Re Mcwilliam'S Wines Pty Limited v Mcdonald'S System of Australia Pty Limited [1980] FCA 159; (1980) 49 FLR 455 NSWG (16 December 1980)

FEDERAL COURT OF AUSTRALIA

Re: McWILLIAM'S WINES PTY. LIMITED
And: McDONALD'S SYSTEM OF AUSTRALIA PTY. LIMITED [1980] FCA 159; (1980) 49 FLR 455
N.S.W.G. No. 20 of 1980
Trade Practices

COURT

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION
Smithers(1), Northrop(2) and Fisher(3) JJ.

CATCHWORDS

Trade Practices - Misleading and deceptive conduct - Use of Trade Mark "Big Mac" in respect of goods being a Trade Mark of another Corporation in respect of a different class of goods - Public misapprehension as to the limits of the corporation rights in respect of the name - Whether conduct creating mere confusion is conduct which is misleading or deceptive - whether advertisement represented that a corporation had a sponsorship approval or affiliation which it did not have.

Trade Practices Act 1974 - Sections 52(1), 53(c) and 53(d)

Trade Practices - Misleading and deceptive conduct - Use of name "Big Mac" in respect of goods being trade mark of another corporation in respect of different class of goods - Public misapprehension as to limits of corporation's rights in respect of name - Whether conduct creating mere confusion is conduct which is misleading or deceptive - Whether advertisement represented that corporation had sponsorship, approval or affiliation which it did not have - Trade Practices Act 1974 (Cth), ss. 52 (1), 53 (c), (d). McDonald's was a fast food retailer which advertised one of its products as a "Big Mac" hamburger, and this name had become exceptionally well known to the public. McWilliam's, a wine producer, published advertisements which showed three two-litre wine bottles and a wine writer who said "I call it the 'Big Mac'".

McDonald's claimed that this use of the words "Big Mac" was: (1) in contravention of s. 52 (1) of the Trade Practices Act as constituting in trade or commerce, engaging in conduct that was misleading or deceptive or likely to mislead or deceive; (2) was a contravention of s. 53 (1) in that the advertisement constituted a representation in trade or commerce in connexion with the supply or possible supply of wine, or in connexion with the promotion of the supply of wine, that the wine had a sponsorship or approval which it did not have: and (3) was a contravention of s. 53 (d) in that the advertisement represented that McWilliam's had a sponsorship or affiliation which it did not have.

The trial judge found that the conduct did not represent that McWilliam's or its wine had a sponsorship, approval or affiliation that it did not have; but found that there had been a breach of s. 52 (1) in that the conduct was likely to mislead or deceive persons as to whether there was a business connexion between McDonald's and McWilliam's. An injunction was granted restraining McWilliam's from using, publishing, or causing, procuring or authorizing the use or publication of the words "Big Mac" in connexion with the supply or possible supply of wine; or in connexion with the promotion by any means of the supply or use of wine.

On appeal.

Held: (1) Whilst McWilliam's conduct in using the name "Big Mac" might have caused confusion as to whether there was some business connexion between McWilliam's and McDonald's, that finding was insufficient to establish that the conduct was misleading or deceptive or likely to mislead or deceive, within s. 52 of the Trade Practices Act. Conduct which merely confuses the public is not conduct which contravenes s. 52 (1).

The relevance of the principles to be derived from the law relating to trade marks and passing off discussed.

Hornsby Building Information Centre Pty. Ltd. v. Sydney Building Information Centre Ltd. [1978] HCA 11; (1978), 140 CLR 216; R. v. Credit Tribunal; Ex parte General Motors Acceptance Corporation, Australia Ltd. [1977] HCA 34; (1977), 137 CLR 545, referred to.

(2) It is for the court to determine, objectively, whether the relevant conduct was misleading or deceptive, or likely to mislead or deceive. Evidence that members of the public have been misled is of slight value and it is for the court to decide whether there was a likelihood that the relevant persons would be misled or deceived.

Parker-Knoll Ltd. v. Knoll International Ltd., (1962) RPC 265; General Electric Co. (of U.S.A.) v. General Electric Co. Ltd., (1972) 1 WLR 729; Concentrated Foods Ltd. v. Champ, (1944) 1 KB 342; Payton & Co. Ltd. v. Snelling, Lampard & Co. Ltd., (1901) AC 308, referred to.

(3) Whilst persons who erroneously thought that "Big Mac" was a name which only McDonald's was entitled to use might have inferred that there was some business connexion between McDonald's and McWilliam's, any such misapprehension would be a consequence of those persons interpreting the advertisement by reference to erroneous concepts and assumptions, and not a consequence of McWilliam's conduct. Conduct which is inherently neither misleading nor deceptive does not acquire a deceptive quality because persons under the influence of erroneous ideas may draw false conclusions concerning it.

Office Cleaning Services Ltd. v. Westminister Window and General Cleaners Ltd., (1946) RPC 39, referred to.

(4) Per Smithers J. - It is difficult to think that conduct is truly 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.

(5) McWilliam's conduct did not amount to misleading or deceptive conduct, or conduct which was likely to mislead or deceive, contrary to s. 52 (1) of the Trade Practices Act; and the appeal would be allowed and the injunction discharged.

HEARING

Sydney, 1980, July 8-10; December 16. 16:12:1980
APPEAL.

Appeal and cross appeal from judgment and orders of Franki J.

D. A. Staff Q.C. and D. P. Wilson, for the appellant.

B. A. Beaumont Q.C. and G. Q. Taperell, for the respondent.

Cur. adv. vult.

Solicitors for the appellant: Baker & McKenzie.

Solicitors for the respondent: Gregory & Co.
R. R. BOARDEN

ORDER

1. The appeal be allowed with costs.

2. The cross-appeal be dismissed with costs.

3. The order made on 21 December 1979 be set aside.

4. The application be dismissed.

5. The respondent pay the appellant's costs of the trial including all reserved costs and the costs of the proceedings for interlocutory relief.

Appeal allowed.

Cross appeal dismissed.

DECISION

This is an appeal as of right from an order of the Federal Court of Australia constituted by a single Judge which granted relief by way of injunction restraining the appellant from using or publishing or causing, procuring or authorising use or publication of the words "BIG MAC" in connection with the supply or possible supply of wine or in connection with the promotion by any means of the supply or use of wine.

The order was based on a finding by the learned Judge that certain conduct of the appellant constituted a contravention of s.52(1) of the Trade Practices Act 1974 (the Act). The order was made pursuant to the authority conferred on the Federal Court of Australia by s.80 of the Act.

The conduct of the appellant which was found to be in contravention of s.52(1) of the Act was the publication of certain advertisements in which there appeared the expression "BIG MAC" which was an expression used by the respondent in its business of restauranteur and "fast food" retailer as the name of one of its products, namely a particular type of hamburger. In the conduct of its business the respondent had also used the name of "McDonald's" quite extensively as a trade name for itself. The "BIG MAC" hamburger had been widely advertised and was exceptionally well known to members of the public as a product of McDonald's. All advertisements were to the same effect and form. Each of them showed pictures of three bottles of wine, each two litres in size, and a number of glasses filled with wine.

The advertisements also contained comments by persons described as "Top wine writers". The comments were about "Rosedale Dry Red". And the labels on the bottles featured the name "McWilliam's" and "Rosedale" and described the contents of one bottle as "Dry Red Table Wine", another as "Medium White Table Wine" and the third as "Dry White Table Wine". One of the comments was by a Mr. Peter Wilson who said about the wine, "I call it the 'big Mac'".

The respondent claimed that the use of the words "BIG MAC" by the appellant constituted, in trade or commerce, engaging in conduct that was misleading or deceptive or likely to mislead or deceive within s.52(1) of the Act. It also claimed that it constituted a contravention of s.53(c) of the Act in that the advertisement constituted a representation, in trade or commerce in connection with the supply or possible supply of wine, or in connection with the promotion by any means of the supply of wine, that the wine had a sponsorship or approval which it did not have. It was also alleged that the advertisement constituted a contravention of s.53(d) of the Act in that, in the same way, the advertisement represented that the respondent had a sponsorship, approval or affiliation which it did not have.

The main complaint of the respondent about the advertisement was the appearance of the words "BIG MAC" in letters about 3.5 centimetres in height, extending substantially right across the advertisement immediately below the word "McWilliam's" which was in letters about 1.5 centimetres in height.

The learned trial Judge found that the use of the words "McWilliam's BIG MAC" in the advertisement might be expected to cause a considerable amount of confusion to a sufficiently relevant number of potential purchasers of either or both the appellant's wines and the respondent's hamburgers. He expressed himself as satisfied that the measure of confusion which the relevant conduct would produce to be such that it would lead to a sufficient number of persons being likely to be misled or deceived upon the question of whether or not there was a business connection between the appellant and the respondent to establish a breach of s.52(1) of the Act. It was upon this finding that the relief granted was based.

The learned trial Judge was not satisfied that by the relevant conduct of the respondent it represented that the Rosedale wine had a sponsorship or approval it did not have or that the respondent had a sponsorship, approval or affiliation which it did not have.

It is hereinafter convenient to use the expression McWilliam's for the appellant and McDonald's for the respondent.

The case made for McDonald's before the learned trial judge was that the conduct complained of was such as was likely to mislead or deceive the relevant persons in relation to whether or not there was some commercial connection between McWilliam's and McDonald's, of almost any type, including for example that McWilliam's and McDonald's had joined together to promote McWilliam's wines, that McDonald's had approved the use by McWilliam's of the name "BIG MAC" for the promotion of its wines, or that McWilliam's and McDonald's had joined in a joint venture to promote the wines, or that McDonald's intended to sell McWilliam's wines in its outlets.

That was the case put for the respondent in this appeal. Neither at the trial nor in this appeal was any case made that the use of the words "BIG MAC" were likely to deceive or mislead persons by causing them to think that the wines in respect of which the words were used were a product of McDonald's.

To my mind the message said to be conveyed by the advertisement might well be likely to create a favourable attitude towards the appellant's wine. Belief that McDonald's towards whom, or whose products a substantial number of the public had pleasurable thoughts, were promoting the sale of the appellant's wine, could not but be a favourable factor, but one would think, on the whole, of minor importance in the sale of the wine.

The first question is whether the conduct of the appellant in publishing the advertisement was misleading or deceptive or likely to mislead or deceive within the meaning of s.52(1) of the Act.

The quality of being misleading or deceptive is said to attach to that conduct because the advertisement conveyed or was likely to convey to readers thereof the impression that McWilliam's and McDonald's had some business connection in relation to the promotion of the wine or the publication of the advertisement.

The learned Judge found that the conduct caused confusion amongst a wide range of people. By confusion it would seem that his Honour meant that a substantial number of people were caused to wonder whether there was some connection of a business nature between the appellant and the respondent. His Honour said that the wonderment which was caused was of such magnitude that it was likely that persons had been or would be misled or deceived by the conduct.

I understand his Honour's finding to be that the conduct of McWilliam's in publishing the advertisement was likely to have caused confusion and wonderment in people's minds as to whether or not there was a business connection between McDonald's and McWilliam's concerning the promotion of the wine, but not to be a finding that the conduct was likely to cause them to form conclusions that there was in fact such a business connection.

I am confirmed in this view because his Honour went to some length in the early part of his Reasons for Judgment to examine authorities which he considered led to the conclusion that a state of affairs which causes confusion is for purposes of the Act to be equated with a state of affairs likely to mislead or deceive. It would seem clear that it was by acting on this view that his Honour made the finding that the conduct of McWilliam's was such as to establish a breach of s.52(1) of the Act. It would seem however that although an approach along these lines to a similar problem arising under s.114 of the Trade Marks Act 1905 was appropriate, and was adopted by Kitto J. in Southern Cross Refrigeration Co. v. Toowoomba Foundry Pty. Ltd. 91 C.L.R. 592 it is not appropriate in respect of s.52 of the Act. Section 114 of the Trade Marks Act provided -

". . . no mark the use of which would by reason of its being likely to deceive or otherwise be deemed disentitled to protection in a court of justice . . . shall be used or registered as a trade mark . . . "

It was pointed out by Kitto J. at p. 594 that the corresponding provision of the English Trade Mark Act 1938 (Imp.) contained the words "or cause confusion" after the words "likely to deceive" and said ". . . but, while these words make the section more specific they add nothing to its effect." And in the same case on appeal in a joint Judgment the Full High Court said (supra at p.608):-

"It is, of course, for the person applying for registration to establish that there in no likelihood of confusion and we agree with Kitto J. that registration should be refused if it appears that there is a real risk that 'the result of the user of the mark will be that a number of persons will be caused to wonder whether it might not be the case that the two products came from the same source'; it is, of course, not necessary that it should appear that the user of the mark will lead to passing-off: see per Morton J. (as he then was) in In re Hack's Application (1940) 58 R.P.C. 91, at p.103."

The critical consideration appears to be that a person upon whom an onus lies to establish that use of his mark is not likely to deceive or be otherwise deemed disentitled to protection in a Court of justice can hardly succeed unless he establishes that there is no likelihood of confusion. The situation which arises under s.52(1) is different. There, one is concerned with establishing that a person engaged in conduct having certain specified qualities, namely that it is misleading or deceptive or likely to mislead or deceive. In such a situation there is no scope for including in the proscribed conduct any conduct which does not fall within the very words of the Act. Accordingly the finding of the learned trial judge, as I have interpreted it, as indicated above, was not itself sufficient to sustain the order made in favour of McDonald's.

As a result this Court was invited to decide whether the conduct of McWilliam's in publishing the advertisement was likely to mislead or deceive persons by causing them to believe that there was a business connection between McDonald's and McWilliam's in relation to the promotion of the sale by McWilliam's of its wine or in relation to some aspect of the advertisement.

In this connection it is to be observed that it is for the Court itself to determine whether there is a likelihood that the relevant persons will be misled, and, in the words of Lord Morris in Parker-Knoll Ltd. v. Knoll International Limited (1962) R.P.C. at 279, "In arriving at a decision the court must not surrender in favour of any witness its own independent judgment". There is ample authority for the proposition that it is for the court objectively to determine whether the conduct is likely to mislead. If anything, authority is somewhat sparse for the view that evidence of members of the public has any relevance at all. Reference may be made to two passages from Halsbury 3rd ed. vol. 38, the first at p.589 dealing with comparison between trade marks; namely,

"Whether or not any degree of resemblance likely to deceive or cause confusion exists, is a question of fact for the tribunal or court to decide upon the evidence in each case and is not a matter for witnesses.

What degree of resemblance is likely to deceive or cause confusion in any instance is incapable of definition a priori and the observations of judges upon other and quite different facts are usually of little help".

The second is at p. 639, paragraph 1051, omitting the first sentence is as follows,

"It is for the court to decide, in an action for infringement or for passing off, whether the similarity of the name or get-up complained of to that employed by the plaintiff is such as to be calculated to deceive, and it is therefore not proper for witnesses to be asked whether in their opinion this is the case."

Reference may be made also to the balance of that paragraph and the succeeding paragraph.

Reference may be made also to the dicta of Lord Diplock in General Electric Co. (of U.S.A.) v. General Electric (Co. Ltd. (1972) 1 W.L.R. at p. 738, Wrottesley J. in Concentrated Foods Ltd. v. Champ (1944) K.B. at p. 350 and Lord Macnaghten in Payton & Co. Limited v. Snelling Lampard & Co. Limited (1901) A.C. at p.311.

In our opinion evidence of members of the public that they have been misled, if it does actually go so far as that, is not conclusive of the question for determination but merely of peripheral value. The court must make up its own mind, and it is easier for the court, particularly in our opinion, in the circumstances of this matter to make an objective determination.

It is important to observe that the expression "BIG MAC" is not used as a name by which to refer to or identify the business entity known as McDonald's. Many witnesses stated that when they saw the words "BIG MAC" in the advertisement they thought of the Big Mac hamburger sold by McDonald's. Certain witnesses then concluded that McDonald's must have a business connection with McWilliam's in relation to the matter of promoting the sale of wine.

But of course no such mental procedure would have occurred unless in the first instance the person concerned had interpreted the use of the expression "BIG MAC" in its setting in the advertisement as a statement of some kind made by McWilliam's with reference to McDonald's "BIG MAC" hamburger. If a person did conclude that the advertisement was making some sort of a statement about the "BIG MAC" hamburger it would be natural for him to try to make sense of the advertisement. If one considers what the situation would have been had the advertisement actually said "McWilliam's - McDonald's" instead of "McWilliam's BIG MAC", it would have been quite reasonable to conclude that the advertisement was saying that McWilliam's and McDonald's were in some joint venture together concerning the wine promotion.

Accordingly if by using the expression "BIG MAC" in its setting an ordinary person knowing of McDonald's hamburger would understand the advertisement to be referring to or saying something about McDonald's hamburger, it seems reasonable that he also should conclude that there is some relevant joint venture. In that case he would be misled. Whether he would be misled by the advertisement or by some other factor may be a question. But he would certainly acquire an erroneous idea of the situation of the parties in relation to the matter in hand.

It would seem therefore that an important question is whether a person knowing of McDonald's "BIG MAC" hamburger would understand the advertisement to be referring to McDonald's hamburger i.e., saying something about it, and if so why.

It has been said that s.52(1) ". . . is concerned with consequences as giving to particular conduct a particular colour. If the consequence is deception, that suffices to make the conduct deceptive." per Stephen J. in Hornsby Building Information Centre Pty. Ltd. v. Sydney Building Information Centre Ltd. [1978] HCA 11; 140 C.L.R. 216 at 228[1978] HCA 11; , 18 A.L.R. 639 at 647. But the mere fact that the conduct was a matter constituting one of the factors by reference to which persons formed an erroneous conclusion is not conclusive that the conduct was deceptive. Thus in the Hornsby case itself it was assumed that by the use of the name "Hornsby Building Information Centre" others were led to believe that that entity was a branch or otherwise associated with the Sydney Centre. Yet it was held that the use of that name was not a contravention of s.52(1) of the act. It was said to be necessary to examine why the misconception has arisen in the minds of others. The explanation was found in the circumstance that the name adopted by the Sydney Building Information Centre being descriptive was equally applicable to any business of a like kind, its very descriptiveness ensured that it was not distinctive of any particular business, and hence its application to other like businesses would not ordinarily mislead the public. (per Stephen J. (supra) 140 C.L.R. at 229 and (1977) 18 A.L.R. at p. 648.) In such circumstances the conduct of the appellant did not have the quality of being truly misleading or deceptive.

To determine how a person with knowledge of McDonald's "BIG MAC" hamburger would interpret the significance of the words "BIG MAC" in the advertisement it is convenient to examine the factors by which it is said a reader of the advertisement might be influenced in his understanding of the message presented in it. Omitting the erroneous assumptions and misconceptions referred to hereafter, they would in substance, be as follows:-

(i) the advertisement was unambiguously about wine, the product of and offered for same by McWilliam's;

(ii) the bottle displayed was obviously a large bottle fitting the description 'big':

(iii) "Mac" might be thought to be a corruption of "Mc" of the name "McWilliam's";

(iv) there was in small print a statement by one, Peter Wilson, a journalist to the effect that "I call it the 'big Mac'";

(v) the words "BIG MAC" were not seen in the advertisement as being used as a name for a wine;

(vi) the words "BIG MAC" in the advertisement could well be apt words to designate a large bottle of McWilliam's Rosedale Wine;

(vii) the expression "BIG MAC" had never previously been used in connection with wine;

(viii) the expression "BIG MAC" was not synonymous with McDonald's

(ix) "BIG MAC" is but a trade name of a hamburger marketed by McDonald's.

(x) the hamburger was exceptionally widely known under the name "BIG MAC" and is an item produced and sold by McDonald's in very large numbers;

(xi) the printing in the advertisement of the words "BIG MAC" was not similar to the printing of the expression "BIG MAC" in the publicity used by the respondent;

(xii) the expression "McWilliam's BIG MAC" was a grammatical way of expressing the notion that the advertisement concerned "BIG MAC" the property of McWilliam's.

(xiii) the words "BIG MAC" are words associated in the public mind with McDonald's hamburger;

(xiv) there was no reason to doubt that McDonald's might join with McWilliam's in promoting wine or in publishing such an advertisement;

It is necessary, however, to consider factor (xiv). "BIG MAC" certainly identifies the McDonald's hamburger, but on the evidence one could not be satisfied that, it is synonymous with the business entity trading as McDonald's. On this matter it is useful to look at the respondent's publicity. In the quantity of publicity materials submitted to the Court one does not find any instance of McDonald's being referred to as "BIG MAC". In every case it is clear that the trader concerned is McDonald's and that the Big Mac hamburger either named or illustrated, is its product. When "free offers" are made it is McDonald's which displays them, the logo which is displayed on publicity material is a capital "M" with the word McDonald's printed across it. The "Ronald McDonald Giant Song Story and Coloring Book" is "Available only at McDonald's", the products are obtainable at "McDonaldland". The invitation to get a "'BIG MAC' hamburger with your back to school clothing" is redeemable only by presenting the relevant voucher at "McDonald's." The cover story of the Sydney "Bulletin" of 2 May 1978 contains an illustration of a "BIG MAC" but features McDonald's stating "at McDonald's they've got a recipe for hamburgers", and advising that it takes money and years of work to become a millionaire making "BIG MAC's" under a McDonald's franchise. The situation is similar in relation to an article in the magazine "Business" and articles in other magazines. The nearest to use in the publicity submitted to the Court of "BIG MAC" being used to refer to the McDonald's business is an item in the Sun Herald of 7 October 1979 headed, "McDonald's is out to get it all" with a sub-heading "'BIG MAC' goes to the movies". That item explains how McDonald's has succeeded in its mission to educate the palates of Australian children and how "the Big Mac company is shaping up to the 1980's". Television texts invite people to "Come to McDonald's. . . We'll give you a Big Mac Free". Subject to Big Mac going to the movies there is no suggestion of an invitation to Big Mac or to Big Mac's or that Big Mac does this or that. There is no suggestion that "BIG MAC" is anything but a hamburger. It is not the company, it is not a business entity.

The great majority of witnesses called by the respondent and some by the appellant deposed that immediately they saw the advertisement they thought of McDonald's Big Mac hamburgers. Some said they wondered whether McWilliam's "could get away with it, since everyone knew that "BIG MAC" was a hamburger." Others said that they thought Big Mac was a name they considered McDonald's was entitled to and therefore McDonald's must have given permission for use of the words "BIG MAC". But there is little support from any of the witnesses for the notion that the expression "BIG MAC" would be used as an alternative name for McDonald's.

It is an alternative name for McDonald's "BIG MAC". But whether it is used in that sense in any particular context would be a question of construction. In the instant case that matter of construction is complicated because of assumptions and preconceived ideas that were entertained by various readers one assumption was that it was most unlikely that McWilliam's would use the same name for its wine pack as the appellant had made famous with respect to its hamburger and that it was unlawful for it to do so unless it was done in conjunction with McDonald's.

In this context McDonald's as an entity, steps into the situation, whereas had the reader been free of his erroneous assumptions and preconceived ideas this would not have happened. So far as persons subject to such assumptions were concerned they certainly acquired an erroneous belief from the advertisement. When in a particular context one uses a trade name associated with a product of another person but which is a name which may lawfully be used, with respect to one's own product there is inevitably a risk that some persons may be confused. So far as McDonald's was concerned, subject to the law relating to passing off, trade mark infringement, and any incidental benefit it could obtain by means of relief under s.52(1), it had no right to deny McWilliam's the use of the name "BIG MAC" in relation to any one of its wine products. And the one thing about which the bulk of witnesses in this case were in no doubt was that the product the subject of the advertisement was a wine product of McWilliam's and not of McDonald's. Also on the evidence no trade mark of McDonalds extended to wine. And whether McDonald's could achieve an incidental benefit through the operation of s.52(1) of the Act depended on the construction which persons would give to the advertisement. Of course it does not follow that over time members of the public acquainted with McDonald's use of the words "BIG MAC" have not become so familiar with its exclusive use as the name of McDonald's product, that they have come to believe that there is some legal or other restriction on the use of those words much wider than that which actually exists. And having regard to the nature and extent of the reputation of Big Mac as a McDonald's hamburger it is quite possible that without formulating the matter in their minds people harbour either consciously or subconsciously, a general concept that in some way, "BIG MAC" belongs to McDonald's. The result may be that they cannot imagine that Big Mac could be used in any context save as referring to McDonald's hamburger and inevitably construe the words in the advertisement as saying something about McDonald's or the Big Mac hamburger.

Any person of one of the states of mind described above who reads the advertisement, and who even observes that it relates to wine, may well think that McDonald's must have consented to the use of the words "BIG MAC" and, accordingly, conclude that there is some business connection between McDonald's and McWilliam's relating to the wine or the advertisement. Immediately a reader thinks that the words "BIG MAC" are a reference to McDonald's hamburger they are misled and it is almost inevitably that he will conclude that the McDonald's must be in the wine venture in some way. What else could a reference to the hamburger suggest?

But were it not for the notion that there would be something improper in the use of the words by any trader other than McDonald's, or that in whatever context they were used they could only refer to McDonald's hamburger, or for some such notion in the mind of a reader, the advertisement would not convey to anybody the idea that it referred to or had anything to do with the hamburger. Any such initial impression would be destroyed by the context. At most, all that might occur would be surprise that McWilliam's were using the same name for its product as McDonald's was using for its. At the most some people might wonder whether McDonald's and McWilliam's were acting together. But even so they would not be misled.

It is a question therefore whether any misapprehension which has arisen is a consequence of McWilliam's conduct or of other factors, namely that the advertisement was read and interpreted by reference to erroneous concepts and assumptions. And the further and critical question is whether conduct otherwise neither misleading nor deceptive acquires deceptive quality because persons under the influence of erroneous ideas draw erroneous inferences concerning it.

It is no doubt a sound view that persons engaging in commercial activity involving communications with the public must take the commercial environment as it actually exists. It may be said therefore, that when McWilliam's published the advertisement the commercial environment was such that it was likely that some persons because of their erroneous preconceived ideas, would understand the words "BIG MAC" to refer to McDonald's hamburger and would draw inferences therefrom as to the possible involvement of McDonald's in the wine venture, and that if they did they would be misled.

Section 52(1) of the Act enjoins traders not to engage in conduct which is described by Stephen J. in the Hornsby Case (supra) as truly a contravention of the section, that is which is misleading or deceptive (see 140 C.L.R. at p. 226, 18 A.L.R. at p.645). It is difficult to think that conduct is truly 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. And that is the case with this advertisement. A person not under the influence of erroneous ideas such as those discussed above may well be surprised to see the words "BIG MAC" being used for a wine pack, he may wonder whether McWilliam's was entitled to use them, he may wonder whether McWilliam's had to get permission to use them. But he cannot proceed from wonder to conclusion or even to probability on those matters. He will never be more than at most, in the state described by the learned trial Judge in his basic finding in this case, namely confused as to whether there was or was not a business connection between McWilliam's and McDonald's. Such a person is not misled.

It follows from the above that those persons who, by approaching the advertisement with erroneous ideas in their mind and interpreting its contents by reference thereto and are thereby misled do not arrive at their erroneous conclusion as a consequence of the terms of the advertisement, but because of the application, to those terms, of reasoning based on erroneous assumptions of their own. A member of the public can hardly complain of being misled by the conduct of another if because of errors made by himself he erroneously interpreted the nature of that conduct. And one would not contemplate that conduct, only misleading to those who misinterpret it because they apply erroneous assumptions in the exercise of interpretation, would be proscribed by the legislature. Such conduct would not be, one would think, truly misleading or deceptive.

In those situations in which it is lawful or a trader to commence to use, in connection with his product, a name already in use by another trader for his product and widely known in respect of that product the possibility that persons familiar with the previous use of the name will, for a time, wonder how it comes to be used for the new product, and to entertain theories about it, inevitably exists. But it is not the purpose of the Trade Practices Act to intercept the conduct of lawful business. But in such situations as last mentioned lawful business would be intercepted if the name could not be used otherwise lawfully, but unlawfully because persons acting by reference to erroneous assumptions might for a time misunderstand what was going on. It seems a sound view that, in such situations, a certain amount of misunderstanding is tolerable, just as it was declared to be tolerable by Lord Simmonds in cases where like descriptive names are used for separate businesses. (see Office Cleaning Services Ltd. v. Westminster Window and General Cleaners Ltd. (1946) R.P.C. 39 at pp. 42-63.

But in this case, basically it is to be tolerated because such misunderstanding as occurs is the consequence not of misleading conduct by the appellant but of a misunderstanding by observers induced by erroneous assumptions on their part.

Having regard to the foregoing the respondent's claim for relief under s.53(c) and (d) of the Act necessarily fails, as it did also in the view of the learned trial judge, for the reasons stated by him.

As a result the appeal should be allowed, the injunction dissolved, the cross appeal dismissed, the action dismissed and the trial Judge's orders as to costs be set aside and in their place it be ordered that the respondent pay the appellant's costs of the application made on 23 November 1979 and that the respondent pay the appellant's costs of the trial including the costs of the proceedings for interlocutory relief and the costs of this appeal.

The facts of this appeal are set out in the reasons for judgment of Smithers J. and need not be repeated. I agree generally with his Honour's reasons for judgment and his conclusion, but I desire to make some general comments.

In reaching his conclusion, the learned trial judge placed great reliance upon expressions of opinion contained in judgments given in matters involving the application of the law relating to trade marks. Likewise, counsel for the respondent relied upon a similar approach. Much assistance can be derived in considering the meaning and application of s.52 Trade Practices Act 1974, as amended, by reference to those authorities and authorities relating to the tort of passing off, but at the same time great care must be taken since the policy of both the common law and statutes relating to trade marks and passing off have a different emphasis to the policy of Part V of the Trade Practices Act. For present purposes it is sufficient to say that the policy of Part V is to protect the public as consumers of goods and services provided by corporations in trade and commerce, see R. v. Credit Tribunal; ex parte General Motors Acceptance Corporation, Australia [1977] HCA 34; (1976-77) 137 C.L.R. 545 per Mason J. at p.561 and Hornsby Building Information Centre Pty. Ltd. v. Sydney Building Information Centre Ltd. [1978] HCA 11; (1977-78) 140 C.L.R. 216 per Stephen J. at p.226.

The law relating to passing off and to trade marks have a common basis, and although based upon deception to the public, are directed to protecting the proprietary rights of a trader. The essential characteristics to found a successful action of passing off have been summarised in Warnink v. Townsend & Sons (Hull) Ltd. (1979) A.C. p.731. At p.742 Lord Diplock said:

"My Lords, A. G. Spalding & Bros. v. A. W. Gamage Ltd., 84 L.J. Ch. 449 and the later cases make it possible to identify five characteristics which must be present in order to create a valid cause of action for passing off: (1) a misrepresentation (2) made by a trader in the course of trade, (3) to prospective customers of his or ultimate consumers of goods or services supplied by him, (4) which is calculated to injure the business or goodwill of another trader (in the sense that this is a reasonably foreseeable consequence) and (5) which causes actual damage to a business or goodwill of the trader by whom the action is brought or (in a quia timet action) will probably do so."

At p.752 Lord Fraser of Tullybelton said:

"As my noble and learned friend, Lord Diplock, said in Star Industrial Co. Ltd. v. Yap Kwee Kor (1976) F.S.R. 256, 269:

'Whatever doubts there may have previously been as to the legal nature of the rights which were entitled to protection by an action for 'passing off' in courts of law or equity, these were laid to rest more than 60 years ago by the speech of Lord Parker of Waddington in Spalding v. A.W. Gamage Ltd., 32 R.P.C. 273 ('the Gamage case') with which the other members of the House of Lords agreed. A passing off action is a remedy for the invasion of a right of property not in the mark, name or get-up improperly used, but in the business or goodwill likely to be injured by the misrepresentation made by passing off one person's goods as the goods of another. Goodwill, as the subject of proprietary rights, is incapable of subsisting by itself. It has no independent existence apart from the business to which it is attached. It is local in character and divisible; if the business is carried on in several countries a separate goodwill attaches to it in each. So when the business is abandoned in one country in which it has acquired a goodwill the goodwill in that country perishes with it although the business may continue to be carried on in other countries."

An action for infringement of a trade mark is a remedy for the invasion of a right in the mark, and at the present time depends upon the existence of a statutory right of a proprietary nature, see Kerly's Law of Trade Marks and Trade Names 10 Ed. para. 15-02, p.307. In Australia, see Trade Marks Act 1955, as amended, and for present purposes s.58, s.62 and s.65. See also Moorgate Tobacco Co. Ltd. v. Philip Morris Ltd. [1980] HCA 32; (1980) 54 A.L.J.R. 479.

The registration of a trade mark under the Trade Marks Act depends largely upon the absence of deception or confusion to the public and it is with respect to the sections relating to that aspect of trade marks law that reference is made. The following sections of the Trade Marks Act 1905-1948 are set out:

"25. Subject to this Act, the Registrar shall not register in respect of goods a trade mark identical with one belonging to a different proprietor which is already on the register in respect of the same goods or description of goods or so nearly resembling such a trade mark as to be likely to deceive."

"114. No scandalous design, and no mark the use of which would by reason of its being likely to deceive or otherwise be deemed disentitled to protection in a court of justice, or the use of which would be contrary to law or morality, shall be used or registered as a trade mark or part of a trade mark."

These two sections and related issues arising in infringement actions have been considered in a large number of matters before the High Court. Registration of a mark confers a right of a proprietary nature and this has affected the exegesis of the sections. In Southern Cross Refrigerating Co. v. Toowoomba Foundry Pty. Ltd. (1953-4) 91 C.L.R. 592 Kitto J. sets out a summary of the relevant principles developed by the courts. At pp.594-5 his Honour said:

"I am concerned, therefore, to consider only s.114, the material provision of which is that no mark, the use of which would by reason of its being likely to deceive or otherwise be deemed disentitled to protection in a court of justice shall be registered as a trade mark. The corresponding section of the English Act (s.11 of the Trade Marks Act 1938 (Imp.)) is in the same terms with the addition of the words 'or cause confusion' after 'likely to deceive'; but, while these words make the section more specific, they add nothing to its effect. In relation both to the English and to the Australian section there are certain propositions which I think may be accepted as established by the cases. I take them, substantially, from the judgment of Romer J., (as he then was), in In re Jellinek's Application (1946) 63 R.P.C. 59, at p.78 : (i) In all applications for registration of a trade mark, the onus is on the applicant to satisfy the Registrar (or the court) that there is no reasonable probability of confusion. (ii) It is not necessary in order to find that a trade mark offends against the section, to prove that there is an actual probability of deception leading to a passing-off. While a mere possibility of confusion is not enough - for there must be a real, tangible danger of its occurring (Reckitt & Colman (Australia) Ltd. v. Boden (1945) 70 C.L.R. 84, at pp.94, 95; Sym Choon & Co. Ltd. v. Gordon Choons Nuts Ltd. [1949] HCA 54; (1949) 80 C.L.R. 65, at p.79) - it is sufficient if the result of the user of the mark will be that a number of persons will be caused to wonder whether it might not be the case that the two products come from the same source. It is enough if the ordinary person entertains a reasonable doubt. (iii) In considering the probability of deception, all the surrounding circumstances have to be taken into consideration. (This includes the circumstances in which the marks will be used, the circumstances in which the goods will be bought and sold, and the character of the probable purchasers of the goods : Jafferjee v. Scarlett [1937] HCA 36; (1937) 57 C.L.R. 115, at p.120). (iv) In applications for registration, the rights of the parties are to be determined as at the date of the application. (v) The onus must be discharged by the applicant in respect of all goods coming within the specification in the application (pursuant to s.32(2)) of the goods or class of goods in respect of which the registration is desired, and not only in respect of those goods on which he is proposing to use the mark immediately. And the onus is not discharged by proof only that a particular method of user will not give rise to confusion. The test is, what can the applicant do if he obtains registration?"

In dismissing the appeal from the decision of Kitto J., the High Court, comprising Dixon C.J., McTiernan, Webb, Fullagar and Taylor JJ. in a joint judgment said at p.607:

"We have thought it necessary to make some reference to the matters proper for consideration in relation to this issue under s.25 for the argument of the appellant seizes upon them and asserts that once these matters have been considered and the relevant issue answered in favour of an applicant it is impossible to say that the use by him, with respect to his goods, of the trade mark in question would be 'likely to deceive' within the meaning of s.114. Whilst conceding that the likelihood of deception is not as great where, in no sense, can it be said that an applicant's goods are the same or of the same description as those of an oponent, it is quite clear that the latter finding by no means disposes of the relevant inquiry under s.114. To suggest that it does really confuses the nature of the inquiry which arises under s.25 for it is not sufficient in order to reach the conclusion that an applicant's goods are of the same description as those of an opponent, merely, to find that in the course of marketing there is a likelihood of deception taking place; the inquiry is much more limited and must be answered in favour of the applicant unless upon an examination of the material matters the conclusion is justified that the applicant's goods ought to be regarded as being of the same description as those of the opponent. This is far from saying that if the evidence shows a probability or likelihood of deception such a conclusion would be justified. Indeed if it were not a distinct and separate inquiry it would be impossible to reconcile the multitude of cases - of which In re Jellinek's Application ((1946) 63 R.P.C. 59) and Reckitt & Colman (Australia) Ltd. v. Boden ((1945) [1945] HCA 12; 70 C.L.R. 84) are themselves examples - in which it has been thought necessary to consider the likelihood of deception notwithstanding a finding that the respective goods of the applicant and the opponent were not the same or of the same description."

It is not necessary to refer in detail to the earlier cases, but it is desirable to set out some passages therefrom. In Jafferjee v. Scarlett (1937) 57 C.L.R. at p.115 Latham C.J. said at p.120:

"Both the applicant and the opponent have filed declarations expressing opinions, on the one hand, that no person is likely to be deceived by the registration of the applicant's mark, and on the other hand, that many persons are likely so to be deceived. The court must of necessity decide this question for itself upon an inspection of the two marks, bearing in mind the circumstances under which the marks will be used and under which goods will be bought and sold, and the character of the probable purchasers of the goods."

At p.122 the Chief Justice said:

"The court must endeavour to put itself in the position of ordinary purchasers of goods who have noticed a trade mark as being distinctive of particular goods, but who have not compared that mark with any other mark, and who are quite probably not aware of the fact that another more or less similar mark exists.

Such purchasers have not had the opportunity or the occasion to make a precise comparison of the two marks. They will be guided, so far as they are influenced by trade marks at all, by a general recollection or impression of the mark which they have seen.

It should not be assumed by the court that the probable purchaser is a specially stupid man, or, on the other hand, that he is a man who sets trade marks side by side and examines them with particularity."

At p.124 Dixon J. said:

"According to those principles the applicant must sustain the burden of excluding real likelihood of confusion between the marks among reasonable persons behaving with as little or as much vigilance as is commonly displayed by those who buy goods of the description in question in the ordinary course of affairs. If the court is not satisfied that there is no serious risk of deception or confusion, the application must fail."

In Radio Corporation Pty. Ltd. v. Disney [1937] HCA 38; (1937) 57 C.L.R. 448 Latham C.J. at p.453 said:

"I do not decide this appeal upon the basis that the opponents have any exclusive right of any kind to the use of the words and figures in question whether by way of trade mark or under a copyright or otherwise. My opinion is based solely upon the ground that, as against the public, the applicants should not be granted the exclusive right to use the words in connection with any goods for the reason that the use of the words by them as a trade mark would be likely to deceive (sec.114)."

The Trade Marks Act 1955, which came into operation on 1 August 1958, replaced the earlier Act of 1905. The earlier s.25 and s.114 are, with some alterations, now contained in s.33 and s.28 respectively. In re Bali Brassiere Co. Inc.'s Registered Trade Mark and Berlei Ltd.'s Application [1968] HCA 72; (1968) 118 C.L.R. 128 Windeyer J. said at pp.139-140:

"Cases were cited to me from passages in judgments dealing with marks held to be, or held not to be, by reason of similarities, deceptive or confusing. I have read these cases, and others. I do not think I need discuss them. The governing principles are not in dispute; and little is to be gained by the quotation of enunciations and elaborations of them in other cases. The difficulty is always in their application to the facts of the case in hand. There are, however, a few observations I would make about item (a) in s.28. It refers to an objective quality of the mark, 'likely to deceive or cause confusion'. A mark is 'likely to deceive' - or in the words of s.62 is 'deceptively similar', which by s.6(3) means the same thing - because of its inherent tendency in use, independently of the purpose or intent of the user. That is to say a mark can be deceptive without being used deceitfully. The word 'deceive', I take it, here has one of the meanings in the Oxford Dictionary, 'to cause to believe what is false, to lead into error'. This accords with Dr. Johnson's statement of its primary sense, which was given as 'to cause to mistake, to bring into error'. Lord Diplock, then Diplock L.J., said in the recent Berlei v. Bali Case (unreported) in the Court of Appeal that: 'Unlike "to deceive", "to cause confusion" does not necessarily connote any intentional misrepresentation on the part of the user.' With great respect for his Lordship's opinion, I doubt whether, in their context in relation to deceptive trade marks, the words 'to deceive' necessarily predicate intentional misrepresentation. However, it is unnecessary to pursue this question, because the words 'or to cause confusion' appear in s.28 and in s.6(3). They apparently denote an alternative, differing from 'to deceive'. Under the earlier Act confusion was not expressly mentioned. It was then considered that a probability of confusion would establish that a mark was likely to deceive. The question of deceptiveness could, it was then said, be judged by asking whether 'there will be a confusion in the mind of the public which will lead to confusion in the goods' : per Lord Parker (then Parker J.) in Re Pianotist Co.'s Application ((1906) 23 R.P.C. 774, at p.777), a passage quoted in this Court in Cooper Engineering Co. Pty. Ltd. v. Sigmund Pumps Ltd. ((1952) [1952] HCA 15; 86 C.L.R. 536, at p.538)."

In applying these principles by analogy to s.52 Trade Practices Act, the learned trial judge concluded:

"In an appropriate case it may be that some limitation upon the way the relevant person was misled or deceived or was likely to be misled or deceived is relevant in determining whether such conduct is in breach of s.52(1) of the Act. In the case before me I am, however, satisfied that the measure of confusion which the relevant conduct will produce is such that it will lead to a sufficient number of persons being likely to be misled or deceived upon the question of whether or not there was a business connection between the applicant and the respondent to establish a breach of s.52(1). This is a very unusual case because of the great reputation of the words 'BIG MAC' in association with 'McDonald's'."

This approach is consistent with that used in the trade marks cases, but as I have said, the policy of the Trade Marks Acts is different from the policy of Part V of the Trade Practices Act. The former is concerned with deception or confusion to the public as to the source of goods, while the latter is concerned with deception to the public as consumers of goods or services. The possible duplication of remedies is referred to in the Hornsby Building Information Centre Case, supra, per Stephen J. 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, not invoked in this case, which allow a person who suffers loss by another's act which is in contravention of s.52 to recover by action the amount of his loss, may render the statutory remedy even more complete."

At pp.226-7 his Honour gave a warning:

"The Sydney Centre will, however, only be entitled to relief if what is in question is truly a contravention of s.52(1); that is to say, is conduct which is misleading or deceptive. It is only this with which s.52(1) is at all concerned. It is not concerned, as such, with any unfairness of competition in trade as between two traders. . . . Section 52 of our Act is on the contrary exclusively concerned with consumer protection. It says nothing about unfair acts or practices but devotes itself to the prohibition of conduct which misleads or deceives. It is in its emphasis upon this aspect of s.52 that the merits of the Hornsby Centre's submissions lie.

In determining the meaning of 'misleading or deceptive' in s.52(1) and in applying it to particular circumstances the law which has developed around the tort of passing off, founded as that tort is upon the protection of the plaintiff's intangible property rights, may not always provide any safe guide. However the long experience of the courts in that field should not be disregarded, some principles which have been developed appear equally applicable to s.52(1)."

Since that decision, s.52 Trade Practices Act has been amended by the inclusion of the words "or is likely to mislead or deceive" but in my opinion that does not affect the general statement of principles by Stephen J. The inclusion of those words is to be read as meaning "may mislead or deceive" or "may be expected to mislead or deceive" or "has a capacity or tendency to mislead or deceive". Subject to the negative onus involved in applications for registration of trade marks, that appears to have been the meaning given to the use of the word "likely" in the phrase "likely to deceive" in the Trade Marks Act 1905-1948.

On an analysis of whether conduct is "misleading or deceptive or is likely to mislead or deceive", under s.52 Trade Practices Act it may be of assistance to consider whether a prospective consumer of goods or services is likely to be confused as to the nature or quality of the goods or services to be supplied or to wonder as to the nature or quality of those goods or services. There may be cases where the source of those goods or services may be of importance in proceedings based upon s.52 of the Trade Practices Act, but in my opinion the present case is not one. In the present case the words "BIG MAC" are descriptive. When used by McDonald's they describe and refer to a particular type of large hamburger. When used by McWilliam's they describe and refer to a particular type of large container of wine. There is no confusion and there can be no confusion between the two types of goods. There is no deception nor is there likely to be deception between the two types of goods. The source of the goods in the sense of who is the supplier of those goods is on the evidence in this case of no importance. The source does not affect the nature or quality of the goods supplied. A consumer purchasing a "BIG MAC" hamburger is unlikely to be handed a "BIG MAC" bottle of wine. A consumer purchasing a "BIG MAC" bottle of wine is unlikely to be handed a "BIG MAC" hamburger. In my opinion, the conduct of McWilliam's is not in contravention of s.52(1) of the Trade Practices Act. We are not concerned with what rights McDonald's may have against McWilliam's in relation to proprietary rights unless on the same facts the conduct by McWilliam's is in contravention of s.52(1) of the Trade Practices Act.

I would allow the appeal with costs and direct the respondent to pay the appellant's costs of the trial.

In this matter I have had the advantage of reading the reasons for judgment of Smithers J. I agree with his conclusions and I adopt his statement of the relevant facts. However, as I find myself in disagreement with the decision of the learned trial judge it is appropriate that I briefly set out the reasons upon which I base my disagreement.

Before us it was the case of counsel for the respondent ("McDonald's") that the evidence established confusion or likelihood of deception as to some business connection between the respondent and the appellant ("McWilliam's"), contrary to fact.

The trial judge found that the appellant's conduct in using the words "Big Mac" had in the circumstances confused the public into believing that there was such a connection and, based on such confusion, he held that he was entitled to conclude that the conduct was "likely to mislead or deceive". In other words, an essential feature of his reasoning, as I understand it, was that, as a matter of law, conduct which "confused" was conduct which was likely to mislead or deceive. Such reasoning was based on the trial judge's understanding of trade mark cases.

In my opinion, the trial judge was incorrect in concluding that conduct which is confusing (in the sense in which he used the word) to members of the public falls within the section. It is however necessary to determine exactly what is meant by the word "confusion" for I see it as having at least two different meanings. A person may be in a state of confusion when he is unable to differentiate between product A and product B. Product A and product B are "confused", i.e. mixed up, in his mind, and this can have been the end result or consequence of misleading or deceptive conduct. This meaning is illustrated by a sentence in Halsbury's Laws of England 3rd ed. vol. 38 p. 597 where the author is dealing with the essentials of an action to prevent use of a trade name. He says in paragraph 998:

"The plaintiff must further prove that the defendant's use of name or mark was likely or calculated to deceive and thus cause confusion and injury, actual or probable . . . " (underlining added)

However, the sense in which the trial judge made use of the word "confusion" was more referable to a state of mind at an earlier stage, namely the state of mind of a person whose preconceived ideas have been disturbed and who is in a state of wonderment in consequence of this disturbance. In my view this state of uncertainty or bewilderment precedes the state of confusion referred to in the previous paragraph of these reasons, and the trial judge when he spoke of the confusion engendered by the advertisement was referring to this state of wonder or uncertainty.

I can not accept that conduct which only produces this state of mind is conduct which misleads or deceives or is likely to mislead or deceive. Stephen J. in Hornsby Building Information Centre Pty. Ltd. v Sydney Building Information Centre Ltd. [1978] HCA 11; (1978) 140 C.L.R. 216, admittedly prior to the insertion of the words "likely to mislead or deceive" in s.52, was quite firm that there was a clear distinction between conduct which confused and conduct which was misleading or deceptive. I refer to page 229 of the report of that case where Stephen J. said "the risk of confusion must be accepted", and to page 230:

"Evidence of confusion in the minds of members of the public is not evidence that the use of the Hornsby Centre's name is itself misleading or deceptive but rather that its intrusion into the field originally occupied exclusively by the Sydney Centre has, naturally enough, caused a degree of confusion in the public mind. This is not, however, anything at which s.52(1) is directed."

It was said by the trial judge that the addition of the words "likely to mislead or deceive" has extended the scope of the paragraph to cover confusing conduct in the sense of conduct which merely causes the public to reconsider or doubt its preconceived ideas. I can see no justification for such an extended meaning. As I see it, all the legislature has done is to ensure that it is not necessary to establish that the impugned conduct has, in the opinion of the court, in fact misled or deceived, but merely that it is such conduct as is capable of misleading or deceiving and is likely to do so. There is no suggestion that any expansion of the meaning of the descriptive words "misleading" and "deceptive" was intended, nor is there any necessity to imply such an expanded meaning. To be confused is an inherently different state of mind from that of being deceived or misled, and the legislature has given no indication that it contemplates encompassing the first mentioned state of mind. It follows that it is my opinion that the contention that an expanded meaning be given to the words can not be supported, and conduct which merely confuses the public is not conduct which contravenes s.52(1).

However counsel for McDonald's also submitted that the evidence established that there was a likelihood of deception of the public as to some business connection between the respondent and the applicant. He based this submission on the trial judge's findings made in reliance on evidence given by members of the public, that a sufficient number of persons were likely to be misled or deceived in this regard. It is correct to say that there was evidence to the effect that various persons came to various conclusions as to the type of business association which they conjectured must exist between the two companies. I am assuming that such evidence went beyond, and that the trial judge found that it went beyond, merely establishing confusion, but I am far from satisfied that such an assumption is justified.

However, accepting, as the trial judge accepted, that members of the public have been misled to the extent of believing that there was a business connection, the question arises whether it inevitably follows that the section has been contravened. It is my opinion that in this case a contravention has not been established notwithstanding such evidence. I am fortified by the fact that the High Court in Hornsby's case, supra was in a similar situation in that, as Stephen J. said at p.228:

"The Sydney Centre tendered some evidence that persons had been misled in this way and for present purposes I will assume that this has occurred."

Notwithstanding this evidence and this assumption the finding of the High Court was that the conduct was not misleading or deceptive.

There are two matters to which I must refer. In the first instance it is for the court to determine whether there is a likelihood that the public will be misled, and, in the words of Lord Morris in Parker Knoll Ltd v Knoll International Limited (1962) R.P.C. at 279:

"In arriving at a decision the court must not surrender in favour of any witness its own independent judgment."

Secondly, as was said by Stephen J., in the sentence which follow the passage of his reasons cited immediately above,

"But to determine whether there has been any contravention of s.52(1) it is necessary to inquire why this misconception has arisen in the minds of others."

In respect of the first matter, I adopt the reasoning of Smithers J. in support of his conclusion that it is for the court to determine objectively whether the conduct under consideration is likely to mislead the public.

The second preliminary matter to which I would refer is the statement of Stephen J. that it is necessary "to inquire why this misconception has arisen in the minds of others". In other words, it is necessary, as I see it, not only to see the conduct in its context, but, in circumstances where the consequence of a finding in favour of a party may be to grant that party a monopoly, to appreciate that that party may have contributed to the misconception. As Stephen J. again said in Hornsby's case at p.230, referring to descriptive names, but in my view equally applicable to the present circumstances,

"To allow this section of the Trade Practices Act to be used as an instrument for the creation of any monopoly in descriptive names would be to mock the manifest intent of the legislation."

Also, at p.229, he said:

"The risk of confusion must be accepted, to do otherwise is to give to one who appropriates to himself descriptive words an unfair monopoly in those words. . ."

In my view, such a warning is a fortiori if the party who might gain the monopoly has assisted, albeit with perfect propriety, in creating the context in which the confusion occurs.

In the present matter it is crucial to enquire why members of the public were lead to believe that, or were wondering whether, there was a business connection between the two companies. Essentially it was in consequence of the substantial reputation which McDonald's had established, through its extentive advertising campaign, in the words "Big Mac". Such was the degree of saturation achieved by the advertising that members of the public associated "Big Mac" exclusively with that company, to the extent of accepting that the company "owned" the words. It followed that they had a preconceived notion in respect of the relationship between the company and the words "Big Mac". Such notion extended probably quite reasonably, to an opinion that nobody else could make use of the words without the approval of McDonald's. This in fact was the true position in respect of a wide range of products, as McDonald's had registered the words as a trade mark in respect of many products including non-alcoholic beverages. It had not however registered the trade mark in respect of alcoholic beverages, a fact unlikely to be known to members of the public. However such was the extent of the association in the minds of the public between McDonald's and the words "Big Mac" produced by the advertising campaign, that the public reasonably believed that McDonald's "ownership" covered the field.

It was against this background that the public became aware of the use of the words by another company in respect of alcoholic beverages. Such use was disturbing to the public's preconceived notions, and understandably lead some members of the public to wonder and conjecture how such use came about. It was a simple step from that wonder to look for an explanation, and to speculate on the possibility of a business connection or of some approval by McDonald's to the use by McWilliam's of the words. In so far as they assumed that McDonald's had exclusive right to the words, some such explanation was logically necessary. However, it was only logically necessary if the assumption was correct, and if the member of the public had a sufficiently enquiring mind to pursue, or was prompted to pursue, the line of thought. It follows that a member of the public could only be "misled" if he pursued a line of conjecture based on and motivated by the unwarranted albeit reasonable assumption. If the conjecture led to a misconception, namely the existence of a business relationship between the two companies, these circumstances were, in the words of Stephen J. in Hornsby's case, supra the reason "why this misconception has arisen in the minds of others". The use of the words by McWilliam's is not to be seen in isolation, but against the background of a misunderstanding. This was the way the matter was perceived by members of the public who gave evidence of having been led to believe there was a business connection, and counsel for McDonald's conceded before us that members of the public could not "form an objective view".

The court however in making its objective determination would not, or should not, be labouring under such a misapprehension and should not, in judging McWilliam's conduct, see it isolated from the context produced by McDonald's advertising campaign. Moreover the use of the words by the former company might have caused confusion, in the sense of causing members of the public to wonder, but would not, in my view, but for the erroneous assumption, have produced the likelihood of deception as to the existence of some business relationship. I have already stated my opinion that the causing of confusion or wonderment is not tantamount to misleading. In my view an objective determination does not take the matter beyond such confusion, and the use of such words by McWilliam's was not likely to reach the stage of actually misleading a member of the public. He might be confused he might be wondering, or his preconceived notions may have been disturbed, but in my opinion he was neither misled nor likely to be misled into an erroneous conclusion.

I agree that the appeal should be allowed and the cross appeal dismissed with costs both here and below to be paid by the respondent.