Re Australian Telecommunications Corporation v Hutchison Telecommunications (Australia) Limited and Hutchison Communications (Australia) Pty Ltd [1990] FCA 24 (8 February 1990)

FEDERAL COURT OF AUSTRALIA

Re: THE AUSTRALIAN TELECOMMUNICATIONS CORPORATION
And: HUTCHISON TELECOMMUNICATIONS (AUSTRALIA) LIMITED and
HUTCHISON COMMUNICATIONS (AUSTRALIA) PTY LTD
No. V G378 of 1989
FED No. 21
Trade Practices
(1990) ATPR para 41-008

COURT

IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY
GENERAL DIVISION
Woodward J.(1)

CATCHWORDS

Trade Practices - misleading or deceptive conduct - passing off - similarity of new trading name "Hutchison Telecoms" to well established name "Telecom" - corporations in competition - whether "telecom" a descriptive word - whether potential clients likely to be misled or deceived - interlocutory injunctions - balance of convenience.

Trade Practices Act 1974 ss 52 and 53

HEARING

MELBOURNE
8:2:1990

Counsel for the Applicant: Dr J McL Emmerson QC

and Mr N J Young

Solicitors for the Applicant: Mallesons Stephen Jaques

Counsel for the Respondents: Mr A C Archibald QC
and Mr L Glick

Solicitors for the Respondents: Baker & McKenzie

ORDER

The application for interlocutory injunctions be dismissed.

The applicant pay the respondents' costs of the application.

Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

DECISION

This is an application for interlocutory injunctions to restrain the respondents from

"(a) advertising or promoting itself, or goods
or services supplied by it, under or by
reference to the name or style "Hutchison
Telecoms" or any name or style including
the words "Telecoms" or "Telecom", or any
name or style deceptively similar thereto; or
(b) advertising, displaying for sale,
offering for sale, marketing, supplying
or selling communications equipment under
or by reference to the name or style
"Hutchison Telecoms" or any name or style
including the words "Telecoms" or
"Telecom", or any name or style
deceptively similar thereto."

2. The action has been brought under ss 52 and 53 of the Trade Practices Act 1974, and claims are also made at common law for passing off and infringement of trade mark. The background to the action is provided by the competitive businesses of the parties in the fields of telephone paging and cellular or mobile phones.

3. The applicant has since 1975 carried out its functions, including its trading activities, under the name "Telecom Australia" which is commonly shortened to "Telecom". I have no doubt that by this short name the applicant has become well known to the Australian public and it has acquired a distinct and valuable reputation which is associated with the name "Telecom", and with a logo which usually accompanies the word in written use on advertisments, brochures, letterheads and products. This logo is a stylized white T, split down the middle, on a circular gold background.

4. In recent times the applicant has become very conscious of the need to advertise its various services and the products which it sells. A number of these products and services are sold under combination titles such as "Telecom Commander", "Telecom Attache", "Telecom Faxstream" and "Telecom Plus". The applicant has also entered into several joint ventures with other organizations, and some of these are known as "Telecom Technologies Pty Ltd", "Telecom Hewlett-Packard Pty Ltd" and "Telecom Messagetech Pty Ltd".

5. The corporate structure of which the respondents form a part is quite complex and I shall not attempt to record it in full. At the base of the structure is Hutchison Whampoa Limited, a very large and successful Hong Kong company. One of that company's wholly-owned subsidiaries is Hutchison Telecommunications Limited. That company, through another joint venture company, is involved in the business of selling cellular telephones, and the provision of services for cellular telephones, in Hong Kong. The same company is also concerned in a telephone paging business.

6. In 1988, Hutchison Telecommunications Limited commenced a policy of overseas expansion. One aspect of this was its incorporation of the second respondent to provide a basis for operations in Australia. The second respondent entered into a joint venture agreement with two Australian companies and for this purpose the first respondent was incorporated. The second respondent now holds 60% of the shares in the first respondent and the other two local companies hold 40% between them. It is not necessary to differentiate between the respondents for the purposes of this judgment.

7. In recent years Hutchison Telecommunications Limited has used the words "Hutchison Telecom" as a trading name for its activities in Hong Kong. Two of its subsidiary companies are known as "Hutchison Telephone" and "Hutchison Paging".

8. It was in the later part of 1986 that Hutchison Telecommunications Limited began to refer to itself internally as "Hutchison Telecom". In early 1987 a public relations agency was engaged to develop materials for a new corporate image for the company. Its recommendations included the use of the term "Hutchison Telecom" and the choice of letterheads, logos, colours and catch-phrases. By early 1987 a decision had been taken to use the word "Telecom" rather than "Telecommunications" as the normal shortened form for the products and services provided by the company. The decision was made because the word "Telecom" had become fashionable in the telecommunications industry, it was easier to pronounce than the much longer word and had become an internationally accepted abbreviation for that word.

9. In this connection I note that the latest (1989) edition of the Oxford English Dictionary shows "telecom" as a colloquial abbreviation of the longer word. It also refers to the plural form "telecoms". It shows the earliest usage of the term as occurring in 1963 and 1964; and by 1981 the 'Economist' was saying "every big telecoms company is evaluating bubbles...for use in private branch exchanges." It also states that British Telecom is the popular name of British Telecommunications, a public corporation providing telecommunications and data processing services, which was separated from the Post Office in 1981.

10. Other dictionaries, including the Macquarie Dictionary, simply show "telecom" as a synonym for telecommunication, or as "short for" telecommunication. In the same way, "telecoms" is short for the plural form of the longer word.

11. I am satisfied that a number of public utilities and public companies throughout the English-speaking world, and elsewhere, now use the words Telecom or Telecoms as part of their names and as descriptive of their activities. These include British Telecom and Northern Telecom, a Canadian-based company, which both operate in Australia, though the former is not yet very active in Australia and the latter is commonly known as "Nortel". Other examples given in evidence were France Telecom, Hong Kong Telecoms, Swedish Telecom, Singapore Telecom, ANT Bosch Telecom, United Telecom, Japan Telecom, Racal Telecom, Matra Telecom, CSE Telecom and Lambic Telecom.

12. To return to the history of the respondents, in April 1989 applications were lodged with the Australian Trademarks Office for the registration of the trademark "HUTCHISON TELECOM". At about the same time applications were also made to the Corporate Affairs Commissions of all States and Territories in Australia for registration of the business name "Hutchison Telecom". The name was accepted in five of the eight States and Territories, but rejected in three of them. As a result of those rejections, which were based upon the similarity of the name sought to that of the applicant, each of the applications was amended to seek registration of the business name "Hutchison Telecoms". This time all eight applications were successful.

13. In the middle of the year the respondents were negotiating with the applicant about a possible joint venture in the field of paging. They did not draw the applicants attention to their intended use of the words "telecom" or "telecoms" in their title. However, in September 1989 a marketing campaign commenced to bring the name "Hutchison Telecoms" to the attention of the Australian public. This campaign first came to the attention of the applicant in early October, and a letter demanding that the use of the word "telecoms" should cease, was sent to the respondents on 19 October. On 25 October the respondents replied, to the effect that they would not give up their use of the name "Hutchison Telecoms", and on 4 December 1989 these proceedings were commenced.

14. Although the applicant sought to suggest that the respondents had, in a number of ways, tried to place themselves as close to the applicant as possible, in order to benefit from its reputation and to gain an unfair commercial advantage, I am not satisfied as the evidence stands at present that the respondents had any such intention. I think that the respondents simply wanted to use in Australia the same name which they were, very sensibly, using in the affairs of their parent company in Hong Kong and elsewhere. They only added the final "s" because they were unable to get appropriate registration throughout Australia without making that concession.

15. I shall deal shortly with some of the specific allegations made on behalf of the applicant as pointing to a lack of good faith and an intention on the part of the respondents to have the first respondent identified in the public mind with the applicant.

16. However, it is convenient to deal first with the question of the respective logos of the applicant and the respondents. In my view the respondents' logo is so different from the applicant's that, far from being a point of identity as was suggested by counsel for the applicant at the outset of the hearing (though not later repeated), it is in fact a clear distinguishing feature. The respondents' logo is a very square "H" in which a "T"-shape can also be identified. The overall effect is very square, and it is normally printed in a bright blue colour. As I have already indicated, the applicant's logo is circular, is basically gold in colour and has a white shape on it which is very clearly the letter 'T'. In my view, no-one would suspect from looking at the logos that there was any relationship between the applicant and the respondents.

17. This is, of course, relevant to the basic issues to be decided in this case. It is also relevant to questions of intention and good faith. In my view, if the respondents had wanted to mislead potential users of their goods and services into thinking that they were in some way connected with the applicant, they would not have chosen a logo so different from the applicant's. They could, I believe, have moved considerably closer before bringing their logo into serious question.

18. The same point can be made of the repondents' 'corporate livery' - the colour scheme of blue, with dark grey printing, used in the letterheads, packaging and in advertising material. This livery was designed primarily for the Hong Kong company, but is apparently used wherever Hutchison subsidiaries operate. Even more significant is the emphasis placed on the word "Hutchison" in all the advertising material. Although the company is normally referred to as "Hutchison Telecoms", this is quite often contracted to "Hutchison".

19. A typical brochure advertising Hutchison Telecoms Pagers concludes with the following information about the first respondent

"Hutchison Telecommunications (Australia)
Limited is the Australian flagship (Australian
owned and operated) subsidiary of Hutchison
Telecommunications Limited, a world leader
specialising in advanced wireless mobile
technology and communications.
Hutchison Telecoms is one of the largest
paging and cellular network and system
operations in Asia with major activities in
Hong Kong, Thailand, Japan and Taiwan, as well
as in the United Kingdom and North America.
Hutchison Telecoms is involved in all
aspects of Mobile and Data Communications
including Mobile Data Satellite Services,
Tracking Systems, Information Services and
Data Gateways. As a world leader, Hutchison
Telecoms is taking communication technology
into the future with CT2/Telepoint and the
Personal Communication Network.
Through Hutchison Telecoms' network of
offices in Brisbane, Gold Coast, (formerly
Bell Page), Adelaide, (formerly Answer Page),
and Perth, (formerly Aust Page), as well as
offices and service facilities in Sydney and
Melbourne, Hutchison Telecoms provides you
with an Australia-wide service that
encompasses paging, cellular phones 24-hour
and after hours answering facilites.
Hutchison is committed to providing you
with an Australia-wide, total communications
service that is second to none. When you
compare our service with any other you'll
discover why Hutchison Telecoms will give you
the winning edge."

20. The applicant has particularly criticized one phrase in this description - 'Australian owned and operated'. The respondents admit that this is inaccurate since the Australian partners in the first respondent, which controls the second respondent, hold only 40% of the shares. However I do not attach any significance to this mis-statement.

21. The balance of the description is accurate and demonstrates two things - first, that Hutchison Telecoms is an abbreviation of, and trade name for, Hutchison Telecommunications Ltd; and, secondly, that the company is part of an international group of companies. I do not believe that any intending client reading this brochure, or others like it, could be left with the impression that Hutchison Telecoms had any affiliation, or other connection, with the applicant.

22. In saying this I take into account that people acquiring the respondent's goods and services are not just the average shopper - the man or woman in the street. Such sophisticated and costly equipment would typically be purchased by a substantial commercial, professional or governmental organization. And the person making the decision would be expected to have, or to acquire in the course of inquiry, some knowledge of the industry and the participants in it. This is particularly so because it is not just a purchase of equipment which is being made. The client concerned is entering into a continuing commercial relationship with the provider of a service.

23. Further to the question of the good faith of the respondents, the applicant relied upon their failure to inform it of their intentions about the use of the name when they were negotiating the possible joint venture in the middle of 1989. There is something in this point but, in my view, not a great deal. The respondents no doubt anticipated that the applicant would object to the usage. They were wise not to make any disclosure before they had achieved general registration of the name "Hutchison Telecoms". If they had made earlier disclosure, there would have been an unnecessary and more difficult dispute over the words "Hutchison Telecom". Having achieved registration of the former name, the respondents could have notified the applicant of the fact, but this might have been seen as a recognition of the applicant's argument for monopoly in the use of the word "Telecoms". At worst, the respondents acted as shrewd businessmen would have done in the circumstances; there was nothing dishonourable in their conduct, in my view.

24. The applicant also relied upon a brochure headed "Cellular Phones" to illustrate two further complaints. This brochure also makes use of the blue "livery" colour for the Hutchison logo and its overall impression, and finishes with the same description of the first respondent's corporate circumstances as that quoted above. However it concludes with the words "Get the Message" in bold type.

25. This expression has been used by the applicant for some time, although I am not satisfied that it is identified with the applicant in the public mind. There is affidavit evidence before me exhibiting a statement from an employee of the well-known advertising company employed by the respondents in preparing their advertising campaign, that the expression was arrived at independently of any other source. I have no reason to doubt the truth of this statement; the expression could easily occur to more than one person in the context of paging systems and celular phones. But even if the slogan had been copied, deliberately or unconsciously, from the applicant's usage of it, I would not attach much importance to it. It is, at most, a straw in a very fitful wind.

26. The applicant's other complaint about this brochure arose from the first section of the brochure, which read,

"KEEPING YOU IN TOUCH
A Hutchison cellular mobile phone keeps
you in touch with the rest of the world.
Your cellular telephone is equipped with
a unique national number so provided you're
within a cellular service area, you can be
found wherever you are in Australia.
What's more, your caller will not have to
prefix your number with a code...or even know
where you are.
The system finds you]
Your cellular phone connects you with
anyone, anywhere, via the MobileNet cellular
network.
You can even re-direct incoming calls to
any other number or to a Hutchison Telecoms
24-hour answering service. That way your
mobile phone will be answered even when you're
not there]
Get the message."

27. The applicant objected to the sentence, "Your cellular phone connects you with anyone, anywhere, via the MobileNet cellular network". It is not disputed that the MobileNet network is a service provided by the applicant to all users of cellular phones. It is a service for which the applicant presently holds a monopoly and into which all providers of mobile telephones must link if they wish to communicate beyond their own immediate network.

28. In these circumstances, and bearing in mind the knowledge to be expected of most potential clients of the respondents, I am unable to see anything questionable in first respondent's choice of words. It could have referred to "the Telecom MobileNet network", but that would hardly have met the applicant's concerns. In my view there is nothing in this argument or in a parallel argument relating to another brochure, paging systems and the applicant's AnswerNet network.

29. The applicant also complained about two short television advertisements which were part of the repondents' publicity campaign. Each showed a situation in which urgent contact was necessary; one of the protagonists in each case had the respondents' paging service and the other did not. The advertisements showed the title "Hutchison Telecoms" and the company logo; they also focussed on the paging device, where the words "Hutchison Paging" were clearly visible. The voice-over in each case said,

"Hutchison, a world leader in
communications, now in Australia. Get the
message. Get the business."

30. In my view, no potential client, seeing these advertisements, would have thought that the company being advertised had any connection with the applicant.

31. Whether considered separately or together, all these points raised by the applicant have failed to persuade me that there is even an arguable case, requiring closer consideration, that the respondents have acted in bad faith or have deliberately tried to establish their business in Australia by suggesting, as Counsel for the applicant submitted, that they are "a branch of Telecom or a joint venture with Telecom" or "trying to get as close as possible to Telecom and their advertising is calculated to achieve this result".

32. However that, of course, is not the end of the matter. The applicant may be able to establish that it has in effect acquired a monopoly right in the use of "Telecom" or "Telecoms" as part of a business name, and that any other company using either word as part of its title, however innocently, would or could be guilty of misleading conduct.

33. Each case such as this must be decided on its owm particular facts as well as those applying generally to the use of the words in question. It is well established that a trader who uses descriptive words as a trade name must accept the risks of confusion which attend that course. I think this applies even in a case, such as the present, where the trader is early in the field with a name, derived as an abbreviation of a common word, which develops in parallel as a proprietary name and a widely used descriptive word.

34. On the question of principle, Stephen J said, in Hornsby Building Information Centre Pty Ltd v Sydney Building Information Centre [1978] HCA 11; (1978) 140 CLR 216 at 229-30,

"There is a price to be paid for the
advantages flowing from the possession of an
eloquently descriptive trade name. Because it
is descriptive it is equally applicable to any
business of a like kind, its very
descriptiveness ensures that it is not
distinctive of any particular business and
hence its application to other like businesses
will not ordinarily mislead the public. In
cases of passing off, where it is the wrongful
appropriation of the reputation of another or
that of his goods that is in question, a
plaintiff which uses descriptive words in its
trade name will find that quite small
differences in a competitor's trade name will
render the latter immune from action. (Office
Cleaning Services Ltd v Westminster Window and
General Cleaners Ltd (1946) 63 RPC 39, at 42
per Lord Simonds.) As his Lordship said
(1946) 63 RPC at 43) the possibility of
blunders by members of the public will always
be present when names consist of descriptive
words - 'So long as descriptive words are used
by two traders as part of their respective
trade names, it is possible that some members
of the public will be confused whatever the
differentiating words may be.' 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 and might even deter other from pursuing
the occupation which the words describe.
If this be so in the case of passing off
actions the case of s 52(1), concerned only
with the interests of third parties, is a
fortiori. 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. Given that a name is no more
than merely descriptive of a particular type
of business, its use by others who carry on
that same type of business does not deceive or
mislead as to the nature of the business described."

35. See also Jenkinson J in Volt Australia Ltd v Directories (Aust) Pty Ltd [1985] FCA 160; (1985) 7 FCR 333 at 335-7.

36. I note, in passing, that if the respondents had chosen to use the title "Hutchison Telecomms" their defence would have been stronger than it is. But in view of the fact that their organization is known elsewhere as "Hutchison Telecom" and that "telecoms" is a word in common usage, it it not surprising that they opted for the usual spelling.

37. Similarly, the applicant's argument would obviously be stronger in the case of the use of "Telecom" than when the plural form is used. It would also be stronger, in my view, if the word "Telecom" or "Telecoms" were the first word of the title. Thus "Telecom Hutchison" would, I believe, be far more likely to mislead than "Hutchison Telecoms". This is because, whenever the applicant uses the word "Telecom" as part of the trade name for a product, service or joint ve nture, it always puts it first, thus giving it a possessive or proprietary flavour - as in "Telecom Commander" and "Telecom Technologies Pty Ltd". The word "Telecoms" in "Hutchison Telecoms" looks just like an abbreviation for Telecommunications - as, of course, it is. Here it is the word "Hutchison" which has the possessive flavour.

38. As I have said, each case must be treated on its merits, and in the present case I am much influenced by the following facts:

(a) the word "telecom" is now in common usage as
an abbreviated alternative to "telecommunications";
(b) the use of the word in its singular form, in
the title "Hutchison Telecom", originated outside Australia
as the convenient trade name of an established company with
an international reputation;
(c) the change to the plural form was accepted by
the respondents in order to distance the first respondent
from the applicant;
(d) its logo, corporate livery and published
descriptive material about the company, in my view, make
clear its separate identity, unrelated to the applicant; and
(e) the technical and expensive nature of the
goods and services provided by the respondents make for a
correspondingly rather discerning type of potential client.

39. For these reasons I believe that the applicant is unlikely to succeed in its present action although, because of the applicant's strongly established reputation in the name "Telecom" (but not in the plural form), I am unable to say that there is not a serious question to be tried.

40. I turn now to the question of balance of convenience. It has been argued for the applicant that its use of the name "Telecom" is firmly established and well recognized, while the respondents are newly on the Australian scene. The applicant therefore has more at stake than the respondents, who could with no great hardship, revert to the use of the full title "Hutchison Telecommunications". Where appropriate, they could also continue to use "Hutchison Paging" for that branch of their business. In this way, their advertisements to this time would not be wasted and there would be no need to make drastic changes to their advertising campaign. Any harm to the respondents would only be in the short term and their damages would be fairly easily quantifiable if they were ultimately successful.

41. I think there is some substance in these arguments, but the respondents make a number of cogent points in reply. In particular they say that they have spent some $1m in three months on their advertising campaign and that if they had to delete all reference to "Hutchison Telecoms" on advertisements, brochures, letterheads, packaging and products it would be very expensive and time-consuming and a source of annoyance to many people with whom they do business, particularly those who had to return products and written matter. The name would be tarnished by such bad publicity if they were ultimately vindicated in their use of it.

42. In addition, the respondents point to some delay on the part of the applicant in bringing proceedings and I note also the rejection by the applicant of an opportunity to treat this application as the trial of the action.

43. It appears that the applicant first knew of the respondents' publicity campaign not later than 3 October, but no letter of demand was sent until 19 October. The undertakings demanded were rejected on 25 October, but proceedings were not issued until 4 December.

44. While these delays should not, in my view, be seen as disentitling the applicant to interlocutory relief, they do add some weight to the respondents' arguments - particularly when it is realized that the applicant used the time from 25 October to the hearing on 19-21 December to prepare voluminous material, but then rejected the Court's invitation to supplement that material if necessary and convert the hearing to a trial of the action, to be continued on that day (20 December) and concluded in early February.

45. The only significance of these circumstances is that the use of the challenged name by the respondents has continued for over four months, and in my view the action ocould now be brought to fairly speedy trial - which could have been even speedier if the applicant had wished.

46. However the most important factor in the present case, so far as the balance of convenience is concerned, is that I am not satisfied that any relevant members of the public are in danger of being misled by the respondents. There is certainly no evidence before me of actual misleading or even confusion. Nor am I persuaded that the applicant is presently suffering any damage as a result of the respondents' campaign.

47. The applicant alleges that it will suffer significant long-term harm if the respondents and others are permitted to use the words "Telecom" or "Telecoms" in business names. I understand this concern, but any question of long-term harm arising from the present case can be determined at the trial of the action. I am unable to see such harm occurring if the respondents continue to be careful in their use of the word "Telecoms", as I believe they have been so far.

48. With regard to other possible cases of the use of these words, in which the applicant claims an effective monopoly, I need only say that nothing I have said in the particular circumstances of the present case should give comfort to any other trader who might be tempted to choose a name deceptively similar to the applicant's "Telecom Australia" or "Telecom" in the hope of benefiting from the similarity.

49. In the view I take of this matter, even if the applicant should ultimately be successful in its action, there was no good reason for it to bring these interlocutory proceedings. The main impact of the respondents' advertising campaign had been felt before the interlocutory proceedings were brought, and the respondents were at all times prepared to facilitate an early trial of the action. The interlocutory proceedings have served no useful purpose and, in the exercise of my discretion, I shall order that the applicant pay the respondents' costs of these proceedings.

50. For the reasons I have given, the application will be dismissed with costs.