and Melbourne between 20 and 25 such premises participated in this activity each year. In Brisbane there were approximately 15 such retail outlets each year. In Adelaide and Perth around 10 retail outlets participated each year. Mr Mack says that he saw at least half a dozen hairdressers, clothing shops and music outlets displaying and selling Lucky Strike cigarettes during each year of the campaign in those three years. The target duration for each display was three months although Mr Mack recalls seeing a number of retailers maintaining these displays for up to 12 months.

116    In approximately 2002 or 2003, BAT implemented a program with Mr Mack’s support as National Field Manager under which the national “Lucky Strike” brand manager educated an employee in each State or Territory about the reputation, history, heritage, background and tobacco blend for Lucky Strike cigarettes. Each such person became what was called the “Lucky Strike brand champion” and that person then assisted in educating other BAT sales representatives in their State or Territory about those matters. Those sales representatives then educated retailers about those matters. Mr Mack says that this meant that the specialised knowledge of the “Lucky Strike” brand was disseminated to many sales representatives and in turn to many retailers. Mr Mack says that he noticed that retailers who had been educated about these matters by BAT sales representatives were significantly more knowledgeable about the Lucky Strike brand than otherwise.

117    Mr Mack also says that during the course of his employment with WD & HO Wills and then with BAT, a range of promotional products were given away by BAT to retailers, hoteliers and recreational venue re-sellers where tobacco legislation permitted that activity to occur. Each promotional product bore the name Lucky Strike. These promotional products included items such as metal business card holders, boxes of three packets of Lucky Strike cigarettes, the Zippo brand cigarette lighters and wristwatches. The business card holders and Zippo lighters each bore the name Lucky Strike in a prominent position on the front. Mr Mack annexes at Annexure 8 a copy of a photograph taken by him of a Zippo brand lighter which is an example of the type of lighter handed out to retailers as promotional products. Mr Mack also at Annexure I attaches a photograph he took of a promotional wristwatch earlier described. Mr Mack says that he saw other promotional material distributed to retailers including flags, ashtrays, plastic shopping bags and clocks all of which featured the name Lucky Strike, and in the case of the plastic shopping bags, those items also featured the name Luckies. Photographs of those articles are attached at Annexure J.

118    Apart from these activities, Mr Mack says that in 1998 he became aware that the British American Tobacco Group was to become involved as a principal sponsor of the Formula One Grand Prix and that its racing team was to be named “British American Racing” (“BAR”). BAR’s involvement in Formula One racing extended from 1999 until 2005. There were two cars in the BAR racing team. Each car raced at each Grand Prix Race on the international circuit each year. The name Lucky Strike featured prominently on both cars every year and each car was identically decorated. In some years the name Luckies also appeared. In its first year of racing, the BAR racing car featured both the “Lucky Strike” and the “State Express 555” brand. Mr Mack says that during this period the overseas Grand Prix Races were shown on television in full in Australia and Mr Mack watched at least segments of those races. He says he saw the name Lucky Strike and also the name Luckies on the BAR cars. He says these names were easily seen by him. He generally watched more of the Singapore Grand Prix than other international Grand Prix events having regard to the proximity of the time zone to Australia.

119    Mr Mack says that he saw the BAR team car the first time it raced in Melbourne in 1999. He says that the pit team servicing the car, the drivers themselves and indeed the entire BAR team wore on their overalls and t-shirts a series of logos and the name “Lucky Strike”. In some instances the name “Luckies” also appeared. The BAR team eventually became known as the BAR Honda team in about 2000 coinciding with the use of Honda engines in the vehicles. At about that time the back of each team jacket began to feature the Honda logo although the name Lucky Strike remained on the front of the jackets. An example of the front of such a jacket displaying “Lucky Strike” in the centre of the jacket contained within the round bullseye; the name Lucky Strike around the collar band; and the name Luckies on the shoulder-pads is contained within Annexure K to Mr Mack’s affidavit. Mr Mack says that this image is substantially identical to the overalls he saw worn by BAR drivers and the team over a number of years between 1999 and 2005. Mr Mack says that he attended the Melbourne Grand Prix in 1999, 2000 to 2003 and 2005. He visited the pits every year.

120    Mr Mack also says that in the years 1999 to 2005 dozens of key tobacco retailers around Australia were invited to attend the Paddock Club, which was a corporate box at the Melbourne Grand Prix event, during all four days of the event. Mr Mack visited the Paddock Club and saw BAT representatives give away to retailers hundreds of different types of promotional products, including hats, jackets, racing team shirts, cameras, pens and cocktail sticks. Each item given away bore the name Lucky Strike. Mr Mack says that on race days, the drivers signed replicas of their helmets bearing the name Lucky Strike and he saw these helmets raffled off during the day. Mr Mack says that when he attended the Grand Prix in those years, he saw retail outlets near and around Albert Park fitted out with promotional material displaying clearly the name Lucky Strike. These displays were visible from the street. He says tobacconists, usually those whose premises had very high consumer visibility and prominent exposure to high traffic thoroughfares, also erected front window displays focusing solely on “Lucky Strike” cigarettes (at least during the period that those displays were consistent with the tobacco legislation). Mr Mack says these displays adopted point of sale material and commonly featured actual packets of Lucky Strike cigarettes. Annexure N is a photograph of an example of a Grand Prix themed window display in the window of “Chris Perera Tobacconist” on Flinders Street in Melbourne near the Flinders Street Railway Station.

121    Mr Mack says that in addition BAT organised a function to coincide with the Grand Prix in Melbourne each year between 1999 and 2000. Each year he attended, approximately 200 to 300 people attended the event and invitees usually consisted of prominent tobacco retailers. During such functions, the venues were decorated with Lucky Strike themed material featuring the name Lucky Strike and a replica of the BAR Formula One car would be displayed inside the venue. Exhibit O is a photograph of the replica vehicle exhibiting “Lucky Strike”.

122    Mr Mack says that the BAR Formula One cars bearing the names Lucky Strike and Luckies were featured in numerous Australian editions of the F1 Racing magazine distributed around Australia. Mr Mack says that from time to time he saw these magazines and they were often handed out at the Grand Prix in Melbourne. In 2000, BAT erected a full size replica of the BAR Honda racing car driven at the Australian Grand Prix at the duty free store at Melbourne Airport. The replica car bore the names Lucky Strike and Luckies. Mr Mack recalls seeing the car parked at the duty free shopping precinct in the Arrivals area, surrounded by large displays of cartons of Lucky Strike cigarettes. A photograph of that display is Annexure P to Mr Mack’s affidavit.

123    From time to time WD & HO Wills and subsequently BAT released limited edition cigarette packets bearing the Lucky Strike trade mark. These packets were often silver hard packets with a black embossed target and black embossed text. The release of these limited edition packets was often timed to coincide with the Grand Prix in Melbourne and Mr Mack says that thousands of these packets were available, displayed and sold at outlets around the track itself. Annexure Q to Mr Mack’s affidavit is a photograph taken by him of a promotional display case featuring these limited edition packets of Lucky Strike cigarettes together with the Lucky Strike logo, Lucky Strike trade mark and the endorsement “an American original”.

124    Mr Mack says that the name “Luckies” was printed on every packet of “Lucky Strike” cigarettes which he saw displayed and sold in Australia between 1976 and 2007. Mr Mack annexes as Annexure R example copies of packaging which he says is substantially identical to the packaging of Lucky Strike cigarettes which he saw displayed and sold in Australia in the period prior to 1994 for the varieties consisting of a hard packet of filter cigarettes; a hard packet of “Lights”; and three soft packets of unfiltered cigarettes on which the name “Luckies” appears in smaller text on the side of each packet.

125    That example of the packaging (apart from the Lights and the soft packets) is at Annexure R, p 97.

126    Annexure S consists of copies of examples of the packaging of “Lucky Strike” cigarettes which bore the name Luckies in fine print on the side of each packet and in the case of the hard packets, in larger print on the back, in the period after 1994 in respect of these varieties: hard pack filters, hard pack Lights, hard pack Menthol Lights, soft pack unfiltered cigarettes, soft pack Lights, soft pack filters and soft pack Menthol Lights.

127    That example of the packaging (being the hard packet of filter cigarettes) is at Annexure S, p 103.

128    Mr Mack says that “during my employment at [LHP], the staff of [LHP] commonly referred to ‘Lucky Strike’ cigarettes as ‘Luckies’”. Mr Mack says that he also heard customers and retailers using this nickname for “Lucky Strike” cigarettes. Mr Mack also says that between 1976 and his retirement in 2007 it was very common for him to refer to Lucky Strike cigarettes as “Luckies” when talking to other employees of WD & HO Wills and BAT including senior management or when talking to retailers or tobacconists. Mr Mack says that when he did so (that is, when he referred to Lucky Strike cigarettes as Luckies) he says that none of those persons indicated to him that they did not understand the reference to Lucky Strike and in responses to him such persons used the same name in the course of conversations with him.

129    Mr Mack says that in his many years working in the Australian tobacco industry, he met thousands of retailers from every State and Territory in Australia both in the field and at a range of different functions. He says that in this period he either participated in discussions with them or listened to their discussions with WD & HO Wills or BAT team members about Lucky Strike cigarettes. He says that the overwhelming majority of these retailers appeared to him to have very good knowledge of the background and history of the Lucky Strike brand. He says that the persons he dealt with were aware that it was a brand that emanated from the United States of America. He says that many retailers referred to the reputation that the Lucky Strike brand had generated during World War II.

130    As to the sale of tobacco products, Mr Mack says that in his various roles in the Australian tobacco industry, he has observed many transactions between retailers and consumers involved in the purchase of cigarettes. He says that he has observed, as a consequence of the usual placement of tobacco products behind a counter or in an area of a retailer’s premises not readily accessible to the customer, that the vast majority of purchases of tobacco products occurs, necessarily, as a result of a consumer orally requesting a particular brand of cigarettes from retailers. Mr Mack says that he can recall hearing customers say to retailers words to the effect of “a pack of Lucky Strike 20s please” or “can I have a packet of Luckies please”.

131    Mr Mack says that as a result of such a request (which I take to be a reference to the requests Mr Mack deposes to that he has heard from time to time made of retailers), the retailer handed the consumer a packet of Lucky Strike cigarettes.

132    Mr Mack deposes that as a consequence of his 30 years or so of experience in the tobacco industry “and my corresponding knowledge, understanding and observation of the sale of tobacco products” it is his opinion that the purchase of cigarettes and other tobacco products ordinarily requires the oral use of particular trade marks or brand names by customers and that such use, especially by a customer, is integral to the sale by retailers of tobacco products. I give weight to that observation simply in the sense of an expression of Mr Mack’s observations of what he has personally seen occur in his visitations to retail sites from time to time across the period of his experience as deposed to in his affidavit.

The further affidavit of Mr Mack

133    Mr Mack swore a further affidavit on 24 March 2010.

134    In the second affidavit, Mr Mack reinforces the contentions in the first affidavit and says that he spent a considerable amount of time visiting various tobacco retailers and speaking with them on the shop floor.

135    In most cases when Mr Mack was present and talking to the retailer, the retailer continued to stand behind the counter and serve customers. He says that customers frequently entered the shops while he was visiting and on those occasions he stood aside away from the shop counter to allow the retailer to serve the customer. As they did so, he listened to and watched how the customers asked for and were provided by the retailer with cigarette products. He says that in the period 1976 to 1982 when working for LHP it was part of his day to day role to visit and speak with tobacco retailers and during these visits he overheard and watched customers ask for and purchase cigarettes and tobacco products. During the period Mr Mack was a cash van salesperson, these visits occurred in the northern suburbs of Melbourne. Between 1979 and 1982 he regularly worked as a relief driver and relieved 30 to 40 drivers in designated areas in Victoria. During his period as a cash van salesperson or a relief driver he visited hundreds of tobacco retailers located in suburbs such as Fawkner and regional areas such as Shepparton.

136    He visited various classes of retailers.

137    He says that in the training and development role at LHP between 1982 and 1985 he continued to visit tobacco retailers although less frequently. There was some overlap between the roles as a cash van salesperson and a training and development manager. He said that in these roles he overheard customers asking for cigarettes and watched the transactions take place.

138    He says that as Training and Development Manager, he visited over a hundred tobacco retailers each month with some located in suburbs in Victoria and southern New South Wales with the remainder located in the Melbourne CBD. He also visited retailers in regional and country areas of Victoria. In that role he visited the full range of tobacco retailers. He says that between 1988 and 1990 when in the same role for WD & HO Wills he had the same level of contact with tobacco retailers and overhead and saw a similar number of customers ask for and purchase cigarettes and tobacco products in the same manner as earlier indicated. He would engage in conversation with tobacco retailers and would stand to one side and watch when customers entered the shop to engage in a purchase transaction. He says that from 1990 until 1995 as Distribution Area Manager, he visited tobacco retailers in Victoria including the Melbourne CBD, Melbourne suburbs and regional and country areas of Victoria. The scope and variety of tobacco retailers he visited was broad and continued to include tobacconists, mixed businesses and other convenience tobacco retailers.

139    In the period 1996 to 2000 he managed the convenience channel including 7 Eleven stores, service stations and mixed businesses. In that role he visited convenience tobacco retailers one week per month on average across Melbourne, Adelaide and Perth.

140    Again, Mr Mack says that on each occasion he visited a retail store, he spoke with the tobacco retailer and as customers came into the store Mr Mack would stand to one side and not interfere with the purchase transaction. He would watch the transaction take place. The retailers he visited in this period included service stations. He also saw transactions involving the purchase of petrol, newspapers and other convenience items. He continued, he says, to frequently hear and see customers ask for and purchase cigarettes and tobacco products throughout each of the days he was dedicated to visiting tobacco retailers.

141    In 2000, he became State Manager for BAT for Victoria and Tasmania and, as he said in his earlier affidavit, in January 2002 he became the National Field Manager for BAT based in Sydney. In this role he was responsible for managing State Managers who in turn were responsible for a large number of sales representatives.

142    In these latter two roles time constraints meant that he no longer visited tobacco retailers one week each month. He says that nevertheless, he continued to regularly visit tobacco retailers on average for one day each month and in doing so he says he visited many dozens of tobacco retailers each year. He visited a broad range of tobacco retailers including tobacconists which predominantly sold tobacco products. The sites he visited were located in Victoria, Tasmania and New South Wales. He says that a similar pattern of conversations with retailers took place, and as purchase transactions occurred, Mr Mack stood to one side and observed the transaction.

143    In the second affidavit, Mr Mack responds to contentions advanced by Mr Cox on behalf of NVS in an affidavit sworn 2 November 2009 which was not ultimately read or relied upon in the proceedings.

144    Mr Mack nevertheless observes that Mr Cox had contended that customers would usually ask for the tobacco product by brand, variant and pack size. Mr Mack took issue with that construction of a typical oral purchase transaction, and said that based upon his experience and observations, customers commonly abbreviated or used nicknames for a great many cigarette brands on the market. Mr Mack said that he had heard customers, for example, refer to Winfield cigarettes as “Winnie” or “Winnies” and Peter Jackson cigarettes as “PJs”. He said that he hard heard Lucky Strike cigarettes referred to as “Luckies” by customers and he had heard customers refer to Stradbroke cigarettes as “Straddies”, John Players cigarettes as “JPs” and Peter Stuyvesant cigarettes as “Stuyvos”. Mr Mack said that it was very common in his experience for customers to order cigarettes without mentioning the particular variant and pack size they wanted to purchase at first instance. He says that a large portion of customers ordered cigarettes by saying words to the effect of “give me a packet of PJs”. In these instances, the precise variant and pack size were not specified and the salesperson commonly asked the customer questions about the variant.

145    Mr Mack also says in his second affidavit that based on his experience BAT commonly refreshed, updated and/or modernised the get-up of cigarette packaging. He identifies packaging changes to Winfield, Benson & Hedges, Holiday and Dunhill cigarettes. At para 30 of his second affidavit, Mr Mack identifies 29 examples of cigarette packaging changes and at Annexure U he annexes examples of packaging changes, as far as he can recall seeing, displayed over particular periods.

146    At para 34 of the second affidavit, Mr Mack deposes to general comments about the sale transaction.

147    He says that based on his experience the majority of purchasers of cigarettes did not look at the packets they were given by the tobacco retailer. He says that typically, customers walked into a shop at which cigarettes were available for sale, requested a packet of cigarettes, pulled out money to pay for the cigarettes and did not look at the packet handed to them (either at all or closely) but rather they accepted the packet, placed it in their pocket or bag and left the store. He says that the entire transaction took place in most cases over a very short period of time and in some instances, depending upon the time of the day, the transaction took place when the shop was crowded or noisy.

148    Mr Mack’s observations about these matters are said to be based upon “his experience” which I take to mean the facts he has deposed to concerning his visitations to retail sites, in the main, in company with sales representatives for purposes associated with the discharge of his various roles. Mr Mack’s evidence of typically what occurs in the course of a sale transaction is to be judged in that context.

149    The second part (Part B) of Mr Mack’s affidavit deposes to his belief about aspects of the retail sale and purchase of cigarettes in Australia. The repetition of the circumstances of Mr Mack’s experience is directed no doubt to providing a foundation of fact upon which Mr Mack might express particular opinions. Mr Mack says this.

150    First, when customers wish to purchase cigarettes they orally request a particular brand of cigarette from the retailer either by reference to the full brand name but more commonly by reference to an abbreviation of the brand name.

151    Secondly, the abbreviations used by customers of cigarette brands are abbreviations commonly used and known both by customers and retailers.

152    Thirdly, cigarette purchasing transactions are generally transactions of short duration.

153    Fourthly, it is not uncommon for cigarette purchase transactions to take place in a crowded or noisy environment (or both) depending upon the size of the shop and the time of day.

154    Fifthly, in most instances customers who have requested cigarettes from a retailer do not look at the packet of cigarettes they are handed by the retailer either, he says, closely or at all, but simply accept the packet handed to them and leave.

155    Sixthly, he asserts that “Lucky Strike” is a well-known brand of cigarettes with a significant reputation in Australia.

156    Seventhly, many customers and retailers, he says, refer in Australia to “Lucky Strike” cigarettes as “Luckies”.

157    Eighthly, many retailers in Australia understand a request for a packet of “Luckies” as a request for Lucky Strike cigarettes.

158    None of these contentions of fact described at [79] to [157] of these reasons contained in Mr Mack’s affidavits are contradicted by any evidence from NVS. Many of the contentions of fact are, of course, challenged in cross-examination but none are contradicted by any evidence. The factual contentions in that sense are unchallenged as a matter of evidence.

159    Having regard to all of those matters and Mr Mack’s experience, Mr Mack then goes on to express the opinion that if a brand of cigarettes called Lucky Dream or Lucky Draw were available in the Australian market, he considers that a significant proportion of consumers and retailers would be likely to refer to them as “Luckies”; a retailer confronted with a request for a packet of Luckies in circumstances where the consumer is seeking to purchase a packet of Lucky Draw or Lucky Dream cigarettes, is likely to interpret the request as a request for a packet of “Lucky Strike” cigarettes; and a retailer confronted with a request for a packet of Luckies by a customer seeking a packet of “Lucky Strike” cigarettes might interpret the request as a request for a packet of Lucky Dream or Lucky Draw cigarettes.

160    Moreover, Mr Mack expresses the opinion that since transactions for the purchase of cigarettes happen at a fast pace, the customer is unlikely to notice being given the wrong packet. Mr Mack also expresses the opinion that customers and retailers are likely to think that Lucky Dream or Lucky Draw cigarettes are simply a variant of “Lucky Strike” cigarettes and that other consumers and retailers are likely to think that Lucky Dream or Lucky Draw cigarettes are Lucky Strike cigarettes in different packaging.

161    Mr Mack then swears the issue at para 41 of his further affidavit by expressing the opinion that the existence of cigarettes in the Australian market with the brand name Lucky Dream or Lucky Draw is likely to cause confusion and deception amongst both retailers and consumers.

162    The affidavits of Mr Mack have been admitted into evidence subject to a global challenge to the expressions of opinion on the footing that Mr Mack is not a person who has “specialised knowledge” based on training, study or experience and the opinion he expresses cannot be shown to be wholly or substantially based on that knowledge and thus the opinion rule contained in s 76 of the Evidence Act 1995 (Cth) is not displaced by s 79 of that Act. By an interlocutory judgment, I found that I would receive into evidence Mr Mack’s opinion evidence subject to further final submissions and a ruling on the issue in the course of this judgment. Accordingly, I have formed the view that notwithstanding Mr Mack’s long working experience in the industry, the nature of his experience is not such that he has developed a body of “specialised knowledge” emanating from that experience which would properly enable opinion evidence of the kind described at [159] to [161] to be received on the question in issue in the proceedings. In reaching this conclusion I have had regard to the references I mentioned to counsel in the course of the proceedings and also the authorities referred to by counsel in the written submissions. In all, the authorities and references are these: Makita (Australia) Pty Ltd v Sprowles (2001) 52 NSWLR 705 at 743-744; R v Tang (2006) 65 NSWLR 681 at 712-713; Gambro Pty Ltd v Fresenius Medical Care Australia Pty Ltd (2007) 245 ALR 15 at [26] and [28]; McKay v Commissioner of Main Roads [2009] WASC 353; CA Henschke & Co v Rosemount Estates Pty Ltd (2000) 52 IPR 42 at [15], [18] and [26]; CA Henschke & Co v Rosemount Estates Pty Ltd (1999) 47 IPR 63 at [59] to [78] and [111] to [113]; ASIC v Vines (2003) 48 ACSR 291 at [12]; Australian Cement Holdings Pty Ltd v Adelaide Brighton Ltd [2001] NSWC 645; R v P (2001) 53 NSWLR 664 at [55]; Cross on Evidence, 8th Edition at [29060]; N v Sumatra Tobacco Trading Company v British American Tobacco Australia Services Limited [2011] FCA 255.

163    I accept subject to [164] and [165] that in relation to the matters asserted by Mr Mack described at [150] to [157] he is giving direct evidence of his observations of ordinary people using ordinary language in the course of common place or ordinary transactions for the sale and purchase of a commonly consumed good based upon his observation of those things over 30 to 31 years. As to matters such as the assertion that customers do not look at the packet of cigarettes handed to them by the retailer either closely or at all, the evidence of the retailers is to be given more attention and greater weight. As to the other matters recorded in those paragraphs, it seems to me that Mr Mack has spent a working life engaged in the promotion of cigarette products, the sale of those products to retailers and the management of personnel engaged in the supply and distribution of those products to retailers of many and various kinds. Mr Mack has been an engaged participant in this industry and has a working lifetime of experience.

164    I do not accept that any weight should be attributed to Mr Mack’s opinions described at [159] and [160]. Mr Mack can speak directly to the facts of transactions and his evidence of those facts is useful and probative of the questions in issue but he cannot exercise the privilege of giving evidence of an opinion of the matters about which he speaks as the field of his retail experience does not represent a sufficient body of experience giving rise to specialised knowledge.

165    Further, Mr Mack cannot swear the issue to be determined by the Court, in the manner described at [161] of these reasons.

166    As to the qualification mentioned at [163] concerning the matters at [150] to [157], it is this.

167    I accept that Mr Mack when visiting retail sites has heard consumers ask for a packet of cigarettes by reference to the full brand name and from time to time (perhaps not uncommonly) he has heard a consumer use an abbreviation of a name in asking for particular cigarettes. The evidence recited at [150] rises no higher than that.

168    I accept that he has heard abbreviations used and has seen retailers respond to the use of a customer’s abbreviation, by selecting a packet of cigarettes in apparent response and hand the packet to the customer [151].

169    I accept Mr Mack’s evidence at [152] and [153] as evidence of his observation of conditions of sale in some retail sites.

170    I do not accept the generality of the evidence described at [154].

171    I accept that he has heard many retailers over his working life, and customers, refer to Lucky Strike cigarettes as Luckies [156].

172    I accept that by reason of his dealings with retailers over many years he understands that many retailers regard a reference to Luckies as a reference to Lucky Strike.

The cross-examination of Mr Mack

173    Mr Mack was challenged at the outset as to his access to BAT’s documents to support his primary evidence.

174    He said that he was not given to understand that documents would not be available to him. He thought that the statements he made in his primary evidence did not require access to particular documents. As to the documents relating to the 1999 re-launch of LUCKY STRIKE, called Project Voyager, those documents are almost non-existent now, he says. Mr Mack was asked whether he had any understanding of why he was selected to give evidence about Lucky Strike and he said that he assumed it was because he had knowledge of the history of the brand, more so than simply information about brand launches or general customer surveys. He added: “You know, I’ve worked with Lucky Strike for 31 years and that’s why I believe I was asked” (T 53, lns 22 to 28).

175    Mr Mack gave evidence that in the period 1976 to 1982, 70% of sales came from the primary brands Marlboro, Viscount, Benson & Hedges and Alpine. Winfield entered the market in 1975. Mr Mack accepted that in this period he had no reason for thinking that Lucky Strike was more significant than any of those brands. Mr Mack confirmed that a big part of his training and development role after 1982 involved selling, introducing brands to retailers and educating retailers about brands and the differences between brands (T 38, lns 35 to 46). From 1990 as Distribution Area Manager, Mr Mack had nine cash van salespeople reporting to him and in that role he spent about one week a month on the road dealing with retailers.

176    As to Mr Mack’s evidence of occasionally seeing retailers selling Lucky Strike cigarettes, Mr Mack accepted that these observations were “coincidental” to his main function as his role did not involve attending sites to see how retailers sold things to consumers although “[i]t was, how can I put it, interesting or a part of my job to see what products were being sold where” (T 40, ln 23). Nevertheless, Mr Mack accepted that observations about sales of Lucky Strike cigarettes in the period 1990 to 1995 in his role (as compared with the sale of other brands) would be “coincidental” and he had no particular interest in sales of Lucky Strike cigarettes over any of the other 15 or so brands the company was distributing.

177    Mr Mack accepted that in that period, in the list of brands being sold by cash van salespersons, Lucky Strike was “very, very low,” (T 40, ln 34) and that Lucky Strike was a “fraction of the percentage of total sales”. In the period after 1995 as Area Manager for WD & HO Wills, Mr Mack became more concerned with wholesale sales to the group known as independent price cutters. In 1996, the channel structure earlier described by Mr Mack was adopted and Mr Mack was responsible for managing trade marketing representatives that would call on independent price cutters. Mr Mack was responsible for the convenience channel, responsible for 60 representatives throughout Victoria, South Australia and Perth.

178    Mr Mack in this role continued to visit tobacco retailers one week each month. He accepted that he did not go to those sites specifically to watch transactions between the retailer and the consumer although he often saw and heard sales representatives and area managers talking about Lucky Strike cigarettes with these retailers (T 43, lns 25 to 33).

179    As to the notion of “often” he said this at (T 43, lns 39 to 45):

It would depend upon what specific brand was being worked at the time. We had a cycle activity calendar … and what would happen is you may work Benson & Hedges for a 12 week period … then you may work Dunhill for a 12 week period, Lucky Strike, which is a very minor brand, you may – at that particular point in time [1996 - 2000], you may work Lucky Strike for a three or four week period. So that would be your focus, predominantly, when going in, to ensure that the cycle plan was being adhered to by our sales representatives and being executed properly.

180    In this period the key brands were Dunhill, Winfield, Benson & Hedges “and the 99 major focus on Lucky Strike” (T 44, lns 4 to 5). Mr Mack gave evidence that in this period, speaking generally, those brands, including Lucky Strike, were “… our key focus for those periods of time with those cycle activities were predominantly those five brands” (T 44, lns 18 to 20). Mr Mack described those brands as “our core brands with BAT” (T 44, ln 21). Mr Mack however accepted that Lucky Strike did not have the same degree of focus as the other brands “over that full period of time” (T 44, ln 26) and, asked by NVS’s counsel to expressly leave aside the re-launch events of 1999, Mr Mack accepted that in the period 1996 to 1998, the other four brands had “far more focus as a promotional product” (T 44, lns 39 to 40); Mr Mack accepted that “Lucky Strike was a very, very minor component of the promotional activity” in the period 1996 to 1998 inclusive” (T 44, lns 44 and 45); and Lucky Strike was a “very minor part of that cycle up to 98” (T 45, lns 1 to 6).

181    It was then put to Mr Mack that the “very, very low level of sales of Lucky Strike up to 1998” caused BAT to decide to re-launch Lucky Strike in 1999. Mr Mack disagreed and gave this context at T 45, lns 10 to 18:

… at that particular point in time, WD & HO Wills did not have a major player in what is called the mainstream segment of the market. We have premium, mainstream and value [segments]. Lucky Strike, at that stage, was seen as a premium brand, and BAT wanted to move it down into mainstream, mainstream being the volume segment of the overall tobacco category. … So what BAT was trying to do was break into that mainstream market … They saw Lucky Strike as being the brand that could do that.

182    Mr Mack accepted that the national 1999 re-launch of Lucky Strike was something of a failure from a sales perspective (T 45, lns 20 and 21).

183    Mr Mack also explained that when in his primary evidence he said he often saw and heard sales representatives talking about Lucky Strike, he was predominantly talking about the re-launch period in 1999 although BAT did “… work Lucky Strikes, but in a very minor way, and in given geographic territories. Territories like, if I can talk Melbourne territories, like Chapel Street, Prahran, Carlton, those sorts of areas, where Lucky Strike sales were good – not great, good” (T 45, lns 28 to 34). Mr Mack accepted that the target customers for Lucky Strike were “urban sophisticates” (T 45, ln 37).

184    As to Mr Mack’s observation that sales representatives, area managers and retailers sometimes referred to Lucky Strike as Luckies in discussions, Mr Mack said that this was his observation; the statement was correct although his evidence properly put was that Lucky Strike was “sometimes” referred to as Luckies (T 46, lns 1 to 9) and internally within LHP Lucky Strike was commonly referred to as Luckies (T 46, lns 17 to 19).

185    As to Mr Mack’s evidence of overhearing customers and retailers using the nickname “Luckies” for Lucky Strike cigarettes in 2000, Mr Mack accepted that he was referring to the “happenstance of [his] overhearing a customer talking to a retailer at one stage or another” [T 46, lns 20 to 24).

186    Mr Mack said that in 2000 in the role of State Manager for BAT he would be in the field approximately one week every two months accompanying managers into the field, visiting tobacco customers, particularly in the CBD area (such as Flinders Street, Melbourne) and liaising with key client retailers.

187    Mr Mack was taken to a document described as “BATA Marketing” contained in the Exhibit B, Confidential Documents at Volume 2, Tab 9 and in particular p 6 which sets out the future profit, net profit and volume for six brands including Lucky Strike and a category described as others (attributed to “Marketing Finance Sept 03”). It was put to Mr Mack that Lucky Strike was an extremely insignificant brand in September 2003 to which he responded “insignificant in so far as sales, but I wouldn’t say insignificant in so far as a brand” (T 51, lns 13 to 15). Mr Mack however accepted that as to the financial matrices of future profit, net profit and volume of sales, Lucky Strike was at that date “extremely insignificant” (T 51, lns 17 and 18). Mr Mack however observed at T 51, lns 41 to 48:

… I have no idea as to why Lucky Strike would feature here [the 2003 marketing document]. My knowledge was that in 2003 we did what was called a seed and feed campaign, which meant that we targeted specific areas within Queensland, New South Wales and Victoria. I can’t remember the name of the project, but … we identified key suburbs. For instance Sydney was Woolloomooloo, Kings Cross, we have Brisbane central business district. … So I cannot remember Lucky Strike being phased out in 2003.

188    Mr Mack accepted that the seed and feed campaign for Lucky Strike was in recognition of a niche market for the product directed to urban sophisticates in a market for “well-educated people who had a desire to smoke something a little different” (T 52, lns 16 and 17). Mr Mack accepted that in the “Portfolio Strategy” section of the September 2003 document, Lucky Strike did not seem to feature.

189    As to the disciplined use of brands, Mr Mack accepted that as far as BAT was concerned, the brand comprises the name, the colour and the general get-up of the packaging; that packaging is a very important part of the brand as it is presented to consumers; it represents the face of the product to consumers; within BAT, brands have a guardian to ensure that there is a consistent brand image presented to consumers; trade names or the names of products must be used in a consistent way; the use of names is carefully controlled by the marketing process; and, in order to understand how a particular name within the tobacco industry is used it is important for people in the position of Mr Mack to have a good understanding of the “context” of the tobacco industry and the nature and habits of customers, consumers (T 54, lns 20 to 45; T 55, lns 15 to 45).

190    As to the notion put to Mr Mack that by 2003 BAT intended to embark upon a seed and feed campaign to promote “Kent” cigarettes to the same customers who were formerly Lucky Strike customers or consumers, Mr Mack said that the target for “Kent” was the female market and the gay market more so than Lucky Strike which was targeted at the urban market. Mr Mack gave evidence that the internal strategy was to re-introduce Kent, in part, into the gay market which had been dominated by Peter Stuyvesant and his recollection was that BAT drove both brands together in their respective target markets “[b]ecause they were to separate customers that were being targeted and from memory … you’ll actually see Kent and Lucky Strike side by side on some promotional photographs” (T 57, lns 15 to 31).

191    Mr Mack accepted that by September 2003 the restrictions on tobacco promotions, reflected at p 30 of the September 2003 document were accurate and included, “no TV, no press, no outdoor, no PR, no direct, no internet, no consumer websites, no consumer offers, no consumer promotions”. Mr Mack accepted that the reference to “no consumer offers” was a reference to a prohibition upon such things as the distribution of Lucky Strike business card holders and Lucky Strike branded Zippo lighters. Mr Mack thought these constraints emerged in legislation in 2001 or 2002. The statutory constraints were generally described within BAT and the tobacco industry as the “darkening market”. Mr Mack gave evidence that these restrictions resulted in a lot of focused education from BAT about the legislation provided to independent price cutters and delivered within the specialist channels.

192    Mr Mack was then taken to a document at Exhibit B, Tab 4, Volume 1 described as “Project Segmentation 2000 Desk Research Phase” prepared by the Consumer Research Department of BAT (May 2000). Mr Mack was taken to p 7 of the document under the heading “Key External Factors Driving the Industry”. Mr Mack accepted as accurate that the Australian tobacco market has a long history as a “dark market” and that key milestones in that process had been these: 1977 national TV ban, 1990 advertising and press ban; 1994 outdoor advertising ban, 1996 sponsorship ban, 1998 Tasmanian restriction on all merchandising & stock display, 1998 ban on smoking in public places (Canberra) and 1999 NSW legislation tightened (two pack facings & no POS (point of sale)). Mr Mack accepted that as a result of those factors, the pack itself and pricing were key elements in the marketing mix for tobacco products and that position prevailed at 2003. The main volume sources of trade were the “grocery organised” channel and the “independent price cutters” (described in the document as “non-food”). Mr Mack said these were very early days (2000) in the channel segmentation arrangements.

193    Mr Mack was taken to the “Purchasing Behaviour” section of the document. Mr Mack accepted that the very high percentage recited at the top of p 11 (confidential) as to the percentage of the consumer cohort that buys their own cigarettes was “predominantly … correct” (T 65, ln 11) although it depended upon the time of the year. At certain times, third party purchasing was not uncommon. As to the percentage of the consumer cohort buying cigarettes once a day and those buying cigarettes every two or three days, Mr Mack accepted as a “broad rule of thumb” the statistics at p 11. Mr Mack accepted that, based on the document, a significant percentage of smokers who could not find their brand at the point of sale where the enquiry was initially made, would prefer to buy their brand elsewhere rather than switch to another brand.

194    Mr Mack was taken to p 14 which sets out statistics under the heading “Consumer Share of Key Brands of the Premium Category”. Mr Mack accepted that the low percentage of consumer share in the period from the first quarter of 1998 to the end of the first quarter in 2000 suggested that Lucky Strike “was not doing very well” (T 67, ln 31).

195    Mr Mack was taken to a further confidential document in Exhibit B, Volume 1, Tab 2 entitled “Product Strategy” for Lucky Strike as at 3 July 2000 (although described as a draft). Mr Mack agreed that the observations in that document reflected the “brand orientation” for Lucky Strike. The Positioning Statement said this:

Lucky Strike is a flavourful, premium quality, American blended cigarette. The brand is a living legend, true to the core of the American dream of free thought. Long term Lucky Stripe will continue to leverage its potential and strategic importance to build business in the following segments; International brands, ASU30 (under 30s), Premium (Full Flavour/Lights).

196    Under the heading “Role of the Brand”, the role was put in this way:

Strategic role in the [BAT] portfolio is to attack Marlboro 20. Lucky Strike will be re-positioned (February 2001) and will build market share from [the current share] (June 2000) to [proposed new market share] to become the company’s leading niche premium cigarette for the ASU30 segment (and the main USB proposition) over the next 5 – 8 years.

197    As a statement of where Lucky Strike was seen to be at 3 July 2000 the document says this under the heading “Where are we?”:

Pre-merger, Wills (Aust) launched Lucky Strike as a mainstream proposition in response to impending excise change and portfolio weakness (no mainstream brand in portfolio). After a successful launch in March 1999, sales have not improved from very low levels. Given the new [BAT] portfolio has Winfield in the mainstream segment …, as a mainstream offering Lucky Strike has very limited potential, evidenced by its small market share and volume. As a premium niche brand however, Lucky Strike presents an opportunity in the Australia marketplace. In Feb 2001, Lucky Strike will be repositioned as a niche premium brand, repackaged in soft-pack utilising a USB (Arrowhead domestic) and priced at parity with Marlboro 20.

198    As to where BAT sought to take Lucky Strike in the market, the document says this under the heading “Where do we want to be?”:

To become the number one cigarette choice for consumers in the “I am different” segment within the next 5 – 8 years. To maintain and build brand equity amongst ASU30 as measured by … image ratings. Improve ASU30 share … challenging the Marlboro 20s.

199    Mr Mack accepted that this description of positioning and the other factors represented the characterisation of Lucky Strike for the period at 2000 and through to 2003.

200    Mr Mack was also taken to the document in Exhibit B at Tab 1, Volume 1 under the heading “Lucky Strike Review”. The document is a review of the performance of Lucky Strike up to and including the year 2000. Page 2 of the document shows posters exhibited up to 2000 displaying Lucky Strike flip-top cigarettes with the words Lucky Strike and Luckies on the packet. Pages 3 and 4 of the document contain sales performance and market share statistics for the years 1998, 1999 and 2000 which show the sales in 1997 and 1998 and the spike in 1999 as a consequence of the national re-launch and then the decline in sales in 2000. Mr Mack accepted that the 1999 re-launch was not successful from a sales perspective and that market share by 2000 was small. Mr Mack accepted the “share performance” and “brand margin” statistics reflected in the document.

201    Since those statistics are confidential, I will not set them out in these reasons. The document recites that Lucky Strike was launched as a mainstream brand in March 1999 and the “proposition” was not successful with the brand declining significantly in the number of cigarettes sold.

202    However, it should be noted that even though the statistics are small, the absolute numbers of cigarettes sold is significant, representing tens of millions of cigarettes sold in 1999 and many millions of cigarettes in 2000. The evidence of Ms Wallace, to be mentioned shortly, sets out in the non-confidential part of her affidavit, the raw numbers (see [226] and [227] of these reasons. Pages 7 and 8 set out information in relation to the repositioning re-launch in February 2001. Page 9 sets out the Lucky Strike targets. The strategy was a seed and feed strategy to 2,500 outlets with a target volume of some millions of cigarettes to be sold. The focus of the expenditure in promoting the brand would be in the HORECA trade which represented a significant percentage of sales but much less than the majority of sales of Lucky Strike cigarettes which necessarily occurred in other retail outlets.

203    As to the photograph of the vending machine attached to Mr Mack’s affidavit depicting a poster image of Lucky Strike on it, Mr Mack accepted that the photograph must have been of a machine in 1999 or 2000 rather than 2002 having regard to the legislative changes.

204    As to the use of the nickname Luckies, Mr Mack accepted that it is an American nickname for Lucky Strike; the manufacturer had chosen to promote the word Luckies in association with Lucky Strike; and, the origin of the nickname Luckies came from the original packaging.

205    As to the references Mr Mack made to meeting thousands of retailers, Mr Mack accepted that he had never sold cigarettes to consumers but did sell them to retailers for on-sale to consumers. Mr Mack accepted his contact with consumers was incidental to being at a shop and seeing interactions between the retailer and consumers and his presence at the retail site was to talk to retailers about brands and how brands were selling.

206    As to Mr Mack’s understanding of the use of nicknames more generally, Mr Mack accepted that the focus of his interaction was with retailers rather than consumers although he observed that consumers would come and go at the retail sites ordering cigarettes when he was there. Mr Mack accepted that not all brands of cigarettes attracted abbreviations or nicknames. He accepted that Holiday, Long Beach, Alpine, Kent, Horizon, Marlboro did not attract nicknames although some brands did (Winnies, PJs, Stuyvos, 3 5s) (T 134 and T 135). Mr Mack accepted that his experience in dealing with retailers, and hearing consumers at retail sites he visited abbreviate a brand name to a nickname, was the basis for his opinion that nicknames or abbreviations are sometimes used for particular products. Mr Mack accepted that the decision to call Lucky Strike by the nickname Luckies from time to time would have been a carefully managed process by BAT (T 136, ln 40).

207    As to the images of the packaging reflected at Exhibit R of Mr Mack’s affidavit, Mr Mack said this.

208    Annexure R, p 97 appeared to Mr Mack to be the packaging available for sale in 1999 during the re-launch because the packets reflected the 12mg and 8mg variants which were produced for the launch in 1999 and the word Luckies appears on the packaging at p 97. The packaging at pp 99 and 100 appeared to Mr Mack to be a soft packet of Lucky Strike with no reference to Luckies. Pages 99 and 100 appeared to Mr Mack to be the same packaging (perhaps just a duplicate). When asked whether Mr Mack could be more precise, about dates, he suggested that “the first one” appears to be the standard packaging from 1976 being the first soft pack of non-filter cigarettes. Mr Mack said this pack was fully imported from the United States (that is, the pack on p 99). Mr Mack said at para 89 of his affidavit that the Annexure R packaging was the packaging of Lucky Strike cigarettes he saw displayed and sold in Australia prior to 1994. Although the Annexure R packaging was thought by Mr Mack to be the packaging available for the 1999 launch, that form of packaging might, he said, have been available for Lucky Strike cigarettes prior to 1994.

209    Mr Mack accepted that he had some uncertainty about the date (T 131, lns 42 and 43).

210    As to Annexure S (p 103) which is marked at the top with the endorsement “Smoking when pregnant harms your baby”, Mr Mack thought that this particular health warning was required in either 2000 or 2001 and the packaging would have transitioned to that form in or about those years. Mr Mack explained the dates by saying that Annexure R represented the pre-health warning packaging and Annexure S represented the post-health warning packaging and Mr Mack simply made his “best estimate” of when those dates took effect.

211    I have examined the evidence of Mr Mack in considerable detail as this witness represents the principal witness on behalf of BAT as to the historical promotion and marketing of Lucky Strike cigarettes and the use and reference to Lucky Strike and Luckies in connection with manufactured tobacco from within BAT albeit that Mr Mack retired in 2007.

212    I accept all of Mr Mack’s evidence subject to the qualifications described at [162] to [172] of these reasons.

213    Even though Mr Mack accepts that his experience of the sale of tobacco products to consumers is “incidental” or “coincidental” to his experience in the sale, supply and distribution of cigarette products to retailers beginning with his experience in the industry as a cash van salesperson and progressing through the various appointments he held and described, Mr Mack continued to engage with retailers throughout the 30 years to 31 years of his experience. In that context he spoke with retailers and saw and heard retailers engage with consumers.

214    I accept his evidence that retailers came to engage with the brand Lucky Strike by calling the product Luckies and I accept that internally within LHP and BAT the product came to be described as Luckies. I also accept that Mr Mack heard and saw transactions over a long period, perhaps intermittently, but nevertheless over a long period, in which consumers also used the nickname Luckies as a description of Lucky Strike cigarettes.

215    I also accept that the origin of the nickname Luckies, on this evidence, came from the manufacturer and BAT and in that sense the manufacturer largely educated or seeded functional elements of the market (whether at the wholesale level by engaging with retailers or in brand management by retailers to consumers) with use of the name Luckies as a nickname or abbreviation for Lucky Strike cigarettes. Notwithstanding the origin of that behaviour, the conduct became one of the contextual circumstances of the tobacco market so far as the use of those names was concerned irrespective of any question of reputation in either name. The propensity to use Luckies as an abbreviation or nickname for Lucky Strike is simply one of the contextual circumstances of the tobacco market.

216    I also accept that facets of the “darkening market” and the legislative changes which introduced progressive prohibition upon various levels of promotion of cigarette products meant that the oral engagement between a customer and a retailer became the dominant mechanism for the purchase and sale of cigarettes, at least to the extent that Mr Mack understood and observed those transactions. I also accept that transactions occur in some sites, according to Mr Mack’s evidence, that are busy and noisy.

217    An important aspect then of the context of the tobacco market is, in Mr Mack’s experience, that retailers occasionally used the nickname Luckies in making reference to Lucky Strike cigarettes and participants within BAT in their engagement with external market participants (retailers) used the term Luckies from time to time in making reference to Lucky Strike cigarettes. That may have been either an entirely cultivated pattern of behaviour or behaviour influenced significantly by the experience of market participants in abbreviating some cigarette product names to a nickname.

218    To the extent that the evidence of Mr Mack across the field of his experience (which I accept) suggests that nicknames were adopted for at least some cigarette products (but plainly not all cigarette products), the propensity of retailers and consumers, at least to some degree, to adopt an abbreviation of Lucky Strike to Luckies, conditioned in all probability by a disposition in the manufacturer to characterise Lucky Strike cigarettes as Luckies (by endorsing Luckies on the cigarette packet on the back of that packet and on the flip-top section of the box until the legislative prohibitions came to pass), seems to me, as a practical matter, in transactions of this kind, very likely.

219    These features of the tobacco market and the behavioural characteristics I have found as facts based upon Mr Mack’s evidence, were characterising features of the market in July 2003.

The evidence of Deborah Joy Wallace and Mr Vikas Gupta

220    Evidence was also given on behalf of BAT by Ms Deborah Joy Wallace.

221    Ms Wallace swore an affidavit on 30 April 2009.

222    Ms Wallace says that she is the Dunhill Brand Manager for BAT and has worked for BAT for 20 years in various roles including a Systems Assistant in the Information Technology Department, a Sales Analyst, a Category Analyst (in which she was responsible for providing information to business divisions regarding sales trends of cigarettes and developing “planograms” which are diagrams for the arrangement of cigarettes in display units within retail sites), a Trade Marketing Representative, a Category Development Executive (from 1999 to 2003), a Category Development Manager (which involved providing support to BAT’s trade team in relation to group cigarette brands including Lucky Strike) and a Channel Development Manager within BAT (which involved working with BAT’s brand teams in developing strategies for the promotion and sale of a number of cigarette brands (predominantly Dunhill)).

223    Since 2004, Ms Wallace has held the positions of Brand Manager for Benson & Hedges (2004 and 2005), Brand Manager “Premium” Band (2005 and 2006) and Brand Manager Dunhill from 2008 to the present.

224    The role as Premium Band Brand Manager focused predominantly upon Dunhill but also relevantly involved experience in dealing with other premium brands identified as Benson & Hedges, Kent, Vogue and Lucky Strike.

225    Ms Wallace explains that since at least 1997 as orders are lodged by BAT’s customers and sales are made, the sales statistics for each brand (including variants) are entered into the BAT computer system and at the end of each month the sales figures are collated, audited, coded, checked, formatted and uploaded into BAT’s principal computer system.

226    On 30 April 2009, Ms Wallace accessed the database and “exported” the sales figures for all Lucky Strike cigarette variants sold in Australia for each year from 1997 to 2004. The statistics are set out in the non-confidential part of Ms Wallace’s affidavit. They reveal these data. The millions of individual sticks (that is, the individual cigarettes) of Lucky Strike cigarettes sold in Australia in the period 1997 to 2004 are these: 1997 - 3m; 1998 – 2.4m; 1999 – 53.1m; 2000 – 20.1m; 2002 – 10.8m; 2003 – 10.3m; and 2004 – 7.7m. Since each packet of cigarettes contains 20 sticks, these statistics reflect a very substantial number of sales of packets of cigarettes.

227    The volume of Lucky Strike cigarettes for all Lucky Strike variants sold in Australia between 1969 and 1999 is set out in a table in Ms Wallace’s affidavit at para 26. The statistics are these: 1969 – 10.8m; 1970 – 9.3m; 1971 – 8.04m; 1972 – 6.5m; 1973 – 6.5m; 1974 – 6.8m; 1975 – 7.1m; 1976 – 7.4m; 1977 – 7.8m; 1978 – 7.5m; 1979 – 6.6m; 1980 - 6.7m; 1991 – 7.1m; 1982 – 6.9m; 1983 – 6.4m; 1984 – 5.9m; 1985 – 5.0m; 1986 - 5.8m; 1987 – 6.2m; 1988 – 6.1m; 1989 – 5.9m; 1990 – 5.6m; 1991 – 5.9m; 1992 - 5.8m; 1993 – 4.4m; 1994 – 4.6m; 1995 – 3.5m; 1996 – 3.3m.

228    Ms Wallace also sets out in the confidential part of her affidavit the categories of expenditure by BAT apart from conduct described as “trade support” which involves discounting cigarette products and providing retailers with merchandising display hardware. Like the sales statistics, the expenditure statistics are also entered into BAT’s computer system and expenditure data has been entered since 1999. The brand expenditure relating solely to Lucky Strike drawn down from BAT’s computer system is set out in confidential Exhibit DW1. I do not propose to review these statistical data in these reasons. Aspects of these data were challenged in cross-examination and I accept that Ms Wallace’s evidence does not provide a sufficiently particularised distributed breakdown of the content of the expenditure categories and I therefore attribute little weight to the expenditure material in determining the matters in controversy.

229    However, taken in conjunction with the evidence of Mr Mack concerning the history of the promotion of Lucky Strike and Luckies, there can be no doubt that substantial sales of cigarettes under and by reference to Lucky Strike and Luckies have been achieved, on these data, from 1969 (and on Mr Mack’s evidence sales were consistently made from 1976); the sales across the period from 1969 to 2004 and especially in the period immediately leading up to 2003 were significant; and, promotional activities had been undertaken over a very long period of time in the range of ways described by Mr Mack.

230    On the question of reputation, independently of any question of the characterisation of the features and circumstances of the tobacco market as described by Mr Mack in the behavioural sense on the part of retailers and consumers (as he observed), there can be no doubt that BAT enjoys a reputation in Lucky Strike and Luckies in connection with manufactured tobacco products. In fact, ultimately counsel for NVS rightly conceded that it could not be contended that reputation had not been made out although the question remained, in what did the reputation reside? Was it simply Lucky Strike or Luckies or both or the names taken in conjunction with (as NVS contends) the controlled and managed get-up for the product involving the Rondel (coloured circle), that is to say “the whole package”.

231    That matter is considered further in these reasons.

232    It may well be that cycles of consumer support have occurred in the market for the sale and purchase of products under the names Lucky Strike and Luckies and it may equally be, as Mr Mack accepts, that the 1999 major national launch was, in sales terms, ultimately unsuccessful. The 2001 seed and feed campaign (a more limited campaign than the national 1999 campaign) may also have been of limited success.

233    Similarly, it may be that the financial contribution of sales of Lucky Strike and Luckies cigarettes is, commercially or financially, uncompelling within the BAT group as compared with other brands which enjoy significant market shares. Mr Mack also accepts that the statistics as to the market share Lucky Strike enjoys, is underwhelming. However, as Mr Mack observed, Lucky Strike is a ‘significant brand’ in the ‘premium sector’ of the market and the statistics on the number of cigarettes sold and promotional activity lead to only one conclusion, namely, that a trade reputation subsists in BAT in respect of Lucky Strike and also Luckies notwithstanding that the commercial measure of that reputation having regard to sales, revenues, profit contribution and market share is comparatively uncompelling, simply on financial matrices as compared with BAT’s major brands.

234    Ms Wallace was cross-examined extensively as to the “brand health factors”.

235    Those factors include not simply sales data but market share statistics, market share according to particular trade channels and spontaneous brand awareness factors. Ms Wallace accepted that although those factors are relevant, not all of them were addressed in her affidavit. Ms Wallace accepted that in the period between 2000 and 2003 Lucky Strike occupied a small market share in the market for cigarettes and that attempts had been made through two re-launches to “breathe life into it” (T 294, lns 21 to 31) or “reposition the brand” (T 300, lns 29 and 30).

236    Ms Wallace was also taken to the brand awareness survey. Ms Wallace accepted that research relating to “unprompted responses” to questions asking consumers to nominate a brand were useful research tools (described as “spontaneous brand awareness”) and that responses to “prompted brand awareness questions” (which nominate the brand and invite the consumers recognition or otherwise of it) were, in her experience, less useful as a way of determining the health of a brand in the market. Ms Wallace accepted that as at 2000 the spontaneous brand awareness for Lucky Strike was “an extremely low figure” (T 312, lns 28 and 29). I have examined Ms Wallace’s evidence in relation to these matters, in particular, because Ms Wallace, importantly, discharged the roles of Category Development Executive from 1999 to late 2000 and Category Development Manager from 2001 to 2002. Ms Wallace became a Channel Development Manager in 2002 and she held this position until 2004. Ms Wallace can speak with some authority about brand health and brand reputation for Lucky Strike. Mr Gupta swore an affidavit on 30 April 2009 in which he talks about survey methodologies, questions which give rise to spontaneous responses and prompted brand awareness questions and responses. Mr Gupta put on evidence of the results extracted from BAT’s Oracle Tracker/GCS database of survey results, in particular, for the period 2001 to 2006. Mr Gupta’s material did not put on the full range of questions which seem to fall under the heading “Cigarette Brand Usage, Awareness & Disposition” in the survey document. A summary chart prepared by Mr Gupta suggested that in those years the brand awareness for “Lucky Strike” cigarettes was above 68% for each of the years and for the majority of time was in the low 70% range. The summary chart was based on the aggregation of unprompted and prompted answers. The awareness rate in response to spontaneous or unprompted answers was extremely low. The response to prompted answers reflected (taken in the aggregate) the statistic described by Mr Gupta. Having regard to the sales volumes described by Ms Wallace and reproduced at [226] and [227] of these reasons, there seems to be some foundation for a recognition by consumers, at least when prompted, of the name Lucky Strike.

237    Ms Wallace was taken to a series of confidential documents starting with the “Operational Review Cascade 2003” (Exhibit B, Volume 2, Tab 8). Ms Wallace accepted that the factors influencing the health of the Dunhill brand identified relevant brand health factors required to be considered in determining the health of the Lucky Strike brand. Ms Wallace accepted that the document at p 74 suggested that there was no planned activity for Lucky Strike for 2004 and that the targets for Lucky Strike in each State and nationally were very low targets for a cigarette brand (T 303, lns 5 to 9).

238    Nevertheless, that document, although the targets were accepted as low targets for Lucky Strike, contains both volume and share targets for 2003 and 2004 for each State and Territory in Australia and national targets for Lucky Strike. In that sense, Lucky Strike had not dropped off the BAT product radar.

239    Ms Wallace was also taken to Exhibit B, Volume 1, Tab 7 entitled “Australian Marketing Landscape [BAT] 2003”. That document suggests that the key volume objective for Lucky Strike was quite small. Ms Wallace accepted that as at 2003 cigarettes were usually displayed in shelf containers behind the retailing counter and that consumers had noted in their recall of brands that display mostly “provided reassurance of availability of brand” and “had appealing blocks of colour”. Ms Wallace accepted that the display of packages was an important part of the marketing process for consumers. Without unnecessarily disclosing confidential statistics, it is important to note that the consumer responses were in the nature of “reassurance” and at p 24 the document also recites that less than 1% of consumers “cite display related reasons as the main reason for choosing their cigarette purchase. Hardly anyone consciously acknowledges display as a primary motivator in their brand choice”. Nevertheless, Ms Wallace accepted that get-up, packaging, colour and distinctive style are important components of alerting consumers to the brand offered for sale (T 310, lns 30 to 46; T 311, lns 1 to 5).

240    Again, without unnecessarily disclosing confidential statistics, Ms Wallace accepted that approximately 30% of cigarette purchasers are very brand loyal to particular brands and that approximately 66% will either buy the brand they seek out or a different variant within that brand.

241    BAT also relied upon the evidence of a number of tobacco retailers in various States of Australia. I do not propose to review in detail the evidence of each of these witnesses. I simply propose to reflect upon some aspects of the evidence and observe the extent to which the evidence is useful in determining the questions to be decided by the Court.

The evidence of Lorraine Meegan Hands

242    The first of those witnesses was Ms Lorraine Meegan Hands who swore two affidavits (29 April 2009 and 24 March 2010).

243    I accept the evidence of Ms Hands in relation to her background experience in the tobacco industry as set out in those affidavits and reflected in her answers to questions in cross-examination. Ms Hands has, plainly enough, worked hard in the tobacco industry and has been successful in each of the roles she has performed. However, I am not satisfied that Ms Hands was sufficiently engaged in the content of her affidavit on a significant number of matters with the result that, in cross-examination, she made a number of significant concessions about the inaccuracy of propositions of fact contained in her affidavit.

244    Whilst, of course, I do not mean to suggest that Ms Hands was doing anything other than telling the truth and being cooperative (reflected in the concessions she made), it seems to me that Ms Hands must have embraced the scope of her affidavit in a way which suggested that an appropriate measure of discrimination and discipline had not been brought to bear in reaching a settled position about important factual matters. Those matters include, for example, the matters at T 100, lns 25 to 40; T 102, lns 20 to 45 and T 103, lns 1 to 19; T 110, lns 15 to 45 at T 111, lns 1 to 12; T 112, lns 25 to 34; T 114, lns 15 to 31; T 115, lns 20 to 36.

245    Accordingly, whilst the affidavits of Ms Hands are admitted into evidence as part of Exhibit A, I place no weight upon her evidence.

246    Apart from these considerations, so far as the expression of opinions about likely consumer reactions reflected in Ms Hands’ second affidavit (24 March 2010) is concerned, I do not accept, in any event, that Ms Hands has developed a body of specialised knowledge based on experience for the purposes of s 79 of the Evidence Act 1995 (Cth) so as to displace the prohibition contained in s 76 upon the giving of opinion evidence.

The evidence of George Georgas, Robert Macaro, Con Sarris and Maxwell Behrendt

247    Evidence was also called by BAT from other retailers, namely Mr George Georgas, Mr Robert Macaro, Mr Con Sarris and Mr Maxwell Behrendt. I accept the evidence of these witnesses. I propose to review briefly the evidence of Mr Macaro. I accept the evidence of Mr Macaro as a useful benchmark description of typical consumer transactions in the engagement between a retailer and a purchaser of cigarette products. Mr Macaro swore two affidavits (29 April 2009 and 24 March 2010).

The evidence of Mr Macaro

248    Mr Macaro is the owner and operator of retail premises “Cignall Frankston” which also trades under the name “Mr Tobacconist” as part of a franchise buying group. Mr Macaro has worked in the tobacco industry since 1995 and for the entire 14 years he has worked in his business in Frankston. He says that since 1995 he has displayed and offered for sale from his business premises a wide range of cigarettes and tobacco products and for almost all of this period this included several varieties of Lucky Strike cigarettes except on those occasions when Lucky Strike cigarettes were out of stock or unavailable.

249    He says that under the trading terms he had with WD & HO Wills and later BAT, he was required to display and offer for sale the full range of cigarettes and tobacco products offered by these companies. He was required to stock at least one packet of each variant of each brand including Lucky Strike variants. He says his business is open six days a week and he has worked at the business for eight hours a day on each of those six days ever since he started work. He estimates that he has sold on average 120 packets of Lucky Strike cigarettes each week throughout the period he has worked at the business. He says that his role in the business involved serving numerous customers on a daily basis, ordering stock on a bi-weekly basis and liaising with tobacco company representatives. He says that on almost all of the occasions that he liaised with the company representatives of WD & HO Wills/BAT, the representatives spoke to him about Lucky Strike cigarettes and they often showed him pamphlets and promotional posters for Lucky Strike cigarettes. He says that most if not all of these items featured the name Lucky Strike and often the nickname for Lucky Strike, being Luckies.

250    In his affidavit he says that customers came into his business and would ask for “a packet of Luckies please” or “a packet of Lucky Strike please”. He says that more than half of the customers who purchased Lucky Strike cigarettes from his business referred to Lucky Strike cigarettes as Luckies and when asked for a packet of Lucky Strike cigarettes he would select the packet from either the display stand behind the counter or the Perspex on the counter (before the particular Victorian statutory restrictions took effect) and then hand the cigarettes to the customer.

251    He says that he recalls that customers “often referred to Lucky Strike cigarettes as Luckies and that more than half of the customers who purchased Lucky Strike cigarettes asked for them by using the name Luckies”. He says that when customers asked for Luckies he always knew that they were referring to Lucky Strike cigarettes because this was a common name for Lucky Strike cigarettes, he says, both in the tobacco industry and amongst customers.

252    He also says that abbreviations or nicknames or slang words are used for some products instead of the full brand. He cites examples as Winnies for Winfield, PJs for Peter Jackson, Dunnies for Dunhill, B&H for Benson & Hedges and Stuyvos for Peter Stuyvesant. He puts Luckies in that camp, as a nickname, abbreviation or slang used by customers for Lucky Strike.

253    Mr Macaro was cross-examined about these matters.

254    Mr Macaro described Lucky Strike going back to 1995 as a “niche product”. He could bank on the customers who bought them. He said that overall sales of Lucky Strike cigarettes amounted to about 1 to 1½% of sales. He says he was asked to estimate how many packets he sold for the purposes of his affidavit rather than percentage. He said that his franchise agreement with the buying group requires the retailer to “stock every product that’s available” and when a new brand is introduced, the manufacturers adjust the “planogram” to locate the relevant product in the relevant place. As to restrictions upon display, Mr Macaro said his recollection was that the restrictions were more pointed in 2005 although there were restrictions in 2003 as well. He seems to recall changes in the legislative arrangements in about 2005. Mr Macaro said that although he did not have any particular reason to pay more or less attention to Lucky Strike than any other brand, he just made sure that the brand was stocked because he was concerned about the whole portfolio and did not want to be out of stock.

255    As to his recollection, Mr Macaro was challenged about his estimates of sales of 120 packets of Lucky Strike cigarettes each week. He said that he did not go back and check his records from 1995 to see if his estimates were correct because he was very familiar with the purchasing patterns and he was responsible for ordering stock. He rejected the notion that he might have been incorrect or slightly wrong about his estimates and said that he had used the word “approximately” because “on average” 120 packets of Lucky Strike cigarettes were sold each week. It could have been a couple more or a couple less but he recalls that he was ordering 12 cartons every week and said “… we have set limits … our stock holdings, per brand, and part of my job – twice a week, I do the orders. So basically I had to make sure at any given time that I had 120 packets of Lucky Strikes on hand, because, roughly, we would sell somewhere in the order of about 11 and 11½ cartons of Luckies a week” (T 216, lns 13 to 18).

256    As to the pattern, Mr Macaro was asked whether he sold Lucky Strike in carton lots to the odd customer and said: “Yes, … Probably, you know, more than half – we’re a tobacconist … so we sell a lot of cartons and we sell a lot of packets. So if they are a weekly customer, they will purchase their carton at the beginning of the week, or at the end of the week, and if they are a daily, they will buy it daily” (T 216, lns 19 to 26), and so far as Lucky Strike was concerned about half of that went to customers who bought them by carton-load, that is to say, approximately “five or six would be carton sales and the rest would be packet sales” (T 216, lns 32 to 33).

257    As to the use of the nickname Luckies, Mr Macaro accepted that he was aware that BAT promotes that name and said that Luckies was on the pack. Mr Macaro accepted that he could identify Lucky Strike by the colours and packaging.

258    As to the sequence of the transaction as at 2003, Mr Macaro said that the steps were these. The customer might come in and ask for a packet of Lucky Strike. Mr Macaro would turn to the place where he knew Lucky Strike was located in the planogram. He would see that place by looking for the bullseye in the middle of the packet. Before doing that, he would ask the customer for the variant. He would select the cigarettes and put the packet on the counter. The customer would look at it and then pay him but sometimes “they would just chuck it [the packet] straight in their bag or in their pocket” (T 218, lns 10 to 12) and when asked whether Mr Macaro would expect the consumer to look at the packet, he said “Not always – it’s a pretty busy shop, so things happen very quickly … a lot quicker than you just described” (T 218, lns 11 to 14). When asked “You were too busy to see what they were doing?”, Mr Macaro said (T 218, lns 15 to 25):

No, no. Look, we are a busy store. We’re a strip shop; a lot of people double park, and things like that. So basically, you know, we grab the smokes, we put them down, we take their money and off they go, and it happens very quickly … if they want to look at it, they will look at it. If they don’t, they don’t.

259    Mr Macaro also accepted that it was not his job to worry about how consumers were thinking when buying a packet of cigarettes “… but I would like to, at least, make sure that they are getting what they are asking for. And, sometimes, they don’t know how to ask for it. They, themselves, are confused. So we have to try and get more information about of them” (T 218, lns 30 to 35).

260    As to whether the place in the planogram where Lucky Strike might sit is kept on full vision for the purchaser to see, Mr Macaro said that that was not always so because, in Victoria, the area allowed for display behind the counter in the planogram is four metres square and Mr Macaro carries seven and a half metres of stock with the result that anything beyond four metres has to be covered and so the customer is not going to see it.

261    As to nicknames, Mr Macaro said that it was especially the younger smokers that created or adopted nicknames and the nicknames he could recall were those set out in the affidavit “including obviously, at that time, Luckies” and by using the phrase “at that time”, Mr Macaro accepted that he was directing his mind to the time when he swore his affidavit in 2009.

262    Mr Macaro also accepted that packaging was important.

263    As to mistakes, Mr Macaro said that mistakes generally arise in two situations the first being when a customer asks “for the usual” and the retailer does not get that right and the second mistake occurs when the retailer is told the brand but not the variant and the retailer might get that wrong. Mr Macaro said that those were the mistakes “from our side of the counter” although the consumer might make a mistake about what he or she wants. Mr Macaro said that those type of mistakes are not necessarily corrected by the customer before he or she leaves the store and “[n]ormally it happens when they’re outside just about to open it, to have a smoke, that they realise and then come back and say, ‘excuse me, I was …’” (T 222, lns 26 to 28). That happens about once a week in Mr Macaro’s store. Mr Macaro serves 200 customers a day and the store serves 500 customers a day over six days a week. Mr Macaro accepted that a mistake once a week in the context of those numbers is not a very large number of mistakes.

264    As to the question of confusion, Mr Macaro was asked whether he had had any experience of confusion in his experience as a tobacconist and he said (T 223, lns 45 to 48; T 224, lns 1 to 14):

Well, I have and that’s what I was trying to say before. When they relaunched John Players in 2009, then there was a complete and utter confusion because people don’t ask for Peter Jacksons they ask for PJs … and the John Player customers are asking for JPs … and the customers are getting JPs and PJs back to front, sideways, whatever. So between me, my staff and the consumer, I would like it to be like foolproof if we could … but it doesn’t happen that way and that’s why when I looked at this and saw Lucky Draw, Lucky Dream, Lucky Strikes, as a retailer, I don’t like that scenario because it’s just – it’s messy. We’re either going to have Lucky Strikes or we’re going to have a mixture of all three in one.

265    As to the proposition that Mr Macaro could train new staff members and less experienced staff members in selling cigarettes, Mr Macaro said, “… but I can’t train the customers. I can train my staff but I can’t train customers that well so … it’s a difficult one – it’s just communication of, you know, products, product knowledge and, you know, sometimes you might have younger staff, part time staff, you know” (T 224, lns 34 to 40).

266    Mr Macaro, like the other tobacco retailers, swore an affidavit in which he expresses opinion evidence about the question of confusion in the mind of consumers. Evidence of this kind was also put on in that form by BAT from Mr George Georgas, Mr Sarris and Mr Behrendt. Although I propose to admit into evidence all of the affidavits of these witnesses, I do not accept that any of them has established a foundation for the giving of expert opinion evidence because they have not established a proper body of specialised knowledge for the purposes of s 79 of the Evidence Act.

267    However, I do accept that at least in terms of their own experience as retailers they are entitled to not only give evidence of their direct observations of behaviour but that they are entitled to give evidence of whether they, as very experienced retailers, would be confused if asked to sell a packet of cigarettes in response to a request for a packet of Luckies in circumstances where a packet of cigarettes was available for sale under the name Lucky Draw or Lucky Dream. In doing so they are not offering expert opinions about how customers would behave but giving evidence borne out of their own experience, upon the relevant hypothesis.

268    Mr Mack is entitled to give such evidence as well.

269    I do not propose to review the remaining evidence from the tobacco retailers.

270    I will simply set out the conclusions arising from all of the evidence.

The evidence of Professor Hajek

271    Before doing so, it is necessary to address the admissibility of the expert evidence called by BAT from Professor Hajek. I propose to admit Professor Hajek’s affidavit material and expert observations. Professor Hajek is a Language Scholar. His qualifications and expertise are set out extensively in his affidavit of 29 April 2009. His expert report is contained at pp 43 to 45 of his affidavit of 29 April 2009. It is in quite brief terms. He observes that Australian English is well-known for its speakers’ marked tendency to use nicknames often formed by abbreviating words, frequently by adding short suffixes to a word. Examples include: Australian reduced to Aussie; Costume/cozzie; present/prezzie; cigarette/ciggie; cardigan/cardie; barbecue/barbie; cockatoo/cocky; dockworker, doctor/docky.

272    Professor Hajek says that this tendency to shorten and create nicknames is more common in Australian English than in other varieties of English even though other varieties may also show similar nicknaming types.

273    Professor Hajek says that a statistical analysis of a database of 1,740 items by Simpson (2008) finds it by far the most common pattern observed among nine different types of patterns and occurs in almost half of all cases (824 items, 47%). Professor Hajek says that there are numerous references to Australian nickname formation in official documentation prepared by federally funded organisations and some examples are given.

274    Professor Hajek was asked whether it is more common for Australians to shorten words or use slang or nicknames in spoken language than people in other countries. He says that by reason of his experience, “I observe that the phenomenon is much more common in Australian English than elsewhere, and is often identified as a mark of it, when compared to British and American English”. Professor Hajek was asked whether he had heard of a product called Lucky Strike. He said he had, for cigarettes. He was asked:

Have you heard of a nickname/slang term for “Lucky Strike”? If yes, what is it and why do you think this nickname/slang term is used for Lucky Strike? If no, what nickname or slang term do you think Australian consumers of “Lucky Strike” would be likely to use for “Lucky Strike” and why?

275    Professor Hajek responded:

I cannot recall if I have directly heard the use of a slang term for Lucky Strike, at least in recent memory – I have little direct contact these days with smokers. However, I would fully expect the term Lucky/Luckies to be used. It is an easy and logical shortening for Australian speakers to make. The first word is already perfectly shaped according the frequent slang formation observed for Australian English (cozzie, prezzie, cocky). It is also paralleled by other cigarette brand names, eg. Winnies for Winfield cigarettes.

276    Professor Hajek was also asked:

Is there a nickname/slang term that you would think Australian consumers would be likely to use for cigarettes called “Lucky Draw”? If yes, what is it and why do you think this nickname/slang term is likely to be used?

277    Professor Hajek responded:

The nickname Australian consumers would be likely to use is Lucky (sg), Luckies (pl). Such a use is to be fully expected – for the reasons given in the preceding paragraph.

278    Professor Hajek gave the same answer to the same question framed in relation to Lucky Dream.

279    Professor Hajek swore a further affidavit on 24 March 2010 in which he provided a further brief report at pp 1041 and 1042. Professor Hajek was asked to assume, contrary to his earlier predictions in the earlier report, that Australians, would not, in practice, shorten “Lucky Strike”, “Lucky Draw” and “Lucky Dream” to “Lucky” or “Luckies”. Assuming those facts, Professor Hajek was asked whether either word, in these two-word “brand names”, would receive more emphasis than the other or be more likely to be remembered by consumers than the other.

280    Professor Hajek said this:

In cases where two words are used together with the structure such as Lucky Draw, Lucky Strike or Lucky Dream where in each case the 1st element is a modifier such as an adjective or a noun functioning as an adjective followed by the second element (also known in grammatical terms as the head of the phrase), usually a noun, it is likely that the first element will receive more emphasis. The reasons for this are as follows:

(a)    the structure is specific + generic. The first element provides additional, specific information that helps identify or narrow down a specific kind of noun. So in the case of “Lucky Draw” or similar the second element could be any kind of “draw”, while the first element identifies only the draws that are lucky, as opposed to anything else;

(b)    in English phonology such phrases (adjective + noun, adjectival noun + noun) are often subject to predictable destressing and reduction of the second element [examples are given]. In these cases we see greatest prominence is given to the first element which retains stress – confirming it to have more emphasis (as measured phonetically by greater loudness, duration and pitch);

(c)    further evidence for (a-b) is to be found in the fact the Australians often elide the more generic element and retain and modify the first, e.g. [examples are given]. In the case of either “black man” or “Blackman”, any informal reduction by Australians leads to “blackie”.

281    As to the second aspect of the matter, Professor Hajek said this:

The first element in constructions such as “Lucky Draw” – given its more specific, identifying nature – is more likely to be remembered and linked to a specific item product or brand name. Additional confirmation of this point is given in (c) above which shows that it is the first element that is retained.

The highly positive connotation of “lucky” will also increase the likelihood that consumers will favour the remembering of it over a second element. A similar effect can be seen with other brand names, such as Silk Cut which, following the patterns observed in Australian English, is likely to be reduced to Silks or Silkies. The emphasis placed here on the first element is reinforced again by the positive and luxurious connotation of the word “silk”. In the case of brand names such as Benson & Hedges, the principles outlined above and in my previous report, do not apply. In cases such as these the grammatical structure is completely different. We have here two personal nouns with equal status, connected by the ampersand (&), and neither modifies the other. In this case reduction, if it occurs, is more likely to be the result of abbreviation, ie. B & H. A reduced form such as Bensies seems impossible.

As stated in my previous report, and based also on the evidence given above, it is worth reiterating that any two word brand names that share the first element Lucky are equally likely to be reduced to the single term “Lucky” or “Luckies”.

282    The objection to the reception into evidence of Professor Hajek’s reports is put on the basis that Professor Hajek has no expertise in matters of branding, marketing or brand names; he was not provided with any information or assumptions of fact in relation to the context for the words he was asked to consider and his evidence does not disclose any assumptions of fact to support his conclusions. Nor do his reports reflect, it is said, any contextual description of the environment within which the terms might be used.

283    I accept into evidence Professor Hajek’s affidavits and reports.

284    However, I accept that as an expert in linguistics, Professor Hajek is in a position to express opinions about language structure and grammatical and syntactic analysis. However, on the question of the disposition of market participants engaged in consumer transactions in relation to particular goods in a particular environment within the context of particular behavioural experience all conditioned by a particular regulatory environment, I am not persuaded that Professor Hajek’s predictive opinion about the propensity of consumers to abbreviate Lucky Dream and Lucky Draw in the way he suggests is authoritative in terms of the field of his expertise.

285    I regard the experience of the retailers and Mr Mack engaged, as they are, as ordinary persons using ordinary language in the context and settings of the commercial transactions in question, as much more compelling. Professor Hajek expresses his opinions in quite short form and although I do not criticise him for that, it seems to me that there is some force in the criticisms made by NVS in their objections to his evidence.

Conclusions and findings

286    Accordingly, I have reached these conclusions and make these findings.

287    I do not regard Lucky Draw or Lucky Dream as words which bear any visual or phonetic resemblance to Lucky Strike.

288    I accept that Lucky Strike is a trade mark which has been used for many years in the context of the sale of cigarettes and although the market share for Lucky Strike cigarettes over time, its revenue contribution and profit contribution may be insubstantial measured against the benchmarks of other brands, the trade mark is nevertheless a feature of the market, albeit a segment of the market which might be described as urban sophisticates or well-educated people seeking a point of differentiation. In making that observation, it seems to me that the presence of Lucky Strike in the market is one of the contextual market circumstances, independently of any question of the nature or extent of the reputation that the trade mark might enjoy.

289    The evidence demonstrates that there are no other cigarettes in the market which contain the word “Lucky” as a trade mark.

290    I also accept that over a long period of time the word Luckies has been used as a nickname for Lucky Strike or an abbreviation or shorthand way by which consumers in the ordinary course of cigarette purchase transactions sometimes seek out a packet of Lucky Strike cigarettes.

291    I accept that in many retail sites, whether specialist tobacconist sites or in the sites described by Mr Mack (including petrol station sites and the other diversified places of sale of cigarette products), that often the transaction will involve environments which are noisy or busy and engage circumstances where either or both the retailer or the consumer, from time to time (although, of course, not always), is under pressure to move through the transaction quickly by reason of the pressure of the daily events of selling.

292    I also accept that although the packaging, get-up, colouration and other factors representing the livery or presentation of the product to the market is important and that manufacturers are astute to the importance of brand prominence and get-up integrity, the sale and purchase of cigarettes is dominated by an oral transaction in which the customer asks for a packet of cigarettes by reference to the name of that product. The consumer was not in a position in 2003 to select a packet of cigarettes or pick up, look at or inspect a range of cigarette products on the shelf to exercise some sort of deliberative selection of a product. The consumer would ask the retailer for a packet of the nominated cigarettes by the name of that product or, where relevant on occasions, by reference to one of the abbreviations described by the retailers in their evidence as their common experience of those particular abbreviations, including Luckies.

293    The retailer in these transactions hears the description and responds to it by turning to the planogram behind the counter and selecting the product or, where the retailer carried a range of stock which meant that not all stock could be contained within the planogram, the retailer would take stock from beneath the counter or from some other area where the consumer had no visual experience of the product. Even where, in 2003, the consumer had a visual point of reference to the planogram, the transaction was dominated by the oral elements of the engagement involving the oral request and a response.

294    I accept that from time to time mistakes occurred.

295    They were not frequent but they were systemic in the sense that they occurred with some degree of regularity notwithstanding that in the scheme of the totality of the transactions they were small. They were however real and not illusory. Some of the examples given in evidence by the retailers suggested some degree of confusion immediately at the point of sale and other evidence suggested not simply confusion but transactions in which a packet of cigarettes other than the one asked for by the customer was supplied. Mostly, that was by reference to a mistake in the variant, but not always. Sometimes customers picked up the packet of cigarettes from the counter and placed them quickly in their pocket or in a bag and on other occasions the retailer might place the product into a bag (with or without other products) and hand the bag to the customer. Many times, no doubt, the customer looked carefully at the packet.

296    Such were the dynamics in the ordinary way between ordinary people engaged in ordinary transactions of this kind.

297    I accept that the introduction into the market of tobacco products bearing the trade marks Lucky Dream and Lucky Draw in circumstances where cigarette products are sold under the trade mark Lucky Strike might bring about what Mr Macaro described as a “messy” situation which, as a retailer, he would not like. Nevertheless, because I am not satisfied that there is any aural or phonetic resemblance or similarity between Lucky Draw and Lucky Strike or Lucky Dream and Lucky Strike, I am not satisfied that there is a real and tangible risk of confusion in the course of the oral transactions described in the evidence.

298    I also accept that smokers tend to have some degree of affection or affinity for a particular brand and, in the main, they will seek out that brand and, by and large, take steps to ensure that they have “their brand”. I accept that smokers who purchase cigarettes on their own behalf tend to be loyal to brands and are more likely than not to be discerning. They are likely to look at the counter and the packet of cigarettes and, quickly or not, satisfy themselves that they have got “their brand”. However, sometimes from the customer’s side of the counter, mistakes occur and also, mistakes occur, on the retailer’s side of the counter. The experience of the retailers in this regard is entirely unsurprising in the context of the purchase and sale of cigarette products in environments which are diversified and sometimes noisy and busy and the participants may be in a hurry to move on. Perhaps, as Mr Macaro observed, they are double-parked in the street or perhaps there are just a lot of people in the shop and the retailer wants to complete the transaction as quickly as possible without being rude.

299    However, although there is considerable brand loyalty, the promotional activities undertaken by BAT are, plainly enough, directed to winning customers to brands as an exercise in product substitution in a competitive market economy and the sales statistics given by Ms Wallace show movement, and at times significant movement, in the numbers of sticks of Lucky Strike cigarettes sold across the period. Those statistics evidence substitution and switching

300    I accept that on the evidence the name Luckies is demonstrated to have been used by customers in the abbreviated sense earlier mentioned not only because the term Luckies was used up to one point in the chronology of the use of Lucky Strike and Luckies on the packaging and at a later point on the back of the packet and not the front of the packet (and in that sense WD & HO Wills and BAT educated the market to the use of that name) but also because customers and retailers came to use that name, for whatever reason, as a common description of Lucky Strike cigarettes. I infer that this was a combination of the education in the use of that name by BAT and behavioural characteristics of customers, consciously or unconsciously, of abbreviating Lucky Strike to Luckies in much the same way as other abbreviations were adopted in the tobacco trade as reflected in the evidence.

301    Notwithstanding the systematic way in which the manufacturers went about deploying product and new brands and the systematic way they went to retail sites and loaded the planograms with product in accordance with the particular layout selected by them to be implemented in the retail sites (by the retailer’s sales representatives), I am not satisfied that the planogram arrangements inevitably and necessarily meant that a retailer could simply turn behind him and select a product on hearing the oral request without any likelihood of confusion or mistake.

302    I accept that manufacturers of cigarette products manage the livery and get-up of the brand and although changes occur in get-up (see [145]), manufacturers assert controls over get-up and try to maintain consistency in the look and feel and get-up for cigarette products.

303    It seems to me that the regulatory environment reflected in the documents put to Mr Mack and accepted by him meant that the progressive reduction in the capacity of customers to independently engage with the product directly, and increased the propensity for mistake. The retailer acts entirely as an intermediary between the product and the customer through the mechanism of a relatively quick oral purchase transaction.

304    I accept that in the ordinary course of use of the English language in descriptive sentence structure, a person might describe events with the conjunction of the words my “lucky day” or my “lucky car” or that was a “lucky guess” or I was born under a “lucky star” or I hit the mark with a “lucky shot”. However, excising those descriptive terms from the orthodoxy of conversation or narrative dialogue and transposing words into the context of the role of commercial badges of origin, commands different considerations. It seems to me that Lucky Draw, in a commercial context, embodies two equally weighted words which identify a product and its origin. So too do the words Lucky Dream and the words Lucky Strike. I am not persuaded that there is a real and tangible likelihood of confusion between Lucky Dream and Lucky Strike or between Lucky Draw and Lucky Strike notwithstanding that, “Lucky” is common to all; the word “Lucky” is only used in relation to cigarettes as Lucky Strike; and transactions take place in what are often noisy, busy environments where the transaction can occur quickly.

305    I accept that although there are a range of possible meanings of these words, the adoption of the term Lucky does convey some field of common meaning in the nature of general good fortune, although there may be other non-overlapping meanings (see the descriptions attributed to the terms “strike”, “draw” and “dream” in the Macquarie Dictionary, 5th Edition, 2009).

306    However, I am satisfied that there is a real likelihood of confusion between Luckies and Lucky Dream and Lucky Draw having regard to aural considerations. Contextually, in the market for cigarette products, Luckies is treated as an abbreviation of Lucky Strike whether by education by BAT or by reason of a disposition in that market of some consumers and retailers to abbreviate, or both. A retailer hearing a request for a packet of Luckies might well reach to the planogram or below the counter for a packet of Lucky Strike cigarettes or, on the hypothesis that a product is in the planogram or under the shelf called Lucky Draw or Lucky Dream, the retailer hearing the reference to Luckies might (in a real and tangible sense rather than a fanciful remote sense), respond to that request by reaching for the rival’s product. Alternatively, from the consumer’s side of the counter, a buyer might seek out the purchase of a packet of Lucky Dream or Lucky Draw cigarettes and use the term Luckies with the result that a retailer might supply that consumer with a packet of Lucky Strike cigarettes. I accept, in this context, that a packet of cigarettes bearing the trade mark Lucky Dream or Lucky Draw would reflect differentiating get-up and that the use of the term Luckies by a consumer seeking out a packet of Lucky Draw or Lucky Dream cigarettes is a less likely source of confusion than a retailer hearing a request for Luckies (as a reference to Lucky Strike) and mistakenly selecting the rival’s product.

307    A number of the retail witnesses have given evidence of their experience over the period of their working life in the retail side of the tobacco industry including matters which relate to the period as at July 2003. However, in expressing their views specifically of mistakes or their experience of confusion from their own perspective (rather than the opinions they gave of the reactions of consumers in the hypothetical presence of trade marks Lucky Draw and Lucky Dream) they have placed their observations or views at the time and date of the swearing of their affidavits in 2009 rather than expressly turning their attention to events as at the priority date of July 2003. I infer however that their evidence remains good for the period at July 2003 as I have no reason to believe that circumstances or events, at least as they relate to the transactions, greatly altered between 2003 and 2009, so as to put that evidence to one side and entirely discard it.

308    I also accept that the evidence demonstrates that cigarettes are also bought by third parties for others. The third party purchasers may not be smokers and the “once removed” consideration suggests a greater likelihood of confusion emerging in respect of those transactions.

309    I accept that the promotional material described by Mr Mack (see [117]) was distributed into the market. I infer that if the manufacturer went to the trouble and expense of producing a range of promotional material of that kind, it must have been used and distributed in the way suggested in the evidence.

310    Notwithstanding the acceptance by Mr Mack and Ms Wallace of the limitations in the health and standing of the brand Lucky Strike, I accept that a reputation has been demonstrated by reference to sales of a significant absolute number of sticks over a long period of time in both names. I also accept that notwithstanding the importance of get-up, colouring and livery, the dominant feature in the mind of retailers and consumers governing the sale, selection and purchase of the product is the name and it seems to me that even though the livery has, in one sense, a persona, the product is known, that is to say the reputation, resides in the brand name, albeit in a stylised or crafted way.

311    I am satisfied that the s 44 ground is made out as Lucky Dream and Lucky Draw are deceptively similar to BAT’s registered trade mark “LUCKIES” subject to the question of “similar goods”. I am also satisfied that the s 60 ground is made out on the footing that each of NVS’s trade marks are deceptively similar to BAT’s “LUCKIES” mark and because of the reputation subsisting in “LUCKIES”, each NVS trade mark would be likely to deceive or cause confusion.

Similar goods

312    Section 44(1)(a)(i) refers to “similar goods”.

313    Section 14(1) provides that goods are similar to other goods if they are the same as the other goods or if they are of the same description as that of the other goods. BAT’s LUCKIES trade mark is registered in respect of “manufactured tobacco”. NVS has applied for registration of its trade marks for goods in Class 34 in respect of a range of goods described as “cigarettes, cigarette filters, kretek cigarettes, cigarette papers, white cigarettes, ashtrays (not made of precious metal), cigars, tobacco, lighters, matches, smokers’ articles”. The term “manufacture” (Macquarie Dictionary, 5th Edition, 2009) means “the making of goods or wares by manual labour or by machinery, especially large scale; the making of anything; a thing or material manufactured”, and “manufactured” means “to make produce by hand or machinery or especially by large scale”. Tobacco is defined to mean: “any plant of the genus Nicotiana, especially one of those species as N. tabacum, whose leaves are prepared for smoking or chewing or as snuff; the leaves so prepared; any of various similar plants or other genera [Spanish tobacco, from Arawak (from Guarani) pipe for smoking, or roll of leaves smoked, or plant]”.

314    It is difficult to see how “ashtrays (not made of precious metal), lighters, matches or smokers’ articles” could be described as “manufactured tobacco”. Accordingly, neither Lucky Draw nor Lucky Dream is prohibited from registration in respect of those physical articles mentioned above, by reason of s 44 of the Act and nor is BAT’s opposition made out under s 60 in respect of those goods.

Section 43

315    I am not satisfied that the evidence demonstrates “some connotation” within s 43 of the Act which either of the trade marks LUCKY DREAM or LUCKY DRAW has and therefore I am not satisfied, for the purposes of s 43, that because of some unidentified particular connotation the trade marks are said have, use of the trade marks in relation to the goods for which registration is sought, would be likely to deceive or cause confusion.

Remaining matters

Gary James Courtney

316    The respondent also seeks to rely upon the affidavit of Gary James Courtney sworn 29 April 2009. Since swearing his affidavit, Mr Courtney has died. He died on 13 October 2009. At the time of swearing his affidavit, Mr Courtney was the State Business Manager (Western Australia and Tasmania) at TSG Franchise Management Pty Ltd. TSG is the franchisor for approximately 237 tobacconist franchises throughout Queensland, New South Wales, Victoria, Tasmania and Western Australia that trade under the name “Tobacco Station”. Mr Courtney was also the Manager at “Cigarette Express” which is a division of TSG and franchisor for approximately 18 smaller retail premises.

317    On 23 February 2010, BAT advised NVS of its intention to serve a Notice of Intention to Adduce Evidence of a Previous Representation under Order 33, rule 16 of the Federal Court Rules and s 67 of the Evidence Act 1995 (Cth). That notice was served on NVS on 1 February 2011.

318    As appears from the above short description, Mr Courtney’s evidence concerns the same field of issues addressed by the other retail witnesses. BAT seeks admission of Mr Courtney’s affidavit as an exception to the hearsay rule under s 63 of the Evidence Act. NVS opposes the admission of the affidavit into evidence on the footing that the affidavit ought to be excluded in the exercise of the Court’s discretion under s 135 of the Evidence Act because, it is said, its probative value is substantially outweighed by the danger that the evidence might be unfairly prejudicial to NVS (s 135(a)) and might be misleading or confusing (s 135(b)).

319    The unfair prejudice is said to arise out of NVS’s inability to cross-examine Mr Courtney on critical issues and NVS is prevented from challenging the reliability of the witness: Longhurst v Hunt [2004] NSWCA 91 at [46]; Ordukaya v Hicks [2000] NSWCA 180 at [6]. In addition, NVS contends that Mr Courtney’s evidence simply repeats the evidence of BAT’s trade witnesses and in that sense Mr Courtney’s evidence is not either central or primarily the source of probative evidence on the questions in issue. Other witnesses deal with the topic.

320    It seems to me that Mr Courtney’s affidavit ought to be admitted into evidence and I will do so. However, having regard to the cross-examination of Ms Hands, it also seems to me that little weight ought to be attributed to Mr Courtney’s affidavit as NVS has no opportunity to test the contentions advanced by Mr Courtney. I have carefully read Mr Courtney’s affidavit material. I note its contents but in reaching the conclusions I have reached, I have afforded Mr Courtney’s assertions very little weight: Short v Crawley [2003] NSWSC 1158 at [8]; Gray v National Crime Authority [2003] NSWCA 111 at 174; Citibank Ltd v Liu; ABN Amro Bank NV v Liu [2003] NSWSC 569 at [21] as the field of the contentions simply cannot be tested.

Standard of proof

321    In reaching the conclusions I have reached, I am satisfied that the opponent has established the higher standard of proof required of it as discussed in these reasons.

The affidavit of Stephen Marcus Stern

322    Mr Stern is a partner of Corrs Chambers Westgarth, the solicitors for BAT. BAT relies upon an affidavit of Mr Stern sworn 29 April 2009. The affidavit of Mr Stern was admitted into evidence subject to any objections that might later be articulated by BAT or identified in submissions. No such objections have been pressed and the affidavit is admitted into evidence.

The affidavits of Chrystal Sheila Dare

323    Ms Dare is a lawyer employed by the solicitors for BAT. Ms Dare filed an affidavit electronically on 10 March 2011 and a further affidavit was filed on 14 March 2011. Both of these affidavits are admitted into evidence as no objections have been taken to the affidavits although NVS reserved the opportunity to do so if thought appropriate, in final submissions.

The affidavit of David Tristan Pitt

324    Mr Pitt is a lawyer employed by Bennett & Philp Lawyers who act on behalf of NVS. Mr Pitt filed an affidavit on 5 November 2009 which contains an extensive analysis throughout Australia of legislation regulating the tobacco industry and particularly the sale, distribution and promotion of tobacco products. I accept that review as an accurate one.

The orders

325    It follows that the appeal by NVS is to be upheld to the following extent. The decision of the Registrar’s delegate is to be varied so as to enable the trade marks Lucky Dream and Lucky Draw to be registered in respect of goods confined to “ashtrays (not made of precious metal), lighters, matches and smokers’ articles”. The cross-appeal by BAT is to be upheld in relation to the contentions relating to “Luckies” going to the s 60 ground of cross-appeal subject to the registration of LUCKY DREAM and LUCKY DRAW in respect of the goods mentioned above. The parties will be ordered to make written submissions in relation to the question of costs.

Associate:

Dated:    9 September 2011