Organic Marketing Australia Pty Limited v Woolworths Limited [2011] FCA 279 (25 March 2011)

Last Updated: 25 March 2011

FEDERAL COURT OF AUSTRALIA

Organic Marketing Australia Pty Limited v Woolworths Limited

[2011] FCA 279

Citation:		Organic Marketing Australia Pty Limited v Woolworths Limited [2011] FCA 279
Parties:		ORGANIC MARKETING AUSTRALIA PTY LIMITED (ACN 098 168 202) and PURPLEBASS PTY LTD AS TRUSTEE OF THE WARD FAMILY TRUST (ACN 118 335 907) v WOOLWORTHS LIMITED (ACN 000 014 675)
File number(s):		NSD 303 of 2011
Judge:		KATZMANN J
Date of judgment:		25 March 2011
Catchwords:		INTERLOCUTORY INJUNCTION – serious question to be tried – balance of convenience TRADE MARKS – infringement – registered composite mark – sign – use as a trade mark – ordinary English expression – whether descriptive only – whether deceptively similar to registered mark
Legislation:		Trade Marks Act 1995 (Cth) ss 17, 41, 92(4)(b), 120, 126 and 191 Competition and Consumer Act 2010 (Cth) Sch 2 ss 18, 29, 232 and 236
Cases cited:		Australian Broadcasting Corporation v O’Neill [2006] HCA 46; (2006) 227 CLR 57 Beecham Group Laboratories Ltd v Bristol Laboratories Pty Ltd [1968] HCA 1; (1968) 118 CLR 618 American Cyanamid Co v Ethicon Ltd [1975] UKHL 1; [1975] AC 396 Instyle Contract Textiles Pty Limited v Good Environmental Choice Services Pty Ltd (No. 2) [2010] FCA 38 Davis v Commonwealth [1988] HCA 63; (1988) 166 CLR 79 Nature’s Blend Pty Ltd v Nestlé Australia Ltd (2010) 272 ALR 487 Registrar of Trade Marks v Woolworths [1999] FCAFC 1020; [1999] 93 FCR 365 Optical 88 Limited v Optical 88 Pty Limited (No. 2) [2010] FCA 1380 de Cordova v Vick Chemical Company (1951) 68 RPC 103 E & J Gallo Winery v Lion Nathan Australia Pty Ltd (2010) 241 CLR 144 Virgin Enterprises Ltd v Virgin Home Loans Pty Ltd [2000] FCA 1175 Interpharma Pty Ltd v Commissioner of Patents [2008] FCA 1498; (2008) 79 IPR 261 Caravelle Investments v Martaban [1999] FCA 1505; (1999) 95 FCR 85
Date of hearing:	22 and 23 March 2011
Place:	Sydney
Division:	GENERAL DIVISION
Category:	Catchwords
Number of paragraphs:	74
Counsel for the Applicants:	Mr I Wylie
Solicitor for the Applicants:	Thomsons Lawyers
Counsel for the Respondent:	Mr A Bannon SC with Mr M Hall
Solicitor for the Respondent:	Mallesons Stephen Jaques

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION	NSD 303 of 2011

BETWEEN:	ORGANIC MARKETING AUSTRALIA PTY LIMITED (ACN 098 168 202) First Applicant PURPLEBASS PTY LTD AS TRUSTEE OF THE WARD FAMILY TRUST (ACN 118 335 907) Second Applicant
AND:	WOOLWORTHS LIMITED (ACN 000 014 675) RESPONDENT

JUDGE:	KATZMANN J
DATE OF ORDER:	25 MARCH 2011
WHERE MADE:	SYDNEY

THE COURT ORDERS THAT:

1. The application for an interlocutory injunction be refused.
   

Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
The text of entered orders can be located using Federal Law Search on the Court’s website.

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION	NSD 303 of 2011

BETWEEN:	ORGANIC MARKETING AUSTRALIA PTY LIMITED (ACN 098 168 202) First Applicant PURPLEBASS PTY LTD AS TRUSTEE OF THE WARD FAMILY TRUST (ACN 118 335 907) Second Applicant
AND:	WOOLWORTHS LIMITED (ACN 000 014 675) RESPONDENT

JUDGE:	KATZMANN J
DATE:	25 MARCH 2011
PLACE:	SYDNEY

REASONS FOR JUDGMENT

Background

1. On 6 March 2011 the respondent (“Woolworths”) launched a major new nationwide advertising campaign. The campaign featured the well-known and respected chef, Margaret Fulton. The campaign was promoted through a 30-second television commercial, newspaper and magazine advertisements, in-store marketing, a catalogue distributed to households and on Woolworths’ website. In the television commercial Ms Fulton pushes a shopping trolley through the fresh produce section of a Woolworths supermarket, declaring:

I’m proud as punch to bring my Honest to Goodness family meals to Woolworths.

2. Two large promotional displays are shown which include a life-sized cardboard cut-out (“standee”) of Ms Fulton and a logo carrying the words “Margaret Fulton’s Honest to Goodness Family Meals”. Ms Fulton’s name appears in an overarching banner above the words “Honest to Goodness” which, in turn, appear above the words “Family Meals”. “Honest to Goodness” appears in a much larger font, “Family Meals” in the smallest.

Ms Fulton goes on to state:

Honest refers to prices. Honest to the last cent.
My price includes all the ingredients; nothing to add from the pantry.
Goodness means it’s good for your family.
And when I say it serves four I mean four decent serves.

4. She then walks up to the standee and declares:

I’m not that short.

5. The television commercial was broadcast throughout Australia between 6 March and 13 March. The campaign is designed to run at least until the end of 2011 with hopes of extending it beyond that time.
6. The first applicant (“Organic Marketing”) is the registered owner in Australia of a composite trade mark consisting of the words “Honest to Goodness” and the image of a tulip stylised with leaves. It appears as an illustration:

7. The trade mark is registered for the following goods and services:

Class: 29 Meat, poultry, preserved, dried and cooked fruits and vegetables; herbs, edible weeds, nut pastes, edible fats and oils, jellies, jams, fruit sauces, eggs, milk, milk products, non-dairy milks, tahini and other snack foods in this class

Class: 30 Coffee, artificial coffee and coffee substitutes, tea, herbal teas, flour, muesli, honey, sauces, pasta

Class: 31 Nuts, grains, beans, seeds, malt, sesame and nut and grain mixes

Class: 35 Retailing and wholesaling of health foods including nuts, grains, cereals, health foods, confectionery, vitamins, minerals, herbal products, fruit and vegetables, organic meats, poultry and eggs; none being wholesale and retail through vending machines

8. It is, I think, notorious that these are goods also sold by Woolworths.
9. The words alone were not registered as a trade mark and Woolworths’ campaign does not use the stylised font or the tulip image. This, in part, informs the controversy that lies at the heart of this case.
10. On 16 March 2011 the applicants applied to the Court for various orders including a permanent injunction, damages or an account of profits and corrective advertising. They also seek interlocutory relief. That relief takes two forms: an order restraining Woolworths, directly or by its directors, officers, employees, agents or otherwise, from infringing the registered mark by using the words and mark “HONEST to GOODNESS” or “Honest to Goodness” and an order requiring Woolworths to forthwith remove all infringing conduct from its website and cancel registration of its domain name.
11. Woolworths resists the application and has filed a cross-claim seeking the removal of the applicants’ trade mark from the register on a number of grounds. One of those grounds is that the applicants have not used the mark in its stylised form for a continuous three-year period.
12. This judgment is concerned with the application for interlocutory relief. The applicants seek the following orders (without alteration):
    1. An order restraining the respondent, until further order, either directly or by its directors, officers, employees, agents or otherwise, from infringing the applicant's Australian registered trade mark number 956076 in classes 29, 30, 31 and 35) (Registered Mark) by using the words and mark “HONEST to GOODNESS” and “Honest to Goodness” or any other words or marks which are substantially identical or deceptively similar to them, and from otherwise representing that it or its products or services have the sponsorship or approval of or are otherwise affiliated with the applicant, including without limitation restraining it from using those words:

(a) as part of any logo or otherwise in television commercials, brochures, in¬store promotional materials and other signage in the fruit and vegetable sections, dried fruit and nuts sections and checkout sections of its retail stores;
(b) in any catalogue or other ex-store promotional materials;
(c) on its website www.woolworths.com.au;
(d) in the respondent's domain name woolworthshonesttogoodness.com.au , or
(e) in any keyword, adword or Google or other search provider sponsored link (together Infringing Conduct).

2. An order that the respondent at its cost forthwith:

(a) remove all Infringing Conduct from its website www.woolworths.com.au;
(b) cancel registration of its domain name woolworthshonesttogoodness.com.au.

13. Through their counsel the applicants offered the usual undertaking as to damages. The usual undertaking is defined in Practice Note CM 14 as an undertaking:

(a) to submit to such order (if any) as the Court may consider to be just for the payment of compensation, to be assessed by the Court or as it may direct, to any person, whether or not a party, adversely affected by the operation of the interlocutory order or undertaking or any continuation (with or without variation) thereof; and

(b) to pay the compensation referred to in (a) to the person there referred to.

14. The application is not accompanied by a statement of claim but supported by an affidavit. Consequently, the precise causes of action are not pleaded. The application recites, however, that it is brought pursuant to ss 120, 126 and 191 of the Trade Marks Act 1995 (Cth) (“Trade Marks Act”), and ss 18, 29, 232 and 236 of Schedule 2 to the Competition and Consumer Act 2010 (Cth) (“CCA”). Section 120 of the Trade Practices Act 1974 (Cth) (“Trade Practices Act”) is concerned with infringements of registered trade marks and s 126 sets out the kind of relief the Court may grant in an action for infringement of a registered trade mark. Section 191 confers jurisdiction on this Court with respect to matters arising under the Trade Marks Act. Schedule 2 to the CCA comprises the Australian Consumer Law (“ACL”). Section 18 prohibits misleading or deceptive conduct in trade or commerce and replaces the former s 52 of the Trade Practices Act. Save that its scope extends now to both corporations and natural persons, it is no different from s 52. Section 29 (formerly s 53 of the Trade Practices Act) prohibits the making of certain false or misleading representations in connection with the supply or possible supply of goods or the promotion of it. Section 232 (formerly s 80) sets out the power of the court to grant an injunction (the power to grant an interim injunction previously in s 80(3) is contained in s 234). Section 236 confers on a person who suffers loss or damage a right to recover from the wrongdoer.
15. The representations the applicants contend have been made are that the Woolworths’ goods “have sponsorship” or approval from the applicants, which is false, contrary to s 29(1)(g) of the ACL and/or that Woolworths has the applicants’ sponsorship, approval or affiliation, which is false, contrary to s 29(1)(h).
16. In short, therefore, the action is concerned with an alleged infringement of a registered trade mark, a contravention of the prohibition against misleading or deceptive conduct in trade or commerce and/or the making of a false or misleading representation. The parties conducted the case on the premise that the claim under s 29 of the ACL would stand or fall with the s 18 claim and no submissions were made about it. Before the proceeding was instituted, the applicants foreshadowed in correspondence with Woolworths an action in tort for passing off but I was asked not to consider it for present purposes and I do not.

General principles

17. In Australian Broadcasting Corporation v O’Neill [2006] HCA 46; (2006) 227 CLR 57 (“O’Neill”) at [19] Gleeson CJ and Crennan J described “the organising principles” to be applied in all applications for an interlocutory injunction in the traditional way:

[A] court will ask whether the plaintiff has shown that there is a serious question to be tried as to the plaintiff’s entitlement to relief, has shown that the plaintiff is likely to suffer injury for which damages will not be an adequate remedy, and has shown that the balance of convenience favours the granting of an injunction.

18. Nevertheless, their Honours also agreed with the explanation of those principles by Gummow and Hayne JJ at [65]-[72] and with their reiteration of the doctrine of the court in Beecham Group Laboratories Ltd v Bristol Laboratories Pty Ltd [1968] HCA 1; (1968) 118 CLR 618 (“Beecham”) which, at first blush, might be seen to be different.
19. In Beecham the Court said that there are two main inquiries in any application for an interlocutory injunction:

(a) whether the plaintiff has made out a prima facie case, in the sense that if the evidence remains as it is there is a probability that at the trial of the action the plaintiff will be held entitled to relief; and

(b) whether the inconvenience or injury which the plaintiff would be likely to suffer if an injunction were refused outweighs or is outweighed by the injury which the defendant would suffer if an injury were granted.

20. Woolworths submitted that the formula in (a) above was preferred in O’Neill over the traditional inquiry (whether there is a serious question to be tried). That is not, however, how I read the judgments. It was not the use of the expression “a serious question to be tried” that troubled the court in O’Neill but the way in which it had been parsed by Lord Diplock in the House of Lords in American Cyanamid Co v Ethicon Ltd [1975] UKHL 1; [1975] AC 396 (“American Cyanamid”) at 407. Gummow and Hayne JJ emphasised that there is no necessity for a plaintiff to show that it is more probable than not that at trial the plaintiff will succeed. It suffices that the plaintiff establishes “a sufficient likelihood of success to justify in the circumstances the preservation of the status quo pending the trial” (at [65]). They referred to the statement in Beecham that the strength of the probability will depend on the nature of the rights the plaintiff asserts and the practical consequences likely to flow from the order sought. I note parenthetically that in the present case no submissions were made on the strength of the probability required having regard to the nature of the rights the applicants are asserting or, in this context, to the practical consequences likely to flow from the order sought. The discussion in O’Neill must be understood against the background of the relevant issue in that case. The question posed (see [135]) was

whether the agreed significance for the grant of an interlocutory injunction of the values of free speech and a free press...was such that relief, by way of prior restraint, should virtually always be refused where the publisher indicated an intention to defend the proceedings and where such defence was not obviously futile or bound to fail? Or whether the general principle applicable to the grant of interlocutory injunctive relief, as stated in Beecham Group Ltd v Bristol Laboratories Pty Ltd...and refined in subsequent cases...applied to such cases so that, in each instance, the issue was whether the applicant has demonstrated that there was a serious question to be tried and that the balance of convenience is in favour of the grant of the injunction sought?

21. Gummow and Hayne JJ rejected the notion (based on something Lord Diplock said in American Cyanamid at 407-8) that there is a serious question to be tried if the court is satisfied that the claim is not frivolous or vexatious and “unless the material available to the court at the hearing of the application ... fails to disclose that the plaintiff has any real prospect of succeeding ... at the trial”. They did so because they considered that the latter proposition appears to reverse the onus of poof and to obscure “the governing considerations” relating to the requisite strength of the probability of success to which I have referred above. Importantly, having regard to the submission Woolworths made, they said (at [70]):

When Beecham and American Cyanamid are read with an understanding of the issues for determination and an appreciation of the similarity in outcome, much of the assumed disparity in principle between them loses its force. There is then no objection to the use of the phrase “serious question” if it is understood as conveying the notion that the seriousness of the question, like the strength of the probability referred to in Beecham, depends upon the considerations emphasised in Beecham.

22. The Beecham formula does not mention the need to show injury for which damages would not be adequate compensation, although Gleeson CJ and Crennan J expressly referred to it in O’Neill. In Instyle Contract Textiles Pty Limited v Good Environmental Choice Services Pty Ltd (No. 2) [2010] FCA 38 at [65] Yates J, after analysing the authorities, concluded that proof of “irreparable injury” was not necessary to enliven the statutory power in s 80 of the Trade Practices Act 1974 (Cth). The same can be said of s 234 of the ACL. In any event, no-one disputes that the question of whether the applicants have suffered injury for which damages would be adequate compensation is a relevant consideration. It would seem that the better view is that this is a factor to be weighed in the balance in the second stage of the inquiry.

The evidence

23. The applicants relied on an affidavit of Matthew Edward Ward, the sole director and secretary of each of the companies, sworn on 16 March 2011. Mr Ward deposed to the history and nature of the businesses, the registration and use of the trade mark and the circumstances giving rise to the alleged infringement.
24. Organic Marketing claim to have first used the trade mark in February 2003 in connection with the sale of a variety of foodstuffs - nuts, dried fruits, cereals, grains, seeds and confectionery - although the kinds of goods in respect of which the mark is registered are far more varied and over time the range of products marketed under the trade mark has expanded significantly.
25. Organic Marketing authorised the second applicant (“Purplebass”) to use the registered mark and the word mark “Honest to Goodness” throughout Australia. The companies are closely related. They share the one director and secretary. Organic Marketing is an investing and finance company, Purplebass carries on the business of food wholesaler and retailer.
26. Since 2003 the applicants have marketed food products under the “Honest to Goodness” brand and sold them direct to the public and also to retail outlets, including a business now owned by Woolworths. Mr Ward described the Honest to Goodness business as a “boutique” one. He gave evidence that its objective is to develop and maintain a reputation for environmental awareness and responsibility and for wholesome foods and organic ingredients that are not mass produced and are selectively distributed through specialist and other boutique outlets.
27. On 21 November 2001 Organic Marketing registered in New South Wales the business name “Honest to Goodness” in respect of the import, export, wholesale and retail distribution of food. On 7 April 2006 ownership in the business name was transferred to Purplebass.
28. Purplebass registered the domain name honestogoodness.com.au on 7 February 2008 and Organic Marketing the domain name goodness.com.au, on 3 April 2003, both of which resolve to the “Honest to Goodness” website. The website is apparently popular, attracting over 13,000 visitors between 12 February and 14 March this year.
29. Currently the applicants provide wholesale and retail services to approximately 350 stores throughout Australia. The business name is used on stationery, business cards, invoices and statements, in product catalogues and point of sale material, on staff uniforms, including t-shirts and aprons, on warehouse and office signage, on vehicles and advertising billboards, on crates and carry bags, at stalls during consumer and industry trade shows and on shopping bags freely distributed at growers’ markets at the end of most calendar years. The business is listed in the last two editions of the publication Foodies’ Guide to Sydney, on Facebook, Twitter and LinkedIn websites, has participated in industry award events and distributes a monthly electronic newsletter to wholesale and retail customers.
30. Mr Ward also gave evidence to the effect that Woolworths knew about the applicants’ business and ought to have known of the registration of the trade mark.
31. On 8 March 2011 soon after he became aware of the campaign Mr Ward wrote to the Board of Directors, the Chief Executive Officer and Management Board of Woolworths and to Ms Fulton alleging infringement of the applicants’ intellectual property rights and requesting that they cease using their intellectual property.
32. Woolworths read an affidavit from its General Manager, Marketing, Mr Luke Dunkerley. Mr Dunkerley described the nature and size of the Woolworths business, the ubiquitous presence and recognition of its trade marks in the community and the genesis of the campaign. He said that the campaign was designed to meet several concerns. They included a perception that customers felt that food sold by supermarkets is “part of a large logistical chain” and consequently “not...fresh enough”. He explained that the campaign was also a reply to a promotion by Coles which featured a “celebrity chef”, Curtis Stone, and which promoted recipes that would feed four people for $10. That cost, however, depended on the cook having certain ingredients in the pantry which were not included in the $10 cost. Woolworths wanted to emphasise that their prices, in contradistinction, were “honest, to the last cent”. Mr Dunkerley stated that the campaign was conceived and approved without knowledge of the applicants, their trade mark or their business. He indicated that the phrase “honest to goodness” was adopted because it represented a well-known expression relevant to good food and reflected Ms Fulton’s substantial reputation. He indicated that the phrase resonated with him as one his mother and grandmother often used. He said that the Woolworths employees who had communicated with Mr and Ms Ward were not part of the Woolworths marketing team and had not been involved in the campaign or the decision to use the “honest to goodness” phrase. He was not cross-examined.
33. Mr Dunkerley’s evidence was that the campaign was designed to reach the customer base “quickly, comprehensively and repetitively”. The campaign is massive. Advertising has been prolific. Catalogues featuring a double page spread of Ms Fulton and her recipes were dispatched in the second and third weeks of March. Catalogues are distributed to over six million households around Australia. The television commercial has been aired widely and frequently. There are 833 Woolworths supermarkets. Signs featuring the “Margaret Fulton’s Honest to Goodness Family Meals” and Ms Fulton herself are displayed on all supermarket security gates, on relevant lines through fresh and grocery departments, on entry gates, as aerial displays and in the form of the standee of Ms Fulton beside a bin containing recipe cards featuring Ms Fulton’s recipes and the cost of producing them for a family of four. Point of sale kits containing this promotional material have been provided to every Woolworths supermarket store manager. As at 21 March 2011 Mr Dunkerley estimated that the direct cost of the campaign exceeds $3 million.
34. Woolworths also proffered evidence of the prevalence of the use of the phrase “honest to goodness” on the internet in connection with food and recipes and its use by other traders as part of a composite trade mark.

Is there a serious question to be tried?

35. I turn first to the cause of action under the Trade Marks Act. Before I do so I make the obvious point that any views I express on the merits are provisional only, based on the evidence before me and without the benefit of a full hearing.`
36. Section 120(1) of the Trade Marks Act provides:

120 When is a registered trade mark infringed?
(1) A person infringes a registered trade mark if the person uses as a trade mark a sign that is substantially identical with, or deceptively similar to, the trade mark in relation to goods or services in respect of which the trade mark is registered.

37. A sign is defined extremely broadly in s 6 of the Trade Marks Act to include any or a combination of the following: any letter, word, name, signature, numeral, device, brand, heading, label, ticket, aspect of packaging, shape, colour, sound or scent. A sign will be deceptively similar to the trade mark “if it so nearly resembles” the mark “that it is likely to deceive or cause confusion”: s 10 of the Trade Marks Act.
38. There are two questions here: whether Woolworths has been using or intends to use a sign as a trade mark, and if so, whether the sign was “substantially identical” or “deceptively similar” to the registered mark.
39. A trade mark is a sign “used, or intended to be used, to distinguish goods or services dealt with or provided in the course of trade by a person from goods or services so dealt with or provided by another person”: Trade Marks Act s 17. It is an essential characteristic of a trade mark that it is capable of distinguishing particular goods or services: Davis v Commonwealth [1988] HCA 63; (1988) 166 CLR 79 at 96, 101, 117. The Registrar of Trade Marks is bound to reject an application for registration if it is incapable of distinguishing the applicant’s goods or services from goods or services of others: Trade Marks Act s 41.
40. On the question of what constitutes use of a trade mark, the relevant principles were recently summarised by the Full Court in Nature’s Blend Pty Ltd v Nestlé Australia Ltd (2010) 272 ALR 487 at [19]:

(1) Use as a trade mark is use of the mark as a “badge of origin”, a sign used to distinguish goods dealt with in the course of trade by a person from goods so dealt with by someone else: Coca-Cola Co v All-Fect Distributors Ltd (1999) 96 FCR 107 ; 47 IPR 481 ; [1999] FCA 1721 at [19] (Coca-Cola); E & J Gallo Winery v Lion Nathan Australia Pty Ltd (2010) 265 ALR 645 ; 86 IPR 224 ; [2010] HCA 15 at [43] (Lion Nathan).

(2) A mark may contain descriptive elements but still be a “badge of origin”: Johnson & Johnson Aust Pty Ltd v Sterling Pharmaceuticals Pty Ltd [1991] FCA 310; (1991) 30 FCR 326 at 347–8 ; [1991] FCA 310; 101 ALR 700 at 723 ; [1991] FCA 310; 21 IPR 1 at 24 (Johnson & Johnson); Pepsico Australia Pty Ltd v Kettle Chip Co Pty Ltd (1996) 135 ALR 192 ; 33 IPR 161; Aldi Stores Ltd Partnership v Frito-Lay Trading Co GmbH (2001) 190 ALR 185 ; 54 IPR 344 ; [2001] FCA 1874 at [60] (Aldi Stores).

(3) The appropriate question to ask is whether the impugned words would appear to consumers as possessing the character of the brand: Shell Co of Australia Ltd v Esso Standard Oil (Aust) Ltd (1963) 109 CLR 407 at 422 ; [1963] ALR 634 at 636 ; 1B IPR 523 at 532 (Shell Co).

(4) The purpose and nature of the impugned use is the relevant inquiry in answering the question whether the use complained of is use “as a trade mark”: Johnson & Johnson at FCR 347; ALR 723; IPR 24 per Gummow J; Shell Co at CLR 422; ALR 636; IPR 532.

(5) Consideration of the totality of the packaging, including the way in which the words are displayed in relation to the goods and the existence of a label of a clear and dominant brand, are relevant in determining the purpose and nature (or “context”) of the impugned words: Johnson & Johnson at FCR 347; ALR 723; IPR 24; Anheuser-Busch Inc v Budejovicky Budvar (2002) 56 IPR 182 ; [2002] FCA 390 (Anheuser-Busch).

(6) In determining the nature and purpose of the impugned words, the court must ask what a person looking at the label would see and take from it: Anheuser-Buschat [186] and the authorities there cited.

41. So what sign has Woolworths used or is intending to use to distinguish its goods or services? For present purposes Woolworths accepted that it used a sign as a trade mark but the sign it used, it submitted, was the combination of the words “Margaret Fulton’s Honest to Goodness Family Meals” and in many instances the words in combination with Ms Fulton’s image. Woolworths’ contention was that their use of the phrase “honest to goodness” cannot be divorced from Ms Fulton or her recipes. It submitted that the phrase is used purely in an adjectival or descriptive sense. It pointed to dictionary definitions of “honest-to-goodness”:

“adj... honest-to-goodness genuine, out-and-out, complete – also adv” (The Chambers Dictionary (2003) p 770)

“honest-to-goodness genuine(ly), real(ly). colloq. (orig. US).” (OED)

42. In his affidavit Mr Dunkerley said that the use of the phrase was conceived by the regional creative director of the advertising agency, M & C Saatchi, because it:

encapsulated what Woolworths is trying to present with the campaign. Honest stands for honest pricing, a fair deal and not including any hidden expenses. Goodness stands for quality, healthy food. In addition, the expression resonates with the image presented by Margaret Fulton, which is someone who is honest, trustworthy and makes good food.

43. Woolworths argued that the applicants would be unable to register the phrase because it is incapable of distinguishing its products from those of another trader. It accepted that the inquiry here is different from the inquiry the Registrar would have to make, but it submitted evidence on the question of whether the phrase was used here to distinguish Woolworths’ services from those of other traders or merely to describe the nature of them.
44. To underscore their point that “honest to goodness” is a descriptive term, Woolworths presented in evidence a lever arch folder some 5cm thick containing instances of the use of the “honest to goodness” phrase by third party traders in connection with food, cooking or similar concepts, downloaded from the internet. This material shows the prevalence of the phrase but it distracts attention from the primary inquiry, that is, whether Woolworths is using it in this way or as badge of origin.
45. In my opinion, there is at least a prima facie case that Woolworths is using the phrase to denote a product. The product consists of Ms Fulton’s recipes, the ingredients for which are readily available and which consumers are encouraged to buy at the advertised prices at Woolworths’ stores. I have reached that conclusion for several reasons. In a good deal of the promotional material the words “honest to goodness” appear in large script, presented with decorative flourishes in a way that might be seen as a brand and in the signature green used by Woolworths for all its advertising. These words (together with Ms Fulton herself) are the target of the viewer’s attention. That can be seen from the following image appearing on the Woolworths website:

46. It is perhaps more obviously so in other advertising paraphernalia in the stores such as the following badge on all recipe pads and in landscape displays:

47. True it is that “honest to goodness” is followed by the words “family meals” and Ms Fulton is a chef who is sharing her recipes with the customers. But the campaign could accurately be described as the “Honest to Goodness” campaign featuring Margaret Fulton. “Honest to goodness” can be regarded as a catchphrase rather than (or rather than merely) a description of the meals. On one view the definitions given to the words by Ms Fulton in the television advertisements and elsewhere support this construction. So, too, does Mr Dunkerley’s evidence about the thinking behind the campaign.
48. The next question is whether the Woolworths sign is deceptively similar to the applicants’ registered mark. Although in their written submissions the applicants made a case for substantial identity, they did not press the point in oral submissions. They rested their case on deceptive similarity. In Registrar of Trade Marks v Woolworths [1999] FCAFC 1020; [1999] 93 FCR 365 French J set out at [50] the relevant criteria. For present purposes they are:

(1) A trade mark is likely to cause confusion if there is a real likelihood that some people will wonder or be left in doubt about whether the two sets of products or the products and services in question come from the same source.

(2) It is necessary to show “a real tangible danger of deception or confusion”. A mere possibility is not enough.

(3) All surrounding circumstances have to be taken into consideration. These include the circumstances in which the marks will be used, the circumstances in which the goods or services will be bought and sold, and the character of the probable acquirers of the goods and services.

49. It is also important to bear in mind that what is to be compared with the Woolworths sign is not the registered trade mark but the effect or impression produced on the mind of potential customers by the registered trade mark. As Yates J recently observed, deceptive similarity may be established when an impugned mark uses an “essential” or “distinguishing” feature of the registered mark: Optical 88 Limited v Optical 88 Pty Limited (No. 2) [2010] FCA 1380 (“Optical 88”); de Cordova v Vick Chemical Company (1951) 68 RPC 103 (“de Cordova”) at 105.
50. There is something to be said for Woolworths’ argument that there is nothing distinctive about the use of an ordinary English expression, that what is distinctive about the registered mark is the writing and the tulip. There is also a confounding circumstance in this case. That is the applicants’ limited use of the registered mark in the last five years. Nevertheless, the comparative exercise required by the statute is an artificial one. It assumes the putative consumer has knowledge of the registered mark.
51. In de Cordova, which, like the present case, concerned a composite mark, Lord Ratcliffe said (at 105-6) in a passage cited in Optical 88 at [104]:

Their Lordships consider that the Court of Appeal were right in holding that the Appellants had infringed Trade Mark 1852. They have not used the mark itself on the goods that they have sold, but a mark is infringed by another trader if, even without using the whole of it upon or in connection with his goods, he uses one or more of its essential features. The identification of an essential feature depends partly on the Court’s own judgment and partly on the burden of the evidence that is placed before it. A trade mark is undoubtedly a visual device; but it is well-established law that the ascertainment of an essential feature is not to be by ocular test alone. Since words can form part, or indeed the whole, of a mark, it is impossible to exclude consideration of the sound or significance of those words. Thus it has long been accepted that, if a word forming part of a mark has come in trade to be used to identify the goods of the owner of the mark, it is an infringement of the mark itself to use that word as the mark or part of the mark of another trader, for confusion is likely to result. It is sufficient to refer to the words of Lord Cranworth, LC, in Seixo v Provezende (1866) LR 1 Ch 192 at p 197: “If the goods of a manufacturer have, from the mark or device he has used, become known in the market by a particular name, I think that the adoption by a rival trader of any mark which will cause his goods to bear the same name in the market, may be as much a violation of the rights of that rival as the actual copy of his device.” ... The likelihood of confusion or deception in such cases is not disproved by placing the two marks side by side and demonstrating how small is the chance of error in any customer who places his order for goods with both the marks clearly before him, for orders are not placed, or are often not placed, under such conditions. It is more useful to observe that in most persons the eye is not an accurate recorder of visual detail, and that marks are remembered rather by general impressions or by some significant detail than by any photographic recollection of the whole.
[Emphasis added.]

52. The applicants’ case is that the words “honest to goodness” are an essential feature of the registered mark and the argument has merit. The tulip device, though not illustrative of the words, could be regarded as an addition to the registered trade mark that does not substantially affect its identity: cf E & J Gallo Winery v Lion Nathan Australia Pty Ltd (2010) 241 CLR 144 at [69]. It is reasonable to suppose that customers are likely to identify the products sold by reference to the words and not the device.
53. In oral submissions counsel for Woolworths emphasised that “this whole campaign is in the Woolworths green. It’s a matter of visual comparison but green is the colour associated with Woolworths marketing”. It might also be observed that when the registered mark is displayed on the applicants’ tents at growers markets it appears in green, the applicants’ T-shirts are green and the business is environmentally-friendly, a position customarily represented by the colour green.
54. “Honest to goodness” is indeed an ordinary English expression but it is also capable of acquiring a secondary meaning, one which indicates an association to those familiar with the applicant’s trade mark or business. Cf Virgin Enterprises Ltd v Virgin Home Loans Pty Ltd [2000] FCA 1175 at [13]. It is entirely feasible in all these circumstances that a consumer with an imperfect recollection of the registered mark would see the Woolworths signs and wonder about an association or affiliation between Woolworths and the Honest to Goodness business. Woolworths submitted that the positioning of the image of Margaret Fulton, the use of her name in an overarching banner and the deployment of the possessive proper noun make it “impossible” to treat “Honest to Goodness” as being used by Woolworths independently of the connection with Ms Fulton. Similarly, it submitted, the descriptive use of “honest to goodness” in connection with “family meals” ties those two expressions together.
55. There are two difficulties with this submission.
56. First, for the purpose of considering infringement under s 120(1) “it is beside the point that the alleged infringer has added other material to the impugned trade mark, even if those steps were taken to avoid the likelihood of deception”: Optical 88 at [99] and the cases referred to there.
57. Secondly, the submission does not engage with the applicants’ point that the putative consumer, who is taken to be aware of the registered mark, the essential feature of which is its name, but with an imperfect recollection of it, sees the same name branded on Woolworths’ promotions. The “brand” might be associated with or connected to Ms Fulton but a consumer might think that, or wonder whether, Ms Fulton is using “Honest to Goodness” products in her recipes and Woolworths is stocking them. Woolworths emphasised that in the television commercial Ms Fulton can be seen and heard to define “honest” and “goodness” so as to avoid any likelihood of confusion. The same can be seen on the website and in the catalogue. Of course, this does not assist the consumer who entered the store without seeing or hearing the television advertisement or reading the relevant entry on the website or in the catalogue. In any event, Woolworths is using the phrase as a play on words. There is room for a double entendre.
58. Mr Dunkerley said no instances of confusion had been reported to him, but Mr Ward gave several examples where queries had been raised about a possible association between Woolworths and his business. This evidence was equivocal and, at times, raised more questions than it answered. But, in any case, the matter is essentially one for the Court.
59. On the question of trade mark infringement I am therefore persuaded that there is a serious question to be tried. It is not necessary, in these circumstances, to consider the claims under the CCA.
60. I may not, however, stop here. Where a positive defence is mounted, the question arises as to whether that conclusion should be qualified by the apparent strength of the defence: Interpharma Pty Ltd v Commissioner of Patents [2008] FCA 1498; (2008) 79 IPR 261 at [17] (“Interpharma”). Here, Woolworths has indicated it proposes to raise a defence under s 122(1) of the Trade Marks Act, which relevantly provides,

In spite of section 120, a person does not infringe a registered trade mark when:
...
(b) the person uses a sign in good faith to indicate:
(i) the... quality, ...[or] value... of goods or services...

61. Woolworths argued that the strength of such a defence undermines any prima facie case, pointing to the definitions of “honest” and “goodness” in the advertising. There was also evidence from Mr Dunkerley going to this issue. But at this point in the proceeding when Mr Dunkerley has not been cross-examined and all the evidence is not before me, I do not think that I should deny the applicants relief on the supposed strength of the foreshadowed defence.
62. Woolworths have also filed a cross-claim seeking to have the mark removed or expunged from the register. The removal application is founded on an allegation of non-use since about 2006. A mark is vulnerable to removal if there has been a continuous period of three years of non-use: Trade Marks Act s 92(4)(b). The case brought in support of the expungement application is that if the registered owner claims that the registration gives it rights to the exclusive use of the phrase “honest to goodness”, then the mark was and is incapable of distinguishing its goods (s 41) and that Organic Marketing, being neither the inventor nor the first user of that mark for foodstuffs in Australia, was not the owner at the time that it applied for registration.
63. The applicants resist the claims. In the case of the claim of non-use the applicants have two responses. First, they contend that “the slightly different representations of the mark without the tulip device did not substantially affect [its] identity”, within the meaning of s 7(1) of the Trade Marks Act. This is a hotly contested point. The second is that there is in fact evidence of the use of the composite mark (in photographs of staff wearing t-shirts displaying the registered mark taken at the warehouse last year).
64. I do not think that the allegations made in the cross-claim militate against the grant of interlocutory relief.

Does the balance of convenience favour the granting of an injunction?

65. As Jessup J put it in Interpharma at 267 [16]:

At base, the decision whether to grant an interlocutory restraint is a discretionary one, and it is traditionally at the point of considering the balance of convenience that the court takes into account every circumstance that has the rational capacity to assist in answering the question whether it would be in the interests of justice to do so...

66. In the applicants’ favour is the speed with which they acted upon becoming aware of Woolworths conduct. The advertisement went to air on 6 March. Mr Ward put pen to paper, so to speak, on 7 March and on 8 March he dispatched his cease and desist letter. When he received no meaningful response he instructed his lawyers to send a formal cease and desist letter. There was a delay of some days in filing the application but that was caused by Woolworths, whose lawyers sought time to take instructions. But there is much that works against the applicants on the balance of convenience.
67. While the strength or weakness of the applicants’ case is a relevant consideration, on this question, I have not formed a firm view. I am, however, firmly of the opinion that the balance of convenience weighs heavily against the grant of interlocutory relief.
68. I am prepared to assume that the applicants can prove injury although the evidence on this point is spare. In his affidavit Mr Ward states that he is “very concerned” that the applicants’ reputation as a “boutique wholesaler and retailer of wholesome foods and organic ingredients which are not mass produced” would be seriously tarnished by an association with a mass market retailer like Woolworths and that if it is permitted to continue there will be a loss of sales and substantial damage to the Honest to Goodness trade mark and business which will be very difficult to quantify. Counsel for the applicants relied on this evidence but added that retail customers who would be enticed by the advertising to enter Woolworths stores where the applicants’ products are not sold might buy products there rather than the applicants’ products. That may be accepted, but it says nothing about the impact on the applicant’s (important) wholesale market. On the other hand the damage to Woolworths is far more significant. There are the direct costs associated with ceasing the campaign that I have already mentioned. But there are indirect and arguably more significant costs. Mr Dunkerley itemised them:

(a) The loss of sales as a result of the cessation of the Campaign itself. The absence from the market of the Campaign is likely to result in a significant loss of sales at Woolworths supermarkets;

(b) For at least six weeks consumers would not receive television advertising, in-store promotions or recipe cards in relation to this critical Campaign. The supermarket industry in Australia is highly competitive and the failure to do these things is likely to lead to a loss of customers to competitors.

(c) Woolworths has calculated that the presence of certain ingredients listed in the recipe cards, such as garlic cloves, sweet paprika, tomatoes or carrots will significantly increase the sale of those ingredients. As a result, Woolworths has pre-ordered additional stock of certain food products in anticipation of increased sales. The cancellation of the Campaign would leave Woolworths with a significant amount of unsold, perishable stock to be disposed of.

(d) The damage to Woolworths’ reputation among its customers would be substantial. Customers will punish a brand for inconsistency. They like knowing that their retailer has a firm vision for what it stands for. The cessation of the Campaign would damage customer trust and reduce customer goodwill towards Woolworths, especially given the implication that Woolworths “stole” the mark. I consider it likely that an order to cease the Campaign would result in negative publicity and negative media commentary about Woolworths. The implication that Woolworths was somehow not being “honest” in its “honest to goodness” campaign would damage the brand, the reputation of the company in the market, and the morale of the business.

(e) I consider that Margaret Fulton would also suffer significant damage to her reputation as a result of the cessation of the Campaign. Margaret is the face of the Campaign and a person with an Australia-wide reputation for honesty and straightforwardness which would be profoundly implicated by the suggestion that she had somehow stolen the expression from another company.

69. I appreciate that damage to a small business may have a greater impact than the same amount of damage to a large enterprise. On the evidence before me, however, the damage to Woolworths far outweighs any damage to the applicants’ business that the continuation of the campaign may cause in the period until final judgment. Without doubt, Woolworths has the capacity to meet any award of damages that may be made in favour of the applicants. On the other hand, there is no evidence to support the conclusion that the applicants could – and what evidence there is suggests they could not. Mr and Mrs Ward, through the applicants’ counsel, offered personal undertakings, but in the absence of evidence that they have any assets – let alone of the extent of them – the undertakings are of next to no assistance. I accept that there is no inflexible rule that the moving party should be denied interlocutory relief if it cannot offer a meaningful undertaking (Caravelle Investments v Martaban [1999] FCA 1505; (1999) 95 FCR 85 (“Caravelle”) at [25]. In such circumstances Finkelstein J in Caravelle required the plaintiff to give security. The applicants relied on two decisions in which either no or nominal security was ordered (Environment East Gippsland Inc v VicForests (No. 2) [2009] VSC 421 and Tait v Bindal People [2002] FCA 322) but both cases are distinguishable on the facts. The applicants are not bringing this case in order to protect the public interest or advance a cause on behalf of a class of persons. Rather, they are concerned with the protection of their own commercial interests. I raised with counsel for the applicants whether his clients would volunteer security. He informed me that he was instructed not to do so. I do not propose to impose such a requirement but, in view of the unsatisfactory evidence concerning the applicants’ capacity to meet an undertaking, their unwillingness to offer any security is a factor to be taken into account.
70. On the question of whether damages would adequately compensate the applicants for any loss, Woolworths submitted:

Although it is accepted that trade mark damages can be hard to quantify, there is no doubt that a trade mark is an economic asset: it is a piece of property and is inextricably associated with use in trade. Damage to it sounds in money, in lost revenue or capital value to the owner. It is not like a case of disclosure of confidential information, for example, where the harm is non-financial.

There is absolutely no doubt here that any judgement would be met. And the court has mechanisms for assisting the assessment of damages, such as discovery and the taking of accounts.

Damages are therefore an adequate remedy, or at least a sufficiently adequate remedy to weigh against the grant of an injunction.

71. I accept these submissions.
72. Both parties are ready to take an early trial date, indicating that they could be ready for a final hearing within a month.
73. In all these circumstances the application for an interlocutory injunction should be refused.
74. I will hear from the parties on the question of costs.

I certify that the preceding seventy-four (74) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Katzmann.

Associate:
Dated: 25 March 2011