Manufacturers may copy the design of a competitor's product and sell it under their own label without contravening s 52, provided the goods are properly labelled and there is no additional misleading conduct. The section does not create de facto monopoly rights in unregistered designs.
Later decisions that cite Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd
Decisions cited by Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd
PARKDALE CUSTOM BUILT FURNITURE PTY. LTD. v. PUXU PTY. LTD. [1982] HCA 44; (1982) 149 CLR 191
Trade Practices
High Court of Australia
Gibbs C.J.(1), Mason(2), Murphy(3), Brennan(4) JJ.
The Hon. Mr. Justice Aickin died before judgment was delivered in this case
CATCHWORDS
Trade Practices - Consumer protection - Misleading or deceptive conduct - Conduct likely to mislead or deceive - Selling goods virtually identical to goods manufactured by another - Goods tagged with manufacturer's label - Trade Practices Act 1974 (Cth), s. 52(1)*.
*Section 52(1) of the Trade Practices Act 1974 (Cth) provides:
misleading or deceptive or is likely to mislead or deceive."
HEARING
1981, April 9; 1982, August 11. 11:8:1982DECISION
1982, August 11.The following written judgments were delivered: -Federal Court of Australia, which, by a majority, reversed the decision given by the judge at first instance, and granted an injunction restraining the present appellant, Parkdale Custom Built Furniture Pty. Ltd. by itself, its servants and agents, from engaging in trade or commerce in conduct that is misleading or deceptive or that is likely to mislead or deceive by selling, offering for sale, dealing with, displaying or advertising any lounge suites, lounges or lounge chairs so as to mislead or deceive members of the public into believing that they are lounge suites, lounges or lounge chairs manufactured by Puxu Pty. Ltd., the present respondent. The case was referred back to a single judge of that court to hear and determine any question of damages. The respondent, which was the plaintiff in the action in the Federal Court, based its claim against the appellant on s. 52(1) of the Trade Practices Act 1974 (Cth), as amended, ("the Act"), which provides as follows:
GIBBS C.J. This is an appeal from a judgment of the Full Court of the
2. The respondent has since June 1978 manufactured and sold, under the name "Post and Rail", furniture which includes lounge suites, which consist of lounges and chairs of distinctive appearance and design known as the "Contour" range. These lounges and chairs had been designed by the respondent's predecessors in business and had been sold by them since some time late in 1976 or early in 1977. The lounge suites were the subject of fairly extensive advertising and had acquired an established reputation. The design of this furniture was not the subject of copyright under the Designs Act 1906 (Cth), as amended. At some time after the "Post and Rail" "Contour" lounge suites were first sold and marketed, the appellant began to manufacture and sell, under the general names "Parkdale Custom Built Furniture" and "Custom Built Furniture", lounge suites known as the "Rawhide" range. It is convenient for present purposes henceforth to speak only of the chairs manufactured by both parties, although what is said with regard to them applies equally to the lounges. The chairs made by the appellant closely resemble those made by the respondent. However, there was sewn into the fron of each of the appellant's chairs a label, in size about 6.35 centimetres (two and a half inches) square, which set out that the chair was "Parkdale Custom Built Furniture" of the "Rawhide" range. The label could be tucked under the upholstery of the chair and would not then be visible and it might easily enough be removed by cutting it off from the chair. Nevertheless it appears to have been the practice of manufacturers to identify chairs by labelling them in that way, and in fact the respondent's chairs bore labels of a similar kind, but somewhat smaller. Having regard to the fact that all chairs which left the appellant were delivered to retailers and were labelled so as to identify the appellant as the manufacturer, and having regard to evidence as to some differences between the chairs respectively manufactured by the parties, the learned primary judge refused to find that the appellant intended to mislead or deceive any potential purchaser into believing that the "Rawhide" chairs were "Contour" chairs. The Full Court did not make any finding to the contrary. (at p195)
3. It appears to me that the learned primary judge placed undue importance on the differences in appearance between the chairs of the appellant and those of the respondent. In his opinion, some of those differences would be likely to be observed by an ordinary member of the public who had looked at the "Contour" chair as a potential purchaser, other differences might not have been detected except by a careful buyer who had a particularly clear picture in his mind of the respondent's chair as a result of an examination of it on a prior occasion, and there were other differences which even a careful buyer with a clear recollection of the respondent's chair would not be likely to see. An ordinary buyer would not be expected to make a detailed comparison of one chair with another, and the general impression given by the appellant's chairs was substantially the same as that given by the respondent's. Further, it is difficult to escape from the conclusion that the appellant deliberately copied the design and appearance of the respondent's chairs. However, it does not follow that the appellant had any intention to mislead or deceive. One manufacturer may copy the product of another, because that product has proved successful and with the intention of taking advantage of an available market for a product of that kind, but with no intention of passing off his own product as the product of the original manufacturer. The fact that the appellant sold its products to retailers, and labelled them before delivery, and the absence of any evidence of any improper agreement between the appellant and any retailer, support the conclusion that the appellant had no intent to mislead or deceive. (at p196)
4. There was evidence which suggested that the appellant's chairs were inferior in quality to those of the respondent. However they were lower in price. The learned primary judge rejected the argument that any conduct of the appellant would have been likely to mislead or deceive prospective purchasers as to the quality of the appellant's chairs. The learned members of the Full Court did not disagree with this conclusion and it was not challenged before us. (at p196)
5. It follows from what I have said that the respondent's claim that the conduct of the appellant was misleading or deceptive, or likely to mislead or deceive, rests solely on the fact that the appellant sold goods which were virtually identical in appearance to those sold by the respondent. There is no suggestion of false labelling or false description. Evidence was given of particular instances in which persons were actually misled by the resemblance in appearance of the chairs. I may deal with this evidence very briefly, since it does no more than reinforce the view that an ordinary observer, not seeing the label, might mistake one chair for the other. Two persons, Mrs. Hogg and Mr. Klug, bought "Rawhide" chairs believing them to be "Post and Rail" chairs. In each case, however, the labels had been removed from the chairs, and there is no suggestion that the appellant had been in any way responsible for their removal. Moreover, in each case a salesman employed by the retailer gave misleading information to the buyer. Another witness, Mr. Layton, the marketing manager for a retail company, included in an advertisement a bromide photograph of the respondent's lounge suite, thinking that it was a photograph of the appellant's suite. The evidence of these witnesses shows that the resemblance between the appellant's chairs and the respondent's chairs was so close that a person looking at the appellant's chairs, without looking for a finding the label on them, would be likely to be misled into thinking that they were the respondent's chairs. But an ordinary person who read the label could not possibly be deceived or misled. (at p197)
6. In these circumstances the conduct of the appellant of which the respondent complains was to manufacture and sell by wholesale chairs whose appearance and design were copied from those of the respondent and which closely resembled the respondent's chairs, but which were properly labelled with the name of the appellant. The question is whether this conduct was misleading or deceptive, or likely to mislead or deceive, within the meaning of those expressions in s. 52. (at p197)
7. The words of s. 52 have been said to be clear and unambiguous: Hornsby Building Information Centre Pty. Ltd. v. Sydney Building Information Centre Ltd. [1978] HCA 11; (1978) 140 CLR 216, at p 225 . Nevertheless they are productive of considerable difficulty when it becomes necessary to apply them to the facts of particular cases. Like most general precepts framed in abstract terms, the section affords little practical guidance to those who seek to arrange their activities so that they will not offend against its provisions. It has been held that the section is not confined to conduct that is intended to mislead or deceive: Hornsby Building Information Centre Pty. Ltd. v. Sydney Building Information Centre Ltd. There is nothing in the section that would confine it to conduct which was engaged in as a result of a failure to take reasonable care. A corporation which has acted honestly and reasonably may therefore nevertheless be rendered liable to be restrained by injunction, and to pay damages, if its conduct has in fact misled or deceived or is likely to mislead or deceive. The liability imposed by s. 52, in conjunction with ss. 80 and 82, is thus quite unrelated to fault and it need not involve any infringement of a right to a trade name, trade mark, copyright or design. It may have been thought that the unequal position of consumers as against the corporations which supply them with commodities justified a measure that from the point of view of the latter seems draconic, but although s. 52 is intended for the protection of consumers, it is enforceable by a trade competitor who is not a consumer (Reg. v. Federal Court of Australia; Ex parte Pilkington A.C.I. (Operations) Pty. Ltd. [1978] HCA 60; (1978) 142 CLR 113, esp at pp 120-121, 128 ) and it is not infrequently used by one trader against a rival to protect a trade name or to prevent a passing-off. The section may have been designed to protect the weak from the powerful, but it may be used by a large and powerful corporation to restrain the activities of a smaller competitor. I am, with all respect, unable to see any reason why a section so broadly expressed and so drastic in its possible consequences should be beneficially construed. I do not suggest that the words of s. 52 should be given "some unnaturally confined meaning" (to use the words of Stephen J. in Hornsby Building Information Centre Pty. Ltd. v. Sydney Building Information Centre Ltd. (1978) 140 CLR, at p 225 ), or that they should be construed to conform with the common law (see World Series Cricket Pty. Ltd. v. Parish (1977) 16 ALR 181, at pp 198-199 ), but simply that they should be given their plain and natural meaning, and should not be understood in some loose or expanded sense. (at p198)
8. The words of s. 52 require the Court to consider the nature of the conduct of the corporation against which proceedings are brought and to decide whether that conduct was, within the meaning of that section, misleading or deceptive or likely to mislead or deceive. Those words are on any view tautologous. One meaning which the words "mislead" and "deceive" share in common is "to lead into error". If the word "deceptive" in s. 52 stood alone, it would be a question whether it was used in a bad sense, with a connotation of craft or overreaching, but "misleading" carries no such flavour, and the use of that word appears to render "deceptive" redundant. The words "likely to mislead or deceive", which were inserted by amendment in 1977, add little to the section; at most they make it clear that it is unnecessary to prove that the conduct in question actually deceived or misled anyone. In McWilliam's Wines Pty. Ltd. v. McDonalds System of Australia Pty. Ltd [1980] FCA 159; (1980) 49 FLR 455; 33 ALR 394 it was rightly held by Smithers J. and by Fisher J. that to prove a breach of s. 52 it is not enough to establish that the conduct complained of was confusing or caused people to wonder whether two products may have come from the same source, and that Southern Cross Refrigerating Co. v. Toowoomba Foundry Pty. Ltd. [1953] HCA 73; (1954) 91 CLR 592 , a decision on the Trade Marks Act 1905 (Cth), as amended, is distinguishable. I need not add to what their Honours said on this subject (1980) 49 FLR, at pp 458-459, 475-476; 33 ALR, at pp 397-398, 412-413 . I agree too with those learned judges that the court must decide objectively whether the conduct is misleading or deceptive or likely to mislead or deceive, and that evidence that members of the public have actually been misled is not conclusive (1980) 49 FLR, at pp 461, 476-477; 33 ALR, at pp 399-400, 413-414 . I would add that evidence that members of the public were misled, not by any conduct of the defendant, but by other circumstances for which the defendant was not responsible, would be quite irrelevant. (at p199)
9. Section 52 does not expressly state what persons or class of persons should be considered as the possible victims for the purpose of deciding whether conduct is misleading or deceptive or likely to mislead or deceive. It seems clear enough that consideration must be given to the class of consumers likely to be affected by the conduct. Although it is true, as has often been said, that ordinarily a class of consumers may include the inexperienced as well as the experienced, and the gullible as well as the astute, the section must in my opinion by regarded as contemplating the effect of the conduct on reasonable members of the class. The heavy burdens which the section creates cannot have been intended to be imposed for the benefit of persons who fail to take reasonable care of their own interests. What is reasonable will or course depend on all the circumstances. The persons likely to be affected in the present case, the potential purchasers of a suite of furniture costing about $1,500, would, if acting reasonably, look for a label, brand or mark if they were concerned to buy a suite of particular manufacture. (at p199)
10. The conduct of a defendant must be viewed as a whole. It would be wrong to select some words or act, which, alone, would be likely to mislead if those words or acts, when viewed in their context, were not capable of misleading. It is obvious that where the conduct complained of consists of words it would not be right to select some words only and to ignore others which provided the context which gave meaning to the particular words. The same is true of acts. In the present case the conduct of the appellant was not simply to manufacture and sell furniture that resembled that of the respondent. The appellant sold only furniture that had been labelled, in the ordinary way, so as to show the name of the manufacturer. If the appellant's conduct was likely to mislead possible purchasers, it is difficult to see why the respondent's conduct in selling its furniture would not also be likely to mislead. However that may be, in my opinion, the conduct of the appellant did not contravene s. 52. Speaking generally, the sale by one manufacturer of goods which closely resemble those of another manufacturer is not a breach of s. 52 if the goods are properly labelled. There are hundreds of ordinary articles of consumption which, although made by different manufacturers and of different quality, closely resemble one another. In some cases this is because the design of a particular article has traditionally, or over a considerable period of time, been accepted as the most suitable for the purpose which the article serves. In some cases indeed no other design would be practicable. In other cases, although the article in question is the product of the invention of a person who is currently trading, the suitability of the design or appearance of the article is such that a market has become established which other manufacturers endeavour to satisfy, as they are entitled to do if no property exists in the design or appearance of the article. In all of these cases, the normal and reasonable way to distinguish one product from another is by marks, brands or labels. If an article is properly labelled so as to show the name of the manufacturer or the source of the article its close resemblance to another article will not mislead an ordinary reasonable member of the public. If the label is removed by some person for whose acts the defendant is not responsible, and in consequence the purchaser is misled, the misleading effect will have been produced, not by the conduct of the defendant, but by the conduct of the person who removed the label. (at p200)
11. For these reasons I have reached the conclusion that the conduct of the appellant was not of the kind to which s. 52 refers. I would accordingly allow the appeal and restore the judgment of the learned primary judge. (at p200)
MASON J. This is an appeal from a decision of the Federal Court (C. A. Sweeney and Lockhart JJ.; St. John J. dissenting) allowing an appeal against the refusal of Keely J. to grant an injunction pursuant to s. 80 of the Trade Practices Act 1974 ("the Act"). The issue was whether the present appellant was contravening s. 52(1) of the Act which provides "A corporation shall not, in trade or commerce, engage in conduct that is misleading or deceptive or likely to mislead or deceive". (at p200)
2. The respondent manufactured and sold furniture called "Post and Rail". The Post and Rail furniture relevant to these proceedings is that part of the "Contour" range comprising two or three seater lounges and lounge chairs. They have an unusual and distinctive appearance and had been extensively advertised. The Post and Rail "Contour" chair was first manufactured and sold in its present form in late 1976 or early 1977. Registration of the design under the Designs Act 1906 (Cth) was not possible because of prior publication before application for registration. (at p200)
3. The appellant has manufactured and sold furniture under the name "Parkdale" including lounge suites and chairs as part of its "Rawhide" range. The appellant had commenced to manufacture and sell the "Rawhide" lounge suite and chairs by June 1978 after the date of manufacture and sale of the respondent's "Contour" lounge suite and chairs. (at p201)
4. The relevant "Rawhide" and "Contour" furniture bear a very close resemblance. The trial judge set out particular details in which the parties' exhibited chairs were identical or closely resembled each other as well as ways in which they differed. His Honour considered that some of the differences would be likely to be observed by an ordinary member of the public who had previously looked at the Post and Rail "Contour" chairs as a potential purchaser. The Full Court appears to have proceeded on the assumption that the items of furniture were substantially identical in appearance. C. A. Sweeney J. considered that Keely J.'s "careful and detailed analysis of the resemblances and differences between the two products was far removed from the processes likely to be involved in consumers' observations and recollections in the market place". No challenge was made to the analysis of the Full Court on this issue and it is therefore appropriate to proceed on the footing that the items are almost identical in appearance and that any differences are not readily observable. Keely J. was not prepared on the evidence to find that the appellant copied the respondent's product for the purpose of selling it as the respondent's goods. However, he did infer that the appellant intended to lead people who saw the relevant "Rawhide" furniture advertised by retailers or in retailers' shop windows to see that the "Rawhide" products closely resembled the "Contour" suite and chairs manufactured by the respondent and to enter the retailer's shop to examine and consider purchasing the "Rawhide" furniture. (at p201)
5. Keely J. found that the appellant's practice was to have a label stating its name and trademark sewn to each lounge suite and lounge chair - before it left the appellant's factory for delivery to a retailer. The label was approximately two and a half inches square (slightly larger than the respondent's label) and was affixed according to the ordinary practice of the trade in much the same position as the respondent's label, namely at the bottom of the upholstery. His Honour concluded that the extent to which the label is readily observable depends upon whether it has been left hanging down or has been physically pushed up behind the upholstery. In the latter case, a person desiring to read the label would need to feel for it and pull it out from below the upholstery. Although there was evidence from two purchasers of the appellant's lounge suite, Mrs. Hogg and Mr. Klug, that the lounge suites did not have the appellant's label on them at the time of sale the trial judge inferred that an employee of the retailer removed the appellant's label in each case. This finding has not been attacked. (at p202)
6. The basic question is whether manufacturing a product and distributing it to retailers for advertisement and sale to the public is conduct prohibited by s. 52(1) when the product, though properly labelled with the name of the manufacturer, very closely resembles and is intended to be seen to closely resemble an earlier product of another manufacturer which is still being marketed and advertised. The respondent complains that the manufacture by the appellant of the "Rawhide" suites and chairs was misleading and deceptive and was likely to mislead or deceive potential purchasers who saw the "Rawhide" furniture into believing that it was the Post and Rail "Contour" furniture. The case has been fought on the footing that the deception was with respect to the source of manufacture as distinct from deception as to the quality of the goods. The respondent initially argued that potential purchasers were likely to be misled into believing that the appellant's lounge suite or chair was a product of Post and Rail quality. This argument was rejected by Keely J. and was not disturbed on appeal. (at p202)
7. Section 52(1) is expressed in terms of broad generalities which are explicitly preserved by s. 52(2). The general words of s. 52(1) should be widely interpreted without being read down by reference to the heading of Pt V "CONSUMER PROTECTION" or to the more specific succeeding sections (see Hornsby Building Information Centre Pty. Ltd. v. Sydney Building Information Centre Ltd. [1978] HCA 11; (1978) 140 CLR 216, at p 225 ). Although s. 52(1) is intended to protect members of the public in their capacity as consumers of goods and services, competitors may seek an injunction to restrain breaches (s. 80(1)(c); Reg. v. Federal Court of Australia; Ex parte Pilkington A.C.I. (Operations) Pty. Ltd. [1978] HCA 60; (1978) 142 CLR 113 ). The remedy to prevent deception of the public often has the incidental effect of protecting a competing trader's goodwill which would be also injured by that deception. (at p202)
8. Nevertheless, it is important to recall that s. 52(1) is "not concerned, as such, with any unfairness of competition in trade as between two traders" (Hornsby (1978) 140 CLR, at p 226 ; cf. s. 5 of the United States Federal Trade Commission Act 1914). It is not directed exclusively or even primarily to situations of passing-off; it extends to any conduct that is likely to mislead or deceive as, for example, the making of negligent statements and false representations as to the quality of goods. It is not enough that conduct damages a rival trader; it must mislead or deceive or be likely to mislead or deceive members of the public in their capacity as consumers. Hornsby and McWilliam's Wines Pty. Ltd. v. McDonald's System of Australia Pty. Ltd. [1980] FCA 159; (1980) 49 FLR 455; 33 ALR 394 show the importance of examining why the alleged misconception arose. Thus in Hornsby it was assumed that the name "Hornsby Building Information Centre" led persons to believe that the Hornsby Centre was a branch of, or otherwise associated with, the Sydney Centre. However, the use of that name did not contravene s. 52(1). The misconception occurred since the very descriptive name adopted by the Sydney Building Information Centre was "equally applicable to any business of a like kind, its very descriptiveness ensures that it is not distinctive of any particular business and hence its application to other like businesses will not ordinarily mislead the public" (1978) 140 CLR, at p 229 . It was important that a trader adopting descriptive words did not thereby secure an unfair monopoly in those words. (at p203)
9. Similarly in McWilliam's the Federal Court (Smithers, Northrop and Fisher JJ.) in holding that s.52(1) had not been breached by McWilliam's use of the expression "BIG MAC" in advertising one of its brands of wine, considered why potential purchasers of that McWilliam's wine and/or the McDonald's hamburgers might have been confused as to whether there was a business connexion between the two companies. Smithers J. (with whom Northrop J. generally agreed) held that such confusion only arose by reason of the erroneous assumption of some potential purchasers that due to McDonald's frequent use of the words "BIG MAC", "there is some legal or other restriction on the use of those words much wider than that which actually exists" (1980) 49 FLR, at p 464; 33 ALR, at p 403 and that conduct could not be relevantly misleading or deceptive if "it tells the truth and is such that if it is observed by persons who have no false ideas concerning extraneous matters nobody will be misled" (1980) 49 FLR, at p 466; 33 ALR, at p 404 . Fisher J. emphasized that if it were accepted that members of the public were misled to the extent of believing that there was a business connexion between the parties, then this was essentially in consequence of the substantial reputation achieved by McDonald's through an extensive advertising campaign. The fact that some members of the public, largely through activity of McDonald's, thereby had an erroneous preconceived notion that nobody else could use the words without the approval of McDonald's should not cause a court to make its objective determination under such a misapprehension (1980) 49 FLR, at pp 477-479; 33 ALR, at pp 414-415 . As we shall see, the reasons for confusion given by some of the witnesses here do not establish that their confusion was due to conduct of the appellant. (at p204)
10. Although, as noted, s. 52 should be generously construed and should not be read down to conform with former common law or equitable requirements (cf. Parish v. World Series Cricket Pty. Ltd. (1977) 16 ALR 172, at pp 198-199 ), there is a complex issue as to the relationship between s. 52 and (a) the statutory object of promoting freedom of competition reflected in the provisions of Pt IV of the Act dealing with "RESTRICTIVE TRADE PRACTICES"; and (b) the statute law regulating patents, trade marks and registered designs. (at p204)
11. Should the general words of s. 52(1) be qualified by considerations of statutory purpose and policy derived from Pt IV and from other statutes regulating industrial property? This is a crucial question here. (at p204)
12. The object of Pt V is to protect the consumer by eliminating unfair trade practices, just as the object of Pt IV is to promote competition by eliminating restrictive trade practices. Knowledge of the history of the legislative proposals, of the legislation and of the controversy which has surrounded it might suggest that the dominant object of the Act is the promotion of freedom of competition. But examination and analysis of its provisions yields no acceptable foundation for this conclusion. The two Parts are independent and there is no direction that one Part is to be read subject to the other. Although they have to be read together as parts of the same statute, they might in other circumstances have been enacted as separate statutes with not very much difference in legal effect. (at p204)
13. Part V contains no counterpart to s. 112 which excludes the operation of Pt IV in matters connected with Pt X. The prohibition in s. 52(1) is addressed to corporations which are also bound to comply with the provisions of Pt IV. The statutory policy, as it seems to me, is that the interests of a consumer of goods or services will best be served when manufacturers compete vigorously without adopting restrictive practices and observe prescribed standards of conduct in their dealings with consumers. (at p204)
14. Once it is accepted that this is the statutory policy I find it difficult to accept the appellant's notion that the general, yet clear, words of s. 52(1) should be read down so as to enable the policy of freedom of competition enshrined in Pt IV to prevail. In a collision between one of two different statutory policies and plain words giving effect to the other statutory policy the plain words will prevail. To my mind the words "misleading" and "deceptive" as applied to conduct in trade and commerce are reasonably plain. And in a collision between the general policy of encouraging freedom of competition and the specific purpose of protecting the consumer from misleading or deceptive conduct it is only right that the latter should prevail. It would be wrong to attribute to the Parliament an intention that the indirect and intangible benefits of unbridled competition are to be preferred to the protection of the consumer from the misleading or deceptive conduct which may be an incidental concomitant of that competition. Given the statutory context here it is more likely that Parliament intended to promote free competition within a regulatory framework that prohibits the trader from engaging in misleading or deceptive conduct, even if it means that one trader cannot in particular cases compete with another trader because the opposite view would give a paramountcy to freedom of competition not accorded to it by the statute. (at p205)
15. The relationship of s. 52(1) with established statutory regimes dealing with related topics gives rise to an important question. Can it be inferred from the detailed treatment of limited monopolies of intellectual and industrial property in specific statutes that s. 52(1) should be read down if it otherwise could facilitate the creation of new monopolies not subject to the limitations imposed by those statutes? In my view there are sound reasons for not construing s. 52 in that way. (at p205)
16. Clearly there is here no question of infringement of a trade mark. As a general proposition the Trade Marks Act 1955 (Cth) is concerned with deception or confusion to the public as to the source of goods, whilst the Trade Practices Act is concerned with deception of the public as consumers of goods or services (McWilliam's (1980) 49 FLR, at pp 472-473; 33 ALR, at p 410 ). Likewise, the operation of s. 52 is not restricted by the common law principles relating to passing-off. If, as I consider, the section provides the public with wider protection from deception than the common law, it does not follow that there is a conflict between the section and the common law. The statute provides an additional remedy. (at p205)
17. To obtain a monopoly in a particular design under the Designs Act it is not sufficient merely to have a period of undisturbed user. The necessary registration is only possible for a "new or original design, which has not been published in Australia before the lodging of an application for its registration" (s. 17(1)). A certificate of registration remains in force for a limited period (s. 26). Importantly a registered design is open to public inspection (s. 27) so that others can assess whether they could be infringing the copyright in a registered design. Thus the statute seeks a balance between limited monopoly rights for traders with a novel design on the one hand and the stimulus of competition aided by access to information on the other hand. Similarly the Patents Act 1952 (Cth) seeks to balance competing interests in connexion with the grant of letters patent for a particular invention. Essentially, in return for the disclosure of his invention a patentee receives a limited monopoly at the expiration of which the invention is available to the public at large. (at p206)
18. The case made by the respondent as a competing trader here is that it is entitled to an injunction to restrain the appellant from producing and selling goods which very closely resemble the respondent's product. Its claim in substance is that s. 52 gives it the rights which it would have had if it had a registered design for the furniture. (at p206)
19. On the other hand the appellant's case is that to forbid a manufacturer to manufacture a product because it too closely resembles a competitor's earlier product without subjecting the resulting monopoly for the earlier product to the limitations imposed by the Designs Act, would be to create a monopoly in a design in circumstances in which that Act does not confer a monopoly. This, the appellant urges, is a result which could scarcely have been intended. (at p206)
20. Mr. Staff Q.C. for the respondent submits that the Patents Act and the Designs Act are directed to a field of obligations and rights quite different from s. 52. In one sense this is so. It is the object of the two statutes to create private property rights. They confer exclusive or monopoly rights in patents and designs respectively and prescribe the conditions according to which these rights come into existence. With s. 52 it is different. Its primary purpose is not to create private property rights but to regulate the conduct of traders by prohibiting them from engaging in conduct which misleads or deceives consumers. Enforcement of this statutory prohibition may enable trader A to prevent trader B from manufacturing or marketing goods which closely resemble those of trader A because the marketing of them will mislead or deceive the public, but this result, if it occurs, will be incidental to the enforcement of the prohibition - it is an unavoidable consequence of protecting the public from misleading or deceptive conduct. When s. 52 is viewed in this light, there is no very strong reason for saying that the generality of its language should be restricted on the ground that it runs counter to the policy and purpose of the Patents Act and the Designs Act. (at p207)
21. It would be otherwise if the policy and purpose of the two statutes were to prohibit all monopoly rights in patents and designs except those for which they provide. If the two statutes were anti-monopoly statutes then we might be justified in saying that the general words of s. 52 should be read subject to the particular words of the Patents Act and the Designs Act - generalia specialibus non derogant. But it is not possible to say of them that they are anti-monopoly statutes - their object is to create exclusive rights. (at p207)
22. The appellant attempts to turn this argument aside by asserting that the policy which underlies the two statutes is that there will be no monopoly rights in patents and designs except on the prescribed statutory conditions. Certainly this is the effect of the two statutes - one can only obtain a grant of letters patent or registration of a design by complying with the statutory conditions. But I would not describe it as the policy of the statutes. Their emphasis is positive, it is on the grant of exclusive rights on stipulated conditions; it is not on the prohibition of similar rights except on stipulated conditions. Consequently, I would not read down the provisions of s. 52 by reference to considerations of policy said to arise from the Patents Act and the Designs Act. As I have already said, the words of the section, though general, are reasonably plain. The argument based on the two statutes is not of sufficient strength to displace the ordinary meaning of the words. (at p207)
23. However, I am inclined to the view that the evidence did not establish conduct by the appellant of the proscribed type. The evidence accepted by Keely J. demonstrates that two persons purchased the appellant's "Rawhide" lounge suite and chairs believing that they were purchasing the respondent's "Contour" furniture. Mrs. Hogg had seen the respondent's furniture displayed the previous year and advertised in magazines. She later saw in a closed retailer's shop a lounge suite manufactured by the appellant which she thought to be a "Contour" lounge suite. It does not appear that when she bought the suite the next day she looked for a label or examined the suite to compare it with her recollection of the Post and Rail "Contour" suite. In fact there was no label on the suite. However, she asked the salesman whether the suite was a Post and Rail suite, specifically telling him that was what she wanted. From the salesman's evasive reply and manner she assumed that he had said that it was Post and Rail. (at p207)
24. Mr. Klug had also seen the respondent's lounge advertised in magazines. He saw a lounge suite manufactured by the appellant but thought it was a Post and Rail suite. He was unaware that it did not have the appellant's label on it. He did not ask who made the suite. However, before purchasing the lounge suite Mr. Klug had some doubts, having earlier seen a Post and Rail "Contour" suite through the door of a closed shop which was almost 40 per cent dearer that the retail price of the "Rawhide" suite. Mr. Klug asked why the price was cheaper compared to the other shop and was told that it was because of bulk buying. (at p208)
25. The trial judge inferred that in each case an employee of the respective retailer had removed the appellant's label. Neither Mrs. Hogg nor Mr. Klug would have purchased the "Rawhide" suite if Mrs. Hogg's question had been truthfully answered or if Mr. Klug had been told that the normal price of the suite which he was considering purchasing was not the higher price which he had seen in the other shop. The trial judge held that Mrs. Hogg and Mr. Klug were misled by a statement by a salesman, as well as by the removal of the appellant's label and not by any conduct of the appellant. However, C. A. Sweeney J. held that the very close resemblance between the two suites enabled the deceptive conduct of the salesman to succeed. Lockhart J. considered that the very close correspondence or near identity between the two products showed that the appellant was putting its product into the hands of retailers with inherent potential to mislead or deceive the public. (at p208)
26. There was also evidence that two persons connected with advertising the appellant's product wrongly assumed that a photograph or newspaper tear sheet of the respondent's furniture showed the appellant's "Rawhide" suite. Mr. Layton was marketing manager of a company selling furniture which had for sale a suite manufactured by the appellant. In preparing a newspaper advertisement of the "Rawhide" suite he used a bromide photograph of the respondent's suite, wrongly assuming that it showed a "Rawhide" suite. Similar evidence was given by Mr. Stanton who received from the owner of a furniture shop a tear sheet from a newspaper not published in Melbourne for a newspaper advertisement in Melbourne. The tear sheet advertised the Post and Rail lounge suite but the reference to Post and Rail had been crossed out in the tear sheet received by Mr. Stanton. This tear sheet was then used as the basis for a Melbourne newspaper advertisement for the "Rawhide" lounge suite. Mr. Stanton assumed that the tear sheet depicted the appellant's "Rawhide" suite when it in fact depicted the "Contour" suite. Keely J. did not consider that this evidence assisted the respondent whereas C. A. Sweeney and Lockhart JJ. considered the evidence of Layton, a man in the furniture trade, to be of great assistance for the respondent. Lockhart J. also was assisted by the evidence of Stanton. (at p209)
27. Keely J. stated that it was necessary to consider whether the appellant's conduct was misleading or deceptive or likely to mislead or deceive "ordinary members of the public likely to be considering purchasing such an item from a retailer" noting that this included "the shrewd and the ingenuous, the educated and uneducated and the experienced and inexperienced in commercial transactions" (C.R.W. Pty. Ltd. v. Sneddon (1972) AR 17, at p 28 ; see also World Series Cricket Pty. Ltd. (1977) 16 ALR 181, at p 203 ). However, his Honour gave detailed consideration to which of the differences between the "Contour" and "Rawhide" suite he considered "would be likely to be observed by an ordinary member of the public who had previously looked at the Post and Rail 'Contour' chair as a potential purchaser". Lockhart J. considered that Keely J. had applied too narrow a test in excluding those who may have seen pictures of the furniture in newspapers, magazines, or on television but not the actual chairs themselves. Whether or not Keely J. did so err, Lockhart J. is correct in stating that here "the relevant class of persons likely to be exposed to the alleged misleading or deceptive conduct would be anyone interested in purchasing lounge suites or chairs in the higher price range". As his Honour noted, the class protected by s. 52 must vary according to the facts of each case. In furniture of this price range in the order of $1,500 for a three piece lounge suite one would in the ordinary course expect persons within the admittedly wide range of potential purchasers to exercise somewhat more vigilance than may be the case with the purchase of items of less financial significance having less impact on the appearance of the home (cf. Jafferjee v. Scarlett [1937] HCA 36; (1937) 57 CLR 115, at p 124 ). (at p209)
28. Conduct does not breach s. 52(1) merely because members of the public would be caused to wonder whether it might not be the case that two products come from the same source. Lockhart J. was of the view that it was enough that the ordinary person entertained a reasonable doubt, relying on the construction given to "likely to deceive" in s. 114 of the Trade Marks Act 1905-1948 by the Court in Southern Cross Refrigerating Co. v. Toowoomba Foundry Pty. Ltd. (1954) 91 CLR 592, at pp 594-595 and on appeal (1954) 91 CLR, at p 607 . In McWilliam's Smithers, Northrop and Fisher JJ. held that it was inappropriate to apply the approach given to s. 114 of the Trade Marks Act to s. 52 of the Act and the respondent does not seek to support the reasoning of Lockhart J. on this point. (at p210)
29. There are sound reasons, some of which are elucidated in McWilliam's, for not applying unchanged the construction given to s. 114 of the Trade Marks Act. (at p210)
30. The Trade Marks Act is concerned with deception or confusion to the public as to the source of goods. The Trade Practices Act is concerned with deception of the public as consumers of goods or services. The function of a trade mark is to identify the source of goods; the purpose of s. 52 is to prohibit misleading or deceptive conduct which will affect the recognition or identification of goods. Registration of a mark confers rights of a proprietary nature. The applicant for a trade mark bears the onus of establishing that use of his mark is not likely to deceive or cause confusion. Under s. 52 the onus is on the plaintiff to show that the conduct is likely to mislead or deceive. Therefore conduct which merely causes some uncertainty in the minds of relevant members of the public does not breach s. 52. (at p210)
31. Here, I am prepared to infer that the very close resemblance of the appellant's and respondent's furniture could lead a person who had previously seen the respondent's furniture either displayed in a shop or advertised in the media mistakenly think on seeing the appellant's "Rawhide" suite that it was a "Contour" suite. It seems unlikely that an ordinary purchaser would notice the very slight differences in the appearances of the suites, especially if the prospective purchaser had not earlier inspected the respondent's "Contour" suite in detail. This inference may go further than the evidence of Mrs. Hogg and Mr. Klug which did not establish a clear conviction before the intervention of the salesmen that a "Contour" suite was being purchased. Mrs. Hogg had specifically asked if it was that brand and Mr. Klug queried the low price of the furniture. (at p210)
32. Since a prospective purchaser looking at a "Rawhide" label affixed in the ordinary course of the trade would hardly mistakenly think that the furniture was "Contour" we must consider whether a purchaser would be expected to look for and see the label. This is not an easy issue to resolve. We have seen that a label affixed in the ordinary course of the trade may not be readily observable. There may be situations where to exploit mistaken views of the public would contravene s. 52 and would not be corrected by an inconspicuous accurate representation made in e.g. a concealed label or the "fine print" of a contract (cf. McWilliam's (1980) 49 FLR, at pp 464-466, 477-479; 33 ALR, at pp 402-404, 414-416 ; Donald and Heydon, Trade Practices Law (1978), vol 2, pp 537-538; Taperell, Vermeesch and Harland, Trade Practices and Consumer Protection, 2nd ed., (1978) pp. 493-494). Here, however, taking into account the importance both financially and aesthetically of the relevant furniture, my conclusion is that a purchaser who considered it important to acquire Post and Rail "Contour" furniture could reasonably be expected to look for and find the label or to take comparable steps, such as inquiring of a salesman, to ensure that furniture from the "Contour" range was being purchased. Indeed the evidence of Mrs. Hogg referred to above supports the view that a prospective purchaser could reasonably be expected to attempt to ascertain the brand name of this type of furniture. Therefore I conclude that the appellant's practice of labelling its "Rawhide" furniture ensured that the similarity of the two suites, even if it might otherwise have been "misleading or deceptive", did not contravene s. 52. (at p211)
33. As St. John J. noted there was no evidence that the appellant had any proprietary interest in the goods after delivery to the retailer or that any retailers were agents of the appellant. Thus the misleading and deceptive conduct of the salesman should not here be attributed to the appellant. With respect, I agree with St. John J. that knowledge by a manufacturer that "some retail salesmen, at some time, would deceive customers as to the identity of the manufacturer of its furniture . . . would not . . . amount to conduct" breaching s. 52. This is not to say that more specific knowledge about the practices of retailers could not provide grounds for attributing that practice to the manufacturer. If the appellant knew that certain retailers were removing its labels or otherwise disguising the furniture's identity, then assuming that labelling was necessary to comply with s. 52, delivery of labelled furniture to those retailers without more may be insufficient to discharge that requirement. (at p211)
34. In the event I would allow the appeal. (at p211)
MURPHY J. The Trade Practices Act 1974, s. 52 provides:misleading or deceptive or is likely to mislead or deceive."
"A corporation shall not, in trade or commerce, engage in conduct that is
2. The section is designed to prevent deceptive or misleading conduct, or
conduct likely to mislead or deceive, by manufacturers
and other traders, not
to protect manufacturers and other traders from competition. Although the
proceedings in this case are instituted
by a competitor, that is no barrier.
As Mason J. pointed out in Reg. v. Federal Court of Australia; Ex parte
Pilkington A.C.I. (Operations)
Pty. Ltd. [1978] HCA 60; (1978) 142 CLR 113, at p 128 :
"There is . . . no incongruity in making the provisions of Pt V of the Act
. . . enforceable at the instance of a competitor
who is not a consumer.
The enforcement, at least by injunction, by such a person of the Pt V
provisions enhances the protection
which they give to consumers. Indeed,
it constitutes the most effective sanction for that protection because the
consumer who
is misled or deceived in consequence of an unfair practice is
unlikely to be a suitor for an injunction . . . . "
"Misleading or Deceptive". (at p212)
3. In Hornsby Building Information Centre Pty. Ltd. v. Sydney Building Information Centre Ltd. [1978] HCA 11; (1978) 140 CLR 216, at p 227 Stephen J. gave as an example of conduct prohibited by s. 52 the advertising of an opera as one in which a named and famous prima donna will appear, when it is intended to produce an unknown young lady bearing by chance the same name. Similarly, if a publisher puts out novels authored by Jane Austen, although the Jane Austen concerned (using her real name) is not the Jane Austen of Sense and Sensibility fame, unless a clear distinction between the well-known and the other is drawn, this conduct would be misleading or deceptive. (at p212)
4. In this case the appellant, Parkdale, manufactured and sold by wholesale a range of furniture ("Rawhide"), including lounge suite and chairs which were so exact a copy of the outward design of Puxu "Post and Rail" ("Contour") lounge suite and chairs that they were extremely deceptive (even apparently to an expert). The Parkdale "Rawhide" range was however of much inferior quality to the Puxu "Contour" range. Although it looked to be the same quality, inferior and weaker material was used where it could not be seen on inspection or would not be noticed. Parkdale sold it with a label which could be tucked into the chair or easily removed. (at p213)
5. The Full Court of the Federal Court found that the chair and lounge suite
manufactured by Puxu Pty. Ltd. had become well known
to the public through
extensive advertising campaigns and furniture exhibitions (see C. A. Sweeney
J. and Lockhart J.). Where Puxu
had established its furniture on the market as
"well-known, the subject of fairly extensive advertising and with an
established reputation",
production of seemingly identical furniture (apart
from the lack of quality, which was not easily observable) by Parkdale was
such
as to mislead or deceive the public. (See Lockhart J. (1980) 43 FLR, at p
425; 31 ALR, at p 94 .) The goods thus had the "distinctive
appearance
characteristic" of the Puxu "Contour" range, and but for the label, putting
them in trade or commerce was misleading or
deceptive. Attaching a
manufacturer's label does not in any absolute sense remove from the scope of
s. 52 conduct which would otherwise
be within the section; it may or it may
not do so, depending on all the circumstances. (at p213)
Distinguishing the Goods. (at p213)
6. To put an imitation into commerce is often deceptive, but the tendency may be overcome as in McWilliam's Wines Pty. Ltd. v. McDonald's System of Australia Pty. Ltd. [1980] FCA 159; (1980) 49 FLR 455; 33 ALR 394 . (In that case the name "BIG MAC" was attached to McWilliam wines in advertisements clearly depicting wine casks as the product of the well known McWilliam wines, thus distinguishing it from "BIG MAC" hamburgers, sold by McDonald's.) Some notice on the goods or in the shop where the goods are sold, or other advertising, may overcome the tendency. If "Bradhill" launched an extensive publicity campaign describing Bradhill sheets as quite different from "Bradmill" sheets, both in quality and in price, the fact that both were sold in identical packaging with Bradhill being distinguished by a label conveying the same message as the advertisements for the sheets, would not bring Bradhill within s. 52. (See also Bryant v. Harris and Co. Ltd. [1980] FCA 75; (1980) 43 FLR 183; 33 ALR 437 where in a passing-off action notices displayed prominently advising that one brand of orange juice was supplied and another was not, were sufficient to distinguish to customers the brand of juice they were purchasing, without any need for bar staff to state explicitly that one rather than the other was being served.) (at p214)
7. I find, as did the majority of the Federal Court, that the imitation in this case is deceptive and in the absence of something attached to the goods (such as sufficient label or ticket) or other means of distinguishing the goods from those of the respondent, the conduct of putting the goods into trade and commerce is misleading or deceptive. It is an issue of fact whether the label attached to the Parkdale furniture was sufficient to overcome the misleading or deceptive tendency of the imitation. I agree with the majority in the Federal Court that the labelling was insufficient. Some prospective purchasers would be likely to be misled or deceived into believing that the goods were produced by the respondent or came from the same source as the respondent's goods. The only distinguishing feature (apart from the difference in quality, not readily apparent on visual inspection) was the small label attached to the underside of a cushion. The cushion had to be lifted and scrutinized closely for the label to be seen. (at p214)
8. The facts in this case contrast starkly with those in Brock v. The Terrace
Times Pty. Ltd. [2003] FCA 325; (1982) 1 FCR 3 where although the
appellant's cook book
closely resembled in size, page-length and style those of a series of cook
books produced by the respondents,
the names of authors and publishers were
printed on the spine and title page of the book, the
title "Heritage" was
distinguishable
from "Terrace Times", and the cover was a dark brown whereas
books of the respondent were produced
in light textured covers. The
Federal
Court held on those facts that "Once the books were examined it would be clear
that they came
from different sources". (at
p214)
Persons to be Protected. (at p214)
9. The prudent buyer may not be misled, but not all buyers are prudent. The Act aims to protect the imprudent as well as the prudent. What degree of imprudence in protected? In applying a similar provision of the Consumer Protection Act 1969 (N.S.W.) the Industrial Commission said that an advertiser's responsibility extended to readers both "shrewd and . . . ingenuous, . . . educated and . . . uneducated and . . . inexperienced in commercial transactions . . . . An advertisement may be misleading even though it fails to deceive more wary readers." (See C.R.W. Pty. Ltd. v. Sneddon (1972) AR 17, at p 28 , adopted by St. John J. in Parish v. World Series Cricket Pty. Ltd. (1977) 16 ALR 172, at p 179 ; see also Re Registered Trade Mark "Yanx"; Ex parte Amalgamated Tobacco Corporation Ltd. [1951] HCA 28; (1951) 82 CLR 199, at p 206 in relation to the Trade Marks Act.) In the United States the standard adopted under the Federal Trade Commission Act 1914 in relation to a somewhat similar provision takes into account "the ignorant, the unthinking and the credulous, who, in making purchases, do not stop to analyze, but are governed by appearances and general impressions". (See Florence Mfg. Co. v. J. C. Dowd & Co. (1910) 178 F 73, at p 75 ; also Aronberg v. Federal Trade Commission (1942) 132 F 2d 165 .) In Federal Trade Commission v. Standard Education Society [1937] USSC 142; (1937) 302 US 112, at p116 (82 Law Ed 141) the Supreme Court pointed out that the fact that a false statement is obviously false (or an imitation obviously an imitation) "to those who are trained and experienced does not change its character, nor take away its power to deceive others less experienced. There is no duty resting upon a citizen to suspect the honesty of those with whom he transacts business. Laws are made to protect the trusting as well as the suspicious. The best element of business has long since decided that honesty should govern competitive enterprises, and that the rule of caveat emptor should not be relied upon to reward fraud and deception". (See also cases in 87 Corpus Juris Secundum 228.) (at p215)
10. The circumstances of this case have provoked judicial differences on the effect of the label. Without extending to extremes the reach of s.52, my view is that the case fits within it. (at p215)
11. The appeal should be dismissed. (at p215)
BRENNAN J. The respondent (Puxu) is the manufacturer of furniture sold under the trade name "Post and Rail". The particular range of furniture with which these proceedings are concerned was designed by one Bruce Dowse and is a Post and Rail lounge suite manufactured and sold under the name "Contour". The lounge and the chairs in this suite have a heavy pine frame with steel bars fitted to shape the seat and back. A cushion is attached to the seat and back. The size and mode of construction of the timber framing, the cushions and the pattern of patchwork leather which covers the cushions are distinctive. The use of three colours of leather patches in the pattern gives a particular appearance to the chairs. The cushions are not merely functional; they give the suite a distinctive aesthetic appearance. (at p215)
2. Puxu was not the first manufacturer of Contour suites. Mr. Dowse, or companies with which he was associated, had manufactured and marketed suites of this kind since late 1976 or early 1977. In June 1978 Puxu acquired the undertaking of the company which had manufactured Contour suites and thereafter it continued to manufacture, advertise and sell them. The "Contour" range of Post and Rail furniture became known to the retail furniture trade and, to an extent, to the public. (at p216)
3. The appellant (Parkdale) is a manufacturer of similar lounge suites. Since June 1978 or thereabouts it has manufactured and sold a lounge suite which is quite similar in construction, materials and appearance to the Contour suite. Parkdale calls its suite "Rawhide". Because the construction, materials and appearance of each suite are so similar, there is a risk that consumers will be confused as to which is the "Contour" suite and which the "Rawhide". However, each manufacturer places a label on its articles. The label on the Rawhide suite is a piece of material approximately two and a half inches square sewn at the front of the chair at the bottom of the upholstery. It can be tucked up behind the upholstery so that it is not visible or it can be pulled down to be inspected. A similar, slightly smaller, label is sewn onto the lounge and chairs of the "Contour" suite. A reference to the respective labels clearly dispels any confusion between the suites and accurately identifies the manufacturer of each of them. (at p216)
4. Puxu commenced proceedings against Parkdale in the Federal Court of
Australia in reliance on s. 52(1) of the Trade Practices Act 1974 (Cth) which
reads:
"A corporation shall not, in trade or commerce, engage in conduct that is
misleading or deceptive or is likely to mislead or
deceive."
The question is whether Parkdale's conduct in manufacturing and selling
"Rawhide" suites was and, if not restrained, would be misleading
or deceptive
or likely to mislead or deceive. That is not a question which turns upon
Parkdale's intention. It depends upon the actual
consequences of its conduct
or (as the result of the 1977 amendment) the likely consequences of its
conduct (see Hornsby Building
Information Centre Pty. Ltd. v. Sydney Building
Information Centre Ltd. [1978] HCA 11; (1978) 140 CLR 216, at p 228 , per Stephen
J., which
was
decided upon the section as it stood prior to the 1977 amendment). At
first
instance, Keely J. made detailed findings
as to the similarities
between
the two suites and as to the differences between them, identifying
the
relative difficulty in detecting
the respective differences.
His Honour came
to the conclusion that Parkdale's conduct could
not be misleading or deceptive
unless
a potential purchaser assumed
"that there is no other suite on the
market which resembles the
'Contour' suite to the extent that
the 'Rawhide'
suite resembles
it" and the potential purchaser was not given information by a
salesman
or by inspection of the label
to dispel his erroneous assumption.
There was evidence that some potential purchasers had been deceived
by retail
salesmen and had
been induced to believe that a Rawhide
suite was a Contour
suite - a deception for which Parkdale was
not responsible unless the
similarity of the suites, which facilitated
the deception, was to be laid at
its door. Keely J. dismissed
Puxu's claim for an injunction
under s. 80 of the
Trade Practices Act
to restrain Parkdale "from displaying, selling, offering
for sale or disposing of any furniture
which imitates or copies the
Plaintiff's
'Contour' range of furniture so as to be misleading or deceptive".
(at p217)
5. On appeal to the Full Court a majority (C.A. Sweeney and Lockhart JJ., St.
John J. dissenting) allowed the appeal, set aside
the order of the trial judge
and in lieu thereof ordered that Parkdale "be restrained from engaging, in
trade or commerce, (in) any
conduct that is misleading or deceptive or that is
likely to mislead or deceive by selling, offering for sale, dealing with,
displaying
or advertising any lounge suites, lounges or lounge chairs so as to
mislead or deceive members of the public into believing that
they are lounge
suites, lounges or lounge chairs manufactured by the appellant". The formal
order does not specify the particular
respects in which the public might be
misled or deceived. To ascertain the precise contravention or threatened
contravention of s.
52 found against Parkdale, one must look at the reasons
for judgment. C.A. Sweeney J. found:
"Members of the public who, through seeing advertisements of the
plaintiff's suites, or through seeing the suites themselves,
had become
familiar with their highly distinctive appearance, they being the only
suites of their kind previously on the
market, were likely to be misled or
deceived by the appearance of the defendant's suites, so as to believe
that they were
produced by the plaintiff."
And Lockhart J. found:
"The very close correspondence, or, in my view, near identity, between the
two products, whether the respondent's product is
deliberately copied from
the appellant's product or not, shows that the respondent is putting into
the hands of retailers its product
with inherent potential to mislead or
deceive the public. That is the genesis of the misleading of the public. The
respondent is
responsible for it because it manufactures the product and
sells it to retailers."
St. John J., in dissent, identified Parkdale's conduct in this way:
"The question as I see it is what, on the evidence, was the defendant's
conduct. Clearly the answer was to copy furniture which
was already on the
market, and extensively advertised, and deliver it to a retailer, properly
labelled according to the practice
of the trade."
The conduct thus identified by all members of the Full Court did not consist
in any use by Parkdale of a mark or name associated
with Puxu; it consisted in
Parkdale's manufacturing and marketing of the Rawhide suite which was so
similar in construction and appearance
to the Contour suite - a suite already
on the market - that purchasers were likely to believe that it was produced by
the manufacturer
of the Contour suite. (at p218)
6. If Puxu is entitled to retain the benefit of a perpetual injunction in the
terms of the order made by the Full Court or in similar
terms, its goodwill as
manufacturer and seller of Contour suites will be protected against the
competition theretofore offered by
Parkdale. The business goodwill of a
manufacturer whose goods are known in the market may be protected by an action
for passing off,
but the same protection can frequently be obtained in
proceedings under s. 52, although the interests primarily protected by those
proceedings are not the goodwill of a business but the interests of consumers:
Reg. v. Federal Court of Australia; Ex parte Pilkington
A.C.I. (Operations)
Pty. Ltd. (1978) 142 CLR 113, at p 128 . Nevertheless
the deception of
consumers may be the means
by which damage
is done both to the goodwill of a
business and to the interests of consumers,
as Stephen J. said in the Hornsby
Building
Information
Centre Case (1978) 140 CLR, at p 226 :
"It is, no doubt, somewhat of a novelty that a quite extensive
jurisdiction in passing off actions, traditionally the concern
of the
Supreme Courts of the States, should be conferred upon the Industrial
Court and that this should be done by an Act
Described as one 'relating to
certain Trade Practices' and by sections not very explicitly directed to
such a subject matter.
However this is, I think, but a consequence of the
very direct relationship which necessarily exists between the deception of
consumers in the course of trade and the injury caused by the unfair
practices of a trade rival. Such deception will quite
often be the means
adopted to produce that injury. Legislation which aims at the prevention
of the former will at the same
time tend to put an end to the latter. If,
moreover, the legislative prohibition can be enforced by an injunction
which 'any
other person' may seek (see s. 80(1)), it then becomes possible
for a trader, injured by the competition of his trade rival,
to gain a
remedy under the Act instead of having recourse to civil action by way of
proceedings for passing off. The remedy
in such a case will not, as in
passing off, be founded upon any protection of the trader's goodwill but,
being directed to preventing
that very deception of the public which is
injuring his goodwill, it will nevertheless be an effective remedy for
that of
which he complains. The provisions of s. 82, . . . which allow a
person who suffers loss by another's act which is contravention
of s. 52
to recover by action the amount of his loss, may render the statutory
remedy even more complete."
Although a cause of action under s. 52 may not coincide with the common law
cause of action - a question to which I had occasion
to refer in World Series
Cricket Pty. Ltd. v. Parish (1977) 16 ALR 181, at p 199 - some principles
developed by the common law are
equally applicable to s. 52 (per Stephen J. in
the Hornsby Building Information Centre Case (1978) 140 CLR, at p 227 ). (at
p219)
7. In my opinion, this is a case where common law principles are relevant to a true understanding of the scope and operation of s. 52. The relevant principles prescribe the protection to which a manufacturer is entitled against the marketing of copies of his goods and the correlative (albeit incidental) protection of consumers who might be led by the appearance of a copy into believing that it is made by that manufacturer. (at p219)
8. The protection afforded by the common law stops short of according to a
manufacturer a monopoly right to the manufacture and
sale of goods of a
particular design unless he is the owner of a design validly registered under
the Designs Act 1906 (Cth) in respect
of goods of that kind. The relevant
principles in a passing off action were stated by Graham J. in Benchairs Ltd.
v. Chair Centre
Ltd. (1974) RPC 429 , a case in which the plaintiffs' claim in
passing off depended solely on the fact that the shape and design
of the
defendants' chair was so close to the shape and design of the plaintiffs'
chair that its mere existence on the market would
lead to confusion with the
plaintiffs' chair. (An alternative claim for infringement of a registered
design succeeded before Graham
J., but failed before the Court of Appeal.)
Graham J. held (1974) RPC, at p 435 :
"the mere copying of the shape of the plaintiffs' article is not in itself
such a representation" (i.e. a representation by the
defendant that his
goods are those of the plaintiff). "Anyone is entitled, subject to some
monopoly or statutory right preventing
him, to copy and sell any article on
the market, and false representation and passing off only arise when a
defendant does something
further which suggests that the article which he is
selling is that of the plaintiff. This he may do by a direct representation
to
that effect such as by the use of the plaintiffs' name or mark, or by an
indirect representation such as by imitation of get-up by
enclosing the
article in a distinctive package which is similar to that used by the
plaintiff." (at p220)
9. The freedom to copy and sell any article on the market is a corollary of
the policy of the law against monopolies, a policy which
vindicated the
freedom to manufacture, buy and sell playing cards in 1602 (Darcy v. Allein:
The Case of Monopolies [1572] EngR 398; (1502) 11 Co Rep
84b (77 ER 1260) ) and which was
confirmed by the passing of the Statute of Monopolies in 1623 (21 Jac. 1 c.
3).
The Statute declared
void all monopolies for the sole buying, selling,
making, working or using of anything within the realm and
forbade such
monopolies
being put into use or execution except in the cases reserved from
proscription by the Statute. Those reservations
provided the basis
for the
grant of patents for inventions, so that the Statute has sometimes been called
"the magna charta of the
patent system" (Deller's
Walker on Patents, 2nd ed.
(1964) (New York), vol. 1, p. 35). So long as a patent remains in force, a
patentee
may exclude others
from using the invention the subject of the patent
(Steers v. Rogers (1893) AC 232, at pp 235 ) and an owner of
a validly
registered
design may, in like manner, exclude others from applying the design
to goods in respect of which the design
is registered. When the
patent expires
or is revoked or the registration of the design ceases to be in force, the
public is free
to use the invention or
to apply the design. The invention or
design is thereafter in the public domain. In W. Edge & Sons Ltd.
v. W.
Niccolls &
Sons Ltd.
(1911) 1 Ch 5, at p 10 Cozens-Hardy M.R. said:
"It is clear law that a patentee, when his patent has expired or been
revoked, has thrown open to the public the right to use
the patent article,
and that the fact of his user during the continuance of the patent does not
entitle him to say that his user
during the life of the patent has so far
associated his name with the goods that no one else can thereafter use the
lately patented
article without deceiving the public or gaining the
reputation of the patentee. This has been again and again laid down by the
Court
with reference to names or words - see Linoleum Manufacturing Co. v.
Nairn (1878) 7 ChD 834 - and the principle seems to me to apply
with at
least equal, if not with greater, force to the article itself."
And later, his Lordship said (1911) 1 Ch 5, at p 10 :
"No length of exclusive user can entitle a man to a monopoly in the
manufacture and sale of a useful combination not protected
by patent."
This case went on appeal to the House of Lords where the judgment of the Court
of Appeal was set aside. The point on which the Court
of Appeal was reversed
will presently be mentioned, but the passages cited contain no error of
principle. Indeed, they follow what
was said by Lord Davey in Cellular
Clothing Co. v. Maxton & Murray (1899) AC 326, at p 344 :
"And on this point I adopt what was said in felicitous language by Fry
L.J. in Siegert v. Findlater (1878) 7 ChD 801, at
p 813 . That is, my
Lords, a matter of express decision in the case of a patent. If a man
invents a new article and protects
it by a patent, then during the term of
the patent he has, of course, a legal monopoly; but when the patent
expires all the world
may make the article, and if they may make the
article they may say that they are making the article, and for that
purpose
use the name which the patentee has attached to it during the time
when he had the legal monopoly of the manufacture. But
the same thing in
principle must apply where a man has not taken out a patent, as in the
present case, but has a virtual
monopoly because other manufacturers,
although they are entitled to do so, have not in fact commenced to make
the article. He
brings the article before the world, he gives it a name
descriptive of the article: all the world may make the article, and
all
the world may tell the public what article it is they make, and for that
purpose they may prima facie use the name by which
the article is known in
the market." (at p221)
10. The public freedom to manufacture and sell an article to which a
particular design is applied is not taken away by the Designs
Act except in
favour of the registered owner of a registered design, and his prima facie
monopoly will be defeated if the design
was not novel or original when it was
registered: Macrae Knitting Mills Ltd. v. Lowes Ltd. [1936] HCA 43; (1936) 55 CLR 725 . The
validity of registration
depends upon the novelty or originality of the design
(see Designs Act s. 17(1));
if it were otherwise the
registered owner would
acquire a monopoly without any compensating benefit being obtained by the
public.
(at p221)
11. The design of the "Contour" suite was not registered under the Designs
Act. Puxu acquired no statutory monopoly in the manufacture
and sale of lounge
suites of the "Contour" design; it acquired no right (either under the Designs
Act or otherwise) to exclude others
from manufacturing lounge suites of the
"Contour" design. Therefore Parkdale was free to apply the design of the
"Contour" suite
to suites of its own manufacture. Of course, Parkdale was not
free to pass off the "Rawhide" suite as a "Contour" suite, but there
is no
evidence that it did so. It used its own trade name; it affixed its own
distinguishing label. Nor did Parkdale get up the "Rawhide"
suite for sale in
a way which would induce anybody to think that it was the "Contour" suite. A
distinction is drawn between the get-up
of goods and the copying of the actual
goods. Similarity in get-up may evidence passing off, but (statutory monopoly
apart) all are
free to copy the goods themselves. The distinction was stated
by Fletcher Moulton L.J. in J. B. Williams Co. v. H. Bronnley &
Co.
Ltd.
(1909) 26 RPC 765, at pp 773-774 :
"The get-up of an article means a capricious addition to the article
itself, - the colour, or shape, it may be, of the wrapper,
or anything of
that kind; but I strongly object to look at anything, that has a value in
use, as part of the get-up of the
article. Anything which is in itself
useful appears to me rightly to belong to the article itself. For
instance, supposing that
a firm had been, say for 20 years, the only firm
to sell wooden chairs in which the natural wood was simply varnished, and
not painted at all, that would not give them the slightest right to
complain of a person putting on the market chairs simply
varnished, even
though they had been the only persons who had sold them for so long that
such chairs might at first be supposed
to be their manufacture. The reason
is that the newcomer has not in any way imitated the get-up; he has only
reproduced the article."
(at p222)
12. Although this statement was criticized by Lord Hill Watson in John Haig
and Co. Ltd. v. Forth Blending Co. Ltd. and W. R. Paterson
Ltd. [1953] ScotCS CSOH_3; (1953) 70 RPC
259, at p 261 , the authority of the statement is recognized by the authors of
the current edition of Kerly's
Law
of Trade Marks and Trade Names, 10th ed.
(1972), pars 16-68. However, if the dichotomy between goods and their get-up
is not
absolute,
as Fletcher Moulton L.J. held it to be, the present case does
not evoke a consideration of their coincidence. (at p222)
13. Deception in the get-up of goods was the ground on which the House of Lords allowed the appeal in William Edge & Sons Ltd. v. William Niccolls & Sons Ltd. (1911) AC 693 . In that case the plaintiffs marketed laundry blues and other tints which were put out in a bag with a stick in it to keep the hands of the user out of water. The plaintiffs had put out their goods in this way for nearly twenty years under what Lord Gorell described as "a thoroughly bad patent" (1911) AC, at p 702 . After the patent was revoked, the defendants put out their blues and tints in the same way. The Court of Appeal held that the blues and tints, the bag and the stick were the relevant article which the defendants were free to copy, but the House of Lords held that a stick of the shape and size used by the plaintiffs was the get-up, imitation of which would wrongly imply that the defendants' goods were goods put out by the plaintiffs. As Lord Gorell noted, if the plaintiffs had attempted to prevent the defendants from using "a stick", the decision of the Court of Appeal would have been right, but the plaintiffs disclaimed that attempt (1911) AC, at p 706 . They sought to restrain the imitation of the stick which they used in putting out their goods, that is, they sought to restrain the defendants' use of a stick of the same shape and size. The plaintiffs succeeded because the use of their stick on "penny packets" which were "chiefly purchased by washerwomen, cottagers, and other persons in a humble station of life" had come to identify the blues and tints thus put out as goods of the plaintiffs' manufacture, though no identifying label had been used. The defendants had added a label sufficient to distinguish their goods in the minds of wholesalers and retailers, but not in the minds of the customers. The label might have suggested to customers that the manufacturer whose blues and tints they were accustomed to buy was merely disclosing its name for the first time. (at p223)
14. The distinction between the design of an article and its get-up is clear enough in principle, but oftentimes its application in particular cases will present questions of nicety and difficulty. The distinction and the difficulties encountered in its application have stimulated considerable discussion: see, for example, Kerly, par. 16-69, J.M. Evans "Passing-Off and the Problem of Product Simulation", Modern Law Review, vol. 31 (1968), p. 642, "Unfair Competition and the Doctrine of Functionality", Columbia Law Review, vol. 64 (1964), 544, esp. at p. 568, Ralph S. Brown Jr., "Product Simulation", ibid., at p. 1216. The present case has not been contested as a case of deceptive get-up; it is a case of substantial similarity in the goods themselves. The question is whether Puxu acquired a prescriptive monopoly in the manufacture of furniture of the Contour design, by reason of the likelihood that consumers would mistake all such furniture as furniture of Puxu's manufacture. Upon the facts of the case as the Full Court found them, a perpetual injunction to restrain manufacturers from manufacturing and selling lounge suites of the Contour design would give to Puxu a monopoly (whether or not the Contour design is novel or original) unlimited in time, provided only that Puxu continues to manufacture and sell that suite. (at p224)
15. If s. 52 of the Trade Practices Act authorized or required the granting
of such an injunction, it would run counter to the intention
of Parliament
implied in the statutes
which create or provide for the creation of
monopolies. Those statutes define the conditions
governing the creation of
monopolies
and thus chart the limits of the contemporary reservations from the
freedom to manufacture and
sell which the Statute of Monopolies
assured. The
notion that patent laws imply an intention to leave free the field of activity
not covered by the grant of monopoly
rights underlay the judgments of the
Supreme Court of the United States in Sears, Roebuck &
Co. v. Stiffel Co.
[1964] USSC 68; (1964) 376 US 225 (11 Law Ed 2d 661) and in Compco Corporation v. Day-Brite
Lighting, Inc. (1964) 376 US234 (11
Law Ed 669) . The
Court of Appeals for the
Seventh Circuit in Sears, Roebuck had held that a likelihood of confusion as
to the source
of products was
sufficient, without passing off, to attract an
Illinois law proscribing unfair competition and to warrant the granting
of
injunctive
relief. The Supreme Court, assuming that the State law had the
operation thus attributed to it, denied the competence
of a State
legislature
to encroach upon federal patent laws. These cases were explained in Goldstein
v. California [1973] USSC 142; (1973) 412 US
546, at pp 569-570 (37 Law Ed 2d 163, at p 181 :
"In regard to mechanical configurations, Congress had balanced the need to
encourage innovation and originality of invention
against the need to insure
competition in the sale of identical or substantially identical products.
The standards established for
granting federal patent protection to machines
thus indicated not only which articles in this particular category Congress
wished
to protect, but which configurations it wished to remain free. The
application of state law in these cases to prevent the copying
of articles
which did not meet the requirements for federal protection disturbed the
careful balance which Congress had drawn and
thereby necessarily gave way
under the Supremacy Clause of the Constitution." (at p224)
16. It would be surprising if s. 52 of the Trade Practices Act were to alter
the "careful balance" of the Patents Act 1952 and the
Designs Act by a
side-wind and, after four centuries, open the
way to the creation of
prescriptive monopolies for the manufacture
of goods. In my view, it does not
have that effect. Perhaps it
should be noted that in Sears, Roebuck the
Supreme Court was careful
to refrain from deciding whether the Court of
Appeals had attributed
the correct operation to the Illinois law - an
operation which
Black J. said "appears to have extended greatly the scope of
the Illinois
law of unfair competition beyond the limits indicated in
the
Illinois cases and beyond any previous decisions of the Seventh Circuit
itself" (1964) 376 US, at p 228, fn 2 (11 Law Ed 661,
at p 665) . (at p225)
17. Conduct cannot be held to fall within s. 52 unless a consumer, not labouring under any mistake or imperfection of understanding of law, would be or would be likely to be misled or deceived by that conduct. Section 52 operates in a milieu of the external legal order, so that the character of conduct which falls for consideration under s. 52 is to be determined by reference to the external legal order as it exists when the conduct is engaged in. Therefore, a manufacturer who exercises his freedom to manufacture goods according to a design which is not protected by valid registration does not engage in conduct which is misleading or deceptive or which is likely to mislead or deceive. If consumers or potential consumers believe that all goods of a particular design are manufactured by him who first establishes a market reputation as a manufacturer of those goods, that belief is or may be erroneous. The error may be attributed to a preconceived belief that the manufacturer who first establishes a market reputation has a monopoly in the manufacture and sale of goods of that kind but, unless the manufacturer has acquired a statutory monopoly, that belief is also erroneous and the error flows from a misconception of law. A later manufacturer who does no more than exercise his freedom to manufacture and sell goods made in accordance with a design in the public domain does not mislead or deceive; and if a consumer has an erroneous preconceived belief that the first manufacturer has a monopoly, a false assumption by the consumer as to the source of the later manufacturer's goods is self-induced. That was the approach taken by the Full Court of the Federal Court with respect to trade names in McWilliam's Wines Pty. Ltd. v. McDonald's System of Australia Pty. Ltd. [1980] FCA 159; (1980) 49 FLR 455; 33 ALR 394 , and I respectfully agree with it. (at p225)
18. Of course, where identical or similar goods are on the market, it may take very little evidence of conduct additional to the mere manufacture and sale of the goods to establish a case under s. 52. The degree of risk of confusion is material to an appreciation of the conduct of a trader in marking or getting up his goods for sale in competition with the goods of another trader. In the present case, however, where Parkdale labelled the "Rawhide" suite in accordance with the practice of the trade and the label clearly distinguished that suite from the "Contour" suite, there was no misleading or deceptive get-up. If customers mistook the "Rawhide" suite for the "Contour" suite the mistake was not induced by Parkdale's conduct. It was not misleading or deceptive conduct merely to manufacture and sell a lounge suite similar to the Contour suite - or, for that matter, a suite identical with the Contour suite. Something more was needed to show conduct inducing a mistaken belief that the "Rawhide" suite was manufactured by Puxu, but only additional evidence, the label, showed conduct which was calculated to correct any confusion as to source. (at p226)
19. The appeal should be allowed and the injunction dissolved. Parkdale should have its costs here and in the Federal Court. (at p226)
ORDER
Appeal allowed with costs.Order of the Full Court of the Federal Court of Australia set aside and in lieu thereof order that the appeal to that court be dismissed with costs including reserved costs.