Re Lego Australia Pty Limited v Paul'S (Merchants) Pty Limited [1982] FCA 19; (1982) 58 FLR 111 (26 February 1982)

FEDERAL COURT OF AUSTRALIA

Re: LEGO AUSTRALIA PTY. LIMITED
And: PAUL'S (MERCHANTS) PTY. LIMITED [1982] FCA 19; (1982) 58 FLR 111
No. G145 of 1981
Trade Practices

COURT

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION
McGregor J.(1)

CATCHWORDS

Trade Practices - Consumer protection - Misleading or deceptive conduct - use of word LEGO being name used by applicant in marketing toys as part of name used in displays and advertisements of irrigation equipment - difference in emphasis of LEGO - different class of goods - only one common outlet - evidence of persons as to association of name with applicant - "assumption" of common origin - whether inference of common sponsorship, approval or affiliation. Trade Practices Act 1974 ss. 52, 53 80

Trade Practices - Consumer protection - Misleading or deceptive conduct - Use of word "Lego" by applicant in marketing toys - Use of word "Lego" by respondent in marketing irrigation equipment - Word "Lego" used with different emphasis by applicant and respondent - Word used in relation to two different classes of goods - Some members of public familiar with word "Lego" in each context - Possibility of mistaken inference being drawn as to common origin of parties' goods - Whether respondent impliedly represented its goods had sponsorship, approval or affiliation which they did not have - Trade Practices Act 1974 (Cth), ss. 52, 53, 80. The applicant marketed building blocks and children's toys under the brand name "Lego", and sought injunctions to restrain the respondent from using the name Lego in connexion with the sprinklers and irrigation equipment which it marketed, on the basis that this was conduct likely to mislead or deceive, or that the respondent was making false representations that its goods had a sponsorship, approval or affiliation which they did not enjoy. Lego building blocks had been sold in Australia since 1963 and in Europe since 1934. Lego, M. Lemelshtrich Ltd. was established in Israel in 1906 manufacturing irrigation equipment; and its products had been marketed in Australia by the respondent since 1974.

Evidence showed that some members of the public associated the word Lego with the applicant's building blocks; some were aware of the name Lego in association with the respondent's irrigation equipment; and some came within both categories.

Held: (1) The use made by the respondent of the name Lego in its advertisements and displays was so inextricably associated or linked with illustrations of sprinkler irrigation equipment that members of the public would not be likely to be misled or deceived into attributing a common source to the building blocks and the sprinkler irrigation products. Because of the different nature of the products, and the full name "Lego, M. Lemelshtrich" which appeared on the respondent's goods, persons who wondered about any relationship between the products were not likely ultimately to be misled or deceived.

McWilliam's Wines Pty. Ltd. v. McDonald's System of Australia Pty. Ltd. [1980] FCA 159; (1980), 49 FLR 455; Snoid v. Handley [1981] FCA 180; (1981), 54 FLR 202; Tillmanns Butcheries v. Australasian Meat Industry Employees' Union [1979] FCA 84; (1979), 42 FLR 331, referred to.

(2) Any persons who drew an erroneous conclusion as to a common source or common connexion between the respondent's and the applicant's goods would not do so due to the respondent's conduct.

(3) The respondent had not represented that its goods had a sponsorship, approval or affiliation which they did not have.

(4) Application dismissed.

HEARING

Sydney, 1981, October 28; November 12-13; December 16-17; 1982, February 26. 26:2:1982
APPLICATION FOR INJUNCTION.

The applicant sought an injunction restraining the respondent from using the name Lego in connexion with the marketing of is goods asserting that its use of the name amounted to misleading or deceptive conduct, or an implied representation that its goods had a sponsorship, approval or affiliation which they did not have.

J. R. T. Wood Q.C. and G. K. Downes, for the applicant.

D. A. Staff Q.C. and H. G. Shore, for the respondent.

Cur. adv. vult.

Solicitors for the applicant: Dawson Waldron.

Solicitors for the respondent: Colin Marks & Co.
R. R. BOADEN

DECISION

LEGO AUSTRALIA PTY. LIMITED (applicant) which markets building blocks suitable for assembly by children to make up toys, by application filed on 16 October 1981 sought relief under ss.52 and 53 of the Trade Practices Act 1974 (the Act) to restrain the use by PAUL'S (MERCHANTS) PTY. LIMITED (respondent) of the name "Lego" in respect of goods which it retails comprising water sprinklers and irrigation components and equipment.

Pleadings were dispensed with; Points of Claim and Points of Reply were at my invitation drawn up. They read as follows -
"A. APPLICANT

1. "Lego" is a name or mark which has been used in connection with children's building blocks since 1934.

2. It was first used in Denmark.

3. The building blocks, made in Switzerland, and Denmark, have been sold internationally under that mark or name, by corporations which the Christiansen family beneficially own or control.

4. Such building blocks, under such mark or name, have been marketed in Australia from 1963, being marketed between 1963 and 1978 by British Lego Limited, and from 1978 to date by Lego Australia.

5. Australian Trade Marks for the word "Lego" are owned by an associated company, Lego Systems AS, and goods so marked have been marketed by the Applicant with the consent of that company.

6. Such goods have been sold through retail outlets in all States of Australia.

7. There has been very extensive advertising in Australia in respect of such goods since 1963, and very substantial sales thereof since such date.

8. The name "Lego" is very widely known in Australia as a name used in connection with children's building blocks, and the suppliers of those blocks.

B. RESPONDENT

1. The Respondent is a supplier and retail outlet for hardware items.

2. The Respondent is the Australian distributor of water sprinkler and irrigation systems manufactured in Israel by Lego M. Lemelstrich Ltd.

3. Such goods manufactured in Israel have since 1929 borne the name "Lego".

4. Such goods have been sold in countries other than Australia.

5. Such goods have been available in Australia since 1974, although advertising in respect thereof and sales thereof have not been substantial.

6. The Applicant asserts that evidence of overseas sales and advertising is relevant only so far as it affects knowledge and information, within Australia, concerning the name Lego.

POINTS OF REPLY -

"1. The Respondent admits paragraphs 1, 2, 3, 4, 6, 7, and 8 of Part A relating to the Applicant.

2. The Respondent admits that some marks are owned as asserted in paragraph 5 Part A in respect of some classes of goods - not including sprinklers and irrigation equipment.

3. The Respondent admits paragraphs 1 to 4 of Part B relating to the Respondent.

4. The Respondent denies paragraph 5 Part B but admits such goods have been available in Australia since 1974.

5. The Respondent disputes paragraph 6, Part B."
The case applicant has sought to make does not emerge clearly from these Points but is referred in argument as presented and quoted later beginning at page 19.

Section 52 of the Act reads -
"(1) A Corporation shall not, in trade or commerce, engage in conduct that

is misleading or deceptive or is likely to mislead or deceive.

(2) Nothing in the succeeding provisions of this Division shall be taken as limiting by implication the generality of sub-section (1)."

Section 53 of the Act reads -
"A corporation shall not, in trade or commerce, in connexion with the supply

or possible supply of goods or services or in connexion with the promotion by any means of the supply or use of goods or services -

(a) falsely represent that goods are of a particular standard, quality, grade, composition, style or model or have had a particular history or particular previous use;

(aa) falsely represent that services are of a particular standard, quality or grade;

(b) falsely represent that goods are new;

(c) represent that goods or services have sponsorship, approval, performance characteristics, accessories, uses or benefits they do not have;

(d) represent that the corporation has a sponsorship, approval or affiliation it does not have;

(e) make a false or misleading statement with respect to the price of goods or services;

(f) make a false or misleading statement concerning the need for any goods or services; or

(g) make a false or misleading statement concerning the existence, exclusion or effect of any condition, warranty, guarantee, right or remedy."

Section 80 of the Act reads -
"(1) The Court may, on the application of -

(a) the Minister;
(b) the Commission; or
(c) subject to sub-section (1A) - any other person,

grant an injunction restraining a person from engaging in conduct that constitutes or would constitute -

(d) a contravention of a provision of Part 1V or V;
(e) attempting to contravene such a provision;
(f) aiding, abetting, counselling or procuring a person to contravene such a provision;
(g) inducing, or attempting to induce, a person, whether by threats, promises or otherwise, to contravene such a provision;
(h) being in any way, directly or indirectly, knowingly concerned in, or party to, the contravention by a person of such a provision; or
(j) conspiring with others to contravene such a provision.

(1A) A person other than the Minister or the Commission is not entitled to make an application under sub-section (1) for an injunction by reason that a person has contravened or attempted to contravene or is proposing to contravene, or has been or is proposing to be involved in a contravention of, section 50.

(2) (3) (4) (5) (6) (7) ......"

The applicant has presented a booklet setting out the history of the business with which the applicant is concerned. It seems that it was first commenced in Denmark in 1932 by Ole Kirk Christiansen, manufacturing step ladders, ironing boards and wooden toys. In 1934 the word "LEGO" was formed from Danish words which meant "play well"; apparently it was realised subsequently that the word itself meant in latin "I study, I put together". By that year a company had been formed presumably to conduct any business arising out of this activity. In 1947 the Lego company in Denmark bought a plastics injection moulding machine for toy production. By 1949 the company produced about 100 different plastic and wooden toys including a small square building component - the "Lego Brick". During this period the staff employed by the company continued to grow so that by 1952, there were 140 employees. In or about 1954, the "Lego Brick" was launched as a so called revolutionary "Lego System of Play" with a "broad educational aim". In the late 1950's, export markets opened up in Europe. In 1958 a new coupling system used in conjunction with the blocks enabled models which were made from them to be more stable and to increase the possible combinations of those which could be made from these blocks. By 1960 there were 450 employees in Danish companies concerned with the venture and by 1980 there were 3,643 people employed worldwide by 30 companies that make up the Lego group.

Part of the history tendered by the applicant includes a list of the years in which sales companies were established in European and other countries. From 1963 to 1978, the applicant's products were marketed in Australia by British LEGO Limited, a company incorporated in the United Kingdom. With effect from 1 January 1978, the applicant purchased the Lego business in Australia. An associated company, Lego Systems A/S, owns and has applied for various trade marks in connection with the Lego business. Sales of these Lego products has continued, increasing each year as is shown on an exhibit which has been tendered. In respect of this an Order has been made as to confidentiality. It is entirely clear that a very large business has been and is being done by the applicant or in respect of similar products both here and through other corporate entities in other parts of the world, backed by a substantial advertisement programme, in this country at least, in which the name "Lego" is especially emphasised. Mr. A.C. Brown, Managing Director of the applicant stated in his affidavit that the name Lego is prominently featured in its products; that name has been extensively advertised since 1962.

An example is reproduced but lacking the colour of the original (Ex.E), in Schedule 1.

The respondent carries on business as a manufacturer of hardware items, as a retailer of those and similar items and as a wholesale distributor of items of its own manufacture as well as items manufactured by others. Its range in respect of retail and distribution of these items is considerable. It operates from five retail stores located in the Sydney metropolitan area, has offices in New South Wales, Queensland and Victoria and a resident representative in the Australian Capital Territory and Tasmania. It has agents in Newcastle, Adelaide and Perth. It has carried on business as a retailer and distributor of such items for over 50 years. Though it is said there is no agreement giving the respondent exclusive distribution rights of the products to which I shall refer as the Lego irrigation equipment, the respondent, from 1974 to the present time, has been the only company or body, in fact, operating as a distributor of this merchandise in Australia with the exception of another company which, for a period from 1977 to 1979, did act as such a distributor.

From the evidence of Adam Zygmunt Szumer, Joint Managing Director of the respondent, it appears that the Lego irrigation equipment was devised by a company, Lego, M. Lemelshtrich Ltd. of Israel, established in 1906, being Israel's first sprinkler manufacturer and, in fact, so it is said, the foundation of that country's irrigation equipment industry.

It is claimed that the range of products of that company are well known throughout the world and have established a record for product excellence. The range of irrigation products entered the Australian market via the respondent's outlets in 1974 and has been on sale continuously in this country since. The products, it is claimed, have achieved a high level of market acceptance. Noticeable sums have been expended by the respondent in advertising the promotion of these Lego irrigation and spray devices; it is noted that the sum so expended is considerably less than that expended by the applicant in respect of its product. Since 1974 the sales turnover for this irrigation equipment has increased from $4,000 to $300,000 for the year ended 30 June 1981. The word Lego as part of a brand name has been used continuously in association with this equipment by the company Lego, M. Lemelshtrich Ltd. of Israel, since 1929, in 45 different countries, the major markets of which are the United States of America, Italy, Spain, France, Greece and South Africa. The word Lego was created from a combination of the first letters of the names of the two partners of the Israel operation in 1929. The equipment of which the respondent is the distributor, consist of both domestic and industrial irrigation and spray components of various sizes and shapes. There are sprays and sprinklers, some semi-automatic. There are various couplings and sections to enable a system to be built up or used whether it be in a home, garden or by way of drip or other irrigation in vineyard or orchard. The components are so made that they are readily able to be attached to each other. They are sometimes made in metal but frequently many of them, or parts of them, are in plastic.

In its advertisement display or packaging the single word Lego is not emphasised or featured singly as in the advertisements for the applicant or packaging of its products or in references to it in the Press. Where the word appears by itself it is stamped on components or is in a setting featuring as background pieces of the actual equipment or depictions thereof. The word Lego is frequently found in a representation of a drop of water, green in colour with thereon, in white letters, "Lego irrigation est. 1906".

An example is reproduced but lacking the colour of the original (Ex.R), in Schedule 2.

In support of its contention, the applicant called evidence (to some of which I refer) from so-called "consumers" said to support that persons had been or might be likely to be misled or deceived by respondent's conduct.

Mr. Stanley, who bought a sprinkler from respondent on 13 October 1980, stated in his affidavit that he was "already aware of the existence of children's plastic building blocks which I know as Lego". Because of his awareness of the existence of the applicant's product, he assumed the same company had made it. He sought to telephone the sprinkler manufacturer, found only one entry in the telephone book (Lego Australia Pty. Limited) and, relying on his assumption, telephoned that company.

Mr. E.R. Leckie was also "already aware of the existence of children's plastic building blocks which I know as LEGO" when in December 1980 or January 1981 he saw sprinkler irrigation equipment in respondent's George Street store and noticed the word Lego thereon. He made the same assumption because of the similarity of the names and the predominence of plastic in the make up of the irrigation equipment. He also made a telephone call after consulting the directory.

Mr. R.J. Holmes was aware of applicant's product in October 1981 and saw an advertisement for "Lego irrigation equipment", went to respondent's Bankstown showrooms and was given a Lego irrigation equipment brochure. After consulting the telephone book he also made a call to the applicant; and, after seeing the telephone entry, he made the same assumption that because the sprinkler system was made of plastic components, it would be distributed by the applicant.

Mr. C. Koellner had assumed that the same company which made children's plastic building blocks which "I knew as Lego" was also responsible for the irrigation equipment, because the name "Lego" was on that equipment and the (irrigation) units are "good units as are the building blocks".

Mrs. J.V. Leach was already aware of the existence of children's plastic blocks (sic) "which I knew as Lego" when she first became aware of the Lego irrigation equipment in 1981 and this by seeing a display in respondent's North Rocks store. She then assumed that the same company made the irrigation equipment; and this because the name Lego was on that equipment and she was aware that companies diversify. Having then found the telephone entry, Lego Australia Pty. Limited, her assumption continued. She said, "....the word "Lego" caused only one thought.... the Lego building block company".

Mr. D. Conway, being aware of the existence of children's plastic building blocks "which I knew as Lego", was in November 1980 given a sprinkler on which was stamped the word Lego. Because that name was the same name as that by which he knew the building blocks and both items were colourful and made of plastic, he assumed the same company made the blocks and irrigation equipment. He also found the telephone entry mentioned above.

Mr. F.P. Punch also refers to being aware of children's building blocks "which I know as Lego" before, it seems, becoming aware of the name "Lego" on a sprinkler he had purchased. The similarity of names and that both items were made of plastic and that companies diversify, caused him to assume that the blocks and sprinklers were made by the same company. He found the telephone entry earlier referred to and continued so to assume.

In November 1981, 21 persons were sought at random in the streets by those acting for the applicant. They were asked a series of questions including -
"What do you associate "LEGO" with?

Have you ever heard of the word LEGO in any other context?"

All answered the first question in a way which could be said to be favourable to the applicant's case. The answers included replies such as "Building", "Little blocks kids put together", "Blocks that kids play with", "Kid's toys", "Children's building blocks", "A kid's construction game". With one exception - referring to tomato paste - none said they had heard of the word Lego in any other context. They were not asked if they had heard of "Lego irrigation" or "Lego irrigation equipment" or in any way referred to the use of Lego in any other context such as sprinklers. It does not appear from these affidavits where the questions were asked. Other evidence indicates the persons were all questioned in and around Sydney and suburbs, and save one, had Sydney addresses.

There is also evidence of the labelling of the applicant's products and the way in which they are referred to in advertisements, newspaper references and on television. In these references the emphasis is on the single word "LEGO". This emphasis is, in my opinion, to be discerned also in the television script and pictures produced therein, being part of advertisements for the applicant's products. I do not mean to imply that there is a total divorcing of the word "Lego" from the name of the applicant's products.

Senior Counsel for the applicant has stated that there is no claim of any fraudulent use by the respondent of the word "LEGO". Nor is there any claim that respondent has been guilty of passing off. The applicant based its case primarily on s.52 of the Act, seeking injunctive relief only and no damages.

The evidence for the respondent included reference to the history of the production of Lego irrigation equipment and the history of its origin in Israel and emergence therefrom to be marketed in other parts of the world. Already I have made reference to this. Various pamphlets and catalogues were tendered which showed the range available and how it could be used in various situations. There were also examples of attitudes by witnesses who were not deceived or misled. A Mr. Tribe, in an affidavit dated 10 November 1981, who had purchased irrigation equipment in that year, was already aware of the Lego building blocks; though it crossed his mind there might be some connection between those and the respondent's products, he dismissed that matter from his mind when he was informed that the irrigation equipment was made in Israel. A Vineyard Manager, Mr. T.P. Barber, in an affidavit of 10 November 1981, was also familiar with both the applicant's and respondent's products; but had never thought there was any connection between the irrigation equipment and the toys. Mr. D. Studds, in an affidavit of 10 November 1981, deposed to being the buyer of gardening and hardware products for Woolworths Limited for the Commonwealth of Australia with which company he had been employed for approximately five years. He is familiar both with the building blocks sold under the name "Lego" and the respondent's equipment. He has never thought that the Lego irrigation range of products was made by the makers of the Lego plastic blocks; the great difference in the nature of the two products made any connection between them, so far as he was concerned, inherently unlikely. During the period of his employment with Woolworths Limited, no enquiries had been made of him or directed to him from anyone in the Woolworths' organisation as to whether there was any connection between the two products. He has not been aware at any stage of any customer or potential customer being under such a misapprehension.

Mr. J. Fahim, in his affidavit of 10 November 1981, stated that he was a business proprietor carrying on the supply and installation of irrigation equipment at Castle Hill. He had heard of the Lego brand of children's plastic toys but never thought that the irrigation equipment, and the toys, were made by the same manufacturer. He had always understood they were made by different companies. Only on two or three occasions since April 1980 has he been asked by a client if there was any connection between the Lego brand of toys and the irrigation equipment though he has installed or sold Lego irrigation equipment to more than 100 clients. Mr. C. Vella, in an affidavit dated 10 November 1981, stated that he carried on business as a market gardener at Austral for the last 23 years, that he had purchased the Lego irrigation spray fittings and some small fan sprays and had known of the product since he first saw it demonstrated at Orange some five or six years ago. He was not aware of any other products by the name "Lego". He knew that Israel was renowned for its development of irrigation technology and he relied on this in making his decision to buy the equipment supplied by the respondent.

Mr. D.A. Robinson, in his affidavit of 10 November 1981, deposed to being the proprietor of Badgerys Creek Nursery, a business he has carried on for approximately three years. For that business he has purchased a range of Lego irrigation equipment. Though he knew of the range of children's plastic building blocks marketed under the name of Lego, the products were so different to him that the possibility of their being manufactured by the same company did not occur to him.

Mr. E.W. Selby, in an affidavit of 10 November 1981, stated that he carried on the business of cultivation of native orchids and plants under the name Plant Propagators for the last three years for which purpose he uses the Lego irrigation equipment. Though aware of the children's building blocks, he never did link the two different kinds of products owing to their very different nature.

Mr. A.J.P. Mulquiney, a greenkeeper, had purchased the irrigation equipment for some years but had never heard of any other products by the name "Lego".

Reference may be made to some of the arguments submitted by Counsel on behalf of their clients.

The applicant submits that the manner of trading and promoting the irrigation equipment by the respondent is such that it is misleading or deceptive or likely so to be by e.g. suggesting there is a common source for the two varieties of goods or some form of business or commercial connection between the respondent and the group of which applicant is a member. As a "secondary" claim, under s.53 of the Act, he submitted that the material of the respondent involved representations that sprinkler and irrigation equipment have the sponsorship or approval of the group of which applicant is a member. He cited Puxu Pty. Ltd. v. Parkdale Custom Built Furniture Pty. Ltd. 31 ALR 73; World Series Cricket Pty. Ltd. v. Parish 16 ALR 181 as to the relevant public. Further 60 telephone enquiries had been received by the applicant from various persons seeking information as to irrigation equipment; he referred to six witnesses called in his case said to have actually accepted the association between the goods marketed by respondent and applicant.

He submitted further that the applicant, to succeed in the case, needs to show only that a significant number of the relevant class ("a broad spectrum of both domestic and commercial users") have been or are likely to be deceived or misled; that it does not matter if some exceptions are proved, particularly if the exceptions relate to persons with specialised information. He referred to C.R.W. Pty. Ltd. v. Sneddon (1972) A.R. 17 at p.31; Snoid v. Handley (Full Court of Federal Court of Australia; unreported 11 November 1981). He submitted that the respondent's conduct here was not only likely to, but almost inevitably would deceive (consistent with the statement in the last cited case at p.10) a "significant" number of persons interested in the products of the applicant.

As to the passing off cases, though the applicant was not endeavouring to make a case thereon, he submitted that the authorities there depend so much on their own facts that it was not proposed to rely on them. Nevertheless he contended that in the passing off cases a similar test of a "significant number of persons" has been consistently applied. He referred to Rolls Razor Ltd. v. Rolls (Lighters) Ltd. (1949) 66 R.P.C. 137. In that decision where there were two dissimilar products, it was thought that the public would consider that they both claimed to be "Rolls Royce" rather than that they had a common trade origin. Counsel submitted to me that the central issue was whether a "significant" number of persons had been misled or deceived or were likely so to be.

Reverting to the facts, he said that a very considerable reputation, on the evidence, had been developed in Australia in respect of the name "LEGO" in the context of building blocks, having as their source, the applicant and associated companies and before there was any significance of the name "Lego" in the context of irrigation equipment.

Further, by reference to the marks on the various items and other methods of conveying to the public, if interested, the authorship of the respondent's equipment, applicant's senior Counsel said that the respondent was not marketing its equipment so as to make it plain that there was no association with the Lego toys; nor was there any evidence of any steps being taken at the point of sale by way of instructions to salesmen or otherwise to convey that there was no association. He contended further that there was no evidence before the Court that any person found their way to the applicant merely because of a telephone entry; but rather all the witnesses that were called were acquainted with the building blocks. Accordingly, it was submitted, the respondent could derive little comfort from reliance only on the entry as being the source of confusion; and further that there was no evidence to suggest that Lego irrigation equipment is universally pronounced with a long or a short "e" and the Lego children's toys with a short or a long "e" but it was a matter of personal use in either case. These last two submissions referred to an argument put forward by respondent's senior Counsel to which reference is made later.

Referring to Hornsby Building Information Centre Pty. Ltd. v. Sydney Building Information Centre Ltd. [1978] HCA 11; (1977-1978) 140 C.L.R. 216 at p.228 per Stephen J., Senior Counsel for respondent submitted that it was only when one reaches the conclusion that not only are consumers misled or likely to be so, but also that that is so because of the respondent's conduct in trade and commerce that the applicant was entitled to relief. Further, he submitted, that it is for the Court to determine whether the conduct is misleading or deceptive; the evidence of witnesses on that question being of little weight. See McWilliam's Wines Pty. Ltd. v. McDonald's System of Australia Pty. Ltd. [1980] FCA 159; 33 ALR 394 per Smithers J. at p.400 and per Northrop and Fisher JJ. at pp.405 and 412 respectively; Snoid v. Handley (supra) p.16.

He submitted that the public to be considered here are those members of the public who may be interested in purchasing Lego irrigation equipment; i.e. because they are the only people who could be misled or deceived in trade. They must, accordingly, be persons who know of the building blocks and the use of the word "LEGO" in connection therewith. He submitted that it was not sufficient that some persons might be "caused to wonder". He submitted that if persons were under a misconception not by reason of the respondent's conduct but because they made an erroneous assumption not induced by the respondent's conduct, applicant was not entitled to relief.

He submitted that it was significant that the use of the word "Lego" by the applicant and the respondent was in two different fields of trade and in respect of different products. He referred to Nugget Polish Company Ld. v. Harboro Rubber Company 29 R.P.C. 113 at p.142 per Neville J. He referred to the evidence, viz. that from 1974 to the end of 1979 the trade of the two products co-existed without any indication of confusion or misconception; without even the applicant becoming aware of the trade in the irrigation products. He referred to Kerly on Trade Marks 9th Edit. at p.386 under the heading "Right restricted to the particular goods"; and to Rolls Razor Ltd. v. Rolls (Lighters) Ltd. (1949) 66 R.P.C. 137 (Rolls) at pp. 139 and 140 contending, or referring as I understood him, to the difficulty, as he argued, for the applicant claiming a monopoly in the name "LEGO" outside its own products or business; and to Edge & Sons Ld.v.Gallon & Son 16 R.P.C. 509 at p.515, this being a case of concurrent reputation; and to Joseph Lucas Ld. v. Fabry Automobile Company Ld. 23 R.P.C. 33 at p.38. He submitted that the thrust of the advertising by the respondent is to emphasise either the long standing Israeli origin of the Lego equipment or its association with irrigation by e.g. the constantly used "drop of water" inside which are the words "Lego Irrigation - est. 1906" or both; that it was important, he submitted, that the word "Lego" was never used by itself; or if it was, then it was inextricably associated with or depicted with irrigation equipment, so that one could not fail to appreciate that "Lego", whenever used by the respondent is used in respect of that equipment. He argued that the Court should reach the conclusion that there was no likelihood of deception from any conduct of the respondent, firstly, because of the totally different nature of the product, secondly, their different function and, thirdly, the substantial difference in the likely customers though conceding that there could be some overlapping. He submitted that on the evidence the only conclusion open was that there was a common outlet for both products only in relation to Woolworths stores; but, even there, they were sold in different departments. Otherwise, it would seem, the two products are sold through different outlets. He commented on the dissimilarity in function and appearance of the products; and that the advertising is different in the sense that for the respondent it was centered on the product, that being irrigation sprinkler equipment; that if the word "Lego" stood alone, there may be those who would think of nothing but building blocks; whereas an aspect of the displays of the respondent was the reference to other words, i.e. "Lego irrigation equipment". He referred to the change in the telephone entry in relation to respondent, viz. that originally the occupation of British Lego Limited was stated to be "Toy manufacturer"; but later the occupation was omitted, that this, he claimed, was deliberate and for the purpose of creating a situation in the market place in which people may become confused so that applicant might found a case such as the instant case; and, further, that since the latter entry was under "L" yet respondent then knew of another Lego name, any confusion of the public was not caused by the respondent.

He contended further that it was significant that after executives in the applicant company had seen the respondent's equipment, the television representative sample of material showed that there had been a change in the pronunciation of the word "Lego" from being pronounced as with a long "e" as "Laygo" pre 1979 to "Lego" with a short "e" thereafter. He submitted that the evidence of the respondent's Managing Director, Mr. Brown, conceded that the change had taken place though not agreeing that this was done for any purpose, i.e. that there was no real decision to change. He joined issue with the argument that both applicant's and respondent's equipment could be described as cheap "products"; in particular, on his submission, the applicant's products were expensive toys and the irrigation equipment was only cheap if one regarded the items separately. In conclusion, he submitted that each product should be found to have a reputation in its own field; those fields were so far apart that no person acting reasonably could possibly conclude that the conduct of the respondent in putting on the market and marketing the range of irrigation equipment was misleading or deceptive.

There was a dispute as to the admissibility of certain evidence being in an affidavit of Ian Fyfe Crawford and being the words attributed to salesmen not employed by respondent. I consider that such evidence is not admissible against the respondent in the ordinary way, as not being statements by respondent's agents.

If the evidence were admissible on the basis of what has or might be expected to happen in practice in the market place when "honest" salesmen are disposed to give helpful information, I find such utterances are not part of any conduct for which the respondent could be said to be liable. Nor would I accept it as a fair sample of what might be expected to happen anyway. If the evidence is offered to show that the salesmen were themselves misled, it is inadmissible as hearsay; and in any case would, if admitted, I consider, be evidence not as to a state of mind of the salesmen but as to what they said. Whatever it may be, their state of mind could be proved by calling them to testify, but not in these circumstances, anyway, by relaying what these unnamed persons are supposed to have said.

Upon a consideration of the whole of the evidence, I find that the class of persons being members of the public who might be expected to see or use the parties' merchandise or experience their displays or advertisements therefor is wide. There would be included parents and persons associated with children on the one hand and with domestic gardens and horticultural pursuits on the other hand. Many of those who become aware of the particular irrigation equipment offered by the respondent would already know of the applicant's products.

Earlier I have referred to witnesses who gave evidence said to support that persons had been or might be likely to be misled or deceived and that the respondent's conduct was or could be responsible therefor. Evidence of deception is persuasive but may not be entitled to much weight. See e.g. McWilliams Wines Pty. Ltd. v. McDonald's System of Australia Pty. Ltd. [1980] FCA 159; 33 ALR 394 at e.g. p.399 where authorities are collected. A learned Judge at first instance had granted relief by injunction under s.80 of the Act. On appeal, Smithers J. at p.399 wrote -
"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 Ltd. (1962) RPC 265 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, at p.639, para 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 suceeding paragraph.

Reference may be made also to the dita of Lord Diplock in General Electric Co (of USA) v. General Electric Co Ltd (1972) 1 WLR 729 at 738; Wrottesley J in Concentrated Foods Ltd v Champ (1944) KB 342 at 350; and Lord Macnaghten in Payton & Co Ltd v Snelling, Lampard & Co Ltd (1901) AC 308 at 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. . . . . "
See also per Northrop and Fisher JJ. at pp.405 and 414 respectively. That it remains the task of the Court to decide whether persons will be misled, is also referred to in Snoid v. Handley (11 November 1981 unreported, Federal Court of Australia) as Counsel had argued. The particular evidence of the witnesses, anyway, before me is not, I find, of great cogency. They arrive at their state of mind at least, partly, by making an assumption to which I have referred. Though I do not attach too much importance to a too literal construction of words, nevertheless, if the witnesses chose their words carefully to assume is "to take for granted or without proof; suppose a fact" - see "The Macquarie Dictionary" at p.143. In my view, no great weight is to be attached to this part of the applicant's case. To some extent, the state of mind of the relevant witnesses, if they could be said to have been misled or deceived, is referrable to their own mental processes, not completely or solely to the actions of the respondent. If they are a qualitative sample of the public who may ponder this matter, I am of the view that they have not significantly advanced the case put forward for the applicant. Furthermore, if there has been confusion, there is not any evidence of it before 1977. There is evidence of telephone calls, approximately 60, over a period of a year, i.e. up to about November 1980. Deponents in the employ of the applicant state in their affidavits that they have "received a number of telephone enquiries about Lego irrigation equipment from members of the public." Notes were produced and tendered in evidence. I infer that those who telephoned had been assisted so to do because there was but one entry referring to any Lego in the telephone book at the relevant time. Whether the enquirers were misled or deceived or were in a stage of enquiring if the telephone entry indeed related to the respondent when really it was that of the applicant or were but confused or were caused to wonder, is difficult to evaluate; either from the wording quoted in the affidavits or from the notes made of those conversations. The evidence is not dissimilar to that referred to by Harman J. in Rolls at p.144 beginning "Thirdly. . . "

In my opinion, the applicant has shown that the word "Lego" by itself has come to have a significance in that it may be associated by appropriate members of the public with applicant's goods, e.g. those who have seen or may see or used or purchased or would be likely so to do because of some experience with them, the applicant's goods, being children's toys in the form of building blocks. There is, however, evidence that another section of the public who may not always be separate in the sense of there being no overlapping, is aware of the name of Lego irrigation equipment or "Lego" in association with irrigation equipment and the products marketed by the respondent in association with that name. Further, I consider that the depiction in the advertisement or displays by the respondent, including the word "Lego" is so inextricably associated with or offered in association with illustrations of sprinkler irrigation equipment including the device of a drop of water, that members of the public would not be likely so to be misled or deceived so as to attribute a common source to the children's blocks and the sprinkler irrigation material. The coincidence of the use of plastic material or that the objects which are marketed by the parties are small, does not seem to me to be of great moment; nor do I agree that they can be classed as "cheap". I am not satisfied by the evidence that applicant varied its telephone entry or pronunciation of Lego in the media in order to prepare for or further the case it might have against respondent.

I consider that only some of those persons who experience the advertisements and displays of the respondent would be aware of the applicant's products. Of those who are so aware, they would be well satisfied, anyway, by the difference in product kind that the articles do not have a common source or that there is a commercial connection of some kind between the parties. And there would be a proportion who would see the name "Lego, M. Lemelshtrich" or the reference to Israel on these displays and advertisements which would be sufficient to dispel any inclination they had to draw an inference as to common sources or commercial connection. The word "Lego" appears on some of the sprinkler equipment. I consider it not to be obtrusive or so prominent as to attract or induce people to accept such dissimilar products as having a common origin with applicant's products.

Persons who might ponder any similarity, even be caused to wonder as to a relationship between the products or who reached a stage of misunderstanding could not be said at that stage in their mental process to be misled or deceived. Thereafter, they would not, I find, be likely to be so misled or deceived.

If any person or a substantial number of persons did or are likely to draw some erroneous conclusion as to common source or commercial connection, they would not do so because of any conduct, so far as evidence refers to it, of the respondent or for which it is responsible.

No suggestion or submission is made that the respondent has set out to mislead or deceive the public or to take advantage of the "Lego" building block reputation. Had it done so, one might more readily accept that applicant might succeed, given that there was conduct potentially misleading or deceiving or likely to mislead or deceive.

I do not agree that in its trade or commerce, including its displays or advertisements, the respondent's conduct has been misleading or deceptive; or that it is "likely", using that word in the sense employed by Deane J. in Tillmanns Butcheries v. Australasian Meat Industry Employees' Union & Others [1979] FCA 84; 27 ALR 367 at p.382, to mislead or deceive.

Although applicant's case was mainly concerned to establish a right under s.52 of the Act, it did also rely, to some extent, on s.53 (it was said, as a "secondary claim") in particular on s.53(c) and s.53(d) of the Act.

I find that the applicant has not established that in trade or commerce the respondent's conduct was or has been misleading or deceptive or is likely to mislead or deceive contrary to s.52 of the Act; or that the respondent has in trade or commerce in connection with the supply or possible supply of goods or in connection with the promotion of the supply of goods represented that goods have a sponsorship or approval or that it has a sponsorship, approval, or affiliation that they or it do not have, contrary to s.53 of the Act.

The application is dismissed.

Applicant is to pay respondent's costs.

Exhibits may be returned.

Exhibit "AS" is to remain with the file in a sealed envelope marked "Exhibit AS - Confidential" until all Exhibits are uplifted.

The order made during the hearing as to the confidentiality to attach to paragraphs 4 and 5 of the affidavit of Kjeld Kirk Kristiansen dated 3 November 1981 is to continue until further order.

SCHEDULES 1 AND 2
SKETCHES OMITTED