FEDERAL COURT OF AUSTRALIA

Procter & Gamble Australia Pty Limited v Energizer Pty Limited

(No 2) [2011] FCA 1446

In these orders the following terms have the following meanings:

The Best Shave Representation is the representation that the Hydro 5 Products provide the best shave for the skin of the user in comparison to all other wet shave razors as alleged by the applicant at paragraph 14 of its second further amended statement of claim.

The Different Properties Representation is the representation alleged by the applicant at paragraph 15 of its second further amended statement of claim.

Hydro 5 Products means the Hydro 5 and the Hydro 5 Replacement Cartridges.

Hydro Products means the five-bladed Schick Hydro 5 razor (Hydro 5), the three-bladed Schick Hydro 3 razor (Hydro 3), replacement cartridges for the Hydro 5 (Hydro 5 Replacement Cartridges) and replacement cartridges for the Hydro 3 (Hydro 3 Replacement Cartridges).

The Long-Lasting Hydration Representation is the representation that the use of certain or all of the Hydro Products will have a beneficial moisturising/hydrating effect on the user’s skin beyond the shaving process.

The Schick Online Advertisement means an online advertisement available at Energizer’s www.schick.com.au website as alleged by the applicant at paragraph 10 of its second further amended statement of claim.

The Transient Hydration Representation is the representation that the use of certain or all of the Hydro Products will have a beneficial moisturising/hydrating effect on the user’s skin during the shaving process.

The Zoo Weekly Advertisements means the two advertisements published in the Zoo Weekly magazine on or about 27 and 28 February 2011 as alleged by the applicant at paragraph 9A of its second further amended statement of claim.

THE COURT DECLARES THAT:

1.    In causing the Zoo Weekly Advertisements to be published, the respondent made the Long-Lasting Hydration Representation in contravention of ss 18(1) and 29(1)(g) of the Australian Consumer Law.

THE COURT ORDERS THAT:

2.    Pursuant to s 232 of the Australian Consumer Law, the Respondent, whether by itself, its agents or howsoever otherwise, is restrained from causing the Zoo Weekly Advertisements to be published.

3.    The applicant’s Different Properties Representation claim be dismissed.

4.    The applicant’s Transient Hydration Representation claim be dismissed.

5.    The applicant’s Long-Lasting Hydration Representation claim, save as to that part of the claim concerning the Zoo Weekly Advertisements, be dismissed.

6.    The applicant’s Best Shave Representation claim, save as to that part of the claim concerning the Schick Online Advertisement, be dismissed.

7.    The matter be stood over for further directions concerning the determination of the balance of the applicant’s Best Shave Representation to 3 February 2012.

8.    The applicant pay 90% of the respondent’s costs of the proceedings to date (as agreed or taxed).

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

REASONS FOR JUDGMENT

1    On 29 November 2011, I delivered judgment in these proceedings: see Procter & Gamble Australia Pty Limited v Energizer Pty Limited [2011] FCA 1347 (the Reasons). For present purposes, I generally adopt any definitions used in the Reasons.

2    These proceedings concern claims by P&G that Energizer has contravened ss 18(1) and 29(1)(g) of the Australian Consumer Law (ACL) in respect of representations made concerning certain of Energizer’s razor products, namely, the Hydro 5, Hydro 3, Hydro 5 Replacement Cartridges and Hydro 3 Replacement Cartridges (as in the Reasons, I will refer to these products collectively as the Hydro Products).

3    As explained in the Reasons, these proceedings concern material used by Energizer in the promotion and sale of the Hydro Products, which included:

    the packaging of the Hydro 5, Hydro 3, Hydro 5 Replacement Cartridges and Hydro 3 Replacement Cartridges;

    the display of the Hydro Products in supermarkets;

    an advertisement published in the Daily Telegraph newspaper on or about 10 January 2011;

    two advertisements published in the Zoo Weekly magazine on or about 27 and 28 February 2011 (the Zoo Weekly Advertisements);

    an online advertisement available at Energizer’s www.schick.com.au website (the Schick Online Advertisement);

    an online advertisement available at Energizer’s www.schickhydro.com.au website;

    material on a “Schick for Men Australia” Facebook page; and

    advertisements broadcast on Australian television (the Television Advertisements);

    material on the YouTube page www.youtube.com/SchickHydro (the YouTube Page).

4    P&G contended, as noted in [6] of the Reasons, that Energizer had contravened the ACL by making representations in the Hydro Materials that:

    the use of certain or all of the Hydro Products will have a moisturising/hydrating effect on the user’s skin during the shaving process (the Transient Hydration Representation); and

    the use of certain or all of the Hydro Products will have a moisturising/hydrating effect on the user’s skin beyond the shaving process (the Long-Lasting Hydration Representation);

    the Hydro 5 Products provide the best shave for the skin of the user in comparison to all other wet shave razors (the Best Shave Representation).

5    Most of the evidence, including expert evidence given in short form reports and in concurrent oral evidence, concerned the Transient Hydration Representation. That representation consumed a very large proportion of the hearing time and of the written submissions. Energizer wholly succeeded on that issue and I found that by making the Transient Hydration Representation it did not contravene ss 18(1) and 29(1)(g) of the ACL.

6    I concluded that the only contravention of ss 18(1) and 29(1)(g) that was established by P&G was in respect of the Long-Lasting Hydration Representation in the Zoo Weekly Advertisements. Otherwise, I concluded that Energizer had not made the Long-Lasting Hydration Representation.

7    With the exception of the YouTube Page, all of the Hydro Materials were said by P&G to have made the Best Shave Representation. I found that Energizer had made the Best Shave Representation in the Schick Online Advertisement but, as I explained at [11] of the Reasons, at this stage of the proceedings I have not been asked to consider whether this contravened the relevant provisions of the ACL. In respect of the other of the relevant Hydro Materials, I found that a “puffery” defence applied and that P&G had not succeeded in establishing that the Best Shave Representation had been made by these materials.

8    It is fair to say that Energizer was almost completely successful, in that it succeeded in respect of the main issue, the Transient Hydration Representation, and with respect to all but two of the Hydro Materials relied upon by P&G.

9    The parties have largely agreed on the orders to be made, but are in disagreement as to:

    whether there should be an injunction restraining further publication of the Zoo Weekly Advertisements; and

    costs.

injunction

10    P&G seeks an injunction restraining Energizer from republication of the Zoo Weekly Advertisements.

11    There is no dispute that the Court has the power to grant an injunction pursuant to s 232 of the ACL. Section 232(4)(a) of the ACL provides that the Court may grant an injunction whether or not it appears that the party intends to engage again, or to continue to engage in the conduct in question.

12    Energizer submits that an injunction should not be granted. It points out that the Zoo Weekly Advertisements were only published twice, on 27 and 28 February 2011. Energizer says that there is no evidence of any future risk of repetition and that there is no evidence of any threat of republication or of deficient systems controls. Nor, it says, is there any evidence to suggest any such further contravention or any temptation so to engage. Energizer’s submissions are to the effect that judgment and a declaration are sufficient protection.

13    These proceedings were commenced on 10 February 2011. The Zoo Weekly Advertisements were published after that date.

14    I accept that, as Energizer points out, that there is no evidence that repetition of the Zoo Weekly Advertisements is contemplated or likely. There is no evidence of a deficiency in Energizer’s control systems. These factors were taken into account by Perram J in Luxottica Retail Australia Pty Ltd v Specsavers Pty Ltd (2010) 267 ALR 721 at [41] and his Honour did not impose an injunction.

15    However, in Luxottica, Perram J noted that the particular advertisement had run its course, both by way of broadcasting and on the internet. In the present case, there is clearly an extensive and diverse advertising and marketing campaign being conducted currently by Energizer, utilising packaging, print media, television, the internet and social media. Different advertisements and “messages” are being utilised. As can be seen from the pleadings and the Reasons, although each of the Hydro Materials had relevant differences, the Hydro Materials contained some claims that were similar. In particular, there was a similarity between the Zoo Weekly Advertisements and the Television Advertisements but, for the reasons given, I concluded that the former were in contravention of the ACL while the latter were not.

16    In my opinion, it is appropriate to clarify the subject matter that contravened the ACL and to make that the subject of an injunction. In the circumstances, it is appropriate to impose an injunction, limited to further publication of the Zoo Weekly Advertisements. This, in my view, is more likely to ensure that Energizer, through its agents, will make certain that there is no repetition of the Zoo Weekly Advertisements.

Costs

17    Both parties’ submissions reflect an acceptance that costs orders should reflect the degree of success that each side has attained. That approach is frequently applied in complex cases and cases where numerous different issues are resolved with mixed success. As P&G submits, mathematical precision is illusory and the exercise of the discretion will often depend upon matters of impression and evaluation (Dodds Family Investments Pty Ltd (formerly Solar Tint Pty Ltd) v Lane Industries Pty Ltd (Solar Tint case) (1993) 26 IPR 261 at 272).

18    Energizer submits that, as the successful party, it is entitled to an award of costs. It accepts that P&G succeeded on what it describes as a ‘sub-issue’ in the proceedings, but characterises that as ‘a very modest degree of success’ in respect of subject matter that occupied a ‘miniscule amount of time and effort’. Energizer points out that P&G led no evidence in respect of either the Zoo Weekly Advertisements or the Schick Online Advertisement over and above the advertisements themselves.

19    Energizer submits that its success can be recognised by an order that it pays P&G’s costs of and incidental to the Long-Lasting Hydration Representation in the Zoo Weekly Advertisements and that the costs of and incidental to the Best Shave Representation in the Schick Online Advertisement be costs in the cause. The latter suggestion is based on the fact that the Court has yet to determine whether the Best Shave Representation, found to have been made in the Schick Online Advertisement, contravenes the ACL.

20    P&G submits that an appropriate costs order is that it pays 60% of Energizer’s costs, reflecting Energizer’s success, and that Energizer pays 40% of P&G’s costs, reflecting its success with respect to the Zoo Weekly Advertisements and the Schick Online Advertisement. No proper basis has been advanced for such an assessment.

21    In my view, it is not appropriate to make the orders proposed by Energizer. It is preferable to make an order of a fixed percentage of costs which reflects each party’s degree of success. Given that:

    the case involved three different representations;

    the case involved many different forms of material; and

    the findings relate to specific issues and specific of the Hydro Materials;

Energizer’s proposed orders would produce unnecessary complexity and cost in taxation (National Auto Glass Supplies (Australia) Pty Ltd v Nielsen & Moller Autoglass (NSW) Pty Ltd (No 9) [2007] FCA 1826 at [30]-[31] per Young J).

22    P&G was successful in respect of one form of the Hydro Materials said to have made the Long-Lasting Hydration Representation and in respect of one form of the Hydro Materials said to have made the Best Shave Representation. In each case, that determination was based on the evidence of the Hydro Materials themselves and the submissions of the parties. P&G was unsuccessful as to the remaining forms of the Hydro Materials said to have made each of those representations. As noted above, the majority of the evidence and of the submissions was directed to the Transient Hydration Representation, on which Energizer was wholly successful.

23    In my opinion, the appropriate order, which reflects that degree of success, is that P&G pay 90% of Energizer’s costs.

24    Otherwise, as the orders jointly proposed by the parties are appropriate, I will make them, albeit subject to some typographical amendments.

Associate:

Dated:    16 December 2011