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Matter or mirage? : The public policy rationale for section 9 of the fair trading act 1986 (N.Z.) 1995

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MATTER OR MIRAGE?: THE PUBLIC POLICY RATIONALE FOR SECTION 9 OF THE FAIR TRADING ACT 1986 (N.Z.) b y C H R I S T O P H E R B R I A N H A L L L 1 . B . ( H o n s . ) , T h e U n i v e r s i t y o f O t a g o , 1 9 8 7 D i p l . P . L . S t u d i e s , T h e U n i v e r s i t y o f V i c t o r i a a t W e l l i n g t o n , 1 9 8 8 B a r r i s t e r a n d S o l i c i t o r o f t h e H i g h C o u r t o f N e w Z e a l a n d A T H E S I S S U B M I T T E D I N P A R T I A L F U L F I L L M E N T O F T H E R E Q U I R E M E N T S F O R T H E D E G R E E O F M A S T E R O F L A W S in T H E F A C U L T Y O F G R A D U A T E S T U D I E S ( F a c u l t y o f L a w ) W e a c c e p t t h i s t h e s i s a s c o n f o r m i n g t o t h e r e q u i r e d s t a n d a r d T H E U N I V E R S I T Y O F B R I T I S H C O L U M B I A J a n u a r y 1 9 9 5 © C h r i s t o p h e r B r i a n H a l l , 1 9 9 5 In presenting this thesis in partial fulfilment of the requirements for an advanced degree at the University of British Columbia, I agree that the Library shall make it freely available for reference and study. I further agree that permission for extensive copying of this thesis for scholarly purposes may be granted by the head of my department or by his or her representatives. It is understood that copying or publication of this thesis for financial gain shall not be allowed without my written permission. Department of The University of British Columbia Vancouver, Canada Date IT? 5" DE-6 (2/88) Abstract 11 The two main points of this thesis are; first, that section 9 of the Fair Trading Act 1986 (New Zealand) has a particular public policy rationale; and, secondly, that, because of drafting inadequacies and of improper approach by the courts, that rationale is not being properly advanced. The first of the writer's theses is that the Act is inadequately drafted. The public policy rationale is identified and seen to be four-fold. The two principal elements are; one, to advance efficiency in the marketplace; and, two, protect consumers, especially those who are less able to protect themselves from the effects of misleading or deceptive conduct. It is determined that efficiency and consumer protection are not always consistent goals but that they are in this particular context of provision of information. It is seen that there are at least three deficiencies in the Act that inhibit promotion of those two limbs of the policy rationale. The writer's second thesis is that the courts have failed to recognise and give effect to the policy rationale for section 9 and have, instead, imported principles developed under the tort of passing off. The public policy rationale for passing off is examined. It is concluded that it primarily owes both its existence and its scope to the interests of traders. The approach of the courts in New Zealand, and those in Australia under their virtually identical section 52 of the Trade Practices Act, is examined and it is seen that passing off principles are imported in at least five areas. Ill The practical effects of the deficiencies in the legislation and in the approach of the courts are identified by a law and economics analysis and by considering nine possible variations of a hypothetical fact example. The result is confirmation that the drafting inadequacies and the approach of the courts together cause reduction of efficiency and disadvantaging of consumers. iv T a b l e o f C o n t e n t s A b s t r a c t i i T a b l e o f C o n t e n t s i v L i s t o f T a b l e s v i A c k n o w l e d g m e n t v i i I n t r o d u c t i o n 1 C h a p t e r O n e : I d e n t i f i c a t i o n o f t h e p u b l i c p o l i c y r a t i o n a l e f o r s e c t i o n 9 o f t h e F a i r T r a d i n g A c t 5 I n t r o d u c t i o n . 5 C u r e d e f e c t s i n t h e p r e v i o u s l e g i s l a t i o n 6 C o m p l y w i t h C E R o b l i g a t i o n s 9 C r e a t e a m o r e e f f i c i e n t m a r k e t 1 0 P r o t e c t c o n s u m e r s 1 5 S u m m a r y 2 2 C h a p t e r T w o : T h e o r e t i c a l e v a l u a t i o n o f t h e p u b l i c p o l i c y r a t i o n a l e 2 4 I n t r o d u c t i o n : . 2 4 E f f i c i e n c y a n d c o n s u m e r p r o t e c t i o n : c o n s i s t e n t ? 2 6 T o r e g u l a t e o r t o n o t r e g u l a t e 2 8 R e c o m m e n d a t i o n s . . . 3 9 C h a p t e r T h r e e : I d e n t i f i c a t i o n o f t h e p u b l i c p o l i c y r a t i o n a l e f o r t h e t o r t o f p a s s i n g o f f 4 4 I n t r o d u c t i o n 4 4 O r i g i n s a n d e a r l y d e v e l o p m e n t 4 6 T h e A d v o c a a t c a s e 5 3 T h e t o r t t o d a y 5 8 E x p a n s i o n i n t o o t h e r t o r t s 7 4 T h e p u b l i c p o l i c y r a t i o n a l e 7 6 C h a p t e r F o u r : T h e a p p r o a c h o f t h e c o u r t s 8 1 I n t r o d u c t i o n 8 1 T h e c o u r t s o n s e c t i o n 9 a n d p a s s i n g o f f . 8 2 P r o t e c t i o n o f d e s c r i p t i v e n a m e s 8 8 V G e t - u p 9 4 R e p u t a t i o n 1 0 2 E v i d e n c e o f d e c e p t i o n 1 0 9 T h e c o m m o n f i e l d o f a c t i v i t y r u l e 1 2 2 C o n c l u s i o n s 1 2 6 C h a p t e r five: T h e e f f e c t s f o r c o n s u m e r s 1 2 7 I n t r o d u c t i o n 1 2 7 T h e f r a m e w o r k 1 2 8 T h e a n a l y s i s 1 3 3 C h a p t e r s i x : S u m m a r y o f c o n c l u s i o n s a n d r e c o m m e n d a t i o n s 1 4 1 A p p e n d i x O n e : R e a s o n i n g f o r t a b l e o n e 1 4 4 A p p e n d i x T w o : R e a s o n i n g f o r c o n c l u s i o n s o n e f f e c t i f B c e a s e s t o t r a d e 1 4 9 L e g i s l a t i o n l i s t 1 5 1 C a s e l i s t 1 5 3 B i b l i o g r a p h y 1 6 1 v i L i s t o f T a b l e s T a b l e O n e : R e s u l t s o f B ' s p a s s i n g o f f o n c o n s u m e r s o n e t o f o u r : 1 3 3 T a b l e T w o : R e s u l t s o f a n a c t i o n p u r s u a n t t o s e c t i o n 9 1 3 7 Acknowledgment vn To my parents, Brian and Margaret, for all their support and encouragement; the staff of International House at U B C for making the transition to Vancouver a relatively smooth one; my supervisor, Professor Joest Blom, and second reader, Professor Peter Burns, for their encouragement, tolerance and guidance; the graduate class of 1993/94 and beyond, especially Doris Buss, Emma Henderson, Mark Kremsner, Kirsty Middleton and Keith Robinson, and to Elizabeth Kirk, for their discussion, insights, comments, humour, tolerance and company; the faculty and staff of the school of law, in particular, Professor Pitman Potter and Gillian Bryant for their time, energy and patience; Robert Payne and the crew of 'Assegai' for their company and humour at my expense as the date for completion continually advanced into the future; and Professor Tony Hickling and Richard MacCuish for providing me with work and the financial ability to stay on and eventually catch up with that date Thank You C B H 30.01.95 INTRODUCTION 1 In 1986, the Labour Government of New Zealand passed the Fair Trading Act of that year, section 9 of which provides that: "No person shall, in trade, engage in conduct that is misleading or deceptive or likely to mislead or deceive."1 Breach of section 9 entitles any party who has suffered loss or damage to bring an action and / or to be compensated for it, whether a party to a proceeding or not. One kind of misleading or deceptive conduct arises when a trader passes its goods off as being those of another. Until the Act came into effect, that conduct was regulated by the tort of passing off, an action available only to the infringed trader. This thesis identifies the public policy rationale for section 9 and examines whether it gives effect to that rationale, adequately or at all in passing off type cases. The writer * has two hypotheses: one, that section 9 and the Act are deficient in some respects and therefore require amendment; and, two, that the courts have failed to give effect to the policy rationale for section 9 and have, instead, applied principles developed in the tort 1 Sections 10, 11 and 12 of the Act contain more specific prohibitions on misleading or deceptive conduct in relation to goods, services and employment respectively. Section 14 is a similar provision in relation to dispositions of land. Section 10 would apply to the fact example used in chapter five, which will not, however, make reference to any of sections 10 to 12 or 14, simply because conduct prohibited by any of them wil l also be prohibited by section 9. 2 o f p a s s i n g o f f . T h e e f f e c t o f t h o s e t w o f a c t o r s i s t h a t t h e r a t i o n a l e f o r s e c t i o n 9 i s n o t a d v a n c e d a s w e l l a s i t m i g h t b e . A f t e r t h i s i n t r o d u c t i o n , t h e t h e s i s h a s s i x c h a p t e r s . T h e f i r s t h y p o t h e i s i s a d d r e s s e d i n c h a p t e r s o n e , t w o a n d f i v e . I n c h a p t e r o n e , t h e p u b l i c p o l i c y r a t i o n a l e f o r s e c t i o n 9 i s i d e n t i f i e d , b y r e f e r e n c e t o t h r e e c l a s s e s o f d o c u m e n t : o n e , t h e U n i t e d S t a t e s a n d A u s t r a l i a n l e g i s l a t i o n o n w h i c h t h e F a i r T r a d i n g A c t a n d s e c t i o n 9 w e r e g e n e r a l l y m o d e l l e d ; t w o , t h e N e w Z e a l a n d l e g i s l a t i o n t h a t p r e c e d e d t h e F a i r T r a d i n g A c t ; a n d , t h r e e , t h e p o l i c y a n d o t h e r d o c u m e n t s t h a t p r e c e d e d p a s s i n g o f t h e A c t . T h o s e d o c u m e n t s s h o w t h a t t h e r e a r e a n u m b e r o f l i m b s t o t h e p u b l i c p o l i c y r a t i o n a l e , i n c l u d i n g t o c u r e d e f e c t s i n t h e p r e v i o u s l e g i s l a t i o n ; f u l f i l l o b l i g a t i o n s u n d e r t h e N e w Z e a l a n d - A u s t r a l i a C l o s e r E c o n o m i c R e l a t i o n s T r a d e A g r e e m e n t ; c r e a t e a m o r e e f f i c i e n t m a r k e t ; a n d p r o t e c t c o n s u m e r s . T h e l a t t e r t w o a r e t h e p r i n c i p a l l i m b s o f t h e p o l i c y r a t i o n a l e f o r s e c t i o n 9 . I n c h a p t e r t w o , t h e r e i s a t h e o r e t i c a l c o n s i d e r a t i o n o f t h e e x t e n t t o w h i c h s e c t i o n 9 i s a p p r o p r i a t e f o r a d v a n c e m e n t o f t h e p o l i c y r a t i o n a l e i d e n t i f i e d i n c h a p t e r o n e . I n s e c t i o n o n e , t h e r e i s c o n s i d e r a t i o n o f t h e i s s u e w h e t h e r t h e t w o p r i n c i p a l l i m b s o f t h e p o l i c y r a t i o n a l e , p r o m o t i o n o f e f f i c i e n c y a n d p r o t e c t i o n o f c o n s u m e r s , a r e e v e n c o n s i s t e n t o r c a p a b l e o f b e i n g a d v a n c e d s i m u l t a n e o u s l y . I t i s c o n c l u d e d t h a t , i n t h i s p a r t i c u l a r c o n t e x t , t h e y a r e a n d t h e y c a n b e . I n s e c t i o n t w o , t h e i s s u e o f w h e t h e r a n d t o w h a t e x t e n t i t i s d e s i r a b l e t o r e g u l a t e f o r e f f i c i e n c y a n d c o n s u m e r p r o t e c t i o n i s c o n s i d e r e d . I t i s c o n c l u d e d t h a t i t i s d e s i r a b l e t o r e g u l a t e b u t t h a t t h e A c t d o e s n o t g o f a r e n o u g h a n d s h o u l d b e a m e n d e d i n s e v e r a l r e s p e c t s . 3 T h e s e c o n d h y p o t h e s i s , t h a t t h e c o u r t s h a v e c o n f u s e d t h e p o l i c y r a t i o n a l e s f o r p a s s i n g o f f a n d f o r s e c t i o n 9 , i s a d d r e s s e d i n c h a p t e r s t h r e e , f o u r a n d f i v e . T h e r a t i o n a l e f o r t h e t o r t i s i d e n t i f i e d i n c h a p t e r t h r e e . T h a t i s d o n e b y r e f e r e n c e t o c a s e l a w i n E n g l a n d , w h e r e t h e t o r t o r i g i n a t e d , a n d i n N e w Z e a l a n d . I t i s s e e n t h a t t h e e x i s t e n c e o f t h e t o r t i s b a s e d o n t h e p r i n c i p l e t h a t n o b o d y h a s t h e r i g h t t o r e p r e s e n t h i s g o o d s a s b e i n g t h e g o o d s o f s o m e b o d y e l s e . I t i s a s s u m e d s u c h r e p r e s e n t a t i o n s d a m a g e t h e g o o d w i l l o f t h e p l a i n t i f f s b u s i n e s s a n d t h e p o l i c y o f t h e a c t i o n i s t o p r e v e n t / c o m p e n s a t e f o r t h a t d a m a g e . T h e r e i s a l s o c o n s i d e r a t i o n o f t h e f a c t o r s t h a t i n f l u e n c e t h e s c o p e o f t h e t o r t . I t i s c o n c l u d e d t h a t , a l t h o u g h t h a t s c o p e i s , t o a m o d e s t e x t e n t , a f f e c t e d b y t h e i n t e r e s t s o f c o n s u m e r s , t h e p r i m a r y f o c u s i s , a g a i n , p r o t e c t i o n o f t r a d e r s . I t i s a l s o c o n c l u d e d t h a t , b e c a u s e t h e t w o a c t i o n s a r e b a s e d u p o n d i f f e r e n t p u b l i c p o l i c y r a t i o n a l e s , t h e c o u r t s s h o u l d t a k e d i f f e r e n t a p p r o a c h e s t o t h e m . I n c h a p t e r f o u r , t h e r e i s a n e x a m i n a t i o n o f t h e a p p r o a c h t a k e n b y t h e c o u r t s t o c a s e s u n d e r s e c t i o n 9 , w h i c h s h o w s t h a t , r a t h e r t h a n d e v e l o p i n g n e w c o n c e p t s a n d s t a n d a r d s i n c a s e s u n d e r t h e s e c t i o n , t h e c o u r t s h a v e i m p o r t e d p r i n c i p l e s d e v e l o p e d i n p a s s i n g o f f . T h e r e i s a l s o s i g n i f i c a n t r e f e r e n c e t o A u s t r a l i a n d e c i s i o n s o n s e c t i o n 5 2 o f t h e i r T r a d e P r a c t i c e s A c t , p r i n c i p a l l y b e c a u s e ; o n e , t h a t A c t h a s b e e n i n e f f e c t l o n g e r a n d a m o r e s u b s t a n t i a l j u r i s p r u d e n c e h a s b e e n g e n e r a t e d ; a n d , t w o , t h e N e w Z e a l a n d c o u r t s h a v e i n d i c a t e d t h a t t h e A u s t r a l i a n d e c i s i o n s a r e a n d w i l l b e o f a s s i s t a n c e t o t h e N e w Z e a l a n d c o u r t s , w h i c h h a v e f o l l o w e d m o s t o f t h e g e n e r a l p r i n c i p l e s g e n e r a t e d i n A u s t r a l i a . 4 E x a m i n a t i o n o f t h e c a s e s s h o w s t h a t t h e c o u r t s i n b o t h c o u n t r i e s h a v e e x p r e s s l y r e c o g n i s e d t h e c o n s u m e r p r o t e c t i o n f l a v o u r o f s e c t i o n 9 b u t h a v e f a i l e d t o g i v e e f f e c t t o i t . T h e i m p o r t a t i o n o f p a s s i n g o f f p r i n c i p l e s h a p p e n s p r i m a r i l y i n f i v e a r e a s ; e a c h i s c o n s i d e r e d s e p a r a t e l y . I n c h a p t e r f i v e , p r a c t i c a l a s p e c t s o f t h e d e f i c i e n c i e s i d e n t i f i e d i n c h a p t e r s t w o a n d f o u r a r e e v a l u a t e d , b y c o n s i d e r i n g t h e e f f e c t o f s e c t i o n 9 o n f o u r c l a s s e s o f c o n s u m e r , u s i n g n i n e v a r i a t i o n s o f a f a c t e x a m p l e . I t s h o w s t h a t t h e d e f i c i e n c i e s i n t h e A c t a n d i n t h e a p p r o a c h o f t h e c o u r t s a r e p a r t i c u l a r l y t e l l i n g f o r o n e c l a s s o f c o n s u m e r , n a m e l y t h o s e w h o a r e l e s s a b l e t o t e l l t h e d i f f e r e n c e b e t w e e n a g e n u i n e p r o d u c t a n d a n i m i t a t i o n o f i t , a n d b e t w e e n a h i g h e r q u a l i t y p r o d u c t a n d a l o w e r q u a l i t y o n e . C h a p t e r s i x c o n t a i n s a s u m m a r y o f t h e c o n c l u s i o n s a n d r e c o m m e n d a t i o n s r e a c h e d i n t h e c h a p t e r s p r e c e e d i n g i t , w h i c h c a n b e s u m m a r i s e d t h a t t h e A c t s h o u l d b e a m e n d e d i n a t l e a s t t h r e e r e s p e c t s , a n d t h e c o u r t s s h o u l d a l t e r t h e i r a p p r o a c h t o c a s e s b r o u g h t u n d e r s e c t i o n 9 , i n a t l e a s t n i n e r e s p e c t s . CHAPTER ONE IDENTIFICATION OF THE PUBLIC POLICY RATIONALE FOR SECTION 9 OF THE FAIR TRADING ACT 1986 s INTRODUCTION I n t h i s c h a p t e r , t h e p u b l i c p o l i c y r a t i o n a l e f o r s e c t i o n 9 o f t h e F a i r T r a d i n g A c t i s i d e n t i f i e d , b y r e f e r e n c e t o h i s t o r i c a l a n d o t h e r f a c t o r s i n t h r e e j u r i s d i c t i o n s : N e w Z e a l a n d , A u s t r a l i a a n d t h e U n i t e d S t a t e s o f A m e r i c a . D o c u m e n t s c r e a t e d b y t h e N e w Z e a l a n d G o v e r n m e n t a n d b y i n t e r e s t e d p a r t i e s 1 s u g g e s t s t h a t t w o l i m b s o f t h e p o l i c y r a t i o n a l e w e r e : o n e , t o c u r e d e f e c t s i n t h e N e w Z e a l a n d l e g i s l a t i o n t h a t p r e v a i l e d p r i o r t o t h e A c t b e i n g p a s s e d ; a n d , t w o , t o f u l f i l l o b l i g a t i o n s p u r s u a n t t o t r a d e a g r e e m e n t s , e n t e r e d i n t o b y N e w Z e a l a n d a n d A u s t r a l i a , a n d , i n p a r t i c u l a r , o b l i g a t i o n s t o h a r m o n i s e e c o n o m i c p o l i c i e s a n d p r a c t i c e s . T h o s e l i m b s a r e c o n s i d e r e d i n p a r t s A a n d B . H i s t o r i c a l f a c t o r s i n A u s t r a l i a a n d t h e U n i t e d S t a t e s a r e s i g n i f i c a n t b e c a u s e s e c t i o n 9 o f 1 It was hoped that would include the 58 submissions and 12 supplementary submissions made by interested parties to the Commerce and Marketing Select Committee of the House of Representatives, and the report of that Committee. Unfortunately, the Parliamentary library does not allow photocopying of the former and the latter consists of a copy of the B i l l with barely legible, handwritten amendments which are of no assistance as far as identifying policy matters is concerned. The writer obtained a copy of the submission and supplementary submission made by the Consumer Council of New Zealand, direct from that body. 6 t h e F a i r T r a d i n g A c t w a s m o d e l l e d o n s e c t i o n 5 2 o f t h e T r a d e P r a c t i c e s A c t 1 9 7 4 ( A u s t r a l i a ) , w h i c h w a s i t s e l f h e a v i l y i n f l u e n c e d b y s e c t i o n 5 o f t h e F e d e r a l T r a d e C o m m i s s i o n A c t 1 9 1 4 ( U . S . ) . T h o s e h i s t o r i c a l f a c t o r s , i n c o n j u n c t i o n w i t h o t h e r m a t e r i a l , s u g g e s t t h a t t w o f u r t h e r l i m b s o f t h e p o l i c y r a t i o n a l e f o r s e c t i o n 9 a r e : t h r e e , t o a d v a n c e e f f i c i e n c y i n t h e m a r k e t - p l a c e ; a n d , f o u r , p r o t e c t t h e e c o n o m i c i n t e r e s t s o f c o n s u m e r s . T h o s e l i m b s a r e c o n s i d e r e d i n p a r t s C a n d D a n d i t i s s e e n t h a t t h e s e c t i o n i s a i m e d a t r e m o v i n g t w o s i g n i f i c a n t b a r r i e r s t o t h o s e o b j e c t i v e s , n a m e l y c o n c e n t r a t i o n s o f e c o n o m i c p o w e r a n d u n f a i r o r d e c e p t i v e a c t s o r p r a c t i c e s . A. CURE DEFECTS IN THE PREVIOUS LEGISLATION P r i o r t o t h e F a i r T r a d i n g A c t , t h e l a w i n N e w Z e a l a n d r e l a t i n g t o t r a d e p r a c t i c e s w a s c o n t a i n e d i n a n u m b e r o f s t a t u t e s , p r i n c i p a l l y t h e M e r c h a n d i s e M a r k s A c t 1 9 5 4 , t h e T r a d e P r a c t i c e s A c t 1 9 5 8 a n d t h e C o n s u m e r I n f o r m a t i o n A c t 1 9 6 9 . T h e T r a d e P r a c t i c e s A c t e s t a b l i s h e d a T r a d e P r a c t i c e s a n d P r i c e C o m m i s s i o n , 2 w h o s e f u n c t i o n s i n c l u d e d t o " i n q u i r e i n t o t r a d e p r a c t i c e s w i t h a v i e w t o d e t e r m i n i n g w h e t h e r a n y s u c h p r a c t i c e s w e r e c o n t r a r y t o t h e p u b l i c i n t e r e s t . " 3 T h e ' p u b l i c i n t e r e s t ' w a s d e f i n e d 2 Section 3. 3 Sections 8(a) and 16. 7 i n t e r m s o f i t s c o n s e q u e n c e s 4 a n d i n c l u d e d u n r e a s o n a b l e i n c r e a s e s i n p r i c e s 5 o r p r o f i t s , 6 t h e u n r e a s o n a b l e l i m i t a t i o n o f c o m p e t i t i o n 7 o r l i m i t a t i o n o r p r e v e n t i o n o f s u p p l y o f g o o d s t o c o n s u m e r s . 8 T h e C o m m i s s i o n h a d p o w e r t o m a k e o r d e r s d i r e c t i n g d i s c o n t i n u a n c e o r n o n - r e p e t i t i o n o f o f f e n d i n g p r a c t i c e s . 9 T h e M e r c h a n d i s e M a r k s A c t d e a l t w i t h a p p l i c a t i o n s o f t r a d e d e s c r i p t i o n s t o g o o d s , i n c l u d i n g n u m b e r , q u a n t i t y , w e i g h t , q u a l i t y , p l a c e o r c o u n t r y o f p r o d u c t i o n a n d m o d e o f m a n u f a c t u r e . 1 0 U n d e r s e c t i o n 1 0 , i t w a s a n o f f e n c e t o a p p l y a n y : " f i g u r e s , w o r d s , o r m a r k s , o r a r r a n g e m e n t o r c o m b i n a t i o n t h e r e o f , w h e t h e r i n c l u d i n g a t r a d e m a r k o r n o t , a s a r e l i k e l y t o l e a d p e r s o n s t o b e l i e v e t h a t t h e g o o d s a r e t h e m a n u f a c t u r e o r m e r c h a n d i s e o f s o m e p e r s o n o t h e r t h a n t h e p e r s o n w h o s e m a n u f a c t u r e o r m e r c h a n d i s e t h e y r e a l l y a r e . " P e n a l t i e s f o r i n f r i n g e m e n t i n c l u d e d a f i n e , i m p r i s o n m e n t a n d f o r f e i t u r e o f p r o p e r t y i n r e l a t i o n t o w h i c h t h e o f f e n c e w a s c o m m i t t e d . 1 1 T h e C o n s u m e r I n f o r m a t i o n A c t w a s t o m a k e p r o v i s i o n f o r i n f o r m a t i v e l a b e l l i n g a n d 4 Section 20. 5 Section 20 (b). 6 Section 20 (c). 7 Section 20 (d). 8 Section 20 (e). 9 Section 19. 1 0 Section 2. 1 1 Section 18. 8 m a r k i n g o f g o o d s a n d t o p r e v e n t d e c e p t i v e o r m i s l e a d i n g p r a c t i c e s 1 2 i n r e l a t i o n t o q u a n t i t y 1 3 o r p r i c e 1 4 o f g o o d s o r q u a n t i t y o f i n g r e d i e n t s o f g o o d s . 1 5 I n a d d i t i o n t o t h e T r a d e P r a c t i c e s P r i c e C o m m i s s i o n , e n f o r c e m e n t o f c o n s u m e r p r o t e c t i o n l e g i s l a t i o n w a s c a r r i e d o u t b y t h e C o n s u m e r C o u n c i l a n d t h e C o n s u m e r s ' I n s t i t u t e , b o t h e s t a b l i s h e d u n d e r t h e C o n s u m e r C o u n c i l A c t 1 9 6 6 . T h e C o u n c i l w a s a p o l i c y - m a k i n g b o d y , c h a r g e d w i t h p r o t e c t i n g a n d p r o m o t i n g t h e i n t e r e s t s o f c o n s u m e r s " b y w h a t e v e r m e a n s a p p e a r t o b e e x p e d i e n t " a n d t o " e n c o u r a g e t h e i m p r o v e m e n t a n d d e v e l o p m e n t o f i n d u s t r y a n d c o m m e r c e " . 1 6 T h e I n s t i t u t e c a r r i e d o u t t h e d a y t o d a y a c t i v i t i e s , i n c l u d i n g r e c e i v i n g a n d a c t i n g o n c o m p l a i n t s f r o m c o n s u m e r s , h o l d i n g d i s c u s s i o n s a n d r e a c h i n g a g r e e m e n t s w i t h t r a d e r s a n d h e l p i n g t h e m d r a f t c o n t r a c t s a n d o t h e r d o c u m e n t s d e s i g n e d t o p l a c e t h e c o n s u m e r a n d t h e t r a d e r i n p o s i t i o n s o f e q u a l s t r e n g t h , c o n d u c t i n g c o m p a r a t i v e p r o d u c t t e s t s a n d m o n i t o r i n g t h e p r a c t i c a l e f f e c t s o f c o n s u m e r l e g i s l a t i o n . 1 7 1 2 Long title. 1 3 Section 4. 1 4 Section 10. 1 5 Section 5, but only in relation to certain goods or classes of goods, as specified by regulation. 1 6 Section 16. 1 7 Consumer Council, Annual Reports for the Years Ended 31 December 1977 and 31 December 1978, 1978 and 1979, Government Printer, pp. 12-14 and pp. 4 and 15 respectively. For a comparison of the New Zealand Consumer Council with similar bodies in other jurisdictions refer Mart in and Smith, The Consumer Interest, 1968, The Pall M a l l Press Ltd. , London, chp. 15. Much of the policy-related work formerly done by the Council is now done by the Ministry of Consumer Affairs, established on 1 July 1985. The Ministry's mission is to develop consistent and co-ordinated consumer policy, provide consumer support measures and, in so doing, create an informed marketplace. From 1 January 1989, the Consumers' Institute has functioned as a privately managed, national consumer association, with government funding being made available only for specific programmes and only where they can be undertaken most efficiently by the Institute: Consumer Policy in OECD Countries, 1985-1986 and 1987-1988, 1987 and 1989, O E C D , Paris, p. 140 and p. 182 respectively. 9 T h e M e r c h a n d i s e M a r k s A c t a n d t h e C o n s u m e r I n f o r m a t i o n A c t w e r e b o t h r e p e a l e d b y t h e F a i r T r a d i n g A c t b e c a u s e t h e y p r o v e d u n s a t i s f a c t o r y a s c o n s u m e r l e g i s l a t i o n . P a r t i c u l a r d e f i c i e n c i e s i d e n t i f i e d a t t h e t i m e i n c l u d e d t h a t t h e y p r o v i d e d " l i t t l e g u i d a n c e t o t r a d e r s a b o u t t h e i r o b l i g a t i o n s , a n d n o r e d r e s s t o c o n s u m e r s a f f e c t e d b y o f f e n d i n g c o n d u c t . " 1 8 T h e 1 9 7 7 W o r k i n g P a r t y o n c o n s u m e r p o l i c y a d v i s e d t h e G o v e r n m e n t t h a t t h e r e w a s a n e e d f o r r e f o r m o f t h e l e g i s l a t i o n r e l a t i n g t o t r a d e p r a c t i c e s a n d c o n s u m e r p r o t e c t i o n . 1 9 A n u m b e r o f d e f e c t s i n t h e p r i o r l e g i s l a t i o n w e r e i d e n t i f i e d , i n c l u d i n g a l a c k o f c l e a r e n f o r c e a b l e s t a n d a r d s o f t r a d i n g c o n d u c t , a n e e d f o r r e a d i l y a c c e s s i b l e r e m e d i e s a n d a n e e d f o r e f f e c t i v e c o n s u m e r s a f e t y p r o v i s i o n s . B. COMPLY WITH OBLIGATIONS UNDER ECONOMIC RELATIONS AGREEMENT WITH AUSTRALIA T h e N e w Z e a l a n d - A u s t r a l i a C l o s e r E c o n o m i c R e l a t i o n s T r a d e A g r e e m e n t ( C E R ) c a m e i n t o f o r c e o n 1 J a n u a r y 1 9 8 3 . A r t i c l e 2 1 p r o v i d e d f o r h a r m o n i s a t i o n o f c u s t o m s , p o w e r s a n d p r o c e d u r e s i n t h e t w o c o u n t r i e s a n d f o r a r e v i e w o f t h e a g r e e m e n t i n 1 9 8 8 t o 18 Parliamentary Debates, vol. 472, p. 2499, 1 July 1986. 1 9 Brown and Grant, The Law of Intellectual Property in New Zealand, 1989, Butterworths, Wellington, para. 7.2. For a discussion of the relationship between section 9 and the common law, as opposed to its relationship to the prior legislation, refer E . K . Paton.yl Comparison Between Section 9 of the Fair Trading Act 1986 and the Common Law [1988-1991] 6 A . U . L . R . 14. 10 c o n s i d e r t h e h a r m o n i s a t i o n o f g o v e r n m e n t e c o n o m i c p o l i c i e s a n d p r a c t i c e s . 2 0 I n i n t r o d u c i n g t h e F a i r T r a d i n g B i l l , t h e M i n i s t e r o f C o n s u m e r A f f a i r s s a i d t h a t t h e i n c l u s i o n i n i t o f c e r t a i n u n f a i r p r a c t i c e s : " [ W ] i l l b r i n g t h e c o u n t r y ' s t r a d i n g l a w i n t o l i n e w i t h t h a t a p p l y i n g i n A u s t r a l i a , r e c o g n i s i n g t h e d e s i r a b i l i t y o f p r o g r e s s i v e l y h a r m o n i s i n g m a r k e t - p l a c e l a w s b e t w e e n o u r t w o c o u n t r i e s . " 2 1 T h e c o u r t s h a v e r e c o g n i s e d t h a t p o l i c y o f h a r m o n i s a t i o n w h e n i n t e r p r e t i n g t h e s t a t u t e a n d h e l d t h a t " c o n s i s t e n c y i n t h e a p p l i c a t i o n o f t h e l e g i s l a t i o n i n t h e C E R c o u n t r i e s s h o u l d c l e a r l y b e a i m e d a t s o f a r a s r e a s o n a b l y p r a c t i c a b l e " 2 2 a n d t h a t t h e A u s t r a l i a n a u t h o r i t i e s w o u l d b e a n i m p o r t a n t g u i d e t o i n t e r p r e t a t i o n o f t h e N e w Z e a l a n d A c t . 2 3 C. CREATE A MORE EFFICIENT MARKET T h e f o r e b e a r s o f t h e N e w Z e a l a n d F a i r T r a d i n g A c t a r e t h e U . S . F e d e r a l T r a d e 2 0 A Memorandum on the Harmonisation of Business Law between the two countries was signed in 1988. 21 Parliamentary Debates, vol. 467, p. 7885, 7 November 1985. Refer generally Department of Trade and Industry Fair Trading Act Explanatory Booklet, 1985, Government Printer, Wellington; Brown and Grant, supra, note 19, para. 7.2. 22 Taylor Bros. Ltd. v Taylors Group Ltd. [1988] 2 N Z L R 1, per Cooke P. at p. 39 (C.A.) . 2 3 Ibid, per McGechan J. at p. 26 and per Cooke P. at p. 39. Note also the comment of Cooke P. in Comite Interprofessionel du Vin de Champagne v Wineworths Ltd. [1992] 2 N . Z . L . R . 327 (the 'Champagne' case) at p. 331 that, while integration is desirable to protect the legitimate interests of Australian traders, "the protection of illegitimate interests is another matter." 11 C o m m i s s i o n A c t 2 4 a n d t h e A u s t r a l i a n T r a d e P r a c t i c e s A c t 1 9 7 4 . S e c t i o n 9 o f t h e N e w Z e a l a n d A c t w a s m o d e l l e d o n s e c t i o n 5 2 o f t h e A u s t r a l i a n A c t , w h i c h m a y n o t h a v e b e e n m o d e l l e d o n , b u t w a s c e r t a i n l y i n f l u e n c e d b y , s e c t i o n 5 o f t h e U . S . A c t . T h o s e t w o p r o v i s i o n s w e r e e n a c t e d p r i m a r i l y t o a d v a n c e e f f i c i e n c y i n t h e m a r k e t p l a c e . 1. U.S. Federal Trade Commission Act (the "FTC Act") T h e h i s t o r y o f t h e F T C A c t i s c l o s e l y c o n n e c t e d w i t h t h a t o f t h e S h e r m a n A n t i - T r u s t A c t , t h e t w o A c t s b e i n g p a s s e d b y t h e s a m e C o n g r e s s . 2 5 U n d e r t h e S h e r m a n A c t , t h e D e p a r t m e n t o f J u s t i c e w a s c h a r g e d w i t h a t t a c k i n g ; o n e , c o m b i n a t i o n s a n d c o n s p i r a c i e s i n r e s t r a i n t o f t r a d e ; a n d , t w o , m o n o p o l i s a t i o n a n d a t t e m p t s t o m o n o p o l i s e . ' 2 6 T h e A c t w a s p a s s e d i n r e s p o n s e t o a p e r c e i v e d t h r e a t a r i s i n g f r o m c o n c e n t r a t i o n o f b u s i n e s s a n d e c o n o m i c p o w e r i n t h e h a n d s o f a f e w b u s i n e s s e s d u r i n g a n d a f t e r t h e C i v i l W a r 2 7 I t w a s c o n s i d e r e d i m p r a c t i c a l a n d u n e n f o r c e a b l e f r o m t h e s t a r t 2 8 a n d w a s s h o r t l y t h e r e a f t e r c i r c u m s c r i b e d b y t h e c o u r t s , w h o h e l d t h a t i t w a s n o t e v e r y r e s t r a i n t o f t r a d e t h a t w a s c a u g h t b y t h e A c t b u t o n l y ' u n r e a s o n a b l e ' r e s t r a i n t s 2 9 A r e s u l t w a s t h e 2 4 15 U.S .C. 45 (1914). 2 5 G . Rublee, The Original Plan and Early History of the Federal Trade Commission (1926) 11 Proceedings of the Academy of Political Science (N.Y.) 666. 2 6 E . R . Baker and D J . Baum, Section 5 of the Federal Trade Commission Act: A Continuing Process of Redefinition (1962) 7 V i l l . L . R . 517, 520. 2 7 R . M . Dietrich, The Federal Trade Commission and Consumer Protection [1973] 1 A . B . L . R . 204, 206- 207. 2 8 Baker and Baum, supra, note 26. 29 Standard Oil Co. of New York v United States 221 U.S. 1 (1911). 12 p a s s i n g o f t h e F T C A c t i n 1 9 1 4 . 3 0 I t s p u r p o s e , t h e r e f o r e , w a s t o r e m e d y d i s s a t i s f a c t i o n o v e r e n f o r c e m e n t o f t h e S h e r m a n A c t , t o a d d r e s s C o n g r e s s ' c o n c e r n s o v e r e c o n o m i c c o n c e n t r a t i o n a n d m o n o p o l i s a t i o n a n d t o c o u n t e r t h e i n e f f i c i e n c i e s t h a t a r i s e f r o m t h e s a m e . I t i s c l e a r t h a t t h e F T C A c t w a s n o t a i m e d a t d e c e p t i v e o r d i s h o n e s t p r a c t i c e s i n t r a d e a n d t h a t C o n g r e s s n e v e r h a d t h a t i s s u e i n m i n d . 3 1 S e c t i o n 5 w a s t h e k e y p r o v i s i o n o f t h e A c t , p r o v i d i n g t h a t : " U n f a i r m e t h o d s o f c o m p e t i t i o n i n c o m m e r c e a r e h e r e b y d e c l a r e d u n l a w f u l . " 3 2 2. The Australian Trade Practices Act 1974 (the "Trade Practices Act") T h e h i s t o r y o f f e d e r a l r e g u l a t i o n o f t r a d e p r a c t i c e s i n A u s t r a l i a , p r i o r t o 1 9 7 4 , w a s n o t a v e r y h a p p y o n e . 3 3 T h e A u s t r a l i a n I n d u s t r i e s P r e s e r v a t i o n A c t 1 9 0 6 , m o d e l l e d o n t h e M A detailed account of events leading up to passing of the Act can be found at Baker and Baum, supra, note 26. 3 1 G . Rublee, supra, note 25 at p. 117; Note, Corrective Advertising Orders of the Federal Trade Commission [1971] 85 Harv. L . R . 477, 479; --I.M. Millstein, The Federal Trade Commission and False Advertising [1964] 64 Colum. L . R . 439, 450. For a summary and analysis of the Senate debates, refer G.H.Montague, Unfair Methods of Competition [1915] 25 Yale L.J . 20. 3 2 As originally drafted, the section did not contain the words "methods of", which were added because of concerns that the original wording would be construed narrowly by the courts, to mean only passing off; refer Baker and Baum, supra note 26, pp. 528 and following. 3 3 L ike the F T C Act, the TP Act regulates only interstate, and not intrastate, trade. In Australia, there are state laws relating to matters also dealt with in Part V of the TP Act, but it is generally considered that their impact has been negligible, mainly due to poor enforcement. Only the federal law wil l be discussed here, for four reasons; one, the state laws are piecemeal and not uniform - there are various statutes dealing with consumer credit, weights and measures, health and safety, food, trading stamps, false and misleading advertising, door to door sales and unordered goods and services. Those statutes generally create offences but do not provide for civil remedies or for private rights of action. Queensland (1989), New South Wales (1987), Victoria (1985) and Western Australia (1987) have also passed Fair Trading Acts which are in similar form to the federal Act and regulate intrastate trade; two, Australia is a single 13 U . S . S h e r m a n A c t , w a s g i v e n a v e r y n a r r o w i n t e r p r e t a t i o n b y t h e c o u r t s , f e l l i n t o d i s u s e a n d w a s r e p e a l e d i n 1 9 6 5 . 3 4 I t w a s r e p l a c e d b y t h e T r a d e P r a c t i c e s A c t 1 9 6 5 w h i c h , l i k e t h e F T C A c t , w a s i n t e n d e d t o a d d r e s s r e s t r i c t i v e t r a d e p r a c t i c e s a n d m o n o p o l i s a t i o n . 3 5 I t s s u c c e s s i n t h a t r e g a r d i s d e b a t a b l e a n d i t w a s s o o n d i s c o v e r e d n o t t o a d d r e s s a d e q u a t e l y a l l t h e p r a c t i c e s b y w h i c h t r a d e c o u l d b e r e s t r i c t e d ; 3 6 f r e e , e f f i c i e n t , c o m p e t i t i o n i n t e r f e r e d w i t h ; s m a l l b u s i n e s s e s d i s c r i m i n a t e d a g a i n s t a n d c o n s u m e r s e x p l o i t e d . 3 7 W h i l e p r o t e c t i o n o f c o n s u m e r s f r o m u n f a i r p r a c t i c e s w a s c l e a r l y l a r g e i n t h e c o l l e c t i v e m i n d o f t h e l e g i s l a t u r e , t h e B i l l h a d a n o t h e r i m p o r t a n t p u r p o s e i n r e l a t i o n t o t h e c o n t r o l o f i n f l a t i o n . A 1 9 7 1 O E C D r e c o m m e n d a t i o n o n a c t i o n a g a i n s t i n f l a t i o n i n t h e f i e l d o f c o m p e t i t i o n p o l i c y 3 8 w a s f o l l o w e d b y a r e p o r t t a b l e d i n P a r l i a m e n t b y t h e C o m m i s s i o n e r o f T r a d e P r a c t i c e s t o t h e e f f e c t t h a t r e s t r i c t i v e t r a d e p r a c t i c e s i n h i b i t e f f e c t i v e market and the TP Act recognises that and is part of a change of emphasis from state to federal control of trading practices, with a view to achieving greater uniformity; three, as noted, the record of enforcement of state laws has been poor; and, fourth and most important, the New Zealand Fair Trading Act is modelled on the TP Act and not on any state legislation. For a discussion of the issues arising from the overlap of state and federal jurisdictions in this area refer J .L. Goldring and L . W . Maher, Consumer Protection Law in Australia, 2d ed. 1983, Butterworths, Sydney, chp. 2 and paras. 1040-1042; C C H Guidebook to Australian Trade Practices Law, 2d ed. 1979, C C H Australia Ltd. , North Ryde, N.S.W., para. 112; Donald and Heydon, 1 Trade Practices Law, 1978, The Law Book Co. Ltd. , Sydney, para. 1.2; Pengilley and Ransom, Federal Deceptive Practices and Misleading Advertising Law: Judgments, Materials and Policy, 1987, Legal Books Pty. Ltd., Sydney, pp. xxvii-xxxii. 3 4 Donald and Heydon, ibid, p.5. 3 5 A matter addressed by a Committee of Economic Enquiry in 1965. 3 6 Donald & Heydon, supra, note 33, pp. 7-9. 37 House of Representatives Parliamentary Debates, vol. 18-20, p. 2733, 25 October 1973. Idem. 14 c o m p e t i t i o n a n d m a k e c o n t r o l o f i n f l a t i o n m o r e d i f f i c u l t . 3 9 W h e r e a s t h e A u s t r a l i a n T r a d e P r a c t i c e s A c t d e a l s w i t h b o t h r e s t r i c t i v e t r a d e p r a c t i c e s a n d c o n s u m e r p r o t e c t i o n , e a c h i s a d d r e s s e d i n s e p a r a t e A c t s i n N e w Z e a l a n d , t h e f o r m e r i n t h e C o m m e r c e A c t 1 9 8 6 . 4 0 T h e F a i r T r a d i n g B i l l w a s s a i d t o b e a " c o m p a n i o n o r c o u n t e r p a r t " t o t h e C o m m e r c e A c t : " W h e r e a s t h e C o m m e r c e B i l l p r o m o t e s w o r k a b l e a n d e f f e c t i v e c o m p e t i t i o n i n t h e m a r k e t s o f N e w Z e a l a n d b y c o n t r o l l i n g r e s t r i c t i v e t r a d e p r a c t i c e s a n d a n t i - c o m p e t i t i v e m e r g e r s a n d t a k e o v e r s , t h e F a i r T r a d i n g B i l l i s d e s i g n e d t o e n a b l e c o n s u m e r s t o t a k e a d v a n t a g e o f t h e i n c r e a s e d c o m p e t i t i o n b y m a k i n g s u r e t h a t t h e y r e c e i v e a c c u r a t e i n f o r m a t i o n t h a t a l l o w s t h e m t o m a k e r a t i o n a l c h o i c e s a b o u t t h e g o o d s a n d s e r v i c e s a v a i l a b l e . " 4 1 T h e F a i r T r a d i n g A c t a n d t h e C o m m e r c e A c t a r e b o t h a d m i n i s t e r e d b y t h e C o m m e r c e C o m m i s s i o n . 3 9 Ibid, p. 2912, 7 November 1973. 4 0 Possibly to avoid the thorny issue that arises when both are dealt with in the same Act, namely how to reconcile the competing policy considerations for the two. For a discussion of that issue in relation to the Australian Act" refer Parkdale Custom Built Furniture Pty. Ltd. v Puxu Pty. Ltd. (1981-82) 149 C .L .R . 191 (H.CAust . ) , per Mason J. at pp. 204-205. 41 Parliamentary Debates, vol. 467, p. 7896, 7 November 1985. While concentration of ownership benefits the consumer in harnessing technological advance to large scale production and results in higher productivity and higher incomes, it also leads to monopolisation and restrictive trade practices. Since World War II, Governments in many developed nations have enacted legislation to address that issue. 15 D. PROTECT CONSUMERS N o t w i t h s t a n d i n g t h e l e g i s l a t i v e i n t e n t , t h e U . S . F e d e r a l T r a d e C o m m i s s i o n a t t a c k e d f a l s e a d v e r t i s i n g f r o m t h e o u t s e t . 4 3 I t s a b i l i t y t o d o s o s u f f e r e d a s e t b a c k i n t h e f o r m o f t h e d e c i s i o n i n FTC v Raladam Co.,44 i n w h i c h a u n a n i m o u s S u p r e m e C o u r t h e l d t h a t f a l s e a d v e r t i s e m e n t s c o u l d b e p r o h i b i t e d b y t h e F T C o n l y w h e r e t h e y a f f e c t e d c o m p e t i t o r s o f t h e r e s p o n d e n t , r e g a r d l e s s o f d e c e p t i o n o f t h e p u b l i c . I n r e s p o n s e , C o n g r e s s p a s s e d t h e W h e e l e r - L e a A c t , 4 5 a m e n d i n g s e c t i o n 5 t o p r o v i d e t h a t : " U n f a i r m e t h o d s o f c o m p e t i t i o n i n c o m m e r c e , and unfair or deceptive acts or practices in commerce, a r e h e r e b y d e c l a r e d u n l a w f u l . " 4 6 A r e s u l t o f t h e W h e e l e r - L e a a m e n d m e n t w a s t h a t , f r o m t h e t i m e o f i t s e n a c t m e n t , t h e C o m m i s s i o n c o u l d c e n t r e i t s a t t e n t i o n o n p r o t e c t i o n o f c o n s u m e r s f r o m d e c e p t i o n . 4 7 E v i d e n c e t h a t s u c h w a s i n t e n d e d c a n b e s e e n , f o r e x a m p l e , i n t h e f a c t t h a t t h e n e w 42 Supra, note 31 and text. 4 3 Refer Millstein, supra, note 31, p. 451. 4 4 283 U.S. 643 (1931). 4 5 52 Stat. 114 (1938) U.S.C. 52 (1958). 4 6 Writer's emphasis. The Wheeler-Lea Act also added broader powers of enforcement; in particular it gave the Commission power to seek interim injunctions, created criminal penalties and set a time limit of sixty days for respondents to seek review of cease and desist orders; Legislation Note, The Federal Trade Commission Act of 1938 [1939] 39 Colum. L.R. 259; M. Handler, The Control of False Advertising Under the Wheeler-Lea Act [1939] 6 Law and Contemporary Problems 91; E.W. Kintner, Federal Trade Commission Regulation of Advertising [1966] 64 Mich. L.R. 1269, 1277. 4 7 That being a subset of consumer protection generally: "[A]ll that state and private activity, which is designed to protect shoppers against defective goods, physical injury, deception, unfair terms in contracts and undue pressure stemming from aggressive salesmanship": D. Swann, Competition and Consumer Protection, 1979, Penguin Books, Harmondsworth, England, p. 267. 16 i n j u n c t i v e r e m e d y w a s a v a i l a b l e o n l y w h e n t h e C o m m i s s i o n h a d r e a s o n t o b e l i e v e t h a t a n i n j u n c t i o n w o u l d b e " t o t h e i n t e r e s t o f t h e p u b l i c . " 4 8 T h e w o r d s ' u n f a i r ' a n d ' d e c e p t i v e ' w e r e b o t h i n t e n d e d t o h a v e w i d e m e a n i n g s a n d t o b e f l e x i b l e t o m e e t n e w c o n d i t i o n s a n d p e r c e p t i o n s . 4 9 D e c e p t i o n h a s b e e n h e l d t o i n c l u d e u s i n g a n o t h e r ' s n a m e a s o n e ' s o w n 5 0 a n d f a l s e l y r e p r e s e n t i n g t h a t a p r o d u c t h a s a c e r t a i n o r i g i n , 5 1 t h u s c o v e r i n g t h e s c o p e o f p a s s i n g o f f . R . M . D i e t r i c h , G e n e r a l C o u n s e l f o r t h e U . S . F e d e r a l T r a d e C o m m i s s i o n , a s s i s t e d w i t h d r a f t i n g o f t h e A u s t r a l i a n A c t 5 2 a n d s e c t i o n 5 2 , i n p a r t i c u l a r , i s s a i d t o b e m o d e l l e d o n s e c t i o n 5 o f t h e F T C A c t . 5 3 S e c t i o n 5 2 p r o v i d e s t h a t : " A c o r p o r a t i o n s h a l l n o t , i n t r a d e o r c o m m e r c e , e n g a g e i n c o n d u c t t h a t i s m i s l e a d i n g o r d e c e p t i v e . " T h e r e l a t i o n s h i p b e t w e e n s e c t i o n s 5 a n d 5 2 w a s c o n s i d e r e d i n Hornsby Building Information Centre Pty. Ltd. v Sydney Building Information Centre Ltd. , 5 4 S t e p h e n J h e l d 4 8 Section 13. To begin with, injunctions under section 13 were available only for breaches of section 12, which prohibits false advertising in relation to food, drugs, devices or cosmetics. By a rider to the Trans-Alaska Pipeline Authorization Act (15 U.S.C. 53(b)) the power of the Commission to obtain injunctions was extended to all subject matters under its jurisdiction. 4 9 Hearings on S. 3744 before the House Committee on Interstate and Foreign Commerce, 74th Congress, 2d. Session 14, 79-80, 85-86, 88-91. 5 0 E.g. Standard Brands, Inc. v Smidler, 151 F.2d. 34 (2d. Cir . 1945). 5 1 E.g. El Moro Cigar Co. v FTC, 107 F. 2d. 429 (4th Cir. 1939). 5 2 R . M . Dietrich, supra note 27. 5 3 For example, Goldring and Maher, supra, note 33, para. 708. 5 4 [1977-1978] 140 C .L .R . 216 (H.CAust . ) . 17 t h a t t h e t w o s e c t i o n s w e r e " s i g n i f i c a n t l y d i f f e r e n t b o t h i n f o r m a n d i n o r i g i n " b e c a u s e t h e U . S . p r o v i s i o n , w h e n f i r s t e n a c t e d , w a s e x c l u s i v e l y c o n c e r n e d w i t h " u n f a i r m e t h o d s o f c o m p e t i t i o n i n c o m m e r c e " a n d w a s n o t c o n c e r n e d w i t h " u n f a i r o r d e c e p t i v e a c t s o r p r a c t i c e s i n c o m m e r c e " u n t i l a m e n d e d i n 1 9 3 8 . H e f u r t h e r h e l d t h a t : " S e c t i o n 5 2 o f o u r A c t i s o n t h e c o n t r a r y e x c l u s i v e l y c o n c e r n e d w i t h c o n s u m e r p r o t e c t i o n . I t s a y s n o t h i n g a b o u t u n f a i r a c t s o r p r a c t i c e s b u t d e v o t e s i t s e l f t o t h e p r o h i b i t i o n o f c o n d u c t w h i c h m i s l e a d s o r d e c e i v e s . " 5 5 W i t h r e s p e c t , t h e w r i t e r d i s a g r e e s t h a t t h e s e c t i o n w a s e x c l u s i v e l y c o n c e r n e d w i t h c o n s u m e r p r o t e c t i o n . I t i s c l e a r f r o m t h e b a c k g r o u n d t o t h e e n a c t m e n t t h a t s e c t i o n 5 2 w a s a l s o a i m e d a t r e d u c i n g i n e f f i c i e n c y . ' U n f a i r n e s s ' w a s d e l i b e r a t e l y l e f t o u t o f s e c t i o n 5 2 , i t b e i n g t h e o p i n i o n o f t h e T r a d e P r a c t i c e s R e v i e w C o m m i t t e e t h a t i t w o u l d , i n A u s t r a l i a n c o n d i t i o n s , r e s u l t i n " a c o n s i d e r a b l e d e g r e e o f u n c e r t a i n t y i n c o m m e r c i a l t r a n s a c t i o n s . " 5 6 I n 1 9 7 6 , t h e T r a d e P r a c t i c e s A c t w a s r e v i e w e d b y t h e S w a n s o n C o m m i t t e e , w h i c h f o r m e d a v i e w t h a t t h e r e c o n t i n u e d t o b e a n i m b a l a n c e o f b a r g a i n i n g p o w e r b e t w e e n s e l l e r s a n d b u y e r s , t o t h e b e n e f i t o f t h e f o r m e r , a n d r e c o m m e n d e d a n u m b e r o f a m e n d m e n t s t o s t r e n g t h e n t h e c o n s u m e r p r o t e c t i o n p r o v i s i o n s . 5 7 M a n y o f t h e C o m m i t t e e ' s 5 5 Ibid, p.226. 5 6 Trade Practices Review Committee, Report to the Minister of Business and Consumer Affairs, August 1976, Australian Government Publication Service, Canberra. 5 7 The Committee was also of the view that uncertainties of interpretation were causing some difficulties and could be inhibiting innovation; refer C C H Guidebook to Australian Trade Practices Law, supra, note 33; Brown and Grant, supra, note 19, para. 7.2. 18 r e c o m m e n d a t i o n s w e r e e f f e c t e d b y t h e T r a d e P r a c t i c e s A m e n d m e n t A c t 1 9 7 7 , i n c l u d i n g s u b s t i t u t i o n o f a w i d e r d e f i n i t i o n o f " c o n s u m e r " , 5 8 r e m o v a l o f t h e i m p r i s o n m e n t p e n a l t y , c r e a t i o n o f w i d e r p o w e r s f o r t h e g r a n t o f i n j u n c t i o n s 5 9 a n d p o w e r t o o r d e r a f f i r m a t i v e d i s c l o s u r e o r c o r r e c t i v e a d v e r t i s i n g , s u b j e c t t o a m a x i m u m e x p e n d i t u r e . 6 0 I t w a s p a r t o f t h e e l e c t i o n p l a t f o r m o f t h e 1 9 8 4 N e w Z e a l a n d L a b o u r G o v e r n m e n t t o " i n i t i a t e c o n s u m e r l a w r e f o r m " a n d t o " e n s u r e t h e o u t l a w i n g o f i n h i b i t i n g o r m i s l e a d i n g a d v e r t i s i n g , w a s t e f u l o r d e c e p t i v e p a c k a g i n g , a n d w o r t h l e s s g u a r a n t e e s a n d t h e e n f o r c e m e n t o f f a i r p r o d u c t s a f e t y a n d i n f o r m a t i o n p r o v i s i o n s . " 6 1 T h e F a i r T r a d i n g A c t s o u g h t t o e s t a b l i s h a f a i r e r b a l a n c e b e t w e e n t r a d e r s a n d c o n s u m e r s , p a r t i c u l a r l y t h o s e o n l o w e r i n c o m e s a n d f o r w h o m E n g l i s h w a s n o t a f i r s t l a n g u a g e . 6 2 A s f a r a s t h i s e l e m e n t o f t h e p u b l i c p o l i c y r a t i o n a l e i s c o n c e r n e d , s e c t i o n 9 w a s p r i m a r i l y a i m e d a t p r o t e c t i n g c o n s u m e r s f r o m m i s l e a d i n g a n d d e c e p t i v e a d v e r t i s i n g , 6 3 a n a r e a i n w h i c h t h e A u s t r a l i a n A c t h a s p r o v i d e d i t s c h i e f b e n e f i t s . 6 4 5 8 Section 4B. The term was deliberately left undefined in the New Zealand Act because the Government wanted the Act to be as broad as possible and did not want to restrict the courts by "unnecessarily tight definitions": Parliamentary Debates, vol. 474, p. 4548, 23 September 1986. In its submission on the B i l l , the Consumer Council expressed concern that no definition of consumer was included: Consumer Council Submission on the Fair Trading Bill, 6 December 1985, paras. 3.1 - 3.4. 5 9 Section 80. 6 0 Section 8 0 A 61 Parliamentary Debates, vol. 472, p. 2499, 1 July 1986. 6 2 Ibid, vol. 467, p. 7888, 7 November 1985. 6 3 Ministry of Consumer Affairs, Guide to the Fair Trading Act 1986, p.3. 6 4 W. Pengilly, The New Zealand Fair Trading Act, The likely impact of the law and commercial conduct in light of Australian experience (1987) N . Z . L . J . 59, 67. 19 I t h a s b e e n s a i d t h a t s e c t i o n 9 i s o n e o f t h e p i v o t a l p r o v i s i o n s o f t h e A c t . 6 5 I t h a s b e e n h e l d t h a t i t i s c o n s u m e r p r o t e c t i o n l e g i s l a t i o n a n d " . . . m u s t b e c o n s t r u e d i n a w a y t h a t e n a b l e s i t t o a c h i e v e i t s p u r p o s e s " , 6 6 a n d t h a t t h e e f f e c t o f t h e s e c t i o n i s t h a t " . . . m e m b e r s o f t h e p u b l i c h a v e a r i g h t n o t t o b e m i s l e d a b o u t w i t h w h o m t h e y a r e d e a l i n g " . 6 7 A s u g g e s t i o n t h a t a p l a i n t i f f m u s t s h o w t h a t t h e c o n d u c t c o m p l a i n e d o f h a s a q u a n t i f i a b l e i m p a c t o n t h e i n t e r e s t s o f c o n s u m e r s h a s b e e n e x p r e s s l y r e j e c t e d , t h e C o u r t o f A p p e a l h o l d i n g t h a t s u c h a t t e m p t s t o " . . . a d d a g l o s s t o t h e A c t . . . " s h o u l d b e d i s c o u r a g e d a n d t h a t o n e m u s t a l w a y s r e t u r n * t o t h e o r d i n a r y w o r d s o f t h e s e c t i o n a n d a p p l y t h e m t o t h e f a c t s . 6 8 C a s e y J . e x p r e s s e d a s i m i l a r v i e w i n Mills v United Building Society: " T h e s i m p l e l a n g u a g e . . . o f s e c t i o n 9 i s c l e a r a n d u n a m b i g u o u s a n d , a t l e a s t f o r t h e r e s o l u t i o n o f a s t r a i g h t f o r w a r d c a s e s u c h a s t h i s , r e q u i r e s n e i t h e r i n t e r p r e t a t i o n n o r q u a l i f i c a t i o n b e y o n d o b s e r v i n g t h a t t h e A c t i s i n t e n d e d t o o p e r a t e i n a s o c i e t y w h i c h e x p e c t s t h a t i n g e n e r a l , h o n e s t p e o p l e m a y b u y a n d s e l l w h a t t h e y p l e a s e . " 6 9 I n Taylor Bros. Ltd. v Taylors Group Ltd., t h e C o u r t o f A p p e a l h e l d t h a t : 6 5 Brown and Grant, supra, note 19, para. 7.8. 66 Goldsbro v Walker [1993] 1 N Z L R 394 (H.C.), per Hardie-Boys J. at p. 406. 67 Taylor Bros. Ltd., supra, note 22, per Cooke P. at p.40; Trust Bank Auckland Ltd. v ASB Bank Ltd. [1989] 3 N Z L R 385, per Cooke P. at 389; Allied Liquor Merchants Ltd. v Independent Liquor (N.Z.) Ltd., unreported, High Court, Auckland, 20 December 1989, CP 2614/89, Gault J. 68 Taylor Bros Ltd., ibid, p. 40. A similar view was expressed in Levi Strauss v Kimbyr Investments [1994] 1 N Z L R 332 (H.C.), per Williams J. at p. 382, in relation to the argument that only point of sale confusion would attract liability. It was held that the protection of the Act is available to potential, as well as actual, purchasers. 6 9 [1988] 2 N Z L R 392, per Casey J. at p. 413. 20 " A s t o w h e n c o n d u c t i s t o b e c h a r a c t e r i s e d a s m i s l e a d i n g o r d e c e p t i v e , j u d u c i a l e x e g e s i s c a n d o l i t t l e a t a g e n e r a l l e v e l t o e x p a n d u p o n t h e o r d i n a r y w o r d s o f t h e s e c t i o n ; a n d o b v i o u s l y i t c a n n o t b e a l l o w e d t o s u p e r s e d e t h e m . I n t h e e n d o n e m u s t a l w a y s r e t u r n t o t h e m a n d a p p l y t h e m t o t h e p a r t i c u l a r f a c t s . " 7 0 I n Taco Company of Australia Inc. v Taco Bell Pty. Ltd.,71 t h e F e d e r a l C o u r t o f A u s t r a l i a h e l d t h a t c o n d u c t w i l l o n l y b e m i s l e a d i n g o r d e c e p t i v e i f i t c o n v e y s a m i s r e p r e s e n t a t i o n a n d t h a t w h e t h e r i t d o e s s o " [ I ] s a q u e s t i o n o f f a c t t o b e d e c i d e d b y c o n s i d e r i n g w h a t i s s a i d a n d d o n e a g a i n s t t h e b a c k g r o u n d o f a l l s u r r o u n d i n g c i r c u m s t a n c e s " . 7 2 T h e A u s t r a l i a n c o u r t s a p p e a r t o h a v e r e s i l e d f r o m t h a t p o s i t i o n t o a d e g r e e a n d t h e F e d e r a l C o u r t h a s s i n c e h e l d t h a t i t i s a t l e a s t a r g u a b l e t h a t t h e c o n v e y i n g o f a r e p r e s e n t a t i o n i s n o t a n e c e s s a r y c o n d i t i o n f o r e s t a b l i s h m e n t o f a c l a i m u n d e r s e c t i o n 5 2 . 7 3 T h e N e w Z e a l a n d c o u r t s h a v e n o t r e q u i r e d p l a i n t i f f s t o p o i n t t o a m i s r e p r e s e n t a t i o n t o b e s u c c e s s f u l i n a c l a i m u n d e r s e c t i o n 9 . I n s t e a d , t h e y r e q u i r e p l a i n t i f f s t o e s t a b l i s h a c a u s a t i v e l i n k b e t w e e n a n y m i s a p p r e h e n s i o n o n t h e p a r t o f t h e p u b l i c a n d t h e d e f e n d a n t ' s c o n d u c t . 7 4 70 Supra, note 22, per Cooke P at pp. 39-40. The Shorter Oxford dictionary defines 'mislead' as "to lead astray in conduct; to lead into error" and 'deceive' as "to cause to believe what is false; to lead into error, delude". 7 1 (1982) 42 A L R 177, 202 7 2 See also D . A . Rice, Toward a Theory and Legal Standard of Consumer Unfairness [1984] 5 Journal of Law & Commerce, 111. 73 Hunt Contracting Co. Pty. Ltd. v Roebuck Resources NL (1992) 110 A . L . R . 183, per French J. at p. 188; State Government Insurance Corporation v Government Insurance of New South Wales (1991) 101 A . L . R . 259, per French J. at p. 311. 7 4 cf. Cerebos Greggs Ltd. v Unilever New Zealand Ltd., unreported, High Court, Auckland, 3 June 1994, C L 71/93, Fisher J. 21 I t d o e s n o t m a t t e r t h a t n o c o n s u m e r i s i n v o l v e d i n t h e t r a n s a c t i o n ; t h e A c t a p p l i e s e q u a l l y t o c o r p o r a t i o n s d e a l i n g w i t h o n e a n o t h e r i n t r a d e o r c o m m e r c e . 7 5 A r i v a l t r a d e r m a y e n f o r c e s e c t i o n 9 a n d i s t h e u s u a l a p p l i c a n t . 7 6 F i n a l l y , i t i s c l e a r t h a t , i n t e r m s o f s e c t i o n 4 3 ( 1 ) a n d ( 2 ) , 7 7 t h e c o u r t h a s a d i s c r e t i o n w h e t h e r o r n o t t o m a k e a n y o r d e r s e v e n w h e r e i t h a s f o u n d c o n t r a v e n t i o n o f s e c t i o n 9 . T h e d i s c r e t i o n i s t o b e e x e r c i s e d t o g i v e e f f e c t t o t h e p o l i c y o f t h e A c t . M a t t e r s s u c h a s t h e c u l p a b i l i t y o f t h i r d p a r t i e s , t h e g r o s s c a r e l e s s n e s s o f t h e c o n s u m e r , a n d t h e m i n o r r o l e o f t h e c o n t r a v e n o r o f s e c t i o n 9 m a y p e r s u a d e t h e c o u r t t h a t j u s t i c e d o e s n o t r e q u i r e t h e c o n t r a v e n o r t o b e a r t h e f u l l l o s s s u s t a i n e d b y t h e c o n s u m e r . 7 8 I n Tot Toys v Mitchell19 i t w a s h e l d t h a t t h e d e f e n d a n t ' s ' t e c h n i c a l ' b r e a c h e s o f t h e A c t w e r e o u t w e i g h e d b y t h e i n t e r e s t s o f c o n s u m e r s a n d c o m p e t i t i o n , s o t h a t t h e p l a i n t i f f s a p p l i c a t i o n f o r a n i n j u n c t i o n w a s r e f u s e d . T h e c o u r t c a u t i o n e d t h a t i t w o u l d b e a n ' e x c e p t i o n a l ' c a s e i n w h i c h a r e m e d y w o u l d b e d e n i e d o n t h a t g r o u n d . 8 0 75 Artifakts Design Group Ltd. v N P Rigg Ltd. [1993] 1 N Z L R 196, 223-224. 76 Phelps v Western Mining Corporation Ltd. (1978) A T P R 40-077; Hornsby Building Information Centre Pty. Ltd. v Sydney Building Information Centre Ltd., supra, note 54, at pp. 396-397; World Series Cricket Pty Ltd. v Parish (1977) 16 A . L . R . 181, 203; Taylor Bros. Ltd., supra, note 22, at p. 39; the Champagne case, supra, note 23, per Cooke P. at 333. 7 7 Both of which provide that the court may make the orders set out there. 78 Goldsbro v Walker, supra, note 66, per Richardson J. at p. 404. 7 9 [1993] 1 N Z L R 325. 8 0 Ibid, p.370. 22 E. SUMMARY T h e r e i s n o t a s i n g l e p u b l i c p o l i c y r a t i o n a l e f o r s e c t i o n 9 ; r a t h e r , t h e r e i s a m i x o f r a t i o n a l e s w h i c h m a y o r m a y n o t b e c o m p l i m e n t a r y . A s f a r a s c u r i n g d e f e c t s i n t h e p r e v i o u s l e g i s l a t i o n i s c o n c e r n e d , t h e F a i r T r a d i n g A c t r a t i o n a l i s e s , a n d p o t e n t i a l l y g i v e s a f f e c t e d c o n s u m e r s d i r e c t r i g h t s o f r e d r e s s . W h e t h e r t h o s e a d d i t i o n a l r i g h t s a r e m e a n i n g f u l i s o n e o f t h e i s s u e s a d d r e s s e d i n c h a p t e r s t w o a n d f i v e . W h e t h e r t h e A c t a d d s c e r t a i n t y i s , p e r h a p s , o p e n t o d e b a t e , b e c a u s e o f a n a b s e n c e o f d e f i n i t i o n o f t e r m s i n c l u d i n g ' c o n s u m e r ' a n d ' t r a d e ' a n d b e c a u s e t h e b o u n d a r i e s o f w h a t c o n d u c t i s ' m i s l e a d i n g ' o r ' d e c e p t i v e ' a r e l e f t t o t h e c o u r t s t o d e c i d e . T h e w o r d s h a v e o r d i n a r y m e a n i n g s , h o w e v e r , a n d i t w i l l u s u a l l y b e a m a t t e r o f c o m m o n s e n s e w h e t h e r o r n o t t h e g o o d s , n a m e , m a r k o r o t h e r i n d i c i a o f o n e t r a d e r i s d e c e p t i v e l y s i m i l a r t o t h a t o f a n o t h e r . F u r t h e r , t h e d e c i s i o n s o f t h e A u s t r a l i a n c o u r t s u n d e r s e c t i o n 5 2 o f t h a t c o u n t r y ' s T r a d e P r a c t i c e s A c t h a v e b e e n a n d w i l l c o n t i n u e t o b e o f s i g n i f i c a n t a s s i s t a n c e . T o t h e e x t e n t t h a t c o m p e t i t i o n l a w a n d t r a d e l a w g o h a n d i n h a n d , t h e F a i r T r a d i n g A c t c o m p l e m e n t s t h e C o m m e r c e A c t a n d t o g e t h e r t h e t w o A c t s r e p r e s e n t c o m p l i a n c e w i t h N e w Z e a l a n d ' s C E R o b l i g a t i o n s a n d b r i n g N e w Z e a l a n d t r a d e p r a c t i c e s l a w i n t o l i n e w i t h F e d e r a l A u s t r a l i a n t r a d e p r a c t i c e s l a w . T h e y w e r e d e s i g n e d t o p r o m o t e e f f e c t i v e 8 1 While lack of such definition is, in theory, not problematic, there remain the potential for problems when the courts supply definitions. The problems that arise from inappropriate definitions are discussed in chapter four. 23 c o m p e t i t i o n a n d a n e f f i c i e n t m a r k e t a n d t o e n a b l e c o n s u m e r s t o t a k e a d v a n t a g e o f t h a t , w i t h a f o c u s o n b o t h d o m e s t i c a n d T r a n s - T a s m a n m a r k e t s . 8 2 T h e e x t e n t t o w h i c h s e c t i o n 9 h a s t h e p o t e n t i a l f o r a d v a n c i n g e f f i c i e n c y a n d f o r p r o t e c t i n g c o n s u m e r s i s c o n s i d e r e d i n c h a p t e r t w o . T h e e x t e n t t o w h i c h t h e c o u r t s h a v e , i n f a c t , r e c o g n i s e d a n d g i v e n e f f e c t t o t h o s e l i m b s o f t h e p o l i c y r a t i o n a l e i s c o n s i d e r e d i n c h a p t e r f o u r . The body of water between New Zealand and Australia is called the Tasman Sea. CHAPTER TWO THEORETICAL EVALUATION OF THE PUBLIC POLICY RATIONALE INTRODUCTION I n c h a p t e r o n e , i t w a s e s t a b l i s h e d t h a t t h e t w o p r i n c i p a l l i m b s o f t h e p u b l i c p o l i c y r a t i o n a l e f o r s e c t i o n 9 a r e t o p r o m o t e e f f i c i e n c y a n d t o p r o t e c t c o n s u m e r s . I n t h i s c h a p t e r , t h e r e i s c o n s i d e r a t i o n o f t h e e x t e n t t o w h i c h s e c t i o n 9 i s a n a p p r o p r i a t e m e a n s o f a d v a n c i n g t h o s e t w i n g o a l s . I n p a r t A , t h e i s s u e o f w h e t h e r t h o s e g o a l s a r e e v e n c o m p l e m e n t a r y i s a d d r e s s e d a n d i t i s c o n c l u d e d t h a t t h e y a r e . I n p a r t B , t h e i s s u e a d r e s s e d i s w h e t h e r r e g u l a t i o n i s t h e b e s t m e a n s o f p r o m o t i n g t h o s e g o a l s . B e c a s u e ' e f f i c i e n c y ' i n t h i s c o n t e x t m e a n s e c o n o m i c e f f i c i e n c y , t h a t e v a l u a t i o n i s c a r r i e d o u t i n c l u d i n g b y a l a w a n d e c o n o m i c s a n a l y s i s . U n l i k e m o s t l a w a n d e c o n o m i c s a n a l y s i s , t h e i s s u e c o n s i d e r e d i s n o t s i m p l y w h e t h e r s e c t i o n 9 a c t i o n s r e s u l t i n e f f i c i e n t a l l o c a t i o n o f r e s o u r c e s b u t , r a t h e r , w h e t h e r t h e y h a v e t h e e c o n o m i c e f f e c t s t h e p u b l i c p o l i c y r a t i o n a l e p r o m o t e d . T h e f o c u s i s t h e e c o n o m i c e f f e c t s f o r a g r o u p o f s o c i e t y , n a m e l y c o n s u m e r s , r a t h e r t h a n f o r s o c i e t y a s a w h o l e , a l t h o u g h e f f i c i e n c y a n d n e t s o c i a l w e l f a r e d o f i g u r e i n t h e p u b l i c p o l i c y r a t i o n a l e . T h a t r a i s e s t h e i s s u e o f d i s t r i b u t i o n , o n 25 w h i c h m o r e i s s a i d i n c h a p t e r f i v e . T h e w r i t e r c o n c l u d e s t h a t , w h i l e t h e r e i s d e b a t e o v e r w h e t h e r a n d t o w h a t e x t e n t r e g u l a t i o n i n t h e m a r k e t p l a c e a i d s e f f i c i e n c y a n d i s t h e r e f o r e d e s i r a b l e , t h e a r g u m e n t s i n f a v o u r o f r e g u l a t i n g f o r c o n s u m e r p r o t e c t i o n a r e p e r s u a s i v e . A s a r e s u l t o f t h e t h e o r e t i c a l d i s c u s s i o n , s o m e p o t e n t i a l d e f i c i e n c i e s i n s e c t i o n 9 a n d t h e A c t a r e i d e n t i f i e d , n a m e l y t h a t ; o n e , t h e A c t l a c k s a d e q u a t e d e t e r r e n c e t o i n f r i n g i n g t r a d e r s ; t w o , l a c k s r e m e d i e s a c c e s s i b l e t o c o n s u m e r s ; a n d , t h r e e , f a i l s t o p r o t e c t l e s s c a p a b l e c o n s u m e r s - a r g u a b l y t h o s e t h e l e g i s l a t u r e h a d i n m i n d w h e n p a s s i n g t h e A c t . I n P a r t C , s u g g e s t i o n s a r e m a d e o n h o w t h e A c t s h o u l d b e a m e n d e d t o g i v e b e t t e r e f f e c t t o t h e p u b l i c p o l i c y r a t i o n a l e . P r i n c i p a l a m o n g t h e s u g g e s t e d a m e n d m e n t s a r e ; f i r s t , f o r t h e c o u r t s t o b e r e q u i r e d t o t a k e t h e i n t e r e s t s o f c o n s u m e r s i n t o a c c o u n t i n a c t i o n s b r o u g h t b y t r a d e r s 1 ; s e c o n d l y , f o r t h e d i s p u t e s t r i b u n a l s t o b e g i v e n j u r i s d i c t i o n t o h e a r a n d d e t e r m i n e a c t i o n s p u r s u a n t t o s e c t i o n 9 ; a n d , t h i r d l y , f o r c r i m i n a l p e n a l t i e s t o b e i m p o s e d i n c a s e s w h e r e t h e d e f e n d a n t h a d n o r e a s o n a b l e b a s i s f o r a b e l i e f t h a t i t s c o n d u c t w o u l d n o t a m o u n t t o p a s s i n g o f f . 1 Which is discussed further in chapters four and five. A. EFFICIENCY AND CONSUMER PROTECTION: CONSISTENT? 26 T h i s P a r t c o n t a i n s a d i s c u s s i o n o f t h e e x t e n t t o w h i c h t h e c o n s u m e r p r o t e c t i o n a n d e f f i c i e n c y l i m b s o f t h e r a t i o n a l e f o r s e c t i o n 9 a r e c o n s i s t e n t , i f a t a l l . I n e c o n o m i c t e r m s , p r o t e c t i o n o f c o n s u m e r s i s a m a t t e r o f d i s t r i b u t i o n , b e c a u s e t h a t p r o t e c t i o n w i l l e f f e c t a r e d i s t r i b u t i o n t o c o n s u m e r s f r o m t h e t r a d e r s w h o w o u l d o t h e r w i s e h a v e p r o f i t e d f r o m t h e i r p u r c h a s i n g e r r o r s . D i s t r i b u t i o n i s a m a t t e r t r a d i t i o n a l l y e x c l u d e d f r o m l a w a n d e c o n o m i c s , w h i c h h a s c o n c e r n e d i t s e l f o n l y w i t h n e t s o c i a l w e l f a r e . I t i s c o n c e r n e d w i t h m a x i m i s a t i o n o f n e t s o c i a l u t i l i t y a n d d i s r e g a r d s t h e w a y i n w h i c h t h a t u t i l i t y i s d i s t r i b u t e d a m o n g m e m b e r s o r g r o u p s i n s o c i e t y , u n l e s s t h a t h a s a n i m p a c t o n e f f i c i e n c y . 2 T h a t s u g g e s t s t w o t h i n g s : o n e , t h a t p r o m o t i o n o f e f f i c i e n c y d o e s n o t n e c e s s a r i l y r e q u i r e p r o t e c t i o n o f c o n s u m e r s ; a n d , t w o , t h a t p r o t e c t i o n o f c o n s u m e r s d o e s n o t n e c e s s a r i l y p r o m o t e e f f i c i e n c y . I n s u m , t h e r e i s n o t a n i n e v i t a b l e c o n n e c t i o n b e t w e e n t h e t w o . T h e a p p r o a c h o f d i s r e g a r d i n g d i s t r i b u t i o n h a s b e e n q u e s t i o n e d r e c e n t l y , o n t h e b a s i s t h a t t h e r e s u l t s o f a n a p p r o a c h b a s e d p u r e l y o n e f f i c i e n c y m a y w e l l o f f e n d m a n y n o t i o n s o f s o c i a l j u s t i c e : " A m o v e t o w a r d t h e e c o n o m i c a l l y o p t i m u m m a y w e l l b e a m o v e a w a y f r o m t h e s o c i a l l y o p t i m u m a s m a n y w o u l d u n d e r s t a n d t h e t e r m . " 3 2 The writer is aware that it has been argued, principally by Richard Posner, that the two concepts, economic efficiency and utilitarianism, are not synonymous but the writer finds the arguments made to support that view unconvincing: refer S. Rose, Law and Economics: Paradigm, Politics or Philosophy, in N . Mercuro (ed.), 1989, Kluwer Academic Publishers, Boston, 233, 242; A J . Duggan, The Economics of Consumer Protection: A Critique of the Chicago School Case Against Intervention, 1982, Adelaide Law Review Association, University of Adelaide, pp. 6, 97-98. 3 E . Mackaay, Economics of Information and Law, 1980, Groupe de Recherche de Consommation, University of Montreal, p. 26; refer also P .H . Aranson in J . M . Graf von der Schulenburg & G Skogh (eds.), Law and Economics and the Law of Economic Regulation, 1986, Kluwer Academic Publishers, Higham, Masachussetts, p. 39. 27 F u r t h e r , a n e f f i c i e n t m a r k e t i s o n e i n w h i c h r e s o u r c e s c o n t i n u a l l y g r a v i t a t e t o h i g h e r v a l u e u s e s . A p e r f e c t l y e f f i c i e n t m a r k e t ( i f t h e r e i s s u c h a t h i n g ) i s o n e i n w h i c h a l l r e s o u r c e s h a v e g r a v i t a t e d t o t h e i r m o s t h i g h l y v a l u e d u s e , s u c h t h a t n o p e r s o n c a n b e m a d e b e t t e r o f f w i t h o u t m a k i n g a n o t h e r p e r s o n w o r s e o f f . M a r k e t e f f i c i e n c y i s e n h a n c e d a s m o r e i n f o r m a t i o n a n d m o r e a c c u r a t e i n f o r m a t i o n g e t s i n t o t h e m a r k e t p l a c e a n d i n f o r m a t i o n i s , t h e r e f o r e , a k e y t o a n e f f i c i e n t m a r k e t . 4 B e c a u s e b u y e r s n e e d r e l i a b l e p r o d u c t i n f o r m a t i o n t o m a k e i n f o r m e d p u r c h a s i n g d e c i s i o n s , l a c k o f i n f o r m a t i o n w i l l r e s u l t i n p o o r l y i n f o r m e d b u y e r s w h o a r e n o t a b l e t o m a k e r a t i o n a l , i n f o r m e d p u r c h a s i n g d e c i s i o n s . T h e y w i l l b u y p r o d u c t s t h e y w o u l d n o t h a v e b o u g h t i f f u l l y i n f o r m e d , w i l l n o t b u y p r o d u c t s t h e y o t h e r w i s e w o u l d h a v e a n d m a y p a y m o r e f o r p r o d u c t s t h a n t h e y o t h e r w i s e w o u l d h a v e . L a c k o f i n f o r m e d b u y e r s w i l l , i n t u r n , r e s u l t i n l e s s i n c e n t i v e f o r s e l l e r s t o c o m p e t e o n p r i c e a n d q u a l i t y a n d l e s s i n c e n t i v e f o r t h e m t o i n n o v a t e . A r e s u l t w i l l b e t h a t s o m e r e s o u r c e s w i l l m o v e t o u s e s n o t m o r e h i g h l y v a l u e d a n d t h e m a r k e t w i l l n o t w o r k e f f i c i e n t l y . T h a t l i n k b e t w e e n c o n s u m e r p r o t e c t i o n a n d e f f i c i e n c y i s , h o w e v e r , s u b j e c t t o t h e p r o v i s o t h a t t h e i n f o r m a t i o n g e n e r a t e d m u s t b e t h e r i g h t k i n d o f i n f o r m a t i o n , t h a t i s , i n f o r m a t i o n t h a t r e d u c e s t h e p o s s i b i l i t y o f c o n s u m e r s b e i n g m i s l e d o r d e c e i v e d a b o u t t h e s o u r c e , o r a n y a t t r i b u t e , o f a p r o d u c t . I t a l s o g i v e s r i s e t o a n i s s u e a s t o h o w m u c h i n f o r m a t i o n s h o u l d b e g e n e r a t e d . A s w i t h a n y o t h e r r e s o u r c e , i n f o r m a t i o n c o m e s a t a c o s t . T h a t c o s t m u s t b e w e i g h e d a g a i n s t t h e c o s t , t o c o n s u m e r s a n d t o s o c i e t y g e n e r a l l y , o f h a v i n g c o n s u m e r s m i s l e d a n d d e c e i v e d . A s f a r a s t h e e f f i c i e n c y r a t i o n a l e i s c o n c e r n e d , o n e 4 E . Thomas Sullivan & Brian A . Marks, The FTC's Deceptive Advertising Policy: A Legal and Economic Analysis [1986] 64 Oregon L . R . 593, 620. 28 o u g h t t o s e e k t h e g e n e r a t i o n o f o n l y t h a t v o l u m e o f i n f o r m a t i o n t h a t i m p o s e s a c o s t l e s s t h a n o r e q u a l t o t h e c o s t i m p o s e d b y n o t r e g u l a t i n g f o r t h e p r o v i s i o n o f i m f o r m a t i o n . B e c a u s e t h e c o n s i s t e n c y b e t w e e n e f f i c i e n c y a n d c o n s u m e r p r o t e c t i o n i s l i m i t e d i n t h e w a y d e s c r i b e d , t h e i s s u e o f h o w t h e r e q u i r e d i n f o r m a t i o n s h o u l d b e g e n e r a t e d i s p r o b l e m a t i c . P a r t i c i p a n t s i n t h e d i s c u s s i o n o f t h e i s s u e s t h a t a r i s e c a n , b r o a d l y , b e l a b e l l e d a s t h o s e w h o f a v o u r r e g u l a t i o n a n d t h o s e w h o d o n o t . B. TO REGULATE OR TO NOT REGULATE Introduction I n t h i s p a r t , t h e r e i s a d d r e s s e d t h e i s s u e o f w h e t h e r o r n o t m a r k e t f o r c e s a l o n e w i l l g e n e r a t e t h e i n f o r m a t i o n r e q u i r e d t o e n s u r e e f f i c i e n t o p e r a t i o n o f t h e m a r k e t a n d a d e q u a t e p r o t e c t i o n o f c o n s u m e r s o r w h e t h e r , a l t e r n a t i v e l y , i t i s n e c e s s a r y a n d e f f i c i e n t t o r e g u l a t e . I n s e c t i o n o n e , t h e r e i s a s u m m a r y o f t h e a r g u m e n t s f o r a n d a g a i n s t r e g u l a t i o n . M u c h o f t h e d e b a t e c e n t r e s a r o u n d t h e e x t e n t t o w h i c h e x i s t i n g c o m p e t i t o r r e m e d i e s a n d c o n s u m e r r e m e d i e s a r e e f f e c t i v e . T h o s e r e m e d i e s a r e e x a m i n e d , i n s e c t i o n s t w o a n d t h r e e , a n d t h e w r i t e r c o n c l u d e s t h a t t h e y d o n o t g o f a r e n o u g h . T h a t l e a d s t o c o n s i d e r a t i o n o f t h e p o t e n t i a l r o l e o f a r e g u l a t o r y b o d y , i n s e c t i o n f o u r . I n s e c t i o n f i v e , t h e m a t t e r s a l r e a d y r a i s e d a r e c o n s i d e r e d i n r e l a t i o n t o s e c t i o n 9 . 2 9 1. The arguments O p p o n e n t s o f r e g u l a t i o n a r g u e t h a t m a r k e t a n d c o m p e t i t i v e f o r c e s r e s u l t i n t h e m o s t e f f i c i e n t f l o w o f i n f o r m a t i o n . T h e y t h e r e f o r e a l s o a r g u e t h a t r e g u l a t i n g t o p r o v i d e i n f o r m a t i o n 5 i s s u p e r f l u o u s a n d d i v e r t s r e s o u r c e s f r o m t h e i r h i g h e s t v a l u e u s e . T h i s i s p a r t o f t h e n e o - c l a s s i c a l s c h o o l o f e c o n o m i c t h e o r y t h a t d e v e l o p e d i n t h e 1 9 7 0 ' s , p r i n c i p a l l y a t t h e U n i v e r s i t y o f C h i c a g o . 6 A c c o r d i n g t o n e o - c l a s s i c a l e c o n o m i c t h e o r y , a l l i n d i v i d u a l s a r e f u l l y i n f o r m e d , r a t i o n a l m a x i m i s e r s o f t h e i r o w n s e l f i n t e r e s t a n d , a c c o r d i n g l y , t h e r e i s a p r o c e s s o f f r e e e x c h a n g e w h i c h w i l l l e a d t o t h e m o s t e c o n o m i c a l l y e f f i c i e n t a l l o c a t i o n o f r e s o u r c e s i n s o c i e t y , s u c h t h a t n o p e r s o n c a n b e m a d e b e t t e r o f f w i t h o u t m a k i n g a n o t h e r p e r s o n w o r s e o f f . 7 T h a t a l l o c a t i o n o f r e s o u r c e s i s s a i d t o b e P a r e t o o p t i m a l o r P a r e t o e f f i c i e n t . F o r e x a m p l e , s t e e l i s u s e d i n p r o d u c t i o n o f b o t h s t e a m r o l l e r s a n d c a r s . A c c o r d i n g t o t h e t h e o r y , t h e p r o c e s s o f f r e e e x c h a n g e w i l l r e s u l t i n t h e m o s t e f f i c i e n t s t e a m r o l l e r / c a r m i x o f p r o d u c t i o n . 8 T h e s a m e a r g u m e n t c a n b e m a d e w i t h r e s p e c t t o i n f o r m a t i o n . S i n c e t h e r e i s a l w a y s a c o s t i n p r o v i d i n g i n f o r m a t i o n , t h e m a r k e t w i l l p r o c e e d , a c c o r d i n g t o n e o - c l a s s i c a l t h e o r y , t o t h e m o s t e f f i c i e n t s t a g e w h e r e t h e a m o u n t o f i n f o r m a t i o n p r o v i d e d i s t h a t w h i c h t h e 5 Although there is a distinction between preventing traders disseminating information that of itself causes deception and forcing traders to disseminate information to prevent deception that would otherwise occur, those against regulation argue that market forces remedy both. Section 9 sometimes requires the former and sometimes the latter, depending on the factual circumstances. 6 G . Minda, The Law and Economics and Critical Legal Studies Movements in American Law in N . Mercuro (ed.), Law and Economics, supra, note 2, pp. 87 and 111, note 3. 7 Mackaay, supra, note 3, p. 24. 8 Duggan, supra, note 2, p. 5. 3 0 m a r k e t i s p r e p a r e d t o d i v e r t f r o m p r o d u c t i o n o f o t h e r r e s o u r c e s . T o t h e n e o - c l a s s i c a l t h e o r i s t , f o r c i n g t h e p r o d u c t i o n o f i n f o r m a t i o n w i l l r e d u c e e f f i c i e n c y , m a i n l y b e c a u s e i t w i l l p r e v e n t p r o d u c t i o n o f m o r e h i g h l y v a l u e d r e s o u r c e s a n d t h u s m o v e t h e m a r k e t a w a y f r o m a s t a t e o f P a r e t o o p t i m a l i t y , b u t a l s o b e c a u s e i t m a y o r w i l l i n c r e a s e c o n s u m e r i s m b e y o n d t h e l e v e l w h i c h m a r k e t f o r c e s w o u l d d i c t a t e . I t i s a r g u e d t h a t t h e m a r k e t g i v e s r i s e t o a n e f f i c i e n t l e v e l o f i n f o r m a t i o n b e c a u s e : 1. c o m p e t i t o r s o f a p r o d u c e r m a k i n g m i s l e a d i n g c l a i m s a b o u t i t s p r o d u c t w i l l , o u t o f c o n c e r n f o r t h e i r m a r k e t s h a r e s , e x p o s e t h e u n t r u t h s ; 2 . w h e r e c o n s u m e r s a r e m i s l e d , t h e y h a v e a v e n u e s o f r e c o u r s e w i t h o u t t h e n e e d f o r r e g u l a t o r y a c t i o n , i n c l u d i n g t a k i n g t h e i r f u t u r e b u s i n e s s e l s e w h e r e . T h o s e i n f a v o u r o f r e g u l a t i o n c h a l l e n g e t h e v a l i d i t y o f t h e a s s u m p t i o n s ; f i r s t , t h a t a l l i n d i v i d u a l s i n s o c i e t y a r e f u l l y i n f o r m e d ; s e c o n d l y , t h a t a l l i n d i v i d u a l s a r e r a t i o n a l m a x i m i s e r s ; a n d , t h i r d l y , t h a t t h e m a r k e t b y i t s e l f p r o c e e d s t o a s t a t e o f P a r e t o o p t i m a l i t y . 9 I n t h e p r e s e n t c o n t e x t , i t w o u l d b e a r g u e d t h a t t h e a s s u m p t i o n t h a t c o n s u m e r s a r e a l l f u l l y i n f o r m e d i s u n s u s t a i n a b l e i n t h e f a c e o f t h e m u l t i t u d e o f p a s s i n g o f f a c t i o n s i n w h i c h p l a i n t i f f s h a v e s u c c e e d e d o n t h e b a s i s t h a t c o n s u m e r s h a v e b e e n m i s l e d ; t h a t f a i l u r e o f t h e s e c o n d a s s u m p t i o n f o l l o w s b e c a u s e , i f c o n s u m e r s a r e f r e q u e n t l y m i s l e d , t h e n t h e i r s e l f i n t e r e s t s a r e n o t m a x i m i s e d ; a n d t h a t , g i v e n t h e u n t e n a b i l i t y o f t h o s e t w o a s s u m p t i o n s , t h e t h i r d m u s t f a l l a s w e l l . 9 H . Simon, Economics, Bounded Rationality and the Cognitive Revolution, 1992, Edward Elgar Publishing Ltd. , Aldershot, England, pp. 186-189. 2. Competitors remedies 3 1 T h e a r g u m e n t t h a t c o m p e t i t o r s o f a p r o d u c e r m a k i n g m i s l e a d i n g c l a i m s w i l l , o u t o f c o n c e r n f o r t h e i r m a r k e t s h a r e s , e x p o s e u n t r u t h s , i s s u p e r f i c i a l l y a t t r a c t i v e i n t h e a r e a o f p a s s i n g o f f t y p e c a s e s . N o - o n e h a s a g r e a t e r i n t e r e s t i n e x p o s i n g t h e d e c e p t i v e t r a d e r t h a n t h e t r a d e r w h o s e p r o d u c t i s b e i n g p a s s e d o f f a n d t h a t i s r e f l e c t e d i n t h e f a c t t h a t a l l r e p o r t e d s e c t i o n 9 c a s e s i n v o l v i n g p a s s i n g o f f h a v e b e e n b r o u g h t b y t h e o f f e n d e d t r a d e r . T h e r e w i l l , h o w e v e r , b e c a s e s w h e r e t h e o f f e n d e d t r a d e r d o e s n o t e x p o s e t h e o f f e n d i n g t r a d e r n o r b r i n g a n y c o u r t a c t i o n , s u c h a s w h e n i t d o e s n o t b e c o m e a w a r e o f t h e o f f e n d i n g c o n d u c t , 1 0 w h e r e t h e i n f r i n g e m e n t i s o f s h o r t d u r a t i o n , w h e r e t h e t r a n s a c t i o n c o s t s o f p u r s u i n g a c o u r t a c t i o n o u t w e i g h a n y b e n e f i t t o b e o b t a i n e d f r o m i t , o r w h e r e a s e t t l e m e n t i s n e g o t i a t e d b e t w e e n t h e p a r t i e s . 1 1 E v e n w h e r e t h e t r a d e r d o e s t a k e a c t i o n , 1 2 i t i s l i k e l y t h e f o c u s w i l l e x c l u s i v e l y b e o n t h e i n t e r e s t s o f t h e t r a d e r s w h o a r e p a r t i e s t o t h e a c t i o n . A s w i l l b e s e e n i n c h a p t e r s f o u r 1 0 Quite likely if it occurs other than in relative proximity to the offended trader's area of operation. 1 1 For a discussion of the economics of negotiating settlements, refer G Tullock, Negotiated Settlement, in J . M . Graf von der Schulenburg, supra, note 3, p.39. 1 2 Competitors already have rights of action in passing off. The principal difference between passing off and section 9, as far as ingredients are concerned, is that the plaintiff must prove damage in the former but not in the latter. That difference may, however, be more apparent than real, given that in most circumstances the courts are now prepared to assume that damage flows from proved misrepresentation. In Comite Interprofessionel du Vin de Champagne v Wineworths Group Ltd. [1992] 2 N Z L R 327 (the Champagne case), the Court of Appeal held that damage to goodwill can be inferred from a tendency to impair distinctiveness (pp. 332, 334). 32 a n d f i v e , t h e i n t e r e s t s o f c o n s u m e r s a r e l i k e l y t o b e o v e r l o o k e d a n d t h e c o n s u m e r p r o t e c t i o n r a t i o n a l e u n f u l f i l l e d . T h e p r o t e c t i o n a f f o r d e d c o n s u m e r s b y v i r t u e o f t h e f a c t t h a t c o m p e t i t o r s h a v e r e m e d i e s w i l l t h e r e f o r e o f t e n b e i l l u s o r y . 3. Consumer remedies T h e a r g u m e n t t h a t c o n s u m e r s h a v e a v e n u e s o f r e c o u r s e i n c l u d i n g t a k i n g t h e i r b u s i n e s s e l s e w h e r e , a n d t h a t t h e s e w i l l g i v e r i s e t o e f f i c i e n t l e v e l s o f i m f o r m a t i o n , i s a l s o s u p e r f i c i a l l y a t t r a c t i v e . T h e r a t i o n a l c o n s u m e r w i l l n e v e r s e e k t o b e a b s o l u t e l y i n f o r m e d a b o u t a p r o d u c t p r i o r t o p u r c h a s e b e c a u s e i n f o r m a t i o n i s a r e s o u r c e w h i c h i s b o u g h t a n d s o l d i n t h e s a m e w a y a s o t h e r c o m m o d i t i e s . T h e a c q u i s i t i o n o f i n f o r m a t i o n , a s w i t h m o s t o t h e r c o m m o d i t i e s , i s s u b j e c t t o t h e l a w o f d i m i n i s h i n g m a r g i n a l u t i l i t y a n d t h e v a l u e o f t h e l a s t p i e c e o b t a i n e d w i l l b e c o n s i d e r a b l y l e s s t h a n t h e f i r s t . 1 3 T h e m o r e r e s o u r c e s a c o n s u m e r d e v o t e s t o a c q u i r i n g i n f o r m a t i o n , t h e l e s s s h e w i l l h a v e f o r t h e p u r c h a s e o f o t h e r i t e m s . T h e r a t i o n a l c o n s u m e r w i l l c o n t i n u e t o s e a r c h f o r i n f o r m a t i o n o n l y u p t o t h e p o i n t w h e r e t h e c o s t o f f u r t h e r s e a r c h i n g i s e q u a l t o t h e b e n e f i t w h i c h t h e n e x t p i e c e o f i n f o r m a t i o n w o u l d b r i n g . 1 4 F o r p r o d u c t s t h a t a r e n o t c o m p l e x , o r w h e r e t h e p r i c e o f t h e p r o d u c t i s l o w a n d i s f r e q u e n t l y p u r c h a s e d ( s o t h a t p r i o r e x p e r i e n c e i s a s o u r c e o f i n f o r m a t i o n ) a n d w h e r e t h e p o t e n t i a l a d v e r s e c o n s e q u e n c e s o f a w r o n g c h o i c e a r e n o t 1 3 Duggan, supra, note 2, p. 29. 1 4 For a discussion of a theory that consumers do not even search that much, refer E . Scott Moynes, Decision Making For Consumers, An Introduction to Consumer Economics, 1976, Macmillan Publishing Co., Inc., pp. 27-29. 3 3 h i g h ( s o t h a t t h e l e a r n i n g e x p e r i e n c e i s n o t a c h i e v e d a t t o o g r e a t a c o s t ) i t m a y t h e r e f o r e b e s a f e t o l e t c o n s u m e r s o b t a i n i n f o r m a t i o n f o r t h e m s e l v e s . 1 5 W h i l e t h e a b i l i t y t o t a k e f u t u r e c u s t o m e l s e w h e r e m a y b e a s a t i s f a c t o r y r e m e d y i n c a s e s i n v o l v i n g a r e l a t i v e l y i n e x p e n s i v e p r o d u c t p u r c h a s e d r e l a t i v e l y f r e q u e n t l y , f o r o t h e r k i n d s o f p u r c h a s e t h e c o s t s o f t h e l e a r n i n g c u r v e m a y b e u n a c c e p t a b l y h i g h a n d t h e a b i l i t y t o p u t t h a t e d u c a t i o n t o u s e l i m i t e d . I t a l s o a s s u m e s t h e c o n s u m e r w i l l b e c o m e a w a r e o f t h e d e c e p t i o n a t s o m e t i m e s u b s e q u e n t t o t h e p u r c h a s e b u t t h a t i s n o t i n e v i t a b l e i n p a s s i n g o f f c a s e s . C o n s u m e r s m a y p u r s u e a c t i o n s , s u c h a s t h o s e u n d e r t h e S a l e o f G o o d s A c t 1 9 0 8 , w h i c h p r o v i d e s c o n s u m e r s w i t h r i g h t s o f r e d r e s s i n c a s e s o f s a l e b y d e s c r i p t i o n , 1 6 f i t n e s s f o r p u r p o s e , 1 7 a n d m e r c h a n t a b l e q u a l i t y . 1 8 T h e f i r s t t w o r e m e d i e s a r e u n l i k e l y e v e r t o b e o f a s s i s t a n c e t o c o n s u m e r s d e c e i v e d i n p a s s i n g o f f a n d t h e t h i r d o n l y r a r e l y - t h e i n f r i n g i n g p r o d u c t w i l l s o m e t i m e s b e o f l o w e r q u a l i t y t h a n t h e i n f r i n g e d o n e b u t n o t a l w a y s a n d , w h e n i t i s , n o t a l w a y s s o i n f e r i o r a s t o c o n s t i t u t e a b r e a c h o f t h e A c t . A l t e r n a t i v e l y , a c o n s u m e r m a y s e e k t o h a v e t h e c o n t r a c t s e t a s i d e o n t h e b a s i s t h a t s h e 1 5 This is the heart of caveat emptor - let the buyer beware - a doctrine which makes the buyer responsible for protecting herself and assumes she wil l do so by applying her intelligence and experience to the process of purchasing. In early times, the consumer may have been able to protect herself. Products were less sophisticated. They could be inspected before purchase. The manufacturer would be well known to the purchaser and readily accessible in the case of fault or deception: D . Swann, Competition and Consumer Protection, 1979, Penguin Books Ltd., Harmondsworth, England, p. 369, note 3. 1 6 Section 15. 1 7 Section 16(a). 1 8 Section 16(b). 3 4 e n t e r e d i n t o i t o n t h e f a i t h o f t h e t r a d e r ' s r e p r e s e n t a t i o n t h a t t h e p r o d u c t w a s t h e g e n u i n e a r t i c l e . T h a t r e m e d y w i l l b e u n h e l p f u l w h e n t h e l o s s i s s m a l l a n d t h e c o s t s o f p u r s u i n g a n a c t i o n o u t w e i g h t h e p o s s i b l e b e n e f i t . I n f a c t , t r a n s a c t i o n c o s t s w i l l b e a s i g n i f i c a n t p r o b l e m f o r c o n s u m e r s w h o s u f f e r o t h e r t h a n s u b s t a n t i a l l o s s e s a n d w i l l p r o b a b l y p r e c l u d e a n y i n d i v i d u a l b r i n g i n g a n a c t i o n . 1 9 W h e n t h e n u m b e r o f a f f e c t e d p a r t i e s i s s u f f i c i e n t l y l a r g e , a c l a s s a c t i o n m a y b e p o s s i b l e b e c a u s e t h e i n d i v i d u a l c o n t r i b u t i o n s t o t h e c o s t o f p r o c e e d i n g s w i l l b e s m a l l e n o u g h t h a t i t w i l l b e e c o n o m i c a l l y a d v a n t a g e o u s t o p r o c e e d a s a g r o u p . F o r a p l a i n t i f f i n a c l a s s a c t i o n , t h e r e w i l l b e e x t r a c o s t s , i n c l u d i n g t h o s e i n r e l a t i o n t o l o c a t i n g a n d c o m m u n i c a t i n g w i t h o t h e r s a f f e c t e d a n d o n m a k i n g c o l l e c t i v e d e c i s i o n s i n c l u d i n g o n p r o s e c u t i o n o f t h e c l a i m a n d n e g o t i a t i o n o f a n y s e t t l e m e n t . T h e t w o v a r i a b l e s t h a t a r e c r i t i c a l i n r e l a t i o n t o t r a n s a c t i o n c o s t s o f a c l a s s a c t i o n , t h e r e f o r e , a r e t h e n u m b e r o f c l a i m a n t s a n d t h e s i z e o f t h e i n d i v i d u a l l o s s e s . 2 0 T h e r e i s a n a s s u m p t i o n i n a l l o f t h i s t h a t d e c i s i o n s a r e m a d e s o l e l y o n t h e b a s i s o f 1 9 Transaction costs are simply the costs of carrying out a transaction. In the case of a civil claim pursuant to section 9 of the Fair Trading Act, for example, the transaction costs are al l those associated with bringing and proving the claim and enforcing any remedy awarded. For further discussion of transaction cost economics, refer E.Williamson, Transaction-Cost Economics: The Governance of Contractual Relations (1979) 22 Journal of Law and Economics, 223; O .E.Williamson, Contract analysis: the transaction cost approach in P.Burrows & Cento G . Veljanovski, The Economic Approach to Law 1981, Butterworth & Co. Publishers Ltd. , London, chp. two; O .E.Williamson, Transaction Cost Economics, address to Yale Law School, 10 January 1986, Law & Economics Programme, Faculty of Law, University of Toronto; E Mackaay, supra, note 3, p.56 and for an examination of the economics of litigation, refer A . Hollander & E . Mackaay, Are Judges Economists at Heart?, 1981, Department de Science Economique et Centre de Recherche en Development Economique, Universite de Montreal, pp. 13-21. 2 0 That applies whether or not the individual losses are the same or even similar: when making an economic assessment of whether or not to proceed, the two variables to consider, other than the amount of the transaction costs, wi l l be the number of claimants and the average loss. 35 w h e t h e r o r n o t t h e e x p e c t e d b e n e f i t ( s ) o u t w e i g h t h e e x p e c t e d t r a n s a c t i o n c o s t ( s ) . T h a t i s a n e l e m e n t o f t h e n e o - c l a s s i c a l e c o n o m i c t h e o r y t h a t a l l i n d i v i d u a l s a r e r a t i o n a l m a x i m i s e r s o f t h e i r o w n s e l f i n t e r e s t ; t h a t t h e y w i l l n o t , f o r e x a m p l e , b r i n g a c l a i m u n d e r s e c t i o n 9 u n l e s s t h e e x p e c t e d b e n e f i t s o u t w e i g h t h e e x p e c t e d c o s t s . E x p e r i e n c e a n d c o m m o n s e n s e s u g g e s t t h a t i s a v a l i d a s s u m p t i o n i n t h e c o n t e x t o f w h e t h e r o r n o t t o i n i t i a t e c o u r t p r o c e e d i n g s . I m p u l s e b u y i n g i s a w e l l k n o w n p h e n o m e n o n , i m p u l s e l i t i g a t i o n i s n o t . 2 1 T h e f o r e g o i n g d i s c u s s i o n l e a d s t o t h e v i e w t h a t c o n s u m e r s w h o s u f f e r s m a l l l o s s e s h a v e n o e f f e c t i v e m e a n s o f o b t a i n i n g a r e m e d y s o t h a t , i n t h o s e c i r c u m s t a n c e s , c o n s u m e r s w i l l n o t b e p r o t e c t e d a n d t h e m a r k e t w i l l n o t w o r k e f f i c i e n t l y . I f t h e r e a r e a s u f f i c i e n t n u m b e r o f s u c h c o n s u m e r s , t h e n a c l a s s a c t i o n m a y b e f e a s i b l e . A s w i l l b e s e e n i n c h a p t e r f i v e , w h e r e s m a l l l o s s e s a r e i n o l v e d , t h e t r a n s a c t i o n c o s t s w i l l m a k e a s u i t u n e c o n o m i c , n o m a t t e r h o w m a n y c o n s u m e r s h a v e b e e n a f f e c t e d . 2 2 2 1 There are exceptions to that, and it is not unheard of for plaintiffs to initiate and pursue litigation for the sake of principle but, to the extent that one is dealing in generalisations, the exceptions can safely be ignored. For judicial recognition of the reasonable forseeability of impulse buying, refer Griffin & Sons Ltd. vRegina (1988) Ltd., unreported, High Court, Dunedin, 01 August 1989, CP 72/89, Fraser J; (1989) 15 B . C . L . 1559. 2 2 To date, there have been no class actions in New Zealand or Australia. Section 23 of the Federal Trade Comission Act provides for class actions but in quite heavily circumscribed conditions, including that each member of the class must have suffered an individual loss of at least $10,000. Section 23 was introduced in 1966 and has been of little benefit to consumers. 3 6 4. Regulatory body I t i s i n t h a t a r e a t h a t a r e g u l a t o r y b o d y h a s s i g n i f i c a n t p o t e n t i a l b e n e f i t , b e c a u s e i t m a y t a k e a c t i o n o n b e h a l f o f a l l a f f e c t e d c o n s u m e r s . I f u s e d i n c o n j u n c t i o n w i t h c o m p e t i t o r a n d c o n s u m e r r e m e d i e s , i t w i l l b e a b l e t o c o n c e n t r a t e o n c a s e s i n w h i c h c o n s u m e r s s u f f e r l o s s e s t o o s m a l l t o j u s t i f y i n d i v i d u a l a c t i o n a n d w h e r e t h e g e n u i n e t r a d e r d o e s n o t p u r s u e a n y a c t i o n . T h e p r i n c i p a l d r a w b a c k o f a r e g u l a t o r y a g e n c y i s t h a t t h e r e w i l l b e a n i n e v i t a b l e t i m e - l a g i n v o l v e d w i t h i t s r e c e i v i n g , i n v e s t i g a t i n g a n d a c t i n g u p o n a c o m p l a i n t . T r a d e r s i n v o l v e d i n s h o r t - t e r m p a s s i n g o f f m a y r e m a i n u n p u n i s h e d . H o w e v e r , g i v e n s u f f i c i e n t r e s o u r c e s , t h e d e l a y s h o u l d n o t b e s i g n i f i c a n t l y g r e a t e r t h a n t h a t i n v o l v e d i f t h e c o n s u m e r w e r e t o s e e k p r i v a t e l e g a l a d v i c e a n d i s s u e p r i v a t e p r o c e e d i n g s . W h e r e c o n s u m e r s h a v e s u f f e r e d s m a l l l o s s e s , i t w i l l b e i n e f f i c i e n t t o r e q u i r e a n a g e n c y t o a t t e m p t t o c o m m u n i c a t e w i t h a n d r e p r e s e n t t h e m a l l ( w h e r e t h a t i s e v e n p o s s i b l e ) . I n t h a t c i r c u m s t a n c e , a n o p t i o n i s t o i m p o s e a f i n e o n t h e o f f e n d i n g t r a d e r , a r e m e d y t h a t w o u l d : ( a ) b e e f f i c i e n t a n d w o u l d a d v a n c e n e t s o c i a l w e l f a r e , a l t h o u g h n o t h a v i n g t h e o p t i m a l d i s t i b u t i o n a l r e s u l t s ; ( b ) s e r v e a s a f o r m o f l o n g - t e r m c o n s u m e r p r o t e c t i o n i n t h a t i t w o u l d h a v e a d e t e r r e n t e f f e c t . 2 3 2 3 P. Burrows & C . G . Veljanovski, The Economic Approach to Law, 1981, Butterworth & Co. Publishers Ltd. , London, pp. 130-131. 3 7 I t i s n o t e n o u g h , h o w e v e r , t h a t t h e r e m e d y s a t i s f y t h o s e t w o l i m b s o f t h e p u b l i c p o l i c y r a t i o n a l e ; i t m u s t a l s o s a t i s f y t h e o v e r - r i d i n g c o n c e r n o f f a i r n e s s . I n t h e U n i t e d S t a t e s , t h e r e a r e c o n s t i t u t i o n a l d i f f i c u l t i e s w i t h e n a c t i n g c r i m i n a l p e n a l t i e s w h e r e t h e r e a r e n o t c l e a r l y d e f i n e d s t a n d a r d s o f c o n d u c t . 2 4 I t i s c o n s i d e r e d t h a t t o i m p o s e c r i m i n a l s a n c t i o n s o n a p a r t y w h o m a y h a v e b e e n u n a w a r e t h a t s h e w a s i n f r i n g i n g , t h a t l a c k o f a w a r e n e s s a r i s i n g f r o m i m p r e c i s i o n i n t h e l a n g u a g e o f t h e s t a t u t e , w o u l d s i m p l y b e u n f a i r . T h e t e r m ' d e c e p t i v e ' i s c o n s i d e r e d t o b e n o t c l e a r l y d e f i n e d 2 5 a n d t h a t i s w h y t h e r e a r e n o c r i m i n a l p e n a l t i e s f o r b r e a c h o f s e c t i o n 5 o f t h e F T C A c t . A s i m i l a r c o n c e r n w o u l d b e j u s t i f i e d i n t h e N e w Z e a l a n d c o n t e x t . T h e r e i s o n l y o n e r e p o r t e d d e c i s i o n i n v o l v i n g a d e f e n d a n t a c t i n g d e l i b e r a t e l y , w i t h k n o w l e d g e o f t h e p l a i n t i f f s n a m e , m a r k o r i n d i c i a , a n d k n o w l e d g e t h a t i t s c o n d u c t m i g h t a m o u n t t o p a s s i n g o f f . 2 6 I n a l l o t h e r c a s e s e x c e p t o n e 2 7 t h e d e f e n d a n t w a s a w a r e o f t h e r e l e v e n t f a c t s b u t b e l i e v e d i t s c o n d u c t w o u l d n o t a m o u n t t o p a s s i n g o f f . I n a b o u t t w o - t h i r d s o f t h o s e c a s e s , t h e d e f e n d a n t ' s b e l i e f w a s e r r o n e o u s a n d t h e q u e s t i o n i s w h e t h e r c o n s u m e r s s h o u l d b e r e q u i r e d t o b e a r t h e l o s s e s a r i s i n g f r o m t h e m i s t a k e n b e l i e f o r w h e t h e r , a l t e r n a t i v e l y , t h e i n f r i n g i n g t r a d e r s h o u l d b e a r t h e m . 2 4 G . E . & P .E . Rosden, 2 The Law of Advertising, 1984, Mathew Bender, New York , New York , para. 17.01[3]. 25 Supra, chapter one, part D . 2 6 The Champagne case, supra, note 12, but while the defendant was aware its activities might amount to passing off, it was not sure that would be the case and it wanted to test the plaintiffs monopoly. 27 Frank M. Winstone (Merchants) Ltd. v Plix Products Ltd. [1985] 1 N Z L R 376 (C.A.) : the evidence suggested the defendant was not aware of the plaintiffs product. 3 8 P o i n t s f a v o u r i n g c o n s u m e r s b e a r i n g t h e l o s s i n c l u d e t h a t : ( a ) t h e l o s s e s a r e t h e r e b y s p r e a d t h r o u g h o u t t h e c o m m u n i t y , i n m u c h t h e s a m e w a y a s i f t r a d e r s h a d t o b e a r t h e r i s k a n d i n s u r e f o r i t ; ( b ) p l a c i n g t h e r i s k o n t r a d e r s m a y s t i f l e c o m p e t i t i o n a n d t h e r e f o r e r e d u c e e f f i c i e n c y ; ( c ) p l a c i n g t h e r i s k o n t r a d e r s m a y a l s o h a v e a n e g a t i v e i m p a c t o n i n n o v a t i o n . A l t h o u g h a p r o d u c t t h a t i s i n n o v a t i v e c a n n o t i n v o l v e p a s s i n g o f f o f a n o t h e r p r o d u c t , i t m a y i n v o l v e p a s s i n g o f f o f f e a t u r e s o f t h a t o t h e r p r o d u c t ; ( d ) a f f e c t e d c o n s u m e r s c a n n o t b e d i r e c t l y c o m p e n s a t e d a n y w a y , b e c a u s e t h e t r a n s a c t i o n c o s t s o f d o i n g s o a r e t o o h i g h ; ( e ) p l a c i n g t h e r i s k o n t r a d e r s w o u l d p r o b a b l y c a u s e t h e m t o r a i s e p r i c e s , s o c o n s u m e r s w o u l d e f f e c t i v e l y b e f u n d i n g t h e i r o w n r e m e d y . P o i n t s f a v o u r i n g t h e i n f r i n g i n g t r a d e r b e a r i n g t h e l o s s i n c l u d e t h a t a f i n e : ( a ) w i l l a d v a n c e n e t s o c i a l w e l f a r e a n d i n d i r e c t l y c o m p e n s a t e c o n s u m e r s ; ( b ) c a n b e u s e d t o f u n d c o n s u m e r e d u c a t i o n , t h u s h e l p i n g t o p r e v e n t f u t u r e l o s s e s a n d a d v a n c i n g e f f i c i e n c y ; ( c ) m a y s e r v e a s a d e t e r r e n t , t h u s a l s o h e l p i n g t o p r e v e n t f u t u r e l o s s e s a n d a d v a n c i n g e f f i c i e n c y . O n b a l a n c e , i n l i g h t o f t h e f o r e g o i n g p o i n t s , i t i s t h e w r i t e r ' s v i e w t h a t a f i n e w o u l d o n l y 3 9 s e r v e t h e p u b l i c p o l i c y r a t i o n a l e a n d o n l y b e f a i r i n c a s e s w h e r e t h e d e f e n d a n t h a d n o r e a s o n a b l e b a s i s f o r a b e l i e f t h a t i t s c o n d u c t m i g h t n o t a m o u n t t o p a s s i n g o f f . T h a t w o u l d a l l o w a p p l i c a t i o n o f t h e s e c t i o n 44 d e f e n c e s t o c r i m i n a l p r o s e c u t i o n s u n d e r s e c t i o n 40, n a m e l y t h a t t h e c o n t r a v e n t i o n w a s d u e t o : ( a ) a r e a s o n a b l e m i s t a k e ; ( b ) r e a s o n a b l e r e l i a n c e o n i n f o r m a t i o n s u p p l i e d b y a n o t h e r p e r s o n ( w h o m u s t b e n a m e d ) ; ( c ) t h e a c t o r d e f a u l t o f a n o t h e r p e r s o n ( w h o m u s t b e n a m e d ) o r t o a n a c c i d e n t o r t o s o m e o t h e r c a u s e b e y o n d t h e d e f e n d a n t ' s c o n t r o l and t h e d e f e n d a n t t o o k r e a s o n a b l e p r e c a u t i o n s a n d e x e r c i s e d d u e d i l i g e n c e t o a v o i d t h e c o n t r a v e n t i o n . 2 8 C. RECOMMENDATIONS S e c t i o n 9 r e q u i r e s t r a d e r s t o d i s c l o s e o n l y a c c u r a t e i n f o r m a t i o n a s t o t h e s o u r c e o f t h e i r p r o d u c t s , s o a s t o n o t d e c e i v e c o n s u m e r s . T h e p r i n c i p a l e c o n o m i c e f f e c t o f d e c e p t i o n i s t o c a u s e a r e d i s t r i b u t i o n o f w e a l t h f r o m t h e d e c e i v e d c o n s u m e r t o t h e d e c e p t i v e t r a d e r . D i s t r i b u t i o n h a s s o m e t i m e s b e e n c o n s i d e r e d a m a t t e r o u t s i d e t h e s c o p e o f l a w a n d e c o n o m i c s , a l t h o u g h t h a t v i e w i s n o t a s p r e v a l e n t a s i t o n c e w a s . W h e t h e r o n e c o n s i d e r s d i s t r i b u t i o n o r n o t , i t i s c l e a r t h a t l a c k o f a c c u r a t e i n f o r m a t i o n w i l l a d v e r s e l y a f f e c t t h e e c o n o m i c i n t e r e s t s o f s o m e c o n s u m e r s o r s o m e c l a s s e s o f 2 8 For judicial consideration of those defences, refer Foodtown Supermarkets Ltd. v Commerce Commission [1991] 1 N Z L R 466; Commerce Commission v Telecom Corporation of New Zealand Ltd., unreported, District Court, Wellington, 9 October 1990, Ongley J.; Rheem v Commerce Commission, unreported, High Court, Auckland, 29 July 1991, A P 166/91, Barker J.; (1991) B . C . L . 1974. 4 0 c o n s u m e r s , w h i c h w i l l , i n t u r n , a d v e r s e l y a f f e c t e f f i c i e n t o p e r a t i o n o f t h e m a r k e t . T o t h a t e x t e n t , t h e t w o l i m b s o f t h e p u b l i c p o l i c y r a t i o n a l e a r e c o n s i s t e n t . T h e a r g u m e n t s f o r a n d a g a i n s t r e g u l a t i o n t o c o m p e l p r o v i s i o n o f a c c u r a t e i n f o r m a t i o n h a v e b e e n c a n v a s s e d . T h e a r g u m e n t s a g a i n s t c e n t r e o n n o t i o n s o f e f f i c i e n c y a n d o n t h e n o t i o n t h a t m a r k e t f o r c e s w i l l p r o v i d e e i t h e r a l l r e q u i r e d i n f o r m a t i o n o r , a l t e r n a t i v e l y , a n e f f i c i e n t l e v e l o f i n f o r m a t i o n . W h e r e a n e f f i c i e n t l e v e l o f i n f o r m a t i o n i s g e n e r a t e d , s o m e c o n s u m e r s w i l l b e d e c e i v e d , b u t i t i s a r g u e d t h a t w i l l b e a n e f f i c i e n t l e v e l o f d e c e p t i o n a n d t h a t d e c e i v e d c o n s u m e r s w i l l h a v e r e m e d i e s a v a i l a b l e w i t h o u t t h e n e e d f o r r e g u l a t i o n c o m p e l l i n g d i s c l o s u r e o f i n f o r m a t i o n . I n p l a i n w o r d s , i t i s a r g u e d t h a t i t i s c h e a p e r t o c u r e t h a n t o p r e v e n t . A g a i n s t a l l o f t h a t , i t i s a r g u e d t h a t p u r s u i t o f e f f i c i e n c y , w i t h o u t r e g a r d f o r i t s d i s t r i b u t i v e e f f e c t s , p r e j u d i c e s c o n s u m e r s o r s o m e c l a s s e s o f c o n s u m e r , b e c a u s e t h e y h a v e n o a c c e s s i b l e r e m e d y ; t h a t i s , t h e r e i s n o c u r e . I f , a s s e e m s t o b e t h e c a s e , t h e r e m e d i e s a r e i n e f f e c t i v e , t h e n i t f o l l o w s t h a t d e c e p t i o n w i l l o c c u r a t a l e v e l g r e a t e r t h a n t h a t w h i c h i s e f f i c i e n t , r e s u l t i n g i n a n i n e f f i c i e n t m a r k e t a s w e l l a s i n l a c k o f p r o t e c t i o n f o r c o n s u m e r s . O n b a l a n c e , i t i s t h e w r i t e r ' s v i e w t h a t t h e r e m e d i e s a v a i l a b l e t o c o n s u m e r s a r e i n e f f e c t i v e i n a s i g n i f i c a n t p r o p o r t i o n o f c a s e s i n v o l v i n g p a s s i n g o f f a n d t h a t t h e a r g u m e n t s i n f a v o u r o f r e g u l a t i o n a r e p e r s u a s i v e . 2 9 I t a l s o f o l l o w s f r o m t h e d i s c u s s i o n t h a t , t o b e e f f e c t i v e , i n g r e d i e n t s o f a r e g u l a t i o n s h o u l d : That conclusion is borne out by the discussion in chapter five. 4 1 ( a ) r e q u i r e t h e i n t e r e s t s o f c o n s u m e r s t o b e t a k e n i n t o a c c o u n t i n a c t i o n s b r o u g h t b y t r a d e r s . T h o s e i n t e r e s t s m a y b e t a k e n i n t o a c c o u n t i n s e c t i o n 9 c a s e s , 3 0 b u t t h e A c t d o e s n o t r e q u i r e i t a n d o u g h t t o b e a m e n d e d a c c o r d i n g l y ; ( b ) i n c l u d e a m e c h a n i s m t o a l l o w a r e g u l a t o r y b o d y t o t a k e a c t i o n , e s p e c i a l l y i n c a s e s w h e r e t h e i n d i v i d u a l l o s s e s t o c o n s u m e r s a r e s m a l l . T h e F a i r T r a d i n g A c t s a t i s f i e s t h a t c r i t e r i o n ; 3 1 ( c ) c o n t a i n a p r o v i s i o n a l l o w i n g i m p o s i t i o n o f a f i n e i n c a s e s w h e r e t h e d e f e n d a n t h a d n o r e a s o n a b l e b a s i s f o r a b e l i e f t h a t i t s c o n d u c t w o u l d n o t a m o u n t t o p a s s i n g o f f . T h e A c t l a c k s s u c h a p r o v i s i o n a n d s h o u l d b e a m e n d e d a c c o r d i n g l y ; ( d ) g i v e s t a n d i n g t o c o n s u m e r s , t o a l l o w t h e m t o t a k e t h e i r o w n a c t i o n s a n d p r o v i d e a n a c c e s s i b l e f o r u m . T h e f o r m e r i s a c h i e v e d u n d e r t h e A c t w h i c h d o e s n o t , h o w e v e r , g o f a r e n o u g h w i t h r e s p e c t t o t h e l a t t e r . I n r e c o g n i t i o n o f t h e h i g h c o s t o f c o u r t p r o c e e d i n g s , j u r i s d i c t i o n w a s g i v e n t o t h e D i s p u t e s T r i b u n a l s t o h e a r d i s p u t e s a n d m a k e c e r t a i n o r d e r s p u r s u a n t t o s e c t i o n 4 3 o f t h e F a i r T r a d i n g A c t . T h e T r i b u n a l s h a v e j u r i s d i c t i o n i n c a s e s w h e r e t h e 3 0 Pursuant to section 41, the Commerce Commission or "any other person" may apply for an injunction. Pursuant to section 43, the court may grant relief to any person "whether or not that person is a party to the proceedings". The only qualification is that the person must have suffered, or be likely to suffer, loss or damage because of the infringing conduct. The courts have held that standing extends to rival traders and to members of the public even if they have no personal interest affected. Idem. 4 2 v a l u e o f t h e p r o p e r t y o r a m o u n t o f t h e l o s s o r d a m a g e i s n o t m o r e t h a n $ 3 0 0 0 , 3 2 a l t h o u g h t h e p a r t i e s m a y a g r e e i n w r i t i n g t o e x t e n d j u r i s d i c t i o n u p t o $ 5 0 0 0 . I t c o s t s a p p r o x i m a t e l y N Z $ 1 0 t o m a k e a c l a i m v a l u e d u n d e r $ 1 0 0 0 a n d $ 2 0 f o r a c l a i m o f a l a r g e r a m o u n t . O n e o f t h e p r i n c i p a l a d v a n t a g e s i s t h a t t h e p a r t i e s a r e e n c o u r a g e d t o a p p e a r f o r t h e m s e l v e s a n d t h u s a v o i d t h e c o s t s a s s o c i a t e d w i t h e n g a g i n g c o u n s e l . T h e j u r i s d i c t i o n g i v e n t o D i s p u t e s T r i b u n a l s d o e s n o t , h o w e v e r , e x t e n d t o c o n t r a v e n t i o n s o f s e c t i o n 9 . T h a t e x c l u s i o n i s p r o b a b l y b a s e d o n a v i e w t h a t d e c i s i o n s u n d e r t h e s e c t i o n i n v o l v e q u e s t i o n s o f l a w t h a t a r e b e y o n d t h e a b i l i t i e s o f t h e T r i b u n a l s t o a n s w e r , i n p a r t i c u l a r t h e q u e s t i o n o f w h e n c o n d u c t i s ' m i s l e a d i n g ' o r ' d e c e p t i v e ' . C o n s u m e r s m a y b r i n g a c t i o n s i n t h e c o u r t s b u t t r a n s a c t i o n c o s t s a r e s i g n i f i c a n t l y h i g h e r t h e r e , p r i n c i p a l l y b e c a u s e o f t h e n e e d t o e n g a g e c o u n s e l , a n d w i l l i n m a n y c a s e s b e p r o h i b i t i v e . T h e f a c t t h a t t h e r e a r e n o c a s e s i n v o l v i n g c o n s u m e r p l a i n t i f f s s u g g e s t s t h a t c o n s u m e r s s i m p l y d o n o t t a k e c a s e s t o t h e c o u r t s . I t a p p e a r s , t h e r e f o r e , t h a t m a n y c o n s u m e r s a r e l e f t w i t h o u t a n y m e a n i n g f u l m e t h o d o f o b t a i n i n g d i r e c t r e l i e f . I n t h e w r i t e r ' s v i e w , i t i s b e t t e r t o h a v e r e l a t i v e l y u n s o p h i s t i c a t e d T r i b u n a l s m a k i n g d e c i s i o n s t h a n t o h a v e c o n s u m e r s d e p r i v e d o f a n a c c e s s i b l e f o r u m a n d t h e A c t s h o u l d b e a m e n d e d t o g i v e D i s p u t e s Disputes Tribunal Act 1988, sec. 10(3). T r i b u n a l s j u r i s d i c t i o n t o h e a r a n d d e t e r m i n e c l a i m s u n d e r s e c t i o n 9 . 4 3 T h i s c o n c l u d e s t h e f i r s t s t a g e o f c o n s i d e r a t i o n o f t h e w r i t e r ' s f i r s t h y p o t h e s i s , t h a t s e c t i o n 9 a n d t h e A c t a r e d e f i c i e n t i n s o m e r e s p e c t s a n d t h e r e f o r e r e q u i r e a m e n d m e n t . T h e d i s c u s s i o n r e s u m e s i n c h a p t e r f i v e , w h e r e p r a c t i c a l e f f e c t s o f t h e d e f i c i e n c i e s i d e n t i f i e d i n t h i s c h a p t e r , a l o n g w i t h f u r t h e r d e f i c i e n c i e s i d e n t i f i e d i n c h a p t e r f o u r , a r e e v a l u a t e d . I n c h a p t e r s t h r e e a n d f o u r , t h e d i s c u s s i o n t u r n s t o t h e w r i t e r ' s s e c o n d h y p o t h e s i s . 3 3 It is acknowledged that, despite the relative accessibility, cheapness and speed of the disputes tribunal procedure, transaction costs would still be a problem for many small claims, but giving jurisdiction to the Disputes Tribunals would nonetheless be an improvement on the present situation. CHAPTER THREE IDENTIFICATION OF THE PUBLIC POLICY RATIONALE FOR THE TORT OF PASSING OFF INTRODUCTION T h e f o c u s n o w t u r n s t o t h e w r i t e r ' s s e c o n d h y p o t h e s i s , t h a t t h e c o u r t s h a v e n o t g i v e n e f f e c t t o t h e p u b l i c p o l i c y r a t i o n a l e f o r s e c t i o n 9 a n d h a v e , i n s t e a d , i m p o r t e d a n d a p p l i e d p r i n c i p l e s d e v e l o p e d i n t h e t o r t o f p a s s i n g o f f . I t w i l l b e s e e n t h a t n o t o n l y i s t h e A c t i n a d e q u a t e l y c o n s t r u c t e d f o r a d v a n c e m e n t o f t h e p o l i c y r a t i o n a l e , b u t , e v e n i f i t w e r e n o t , t h e c o u r t s h a v e a p p l i e d s e c t i o n 9 i n a m a n n e r t h a t i t s e l f t h w a r t s s u c h a d v a n c e m e n t . I n t h i s c h a p t e r , t h e p u b l i c p o l i c y r a t i o n a l e f o r p a s s i n g o f f i s i d e n t i f i e d . T o t h a t e n d , t h e d e v e l o p m e n t o f p a s s i n g o f f i s r e v i e w e d , w i t h a f o c u s o n t h e e v i l ( s ) i t w a s d e s i g n e d t o c u r e a n d o n t h e r e q u i r e m e n t s f o r s u c c e s s f u l l y p r o s e c u t i n g t h e a c t i o n . P a r t s A a n d B a d d r e s s t h e o r i g i n s a n d e a r l y d e v e l o p m e n t o f t h e t o r t , a n d t h e s e m i n a l c a s e oi Erven Warnink B.V. v J. Townend & Sons (Hull) Ltd.,1 r e s p e c t i v e l y , a n d d e a l m o s t l y w i t h E n g l i s h c a s e s , b e c a u s e t h a t i s w h e r e t h e t o r t o r i g i n a t e d . I t w i l l b e s e e n t h a t i t d e v e l o p e d o u t o f t h e t o r t o f d e c e i t a n d i s b a s e d o n t h e p r i n c i p l e t h a t n o b o d y h a s a n y r i g h t t o r e p r e s e n t h i s g o o d s a s b e i n g t h e g o o d s o f s o m e b o d y e l s e . I t i s a s s u m e d t h a t s u c h 1 [1979] A C . 731 (H.L.) (the Advocaat case). 45 r e p r e s e n t a t i o n s d a m a g e t h e g o o d w i l l o f t h e p l a i n t i f f s b u s i n e s s 2 a n d t h e a c t i o n i s d e s i g n e d t o p r e v e n t / c o m p e n s a t e f o r t h a t d a m a g e . I n P a r t C , t h e s c o p e o f t h e t o r t i n m o d e r n t i m e s i s c o n s i d e r e d b y r e f e r e n c e t o i t s t h r e e p r i n c i p a l e l e m e n t s : g o o d w i l l , m i s r e p r e s e n t a t i o n a n d d a m a g e . N e w Z e a l a n d c a s e s f e a t u r e , s h o w i n g t h a t t h e t o r t h a s a s h o r t b u t r e l a t i v e l y s u b s t a n t i a l h i s t o r y t h e r e . A s t h e l a w i n N e w Z e a l a n d h a s d e v e l o p e d , t h e r e h a s b e e n l e s s r e l i a n c e o n E n g l i s h a u t h o r i t i e s b u t t h e l a w i n t h e t w o c o u n t r i e s i s s u b s t a n t i a l l y t h e s a m e , w i t h t h e o n l y s i g n i f i c a n t d i f f e r e n c e a r i s i n g f r o m t h e s p e c i a l e c o n o m i c r e l a t i o n s h i p b e t w e e n N e w Z e a l a n d a n d A u s t r a l i a . T h e c a s e s i n b o t h j u r i s d i c t i o n s e m p h a s i z e t h a t t h e i s s u e s t o b e a d d r e s s e d i n a n a c t i o n f o r p a s s i n g o f f a r e f a c t u a l a n d e a c h c a s e w i l l d e p e n d o n i t s o w n u n i q u e f a c t s . T h e t o r t i s f l u i d a n d h a s c o n t i n u o u s l y d e v e l o p e d t o m e e t n e w m e t h o d s o f m a k i n g , s e l l i n g a n d p r o m o t i n g g o o d s a n d s e r v i c e s . F o r t h a t r e a s o n , i t i s d i f f i c u l t t o p r o v i d e a c o n c i s e s u m m a r y o f t h e l a w a n d t h i s c h a p t e r c o n v e y s a n a p p r e c i a t i o n o f t h e o u t e r l i m i t s o f t h e l a w o f p a s s i n g o f f i n s o m e o f i t s m o r e s i g n i f i c a n t f a c t u a l a p p l i c a t i o n s r a t h e r t h a n a c o m p r e h e n s i v e s t a t e m e n t o f t h e l a w . 3 2 Although that is not always the case: refer, for example, to Dominion Rent A Car Ltd. v Budget Rent A Car Systems (1970) Ltd. [1987] 2 N Z L R 395 (C.A.) . Damage is most likely to arise when the defendant's product is cheaper than the plaintiffs - the plaintiff wi l l usually suffer loss of custom - or where the defendant's product is inferior in quality - the plaintiff wi l l usually suffer loss of reputation. 3 For which the reader would be admirably served by reference to Brown & Grant, The Law of Intellectual Property in Mew Zealand, 1989, Butterworths, Wellington, for a statement of the New Zealand law; C. Wadlow, The Law of Passing Off, 1990, Sweet & Maxwell, London, for a statement of the English law; and S. Ricketson, The Law of Intellectual Property, 1984, The Law Book Co., Melbourne, for a statement of the Australian law. 4 6 I n P a r t D , t h e r e i s c o n s i d e r a t i o n o f t h e m o v e i n s o m e j u r i s d i c t i o n s t o e x p a n d t h e t o r t o f p a s s i n g o f f i n t o a m o r e g e n e r a l t o r t o f u n f a i r c o m p e t i t i o n . P a r t E c o n t a i n s a s u m m a r y o f t h e c h a p t e r , c o n s i d e r a t i o n o f c o m m e n t a r i e s o n t h e n a t u r e o f t h e p u b l i c p o l i c y r a t i o n a l e f o r t h e t o r t o f p a s s i n g o f f a n d e x p r e s s i o n o f t h e w r i t e r ' s v i e w t h a t i t e x i s t s f o r t h e b e n e f i t o f t r a d e r s b u t t h a t t h e e x t e n t o f t h a t p r o t e c t i o n i s c i r c u m s c r i b e d , t o a m o d e s t e x t e n t , b y t h e i n t e r e s t s o f c o n s u m e r s . A. ORIGINS AND EARLY DEVELOPMENT 1. In the beginning T h e t o r t o f p a s s i n g o f f d a t e s b a c k t o a t l e a s t 1 6 1 8 . I t o r i g i n a t e d , t o g e t h e r w i t h a n u m b e r o f o t h e r t o r t s , 4 o u t o f t h e t o r t o f d e c e i t . 5 W h a t i s g e n e r a l l y c o n s i d e r e d t o b e t h e f i r s t p a s s i n g o f f c a s e i s u n r e p o r t e d a n d u n n a m e d . I t s e x i s t e n c e i s k n o w n o n l y b y v i r t u e o f r e f e r e n c e s t o i t i n t w o s u b s e q u e n t c a s e s , Southern v How6 a n d Dean v Steel? I t a p p e a r s t o h a v e b e e n a n a c t i o n b r o u g h t b y a c l o t h i e r , w h o h a d " g r e a t r e p u t a t i o n f o r h i s m a k i n g 4 Slander of title, slander of goods and injurious falsehood. 5 Though it differs from the tort of deceit in that the plaintiff must prove not that he was deceived but that members of the public or trade were or are likely to be deceived by such false representations: D Young Q C , Passing Off: The Law and Practice Relating to the Imitation of Goods, Businesses and Professions, 1985, Oyez Longman Publishing Ltd, London, p . l . 6 (1618) Cro. Jac. 468. 7 (1626) Lat. 188; 82 E.R. 39. 47 o f h i s c l o t h " , a g a i n s t a n o t h e r c l o t h i e r w h o u s e d t h e p l a i n t i f f s m a r k o n h i s o w n " i l l - m a d e c l o t h o n p u r p o s e t o d e c e i v e h i m " . I t w a s h e l d t h a t " a n a c t i o n d i d w e l l l i e " . 8 T h e r e w e r e a n u m b e r o f c a s e s r e p o r t e d i n t h e r e m a i n d e r o f t h e e i g h t e e n t h c e n t u r y , d e a l i n g w i t h s i m i l a r f a c t s . 9 I n t h e m , p a s s i n g o f f c o n t i n u e d t o b e t r e a t e d a s a f o r m o f d e c e i t f o r w h i c h p r o o f o f b a d f a i t h o r a n i n t e n t i o n t o d e c e i v e w a s n e c e s s a r y . T h e n e e d t o p r o v e b a d f a i t h w a s g r a d u a l l y r e m o v e d d u r i n g t h e c o u r s e o f t h e n i n e t e e n t h c e n t u r y a n d i s n o l o n g e r a r e q u i r e m e n t a t a l l . 1 0 2. The first unambiguous case T h e f i r s t u n a m b i g u o u s p a s s i n g o f f c a s e a p p e a r s t o h a v e b e e n Sykes v Sykes.11 T h e p l a i n t i f f m a d e a n d s o l d s h o t - b e l t s a n d p o w d e r f l a s k s m a r k e d w i t h t h e w o r d s " S y k e s P a t e n t " . H i s g o o d s w e r e o f h i g h q u a l i t y a n d e n j o y e d a " g r e a t r e p u t a t i o n " w i t h t h e Although three different reports give different impressions as to who was the plaintiff and which party was successful, this seems to be the most logical version: Wadlow, supra, note 3, para. 1-06; Ricketson, supra, note 3, para. 24.2. 9 Blanchard v Hill (1742) 26 E . R . 692; Singleton v Bolton (1783) 99 E . R . 661; Webster v Webster (1791) 36 E . R . 949; Hogg v Kirby (1803) 32 E . R . 336; Byron (Lord) v Johnson (1816) 35 E . R . 851; Crutwell v Lye (1810) 34 E .R . 129; Canham v Jones (1813) 35 E . R . 302. 10 Bourne v Swan & Edgar Ltd. [1903] 1 Ch. D . 211 per Farwell J at p.223: "The first point is that it certainly is not now, and since Lord Cottenham's decision in Millington v Fox (1838) 3 My. & Cr. 338 never was in the old Court of Chancery or in the Chancery Division, necessary to prove fraud. It has been pointed out by many judges that the injury to the plaintiff is the same whatever the intentions of the defendant may have been..." (1824) 107 E . R . 834. 48 p u b l i c . 1 2 T h e d e f e n d a n t a d o p t e d t h e s a m e n a m e o n s i m i l a r b u t i n f e r i o r g o o d s m a d e b y h i m , c a u s i n g d a m a g e t o t h e p l a i n t i f f s r e p u t a t i o n a n d p r e v e n t i n g h i m f r o m s e l l i n g a g r e a t q u a n t i t y o f h i s o w n g o o d s . T h o u g h t h e r e t a i l e r s t o w h o m t h e d e f e n d a n t s o l d k n e w t h e g o o d s w e r e n o t m a d e b y t h e p l a i n t i f f , t h e y w e r e s o l d t o t h e m f o r t h e p u r p o s e o f r e s a l e t o t h e p u b l i c a n d w i t h t h e i n t e n t i o n t h a t t h e p u b l i c s h o u l d b e l i e v e t h e y w e r e t h e g o o d s o f t h e p l a i n t i f f . I t w a s h e l d t h a t t h e d e f e n d a n t a d o p t e d t h e m a r k f o r i n d u c i n g t h e p u b l i c t o s u p p o s e t h e a r t i c l e s w e r e m a d e b y t h e p l a i n t i f f a n d t h a t h e s h o u l d n o t b e a l l o w e d t o d o s o . T h e t h r e e c r i t i c a l e l e m e n t s o f t h e a c t i o n w e r e s a i d t o b e m i s r e p r e s e n t a t i o n , g o o d w i l l a n d d a m a g e . T h e y a r e s t i l l t h e t h r e e c r i t i c a l e l e m e n t s o f t h e a c t i o n t o d a y . 3. 'Classic' passing off T h e d e c i s i o n o f t h e H o u s e o f L o r d s i n Reddaway v Banham m a r k e d t h e n e x t s i g n i f i c a n t d e v e l o p m e n t o f t h e t o r t , i t s i m p o r t a n c e b e i n g d u e t o t h e s t a t e m e n t s o f p r i n c i p l e m a d e b y L o r d H a l s b u r y L . C . a n d L o r d H e r s c h e l l . 1 3 T h e p l a i n t i f f h a d f o r s o m e y e a r s m a d e m a c h i n e b e l t i n g a n d s o l d i t a s ' C a m e l H a i r B e l t i n g ' , a n a m e w h i c h h a d c o m e t o m e a n i n t h e t r a d e t h e p l a i n t i f f s b e l t i n g a n d n o t h i n g 1 2 Idem. 13 Reddaway (Frank) & Co. Ltd. v George Banham & Co. Ltd. [1896] A.C. 199 (H.L.) . One author has said that this is the time that "passing off came of age": Wadlow, supra, note 3, para. 1-09. 49 e l s e , a l t h o u g h i t w a s u s u a l f o r s u c h b e l t i n g t o b e m a d e o f c a m e l h a i r . 1 4 T h e d e f e n d a n t b e g a n t o s e l l b e l t i n g , m a d e o f c a m e l ' s h a i r , a n d s t a m p e d i t ' C a m e l H a i r B e l t i n g ' , s o a s t o b e l i k e l y t o m i s l e a d p u r c h a s e r s i n t o t h e b e l i e f t h a t i t w a s t h e p l a i n t i f f s b e l t i n g , e n d e a v o u r i n g t h u s t o p a s s o f f h i s g o o d s a s t h e p l a i n t i f f s . I n f i n d i n g f o r t h e p l a i n t i f f , L o r d H e r s c h e l l L . C . s t a t e d t h e l a w a s f o l l o w s : " F o r m y s e l f , I b e l i e v e t h e p r i n c i p l e o f l a w m a y b e v e r y p l a i n l y s t a t e d , a n d t h a t i s , t h a t n o b o d y h a s a n y r i g h t t o r e p r e s e n t h i s g o o d s a s t h e g o o d s o f s o m e b o d y e l s e . H o w f a r t h e u s e o f p a r t i c u l a r w o r d s , s i g n s , o r p i c t u r e s d o e s o r d o e s n o t c o m e u p t o t h e p r o p o s i t i o n w h i c h I h a v e e n u n c i a t e d i n e a c h p a r t i c u l a r c a s e m u s t a l w a y s b e a q u e s t i o n o f e v i d e n c e , a n d t h e m o r e s i m p l e t h e p h r a s e o l o g y , t h e m o r e l i k e i t i s t o a m e r e d e s c r i p t i o n o f t h e i t e m s o l d , t h e g r e a t e r b e c o m e s t h e d i f f i c u l t y o f p r o o f ; b u t i f t h e p r o o f e s t a b l i s h e s t h e f a c t t h e l e g a l c o n s e q u e n c e a p p e a r s t o f o l l o w " . 1 5 H i s L o r d s h i p s a i d t h a t h i s i n i t i a l v i e w w o u l d h a v e b e e n t h a t t h e d e s c r i p t i o n ' C a m e l H a i r B e l t i n g ' i n r e l a t i o n t o b e l t i n g m a d e o f c a m e l h a i r w o u l d h a v e s u g g e s t e d a " d i f f i c u l t y o f p r o o f b u t a c c e p t e d t h e j u r i e s f i n d i n g t h a t t h e d e s c r i p t i o n d e n o t e d g o o d s o f t h e p l a i n t i f f a n d a c c e p t e d a l s o t h a t t h e f i n d i n g w a s s u p p o r t a b l e o n t h e e v i d e n c e . 1 6 Reddaway a n d t h e c a s e s w h i c h p r e c e d e d i t i n v o l v e d w h a t h a s n o w b e c o m e k n o w n a s ' c l a s s i c p a s s i n g o f f , p r o v i d i n g r e l i e f o n l y w h e r e t h e m i s r e p r e s e n t a t i o n i n v o l v e d u s e o f t h e p l a i n t i f f s n a m e , m a r k o r g e t - u p . F r o m t h a t b a s e , t h e t o r t w a s g r a d u a l l y e x t e n d e d t o p r o v i d e r e l i e f a g a i n s t a m u c h b r o a d e r r a n g e o f m i s r e p r e s e n t a t i o n s w h i c h c o u l d i n f r i n g e 1 4 A finding of fact by the jury at first instance: per Lord Herschell at p. 201. 1 5 Idem. 1 6 Ibid, p. 205. 50 a t r a d e r ' s g o o d w i l l , i n c l u d i n g a p p e a r a n c e o f g o o d s , 1 7 a n d g o o d s m a d e b y t h e p l a i n t i f f . 1 8 T h e l a t t e r w a s e s t a b l i s h e d i n Spalding v Gamage, w h i c h a l s o r e a f f i r m e d , h o w e v e r , t h a t t h e t o r t p r o t e c t s t h e " p r o p e r t y i n t h e b u s i n e s s o r g o o d w i l l l i k e l y t o b e i n j u r e d b y t h e r e p r e s e n t a t i o n " r a t h e r t h a n a n y p r o p e r t y i n t h e g o o d s t h e m s e l v e s o r f e a t u r e o f t h e m . 1 9 T h e p r i n c i p a l r e a s o n f o r t h a t i s t h a t t o g r a n t t h e p l a i n t i f f s o m e p r o p e r t y i n t h e n a m e , m a r k o r g e t u p w o u l d b e t o e n c r o a c h o n t h e d o m a i n s o f c o p y r i g h t , t r a d e m a r k a n d p a t e n t l a w w h i c h a r e g o v e r n e d b y s t a t u t e . B y r e s t r i c t i n g t h e t o r t i n t h a t w a y , t h e c o m m o n l a w a l s o f a v o u r s f r e e c o m p e t i t i o n o v e r t h e p r i v a t e i n t e r e s t s o f a t r a d e r i n o b t a i n i n g p r o t e c t i o n i n a p r o d u c t d e s i g n . 2 0 17 William Edge & Sons Ltd. v William Nicholls & Sons Ltd. [1911] A . C . 693: the House of Lords considered the claim of a manufacturer of laundry blue, sold in a calico bag with a wooden stick attached to it. The defendants exactly imitated the plaintiffs product, save that they attached a label bearing their name. The House upheld the injunction granted at first instance (and overturned by the Court of Appeal) but, in doing so, appears to have been strongly influenced by the evidence that the plaintiffs product was mainly bought by uneducated persons who would not know the plaintiffs name and who would therefore be deceived notwithstanding that the defendant's name was attached to its product (pp. 704-705). The Court appears also to have been influenced by, the fact that the defendants' product was an exact replica of the plaintiffs, and it was held that the defendants could have used a different form, shape or size so as not to be liable to deceive (p. 703). The fact that the plaintiff was granted protection of the get-up of its product must therefore be seen in light of; one, the class of consumer to whom the product was sold; and, two, the extent to which the defendant's product imitated the plaintiffs. 1SAG Spalding & Bros. vA.W. Gamage Ltd. (1915) 32 R.P .C. 273: the plaintiff had sold a football, novel in that its cover was moulded instead of sewn. A large number proved unsatisfactory and were sold as waste rubber to a firm that resold them to the defendant. The plaintiff brought out a new ball with a sewn cover. The defendant advertised its footballs under the same description as the plaintiffs new balls. It said this was due to a mistake and apologised. Later advertisements did not repeat the mistake but did not rectify the mistake in the earlier advertisement either. The plaintiff successfully sought an injunction restraining the defendant from selling or advertising footballs, other than the new one, under the description given it by the plaintiff. Lord Parker referred to the principle, stated in Reddaway v Banham, supra, note 13, that nobody has any right to represent his goods as the goods of somebody else and said that it must: "[I]nvolve as a corollary the further proposition, that no one, who has in his hands the goods of another of a particular class or quality, has a right to represent those goods to be the goods of that other of a different quality or belonging to a different class" (p. 284). 1 9 Ibid, p. 284. For a discussion of the prior theories on the nature of the interest protected refer Ricketson, supra, note 3, para. 24.4. 2 0 M . B . Clark, Passing Off and Unfair Competition - The Regulation of the Marketplace [1990] 6 IPJ 1, 31. 51 4. The common field of activity rule F o l l o w i n g Spalding v Gamage, t h e e x p a n s i o n o f t h e t o r t w a s g r e a t l y l i m i t e d b y t h e d e c i s i o n i n McCulloch v Lewis A. May (Produce Distributors) Ltd.21, i n w h i c h t h e p l a i n t i f f w a s a b r o a d c a s t e r k n o w n a s ' U n c l e M a c ' ; t h e d e f e n d a n t t h e m a n u f a c t u r e r o f a b r e a k f a s t c e r e a l c a l l e d ' U n c l e M a c ' s P u f f e d W h e a t ' . W y n n - P a r r y J . c a n v a s s e d p r e v i o u s a u t h o r i t i e s a n d t o o k t h e v i e w t h a t a l l t h e c a s e s i n w h i c h t h e c o u r t h a d i n t e r v e n e d h a d a c o m m o n f a c t o r , n a m e l y t h a t t h e r e w a s a c o m m o n f i e l d o f a c t i v i t y , i n w h i c h , h o w e v e r r e m o t e l y , b o t h t h e p l a i n t i f f a n d t h e d e f e n d a n t w e r e e n g a g e d . H e h e l d t h a t i t w a s t h e p r e s e n c e o f t h a t f a c t o r t h a t g r o u n d e d t h e j u r i s d i c t i o n o f t h e c o u r t . 2 2 T h e p l a i n t i f f s c l a i m i n p a s s i n g o f f f a i l e d o n t h e b a s i s t h e r e w a s n o c o m m o n f i e l d o f a c t i v i t y i n w h i c h t h e p a r t i e s w e r e e n g a g e d . T h e r a t i o n a l e w a s t h a t u n l e s s t h e p a r t i e s w e r e i n t h e s a m e l i n e o f b u s i n e s s , t h e r e w o u l d b e n o p o s s i b i l i t y o f c o n f u s i o n o f t h e p u b l i c a s t o a n y c o n n e c t i o n b e t w e e n t h e p l a i n t i f f a n d t h e d e f e n d a n t . 2 3 T h e s t r e n g t h o f t h e c o m m o n f i e l d o f a c t i v i t y r u l e w a s d i l u t e d i n t h e Advocaat c a s e 2 4 a n d e f f e c t i v e l y w a s h e d a w a y i n Lego System A/S v Lego Lemelstrich Ltd.25 I n t h e l a t t e r , t h e 2 1 [1947] 2 A l l E .R . 845. 2 2 Ibid, p. 851. 2 3 That the case stood for that principle was made clear in Annabel's (Berkerty Square) Ltd. v G. Shock [1972] R.P .C. 838, 844. Refer also Wombles Ltd. v Wombles Skips Ltd. [1975] F.S.R. 488 (the Wombles case), Lyngstad v Annabas Products Ltd. [1977] F.S.R. 62 (the ABBA case) and Tavener Rutledge v Trexapalm Ltd. [1975] F.S.R. 479 (the Kojak case). 24 Supra, note 1. 2 5 [1983] F.S.R. 155 (the English Lego case). That approach was followed in Mirage Studios v Counter- Feat Clothing Ltd. [1991] F.S.R. 145 (the Ninja Turtles case). 52 b u i l d e r o f t h e f a m o u s L e g o b u i l d i n g b l o c k s o b t a i n e d a n i n j u n c t i o n r e s t r a i n i n g t h e d e f e n d a n t f r o m s e l l i n g c o l o u r e d p l a s t i c i r r i g a t i o n e q u i p m e n t u n d e r t h e L e g o n a m e . F a l c o n e r J . h e l d t h a t ' c o m m o n f i e l d o f a c t i v i t y ' i s n o t a t e r m o f a r t b u t m e r e l y a s h o r t - h a n d t e r m f o r s a y i n g t h e r e i s a n e e d f o r a r e a l p o s s i b i l i t y o f c o n f u s i o n a n d t h a t , o n t h e f a c t s , t h e r e w a s a r e a l r i s k t h a t a s u b s t a n t i a l n u m b e r o f p e r s o n s a m o n g t h e r e l e v a n t s e c t i o n o f t h e p u b l i c w o u l d b e l i e v e t h e r e w a s a b u s i n e s s c o n n e c t i o n b e t w e e n t h e p l a i n t i f f a n d d e f e n d a n t . 2 6 T h e r u l e m a y s t i l l h a v e s o m e v a l i d i t y i n r e l a t i o n t o e x t r a - t e r r i t o r i a l i t y i s s u e s , w h e r e i t m a y p r e c l u d e a f o r e i g n p l a i n t i f f f r o m o b t a i n i n g r e l i e f w h e r e i t d o e s n o t c a r r y o n b u s i n e s s i n t h e c o u n t r y . 2 7 I n N e w Z e a l a n d , t h e m o r e s i m i l a r t h e b u s i n e s s e s o f t h e p l a i n t i f f a n d d e f e n d a n t , t h e e a s i e r i t w i l l b e f o r t h e p l a i n t i f f t o s h o w c o n f u s i o n . I n Taylors Bros. Ltd. v Taylors Group Ltd., M c G e c h a n J . i d e n t i f i e d t w o s t r e a m s o f E n g l i s h a u t h o r i t y - o n e t h a t t r e a t e d t h e n e e d f o r a c o m m o n f i e l d o f a c t i v i t y a s c o n c l u s i v e a n d o n e t h a t d i d n o t . H e t o o k t h e v i e w t h a t h e w a s c o m m i t t e d t o n e i t h e r a p p r o a c h a n d " w i t h o u t h e s i t a t i o n " a d o p t e d t h e l a t t e r : " A p p r o a c h e s w h i c h r e g a r d t h e e x i s t e n c e o f a s o c a l l e d c o m m o n f i e l d o f a c t i v i t y a s d e c i s i v e , a n d i t s a b s e n c e a s a n i n s u r p a s s a b l e b a r r i e r , w i t h r e s p e c t m i s t a k e s i g n f o r s u b s t a n c e . T h e q u e s t i o n t o b e d e t e r m i n e d i s w h e t h e r a n a c t i v i t y o n t h e p a r t o f t h e d e f e n d a n t m a y m i s l e a d p o t e n t i a l c u s t o m e r s i n t o t h i n k i n g t h e a c t i v i t y i s t h a t o f t h e p l a i n t i f f . " 2 8 2 6 Ibid, pp. 187-188. 11 Infra, part C.l(c); Athletes' Foot Marketing Associates v Cobra Sports Ltd. [1980] R .P .C . 343. 2 8 [1988] 2 N Z L R 1, 20. His Honour went on to say that there is less risk of confusion where the two fields of business are totally unrelated but that the existence or otherwise of a common field of activity is no more than a pointer toward probable presence or absence of confusion. 5 3 I n t h e C o u r t o f A p p e a l , C o o k e P . a p p r o v e d t h a t a p p r o a c h b u t c a u t i o n e d t h a t t h e p r i n c i p l e , t h a t a n a m e m a y b e d i s t i n c t i v e i n a g e o g r a p h i c a l a r e a , c o u l d n o t a p p l y t o g i v e a p a r t y a p r a c t i c a l m o n o p o l y o f a r e l a t i v e l y c o m m o n p l a c e n a m e i n a f i e l d w h e r e t h e n a m e i s n o t d i s t i n c t i v e : " T a y l o r s W e l l i n g t o n c o u l d n o t , w e t h i n k , r e s t r a i n t h e u s e i n W e l l i n g t o n o f t h e n a m e T a y l o r s f o r , s a y , f o o d s t u f f s . I t m u s t a l w a y s b e a q u e s t i o n o f f a c t a n d d e g r e e . " 2 9 B. THE ADVOCAAT CASE U p u n t i l a b o u t 1 9 6 0 , m i s d e s c r i p t i o n o f g o o d s o r m i s u s e o f a d e s c r i p t i v e t e r m w a s c o n s i d e r e d t o b e o u t s i d e t h e s c o p e o f t h e t o r t . F r o m t h a t d a t e , a n u m b e r o f c a s e s c h a l l e n g e d t h a t v i e w . T h e f i r s t w a s Bollinger v Costa Brava Wine Co. Ltd.,31 i n w h i c h i t w a s h e l d t h a t t h e p r o d u c e r s o f C h a m p a g n e w e r e e n t i t l e d t o r e s t r a i n t h e d e f e n d a n t s f r o m d e s c r i b i n g a n d s e l l i n g w i n e , n o t p r o d u c e d i n t h e C h a m p a g n e r e g i o n o f F r a n c e , a s ' S p a n i s h C h a m p a g n e ' . T h a t c a s e w a s f o l l o w e d b y o t h e r s i n v o l v i n g S h e r r y , 3 2 H a r r i s 2 9 Ibid, per Cooke P. at p.38. His Honour referred to the English Lego decision as "...perhaps an extreme case." 30 Supra, note 1. 3 1 [1960] Ch. 262. 32 Vine Products Ltd. v Mackenzie & Co, Ltd. [1969] R.P.C. 1. 54 T w e e d 3 3 a n d S c o t c h W h i s k y 3 4 a n d c u l m i n a t e d i n t h e d e c i s i o n o f t h e H o u s e o f L o r d s i n t h e Advocaat c a s e . 3 5 I n t h a t , s e m i n a l , C o m m o n w e a l t h c a s e o n p a s s i n g o f f L o r d s D i p l o c k a n d F r a s e r r e v i e w e d a n d r a t i o n a l i s e d t h e p r e v i o u s a u t h o r i t i e s a n d f o r m u l a t e d g e n e r a l s t a t e m e n t s o f p r i n c i p l e t h a t r e m a i n t h e c o r n e r s t o n e s o f t h e a c t i o n . T h e D u t c h p l a i n t i f f m a d e A d v o c a a t a n d e x p o r t e d i t t o a n d s o l d i t i n B r i t a i n . I t w a s m a d e o f e g g y o l k , s u g a r a n d a s p i r i t c a l l e d B r a n d e w i j n . I t a c q u i r e d a s u b s t a n t i a l r e p u t a t i o n i n B r i t a i n a s a d i s t i n c t a n d r e c o g n i s a b l e d r i n k . T h e d e f e n d a n t s s t a r t e d m a k i n g a n d s e l l i n g a d r i n k c a l l e d " K e e l i n g ' s O l d E n g l i s h A d v o c a a t " . 3 6 I t w a s m a d e o f d r i e d e g g p o w d e r a n d Cyprus s h e r r y . I t c o u l d n o t b e s h o w n i t w a s m i s t a k e n f o r t h e p l a i n t i f f s A d v o c a a t , b u t i t c a p t u r e d a l a r g e p a r t o f t h e p l a i n t i f f s E n g l i s h m a r k e t . T h e p l a i n t i f f b r o u g h t a n a c t i o n a l l e g i n g p a s s i n g o f f a n d s o u g h t a n i n j u n c t i o n r e s t r a i n i n g t h e d e f e n d a n t s (1) f r o m s e l l i n g o r o f f e r i n g f o r s a l e a n y p r o d u c t u n d e r t h e A d v o c a a t n a m e u n l e s s i t c o n s i s t e d o f s p i r i t a n d e g g s a n d d i d n o t i n c l u d e w i n e ; a n d ( 2 ) f r o m m i s r e p r e s e n t i n g t h a t a m i x t u r e o f w i n e a n d e g g s i s A d v o c a a t . T h e c a s e d i f f e r e d f r o m ' c l a s s i c ' p a s s i n g o f f c a s e s b e c a u s e ; f i r s t , t h e p l a i n t i f f h a d n o c a u s e o f a c t i o n i n i t s c l a s s i c f o r m o f a t r a d e r r e p r e s e n t i n g h i s g o o d s a s t h e g o o d s o f s o m e b o d y e l s e , s i n c e t h e y c o u l d n o t p r o v e a n y p u r c h a s e r o f t h e d e f e n d a n t ' s d r i n k w a s m i s l e d o r l i k e l y t o b e m i s l e d i n t o c o n f u s i n g i t w i t h t h e p l a i n t i f f s d r i n k o r e v e n t o t h i n k i t w a s 33 Argyllshire Weavers Ltd. v A. Macaulay Tweeds Ltd. [1964] R.P .C. 477. 34 Walker (John) & Sons Ltd. v Henry Ost & Co. Ltd. [1970] 1 W . L . R . 917. 35 Supra, note 1. 3 6 A t a price significantly lower than the plaintiffs. 55 D u t c h A d v o c a a t o f a n y m a k e ; 3 7 a n d , s e c o n d l y , t h e p l a i n t i f f s w e r e t r a d e r s c l a i m i n g t h a t t h e a c t i o n s o f t h e d e f e n d a n t s i n t e r f e r e d w i t h t h e i r s h a r e d g o o d w i l l . T h e p a s s i n g o f f c o m p l a i n e d o f w a s t i e d t o t h e p r o d u c t g e n e r a l l y , n o t t o t h e p l a i n t i f f s ' p r o d u c t s p e c i f i c a l l y , s o t h e q u e s t i o n w a s w h e t h e r t h e H o u s e s h o u l d a p p r o v e t h e e x t e n d e d c o n c e p t a p p l i e d i n t h e Champagne, Sherry a n d Scotch Whisky c a s e s . L o r d s D i p l o c k a n d F r a s e r d e l i v e r e d s p e e c h e s o n b e h a l f o f a u n a n i m o u s H o u s e . 3 8 L o r d D i p l o c k h e l d t h a t t h e p r e v i o u s a u t h o r i t i e s : " [ M ] a k e i t p o s s i b l e t o i d e n t i f y f i v e c h a r a c t e r i s t i c s w h i c h m u s t b e p r e s e n t i n o r d e r t o c r e a t e a v a l i d c a u s e o f a c t i o n f o r p a s s i n g o f f : ( 1 ) a m i s r e p r e s e n t a t i o n , ( 2 ) m a d e b y a t r a d e r i n t h e c o u r s e o f t r a d e , ( 3 ) t o p r o s p e c t i v e c u s t o m e r s o f h i s o r u l t i m a t e c o n s u m e r s o f g o o d s o r s e r v i c e s s u p p l i e d b y h i m , ( 4 ) w h i c h i s c a l c u l a t e d t o i n j u r e t h e b u s i n e s s o r g o o d w i l l 3 9 o f a n o t h e r t r a d e r ( i n t h e s e n s e t h a t t h i s i s a 37 Supra note 1, per Lord Diplock at p. 739 and per Lord Fraser at p. 750. 3 8 The fact that both of them did so produced some confusion as to what was the ratio of the case but the more popular approach is to apply the five point test formulated by Lord Diplock. While it focuses on the actions of the defendant, Lord Fraser's formulation focused on what the plaintiff had to prove to be successful: "It is essential for the plaintiff in a passing off action to show at least the following facts:-(l) that his business consists of, or includes, selling in England the class of goods to which the particular trade name applies; (2) that the class of goods is clearly defined, and that in the minds of the public, or a section of the public, in England, the trade name distinguishes that class from other similar goods; (3) that because of the reputation of the goods, there is goodwill attached to the name; (4) that he, the plaintiff, as a member of the class of those who sell the goods is the owner of goodwill in England which is of substantial value; (5) that he has suffered, or is really likely to suffer, substantial damage to his property in the goodwill by reason of the defendant selling goods which are falsely described by the trade name to which the goodwill is attached. Provided these conditions are satisfied, as they are in the present case, I consider that the plaintiff is entitled to protect himself by a passing off action." Lord Fraser's formulation is more closely tied to the facts of the case while L o r d Diplock's is of more general application and it is perhaps for that reason that Lord Diplock's has been applied more often. 3 9 Which His Lordship described as a broad concept and cited with approval Lord MacNaghten in Inland Revenue Commissioners v Muller & Co's. Margarine Ltd. [1901] A . C . 217, 222-224: "It is the benefit and advantage of the good name, reputation and connection of a business. It is the attractive force which 5 6 r e a s o n a b l y f o r e s e e a b l e c o n s e q u e n c e ) a n d ( 5 ) w h i c h c a u s e s a c t u a l d a m a g e t o a b u s i n e s s o r g o o d w i l l o f t h e t r a d e r b y w h o m t h e a c t i o n i s b r o u g h t o r ( i n a q u i a t i m e t a c t i o n ) w i l l p r o b a b l y d o s o . " 4 0 H i s L o r d s h i p w a s a t p a i n s t o p o i n t o u t t h a t e a c h c a s e w o u l d d e p e n d o n i t s o w n f a c t s a n d t h a t w h i l e a l l p a s s i n g o f f a c t i o n s p r e s e n t t h o s e c h a r a c t e r i s t i c s , a l l f a c t u a l s i t u a t i o n s p r e s e n t i n g t h e m w o u l d n o t n e c e s s a r i l y g i v e r i s e t o a c a u s e o f a c t i o n f o r p a s s i n g o f f . 4 2 H e f u r t h e r h e l d t h a t t h e c a s e b e f o r e t h e H o u s e p r e s e n t e d t h e f i v e c h a r a c t e r i s t i c s , t h a t t h e r e w a s n o g r o u n d o f p u b l i c p o l i c y r e q u i r i n g t h e w i t h - h o l d i n g o f a r e m e d y 4 3 a n d t h a t t h e i n j u n c t i o n o v e r t u r n e d b y t h e C o u r t o f A p p e a l s h o u l d b e r e s t o r e d . L o r d F r a s e r r e a c h e d t h e s a m e v i e w . L o r d D i p l o c k ' s t e s t i s n o w t h e o n e m o s t c o m m o n l y a p p l i e d i n N e w Z e a l a n d . O t h e r t e s t s t o h a v e b e e n a p p l i e d i n c l u d e a c o m b i n a t i o n o f t h e t e s t s o f L o r d s D i p l o c k a n d F r a s e r , 4 4 brings in custom." Supra, note 1, p. 741. 4 0 Ibid, p. 742. 4 1 Ibid, p. 748. 4 2 Ibid, p. 742. In particular, he held that: "[I]n an economic system which has relied on competition to keep prices down and to improve products there may be practical reasons why it should have been the policy of the common law not to run the risk of hampering competition by providing civil remedies to everyone competing in the market who has suffered damage to his business or goodwill in consequence of inaccurate statements of whatever kind that may be made by rival traders about their own wares." 4 3 Relying principally on what he saw as a progressive intervention by Parliament in the interests of consumers by imposing by statute a higher standard of conduct of commercial candour on traders than had previously applied and holding that: "[Development of the common law...ought to proceed on a parallel rather than a diverging course"; ibid, at p. 743. For a discussion on that aspect of the case, refer J .G. Starke Q.C., Trade names - Passing off action - Right to exclusive use of trade description - Impact of legislation on principles applicable [1980] 54 A . L . J . 745. 4 4 Although Todd The Law of Torts in New Zealand, 1991, Sydney, The Law Book Company, p. 607 suggests that the tests of Lords Diplock and Fraser "[A]re to be viewed as a complimentary whole" and although in effect many of the cases apply a synthesis of the two, it is infrequent that a court wi l l approve and apply both sets of tests. Rather, the cases reflect a selection of one or the other or, alternatively, one 57 t h e t h r e e p o i n t t e s t p r o p o u n d e d b y P o w e l l J . i n Fletcher Challenge Ltd. v Fletcher Challenge Pty. Ltd.4S, t h e t h r e e p o i n t t e s t p r o p o u n d e d b y R i c k e t s o n , 4 6 t h e t e s t f r o m Reckitt & Colman Products Ltd. v Borden Inc.,47 o r a c o m b i n a t i o n o f s o m e o f t h e m . W h a t e v e r t e s t i s a p p l i e d d o e s n o t a f f e c t t h e p o s i t i o n p r e v i o u s l y s t a t e d , n a m e l y t h a t t h e t h r e e i n g r e d i e n t s r e q u i r e d t o b e s a t i s f i e d t o s u c c e s s f u l l y p r o s e c u t e a n a c t i o n f o r p a s s i n g o f f a r e m i s r e p r e s e n t a t i o n , g o o d w i l l a n d d a m a g e a n d , t o t h a t e x t e n t , t h e l a w s i n E n g l a n d a n d N e w Z e a l a n d a r e t h e s a m e . of the other tests referred to in this Part. Exceptions to that include Klissers Farmhouse Bakeries Ltd. v Harvest Bakeries Ltd. [1985] 2 N Z L R 143,146 where, in the High Court, Davison C J set out with approval both sets of test and, in the Court of Appeal, Somers and Casey JJ. adopted the same course but Bisson J applied that of Lord Diplock only ([1988] 1 N Z L R 16, 22, 27 and 31 respectively). Somers and Casey JJ. took the same approach in Dominion Rent A Car Ltd. v Budget Rent A Car Systems (1970) Ltd., supra, note 2. See also the High Court decision in Taylor Bros. Ltd. v Taylors Group Ltd., supra, note 28, per McGechan J. at p. 16. 4 5 [1982] 8 F.S.R. 1, 11: a plaintiff must establish that: (a) his goods, or his business, has acquired a certain reputation or goodwill; (b) the actions of the defendant have caused, or in al l probability wi l l cause, the ordinary customers of the plaintiffs business to believe that the defendant's goods are those, or that the defendant's business is that, of the plaintiff; (c) in consequence, the plaintiff has suffered, or is likely to suffer, injury in his trade or business. Brown & Grant cite a number of cases in which that test has been applied but are all are High Court decisions and it has never been adopted by the Court of Appeal: supra, note 3, para. 3.6, note 3. 4 6 Ricketson, supra, note 3, para. 24.10: a plaintiff must prove that: (a) there is some reputation or goodwill attached to his name, mark or get-up; (b) the defendant has used the same or a deceptively similar name, mark or get-up so as to confuse or deceive the relevant section of the public; (c) as a result of the defendants conduct, damage has been or is likely to be caused to the plaintiffs business reputation or goodwill. Refer also Brown & Grant, supra, note 3, para. 3.6, note 4 for cases in which that test has been applied. 4 7 [1990] 1 A l l E . R . 873: the plaintiff must prove that: (a) there is some reputation attached to its name, mark or get up; (b) the defendant used the same or a deceptively similar name, mark or get up so as to confuse or deceive the relevant public or, if unrestrained, is likely to do so; (c) as a result, damage has been, or is likely to be, caused to the plaintiffs business, reputation or goodwill. Refer also Tot Toys v Mitchell [1993] 1 N Z L R 325. 58 C. THE TORT TODAY F o l l o w i n g t h e Advocaat d e c i s i o n , a n d i n a c c o r d a n c e w i t h t h e s t a t e m e n t o f L o r d D i p l o c k t h a t e a c h c a s e m u s t b e d e a l t w i t h a c c o r d i n g t o i t s o w n f a c t s , 4 8 t h e t o r t h a s c o n t i n u e d to d e v e l o p a n d b e e x t e n d e d t o n e w s i t u a t i o n s . I n m o s t i n s t a n c e s , t h e e x t e n s i o n s h a v e b e e n i n r e l a t i o n t o t h e k i n d s o f p r o d u c t o r d e v i c e i n w h i c h g o o d w i l l m a y r e s i d e . A l t h o u g h f e w e r i n n u m b e r , t h e r e h a v e a l s o b e e n c a s e s i n w h i c h t h e k i n d s o f r e p r e s e n t a t i o n a n d d a m a g e w h i c h f a l l w i t h i n t h e a m b i t o f t h e t o r t h a v e b e e n e x p a n d e d . 1. Goodwill (a) Generally T h e s c o p e o f t h e t o r t i s m o s t s i g n i f i c a n t l y d e t e r m i n e d b y t h e b r e a d t h t h e c o u r t s a r e p r e p a r e d t o g i v e t o t h e c o n c e p t o f g o o d w i l l . T h e d e f e n d a n t ' s m i s r e p r e s e n t a t i o n m u s t r e l a t e t o s o m e t h i n g w h i c h t h e p l a i n t i f f h a s a r i g h t t o p r o t e c t : " O n e i m p o r t a n t l i m i t a t i o n o n t h e r i g h t o f a t r a d e r t o r e s t r a i n a n o t h e r i s t h a t h e m u s t s h o w a n i n v a s i o n o f t h a t i n t a n g i b l e r i g h t o f p r o p e r t y c o m p e n d i o u s l y d e s c r i b e d a s g o o d w i l l w h i c h c a n o n l y e x i s t i n N e w Z e a l a n d w h e n a t t a c h e d t o a b u s i n e s s h a v i n g s o m e c o n n e c t i o n w i t h t h i s c o u n t r y . T h e e x i s t e n c e o f a t r a d i n g r e p u t a t i o n b y i t s e l f i s n o t s u f f i c i e n t - t h e r e c a n 4 8 One author has noted that, for that reason, it is increasingly difficult for lawyers to advise their clients on whether to raise or contest an action in this area: R . C . Ell iot , Recent Developments in English Law. Passing Off: A Change of Emphasis? [1992] 1 Scots Law Times 164,165. That is a classic illustration of the struggle at common law to balance the demands for certainty and flexibility. b e n o d a m a g e o t h e r t h a n t o a r i g h t o f p r o p e r t y . " 5 9 A c r u c i a l e l e m e n t o f e s t a b l i s h i n g g o o d w i l l i s t h a t t h e m a t t e r s a i d t o b e i m i t a t e d b y t h e d e f e n d a n t m u s t b e d i s t i n c t i v e a n d t h e d i s t i n c t i v e f e a t u r e m u s t b e l i n k e d w i t h t h e p l a i n t i f f . I n r e l a t i o n t o a n a m e , i t h a s b e e n h e l d t h a t t h e m o r e d e s c r i p t i v e i t i s t h e l e s s l i k e l y t h a t i t w i l l b e d i s t i n c t i v e . 5 0 I n r e l a t i o n t o g e t - u p o f t h e p l a i n t i f f s g o o d s , t h e m o r e c l o s e l y i t r e s e m b l e s t h e g e t - u p o f s i m i l a r p r o d u c t s i n t h e m a r k e t , t h e m o r e d i f f i c u l t i t w i l l b e t o e s t a b l i s h d i s t i n c t i v e n e s s . 5 1 T h e q u e s t i o n o f w h a t i s r e q u i r e d t o e s t a b l i s h d i s t i n c t i v e n e s s o f a p r o d u c t t h a t i s f u n c t i o n a l i n n a t u r e w a s c o n s i d e r e d i n Tot Toys v Mitchell.52 T h e d e f e n d a n t p r o p o s e d t o s e l l a w o o d e n t o y i d e n t i c a l t o t h a t o f t h e p l a i n t i f f , i n t h e s h a p e o f a b e e a n d w i t h w h e e l s t h a t m a d e t h e w i n g s r o t a t e w h e n p u l l e d a l o n g b y a s t r i n g . F i s h e r J . h e l d t h a t i f a f e a t u r e r e l i e d o n a s b e i n g p a r t o f a d i s t i n c t i v e g e t - u p i s f u n c t i o n a l , i t c a n q u a l i f y a s p a r t o f t h e g e t - u p o n l y i f i t i s : " . . . n o t t h e f u n c t i o n a l i d e a p e r s e b u t t h e c a p r i c i o u s w a y i t h a s b e e n e x p r e s s e d " . F e a t u r e s w i l l b e m o r e l i k e l y t o q u a l i f y a s g e t - u p i f t h e y a r e f a n c i f u l , o r i g i n a l , u n u s u a l o r s e l e c t e d f r o m a v a s t r a n g e o f a v a i l a b l e p o s s i b i l i t i e s r a t h e r t h a n s i m p l e , o b v i o u s , m u n d a n e o r s e l e c t e d f r o m a l i m i t e d r a n g e . O n t h e f a c t s , i t w a s h e l d t h a t t h e d e f e n d a n t w a s f r e e t o m a r k e t t o y s r e s e m b l i n g t h o s e o f t h e p l a i n t i f f a s l o n g a s t h e y 49 Dominion Rent A Car, supra, note 2, per Somers J. at p. 420. 5 0 Ibid, per Cooke P. at 408 in relation to use of the name 'Budget'. 5 1 For example, Klissers Farmhouse Bakeries Ltd. v Harvest Bakeries Ltd., supra, note 44, per Cooke P. at p. 19: "...I would regard the checks [on the plaintiffs bags] as merely a typical decoration used on bags containing bakery products and on many other products and fabrics." Refer also infra, part B . 52 Supra, note 47, at p. 344. 6 0 w e r e a d e q u a t e l y d i s t i n g u i s h e d f r o m t h e p l a i n t i f f s t o y s ( w h i c h t h e y w e r e ) . I n Levi Strauss v Kimbyr Investments,53' t h e d e f e n d a n t w a s r e s t r a i n e d f r o m i m i t a t i n g t h e p l a i n t i f f s w e l l k n o w n ' r e d t a b ' o n t h e r e a r p o c k e t o f i t s j e a n s . T h e c o u r t s h a v e b e e n r e l u c t a n t t o g r a n t p r o t e c t i o n i n t h i s a r e a o n t e r m s m o r e f a v o u r a b l e t h a n t h o s e a v a i l a b l e u n d e r t r a d e m a r k s o r d e s i g n l e g i s l a t i o n 5 4 a n d Levi Strauss c o u l d b e s e e n i n l i g h t o f t h e f a c t t h e c o u r t h a d a l r e a d y h e l d t h e d e f e n d a n t ' s t a b i n f r i n g e d t h e p l a i n t i f f s r e g i s t e r e d t r a d e m a r k . 5 5 A g a i n s t t h a t , W i l l i a m s J . a l s o s t a t e d t h a t h e w o u l d h a v e u p h e l d t h e c l a i m f o r p a s s i n g o f f e v e n i f h e h a d h e l d t h a t t h e p l a i n t i f f s t r a d e m a r k s w e r e l i m i t e d t o t h e t a b i n o n e p o s i t i o n o n t h e l e f t o f t h e r i g h t r e a r p o c k e t , t h e e f f e c t b e i n g t o g i v e t h e p l a i n t i f f w i d e r p r o t e c t i o n i n p a s s i n g o f f t h a n u n d e r t h e T r a d e M a r k s A c t . (b) Recent extensions S i g n i f i c a n t e x t e n s i o n s t o t h e c o n c e p t o f g o o d w i l l h a v e i n c l u d e d g o o d w i l l i n r e l a t i o n t o t h e p o s s i b i l i t y o f b e i n g a b l e t o e x p a n d i n t o m a k i n g a n d s e l l i n g o f a n o t h e r k i n d o f p r o d u c t , 5 6 5 3 [1994] 1 N Z L R 332 (the Levi Strauss case). For a comprehensive review of cases in this area, refer Brown & Grant, supra, note 3, paras. 3.62 - 3.65 inclusive. 5 4 Refer, for example, Starcross Pty. Ltd. v Liquidchlor Pty. Ltd. (1981) 1 T.P.R. 103. 55 Supra, note 53, pp. 346-377. 5 6 The English Lego case, supra, note 26. Note that a case involving the plaintiffs Australian licensee and virtually identical facts as Lego was brought in Australia, although it was argued on a cause of action pursuant to section 52 of the Trade Practices Act and not passing off. The plaintiffs claim was rejected, the court being satisfied that the differences between the two products would mean that people would not confuse them as having a common source. The court rejected evidence of actual confusion and said it had to determine the propensity for deception for itself: Lego Australia Pty. Ltd. v Paul's (Merchants) Pty. Ltd. (1982) A.T .P .R . 40-308, 43-805 (the Australian Lego case). Falconer J. distinguished the Australian decision on the facts and on the ground it was not a passing off case. 6 1 a s l o n g a s t h e r e i s a r e a l l i k e l i h o o d o f c o n f u s i o n a n d a r e a l i s t i c p r o s p e c t o f d a m a g e ; 5 7 g o o d w i l l i n r e l a t i o n t o e x p a n d i n g t h e n a t u r e o f t h e p l a i n t i f f s p r e s e n t b u s i n e s s ; 5 8 g o o d w i l l i n s l o g a n s o r v i s u a l i m a g e s a s s o c i a t e d w i t h a p r o d u c t i n a n a d v e r t i s i n g c a m p a i g n , p r o v i d e d t h e y h a v e b e c o m e p a r t o f t h e p r o d u c t ; 5 9 g o o d w i l l i n r e l a t i o n t o p h o t o g r a p h s o f t h e p l a i n t i f f s p r o d u c t s , s o t h a t a d e f e n d a n t w a s r e s t r a i n e d f r o m u s i n g p h o t o g r a p h s o f c o n s e r v a t o r i e s m a d e b y t h e p l a i n t i f f i n i t s ( t h e d e f e n d a n t s ' ) a d v e r t i s i n g p o r t f o l i o s , e v e n t h o u g h i t w a s n o t a l l e g e d t h a t a n y m e m b e r o f t h e p u b l i c l o o k i n g a t t h e p h o t o g r a p h s w o u l d a s s o c i a t e a n y c o n s e r v a t o r y w i t h t h e p l a i n t i f f ; 6 0 a n d g o o d w i l l i n t h e n a m e o f a p u b l i c a t i o n , a d e p a r t u r e f r o m t h e p r e v i o u s a n d c o n s i s t e n t l y h e l d v i e w t h a t a p l a i n t i f f 57 Stringfellow v McCains Foods (GB) Ltd. [1984] R.P.C. 501. 5 8 The defendant in Associated Newspapers pic v Insert Media Ltd. [1991] 3 A l l E . R . 535 was restrained from inserting extraneous advertising material between the pages of the plaintiffs newspapers without the plaintiffs knowledge or approval. The case may reinforce the position taken by the court in the Lego case that a plaintiff may have goodwill in a business it has not yet entered into because, although the plaintiff intended to move into the insertion business, it had not yet done so. Although Mummery J. referred to damage to the goodwill of the plaintiff in relation to the publicly perceived quality of its advertising (in respect of which the plaintiff had led a lot of evidence with a view to showing that it took great care to be impartial and to maintain a very high standard and to ensure compliance with statutory and regulatory controls), he also appeared to be influenced by the fact the plaintiff was in the process of moving into the insertion business itself, and specifically referred to the Lego decision in that context (p. 814). The extent to which the Court may have been influenced by this factor is not, however, entirely clear and the decision could stand on the basis of the potential damage to the plaintiffs' goodwill in relation to the perceived quality of its advertising. The Court of Appeal merely said it agreed completely with Mummery J . that, for the reasons given, damage to reputation and goodwill was likely to occur in the circumstances of that case. For a discussion of the implications if the decision was influenced by the plaintiffs intended expansion into the insertion business refer to A . A . Horton, Passing Off: Extending the Frontiers of Protection? [1991] 13 E I P R 141, especially at p. 145. 59 Cadbury-Schweppes Pty. Ltd. v Pub Squash Co. Pty. Ltd. [1981] 1 W . L . R . 193 (Privy Council, on appeal from Australia): the plaintiff failed to make out its case because it could not establish that the defendant's imitation of the plaintiffs advertising of a lemon squash drink with a rugged, manly theme had misled the market into thinking that the defendant's product was that of the plaintiff. 60 Bristol Conservatories Ltd. v Conservatories Custom Built Ltd. [1989] R .P .C . 455: the Court of Appeal held that the tort of passing off is not limited to just two types, the 'classic' type and the extended form established in the Advocaat case. It was held that, by showing the photographs to a prospective customer, goodwill arose toward the supplier of those conservatories and was simultaneously misappropriated by the defendants. Note, however, that the five characteristics set out by Lord Diplock in Advocaat were present so it is debatable whether the case actually extended the law. For a comment, refer C. Morcom, Developments in the Law of Passing Off [1991] 13 E I P R 380, 383. c o u l d n o t h a v e g o o d w i l l i n s u c h c o m m o n , d e s c r i p t i v e w o r d s . ' 6 2 S i g n i f i c a n t a r e a s t o w h i c h i t h a s b e e n h e l d g o o d w i l l d o e s n o t e x t e n d i n c l u d e r e p u t a t i o n a s t o t h e m e t h o d o f p r e s e n t a t i o n a t r e t a i l s a l e s o a s t o p r e v e n t o t h e r t r a d e r s f r o m u s i n g a d i f f e r e n t m e t h o d o f p r e s e n t a t i o n o f t h e s a m e p r o d u c t , s u c h a s s e l l i n g t h e p l a i n t i f f s h a m p r e - s l i c e d a n d p a c k a g e d w h e n t h e p l a i n t i f f a l l e g e d i t s h a m h a d a r e p u t a t i o n f o r b e i n g s o l d w h o l e o r e l s e s l i c e d i n f r o n t o f t h e c u s t o m e r . 6 2 (c) Foreign plaintiffs T h a t a f o r e i g n p l a i n t i f f m a y h a v e g o o d w i l l i n E n g l a n d w a s w e l l s e t t l e d i n Advocaat a n d t h e c a s e s w h i c h p r e c e e d e d i t . T h e i s s u e h a s a l s o b e e n c o n s i d e r e d b y t h e N e w Z e a l a n d c o u r t s o n a n u m b e r o f o c c a s i o n s . I n Dominion Rent A Car Ltd. v Budget Rent A Car Systems (1970) Ltd., C o o k e P . t o o k t h e v i e w t h a t t h e r e w a s , a t t h a t t i m e , n o d i s t i n c t i v e 61 Morgan-Grampian v Training Personnel Ltd. [1991] F.S.R. 267 was the first successful case since the 1970's for a plaintiff to restrain rival publications with similar titles by means of passing off. Morgan- Grampian published a series of speciality magazines, each entitled "What's New In..." for example, farming or marketing. The defendants published a magazine originally called "Training Personnel", but changed the name to "What's New In Training". The plaintiff had no magazine about training. In granting interim relief to the plaintiff, Mummery J. held that the words "What's New In" were distinctive of the plaintiff. Previously, plaintiffs had mostly poor fortune in this area because most magazine titles are highly descriptive, rather than distinctive, and the courts have been reluctant to grant injunctive relief to owners of descriptively titled magazines. Further, readers of magazines and newspapers traditionally show high loyalty to the titles they regularly read and it is therefore difficult to prove sufficient confusion to ground a passing off action: refer, for example, World Athletics Ltd. v ACM Webb [1981] F.S.R. 27 where the proprietors of 'Athletics Weekly' failed in their attempt to prevent publication of 'Athletics Monthly'. The court held that the differences in size, price, frequency of publication, content and layout would sufficiently distinguish the two magazines. 62 Consorzio del Prosciutto di Parma v Marks & Spencer pic, Unreported, 29 November 1990 ( the Parma ham case). The ham of the plaintiff had always been sold whole or in slices cut in front of the customer. The plaintiff said this was part of the reputation of the ham. The defendant started selling the ham pre-sliced and packaged and the plaintiff complained. The Court held that there was no misrepresentation in selling sliced Parma ham as sliced Parma ham and that just because Italian law provided that ham not carved in front of the customer could not be sold in Italy as Parma ham did not mean that such ham ceased to be Parma ham. 'Parma ham' simply meant ham as treated in a particular manner, however it was sold following treatment. 6 3 a p p r o a c h t o t h e q u e s t i o n o f w h a t l e v e l o f a c t i v i t y i n N e w Z e a l a n d a f o r e i g n p l a i n t i f f n e e d e d t o s h o w i n o r d e r t o s a t i s f y t h e r e q u i r e m e n t t h a t i t h a v e g o o d w i l l t h e r e . 6 3 T h e c o u r t d i d l i t t l e t o a l t e r t h a t s i t u a t i o n , p r e f e r r i n g t o s a y t h a t e a c h c a s e h a d t o d e p e n d o n i t s o w n f a c t s . 6 4 T h e m i n i m u m b u s i n e s s c o n n e c t i o n h e l d t o s a t i s f y t h e r e q u i r e m e n t i s p u b l i c i t y o f t h e f a c t t h a t t h e p l a i n t i f f i n t e n d e d t o s e t u p b u s i n e s s i n N e w Z e a l a n d a n d t o o k p r e l i m i n a r y s t e p s t o w a r d t h a t e n d , 6 5 a l t h o u g h , w h e r e t h e p l a i n t i f f h a s a n i n t e r n a t i o n a l r e p u t a t i o n w h i c h e x t e n d s t o N e w Z e a l a n d , n o t m u c h i n t h e w a y o f a c t i v i t y i n N e w Z e a l a n d w i l l b e r e q u i r e d t o e s t a b l i s h g o o d w i l l t h e r e a n d i t h a s b e e n h e l d t h a t t h e r e p u t a t i o n m a y b e a l m o s t t a n t a m o u n t t o g o o d w i l l . 6 6 S p e c i a l c o n s i d e r a t i o n s m a y a p p l y w h e n t h e p l a i n t i f f i s f r o m A u s t r a l i a . I n t h e Dominion Rent A Car c a s e , C o o k e P . h e l d t h a t , i f t h e r e i s a s u f f i c i e n t b u s i n e s s c o n n e c t i o n w i t h N e w Z e a l a n d , t h e n g o o d w i l l m a y t r a n s c e n d n a t i o n a l b o u n d a r i e s . 6 7 D e s p i t e t h e s t a t e m e n t s 63 Supra, note 2, per Cooke P. at p. 405. For a helpful review of earlier authorities, refer Esanda Ltd. v Esanda Finance Ltd. [1984] F.S.R. 96 (HC) . 6 4 Idem. 65 Keg Restaurants Ltd. v Brandy's Restaurant Ltd. (1983) 1 N Z I P R 453. 66 Dominion Rent A Car Ltd., supra, note 2, per Somers J. at p. 420. In Pioneer Hi-Bred Com Co. Ltd. v Hy-Line Chicks Pty. Ltd [1978] 2 N Z L R 50, the Court of Appeal held that use of the American applicant's mark was likely to deceive or cause confusion because the applicant had a reputation in New Zealand even though it had never traded here. The court held that advertising of the applicant's products in New Zealand was enough to establish reputation. Note, however, that the action was for breach of trade mark, rather than for passing off. 67 Supra, note 2, p. 406. And , at p. 407, after referring to Halsbury's Laws of England (4th ed.), para. 179 in relation to the European Economic Community and to the New Zealand - Australia Free Trade Agreement (1966), the Closer Economic Relations Head of Agreement (1982) and the Australia - New Zealand Closer Economic Relations Trade Agreement (1983): "[I] think that the Courts of the two 6 4 o f p r i n c i p l e , t h e r e h a s n o t b e e n a n y c a s e i n w h i c h t h e p l a i n t i f f h a s e s t a b l i s h e d g o o d w i l l i n N e w Z e a l a n d s o l e l y b y v i r t u e o f i t s A u s t r a l i a n a c t i v i t i e s a n d w i t h o u t a l s o h a v i n g s o m e b u s i n e s s a c t i v i t y i n N e w Z e a l a n d . T h e a p p r o a c h t o A u s t r a l i a n t r a d e r s m a y t h e r e f o r e n o t b e a s d i f f e r e n t f r o m t h e a p p r o a c h t o f o r e i g n t r a d e r s g e n e r a l l y a s t h o s e s t a t e m e n t s m i g h t i m p l y . I n Fletcher Challenge Ltd. v Fletcher Challenge Pty. Ltd.,68 t h e S u p r e m e C o u r t o f N e w S o u t h W a l e s c o n s i d e r e d t h e r e q u i r e m e n t s f o r e s t a b l i s h m e n t o f b u s i n e s s g o o d w i l l t h e r e , b y a N e w Z e a l a n d t r a d e r . T h e p l a i n t i f f w a s i n c o r p o r a t e d a s a h o l d i n g c o m p a n y f o r t h r e e s u b s t a n t i a l N e w Z e a l a n d c o m p a n i e s . T h o s e t h r e e h a d a n u m b e r o f t r a d i n g s u b s i d i a r i e s , s o m e o f w h i c h w e r e r e g i s t e r e d i n N e w S o u t h W a l e s a s f o r e i g n c o m p a n i e s a n d w e r e w e l l k n o w n i n A u s t r a l i a . N e w s o f t h e a m a l g a m a t i o n w a s r e l e a s e d t o t h e N e w Z e a l a n d a n d S y d n e y s t o c k e x c h a n g e s a n d a r t i c l e s a p p e a r e d i n A u s t r a l i a n n e w s p a p e r s a n d f i n a n c i a l j o u r n a l s . O n t h e s a m e d a y , t h e n a t u r a l d e f e n d a n t s l o d g e d a n a p p l i c a t i o n f o r r e s e r v a t i o n o f t h e ' F l e t c h e r C h a l l e n g e ' n a m e . P o w e l l J . h e l d t h a t i t w a s l e g i t i m a t e , a t t h a t s t a g e o f t h e p r o c e e d i n g , t o t r e a t t h e a n n o u n c e m e n t o f t h e p r o p o s e d a m a l g a m a t i o n a n d p r o p o s e d countries should be prepared as far as reasonably possible to recognize the progress that has been made towards a common market." That philosophy has been adopted by the courts in subsequent cases, although even with that liberal approach the plaintiff wi l l sometimes fail to establish a goodwill in New Zealand; for example, Watson v Dolmark Industries Ltd. [1992] 3 N Z L R 311, especially at p. 320. 68 Supra, note 45. Refer also the decision of the Fu l l Federal Court of Australia in Taco Bell Pty. Ltd. v Taco Company of Australia Inc. (1982) A T P R 40.303; Chase Manhattan Overseas Corporation v Chase Corporation Ltd. (1985) 63 A . L . R . 345 - the Australian compay's application to restrain the New Zealand company from using the name 'Chase' in respect of its Australian operations was dismissed on the basis that the parties had very little common field of activity and there was no real chance that any members of the public would be misled. It was also held that an overseas company commencing operation in Australia is not necessarily in the same position as a newly incorporated company - it may, as in this case, be known in Australia before starting to trade there. The New Zealand company conducted no business in Australia other than the raising of funds to finance its activities; P.F. Sutherland Note (1986) 60 A L . J . 408; VISA International Services Assoc. v Beiser Corporation Pty. Ltd. (1983) 6 T P R 82. 6 5 n e w c o m p a n y n a m e a s c r e a t i n g a n e w r e p u t a t i o n w h i c h p r e c e e d e d t h e l o d g m e n t o f t h e d e f e n d a n t ' s a p p l i c a t i o n b y a f e w h o u r s . T h e c a s e h a s b e e n c i t e d a s a n e x a m p l e o f a m o r e l i b e r a l a n d f l e x i b l e a p p r o a c h t o t h e e s t a b l i s h m e n t o f g o o d w i l l 6 9 b u t m u s t b e s e e n i n l i g h t o f : ( a ) t h e p r e c e e d i n g a n d a l t e r n a t i v e f i n d i n g o f t h e c o u r t , t h a t t h e p l a i n t i f f w a s e n t i t l e d t o t h e c o m b i n e d g o o d w i l l o f i t s t h r e e c o n s t i t u e n t c o m p a n i e s ; 7 0 ( b ) t h e f a c t t h a t t h e e v i d e n c e t e n d e r e d t o s u p p o r t t h e e x i s t e n c e o f r e p u t a t i o n w a s n o t c h a l l e n g e d b y t h e d e f e n d a n t , e v e n u n d e r c r o s s - e x a m i n a t i o n ; 7 1 ( c ) t h e f i n d i n g t h a t t h e n a t u r a l d e f e n d a n t s h a d c o n s p i r e d t o d e l i b e r a t e l y a p p r o p r i a t e t h e c o m m e r c i a l r e p u t a t i o n o f t h e p l a i n t i f f a n d w e r e g u i l t y o f c i v i l c o n s p i r a c y . 7 2 B e c a u s e o f t h e a b o v e f a c t o r s , i t i s t h e w r i t e r ' s v i e w t h a t t h e c a s e d o e s n o t r e p r e s e n t a d i v e r s i o n f r o m t h e t r a d i t i o n a l a p p r o a c h t o e s t a b l i s h m e n t o f g o o d w i l l f o r t h e p u r p o s e s o f p a s s i n g o f f . A c a s e w h i c h m a y w e l l h a v e h a d t h a t e f f e c t i s ConAgra Inc. v McCain Foods 6 9 For example, by the authors of McKeough & Stewart Intellectual Property in Australia 1991, Butterworths, Sydney, para. 1715. 70 Supra, note 45, p. 12. 7 1 Ibid, pp. 12-13. 7 2 Ibid, pp. 13-14. 6 6 (Aust.) Pty. Ltd.,73 w h e r e L o c k h a r t J . r e v i e w e d t h e a u t h o r i t i e s i n E n g l a n d , I r e l a n d , H o n g K o n g , C a n a d a , t h e U n i t e d S t a t e s , N e w Z e a l a n d a n d A u s t r a l i a 7 4 a n d h e l d t h a t , i n v i e w o f t h e s o p h i s t i c a t i o n o f m o d e r n c o m m u n i c a t i o n s a n d a d v e r t i s i n g a n d t h e f r e q u e n t t r a v e l o f r e s i d e n t s o f m a n y c o u n t r i e s , i t i s n o l o n g e r n e c e s s a r y f o r a p l a i n t i f f t o h a v e a b u s i n e s s o r b u s i n e s s p r e s e n c e i n A u s t r a l i a a n d t h a t n o r i s i t n e c e s s a r y t h a t i t s g o o d s b e s o l d t h e r e : " I t i s s u f f i c i e n t i f h i s g o o d s h a v e a r e p u t a t i o n i n t h i s c o u n t r y a m o n g p e r s o n s h e r e , w h e t h e r r e s i d e n t s o r o t h e r w i s e , o f a s u f f i c i e n t d e g r e e t o e s t a b l i s h t h a t t h e r e i s a l i k e l i h o o d o f d e c e p t i o n a m o n g c o n s u m e r s a n d p o t e n t i a l c o n s u m e r s a n d o f d a m a g e t o h i s r e p u t a t i o n " . 7 5 H i s H o n o u r f u r t h e r h e l d t h a t , t o m e e t t h a t t e s t , a p l a i n t i f f w o u l d n e e d t o s h o w t h a t a s u b s t a n t i a l n u m b e r o f p e o p l e i n t h e j u r i s d i c t i o n w e r e a w a r e o f i t s p r o d u c t . 7 6 T h e p l a i n t i f f , w h i c h w a s b a s e d i n t h e U n i t e d S t a t e s , f a i l e d t o s a t i s f y t h e c o u r t o n t h a t t e s t a n d i t r e m a i n s t o b e s e e n w h e t h e r t h e c o u r t s w i l l b e p r e p a r e d t o t a k e t h e n e x t s t e p a n d h o l d t h a t a n o n - t r a d i n g p l a i n t i f f h a s a s u f f i c i e n t r e p u t a t i o n . (d) Concurrent rights N e w Z e a l a n d c o u r t s h a v e h e l d t h a t a p l a i n t i f f a n d d e f e n d a n t m a y h a v e c o n c u r r e n t r i g h t s i n t h e g o o d w i l l a t t a c h i n g t o a n a m e o r o t h e r d i s t i n c t i v e f e a t u r e . T h e m o s t n o t a b l e e x a m p l e i s t h e Dominion Rent A .Car c a s e 7 7 w h e r e , i n s e p a r a t e H i g h C o u r t a c t i o n s , 7 8 7 3 (1992) 33 F .C.R. 302 7 4 Ibid, pp. 310-344. 7 5 Ibid, p. 344. 7 6 Ibid, p. 346. 77 Supra, note 2. 6 7 t h e p l a i n t i f f a n d d e f e n d a n t b o t h o b t a i n e d i n j u n c t i o n s a g a i n s t e a c h o t h e r s u s e o f t h e w o r d ' B u d g e t ' i n r e l a t i o n t o t h e c a r r e n t a l b u s i n e s s . T h e C o u r t o f A p p e a l r e s o l v e d t h e c a s e o n t h e b a s i s t h a t t h e p a r t i e s h a d c o n c u r r e n t r i g h t s i n t h e g o o d w i l l a t t a c h i n g t o t h e w o r d a n d c o u l d b o t h c o n t i n u e t o u s e i t . 7 9 I t i s c l e a r t h a t t i m i n g i s o f t h e e s s e n c e , s o t h a t c o n c u r r e n t r i g h t s w i l l b e m o r e l i k e l y t o a r i s e w h e r e t h e s e c o n d e n t r a n t t o t h e m a r k e t e n t e r s w i t h i n a s h o r t t i m e o f t h e f i r s t e n t r a n t . 8 0 C o n c u r r e n t u s e m a y n o t o n l y g i v e r i s e t o c o n c u r r e n t r i g h t s b u t , f i n a l l y i n r e l a t i o n t o g o o d w i l l , b y a c q u i e s c i n g i n t h e d e f e n d a n t s c o n d u c t , t h e p l a i n t i f f m a y l o s e i t s g o o d w i l l a l t o g e t h e r . I n Watson v Dolmark Industries Ltd. t h e p l a i n t i f f s c o m p l a i n t w a s i n r e l a t i o n t o p l a s t i c s t o r a g e t r a y s w h i c h t h e d e f e n d a n t i n i t i a l l y m a d e u n d e r l i c e n c e f r o m t h e p l a i n t i f f . T h e l i c e n c e w a s l a t e r c a n c e l l e d b u t t h e d e f e n d a n t c o n t i n u e d t o m a k e a n d s e l l t h e t r a y s . T h e p l a i n t i f f s c l a i m f o r p a s s i n g o f f w a s d i s m i s s e d o n t h e b a s i s t h a t a n y g o o d w i l l a t t a c h e d t o t h e n a m e o f t h e p r o d u c t w a s e c l i p s e d b y t h e d e f e n d a n t ' s p e r m i t t e d m a r k e t i n g u n d e r i t s o w n n a m e . 8 1 78 Mutual v Dominion, unreported, High Court, Auckland, 9 August 1982, A 1654/77, Moller J.; Dominion v Mutual, unreported, High Court, Auckland, 8 November 1984, A 9/84, Vautier J. 79 Supra, note 2, per Cooke P. at p. 408, per Somers J. at p. 421 and per Casey J. at p. 427. 8 0 In the Dominion Rent A Car case, the two entries were simultaneous as the parties had at the outset been involved in a business that was essentially a joint venture. That can be contrasted with Wineworths Ltd. v Comite Interprofessionel du Vin de Champagne [1992] 2 N Z L R 327 (the Champagne case), where the second entrant was more than forty years later in time and it was held that no question of concurrent rights could arise: per Cooke P. at p. 331, per Gault J. at p. 340. 81 Supra, note 68, per Cooke P. at p. 314 and per Anderson J. at p. 320. There was no reference to the plaintiff on the tray or its packaging. The plaintiff may also fail to establish goodwill when it does not deal directly with the public, which therefore does not associate the product with the plaintiff: Artifakts Design Group Ltd. vN.P. RiggLtd. [1993] 1 N Z L R 196, 226, where Williams J. held that :"...in the unusual circumstance that it did not deal directly with diary purchasers, the plaintiff did not have any goodwill in the get up of the diaries." 6 8 2. Misrepresentation T h e e s s e n c e o f p a s s i n g o f f i s t h e m a k i n g o f a m i s r e p r e s e n t a t i o n w h i c h w i l l h a r m t h e p l a i n t i f f s g o o d w i l l . I n i t s u s u a l f o r m , t h e m i s r e p r e s e n t a t i o n w i l l b e t h a t t h e g o o d s o r s e r v i c e s o f t h e d e f e n d a n t a r e t h o s e o f t h e p l a i n t i f f , o r a r e k n o w n o f a n d a p p r o v e d b y t h e p l a i n t i f f . T h e r e q u i r e m e n t i s n o w o f t e n e x p r e s s e d i n t e r m s o f a n e e d t o s h o w t h a t t h e d e f e n d a n t ' s c o n d u c t h a s c a u s e d o r i s l i k e l y t o c a u s e c o n f u s i o n . 8 2 I t h a s b e e n h e l d t h a t m i s r e p r e s e n t a t i o n w i l l o c c u r w h e r e t h e d e f e n d a n t i n s e r t e d a d v e r t i s e m e n t s b e t w e e n t h e p a g e s o f n a t i o n a l n e w s p a p e r s p u b l i s h e d b y t h e p l a i n t i f f , b e c a u s e t h e p u b l i c w o u l d p e r c e i v e t h a t t h e i n s e r t s f o r m e d p a r t o f t h e p a p e r , w e r e c o n n e c t e d w i t h t h e p u b l i s h e r s o f t h e p a p e r a n d w e r e a d v e r t i s e m e n t s f o r w h i c h t h e p u b l i s h e r s a c c e p t e d r e s p o n s i b i l i t y ; 8 3 w h e r e t h e d e f e n d a n t m a d e a n d s o l d g o o d s b e a r i n g i m a g e s o f c h a r a c t e r s c r e a t e d b y t h e p l a i n t i f f , b e c a u s e i t w a s h e l d t h a t t h e p u b l i c w a s a w a r e t h e c h a r a c t e r s h a d b e e n l i c e n s e d a n d t h a t t h e r e w a s t h e r e f o r e a m i s r e p r e s e n t a t i o n 8 2 The most authoritative New Zealand formulation is that of Cooke P. in Klissers Farmhouse Bakeries, supra, note 44: "[Tjhe plaintiff needs to establish only that a substantial number of purchasers wi l l be deceived by the defendant's packaging into the belief that the product is made by the plaintiff...The opinions of trade and other witnesses as to what would be likely may be helpful but in the end it is the Judge, applying the right principles, who has to answer that question" (pp. 18-19). The New Zealand courts have applied many different tests in connection with the confusion requirement including 'the ultimate purchasers', 'a substantial number of purchasers', 'a member of the public possessing average intelligence', 'the ordinary, ignorant and unwary member of the public', and 'the probability of confusion in the course of trade': Brown & Grant, supra, note 3, para. 3.32. The diversity of tests is either a lack of consistency on the part of the courts, a reflection of the factual nature of the action, or a combination of the two. 83 Associated Newspapers, supra, note 58: it was held that the insertions might involve a representation that the defendants were involved with the plaintiffs, if the facts supported such a conclusion. The Court of Appeal disagreed with the finding of Mummery J. at first instance (reported at [1990] 2 A l l E . R . 803), that the placing of advertising inserts would necessarily involve a misrepresentation that the inserts were connected with the plaintiff. 6 9 t h a t t h e d e f e n d a n t s ' g o o d s w e r e l i c e n s e d b y t h e p l a i n t i f f s ; 8 4 a n d t h a t t o s u s t a i n a c a u s e of a c t i o n i n p a s s i n g o f f t h e r e n e e d n o t n e c e s s a r i l y b e a r e p r e s e n t a t i o n t o t h e p u b l i c , b u t t h a t i t i s e n o u g h i f t h e r e i s a r e p r e s e n t a t i o n t o s o m e r e l e v a n t s e c t i o n o f i t , s u c h a s a d v e r t i s e r s i n a t r a d e m a g a z i n e . 8 5 A r e l a t e d i s s u e a r i s e s w h e n t h e p l a i n t i f f s g o o d s a r e s o l d n o t t o t h e p u b l i c , b u t t o a n i n t e r m e d i a r y . A c o m m o n e x a m p l e i s t h a t o f p h a r m a c e u t i c a l s , w h i c h a r e d i s p e n s e d t o t h e p u b l i c b y d o c t o r s a n d p h a r m a c i s t s . I t h a s b e e n h e l d t h a t t h e r e l e v a n t s e c t i o n o f t h e 8 4 The Ninja Turtles case, supra, note 25, represented a step forward for the tort of passing off in its application to character merchandising and distinguished a number of other character merchandising cases including the Wombles, Kojak and ABBA cases, supra, note 23. The plaintiffs were the creators of the Ninja Turtle cartoons and certain licensing agents. The defendants used the cartoons on clothing, without permission from the plaintiffs. The novel aspect of the case was that "the defendants were not marketing the turtle image in competition with the plaintiff; they were making and selling goods bearing those images. There was therefore no misrepresentation by the defendants to the plaintiffs' trade customers. Hence it was necessary to establish a misrepresentation by the defendants that their goods were connected in some way with the business of the plaintiffs." - M . Elmslie and M . Lewis Passing Off and Image Marketing in the U.K. [1992] 14 E.I.P.R. 270, 271. It has been argued that the case is out of line with prior authority in that the court focused on a need for some intellectual property right rather than on goodwill and a reading of the case supports that view. The Vice Chancellor relied on the ABBA decision to support his propositions, one, that a plaintiff must establish some intellectual property right in the goodwill sought to be protected, and, two, there is no property in a name that can be protected by English law. In fact, Oliver J. did not decide ABBA on that basis. Since at least Spalding v Gamage (supra, note 18), the tort has protected property in the business or goodwill and not any property in the goods themselves and the Ninja Turtles decision appears to be out of line with authority to that extent. The leading and only New Zealand authority is Tony Blain Pty. Ltd. v Splain [1993] 3 N Z L R 185, in which the plaintiff was the licensee of merchandise relating to certain artists including Paul McCartney and the band Metallica. The plaintiff obtained ex parte injunctions restraining unauthorised persons from selling any infringing material at concerts to be given by the two (because such persons could not at that stage be identified, a blanket injunction was made in terms that the plaintiffs' solicitors could serve any person found at the relevant time to be in breach and the case is unusual in that respect). The case is consistent with the Ninja Turtles decision, especially in that the court looked for some proprietary right in the plaintiff: "It [the plaintiff] clearly shows sufficient proprietary interest to seek relief on the basis of apprehended future breaches of copyright and passing o f f (p. 189). Note that the proprietory right identified in relation to the passing off claim appears to have been goodwill: p. 188, line 46. 8 5 In Morgan Grampian, supra, note 61, the court considered the evidence of confusion among advertisers to be critical because the plaintiffs profits derived solely from advertising revenue. The case appears to extend the protection afforded by the tort from the usual case of representation to the public, although the unusual facts may mean its effect is not as wide as may first be thought; in particular, the facts that the confusion looked to was of advertisers and not the public and that the defendant was seeking to retitle an existing magazine, rather than launch a new one. 7 0 p u b l i c i s n o t l i m i t e d t o t h e d o c t o r s a n d p h a r m a c i s t s t o w h o m t h e p r o d u c t s a r e s o l d , b u t i n c l u d e s t h e p a t i e n t s w h o u l t i m a t e l y c o n s u m e t h e m . 8 6 T h a t i s i n l i n e w i t h e a r l y p a s s i n g o f f c a s e s s u c h a s Sykes v Sykes87 a n d w i t h p o i n t ( 3 ) o f L o r d D i p l o c k ' s f o r m u l a t i o n i n t h e Advocaat c a s e , t h a t t h e r e p r e s e n t a t i o n o f t h e d e f e n d a n t b e t o " p r o s p e c t i v e c u s t o m e r s o f h i s o r u l t i m a t e c o n s u m e r s o f g o o d s o r s e r v i c e s s u p p l i e d b y h i m . " 8 8 3. Damage T h e p l a i n t i f f m u s t p r o v e d a m a g e t o i t s g o o d w i l l r e s u l t i n g f r o m t h e m i s r e p r e s e n t a t i o n . I n t h e Dominion Rent A Car c a s e , C o o k e P . e x a m i n e d r e v e n u e f i g u r e s f o r t h e p a r t i e s o v e r t h e r e l e v a n t p e r i o d i n r e a c h i n g t h e v i e w t h a t t h e p r o b a b i l i t y w a s t h a t M u t u a l h a d b e n e f i t e d f r o m a n y c o n f u s i o n b e t w e e n i t s b u s i n e s s a n d t h a t o f D o m i n i o n a n d t h a t t h e r e f o r e M u t u a l ' s c l a i m f o r p a s s i n g o f f m u s t f a i l . 8 9 H o w e v e r , i t i s n o t n e c e s s a r y t o l e a d s u c h p r e c i s e e v i d e n c e a n d m o r e s u b t l e f o r m s o f d a m a g e h a v e b e e n r e c o g n i s e d b y t h e c o u r t s . I n Taylor Bros. Ltd., t h e C o u r t o f A p p e a l c o n s i d e r e d e v i d e n c e i n r e l a t i o n t o d i v e r s i o n o f t r a d e , d a m a g e t o r e p u t a t i o n c a u s e d b y l a p s e s o n t h e p a r t o f t h e d e f e n d a n t s a n d i n u n d a t i o n o r d i l u t i o n o f t h e p l a i n t i f f s g o o d w i l l i n t h e n a m e ' T a y l o r s ' t o t h e p o i n t w h e r e t h e p l a i n t i f f w o u l d n o l o n g e r b e r e c o g n i s e d b y i t s o w n n a m e a n d t h e s a l e p r i c e o f 8 6 Refer Wadlow, supra, note 3, para. 6-53. On that authors comment on the Canadian decision in Parke Davis & Co. v Empire Laboratories Ltd., [1964] S.C.R. 351, refer now Ciba-Geigy Ltd. vApotexInc. [1992] 3 S.C.R. 120, which reverses the effect of the earlier decision. 87 Supra, note 11. 88 Supra, note 1. 89 Supra, note 2, p. 412. 7 1 t h e n a m e w o u l d b e s h a r p l y d i m i n i s h e d . T h e C o u r t f o u n d t h e r e t o b e s u f f i c i e n t e v i d e n c e o f d a m a g e o f t h e s e c o n d a n d t h i r d k i n d s a n d w a s p r e p a r e d t o i n f e r d a m a g e f r o m a t e n d e n c y t o i m p a i r d i s t i n c t i v e n e s s . I t h e l d t h a t t h e p r i n c i p l e m u s t , h o w e v e r , b e a p p l i e d w i t h c a u t i o n i n t w o r e s p e c t s : f i r s t , t h e r e a r e c a s e s w h e r e c o n f u s i o n w i t h a l a r g e r o r g a n i s a t i o n m a y b e t o t h e b e n e f i t o f a p a r t y s o d a m a g e m a y n o t b e a s s u m e d a n d w o u l d b e r e q u i r e d t o b e p r o v e d ; a n d , s e c o n d l y , t h e p r i n c i p l e c a n n o t a p p l y t o g i v e a p a r t y a p r a c t i c a l m o n o p o l y i n a r e l a t i v e l y c o m m o n n a m e . 9 0 I n t h e Champagne91 c a s e , t h e C o u r t o f A p p e a l a f f i r m e d , i n f i n d i n g f o r t h e p l a i n t i f f , t h a t d a m a g e f r o m g o o d w i l l c a n b e i n f e r r e d f r o m a t e n d e n c y t o i m p a i r d i s t i n c t i v e n e s s . T h e y c a s t d o u b t , h o w e v e r , o n w h e t h e r l o s s o f a b i l i t y t o l i c e n s e u s e o f a n a m e m a y b e e n o u g h . 9 2 90 Supra, note 28, per Cooke P. at pp. 37-38. 91 Supra, note 80. 9 2 It wi l l be recalled that in the English Lego case (supra, note 25) the House of Lords held that allowing the defendant to use the Lego name in relation to irrigation equipment would preclude the plaintiff from expanding into that business or from licensing someone else to use the name in that business and further held that was sufficient to satisfy the damage requirement. Although the court in Taylor Bros. Ltd. addressed itself more to the dilution issue than the licensing one, the statements of Cooke P. that Taylors would not, for example, be able to complain of use of the name in relation to foodstuffs and his description olLego as an extreme case suggests disapproval of that formulation (supra, note 29). The issue has not come before the Court of Appeal again but it was considered by Fisher J. in the High Court in Tot Toys v Mitchell (supra, note 47). It was not necessary for the court to rule on whether loss of licensing ability is adequate to show damage because it had already found there was no deception (confusion). To the extent the courts seem prepared to infer damage from confusion it may never be necessary for them to specifically rule on the licensing question. 7 2 4. Disclaimers T h e c o u r t s h a v e a l s o c o n s i d e r e d t h e i s s u e o f w h e t h e r a p u r p o r t e d d i s c l a i m e r c a n b e e f f e c t i v e i n t h i s a r e a . I n t h e l e a d i n g c a s e , Associated Newspapers pic. v Insert Media Ltd., i t w a s h e l d t h a t a p r o p o s e d s t a t e m e n t o f d i s c l a i m e r , t h a t t h e i n s e r t s w e r e n o t a p p r o v e d b y t h e p l a i n t i f f , w e r e i n e f f e c t i v e o n o n e o r b o t h o f t w o b a s e s : o n e , t h e r e p r e s e n t a t i o n w a s m a d e a t t h e p o i n t o f s a l e a n d t h e d i s c l a i m e r c o u l d h a v e n o e f f e c t b e c a u s e i t w o u l d n o t c o m e t o t h e p u r c h a s e r ' s a t t e n t i o n u n t i l s o m e t i m e a f t e r s a l e ; o r , t w o , t h e p r e s e n c e o f t h e u n a u t h o r i s e d i n s e r t s a l o n g s i d e a u t h o r i s e d i n s e r t s a n d a d v e r t i s e m e n t s w a s a r e p r e s e n t a t i o n t h a t t h e y w e r e p a r t o f t h e p u b l i c a t i o n i s s u e d b y t h e p l a i n t i f f s . T h e d i s c l a i m e r c o u l d n o t c o n v e r t t h a t f a l s e r e p r e s e n t a t i o n i n t o a t r u e o n e . T h e c o u r t h e l d t h a t i t m i g h t e v e n s u g g e s t s o m e a r r a n g e m e n t o r c o l l a b o r a t i o n b e t w e e n t h e p l a i n t i f f a n d d e f e n d a n t . 9 3 T h e h o l d i n g t h a t a d i s c l a i m e r c o u l d n e v e r b e e f f e c t i v e i n t h e c i r c u m s t a n c e s m a y r e p r e s e n t a s i g n i f i c a n t e x t e n s i o n o f t h e p r o t e c t i o n a f f o r d e d b y t h e t o r t , b u t m a y a l s o b e a d e c i s i o n l i m i t e d t o t h e u n u s u a l f a c t s o f t h a t p a r t i c u l a r c a s e . I t i s c e r t a i n l y d i v e r g e n t f r o m p r i o r a u t h o r i t y . 9 4 O n l y f i v e N e w Z e a l a n d c a s e s h a v e c o n s i d e r e d t h e e f f e c t i v e n e s s o f d i s c l a i m e r s . A l t h o u g h n o n e h a s p r o v i d e d a d e t a i l e d d i s c u s s i o n o n t h e p o i n t , t h e l a w h e r e s e e m s t o b e t h e s a m e 93 Supra, note 58, pp. 812-813. 9 4 Especially Illustrated Newspapers Ltd. v Publicity Services (London) Ltd. [1938] 1 A l l E.R. 321, 328, in which Crossman J. held, on similar facts, that an injunction would not be appropriate where the defendant made it perfectly clear that the inserts were not part of the plaintiffs publication and that the plaintiff was not in any way responsible for them. 7 3 a s i n E n g l a n d , n a m e l y t h a t a d i s c l a i m e r c a n b e e f f e c t i v e i f i t p r e v e n t s t h e c o n f u s i o n t h a t w o u l d o t h e r w i s e a r i s e , a n d t h a t w h e t h e r a n y d i s c l a i m e r i s s o e f f e c t i v e i s a q u e s t i o n o f f a c t . 9 5 T h e c o u r t s a p p e a r t o b e s u s p i c i o u s a b o u t t h e e f f e c t i v e n e s s o f d i s c l a i m e r s a n d t h e r e f o r e i m p o s e a h i g h s t a n d a r d . 9 6 I n t h e l e a d i n g N e w Z e a l a n d c a s e , Taylor Bros. Ltd v Taylors Group Ltd.,91 M c G e c h a n J . i n t h e H i g h C o u r t , g r a n t e d a c o n d i t i o n a l i n t e r i m i n j u n c t i o n w h i c h a l l o w e d t h e d e f e n d a n t t o u s e t h e n a m e ' T a y l o r s ' o n l y i n a c c o r d a n c e w i t h a r a n g e o f c o n d i t i o n s i n c l u d i n g r e l a t i n g t o h o w t h e t e l e p h o n e s h o u l d b e a n s w e r e d , w h a t s h o u l d b e s a i d i n o r a l In Noel Leeming Television Ltd. v Noel's Appliance Centre Ltd. (No. 2), unreported, High Court, Christchurch, 27 August 1985, A102/85, Holland J., a notice: 'Please note that this is not a Noel Leeming Appliance Store' was held to be effective to distinguish the defendant's business from that of the plaintiff; the defendant in Sunshine Leisure Products (NZ) Ltd. v Great Outdoors Co. Ltd. [1986] 2 N Z L R 183, was allowed to continue using the name 'Sunline' on its products provided they were clearly distinguished from those of the plaintiff. The court did not express a view on what would be necessary to clearly distinguish the two lines of product. Note also that the court was persuaded to grant an injunction in those conditional terms rather than in absolute terms because, at least at that time and although the fact was in issue in the substantive proceeding, both parties had registered trade-marks in the words complained of ('Sunshine' for the plaintiff, 'Sunline' for the defendant); in Prudential Building and Investment Society of Canterbury v Prudential Assurance Company of New Zealand Ltd. [1988] 2 N Z L R 653, the Court of Appeal ordered the defendant to stop using the word 'Prudential' outside Canterbury except with a disclaimer in clear words in a prominent place that it was not in any way associated with the plaintiff. It also ordered that the defendant use the word in Canterbury: (a) only in conjunction with its full registered name; and (b) not in the typeface used by the plaintiff; in Tot Toys v Mitchell, supra, note 47, it was held that putting the toys in issue in a plastic bag with a cardboard header strip on which would be marked the name of the toy and the name of the defendant, putting the defendant's name on each toy, and painting the toys a colour distinctively different from the colour of the plaintiffs toys would be sufficient distinction. It was also held that actioning the first matters, without painting the toys a distinctively different color, would not be sufficient. 9 6 That is substantially the same as the position in Australia, as summarised by Wilcox J. in Hutchence v South Seas Bubble Pty. Ltd. (1986) 64 A . L . R . 330: "There are occasions upon which the effect of otherwise misleading or deceptive conduct may be neutralised by an appropriate disclaimer...Such cases are likely to be comparatively rare and to be confined to situations in which the court is able to reach satisfaction - the onus resting on the party relying on the disclaimer - that the disclaimer is likely to be seen and understood by all those - leaving aside isolated exceptions - who would otherwise be misled before they act in relation to the relevant transactions"; refer also Brown & Grant, supra, note 3, para. 7.21 and the cases cited at note 3 to it. Supra, note 28. 74 d i s c u s s i o n , t h e s t y l e o f l e t t e r i n g t o b e u s e d i n c o r r e s p o n d e n c e , b u s i n e s s d o c u m e n t s , a d v e r t i s i n g a n d p r o m o t i o n a l m a t e r i a l , t e l e p h o n e a n d p o s t o f f i c e b o x d i r e c t o r i e s a n d r e q u i r i n g t h e d e f e n d a n t t o a d v i s e a n y c u s t o m e r w h o m i s t a k e n l y c o n t a c t e d i t o f t h e e x i s t e n c e o f t h e m i s t a k e a n d i n v i t i n g i t t o c o n t a c t t h e p l a i n t i f f . 9 8 A t t h e s u b s t a n t i v e h e a r i n g , h e e x p r e s s e d d o u b t a b o u t w h e t h e r d i s c l a i m e r s " . . . w o u l d p r o v e w o r k a b l e i n t h e r e a l w o r l d o n t h e f a c t o r y o r o f f i c e f l o o r a n d d r i v e r s s e a t . . . " a n d t h e f i n a l i n j u n c t i o n g r a n t e d b y t h e c o u r t w a s i n a b s o l u t e t e r m s . 9 9 D. EXPANSION INTO OTHER TORTS I n t h e U n i t e d S t a t e s o f A m e r i c a a n d , m o r e r e c e n t l y a n d t o a l e s s e r e x t e n t , i n C a n a d a 1 0 1 t h e r e h a s b e e n a m o v e t o e x p a n d t h e t o r t o f p a s s i n g o f f t o a m o r e g e n e r a l 9 8 For the full terms of the injunction, refer to the Court of Appeal decision, ibid, pp. 34-35. 9 9 [1990] 1 N Z L R 19, 32; restraining the defendant from using the name in any business offering or providing drycleaning, laundry, linen hire, or garment hire services in the wider Wellington region. The court was partly influenced by the fact the defendant had breached the interim injunction in several respects. 100 International News Service v The Associated Press (1918) 248 U S 215. There has also been development of statutory and tortious rights of privacy, particularly relevant in the area of personality merchandising. The need for a privacy tort was first advocated by Warren and Brandeis in The Right of Privacy (1890) 4 Harv. L . R. 193 and first enacted by the New Y o r k legislature following a refusal, by the New Y o r k Court of Appeals, of a claim by an "attractive woman" whose photograph was used, without her consent, to advertise flour: Roberson v Rochester Folding Box Co. (1902) 171 N . Y . 538, 64 N . E . 442. The New Y o r k Act makes it both a misdemeanour and a tort to make use of the name, portrait or picture of any person for advertising or trade purposes without his or her written consent: N . Y . Sess. Laws 1903, c. 132, ss. 1-2 as amnd. 1921. Similar legislation has been passed in many other states. 101 Orkin Exterminating Co. v Pestco Co. of Canada [1985] 19 D . L . R (4th) 90 (Ont. C.A.) ; Canada Safeway Ltd. v Manitoba Food and Commercial Workers, Local 832 (1983) 25 C.C.L.T . 1 (Man. C A . ) cited in M . B . Clark, Passing Off and Unfair Competition: The Regulation of the Marketplace [1990] 6 I P J 1, 22-23. In Ontario, there has been development of a tort of appropriation of personality: Krouse v Chrysler 75 t o r t o f u n f a i r c o m p e t i t i o n . U n d e r t h a t c a u s e o f a c t i o n , a t r a d e r o b t a i n s p r o t e c t i o n a g a i n s t d a m a g e c a u s e d e i t h e r b y u n f a i r c o m p e t i t i o n o r t h e m i s a p p r o p r i a t i o n o f k n o w l e d g e o r i n f o r m a t i o n i n w h i c h s h e h a s a q u a s i - p r o p r i e t a r y r i g h t . T h e n e e d t o e s t a b l i s h g o o d w i l l , w h i c h i s c r i t i c a l t o t h e p a s s i n g o f f a c t i o n , i s n o t n e c e s s a r y i n t h e u n f a i r c o m p e t i t i o n c o m p l a i n t . L o r d D i p l o c k r e f e r r e d t o a c o n c e p t o f ' u n f a i r t r a d i n g ' i n Advocaat, b u t t h a t c a s e i s s t r i c t l y o n e o f p a s s i n g o f f . 1 0 3 I n t h e Sherry c a s e , 1 0 4 C r o s s J s u g g e s t e d t h a t t h e Champagne c a s e 1 0 5 w e n t : " . . . w e l l b e y o n d w e l l - t r o d d e n p a t h s o f p a s s i n g o f f i n t o t h e u n m a p p e d a r e a o f ' u n f a i r t r a d i n g ' o r u n l a w f u l c o m p e t i t i o n . . . " , b u t t h a t i d e a w a s q u a s h e d b y t h e H o u s e o f L o r d s i n Shaw Bros. (HK) Ltd. v Golden Harvest (HK) Ltd.106 I n E n g l i s h l a w , p a s s i n g o f f d o e s n o t p r o v i d e r i g h t s o f p u b l i c i t y o r p r i v a c y , n o r o f m i s a p p r o p r i a t i o n o f p e r s o n a l i t y o r c h a r a c t e r a n d t h e r e a r e n o s e p a r a t e t o r t s g i v i n g p r o t e c t i o n i n t h o s e a r e a s Canada Ltd. (1974) 40 D . L . R . (3d) 15 (Ont. C.A.) ; Athans v Canadian Adventure Camps Ltd. (1978) 80 D . L . R . (3d) 583 (Ont. H.C.J.); Multivision Films, Inc. v McConnell Advertising Co. Ltd. (1983) 69 C.P.R. (2d) 1, although the scope, if not the existence, of such a tort was questioned in Dowell v Mengen Institute (1983) 72 C.P.R. (2d) 238 (Ont. H.C.J.). Rights of privacy have been given statutory protection in British Columbia (Privacy Act, R.S.B.C. 1979, c. 336, sec. 3)), Manitoba (Privacy Act, S .M. 1970, c. 74, sec. 3(2)), Saskatchewan (Privacy Act, R.S.S. 1978, c. P-24, sec. 3(c)), and Newfoundland (Privacy Act, S.N. 1981, c.6, sec. 4(c)). Refer also Seiko Time Canada Ltd. v Consumers Distributing Co. Ltd. (1984) C C L T 296, 312, where the Supreme Court of Canada appeared to recognise an expanded scope of the passing off action and said that the focus is on protection of the community from the harmful effects of unfair competition or trading. The ingredients of the test set out by Lord Diplock in the Advocaat case were, however, present in that case, so the comments of the court appear to be strictly obiter. 102 Supra, note 1. 1 0 3 Albeit in an expanded, rather than the classic, sense. 104 Supra, note 32, p. 146. 105 Supra, note 31. 106 9̂72] R .p . c . 559, 562-563. For a discussion, refer D . Vaver The Protection of Character Merchandising -A Survey of Some Common Law Jurisdictions [1978] 9 I P C L 541. 7 6 o r f o r u n f a i r c o m p e t i t i o n . I n McBean's Orchards (Australia) Pty. Ltd. v McBean's Orchards Ltd.,108 J e f f r i e s J . h e l d t h a t t h e Advocaat c a s e r e c o g n i s e d t h a t t h e t o r t o f p a s s i n g o f f i s u n d e r g o i n g c h a n g e a n d m a y b e m o v i n g t o w a r d a g e n e r a l u n f a i r c o m p e t i t i o n a c t i o n , b u t h e a l s o h e l d t h a t t h e c a s e a t b a r w a s n o t s u c h a c a s e . T h e r e h a s b e e n n o o t h e r c a s e g i v i n g r e c o g n i t i o n t o s u c h a n a c t i o n . B e c a u s e s e c t i o n 9 d o e s n o t r e q u i r e t h e p l a i n t i f f t o e s t a b l i s h g o o d w i l l o r t o p r o v e d a m a g e , i t s e e m s u n l i k e l y t h e t o r t w i l l e x p a n d i n t h a t d i r e c t i o n i n N e w Z e a l a n d . 1 0 9 E. THE PUBLIC POLICY RATIONALE O p i n i o n s o n w h a t i s t h e p u b l i c p o l i c y r a t i o n a l e f o r t h e t o r t o f p a s s i n g o f f a r e d i v e r s e . I t h a s v a r i o u s l y s a i d t h a t p a s s i n g o f f h a s i t s p r i m a r y f u n c t i o n i n t h e i n t e r e s t s o f t h e b u y i n g 1 0 7 Nor does it appear from the cases that counsel have strenuously argued, i f at all, that passing off should be extended in those ways or that other torts should be developed. A possible reason is that English law: "[H]as generally leant by instinct in favour of the free use of ideas, whether in a commercial context or otherwise. Copyright, passing off and other rights of action exist by way of special exception to this in order to allow a fair return on creative and promotional activities. There has been an understandable reluctance to concede the same right in respect of every conceivable return from the use of an idea": W.R. Cornish, Character Merchandising in the U.K: Rights in Fictional Characters (1978) 16 A I P L 492, 494. For an argument that a tort of appropriation of personality is already known to the common law refer R.G.Howel l , The Common Law Appropriation of Personality Tort (1986) IPJ 149, 153; Frazer, Appropriation of Personality - a New Tort? (1983) 99 L .Q .R . 281. Refer also Lonrho Ltd. v Shell Petroleum Ltd. [1982] A . C . 173. 1 0 8 (1982) 1 N Z I P R 406. 1 0 9 The same is true in Australia, where the courts have also rejected the development of a tort of unfair competition: Moorgate Tobacco Co. Ltd. v Philip Morris Ltd. (1984) 56 C .L .R . 414. 7 7 p u b l i c 1 1 0 ; t h a t i t p r o t e c t s t h e c o m p e t i n g t r a d e r ; 1 1 1 o r , r e p r e s e n t s a c o m p r o m i s e b e t w e e n t w o c o n f l i c t i n g o b j e c t i v e s ; o n t h e o n e h a n d t h e p u b l i c i n t e r e s t i n f r e e c o m p e t i t i o n , o n t h e o t h e r t h e p r o t e c t i o n o f a t r a d e r a g a i n s t u n f a i r c o m p e t i t i o n b y o t h e r s " ; 1 1 2 o r , " p r o t e c t s t h e r i g h t s o f t r a d e r s a n d c o m p e t i t o r s , not o f c o n s u m e r s " ; 1 1 3 o r , i s " b r o u g h t b y t h e t r a d e r w h o s e g o o d w i l l h a s b e e n i n j u r e d , b u t i s b a s e d o n a m i s r e p r e s e n t a t i o n m a d e t o c o n s u m e r s . . . " 1 1 4 T h e l a c k o f u n i f o r m i t y i s u n d e r s t a n d a b l e g i v e n t h a t d e c i s i o n s o n p a s s i n g o f f c o m p l a i n t s a f f e c t b o t h t r a d e r s a n d c o n s u m e r s . T r a d e r s h a v e i n t e r e s t s i n p r o t e c t i n g i n v e s t m e n t s i n d e v e l o p m e n t o f n e w p r o d u c t s a n d i d e a s ; t h e y h a v e a c o n f l i c t i n g i n t e r e s t i n p r e s e r v i n g t h e a b i l i t y o f t r a d e r s t o c o m p e t e a n d n o t a l l o w o n e t r a d e r t o g a i n a m o n o p o l y i n a n y a r e a . C o n s u m e r s a l s o h a v e i n t e r e s t s i n c o m m u n i t y a c c e s s t o i n t e l l e c t u a l p r o g r e s s a n d i n p r o m o t i n g c o m p e t i t i o n t h a t w i l l u s u a l l y r e s u l t i n l o w e r p r i c e s ; t h e y h a v e a c o n f l i c t i n g i n t e r e s t i n a l l o w i n g s o m e p r o t e c t i o n t o i n n o v a t o r s , w h o m a y n o t b e i n c l i n e d t o i n n o v a t i o n i n t h e a b s e n c e o f s o m e p r o t e c t i o n o f t h e e n d p r o d u c t . S o m e e l e m e n t s o f t h e t o r t s u g g e s t a f o c u s o n t h e i n t e r e s t s o f t h e r i v a l t r a d e r , i n c l u d i n g 1 1 0 P. J. Kaufmann, Passing off and Misappropriation, 9 Studies in Industrial Property & Copyright Law, The Max Planck Institute For Foreign and International Patent, Copyright and Competition Law, Munich, 1986, at p. 3. 1 1 1 M . B . Clark, Passing Off and Unfair Competition: The Regulation of the Marketplace [1990] 6 IPJ 1, at pp. 17-18: "The protection of consumers, while a consequential result of granting relief, is not the thrust of the action". 112 Dominion Rent A Car, supra, note 2, per Somers J. at p. 420. 1 1 3 Todd, supra, note 44, at p. 619. 1 1 4 D . Shanahan, The Trademark Right: Consumer Protection or Monopoly?, (1982) 72 T M R 233, 234. 78 t h a t : ( i ) t h e a c t i o n o r i g i n a t e d f r o m t h e t o r t o f d e c e i t a n d , i n i t s e a r l y d e v e l o p m e n t , w a s a i m e d a t p r e v e n t i n g d e c e i t o f t h e r i v a l t r a d e r ; . ( i i ) i t i s n o w n e c e s s a r y t o p r o v e d e c e p t i o n o f t h e p u b l i c o n l y b e c a u s e t h a t e s t a b l i s h e s d a m a g e t o t h e p l a i n t i f f , f o r e x a m p l e , t h a t t h e p l a i n t i f f w i l l s u f f e r l o s s o f s a l e s i f h e r c u s t o m e r s b u y a c o m p e t i t o r ' s p r o d u c t i n t h e m i s t a k e n b e l i e f t h a t i t i s t h e p l a i n t i f f s . T h e d e c e p t i o n i s o f t h e p u b l i c b u t about t h e p l a i n t i f f a n d h e r c o n n e c t i o n w i t h t h e p r o d u c t ; ( i i i ) i t i s t h e t r a d e r ' s g o o d w i l l a n d r e p u t a t i o n t h a t i s t h e s u b j e c t o f t h e a c t i o n ; ( i v ) t h e p r o t e c t i o n i s l i n k e d t o g o o d w i l l a n d n o t a n y p r o p r i e t a r y r i g h t s i m p l y b e c a u s e t h e l a t t e r i s a d d r e s s e d b y l e g i s l a t i o n s u c h a s t h a t r e l a t i n g t o t r a d e m a r k s , p a t e n t a n d c o p y r i g h t ; ( v ) t h e p r o t e c t i o n a f f o r d e d b y t h e t o r t m a y r e d u c e c o m p e t i t i o n a n d t h e r e b y r e s u l t i n i n c r e a s e d p r i c e s a n d / o r l o w e r q u a l i t y . O t h e r e l e m e n t s g i v e t h e a c t i o n a c o n s u m e r p r o t e c t i o n f l a v o u r , i n c l u d i n g t h a t : ( i ) d e c e p t i o n o f t h e c o n s u m i n g p u b l i c m u s t b e e s t a b l i s h e d f o r a p l a i n t i f f t o b e 7 9 s u c c e s s f u l ; 1 1 5 ( i i ) t h e c a u s e o f a c t i o n i s t i e d t o t h e p a l i n t i f f s b u s i n e s s o r g o o d w i l l , r a t h e r t h a n t o a n y p r o p r i e t a r y r i g h t i n t h e n a m e , m a r k o r g e t - u p i n i s s u e . I t t h e r e f o r e a l l o w s a g r e a t e r d e g r e e o f i m i t a t i o n a n d c o m p e t i t i o n t h a n , f o r e x a m p l e , a t r a d e m a r k . C o n s u m e r s a r e t h e b e n e f i c i a r i e s o f t h a t g r e a t e r d e g r e e o f c o m p e t i t i o n ; ( i i i ) a n i m i t a t o r w i l l h a v e a g o o d d e f e n c e i f s h e a d e q u a t e l y d i s t i n g u i s h e s h e r g o o d s f r o m t h o s e o f t h e p l a i n t i f f . T h a t a l s o a l l o w s c o m p e t i t i o n a n d t h e r e b y b e n e f i t s c o n s u m e r s ; ( i v ) t h e E n g l i s h a n d N e w Z e a l a n d c o u r t s h a v e r e s i s t e d d e v e l o p m e n t o f a t o r t o f u n f a i r c o m p e t i t i o n , t h u s l i m i t i n g t h e p r o t e c t i o n a f f o r d e d t o t r a d e r s , t o t h e b e n e f i t o f c o n s u m e r s . O n b a l a n c e , i t i s t h e w r i t e r s v i e w t h a t t h e t o r t i s n e i t h e r w h o l l y t r a d e r o r i e n t e d n o r w h o l l y c o n s u m e r o r i e n t e d a n d , w i t h t h e c o m p e t i n g i n t e r e s t s i n v o l v e d i n a n y c a s e , i t d o e s n o t s e e m p o s s i b l e t o s e r i o u s l y a r g u e o t h e r w i s e . W h i l e t h e e x i s t e n c e o f t h e t o r t o w e s i t s e l f t o t h e i n t e r e s t s o f t r a d e r s , i t r e f l e c t s t h e i n t e r e s t s o f b o t h c o n s u m e r s a n d t r a d e r s . I t h a s e x p a n d e d c o n s i d e r a b l y f r o m i t s o r i g i n a l s c o p e , p r i n c i p a l l y i n r e s p o n s e t o n e w k i n d s o f p r o d u c t a n d n e w m e t h o d s o f m a n u f a c t u r e a n d p r o m o t i o n . C o n s t r a i n t s o n e x p a n s i o n o f t h e t o r t h a v e i n c l u d e d t h e c o n c e r n o f t h e c o u r t s n o t t o g r a n t a m o n o p o l y t o o n e 1 1 S Or some other relevant body, such as the advertisers in Morgan-Grampian v Training Personnel, supra, note 62. 80 t r a d e r , t h e r e b y d e p r i v i n g o t h e r t r a d e r s o f a n o p p o r t u n i t y t o c o m p e t e , b u t a l s o t h e i r c o n c e r n n o t t o d e p r i v e c o n s u m e r s o f t h e b e n e f i t s o f t h a t c o m p e t i t i o n . 1 1 6 H a v i n g s a i d t h a t , i n n o c a s e h a s t h e c o u r t g i v e n t h e i n t e r e s t s o f c o n s u m e r s p r i o r i t y o v e r t h o s e o f t r a d e r s , i n t h e s e n s e o f w i t h h o l d i n g a r e m e d y t h a t w o u l d o t h e r w i s e h a v e b e e n g r a n t e d . T h e w r i t e r c o n c l u d e s t h a t b o t h t h e e x i s t e n c e a n d t h e e x t e n t o f t h e p r o t e c t i o n a r e c o n c e r n e d p r i n c i p a l l y w i t h t h e i n t e r e s t s o f t r a d e r s a n d t h a t t h e i n t e r e s t s o f c o n s u m e r s a r e v e r y m u c h s e c o n d a r y . T h a t c a n b e c o n t r a s t e d w i t h t h e p u b l i c p o l i c y r a t i o n a l e f o r s e c t i o n 9 , a s i d e n t i f i e d i n c h a p t e r o n e . I t i s c o n c e r n e d p r i m a r i l y w i t h t h e i n t e r e s t s o f c o n s u m e r s ; t h e t o r t w i t h t h e i n t e r e s t s o f t r a d e r s . O n e w o u l d a c c o r d i n g l y t h i n k t h a t d i f f e r e n t t e s t s a n d s t a n d a r d s w o u l d h a v e b e e n d e v e l o p e d a n d a p p l i e d u n d e r s e c t i o n 9 . A s w i l l b e s e e n i n c h a p t e r f o u r , t h a t h a s n o t h a p p e n e d . Refer, for example, to Lord Diplock's policy statement in the Advocaat case, supra, note 1 and text. CHAPTER FOUR THE APPROACH OF THE COURTS e i INTRODUCTION I t h a s b e e n s a i d , i n r e l a t i o n t o t h e F a i r T r a d i n g A c t , t h a t : " T h e e f f e c t o f t h e s t a t u t e o n t h e d e v e l o p m e n t o f t h e t o r t o f p a s s i n g o f f w i l l l a r g e l y d e p e n d o n t h e a t t i t u d e t a k e n b y t h e c o u r t s t o t h e e x i s t e n c e o f a n a l t e r n a t i v e j u r i s d i c t i o n . T h e s t a t u t o r y a c t i o n m a y b e " r e a d d o w n " b y t h e a p p l i c a t i o n o f , p o s s i b l y i n a p p r o p r i a t e , p a s s i n g o f f p r i n c i p l e s ; a n d / o r t h e e x t e n s i o n o r d e v e l o p m e n t o f t h e p a s s i n g o f f a c t i o n m a y b e c i r c u m s c r i b e d b y t h e e x i s t e n c e o f a s t a t u t o r y p a r a l l e l . O r t h e r e m a y b e a m o r e r o b u s t a t t i t u d e t a k e n w i t h t h e r e s u l t t h a t t h e s t a t u t e w i l l p r o v i d e a g e n u i n e l y a l t e r n a t i v e a n d o f t e n c o m p l e m e n t a r y w e a p o n i n t h e h a n d s o f t h e e t h i c a l r i v a l t r a d e r . " 1 I n c h a p t e r o n e , t h e r e w a s c o n s i d e r a t i o n o f j u d i c i a l s t a t e m e n t s o n t h e c o n s u m e r p r o t e c t i o n r a t i o n a l e f o r s e c t i o n 9 . 2 T h a t s h o w e d t h a t , c o n s i s t e n t w i t h t h e p u b l i c p o l i c y r a t i o n a l e , t h e i n t e r e s t s o f c o n s u m e r s h a v e b e e n f o r e m o s t i n j u d i c i a l c o m m e n t a r y o n t h e s e c t i o n . A t t e m p t s b y c o u n s e l t o l i m i t t h e m e a n i n g s o f w o r d s i n t h e s e c t i o n , a n d l i m i t t h e s c o p e o f t h e s e c t i o n i t s e l f , h a v e b e e n o v e r - r u l e d . I n d o i n g s o , t h e c o u r t s h a v e , h o w e v e r , g o n e b e y o n d e v e n t h e i n t e r e s t s o f c o n s u m e r s , s a y i n g t h a t i t i s n o t n e c e s s a r y f o r a p l a i n t i f f t o s h o w t h a t s u c h i n t e r e s t s a r e h a r m e d i n o r d e r t o b e s u c c e s s f u l . A s w e l l a s e m p h a s i z i n g 1 Todd, The Law of Torts in New Zealand, 1991, The Law Book Company Ltd. , Sydney, p. 640. Note that, even while sounding that warning, the author appears to have neglected the fact that one of the principal aims of the Act was to provide a weapon for the use of consumers. 2 Supra, chapter one, part D . 82 t h e c o n s u m e r p r o t e c t i o n r a t i o n a l e f o r s e c t i o n 9, t h e c o u r t s h a v e s t r e s s e d t h a t t h a t a c t i o n i s d i f f e r e n t f r o m p a s s i n g o f f a n d t h e y h a v e d e t a i l e d t h e d i f f e r e n c e s b e t w e e n t h e t w o . S o m e e x a m p l e s o f t h a t a r e c o n s i d e r e d i n p a r t A . I t i s t h e w r i t e r ' s t h e s i s t h a t t h e j u d i c i a l c o m m e n t a r y o n t h e p u b l i c p o l i c y r a t i o n a l e f o r s e c t i o n 9 o f t e n a m o u n t s t o l i t t l e m o r e t h a n l i p - s e r v i c e . W h i l e e m p h a s i z i n g t h e d i f f e r e n t p o l i c y r a t i o n a l e s f o r t h e t w o a c t i o n s , t h e c o u r t s h a v e n e v e r t h e l e s s a p p l i e d m a n y o f t h e t e s t s d e v e l o p e d i n t h e t o r t o f p a s s i n g o f f . B e c a u s e t h e p r i n c i p a l r a t i o n a l e o f t h a t c a u s e o f a c t i o n i s t o p r o t e c t t r a d e r s , a p p l i c a t i o n o f t h e t e s t s i n s e c t i o n 9 a c t i o n s i s i n a p p r o p r i a t e a n d p r e j u d i c e s t h e i n t e r e s t s o f c o n s u m e r s . T h e i m p o r t a t i o n o f p a s s i n g o f f p r i n c i p l e s i n t o s e c t i o n 9 c a s e s h a p p e n s i n r e l a t i o n t o p r o t e c t i o n o f d e s c r i p t i v e n a m e s , g e t u p , l o c a t i o n a n d d u r a t i o n o f r e p u t a t i o n , e v i d e n c e o f d e c e p t i o n a n d t h e c o m m o n f i e l d o f b u s i n e s s a c t i v i t y r u l e . 3 E a c h w i l l b e c o n s i d e r e d s e p a r a t e l y , i n P a r t s B t o F . A. THE COURTS ON SECTION 9 AND PASSING OFF I n Chase Manhattan Overseas Corporation v Chase Corporation Ltd., W i l c o x J . s e t o u t t h e 3 Those headings were first addressed by Michael Blakeney in his article, Old Wine in New Bottles: Influence of the Common Law on the Interpretation of section 52 of the Trade Practices Act (1984) 58 A . L J . 316, in which the approach of the Australian courts in decisions prior to 1984 is criticized on the same basis as the writer criticizes New Zealand and Australian decisions since that date. It wi l l be seen that the Australian courts continue to tread the wrong path and that the New Zealand courts have followed. 83 f o l l o w i n g g e n e r a l p r i n c i p l e s , i n r e l a t i o n t o s e c t i o n 5 2 o f t h e T r a d e P r a c t i c e s A c t : " ( a ) c o n d u c t c a n n o t , f o r t h e p u r p o s e s o f s e c t i o n 5 2 , b e c a t e g o r i z e d a s m i s l e a d i n g o r d e c e p t i v e , o r l i k e l y t o b e m i s l e a d i n g o r d e c e p t i v e , u n l e s s i t c o n t a i n s o r c o n v e y s a m i s r e p r e s e n t a t i o n . . . ; ( b ) a s t a t e m e n t w h i c h i s l i t e r a l l y t r u e m a y n e v e r t h e l e s s b e m i s l e a d i n g o r d e c e p t i v e . . . T h i s w i l l o c c u r , f o r e x a m p l e , w h e r e t h e s t a t e m e n t a l s o c o n v e y s a s e c o n d m e a n i n g w h i c h i s u n t r u e . . . ; ( c ) c o n d u c t i s l i k e l y t o m i s l e a d o r d e c e i v e i f t h i s i s a ' r e a l o r n o t r e m o t e c h a n c e o r p o s s i b i l i t y r e g a r d l e s s o f w h e t h e r i t i s l e s s o r m o r e t h a n f i f t y p e r c e n t ' . . . ; ( d ) t h e q u e s t i o n w h e t h e r c o n d u c t i s , o r i s l i k e l y t o b e , m i s l e a d i n g o r d e c e p t i v e i s a n o b j e c t i v e o n e , t o b e d e t e r m i n e d b y t h e c o u r t f o r i t s e l f , i n r e l a t i o n t o o n e o r m o r e i d e n t i f i e d s e c t i o n s o f t h e p u b l i c , t h e c o u r t c o n s i d e r i n g a l l w h o f a l l w i t h i n a n i d e n t i f i e d s e c t i o n o f t h e p u b l i c i n c l u d i n g t h e a s t u t e a n d t h e g u l l i b l e , t h e i n t e l l i g e n t a n d t h e n o t s o i n t e l l i g e n t , t h e w e l l e d u c a t e d a s w e l l a s t h e p o o r l y e d u c a t e d , m e n a n d w o m e n o f v a r i o u s a g e s p u r s u i n g a v a r i e t y o f v o c a t i o n s . . . E v i d e n c e o f t h e f o r m a t i o n i n f a c t o f a n e r r o n e o u s c o n c l u s i o n i s a d m i s s a b l e b u t n o t c o n c l u s i v e . . . ; ( e ) o r d i n a r i l y , m e r e p r o o f o f c o n f u s i o n o r u n c e r t a i n t y w i l l n o t s u f f i c e t o p r o v e m i s l e a d i n g o r d e c e p t i v e c o n d u c t . . . H o w e v e r , w h e r e c o n f u s i o n i s p r o v e d , t h e C o u r t s h o u l d i n v e s t i g a t e t h e c a u s e ; s o t h a t i t m a y d e t e r m i n e w h e t h e r t h i s i s b e c a u s e o f m i s l e a d i n g o r d e c e p t i v e c o n d u c t o n t h e p a r t o f t h e r e s p o n d e n t . . . " 4 T h e A u s t r a l i a n c o u r t s h a v e e m p h a s i z e d t h a t i t i s n o t a p p r o p r i a t e m e r e l y t o i m p o r t p a s s i n g o f f p r i n c i p l e s a n d c o n c e p t s i n t o c a s e s u n d e r s e c t i o n 5 2 . I t h a s b e e n h e l d t h a t t o d o s o w o u l d l i k e l y b e " . . . p r o d u c t i v e o f e r r o r a n d t o g i v e r i s e t o a r g u m e n t s f o u n d e d o n f a l s e a s s u m p t i o n s " . 5 I n t h e Hornsby c a s e , t h e c o u r t e m p h a s i z e d t h a t s e c t i o n 5 2 a n d t h e t o r t o f p a s s i n g o f f a r e q u i t e d i f f e r e n t i n t h e s e n s e t h a t : 4 (1985) 63 A L R 345, 354-355. 5 Taco Company Of Australia Inc. v Taco Bell Pty. Ltd. (1982) 42 A L R 177. 8 4 " . . . s e c t i o n 5 2 i s c o n c e r n e d w i t h c o n d u c t w h i c h i s d e c e p t i v e o f m e m b e r s o f t h e p u b l i c i n t h e i r c a p a c i t y a s c o n s u m e r s o f g o o d s o r s e r v i c e s : i t i s n o t c o n c e r n e d m e r e l y w i t h t h e p r o t e c t i o n o f t h e r e p u t a t i o n o r g o o d w i l l o f c o m p e t i t o r s i n t r a d e o r c o m m e r c e . " 6 B r e n n a n J . h e l d , i n World Series Cricket Pty. Ltd. v Parish, t h a t t h e p r o v i s i o n s o f t h e A c t " . . . a r e n o t w r i t t e n o n a p a l i m p s e s t o n w h i c h t h e t o r t i o u s p r i n c i p l e s a r e p e r c e i v e d t o b e u n d e r l y i n g " a n d t h a t t h e m e r e f a c t t h a t a p l a i n t i f f h a s a c h o i c e o f r e m e d y d o e s n o t r e q u i r e t h e s t a t u t o r y r e m e d i e s t o b e c o n s t r u e d s o a s t o a c c o r d w i t h t h e c o m m o n l a w . 7 F i n a l l y , i n Parkdale Custom Built Furniture Pty. Ltd. v Puxu Pty. Ltd., M a s o n J . m a d e i t c l e a r t h a t s e c t i o n 5 2 i s n o t t o b e r e a d d o w n b y r e f e r e n c e t o c o m m o n l a w o r e q u i t a b l e r e q u i r e m e n t s f o r p a s s i n g o f f o r b y r e f e r e n c e t o s t a t u t e s d e a l i n g w i t h p a t e n t s a n d r e g i s t e r e d d e s i g n s . 8 I n s u m m a r y , t h e r e f o r e , t h e A u s t r a l i a n c o u r t s a p p e a r t o h a v e b e e n u n a n i m o u s i n t h e i r v i e w t h a t , i n a p a s s i n g o f f t y p e c a s e , i t i s n o t a p p r o p r i a t e t o m e r e l y a p p l y p a s s i n g o f f p r i n c i p l e s t o c a s e s u n d e r s e c t i o n 5 2 . 9 6 Homsby Building Information Centre Pty Ltd. v Sydney Building Information Centre Ltd. [1977-78] 140 C.L.R. 216, per Barwick C.J. at p. 220. 7 [1977-78] 16 A . L . R . 181, 198-199. 8 (1981-82) 149 C .L .R . 191, 195-197. Refer also McWilliams Wines Pty. Ltd. v McDonalds System of Australia Ltd. [1980] 49 F . L . R . 455 (the Big Mac case), per Northrop J . at pp. 467 - 469; S. Ricketson The Law of Intellectual Property, 1984, The Law Book Co., Melbourne, paras. 40.49 - 40.57, for a discussion of the overlap between industrial property rights and consumer protection and of how the competing policy objectives may be rationalised. 9 cf. R&C Products Pty. Ltd. vSC Johnson & Sons Pty. Ltd. (1993) 113 A . L . R . 487, per Davies J . at p. 491: "...it is unlikely .that in a case such as the present the two bases of liability would have a significantly different application. In the application of s 52, authorities which have considered the common law tort provide guidance by analogy as to the type of conduct which would be likely to mislead or deceive the public." 8 5 T h e N e w Z e a l a n d c o u r t s h a v e g e n e r a l l y f o l l o w e d t h e s a m e a p p r o a c h . T h e y h a v e g e n e r a l l y e n d o r s e d t h e p r i n c i p l e s e s p o u s e d i n Chase,10 a l t h o u g h i n Levi Strauss & Co. v Kimbyr Investments Ltd. t h e C o u r t o f A p p e a l p o i n t e d o u t t h a t t h e r e a r e s o m e d i f f e r e n c e s i n e m p h a s i s b e t w e e n t h e N e w Z e a l a n d a n d A u s t r a l i a n c o u r t s w i t h r e s p e c t t o p a r a g r a p h ( e ) a n d t h a t t h e t e s t t o b e a p p l i e d i n N e w Z e a l a n d i s t h a t i t i s n o t e n o u g h t h a t t h e c o n d u c t c a u s e s a s t a t e o f w o n d e r o r d o u b t i n t h e m i n d s o f p e o p l e a b o u t , f o r e x a m p l e , t h e i d e n t i t y o r o t h e r w i s e o f t w o b u s i n e s s e s : " T h e l i n e i n t h e l a t t e r c a s e c a n b e a f i n e o n e , w e t h i n k , f o r i f t h e C o u r t i s s a t i s f i e d ( o n t h e b a l a c e o f p r o b a b i l i t i e s ) t h a t s o m e c o n s u m e r s w i l l w o n d e r , i t m a y a t t i m e s n o t b e d i f f i c u l t t o t a k e t h e f u r t h e r s t e p o f c o n c l u d i n g t h a t s o m e a r e l i k e l y t o b e m i s l e d ; b u t o f c o u r s e t h i s i s n o t n e c e s s a r i l y s o . " 1 1 In Taylor Bros. Ltd,12 t h e f i r s t c i v i l c a s e t o c o n s i d e r s e c t i o n 9 , M c G e c h a n J . a n d t h e C o u r t o f A p p e a l b o t h i n d i c a t e d t h a t t h e p r i n c i p a l d i f f e r e n c e b e t w e e n t h e t w o a c t i o n s i s t h a t o n l y p a s s i n g o f f r e q u i r e s a p l a i n t i f f t o p r o v e i n j u r y o r l i k e l i h o o d o f i n j u r y t o h i s o w n g o o d w i l l ; t h e A c t t h u s h a v i n g a w i d e r s c o p e t h a n t h e t o r t . 1 3 I n Comite Interprofessionel du Vin de Champagne v Wineworths Group Ltd.,14 G a u l t J . h e l d t h a t , i n t h a t c o n t e x t o f a d i s p u t e b e t w e e n r i v a l t r a d e r s , a f i n d i n g o f b r e a c h o f t h e A c t a d d e d n o t h i n g i n p r a c t i c a l t e r m s t o t h e d e c i s i o n o n t h e p a s s i n g o f f c a u s e o f a c t i o n . T h a t m i g h t , o n i t s f a c e , b e 10 Taylor Bros. Ltd. v Taylors Group Ltd [1988] 2 N Z L R 1 (H.C. and C A ) , per Cooke P. at pp. 28 and 39. 1 1 [1994] 1 N Z L R 332, 381. 12 Supra, note 10 at p. 27. 1 3 Idem, per Cooke P. at p. 39. 1 4 [1992] 2 N Z L R 327 (the Champagne case) at p. 344. 8 6 c o n s t r u e d a s a f i n d i n g t h a t t h e e l e m e n t s t o b e s a t i s f i e d a r e t h e s a m e f o r b o t h c a u s e s o f a c t i o n , b u t t h e c o m m e n t w a s , o n e , m a d e w i t h p a r t i c u l a r r e f e r e n c e t o t h e f a c t t h a t t h e c o u r t h a d a l r e a d y f o u n d i n f a v o u r o f t h e p l a i n t i f f o n p a s s i n g o f f ; a n d , t w o , d i r e c t e d t o t h e r e m e d i e s a v a i l a b l e t o t h e p a r t i c u l a r p l a i n t i f f a s a m a t t e r o f p r a c t i c a l i t y , r a t h e r t h a n t o t h e e l e m e n t s t o b e p r o v e d a s a m a t t e r o f p o l i c y o r p r i n c i p l e . A m o r e d e t a i l e d a n a l y s i s o f t h e d i f f e r e n c e s b e t w e e n / s i m i l a r i t i e s o f t h e t w o a c t i o n s w a s u n d e r t a k e n i n Tot Toys v Mitchell15 w h e r e F i s h e r J . h e l d t h a t i n a t l e a s t f i v e r e s p e c t s i t i s e a s i e r t o e s t a b l i s h a c a u s e o f a c t i o n f o r t h e p u r p o s e s o f t h e A c t t h a n f o r p a s s i n g o f f : 1. u n d e r t h e A c t t h e r e i s n o r o o m f o r t h e d i s t i n c t i o n b e t w e e n c a p r i c i o u s a n d n o n - c a p r i c i o u s g e t - u p , w h i c h H i s H o n o u r p r e v i o u s l y d r e w i n t h e c o n t e x t o f p a s s i n g o f f ; 1 6 2. d a m a g e t o t h e p l a i n t i f f i s n o t a n e s s e n t i a l e l e m e n t o f t h e s t a t u t o r y a c t i o n ; 3. s o u r c e m o t i v a t i o n o n t h e p u r c h a s e r ' s p a r t i s n o t a n e s s e n t i a l e l e m e n t o f t h e s t a t u t o r y a c t i o n , e v e n w h e r e t h e p l a i n t i f f s c o m p l a i n t i s d i v e r s i o n o f 1 5 [1993] 1 NZLR 325, 367-368. 1 6 Ibid, pp. 335-347. His Honour earlier made a distinction between "functional" and "capricious" aspects of get up. The former he defined as "...those utilitarian features of a product which serve the objects for which the product was designed and which wil l therefore be of benefit to the purchaser when the product is ultimately put into use" (p.335); and "capricious" as "...a design choice which is arbitrary, not uniquely desirable, and therefore not solely driven by considerations of logic or utility. If when presented with a range of possible choices a designer chooses one because it wi l l be cheaper, easier to produce, or more useful to the consumer, the choice is not capricious. But it is capricious if it is a random selection from a range of equally acceptable solutions or is motivated by nothing more than aesthetics or a desire to be distinctive." It was held that features of a product are more likely to qualify for protection in passing off if they are fanciful, original, unusual, or selected from a vast range of available possibilities rather than simple, obvious, mundane or selected from a limited range (p. 344). Even though he accepted.that any wooden toy having the colour, shape and mechanical characteristics of the Buzzy Bee was likely to be regarded by many New Zealanders as a Buzzy Bee, Fisher J. held those features did not form part of the capricious get up and therefore could not be protected by an action in passing off. 8 7 t r a d e ; 1 7 4. t h e r e i s n o n e e d f o r t h e p l a i n t i f f t o p r o v e d a m a g e t o h i m o r h i s g o o d s ; 1 8 5. d e c e p t i o n a t a n y t i m e c o n s t i t u t e s a b r e a c h o f t h e A c t . I f t h e r e i s i n i t i a l d e c e p t i o n , i m m e d i a t e c o r r e c t i o n a t t h e p o i n t o f s a l e w i l l b e t o o l a t e t o r e c t i f y t h e b r e a c h . I n c o n t r a s t , s u c h c o r r e c t i o n m a y d e f e a t a c l a i m i n p a s s i n g o f f , i f m a d e b e f o r e d i v e r s i o n o f t h e c u s t o m e r h a s o c c u r r e d . H a v i n g s e t o u t t h o s e d i f f e r e n c e s , H i s H o n o u r p r o c e e d e d t o m a k e c l e a r , h o w e v e r , t h a t e s t a b l i s h i n g t h e t e c h n i c a l i n g r e d i e n t s o f t h e a c t i o n i s n o t t h e e n d o f t h e m a t t e r , a n d t h e p l a i n t i f f u n d e r s e c t i o n 9 m u s t g o o n t o s h o w t h a t o n e o f t h e , d i s c r e t i o n a r y , r e m e d i e s o u g h t t o b e g r a n t e d . F i s h e r J . h e l d t h a t t h e f i v e m a t t e r s d e t a i l e d a b o v e a r e a l s o r e l e v a n t t o t h e q u e s t i o n o f w h e t h e r a n y r e m e d y s h o u l d b e g r a n t e d , t h e e s s e n t i a l q u e s t i o n b e i n g : " . . . w h e t h e r t h e ' m i s l e a d i n g o r d e c e p t i v e ' c o n d u c t i s l k e l y t o h a v e a s u f f i c i e n t l y s e r i o u s i m p a c t u p o n c u s t o m e r s r a t h e r t h a n t r a d e c o m p e t i t o r s . " 1 9 T h e r e f o l l o w s a d i s c u s s i o n o f a r e a s i n w h i c h t h e c o u r t s h a v e i g n o r e d t h e i r o w n a d v i c e a n d i m p o r t e d p a s s i n g o f f p r i n c i p l e s i n t o c a s e s u n d e r s e c t i o n 9 . 1 7 His Honour earlier held (pp. 349-353) that source motivation has always been an essential ingredient of diversion passing off (where the damage claimed by the plaintiff is diversion of trade to a business rival due to the latter's misrepresentation; the other kinds of damage claimed in this case were that arising from association with an inferior product and injury to character merchandising rights) notwithstanding that it had not usually been articulated as a separate requirement. Because proof of damage to the plaintiffs goodwill is an essential element of the action, and because it must be shown that damage flowed from the defendant's misrepresentation, a claim of diversion passing off wil l be made out only if the customer would not have purchased the defendant's product but for that misrepresentation. 1 8 See also Prudential Assurance Co. of New Zealand Ltd. v Prudential Building and Investment Society of Canterbury [1988] 2 N Z L R 653, per Bisson J. at p. 659. Ibid, p. 368. B. PROTECTION OF DESCRIPTIVE NAMES 8 8 D e s c r i p t i v e n a m e s a r e t h o s e w h i c h i n d i c a t e t h e n a t u r e , r a t h e r t h a n t h e s o u r c e , o f g o o d s . A l t h o u g h p r o t e c t i o n o f d e s c r i p t i v e n a m e s h a s b e e n a f f o r d e d i n p a s s i n g o f f s i n c e Reddaway v Banham,20 L o r d H e r s c h e l l a c c e p t e d t h e f i n d i n g s o f t h e j u r y i n t h a t c a s e r e l u c t a n t l y a n d a p p e a r e d n o t t o s h a r e i t s v i e w t h a t t h e d e s c r i p t i o n ' c a m e l h a i r b e l t i n g ' d e n o t e d g o o d s o f t h e p l a i n t i f f . I t w a s s e e n i n c h a p t e r t h r e e t h a t t h e c o u r t s a r e r e l u c t a n t t o a f f o r d p r o t e c t i o n t o d e s c r i p t i v e n a m e s , t h e r a t i o n a l e b e i n g t h a t t h e d e s c r i p t i v e n e s s o f t h e n a m e e n s u r e s t h a t i t i s n o t d i s t i n c t i v e o f a n y p a r t i c u l a r b u s i n e s s a n d h e n c e i t s a p p l i c a t i o n t o o t h e r l i k e b u s i n e s s e s w i l l n o t o r d i n a r i l y m i s l e a d t h e p u b l i c . 2 1 I n c o n s t r u i n g s e c t i o n s 9 a n d 5 2 , t h e c o u r t s i n N e w Z e a l a n d a n d A u s t r a l i a h a v e t r e a t e d t h e i s s u e o f w h e t h e r o r n o t a n a m e i s d e s c r i p t i v e a s d e t e r m i n a t i v e . I t h a s b e e n h e l d t h a t : " T h e r i s k o f c o n f u s i o n m u s t b e a c c e p t e d , t o d o o t h e r w i s e i s t o g i v e t o o n e w h o a p p r o p r i a t e s t o h i m s e l f d e s c r i p t i v e w o r d s a n u n f a i r m o n o p o l y i n t h o s e w o r d s a n d m i g h t e v e n d e t e r o t h e r s f r o m p u r s u i n g t h e o c c u p a t i o n w h i c h t h e w o r d s d e s c r i b e . " 2 2 2 0 [1896] A . C . 199; refer, supra, chapter three, notes 13-17 and text. 21 Homsby Building Information Centre Pty. Ltd. v Sydney Building Information Centre Ltd., supra, note 6; Cadbury Schweppes Pty. Ltd. v Pub Squash Ltd. [1981] 1 A l l E.R. 213. 22 Homsby, supra, note 6, per Stephen J. at p. 239. In Parkdale Custom Built Furniture Pty. Ltd. v Puxu Pty. Ltd., supra, note 8, Mason J. referred to the consumer protection policy of the Act and conceded that it might require prohibition of conduct in a way that would result in a limited monopoly in the design of a product, but (1) that case involved a claim in relation to design of a product rather than in relation to name; and (2) Mason J. considered the evidence not strong enough to demonstrate a protectable reputation in the plaintiffs design. 8 9 T h r e e p o i n t s a r i s e . T h e f i r s t i s t h a t t h e r e i s a g r e a t l a c k o f c o n s i s t e n c y a n d l o g i c b e t w e e n t h o s e n a m e s w h i c h h a v e b e e n p r o t e c t e d a n d t h o s e w h i c h h a v e n o t . V i s a , 2 3 M o t o r c a r d , 2 4 B l u e a n d F r e s h , 2 5 P u r e a n d S i m p l e , 2 6 P o p u l a r M e c h a n i c s , 2 7 T a c o B e l l , 2 8 D i e s e l & T u r b o , 2 9 H I T , 3 0 C h a m p a g n e 3 1 a n d S c o t c h W h i s k y 3 2 h a v e a l l b e e n h e l d n o t t o b e p u r e l y d e s c r i p t i v e a n d t h e r e f o r e t o b e c a p a b l e o f s u s t a i n i n g a n a c t i o n p u r s u a n t t o s e c t i o n 5 2 . R e n t A U t e , 3 3 B u i l d i n g I n f o r m a t i o n C e n t r e , 3 4 S a i n t G e r m a i n , 3 5 C h a m p a g n e , 3 6 B i g M a c , 3 7 W e s t C o a s t C o o l e r , 3 8 P i t s t o p 3 9 a n d t h e N e w 23 Visa International Service Assoc. v Beiser Corporation Pty. Ltd. (1983) 6 T.P.R. 82. 24 Motorcharge Pty. Ltd. v Motorcare Pty. Ltd (1982) 42 A . L . R . 136, but only in Western Australia and not in New South Wales or Victoria. 25 Rand C Products Pty. Ltd. v Hunters Products Pty. Ltd. (1988) A.T .P .R . 40-839, 49,054. 26 Abundant Earth Pty. Ltd. v R and C Products Pty. Ltd. (1985) 59 A L R 211. 27 Snoid v C.B.S. Records Australia Ltd. (1981) 54 F . L . R . 202. 28 Taco Co. Of Australia Inc. v Taco Bell Pty. Ltd., supra, note 5. 29 Theodorus Couwenberg & Son Ltd. v Diesil Progress NZ Ltd. (1988) 2 N Z B L C 102,976. 30 Trust Bank Auckland Ltd. vASB Bank Ltd. [1989] 3 N Z L R 385. 31 Supra, note 14. 32 The Scotch Whisky Assoc. v Norman James Eade, unreported, High Court, Christchurch, 4 July 1990, CP 204/90, Holland J.; unreported, Court of Appeal, 20 August 1990, C A 177/90. 33 Rent A Ute Pty. Ltd v Golden 214 Pty. Ltd. (1987) A T . P . R . 40-800. 34 Hornsby Building Information Centre, supra, note 7. 35 Weitmann v Katies Ltd. (1977) 29 F . L . R . 336. 36 Comite Interprofesionel du Vin de Champagne v N.L. Burton Pty. Ltd. (1981) 1 T.P.R. 128 (the Australian Champagne case); InstitutNational des Appelations d'Origine des Vines et Eaux-de-Vie v Andres Wines Ltd (1990) 71 D . L . R . (4th) 575 (the Canadian Champagne case). 3 7 The Big Mac case, supra, note 8. 38 Irish Distillers Ltd. v S. Smith & Son Pty. Ltd (1987) A T . P . R . 40-756. 39 Pitstop Exhaust Ltd. v Alan Jones Pitstop International Ltd. (1988) 2 N Z B L C 102,968. 9 0 Z e a l a n d W i n e S o c i e t y 4 0 h a v e b e e n h e l d t o b e d e s c r i p t i v e a n d n o t c a p a b l e o f s u s t a i n i n g a n a c t i o n . T h e l i n e b e t w e e n w h a t i s d i s c r i p t i v e i n t h e e y e s o f t h e c o u r t s , a n d w h a t i s n o t , i s a r b i t r a r y a n d w i t h o u t a d e q u a t e r e g a r d t o t h e c o n s u m e r s w h o s e i n t e r e s t s t h e A c t i s i n t e n d e d t o p r o t e c t . T h e l a c k o f l o g i c a n d c o n s i s t e n c y b e t w e e n t h o s e n a m e s w h i c h h a v e b e e n p r o t e c t e d a n d t h o s e w h i c h h a v e n o t i s a m p l e e v i d e n c e t h a t t r e a t i n g t h e i s s u e o f d e s c r i p t i v e n e s s a s d e t e r m i n a t i v e o f w h e t h e r t h e c o n d u c t c o m p l a i n e d o f i s m i s l e a d i n g o r d e c e p t i v e i s u n j u s t i f i a b l e . P e r h a p s t h e m o s t t e l l i n g e x a m p l e o f l a c k o f r e g a r d f o r t h e p o l i c y r a t i o n a l e f o r s e c t i o n 9 , i n t h i s c o n t e x t , i s c o n t a i n e d i n t h e d e c i s i o n o f R o b e r t s o n J . i n t h e N e w Z e a l a n d W i n e S o c i e t y c a s e . 4 1 B o t h p a r t i e s c l a i m e d a n i n j u n c t i o n t o r e s t r a i n t h e o t h e r f r o m u s i n g t h a t n a m e . H i s H o n o u r h e l d t h a t : " I f e a c h o f t h e s e t r a d i n g o r g a n i s a t i o n s w i s h e s t o p e r s i s t i n u s i n g d e s c r i p t i v e t e r m s w h i c h w i l l m a k e i t d i f f i c u l t f o r t h e p u b l i c t o d i s t i n g u i s h w h i c h i s t h e a c t i v i t i e s o f o n e f r o m t h e a c t i v i t i e s o f t h e o t h e r , t h e n t h a t i s t h e p r i c e t h a t t h e y c h o o s e f o r m a i n t a i n i n g a c o m m e r c i a l r e a l i t y w h i c h h a s t h e p o t e n t i a l t o c o n f u s e . " T h e a c k n o w l e d g m e n t t h a t t h e a c t i v i t i e s o f t h e p a r t i e s h a d t h e p o t e n t i a l t o c o n f u s e w a s a r e a s o n f o r m a k i n g a n i n j u n c t i o n , n o t a r e a s o n f o r w i t h - h o l d i n g o n e 4 2 T h e s e c o n d p o i n t i s t h a t t h e c o u r t s h a v e , p a r t i c u l a r l y w h e n d e a l i n g w i t h d e s c r i p t i v e n a m e s , d r a w n a d i s t i n c t i o n b e t w e e n c o n f u s i o n o r w o n d e r m e n t o n t h e o n e h a n d a n d 40 Cardmember Wines Ltd. v The Wine Society Ltd. (1992) 4 T C L R 556. 4 1 Idem. 4 2 Even if such injunction was simply in terms of an order that each party take adequate steps to distinguish its business from that of the other. 9 1 m i s l e a d i n g o r d e c e p t i o n o n t h e o t h e r . T h e f o r m e r o c c u r s w h e n t h e d e f e n d a n t ' s a c t i v i t i e s m o v e s o m e s e c t i o n o f t h e p u b l i c s i m p l y t o w o n d e r w h e t h e r t h e r e i s a c o n n e c t i o n b e t w e e n t h e p a r t i e s a n d d o e s n o t a m o u n t t o b r e a c h o f t h e A c t . T h e l a t t e r a r i s e s w h e r e t h e a c t i v i t i e s c a u s e t h e p u b l i c t o b e l i e v e t h e r e i s a c o n n e c t i o n a n d d o e s a m o u n t t o b r e a c h o f t h e A c t . 4 3 A c o m p a r i s o n c a n b e m a d e w i t h s e c t i o n 1 6 o f t h e T r a d e M a r k s A c t 1 9 5 3 , w h i c h p r o h i b i t s r e g i s t r a t i o n a s a t r a d e m a r k o f a n y m a t t e r t h a t w o u l d b e l i k e l y t o d e c e i v e o r c a u s e c o n f u s i o n . 4 4 I t h a s b e e n h e l d t h a t s e c t i o n 1 6 i s p r i n c i p a l l y a i m e d a t p r o t e c t i o n o f c o n s u m e r s a n d t h a t i t i s e n o u g h i f m e m b e r s o f t h e p u b l i c a r e " c a u s e d t o w o n d e r " w h e t h e r t h e g o o d s b e a r i n g t h e a p p l i c a n t ' s m a r k c o m e f r o m s o m e o t h e r s o u r c e . 4 5 I t i s c o n c e d e d t h a t t h e w o r d i n g o f s e c t i o n 1 6 m a k e s i t e a s i e r t o a p p l y a w i d e r t e s t o f d e c e p t i o n o r c o n f u s i o n a n d i t m a y b e t h a t a m e n d m e n t o f s e c t i o n 9 i s r e q u i r e d , t o i n c l u d e c o n f u s i o n . I n c h a p t e r f i v e , i t w i l l b e s e e n t h a t , w h e n a c o n s u m e r i s n o t a b l e t o t e l l t h e d i f f e r e n c e b e t w e e n a g e n u i n e p r o d u c t a n d a n i m i t a t i o n o f i t , s h e w i l l m a k e h e r p u r c h a s i n g d e c i s i o n s o n t h e b a s i s o f p r i c e . W h e n t h e p r i c e o f t h e t w o p r o d u c t s i s t h e 4 3 Refer Chase Manhattan Overseas Corp. v Chase Corporation Ltd., supra, note 4; Homsby, supra, note 6, at p. 230; the Big Mac case, supra, note 8 at p.461; Taylor Bros. Ltd. v Taylors Group Ltd., supra, note 10. 4 4 Section 16 provides that: "It shall not be lawful to register as a trade mark or part of a trade mark any scandolous matter or any matter the use of which would be likely to deceive or cause confusion or would be contrary to law or morality or would otherwise be disentitled to protection in a Court of Justice." For a commentary on the section, refer Brown & Grant, The Law of Intellectual Property in New Zealand, 1989, Butterworths, Wellington, paras. 2.37-2.49. 45 Pioneer Hi-Bred Corn Co. v Hy-Line Chicks Pty. Ltd. [1975] 2 N Z L R 422, per Richardson J. at p. 62. The same situation prevails in Australia, section 28(a) of the Trade Marks Act 1955 requiring proof of "deception or confusion". For an example of a case where a plaintiff succeeded under sec. 28(a) but failed to establish misleading or deceptive conduct under section 52, refer Murray Gouldbum Co-Operative Co. Ltd. v New South Wales Dairy Corporation (1989-90) 24 F C R 370. 9 2 s a m e , t h e r e i s a f i f t y p e r c e n t p r o b a b i l i t y t h a t t h e c o n s u m e r w i l l b u y t h e i m i t a t i o n p r o d u c t . W h e n t h e i m i t a t i o n i s c h e a p e r , t h e r e i s a o n e h u n d r e d p e r c e n t p r o b a b i l i t y t h a t s h e w i l l b u y i t . T h e i m p o r t a n t f a c t o r i s t h e c o n s u m e r ' s i n a b i l i t y t o t e l l t h e t w o p r o d u c t s a p a r t . T h a t d o e s n o t r e q u i r e t h a t s h e b e p o s i t i v e l y m i s l e d ; e v e n i f s h e i s m e r e l y c o n f u s e d t h e n s h e w i l l n o t b e a b l e t o t e l l t h e p r o d u c t s a p a r t a n d e r r o n e o u s p u r c h a s i n g d s e c i s i o n s w i l l r e s u l t . I t i s a c c o r d i n g l y t h e w r i t e r ' s v i e w t h a t p r o o f o f c o n f u s i o n s h o u l d b e e n o u g h u n d e r s e c t i o n 9. T o m a k e t h a t t h e s t a n d a r d w o u l d s a t i s f y t h e c o n s u m e r p r o t e c t i o n r a t i o n a l e a n d w o u l d b e c o n s i s t e n t w i t h o t h e r c o n s u m e r p r o t e c t i o n l e g i s l a t i o n , s u c h a s t h e T r a d e M a r k s A c t . I t i s o p e n t o t h e c o u r t s t o t a k e t h e v i e w t h a t t h e d i f f e r e n c e i n w o r d i n g b e t w e e n s e c t i o n 9 o f t h e F a i r T r a d i n g a c t a n d s e c t i o n 1 6 o f t h e T r a d e M a r k s A c t i s d e l i b e r a t e a n d t h a t a n y i n c l u s i o n o f c o n f u s i o n m a y o n l y c o m e f r o m P a r l i a m e n t . T h e r e w o u l d b e s o m e m e r i t i n t h a t v i e w . B u t t h e c o u r t s h a v e t a k e n a f l e x i b l e a p p r o a c h u n d e r s e c t i o n 1 6 , h o l d i n g t h a t t h e c o n c e r n i s w i t h " p r a c t i c a l b u s i n e s s p r o b a b i l i t i e s , n o t h y p o t h e t i c a l p o s s i b i l i t i e s o f d e c e p t i o n o r c o n f u s i o n . " 4 6 F o r t h e r e a s o n s s t a t e d a b o v e , t h e s a m e a p p r o a c h s h o u l d b e t a k e n i n s e c t i o n 9 c a s e s . T h e t h i r d p o i n t a r i s e s f r o m t h e r e l u c t a n c e ( s o m e t i m e s r e f u s a l ) o f t h e c o u r t s t o a c c o r d a n y , o r a n y s i g n i f i c a n t , w e i g h t t o e v i d e n c e o f a c t u a l m i s l e a d i n g o r d e c e p t i o n o f t h e p u b l i c . I n t r e a t i n g t h e d e a c r i p t i v e n e s s o r o t h e r w i s e o f a n a m e a s d e t e r m i n a t i v e , t h e c o u r t s p l a c e n o o r m i n i m a l v a l u e o n s u c h e v i d e n c e . I n t h e Big Mac c a s e , S m i t h e r s J . h e l d t h a t : Pioneer Hi-Bred Corn, ibid, per Richardson J. at p. 76. 9 3 " I n m y o p i n i o n e v e n c e o f m e m b e r s o f t h e p u b l i c t h a t t h e y h a v e b e e n m i s l e d , i f i t d o e s a c t u a l l y g o s o f a r a s t h a t , i s n o t c o n c l u s i v e o f t h e q u e s t i o n f o r d e t e r m i n a t i o n b u t m e r e l y o f p e r i p h e r a l v a l u e . T h e c o u r t m u s t m a k e u p i t s o w n m i n d a n d i t i s e a s i e r f o r t h e c o u r t , p a r t i c u l a r l y i n m y o p i n i o n , i n t h e c i r c u m s t a n c e s o f t h i s m a t t e r , t o m a k e a n o b j e c t i v e d e t e r m i n a t i o n . " 4 7 C o n v e r s e l y , i n t h e N e w Z e a l a n d Champagne c a s e , 4 8 t h e r e w a s a m a s s o f e v i d e n c e s u g g e s t i n g t h a t t h e p u b l i c w o u l d n o t b e m i s l e d b y t h e d e f e n d a n t ' s a c t i v i t i e s 4 9 a n d y e t J e f f r i e s J . ( w h o s e c o n c l u s i o n w a s a c c e p t e d b y t h e C o u r t o f A p p e a l ) h e l d t h e d e f e n d a n t ' s c o n d u c t t o b e m i s l e a d i n g o r d e c e p t i v e , w i t h o u t a n y e x p l a n a t i o n o f w h y h e p r e f e r r e d t h a t v i e w . 5 0 A n e f f e c t o f t h e d e c i s i o n w a s t o d e p r i v e t h e c o n s u m i n g p u b l i c o f a g r e a t e r c h o i c e o f C h a m p a g n e s t y l e w i n e a t a s i g n i f i c a n t l y l o w e r c o s t t h a n t h e p r o d u c t p r o d u c e d b y t h e p l a i n t i f f s m e m b e r s . T h e w r i t e r s e e s n o l o g i c a l b a s i s f o r t h e v i e w t h a t t h e c o u r t i s i n a b e t t e r p o s i t i o n t o j u d g e t h e m a t t e r t h a n a m e m b e r o f t h e p u b l i c w h o h a s a c t u a l l y b e e n m i s l e d . A g a i n , t h a t a p p r o a c h c a n b e c o n t r a s t e d w i t h t h a t t a k e n u n d e r s e c t i o n 1 6 o f t h e T r a d e M a r k s A c t , i n r e s p e c t o f w h i c h i t h a s b e e n h e l d t h a t , w h i l e t h e j u d g e i s e n t i t l e d t o t a k e i n t o a c c o u n t h i s o w n r e a c t i o n s a n d e x p e r i e n c e a s a m e m b e r o f t h e p u b l i c , " e v i d e n c e o f p e r s o n s a c c u s t o m e d t o d e l a i n g i n t h a t m a r k e t a s t o t h e l i k e l i h o o d o f d e c e p t i o n o r c o n f u s i o n i s e s s e n t i a l " , e s p e c i a l l y w h e r e t h e g o o d s a r e s o l d i n a s p e c i a l i s t m a r k e t . 5 1 T h i s i s s u e i s c o n s i d e r e d i n g r e a t e r d e t a i l i n p a r t E . The Big Mac case, supra, note 8, at p. 461. Supra, note 14. Ibid, at pp. 440 - 446 inclusive. Ibid, at pp. 446-447. Pioneer Hi-Bred Corn Co. v Hi-Line Chicks Pty. Ltd., supra, note 45, per Richardson J. at p. 62. C. GET UP 9 4 " G e t - u p " m e a n s t h e w h o l e v i s i b l e e x t e r n a l a p p e a r a n c e o f g o o d s i n t h e f o r m i n w h i c h t h e y a r e l i k e l y t o b e s e e n b y t h e p u b l i c b e f o r e p u r c h a s e , i n c l u d i n g a n y p a c k a g i n g . 5 2 I t i s c l e a r f r o m t h e d i s c u s s i o n i n c h a p t e r t h r e e t h a t t h e p r o t e c t i o n a f f o r d e d b y p a s s i n g o f f i s o f t h e p l a i n t i f f s g o o d w i l l i n i t s b u s i n e s s g e n e r a l l y a n d n o t a n i n t e r e s t i n t h e n a m e , m a r k , g e t - u p o r o t h e r i n d i c i a o f t h e p r o d u c t , s e r v i c e o r b u s i n e s s , u n l e s s t h a t g e t - u p i s d i s t i n c t i v e o f t h e p l a i n t i f f . 5 3 I t w i l l b e r e c a l l e d t h a t , t o e s t a b l i s h d i s t i n c t i v e n e s s i n r e l a t i o n t o g e t - u p o f p r o d u c t s , t h e p l a i n t i f f i n p a s s i n g o f f m u s t p r o v e ; o n e , t h a t i t s g e t - u p d i s t i n g u i s h e s i t s p r o d u c t f r o m t h o s e o f o t h e r t r a d e r s i n a t l e a s t a s e c t i o n o f t h e p u b l i c s o t h a t ; t w o , t h e p l a i n t i f f h a s g o o d w i l l a r i s i n g f r o m t h a t g e t - u p ; a n d , t h r e e , t h a t t h e p l a i n t i f f w i l l , o r i s l i k e l y t o , s u f f e r d a m a g e t o i t s g o o d w i l l b y t h e g e t - u p a d o p t e d b y t h e d e f e n d a n t . 5 4 T h e d i f f i c u l t y f a c i n g m o s t p l a i n t i f f s i s t h a t v e r y f e w t r a d e r s u s e g e t - u p a s t h e p r i m a r y m e a n s o f i d e n t i f i c a t i o n o f t h e i r g o o d s - m o s t r e l y o n m a r k s a n d b r a n d n a m e s . B e c a u s e t h e r e l u c t a n c e o f t h e c o u r t s t o p r o t e c t g e t - u p u n d e r p a s s i n g o f f i s l i n k e d t o a n e e d f o r t h e p l a i n t i f f t o e s t a b l i s h g o o d w i l l i n t h a t g e t - u p , a n d b e c a u s e i t i s u n n e c e s s a r y f o r a p l a i n t i f f t o e s t a b l i s h g o o d w i l l u n d e r s e c t i o n 9 , o n e m i g h t t h i n k i t w o u l d b e e a s i e r 5 2 C. Wadlow, The Law of Passing Off, 1990, Sweet & Maxwell, London, para. 6.39. 53 Supra, chapter three, part A 3 . 54 Klissers Farmhouse Bakeries Ltd. v Harvest Bakeries Ltd. [1988] 1 N Z L R 16, per Somers J. at p. 23. 9 5 t o o b t a i n p r o t e c t i o n o f g e t - u p u n d e r s e c t i o n 9 . H o w e v e r , t h e c o u r t s i n N e w Z e a l a n d a n d A u s t r a l i a h a v e b e e n r e l u c t a n t t o g r a n t p r o t e c t i o n o f g e t - u p . T h e A u s t r a l i a n c o u r t s h a v e t a k e n a p a t i c u l a r l y h a r d l i n e i n t h i s a r e a a n d , i n c a s e s i n w h i c h g e t - u p a l o n e w a s t h e b a s i s o f a s e c t i o n 5 2 a c t i o n , t h e p l a i n t i f f h a s a l w a y s f a i l e d . W h e r e i t h a s b e e n s u c c e s s f u l , t h e r e h a s b e e n a n u m b e r o f f a c t o r s r e l i e d u p o n , i n c l u d i n g l a b e l l i n g , p a c k a g i n g a n d c o l o u r . 5 5 T w o s i g n i f i c a n t i n s t a n c e s o f a p l a i n t i f f c l a i m i n g s o l e l y o n t h e b a s i s o f g e t - u p a r e Brock v The Terrace Times Pty. Ltd56 a n d Parkdale Custom Built Furniture Pty. Ltd. v Puxu Pty. Ltd.51 I n t h e f o r m e r , t h e a p p l i c a n t ' s a n d r e s p o n d e n t ' s c o o k e r y b o o k s w e r e t h e s a m e s h a p e a n d s i z e , w e r e s i m i l a r l y d e c o r a t e d w i t h p a t t e r n s o f i r o n l a c e , h a d g l o s s y f i n i s h e s a n d c o n t a i n e d s i m i l a r l i n e d r a w i n g s a n d h i s t o r i c a l n o t e s . T h e t r i a l j u d g e 5 8 f o u n d c o n t r a v e n t i o n o f s e c t i o n 5 2 b u t t h e m a j o r i t y i n t h e F u l l F e d e r a l C o u r t a l l o w e d t h e a p p e a l . I t w a s h e l d t h a t i t w o u l d b e " . . . e x t r e m e l y d i f f i c u l t t o e s t a b l i s h t h e r e q u i s i t e d e g r e e o f d i s t i n c t i v e n e s s b a s e d o n t h e s h a p e a n d s i z e o f a b o o k . " 5 9 I n t h e Parkdake c a s e , t h e l e a d i n g A u s t r a l i a n a u t h o r i t y , t h e p l a i n t i f f s o l d l o u n g e s u i t e s a n d 5 5 Refer Bradmill Industries Ltd. vB&S Products Pty. Ltd. (1980) A .T .P .R . 40-196; Rolls Royce Motors Ltd. v D.IJL (Engineering) Pty. Ltd. (1981) 50 F . L . R . 340; Dial-An-Angel Pty. Ltd. v Sagitaur Services Pty. Ltd. (1990) 96 A . L . R . 181. 5 6 (1982) 1 T.P.R. 24. 57 Supra, note 8. 5 8 Reported at (1981) 4 T.P.R. 356. 59 Supra, note 56, at p. 28. The court appears to have ignored the other features relied upon by the plaintiff; cf. LSKMicrowace Technology Pty. Ltd. v Rylead Pty. Ltd. (1990) 16 I.P.R. 107 (F.C.A.) . 9 6 c h a i r s o f a q u i t e d i s t i n c t i v e d e s i g n a n d a p p e a r a n c e w h i c h h a d a n e s t a b l i s h e d r e p u t a t i o n . T h e d e f e n d a n t b e g a n t o m a k e a n d s e l l a l m o s t i d e n t i c a l l o u n g e s u i t e s , w i t h a t w o a n d o n e - h a l f i n c h s q u a r e l a b e l a t t a c h e d a n d b e a r i n g t h e d e f e n d a n t ' s n a m e . T h e H i g h C o u r t o f A u s t r a l i a r e v e r s e d t h e d e c i s i o n o f t h e F e d e r a l C o u r t a n d d i s h a r g e d t h e i n j u n c t i o n g r a n t e d b y i t . 6 0 I t i s t h e w r i t e r ' s v i e w t h a t , i n s o d o i n g , e a c h o f t h e m a j o r i t y a p p l i e d f l a w e d r e a s o n i n g , a s f o l l o w s : ( a ) G i b b s C J . 6 1 h e l d t h a t ; f i r s t , s e c t i o n 5 2 h a s d r a s t i c p o s s i b l e c o n s e q u e n c e s a n d s h o u l d n o t b e b e n e f i c i a l l y c o n s t r u e d ; a n d , s e c o n d l y , t h e d e f e n d a n t ' s a c t i o n s s h o u l d b e c o n s i d e r e d i n r e l a t i o n t o r e a s o n a b l e c o n s u m e r s a n d n o t p e o p l e w h o f a i l t o t a k e c a r e o f t h e i r o w n i n t e r e s t s . T h e r e i s n o j u s t i f i c a t i o n f o r t h e f i r s t p o i n t ; t h e s e c o n d i s p l a i n l y w r o n g a n d f o r t u n a t e l y d o e s n o t r e p r e s e n t t h e l a w i n N e w Z e a l a n d . A s s e e n i n c h a p t e r o n e , i t i s p e o p l e w h o a r e u n a b l e t o t a k e c a r e o f t h e i r o w n i n t e r e s t s w h o a r e a t t h e h e a r t o f t h e c o n s u m e r p r o t e c t i o n r a t i o n a l e f o r s e c t i o n 9 . A s w i l b e s e e n i n c h a p t e r f i v e , t h e y a r e t h e c o n s u m e r s w h o a r e m o s t a f f e c t e d b y m i s l e a d i n g a n d d e c e p t i v e c o n d u c t a n d w h o a r e t h e r e f o r e m o s t i n n e e d o f p r o t e c t i o n ; 6 2 6 0 The Fu l l Federal Court ((1979-1980) 43 F . L . R . 405), granted the injunction sought by the plaintiff on the basis that: (a) by producing a product that so closely corresponded with the plaintiffs, the defendant put into the hands of retailers a product with the inherent potential to mislead or deceive the public; (b) the label was underneath the upholstery and, further, could easily be removed, so affixing of the label did not alter that potential; and, (c) the fact that consumers and at least one retailer were misled meant the defendant was guilty of misleading or deceptive conduct in contravention of section 52. 61 Supra, note 8, from p. 194. 6 2 The Australian courts appear to continue apply the wrong test in this regard. In Argy v Blunts & Lane Cove Real Estate Pty. Ltd. (1990) 94 A L R 719, for example, H i l l J. in the Federal Court said that any submission along the lines of "you should not have believed me when I misled you" would be a bold one. But he went on to hold that a foolish person misled by a representation no 'normal', i.e. reasonable, person would take seriously would not be protected under section 52. 9 7 ( b ) M a s o n J . 6 3 h e l d t h a t t h e e s s e n c e o f t h e c a s e w a s w h e t h e r j u s t m a k i n g a d e c e p t i v e l y s i m i l a r l o o k i n g p r o d u c t i s a b r e a c h o f s e c t i o n 5 2 . I n t h e w r i t e r ' s v i e w , t h a t w a s n o t t h e i s s u e a t a l l . H a v i n g a c c e p t e d t h e p l a i n t i f f h a d a r e p u t a t i o n i n i t s p r o d u c t , 6 4 i t m u s t f o l l o w t h a t t h e d e f e n d a n t ' s c o n d u c t w a s p r i m a f a c i e m i s l e a d i n g . T h e r e a l i s s u e w a s w h e t h e r t h e l a b e l w a s e f f e c t i v e t o p r e v e n t m i s l e a d i n g . M a s o n J . d e v o t e d o n l y o n e - h a l f o f o n e p a g e o f h i s t w e l v e p a g e j u d g m e n t t o c o n s i d e r a t i o n o f t h a t i s s u e , a n d h e l d t h a t t h e l a b e l w a s e f f e c t i v e . T h e b a s i s f o r t h a t h o l d i n g w a s t h a t i t w o u l d b e r e a s o n a b l e t o e x p e c t a c o n s u m e r t o e i t h e r l o o k f o r a n d f i n d t h e l a b e l o r t o i n q u i r e o f a s a l e s p e r s o n . T h e r e a r e t w o f l a w s i n t h a t r e a s o n i n g : f i r s t l y , t h e a p p l i c a t i o n o f a s t a n d a r d o f r e a s o n a b l e n e s s ; 6 5 a n d , s e c o n d , t h e i m p l i c i t f i n d i n g t h a t d i s c u s s i o n w i t h a s a l e s p e r s o n c a n r e c t i f y m i s l e a d i n g t h a t h a s a l r e a d y o c c u r r e d . I t h a s a l r e a d y b e e n s e e n t h a t i t h a s b e e n h e l d i n N e w Z e a l a n d t h a t d e c e p t i o n a t a n y t i m e c o n s t i t u t e s a b r e a c h o f t h e A c t a n d c o r r e c t i o n a t t h e p o i n t o f s a l e c o m e s t o o l a t e . 6 6 I n v i e w o f t h e c o n s u m e r p r o t e c t i o n r a t i o n a l e o f t h e a c t i o n a n d i n v i e w o f t h e r e l a t i v e e a s e o f d i s t i n g u i s h i n g p r o d u c t s p r i o r t o t h e p o i n t o f s a l e , i t i s t h e w r i t e r ' s v i e w t h a t t h e N e w Z e a l a n d a p p r o a c h i s p r e f e r a b l e ; ( c ) B r e n n a n J . 6 7 s e e m e d p a r t i c u l a r l y i n f l u e n c e d b y h i s v i e w t h a t a n i n j u n c t i o n o f Supra, note 8, from p.200. On reputation, refer part D. , infra. See comments above. Tot Toys v Mitchell, supra, note 15. Supra, note 8, from p. 215. 9 8 t h e k i n d s o u g h t w o u l d g i v e t h e p l a i n t i f f a m o n o p o l y , u n l i m i t e d i n t i m e . W i t h r e s p e c t , t h a t i s n o t t h e e f f e c t t h e i n j u n c t i o n w o u l d h a v e h a d , i f g r a n t e d . P u x u s o u g h t a n i n j u n c t i o n r e s t r a i n i n g t h e d e f e n d a n t f r o m : " s e l l i n g , o f f e r i n g f o r s a l e , d e a l i n g w i t h , d i s p l a y i n g o r a d v e r t i s i n g a n y l o u n g e s u i t e s s o a s t o m i s l e a d o r d e c e i v e t h e p u b l i c t h a t t h e y a r e l o u n g e s u i t e s , l o u n g e s o r l o u n g e c h a i r s m a n u f a c t u r e d b y t h e a p p e l l a n t " . T h e e f f e c t o f a n i n j u n c t i o n i n t h o s e t e r m s w o u l d n o t h a v e r e q u i r e d P a r k d a l e t o c e a s e t o m a n u f a c t u r e ; i t w o u l d s i m p l y h a v e r e q u i r e d i t t o t a k e b e t t e r s t e p s t o e n s u r e t h e p u b l i c w e r e n o t m i s l e d t h a n a t w o a n d o n e - h a l f i n c h s q u a r e l a b e l u n d e r t h e u p h o l s t e r y o f i t s f u r n i t u r e . A l l o f t h a t i s s u b j e c t t o t h e f u r t h e r c o m m e n t t h a t t h e r e i s n o t h i n g i n s e c t i o n 5 2 t o p r o h i b i t t h e g r a n t i n g o f i n j u n c t i o n s t h a t h a v e t h e e f f e c t o f c o n f e r r i n g m o n o p o l i e s . ( d ) t h e c o u r t j u s t i f i e d i t s d e c i s i o n t o s o m e e x t e n t o n t h e f a c t t h a t t h e r e w a s n o e v i d e n c e t h a t t h e d e f e n d a n t ' s c o p y i n g w a s d e l i b e r a t e . T h a t i m p o r t s a n i n t e n t r e q u i r e m e n t i n t o t h e c a s e a n d t h e r e i s n o j u s t i f i c a t i o n f o r d o i n g t h a t . F u r t h e r , o n t h e e v i d e n c e , i t i s h a r d t o s e e h o w t h e d e f e n d a n t ' s c o p y i n g c o u l d h a v e b e e n o t h e r t h a n d e l i b e r a t e . 6 8 I n t h o s e c i r c u m s t a n c e s , i t i s n e c e s s a r y t o i m p o s e a h i g h s t a n d a r d o f c a r e o n t h e l a t e r i n t i m e m a n u f a c t u r e r t o e n s u r e t h a t i t s p r o d u c t i s d i s t i n g u i s h a b l e f r o m t h a t o f t h e f i r s t i n t i m e . A t w o a n d o n e - h a l f i n c h s q u a r e l a b e l u n d e r n e a t h t h e u p h o l s t e r y w h i c h c o u l d o n l y b e s e e n i f s e a r c h e d f o r a n d w h i c h c o u l d e a s i l y b e r e m o v e d i s n o t e n o u g h . I t i s a n e v e n l o w e r s t a n d a r d t h a n 6 8 The plaintiffs design was arrived at by a long process of trial and error and numerous modifications. U p until the defendant's activities, the combination of features was unique, as were many of them taken individually. The defendant's design was an almost exact imitation, both as to external appearance and internal construction - refer decision of the Fu l l Federal Court, supra, note 58, at pp. 409-410. 9 9 t h a t i m p o s e d b y t h e c o u r t s o n d e f e n d a n t ' s i n p a s s i n g o f f c a s e s , w h e n t h e y s e e k t o r e l y o n d i s c l a i m e r s . I t w a s s e e n i n c h a p t e r t h r e e 6 9 t h a t t h e c o u r t s h a v e t a k e n a s u s p i c i o u s a t t i t u d e t o d i s c l a i m e r s t h e r e . F o r r e a s o n s o f t h e p o l i c y r a t i o n a l e s i n v o l v e d , t h e y o u g h t t o b e m o r e , a n d n o t l e s s , s u s p i c i o u s i n c a s e s u n d e r s e c t i o n s 9 a n d 52; ( e ) f i n a l l y , t h e c o u r t a p p e a r s t o h a v e b e e n i n f l u e n c e d b y t h e f a c t t h a t b o t h p a r t i e s s o l d t h e i r p r o d u c t t o r e t a i l e r s , r a t h e r t h a n d i r e c t t o t h e p u b l i c . 7 0 I t w a s s e e n i n c h a p t e r t h r e e t h a t i s s u e h a s b e e n a d d r e s s e d i n p a s s i n g o f f t o o 7 1 a n d t h a t l i a b i l i t y m a y a r i s e f o r r e p r e s e n t a t i o n s t o p r o s p e c t i v e c u s t o m e r s o r t o u l t i m a t e c o n s u m e r s o f g o o d s o r s e r v i c e s s u p p l i e d b y t h e d e f e n d a n t . F o r t h e p o l i c y r e a s o n s i d e n t i f i e d i n t h i s p a p e r , t h e r e i s n o j u s t i f i c a t i o n f o r s e t t i n g a m o r e l i m i t e d c l a s s i f i c a t i o n o f t h e p u b l i c u n d e r s e c t i o n s 9 a n d 5 2 . T h e r e a s o n i n g o f t h e F e d e r a l C o u r t i s t h e r e f o r e p r e f e r a b l e t o t h a t o f t h e H i g h C o u r t . T h e H i g h C o u r t o f N e w Z e a l a n d h a s r e c e n t l y c o n s i d e r e d t h e i s s u e a n d h e l d t h a t a m a n u f a c t u r e r i s l i a b l e f o r : " . . . t h e f o r s e e a b l e d e c e p t i o n o f t h o s e u l t i m a t e c o n s u m e r s w h o p u r c h a s e f r o m i n t e r m e d i a r i e s " w h i l e t h e " m a n u f a c t u r e r i s n o t r e s p o n s i b l e f o r t h e i n d e p e n d e n t c o n d u c t o f t h e r e t a i l e r i f t h a t c o n d u c t h a s n o t b e e n w i t h i n t h e 69 Supra, part C.4. 7 0 There was evidence of actual deception of two consumers but in those instances the label had either been removed or tucked under the seat of the chair so as to be out of sight. The court held that any deception that thereby arose was caused by the conduct of the rtailer involved, rather than anything the defendant had done. 71 Supra, chapter three, part C.2. r e a s o n a b l e c o n t e m p l a t i o n o f t h e m a n u f a c t u r e r . ' 1 0 0 T h e h e a d n o t e t o t h e C o m m o n w e a l t h L a w R e p o r t o f t h e Pardale c a s e s t a t e s t h a t a m a n u f a c t u r e r d o e s n o t c o n t r a v e n e s e c t i o n 5 2 m e r e l y b y m a k i n g a n d d i s t r i b u t i n g a p r o d u c t w h i c h , t h o u g h p r o p e r l y l a b e l l e d w i t h t h e m a n u f a c t u r e r s n a m e , v e r y c l o s e l y r e s e m b l e s a n d i s i n t e n d e d t o b e s e e n t o v e r y c l o s e l y r e s e m b l e a p r o d u c t o f a n o t h e r m a n u f a c t u r e r w h i c h h a s p r e v i o u s l y b e e n a n d s t i l l i s a d v e r t i s e d a n d m a r k e t e d . T h e N e w Z e a l a n d C o u r t o f A p p e a l h a s h e l d t h a t t h e r e i s : " [ A ] d a n g e r i n a t t e m p t i n g t o g e n e r a l i s e i n t h a t w a y a n d [ w e ] d o u b t w h e t h e r t h e j u d g m e n t s w e r e i n t e n d e d t o d o s o . . . " 7 3 a l t h o u g h , i n t h e w r i t e r ' s v i e w , t h a t i s a n a c c u r a t e s u m m a r y o f t h e e f f e c t o f t h e A u s t r a l i a n d e c i s i o n . T h e r e i s o n l y o n e N e w Z e a l a n d s e c t i o n 9 c a s e d e a l i n g s q u a r e l y w i t h g e t - u p , n a m e l y Tot Toys v Mitchell.74 T h e p l a i n t i f f i n t h a t c a s e w a s t h e s u c c e s s o r r i g h t - h o l d e r i n r e s p e c t o f t h e d e s i g n a n d m a n u f a c t u r e o f a c h i l d ' s w o o d e n t o y , n a m e d " B u z z y B e e " . I t r a n o n 72 Cerebos Greggs Ltd. v Unilever New Zealand Limited, unreported, High Court, Auckland, 3 June 1994, C L 71/93, Fisher J. 73 Taylor Bros. Ltd. v Taylors Group Ltd., supra, note 10, per Cooke P. at p. 40. 74 Supra, note 15. Klissers Farmhouse Bakeries v Harvest Bakeries Ltd., supra, note 54, involved the get- up of bread packages, but was brought prior to the Act coming into effect. UPL v Dux Engineers [1989] 3 N Z L R 135 (design, appearance and operating features of plastic lavatory seat, l id, backflap and cistern) and Watson v Dolmark Industries Ltd. [1992] 3 N Z L R 311 (design, appearance and name of plastic storage trays) were both cases in which get-up was involved and in which a cause of action under section 9 could have been brought but was not. 1 0 1 w h e e l s w h i c h c a u s e d t h e w i n g s t o r o t a t e w h e n t h e t o y w a s p u l l e d a l o n g b y a s t r i n g . T h e d e f e n d a n t s t a r t e d m a k i n g a n i d e n t i c a l t o y a n d c a l l e d i t " K i w i B e e " . T h e p l a i n t i f f s c l a i m s i n p a s s i n g o f f a n d f o r b r e a c h o f s e c t i o n 9 b o t h f a i l e d . I n r e l a t i o n t o s e c t i o n 9 , F i s h e r J . f o u n d t h a t t h e r e w e r e t e c h n i c a l b r e a c h e s b u t t h a t t h e i n t e r e s t s o f t h e p l a i n t i f f i n s e c u r i n g a n i n j u n c t i o n w e r e o u t w e i g h e d b y t h e i n t e r e s t s o f c o n s u m e r s a g a i n s t o n e . I n d o i n g s o , h e r e l i e d o n f o u r f a c t o r s : 1. t h e t r a n s p a r e n t n a t u r e o f t h e t o y a n d t h e f a c t t h a t i t s i m p o r t a n t f e a t u r e s c o u l d b e s e e n a t a g l a n c e m e a n t f e w c u s t o m e r s w o u l d b e i n f l u e n c e d b y a s s u m p t i o n s a s t o s o u r c e ; 2 . t h e d e f e n d a n t u n d e r t o o k t o t a k e c o n s i d e r a b l e s t e p s t o d i s t i n g u i s h h e r p r o d u c t ; 3. t h e p l a i n t i f f w a s a s u c c e s s o r i n t i t l e a n d n o - o n e w o u l d s e r i o u s l y t h i n k t h e c r e a t o r s w e r e s t i l l p e r s o n a l l y i n v o l v e d i n m a n u f a c t u r e o f t h e t o y s ; a n d 4 . a d i s t i n c t i o n b e t w e e n c a p r i c i o u s a n d n o n - c a p r i c i o u s f e a t u r e s : " I t i s i n t h e p u b l i c i n t e r e s t t h a t a n u n u s u a l l y i n g e n i o u s w a y o f m a k i n g a t o y b e e s h o u l d b e l e f t i n t h e p u b l i c d o m a i n . " 7 5 W h i l e t h e c o u r t ' s r e s t r a i n t i n t h e n a m e o f c o n s u m e r i n t e r e s t s m a y , a t f i r s t b l u s h , a p p e a r c o m m e n d a b l e , e x a m i n a t i o n o f t h e r e a s o n i n g b e h i n d , a n d t h e e f f e c t o f , t h e d e c i s i o n s h o w s t h a t i t p r o b a b l y d i d m o r e t o h a r m t h a n p r o m o t e t h e i n t e r e s t s o f c o n s u m e r s . F a c t o r s 1 a n d 2 m a y b e v a l i d i n r e l a t i o n t o c o n s u m e r s w h o a r e a b l e t o t e l l t h e d i f f e r e n c e b e t w e e n a g e n u i n e p r o d u c t a n d a n i m i t a t i o n o f i t b u t n o t a l l c o n s u m e r s c a n . F a c t o r 3 a p p e a r s i r r e l e v a n t a n d c o n t r a d i c t o r y t o t h e c o u r t ' s e a r l i e r f i n d i n g , t h a t t h e p l a i n t i f f h a d s t a n d i n g t o s u e . 7 6 A p p l i c a t i o n o f f a c t o r 4 c o n t r a d i c t s t h e c o u r t ' s e a r l i e r r u l i n g , t h a t t h e Ibid, pp. 370-371. Ibid, pp. 347-349. 1 0 2 d i s t i n c t i o n b e t w e e n c a p r i c i o u s a n d n o n - c a p r i c i o u s f e a t u r e s i s r e l e v a n t o n l y i n p a s s i n g o f f a n d n o t u n d e r s e c t i o n 9 . 7 7 T o s a y , a s F i s h e r J . d o e s , t h a t t h e m o r e i n g e n i o u s a n i d e a t h e l e s s p r o t e c t i o n i t s h o u l d h a v e i s i l l o g i c a l a n d o u t o f s t e p w i t h t h e p o l i c y o f i n t e l l e c t u a l p r o p e r t y l a w g e n e r a l l y - t o p r o t e c t n o v e l a n d o r i g i n a l i d e a s . I n s u m m a r y , a n d w i t h p a r t i c u l a r r e f e r e n c e t o f a c t o r s 3 a n d 4 , t h e c o u r t a p p e a r s t o h a v e a p p l i e d p r i n c i p l e s r e l e v a n t t o p a s s i n g o f f t o t h e c a u s e o f a c t i o n u n d e r s e c t i o n 9 , e v e n w h i l e s a y i n g t h a t s u c h i s i n a p p r o p r i a t e . D. REPUTATION I t h a s a l r e a d y b e e n s e e n t h a t ; o n e , a p l a i n t i f f i n p a s s i n g o f f m u s t p r o v e t h a t i t h a s g o o d w i l l i n t h e j u r i s d i c t i o n ; t w o , t h e c o u r t s i n b o t h A u s t r a l i a a n d N e w Z e a l a n d ( a n d i n E n g l a n d a n d o t h e r j u r i s d i c t i o n s ) h a v e g r a p p l e d w i t h t h e i s s u e o f w h a t l e v e l o f a c t i v i t y i n t h e j u r i s d i c t i o n a f o r e i g n p l a i n t i f f n e e d s h o w t o p r o v e t h a t i t h a s g o o d w i l l t h e r e ; t h r e e , g e n e r a l l y t h e c o u r t s r e q u i r e s o m e t r a d i n g a c t i v i t y w i t h i n t h e j u r i s d i c t i o n ; f o u r , t h e N e w Z e a l a n d c o u r t s h a v e h e l d t h a t s p e c i a l c o n s i d e r a t i o n s m a y a p p l y w h e n t h e p l a i n t i f f i s f r o m A u s t r a l i a a n d g o o d w i l l m a y t r a n s c e n d n a t i o n a l b o u n d a r i e s ; 7 9 b u t , f i v e , t h e r e h a s n o t b e e n a n y c a s e i n w h i c h a p l a i n t i f f h a s e s t a b l i s h e d g o o d w i l l i n N e w Z e a l a n d s o l e l y b y Ibid, p. 367. Supra, chapter three, part C.l(c). As will be seen, the position is the same in Australia. 1 0 3 v i r t u e o f i t s A u s t r a l i a n a c t i v i t i e s a n d w i t h o u t a l s o h a v i n g s o m e b u s i n e s s a c t i v i t y i n N e w Z e a l a n d . A l t h o u g h t h e p o s i t i o n i n N e w Z e a l a n d a n d A u s t r a l i a i s m o r e l i b e r a l t h a n i n E n g l a n d , 8 0 i t w a s h e l d i n t h e m o s t r e c e n t N e w Z e a l a n d c a s e t o c o n s i d e r t h e i s s u e t h a t " I n t h i s c a s e , o n t h e e v i d e n c e , o v e r f l o w r e p u t a t i o n f r o m A u s t r a l i a n a c t i v i t i e s w o u l d b e i n s u f f i c i e n t t o e s t a b l i s h a g o o d w i l l i n N e w Z e a l a n d e v e n w i t h t h e m o r e l i b e r a l a p p r o a c h t o t h e e s t a b l i s h m e n t o f g o o d w i l l r e f l e c t e d i n r e c e n t c a s e s . " 8 1 T h e r a t i o n a l e f o r t h a t a p p r o a c h i s t h a t m e r e l y b e c a u s e m e m b e r s o f t h e p u b l i c i n t h e j u r i s d i c t i o n h a v e h e a r d o f t h e p l a i n t i f f o r i t s b u s i n e s s d o e s n o t m e a n t h a t t h e p l a i n t i f f h a s g o o d w i l l t h e r e . I n t h e Athlete's Foot c a s e , 8 2 f o r e x a m p l e , t h e f a c t t h a t m e m b e r s o f t h e p u b l i c h a d h e a r d o f t h e p l a i n t i f f m e a n t t h a t i t w a s k n o w n i n E n g l a n d . B u t t h e f a c t t h a t i t s p r o d u c t s c o u l d n o t b e p u r c h a s e d i n E n g l a n d m e a n t t h a t i t c o u l d n o t h a v e g o o d w i l l t h e r e . 8 3 A l l o f t h a t i s c o n s i s t e n t w i t h t h e r a t i o n a l e f o r t h e t o r t o f p a s s i n g o f f , n a m e l y , t o p r o t e c t t h e g o o d w i l l o f t h e p l a i n t i f f t r a d e r . U n d e r s e c t i o n s 9 a n d 5 2 , i t i s t h e c o n s u m i n g p u b l i c t h a t a r e t o b e p r o t e c t e d a n d n o t t h e 8 0 Refer Alain Bemardin et Cie v Pavilion Properties Ltd. [1967] R.P .C. 581 (the "Crazy Horse" case); Athletes Foot Marketing Associates Inc. v Cobra Sports Ltd. [1980] R.P .C. 343. In the latter, the plaintiff carried on a retail shoe franchising business in the U.S .A . It had a prospective franchisee in England but had not started to trade there. There was considerable evidence of public knowledge of the plaintiffs business but none from any person in England having brought anything from one of the plaintiffs franchised shops abroad. The plaintiffs advertisements in American publications reached England, but did not solicit postal trade. A n interlocutory injunction was refused. Refer also Wadlow, supra, note 52, paras. 2-23 - 2-29 inclusive. 81 Watson v Dolmark Industries Ltd., supra, note 74, per Anderson J. at p. 320. 82 Supra, note 80. A n d could suffer no loss there either. 1 0 4 g o o d w i l l o f a n y t r a d e r . S i n c e g o o d w i l l a r i s e s f r o m a c t i v i t y , i t i s n o t n e c e s s a r y t h a t t h e r e b e a n y a c t i v i t y t o s a t i s f y t h e r e q u i r e m e n t s o f t h e s t a t u t o r y a c t i o n s . U n d e r t h o s e a c t i o n s , i t i s a w a r e n e s s o f r e p u t a t i o n t h a t i s t h e k e y , n o t a n y a c t i v i t y . B e c a u s e o f t h a t , o n e w o u l d e x p e c t t h a t i t w o u l d b e e a s i e r f o r f o r e i g n p l a i n t i f f s t o s u c c e e d i n a c t i o n s u n d e r s e c t i o n s 9 a n d 5 2 t h a n i n p a s s i n g o f f , b u t t h a t i s n o t t h e c a s e . A u s t r a l i a n d e c i s i o n s u n d e r s e c t i o n 5 2 h a v e c o n s i s t e n t l y a p p l i e d t h e s a m e s t a n d a r d a s i n p a s s i n g o f f a n d r e q u i r e d s o m e t r a d i n g a c t i v i t y i n t h e j u r i s d i c t i o n . 8 4 I n t h e Dairy Vale c a s e , 8 5 T o o h e y J . a c k n o w l e d g e d t h a t a b s e n c e o f t h e p l a i n t i f f s p r o d u c t f r o m t h e W e s t e r n A u s t r a l i a n m a r k e t w a s n o t n e c e s s a r i l y f a t a l t o a n a r g u m e n t b a s e d o n m i s l e a d i n g o r d e c e p t i v e c o n d u c t a n d l a c k o f e v i d e n c e o f t h e e x t e n t t o w h i c h t h e p l a i n t i f f s p r o d u c t w a s k n o w n t h e r e w a s p a r t c a u s e o f t h e p l a i n t i f f f a i l i n g i n i t s a p p l i c a t i o n f o r a n i n j u n c t i o n . N e v e r t h e l e s s , t h e c o u r t a p p l i e d t h e p a s s i n g o f f t e s t o f r e q u i r i n g t r a d e i n t h e j u r i s d i c t i o n a n d c e r t a i n l y m a d e n o r e f e r e n c e t o c o n s u m e r s i n i t s d e c i s i o n . B r o w n & G r a n t 8 6 c i t e Elders LXL Ltd. v Australian Estates Pty. Ltd. a s a n i l l u s t r a t i o n o f t h e c o n t r a s t i n g r e q u i r e m e n t s , i n t e r m s o f r e p u t a t i o n , b e t w e e n p a s s i n g o f f a n d s e c t i o n 9 . I t i s t r u e t h a t t h e p l a i n t i f f i n t h a t c a s e s u c c e e d e d u n d e r s e c t i o n 5 2 o n t h e b a s i s o f a c o n t i n u i n g p u b l i c a w a r e n e s s o f t h e n a m e ' A u s t r a l i a n E s t a t e s C o m p a n y L t d . ' , a n d f a i l e d i n p a s s i n g o f f b e c a u s e o f a l a c k o f a c t u a l t r a d i n g u s e o f t h e n a m e s i n c e 1 9 8 4 . H o w e v e r , 84 Taco Company of Australia Inc., supra, note 5; Dairy Vale Metro Co. Operative Ltd. v Brownes Dairy Ltd. (1981) 35 A . L . R . 494, 501; Dairy Industry Marketing Authority v Southern Farmers Co-Operative Ltd. (1982) 1 T.P.R. 64. 8 5 Ibid - application for an interlocutory injunction. 8 6 Brown & Grant, supra, note 44, para. 7.14. 1 0 5 t h e d e c i s i o n w a s l a r g e l y c o n c e r n e d w i t h t h e e x t e n t t o w h i c h t h e r e h a d b e e n a s s i g n m e n t o f t h e g o o d w i l l i n t h e c o m p a n y t o t h e p l a i n t i f f . F u r t h e r , a n d m o r e i m p o r t a n t l y i n t h i s c o n t e x t , t h e c a s e d i d n o t i n v o l v e a f o r e i g n p l a i n t i f f a n d w a s n o t a b o u t e x t r a - t e r r i t o r i a l e s t a b l i s h m e n t o f r e p u t a t i o n o r g o o d w i l l . 8 7 T h e r e i s , h o w e v e r , o n e n o t a b l e e x c e p t i o n t o t h e g e n e r a l a p p r o a c h i n A u s t r a l i a , i n t h e d e c i s i o n o f B e a u m o n t J . i n Peter Isaacson v Nationwide News.88 T h e p a r t i e s b o t h d e c i d e d t o p u b l i s h a S u n d a y n e w s p a p e r i n t h e n o r t h e r n t e r r i t o r y o f A u s t r a l i a a n d c a l l i t t h e ' S u n d a y T e r r i t o r i a n ' . T h e p a p e r s w e r e l a u n c h e d a t a b o u t t h e s a m e t i m e . O n a c l a i m a n d c r o s s - c l a i m u n d e r s e c t i o n 5 2 , b o t h p a r t i e s w e r e o r d e r e d n o t t o u s e t h e n a m e w i t h o u t d i s t i n g u i s h i n g i t s n e w s p a p e r f r o m t h a t o f t h e o t h e r p a r t y . T h a t c o u r s e w a s a d o p t e d b y t h e c o u r t s o a s t o a d v a n c e " t h e p r i m a r y o b j e c t o f s 5 2 , b e i n g t h e p r o t e c t i o n o f t h e c o n s u m e r i n t e r e s t " . T h e d e c i s i o n , i n t h e c o n t e x t o f t w o p a r t i e s c o m m e n c i n g t o u s e e x a c t l y t h e s a m e n a m e a t e x a c t l y t h e s a m e t i m e , i s c l e a r l y c o r r e c t . 8 9 B u t i t i s a t i s a t l e a s t a r g u a b l e t h a t , o n t h e f a c t s , t h e s a m e d e c i s i o n w o u l d h a v e b e e n r e a c h e d w h e t h e r t h e c o n s u m e r i n t e r e s t w a s t a k e n i n t o a c c o u n t o r n o t . T h e d e c i s i o n i s t h e r e f o r e p r o b a b l y n o t t h e v i c t o r y f o r c o n s u m e r s t h a t i t m i g h t a t f i r s t a p p e a r t o b e . 9 0 8 7 The decision is reported at (1987) 10 IPR 575. 8 8 (1984) 56 A . L . R . 595. 8 9 It is similar to the decision in Dominion Rent A Car Ltd. v Budget Rent A Car Systems (1970) Ltd. [1987] 2 N Z L R 395, in which the New Zealand Court of Appeal held that both parties were entitled to continue using the name 'Budget' in relation to the car rental business, as long as each took steps to distinguish its business from that of the other. In that case, however, there was no reference to the consumer interest. 9 0 Refer also ConAgra Inc. v McCain Foods (Aust.) Pty. Ltd. (1991) 101 A L R 461, where the Federal Court held that the plaintiff had an onus of proving on the balance of probabilities that the name and get up of its product were known to a significant number of Australian consumers and that it had a significant reputation in Australia. 1 0 6 T o b e g i n w i t h , i t a p p e a r e d t h a t t h e N e w Z e a l a n d c o u r t s w e r e g o i n g t o t a k e a n a p p r o a c h m o r e i n k e e p i n g w i t h t h e p u b l i c p o l i c y r a t i o n a l e f o r s e c t i o n 9 . I n Midas International Corporation v Midas Autocare Ltd. 9 1 t h e p l a i n t i f f a r g u e d t h a t t h e q u e s t i o n o f b u s i n e s s a c t i v i t y i n N e w Z e a l a n d w a s i r r e l e v a n t a s l o n g a s t h e r e w a s s u f f i c i e n t e v i d e n c e o f r e p u t a t i o n . B e c a u s e t h e c a s e p r o c e e d e d m a i n l y o n t h e a l l e g a t i o n o f p a s s i n g o f f , a n d b e c a u s e a r g u m e n t o n s e c t i o n 9 w a s l i m i t e d , t h e c o u r t d i d n o t m a k e a r u l i n g o n t h a t p o i n t . B u t E i c h e l b a u m J . o b s e r v e d t h a t : " . . . i t m a y n o t b e l o n g b e f o r e t h e p r e c e d i n g d i s c u s s i o n o n t h e l a w r e l a t i n g t o t h e r e q u i r e m e n t o f a d e g r e e o f b u s i n e s s a c t i v i t y i s s e e n a s o t i o s e . " 9 2 T h a t o p e n i n g h a s n o t b e e n t a k e n u p a n d , r e g r e t t a b l y , t h e c o u r t s c o n t i n u e t o r e q u i r e t r a d i n g a c t i v i t y i n t h e j u r i s d i c t i o n . I n t h e Champagne93 a n d Scotch Whisky94 c a s e s , t h e p l a i n t i f f s h a d a s u b s t a n t i a l t r a d i n g a c t i v i t y i n N e w Z e a l a n d a n d i t w a s h e l d t h e y h a d r e p u t a t i o n t h e r e . I n t h e Champagne c a s e , t h e r e w a s a l s o a n i s s u e a s t o w h e t h e r t h e A u s t r a l i a n d e f e n d a n t h a d a r e p u t a t i o n i n N e w Z e a l a n d . T h e f i n d i n g t h a t i t d i d n o t w a s b a s e d l a r g e l y o n a c o m p a r i s o n o f t h e d u r a t i o n a n d s c a l e o f t r a d i n g a c t i v i t y o f t h e p a r t i e s . 9 5 (1988) 2 N Z B L C 102,915. Ibid, pp. 102,921-922. Supra, note 14. Supra, note 32. Supra, note 14, p. 331. 1 0 7 T h e H i g h C o u r t r e g r e s s e d e v e n f u r t h e r i n t h e New Zealand Wine Society c a s e , 9 6 w h e n R o b e r t s o n J . c o n s i d e r e d t h e p l a i n t i f f s c l a i m s i n p a s s i n g o f f a n d u n d e r s e c t i o n 9 t o g e t h e r a n d h e l d t h a t : " W h i l e , w i t h a n e v e r i n c r e a s i n g f l o w i n t r a d e a n d a c t i v i t y a c r o s s t h e T a s m a n , t h e t h r e s h o l d h a s b e c o m e l o w e r , t h e r e m u s t b e s o m e i d e n t i f i a b l e b u s i n e s s a c t i v i t y a n d i n m y j u d g m e n t n o n e e x i s t e d . " 9 7 I n Granny May's Management Ltd v Whitcoulls Group Ltd.,98 t h e p l a i n t i f f r a n a f r a n c h i s e o p e r a t i o n w i t h o v e r f i f t y ' G r a n n y M a y ' s h o p s i n A u s t r a l i a , s e l l i n g s t a t i o n e r y a n d g i f t i t e m s . I t h a d d i s c u s s i o n s w i t h t h e d e f e n d a n t a b o u t p u r c h a s i n g a n u m b e r o f i t s N e w Z e l a n d s t o r e s b u t t h o s e d i s c u s s i o n s w e r e n o t f r u i t f u l . T h e p l a i n t i f f g r a n t e d a m a s t e r f r a n c h i s e t o a n o t h e r N e w Z e a l a n d p a r t y . T h e d e f e n d a n t t o o k s t e p s t o c h a n g e t h e n a m e o f s o m e o f i t s s t o r e s t o G r a n n y M a y . O n t h e p l a i n t i f f s p a s s i n g o f f c l a i m , H i l l y e r l o o k e d f o r b o t h r e p u t a t i o n a n d b u s i n e s s a c t i v i t y a n d h e l d t h e r e w a s s u f f i c i e n t e v i d e n c e o f b o t h . T h e b u s i n e s s a c t i v i t y i n c l u d e d a d v e r t i s i n g i n N e w Z e a l a n d m a g a z i n e s a n d c a t a l o g u e s , g r a n t i n g o f t h e m a s t e r f r a n c h i s e a g r e e m e n t , m a k i n g a r r a n g e m e n t s w i t h b a n k e r s , o p e n i n g t h e f i r s t s t o r e a n d s u b s t a n t i a l a d v e r t i s i n g i n r e l a t i o n t o t h a t o p e n i n g . O n t h e s e c t i o n 9 c l a i m , c o u n s e l s u b m i t t e d t h e r e m u s t b e s o m e r e p u t a t i o n . T h e c o u r t a g r e e d a n d c i t e d , w i t h a p p a r e n t a p p r o v a l , Midas a n d Pioneer Hi-Bred Corn." I t d i d 96 Supra, note 40. 9 7 Ibid, p. 561. 9 8 (1993) 5 T C L R 148. 99 Supra, note 45. 1 0 8 n o t , h o w e v e r , g o a s f a r a s t o f i n d t h a t b u s i n e s s a c t i v i t y i s n o t r e q u i r e d a n d t h e c o u r t s v i e w o n t h a t p o i n t i s , a t b e s t , u n c l e a r . B e c a u s e o f i t s f i n d i n g , i n p a s s i n g o f f , t h a t t h e p l a i n t i f f h a d s u f f i c i e n t t r a d i n g a c t i v i t y i n t h e j u r i s d i c t i o n , t h e r a t i o o f t h e c a s e i s t h a t t r a d i n g a c t i v i t y m a y o r m a y n o t b e a r e q u i r e m e n t u n d e r s e c t i o n 9 . T h e p o s i t i o n o n e s t a b l i s h m e n t o f r e p u t a t i o n c a n a c c o r d i n g l y b e s u m m a r i s e d a s f o l l o w s . T h e g o o d w i l l e s t a b l i s h e d b y r e p u t a t i o n i s w h a t p a s s i n g o f f p r o t e c t s . I n b o t h A u s t r a l i a a n d N e w Z e a l a n d , s o m e t r a d i n g a c t i v i t y i n t h e j u r i s d i c t i o n i s a p r e - r e q u i s i t e t o a s u c c e s s f u l p a s s i n g o f f c l a i m . T h e s t a t u t o r y c a u s e s o f a c t i o n p r o h i b i t m i s l e a d i n g a n d d e c e p t i v e c o n d u c t . R e p u t a t i o n i s a p r e - r e q u i s i t e t o m i s l e a d i n g b u t c a n e x i s t w i t h o u t t r a d i n g i n t h e j u r i s d i c t i o n . I t i s t h e r e f o r e n o t n e c e s s a r y f o r t h e c o u r t s t o r e q u i r e t r a d i n g i n t h e j u r i s d i c t i o n a s a n e l e m e n t u n d e r t h e s t a t u t e s . J u d i c i a l p r o n o u n c e m e n t s o n t h e d i f f e r e n c e s b e t w e e n t h e t w o a c t i o n s s u g g e s t t h a t t h e c o u r t s r e c o g n i s e t h a t . T h e c o u r t s h a v e c o m e c l o s e t o h o l d i n g t h a t b u s i n e s s a c t i v i t y i s n o t r e q u i r e d , b u t o n l y i n c a s e s w h e r e t h e r e i s t r a d i n g a c t i v i t y . I n o t h e r c a s e s , t h e s a m e s t a n d a r d a s i n p a s s i n g o f f i s i m p o s e d , a n d t h e r e h a s n o t b e e n a n y c a s e i n w h i c h a p l a i n t i f f h a s s u c c e e d e d i n t h e a b s e n c e o f t r a d i n g a c t i v i t y i n t h e j u r i s d i c t i o n , n o m a t t e r h o w w e l l i t m a y b e k n o w n t h e r e . I n t h e w r i t e r ' s v i e w , t h a t i s t h e w r o n g a p p r o a c h . I t h a s b e e n s e e n t h a t a m o r e f l e x i b l e s t a n d a r d p r e v a i l s u n d e r t h e T r a d e M a r k s A c t , a l s o a c o n s u m e r p r o t e c t i o n s t a t u t e , a n d i t i s o p e n t o t h e c o u r t s t o a p p l y t h a t s t a n d a r d i n s e c t i o n 9 c a s e s . 1 0 0 1 0 0 The Trade Marks legislation in some jurisdictions, for example Canada (Trade-marks Act of Canada R.S., c. T-10, s. 5) include provisions on what is required for a plaintiff to show that it has a reputation there. Neither the New Zealand nor Australian Acts contain such a provision. 1 0 9 E. EVIDENCE OF DECEPTION 1. Individual consumer evidence I t i s a f e a t u r e o f p a s s i n g o f f c a s e s t h a t t h e c o u r t s f a v o u r t h e i r o w n j u d g m e n t o f w h a t i s l i k e l y t o m i s l e a d o v e r e v i d e n c e o f a c t u a l m i s l e a d i n g o f m e m b e r s o f t h e p u b l i c . 1 0 1 T h a t h a s a l r e a d y b e e n c o n s i d e r e d i n r e l a t i o n t o d e s c r i p t i v e n a m e s . 1 0 2 T h e Big Mac c a s e w a s c i t e d a s a , p e r h a p s , e x t r e m e e x a m p l e o f t h e a t t i t u d e o f t h e c o u r t s t o e v i d e n c e o f a c t u a l m i s l e a d i n g , S m i t h e r s J . d e s c r i b i n g e v i d e n c e f r o m m e m b e r s o f t h e p u b l i c a s " m e r e l y o f p e r i p h e r a l v a l u e " . 1 0 3 T h e r e a r e a r g u m e n t s t o b e m a d e t h a t t h a t a p p r o a c h o f t h e c o u r t s i s i n a p p r o p r i a t e i n t h e c o n t e x t o f p a s s i n g o f f . I t i s o f m o r e c o n c e r n h e r e , h o w e v e r , t h a t t h e s a m e a p p r o a c h h a s b e e n t a k e n t o c l a i m s u n d e r s e c t i o n s 9 a n d 5 2 . I n i t i a l l y , t h a t a r o s e b e c a u s e t h e c o u r t s a p p l i e d t h e s t a n d a r d o f t h e r e a s o n a b l e p e r s o n i n m e a s u r i n g t h e m i s l e a d i n g o r d e c e p t i v e c o n d u c t . 1 0 4 L a t e r , t h e c o u r t s a c c e p t e d t h a t t h e l i k e l i h o o d o f d e c e p t i o n i s t o b e j u d g e d 1 0 1 Refer, for example, Kiissers Farmhouse Bakeries Ltd. v Harvest Bakeries Ltd., supra, note 54, per Cooke P. at p. 18: "Apart from opinions produced by surveys and the like and other questions deliberately put to obtain answers that might be used in evidence, there was exiguous evidence of actual confusion by any purchaser in fact. It seems to reduce to one instance...The lack of a body os such evidence, however, is again not uncommon and by no means fatal to the plaintiffs case; the court has to assess probabilities. The opinions of trade and other witnesses as to what would be likely may be helpful, but in the end it is the Judge, applying the right principles, who has to answer that question." cf. Pioneer Hi-Bred Corn Co., supra, note 45 and text.. 102 Supra, part B. 103 Supra, note 8. 1 0 4 For example, Parkdale Custom Built Furniture Ltd., supra, note 8, p. 199. 1 1 0 b y r e f e r e n c e t o p e r s o n s o f a l l l e v e l s o f a s t u t e n e s s a n d i n t e l l i g e n c e , 1 0 5 b u t t h e y c o n t i n u e d t o p r e f e r t h e i r o w n j u d g m e n t t o t h a t o f t h e p u b l i c a n d h a v e , a c c o r d i n g l y , c o n t i n u e d t o a p p l y t h e p a s s i n g o f f t e s t a n d , d e f a c t o , t o a p p l y t h e s t a n d a r d o f t h e r e a s o n a b l e p e r s o n . I n t h e w r i t e r ' s v i e w , t h e f a c t t h a t t h e A c t i s s o c l e a r l y a i m e d a t p r o t e c t i o n o f c o n s u m e r s 1 0 6 i s a m p l e r e a s o n f o r g r e a t e r w e i g h t t o b e g i v e n t o e v i d e n c e f r o m c o n s u m e r s o f t h e c o n s e q u e n c e s o f a c t i v i t i e s s u p p o s e d l y p r o h i b i t e d b y t h e A c t . I t w i l l b e r e c a l l e d t h a t t h e t h e d e f e n d a n t i n t h e Big Mac c a s e , 1 0 7 M c W i l l i a m s W i n e s , p u b l i s h e d a d v e r t i s e m e n t s o f c e r t a i n o f i t s w i n e p r o d u c t s , s h o w i n g t h r e e , t w o l i t r e w i n e b o t t l e s , w i t h a s t a t e m e n t f r o m a w i n e w r i t e r : " I c a l l i t t h e B i g M a c " . M c D o n a l d s c o m p l a i n e d t h a t u s e o f t h e w o r d s ' B i g M a c ' w o u l d m i s l e a d o r d e c e i v e t h e p u b l i c i n t o t h i n k i n g t h a t M c D o n a l d s s p o n s o r e d o r a p p r o v e d o f t h e w i n e . A l o t o f e v i d e n c e f r o m c o n s u m e r s w a s p r e s e n t e d , t o t h e e f f e c t t h a t u s e o f t h e w o r d s ' B i g M a c ' c a u s e d t h e m t o w o n d e r w h e t h e r t h e r e w a s a c o n n e c t i o n b e t w e e n t h e p a r t i e s . T h e t r i a l j u d g e f o u n d i n f a v o u r o f M c D o n a l d s , n o t o n t h e b a s i s o f i t s c o m p l a i n t b u t o n t h e b a s i s t h e a d v e r t i s e m e n t s w o u l d m i s l e a d o r d e c e i v e t h e p u b l i c i n t o t h i n k i n g t h e r e w a s a b u s i n e s s c o n n e c t i o n b e t w e e n t h e p a r t i e s . T h e F e d e r a l C o u r t o f A u s t r a l i a a l l o w e d M c W i l l i a m ' s a p p e a l , f o r t w o r e a s o n s . F i r s t , i t f o c u s s e d o n t h e f a c t t h e t r i a l c o u r t j u d g e h a d r e f e r r e d t o c o n s u m e r s b e i n g c o n f u s e d , o r w o n d e r i n g a b o u t a c o n n e c t i o n , r a t h e r t h a n t o c o n s u m e r s b e i n g m i s l e d o r d e c e i v e d . 1 0 8 S e c o n d l y , a n d m o r e i m p o r t a n t l y i n t h i s c o n t e x t , i t w a s 105 Taco Bell, supra, note 5. 106 Supra, chp. two, part B.4. 107 Supra, note 8. 1 0 8 For a discussion on that point, refer part B , supra. I l l h e l d t h a t i t i s f o r t h e c o u r t t o d e t e r m i n e w h e t h e r t h e r e i s a l i k e l i h o o d r e l e v a n t p e r s o n s w i l l b e m i s l e d a n d t h a t , i n t h e p r e s e n t c a s e , s u c h w a s n o t l i k e l y . 1 0 9 A s t o t h e e v i d e n c e f r o m c o n s u m e r s , t h e c o u r t h e l d t h a t a n y a c t u a l d e c e p t i o n a r o s e n o t f r o m M c W i l l i a m s a d v e r t i s e m e n t b u t f r o m c o n s u m e r s o w n e r r o n e o u s a s s u m p t i o n s t h a t t h e r e w a s s o m e c o n n e c t i o n b e t w e e n t h e p a r t i e s a n d t h a t t h e r e w a s t h e r e f o r e n o c a u s a l c o n n e c t i o n b e t w e e n t h e a d v e r t i s e m e n t a n d t h e m i s l e a d i n g o r d e c e p t i o n . A s h a s b e e n p o i n t e d o u t , a n y c o n d u c t t h a t i s m i s l e a d i n g o r d e c e p t i v e w i l l g i v e r i s e t o e r r o n e o u s a s s u m p t i o n s o n t h e p a r t o f c o n s u m e r s a n d t h a t t o h o l d t h a t a n e r r o n e o u s a s s u m p t i o n b r e a k s t h e c a u s a l l i n k r a t h e r b e g s t h e q u e s t i o n . 1 1 0 T h e s a m e a p p r o a c h w a s t a k e n i n t h e Parkdale c a s e . 1 1 1 M a s o n J . h e l d t h a t a p u r c h a s e r w h o w a n t e d t o b u y t h e a p l i c a n t ' s b r a n d c o u l d r e a s o n a b l y b e e x p e c t e d t o f i n d t h e l a b e l o r i n q u i r e o f t h e s a l e s p e r s o n . 1 1 2 B r e n n a n J . h e l d t h a t a n y m i s l e a d i n g o r d e c e p t i o n f l o w e d n o t f r o m c o n d u c t o f t h e r e s p o n d e n t b u t f r o m a n e r r o n e o u s b e l i e f o n t h e p a r t o f c o n s u m e r s t h a t : " . . . t h e m a n u f a c t u r e r w h o f i r s t e s t a b l i s h e s a m a r k e t r e p u t a t i o n h a s a m o n o p o l y i n t h e m a n u f a c t u r e a n d s a l e o f g o o d s o f t h a t k i n d . . . t h e e v e n t 109 Supra, note 8, per Smithers J. at p. 460. 1 1 0 Brown & Grant, supra, note 44, para. 7.13. 111 Supra, note 8. 1 1 2 Ibid, p. 211; cf. Marcol v Commerce Commission [1991] 2 N Z L R 502 (H.C.), per Tipping J. at p. 506: "It must be accepted for present purposes that the average shopper wi l l be likely to examine such things as labels on garments in a relatively casual and unwary manner." f l o w s f r o m a m i s c o n c e p t i o n o f l a w . " 112 I n t h e w r i t e r ' s v i e w , b o t h j u d g e s a p p l i e d t h e w r o n g t e s t s . M a s o n J . c l e a r l y i m p o s e d t h e s t a n d a r d o f t h e r e a s o n a b l e s h o p p e r , w h e r e a s t h e s e c t i o n i s i n t e n d e d t o p r o t e c t c o n s u m e r s o f a l l l e v e l s o f i n t e l l i g e n c e a n d a b i l i t y . 1 1 4 A s a l r e a d y n o t e d , B r e n n a n J . i s w r o n g b e c a u s e t h e e f f e c t o f t h e s e c t i o n is t o g i v e t h e t r a d e r w h o e s t a b l i s h e s a r e p u t a t i o n a m o n o p o l y i n g o o d s o f t h a t k i n d , a t l e a s t t o t h e e x t e n t o f b e i n g a b l e t o p r e c l u d e a n y o t h e r m a n u f a c t u r e r s e l l i n g a p r o d u c t t h a t i s d e c e p t i v e l y s i m i l a r . T h e i s s u e w a s r e v i s i t e d i n t h e Taco Bell c a s e , 1 1 5 i n w h i c h t h e c o u r t n o t e d c r i t i c i s m o f t h e ' e r r o n e o u s a s s u m p t i o n ' t e s t a n d s u g g e s t e d t h e Big Mac d e c i s i o n h a d b e e n i n c o r r e c t l y i n t e r p r e t e d . O n t h e i s s u e o f e v i d e n c e f r o m m e m b e r s o f t h e p u b l i c , t h e c o u r t a f f i r m e d t h a t i t ( t h e c o u r t ) h a s t h e r o l e o f d e t e r m i n i n g w h e t h e r c o n d u c t i s m i s l e a d i n g o r d e c e p t i v e 1 1 6 a n d s a i d t h a t i t s h o u l d r e c e i v e e v i d e n c e o f a n y a c t u a l m i s c o n c e p t i o n o f a 1 1 3 Ibid, p. 225; See also Lego Australia Pty. Ltd. v Paul's (Merchants) Pty. Ltd. (1982) 60 F . L . R . (1982) A.T .P .R . 40-275, p. 43,478 (F.C.A.) : "...the state of mind of the relevant witnesses, if they could be said to have been misled or deceived, is referable to their own mental processes, nor completely or solely to the actions of the respondent...I am of the view that they have not significantly advanced the case put forward for the applicant; (1982) A.T .P .R . 40-308, p. 43,806 (Full F .C .A . ) : "Any members of the public who were confused or under a misconception in that regard were so confused or under such a misconception as a result of an unwarranted assumption which they themselves made." 1 1 4 Another point on which the Australian courts continue to take a position that is not compatible with the public policy rationale for section 52. In Argy v Blunts & Lane Cove Real Estate Pty. Ltd., supra, note 62, at pp.741-745, H i l l J. reviewed Australian authorities on the point and confirmed the view taken in Parkdale v Puxu {supra, note 8 at pp.198-199) that even though a class of consumers may be expected to include inexperienced and gullible consumers, the section shouild be regarded as contemplating the effect of the conduct on reasonable members of the class. In the writer's view, the background to enactment and the policy rationale amply demonstrate that test is simply wrong. 115 Supra, note 5, pp. 199-203 inclusive. Ibid, pp. 202-203. 113 m e m b e r o f t h e p u b l i c b u t d e t e r m i n e f o r i t s e l f w h e t h e r t h e m i s c o n c e p t i o n a r i s e s f r o m m i s l e a d i n g o r d e c e p t i v e c o n d u c t o n t h e p a r t o f t h e r e s p o n d e n t o r , a l t e r n a t i v e l y , f r o m s o m e o t h e r c a u s e . T h e e v i d e n c e f r o m c o n s u m e r s w a s m u c h l e s s s u b s t a n t i a l i n t h a t c a s e t h a n i n t h e Big Mac c a s e , a n d t h e d e c i s i o n t h a t t h e e a r l i e r i n t i m e o p e r a t o r s h o u l d p r e v a i l o v e r t h e n e w c o m e r w a s p r o b a b l y t h e c o r r e c t o n e . T h e w o r r y i n g f e a t u r e o f t h e d e c i s i o n i s t h e c o u r t ' s r i g i d a d h e r e n c e t o t h e v i e w t h a t e v i d e n c e f r o m m e m b e r s o f t h e p u b l i c i s o f m i n i m a l v a l u e . O f e v e n g r e a t e r c o n c e r n i s t h e a p p r o a c h t a k e n i n Happy Landings Pty. Ltd. v Magazine Promotions Pty. Ltd.117 T h e a p p l i c a n t p u b l i s h e d c o o k e r y b o o k s e n t i t l e d ' T h e H e a l t h R e v o l u t i o n ' , ' T h e N e w H e a l t h R e v o l u t i o n ' a n d ' T h e N e w H e a l t h R e v o l u t i o n C o o k b o o k ' . T h e r e s p o n d e n t s t a r t e d p u b l i s h i n g a c o o k e r y b o o k e n t i t l e d ' T h e H e a l t h y R e v o l u t i o n C o o k b o o k ' . O n a p p l i c a t i o n f o r a n i n t e r l o c u t o r y i n j u n c t i o n , L o c k h a r t J . h e l d t h a t t h e a p p l i c a n t h a d a " n o t u n a r g u a b l e " c a s e b u t t h a t i t w a s n o t a s t r o n g c a s e , n o t w i t h s t a n d i n g " a c o n s i d e r a b l e b o d y o f e v i d e n c e , p r i n c i p a l l y b y a f f i d a v i t . . . i n c l u d i n g e v i d e n c e r e l a t i n g t o k n o w l e d g e o f m e m b e r s o f t h e p u b l i c w i t h r e s p e c t t o b o t h p u b l i c a t i o n s . " 1 1 8 I n t h i s a r e a , t h e N e w Z e a l a n d c o u r t s h a v e n o t b e e n i n c l i n e d t o m a k e s t a t e m e n t s o f p r i n c i p l e i n t e r m s q u i t e a s s t r o n g a s t h e i r A u s t r a l i a n c o u n t e r p a r t s , b u t t h e a p p r o a c h 1 1 7 (1984) A .T .P .R . 40-459. 1 1 8 See also Snoid v Handley, supra, note 27: the respondents, an Australian band called 'Popular Mechanics', sought an injunction restraining the appellants, members of a New Zealand band called 'Pop Mechanix', from using that name in Sydney and Canberra. The appellants sought to rely on a lack of any evidence of actual deception at the points of sale of records. It was held (p. 743,235) that evidence of any actual deception, at the point of sale, "even if it had been called, would have been of limited importance at the trial. It certainly would not have been decisive. The Court must itself determine whether there is a likelihood that the relevant persons will be misled." 1 1 4 t a k e n a p p e a r s t o b e t h e s a m e i n b o t h j u r i s d i c t i o n s . I n t h r e e e a r l y a n d o n e m o r e r e c e n t N e w Z e a l a n d c a s e s , t h e r e w a s s u b s t a n t i a l e v i d e n c e o f a c t u a l m i s l e a d i n g o r d e c e p t i o n o f m e m b e r s o f t h e p u b l i c . A l l f o u r d e c i s i o n s w e r e i n f a v o u r o f t h e a p p l i c a n t s , w h i c h m i g h t s u g g e s t t h e c o u r t s h e r e f i n d s u c h e v i d e n c e m o r e p e r s u a s i v e t h a n t h e A u s t r a l i a n c o u r t s d o . I t i s c l e a r f r o m t h e d e c i s i o n s , h o w e v e r , t h a t t h a t e v i d e n c e w a s n o t d e c i s i v e a n d t h a t t h e c o u r t s i m p o s e d t h e i r o w n j u d g m e n t , w h i c h o n l y h a p p e n e d t o f a v o u r t h e v i e w t h a t m i s l e a d i n g o r d e c e p t i o n w a s l i k e l y . I n Taylor Bros. Ltd. v Taylors Group Ltd. , 1 1 9 M c G e c h a n J . i n t h e H i g h C o u r t r e v i e w e d a n d c l e a r l y r e l i e d o n t h e s u b s t a n t i a l e v i d e n c e o f c o n f u s i o n o f c o n s u m e r s , i n f i n d i n g f o r t h e a p p l i c a n t . T h e C o u r t o f A p p e a l 1 2 0 h e l d t h a t M c G e c h a n J . ' s f i n d i n g s w e r e w e l l j u s t i f i e d o n t h e e v i d e n c e . I t a l s o h e l d , h o w e v e r , t h a t t h e t e s t o f w h e n c o n d u c t i s t o b e c h a r a c t e r i s e d a s m i s l e a d i n g o r d e c e p t i v e i s o n e f o r t h e c o u r t t o d e t e r m i n e o n t h e f a c t s . 1 2 1 I n Prudential Building Society of Canterbury v Prudential Assurance Co. of New Zealand Ltd., M c G e c h a n J. h e l d t h a t t h e p o t e n t i a l f o r m i s l e a d i n g w a s o b v i o u s a n d w a s " r e i n f o r c e d 119 Supra, note 10. Taylor Bros, had been in the dry-cleaning and garment hire businesses in Wellington for many years. The respondent was involved in similar businesses, but not in Wellington. It acquired two Wellington companies involved in linen hire and dry-cleaning and used the name 'Taylors' in relation to them. Taylor Bros, sought an injunction, alleging passing off and breach of section 9, and was successful on both causes. See also the subsequent decision, concerning the respondent's use of the name 'Laytons', reported at [1990] 1 N Z L R 19 ( C A ) . 1 2 0 Ibid, per Cooke P. at pp. 39-40. Ibid, p. 39, lines 52-55. 1 1 5 b y s o m e e v i d e n c e o f a c t u a l c o n f u s i o n " . 1 2 2 T h e C o u r t o f - A p p e a l a g r e e d w i t h t h e f i n d i n g s , w h i l e m a k i n g i t c l e a r t h a t t h e c o u r t s i n f e r e n c e i s t h e p r i m a r y d e t e r m i n a n t a n d t h e e v i d e n c e i s s e c o n d a r y . I n Trust Bank Auckland Ltd. v ASB Bank Ltd.,113 t h e r e w a s , a g a i n , e v i d e n c e s u g g e s t i n g a " s i g n i f i c a n t d e g r e e " o f a c t u a l m i s l e a d i n g o r d e c e p t i o n , i n c l u d i n g t h e r e s u l t s o f t w o s u r v e y s o f m e m b e r s o f t h e p u b l i c a n d o f b a n k s t a f f . 1 2 4 T h e C o u r t o f A p p e a l d i d n o t m a k e a n y s t a t e m e n t o n t h e v a l u e o f o r w e i g h t t o b e a t t a c h e d t o s u c h e v i d e n c e b u t i t r e f e r r e d , w i t h a p p a r e n t a p p r o v a l , t o t h e s t a t e m e n t o f E l l i s J . i n t h e H i g h C o u r t , t h a t h e a c t e d " t o n o s m a l l e x t e n t o n f i r s t i m p r e s s i o n a n d i n f e r e n c e " . T h e C o u r t o f A p p e a l a l s o c o u c h e d i t s d e c i s i o n , i n f a v o u r o f t h e a p p l i c a n t , i n t e r m s o f t h e " l i k e l i h o o d " o f t h e p u b l i c b e i n g m i s l e d a n d w h a t m e m b e r s o f t h e p u b l i c " w o u l d r e a s o n a b l y s u p p o s e " 1 2 5 a n d s a i d t h a t d e c i s i o n s i n s u c h c a s e s , w h e t h e r t h e c a u s e o f a c t i o n i s p a s s i n g o f f o r b r e a c h o f t h e F a i r T r a d i n g A c t o r T r a d e M a r k l e g i s l a t i o n d e p e n d s " t o a s p e c i a l d e g r e e o n j u d i c i a l r e a c t i o n , h o w e v e r f u l l t h e e v i d e n c e a n d t h e a r g u m e n t s o f c o u n s e l . " I t i s a p p a r e n t t h a t 122 Supra, note 18 at p. 658. The English respondent was registered as an overseas company in New Zealand and had traded there since 1922, in the field of financial services. The Society was incorporated in Christchurch in 1908. Legislative changes in 1987 extended the range of allowable activities for a building society and the Society undertook vigorous expansion. It opened offices throughout the country and offered a broader range of services than it had previously. The respondent complained under section 9 and in passing off and was successful in both, save with recognition of the Society's old established business in the province of Canterbury. 123 Supra, note 30: A S B operated a special high interest savings account, called a H I T acoount, in Auckland. Other Trust Banks operated H I T accounts elsewhee. T B A commenced business in Auckland and advertised a H I T account similar to ASB's . The latter sought an injunction, sueing in passing off and under section 9. The High Court found in favour of the applicant in both causes of action. The Court of Appeal confined itself to section 9 and dismissed the appeal. 1 2 4 Ibid, p. 388. 1 2 5 Ibid, p. 389, lines 42 and 53. 116 t h e c o u r t ' s v i e w o f w h a t w a s l i k e l y c a r r i e d m u c h g r e a t e r s w a y t h a n t h e e v i d e n c e o f w h a t h a d a l r e a d y h a p p e n e d . 1 2 6 T h e p r i n c i p a l i s s u e i n t h e Champagne c a s e 1 2 7 w a s w h e t h e r t h e w o r d ' C h a m p a g n e ' h a d b e c o m e g e n e r i c i n N e w Z e a l a n d o r w h e t h e r , i n s t e a d , i t r e m a i n e d d i s t i n c t i v e o f w i n e m a d e i n t h e C h a m p a g n e r e g i o n o f F r a n c e a n d a c c o r d i n g t o t h e C h a m p a g n e m e t h o d . A s f a r a s t h e p l a i n t i f f s c a u s e o f a c t i o n u n d e r s e c t i o n 9 w a s c o n c e r n e d , t h a t t r a n s l a t e d t o w h e t h e r u s e o f t h e w o r d i n c o n n e c t i o n w i t h w i n e n o t m a d e i n C h a m p a g n e a n d / o r n o t m a d e a c c o r d i n g t o t h e C h a m p a g n e m e t h o d w a s m i s l e a d i n g o r d e c e p t i v e . T h e r e w a s c o n s i d e r a b l e e v i d e n c e f r o m e a c h s i d e . 1 2 8 J e f f r i e s J . r e a c h e d t h e v i e w t h e w o r d i s n o t g e n e r i c b u t o f f e r e d n o i n s i g h t i n t o w h y h e p r e f e r r e d t h e e v i d e n c e i n s u p p o r t o f t h a t v i e w o r , i n d e e d , w h a t w e i g h t h e a t t a c h e d t o t h e e v i d e n c e a t a l l . H i s r e f e r e n c e t o t h e i m p a c t o f t h e w o r d o n " o r d i n a r y , a v e r a g e N e w Z e a l a n d e r s f o r w h o m w i n e d r i n k i n g g e n e r a l l y p l a y s n o s i g n i f i c a n t p a r t i n t h e i r l i v e s " s u g g e s t s , h o w e v e r , t h a t h e r e l i e d p r i n c i p a l l y o n h i s o w n v i e w . T h e c o u r t a d o p t e d t h e s a m e a p p r o a c h a n d t h e s a m e c o n c l u s i o n , i n b o t h p a s s i n g o f f a n d u n d e r s e c t i o n 9 - s i m p l y a p p l y i n g t h e p a s s i n g o f f t e s t u n d e r s e c t i o n 9 , w i t h o u t c o n s i d e r i n g t h e d i f f e r e n t p o l i c y r a t i o n a l e s f o r t h e t w o a c t i o n s . 1 2 9 T h e s a m e i s t r u e o f t h e C o u r t o f A p p e a l , w h i c h a p p r o v e d t h e f i n d i n g s o f J e f f r i e s J . 1 3 0 a n d h e l d t h a t 1 2 6 Ibid, per Cooke P. at p. 387. 127 Supra, note 14. 1 2 8 Plaintiffs evidence reviewed in the decision of the High Court, reported at [1991] 2 N Z L R 439-440; defendant's evidence reviewed pp. 440-442; market research evidence reviewed p. 445. 1 2 9 Ibid, p. 452, line 52. 1 3 0 Ibid, p. 332. 1 1 7 i t " i s u n n e c e s s a r y t o g o b e y o n d t h e c l e a r w o r d s o f t h e s e c t i o n a n d t h e f i n d i n g s m a d e i n r e s p e c t o f t h e e l e m e n t s o f p a s s i n g o f f . " 1 3 1 I n d i v i d u a l w i t n e s s e s i n p a s s i n g o f f t y p e c a s e s a r e u s u a l l y e i t h e r t r a d e w i t n e s s e s , c o n s u m e r s o r e n t r a p m e n t w i t n e s s e s . I t i s c o n c e d e d t h a t t h e r e a r e d i f f i c u l t i e s w i t h e v i d e n c e f r o m a l l t h r e e g r o u p s : t h e y h a v e n o p a r t i c u l a r q u a l i f i c a t i o n s , o t h e r t h a n b e l o n g i n g t o t h e a p p r o p r i a t e c l a s s ; w i l l u s u a l l y r e p r e s e n t o n l y a s m a l l f r a c t i o n o f t h e c l a s s ; w i l l n o t n e c e s s a r i l y b e r e p r e s e n t a t i v e o f t h e p r e d o m i n a n t v i e w ; a n d a r e o p e n t o t h e s u s p i c i o n t h a t t h e i r e v i d e n c e h a s b e e n c o a c h e d . E f f o r t s t o o v e r c o m e t h o s e d i f f i c u l t i e s m a y r e s u l t i n a m u l t i t u d e o f w i t n e s s e s f r o m e a c h s i d e , e a c h r e q u i r i n g e x a m i n a t i o n i n c h i e f a n d c r o s s e x a m i n a t i o n , t h u s t r y i n g t h e c o u r t ' s p a t i e n c e 1 3 2 a n d a d d i n g s i g n i f i c a n t l y t o t h e c o s t o f l i t i g a t i o n . 2. Survey evidence A n a l t e r n a t i v e i s a v a i l a b l e i n t h e f o r m o f s u r v e y e v i d e n c e , w h i c h h a s a l r e a d y b e e n r e f e r r e d t o i n c o n n e c t i o n w i t h a n u m b e r o f t h e c a s e s c i t e d i n t h i s c h a p t e r . T w o i s s u e s 1 3 1 Ibid, p. 345. 1 3 2 In Customglass Boats Ltd. v Salthouse Bros. Ltd [1976] 1 N Z L R 36, Mahon J. referred to an "interminable parade of witnesses" (p. 42). In Sterling Pharmaceuticals (N.Z.) Ltd. v Boots Co. (N.Z.) Ltd. (No. 2) [1991] 2 N Z L R 634, 637 (H.C.) Hillyer J. appeared to approve a proposition that a statement wi l l be misleading if it wil l "lead one ordinary member of the public likely to read the statement or to be influenced by it, into error", but that proposition does not represent the law in New Zealand and never has. 1 1 8 a r i s e i n c o n n e c t i o n w i t h s u r v e y e v i d e n c e : f i r s t , i t s a d m i s s a b i l i t y ; a n d , s e c o n d l y , t h e w e i g h t t o b e a t t a c h e d t o i t i f a n d w h e n i t i s a d m i t t e d . I n t h e U n i t e d S t a t e s , t h e c o u r t s h a v e a c c e p t e d s i n c e a t l e a s t 1 9 6 1 t h a t s u r v e y e v i d e n c e i s a d m i s s a b l e i n d e c e p t i v e a d v e r t i s i n g c a s e s , 1 3 3 a n d h a v e s o m e t i m e s d r a w n i n f e r e n c e s a d v e r s e t o a p a r t y o n t h e b a s i s t h a t i t h a s not s u b m i t t e d s u r v e y e v i d e n c e . 1 3 4 I n N e w Z e a l a n d , p r i o r t o 1 9 7 6 , i t w a s c o n s i d e r e d t h a t i t w a s h e a r s a y , a n d t h e r e f o r e i n a d m i s s a b l e , f o r s u r v e y c o n d u c t o r s t o r e p o r t o n t h e r e s p o n s e s o f p e o p l e , u n l e s s t h o s e r e s p o n d e n t s w e r e a v a i l a b l e t o r e s p o n d p e r s o n a l l y , e s p e c i a l l y f o r c r o s s e x a m i n a t i o n . 1 3 5 T h a t c h a n g e d i n Customglass Boats Ltd. v Salthouse Bros. Ltd.,136 w h e r e M a h o n J . h e l d t h a t e i t h e r t h e h e a r s a y r u l e d o e s n o t a p p l y t o s u r v e y e v i d e n c e o r t h a t a n e x c e p t i o n t o t h e r u l e a l l o w s s u r v e y e v i d e n c e t o b e a d m i t t e d . 1 3 7 T h a t p o s i t i o n h a s b e e n a c c e p t e d a n d 133 Elliot Knitwear, Inc. 59 F T C 893 (1961). 1 3 4 L . E . Evans Jr. and D . M . Gunn Trademark Survey Evidence (1990) 22 I.P.L.R. 289, esp. at pp. 315- 316. One American scholar has undertaken a case analysis of the various kinds of extrinsic evidence that have been tendered in deceptive advertising cases there, including consumer surveys, expert opinions either supported or unsupported by consumer surveys, reference definitions and evidence from individual consumers. H e concludes that, in deceptive advertising cases, in which extrinsic evidence is necessary, consumer survey evidence is the best extrinsic evidence: refer L L . Preston Extrinsic Evidence in Federal Trade Commission Deceptiveness Cases (1987) C .B .L .R . 633. 1 3 5 For an explanation of why it was considered hearsay, refer J. Farmer The Admissability of Hearsay Evidence in Intellectual Property Cases [1984] 7 U.N.S .W.L.J . 57, esp. at pp. 60-64. For an explanation of the different considerations which wil l arise at the interlocutory stage, on the one hand, and final trial, on the other, refer P . G . M . Pattison Market Research Surveys - Money Well Spent? The Use of Survey Evidence in Passing Off Proceedings in the U.K. [1990] 3 E.I.P.R. 99, 99-100. 136 Supra, note 132. 1 3 7 His Honour held that survey evidence wil l , in many instances, not be hearsay since it is not offered to prove the truth of the statments contained there; rather it constitutes proof of the fact that opinions reflected by the survey do exist, that being something quite different from the issue of the correctness or otherwise of the opinions offered, He held, alternatively, that even i f the evidence was categorised as hearsay, it would be admissable under the well established exception to the hearsay rule, as evidence 1 1 9 c o n f i r m e d i n s u b s e q u e n t N e w Z e a l a n d c a s e s . 1 3 8 I t h a d f o r s o m e t i m e p r e v i o u s l y b e e n t h e p o s i t i o n t a k e n i n U n i t e d K i n g d o m t r a d e m a r k a n d p a t e n t c a s e s 1 3 9 a n d w a s s u b s e q u e n t l y a c c e p t e d i n t h e c o n t e x t o f d e c e p t i v e a d v e r t i s i n g . 1 4 0 T h e A u s t r a l i a n c o u r t s h a v e b e e n m u c h s l o w e r t o a d o p t t h a t a p p r o a c h . T h e n e c e s s i t y p r i n c i p l e w a s r e j e c t e d i n t h e Big Mac c a s e a n d Customglass Boats w a s n o t f o l l o w e d i n Mobil Oil Corporation v Registrar of Trade Marks}41 I n Shoshana Pty. Ltd. v 10th Cantonae Pty. Ltd., s u r v e y e v i d e n c e w a s a d m i t t e d a s f a l l i n g w i t h i n t h e s t a t e o f m i n d e x c e p t i o n t o t h e h e a r s a y r u l e b u t o n l y b e c a u s e t h e s u r v e y w a s n o t c o m m i s s s i o n e d s p e c i f i c a l l y f o r t h e l i t i g a t i o n . 1 4 2 T h a t d e t e r m i n a t i o n w a s m a d e o n t h e b a s i s t h a t , w h e r e s u r v e y e v i d e n c e i s o b t a i n e d s p e c i f i c a l l y f o r a c a s e , t h e r e i s a g r e a t e r r i s k o f i n t r o d u c t i o n o f b i a s e d q u e s t i o n s a n d m e t h o d s . I n t h e w r i t e r ' s v i e w , t h o s e p o i n t s w i l l b e r e l e v a n t t o t h e q u e s t i o n o f w e i g h t , b u t n o t t o t h a t o f a d m i s s a b i l i t y . S u c h h a s b e e n a c k n o w l e d g e d b y t h e F u l l F e d e r a l C o u r t i n Arnotts v TPC, i n w h i c h i t w a s h e l d t h a t , g i v e n t h a t t h e c o u r t h a s a d i s c r e t i o n t o a d m i t e v i d e n c e e v e n i f i t i s h e a r s a y i t i s " m o r e s e n s i b l e t o c o n c e n t r a t e tending to prove the public state of mind (p. 41). 1 3 8 Refer R . Langton and L . Trotman >4n Empirical Study of the Weight of Survey Evidence in Deceptive Advertising Litigation [1992] 5 Cant. L . R . 147. That article also contains a helpful discussion on how to design a survey to ensure maximum probative value. 1 3 9 Ibid, note 2. 140 Lego System Aktieselskab v Lego M Lemelstrich Ltd. [1983] F S R 155. 1 4 1 (1983) 51 A L R 735. 142 ( 1 9 g 7 ) u j p R 2 4 9 ) 3 0 0 1 2 0 a t t e n t i o n u p o n t h e n e c e s s i t y f o r , a n d t h e r e l i a b i l i t y o f t h e s u r v e y e v i d e n c e . . . " 1 4 3 A s f a r a s w e i g h t i s c o n c e r n e d , o n e o f t h e b e t t e r f o r m u l a t i o n s i s t o b e f o u n d i n t h e j u d g m e n t o f W h i t f o r d J . i n Imperial Group pic v Philip Morris LM.: ( a ) i n t e r v i e w e e s m u s t r e p r e s e n t a r e l e v a n t c r o s s s e c t i o n o f t h e g e n e r a l p u b l i c a n d m u s t n o t b e a w a r e o f t h e l i t i g a t i o n ; ( b ) t h e s i z e o f t h e s a m p l e m u s t b e s t a t i s t i c a l l y s i g n i f i c a n t ; ( c ) t h e s u r v e y m u s t b e c o n d u c t e d f a i r l y ; ( d ) a l l t h e s u r v e y s c a r r i e d o u t m u s t b e d i s c l o s e d t o t h e o t h e r p a r t y ; ( e ) a l l a n s w e r s m u s t b e d i s c l o s e d t o t h e o t h e r p a r t y ; ( f ) t h e r e m u s t b e n o l e a d i n g o r s u g g e s t i v e q u e s t i o n s ; ( g ) e x a c t , v e r b a t i m a n s w e r s m u s t b e d i s c l o s e d t o t h e o t h e r p a r t y ; ( h ) a l l i n s t r u c t i o n s t o i n t e r v i e w e r s m u s t b e d i s c l o s e d t o t h e o t h e r p a r t y ; ( i ) a n y c o d i n g i n s t r u c t i o n s s h o u l d b e d i s c l o s e d t o t h e o p p o s i n g p a r t y ; ( j ) a s a m p l e , p r e - t e s t s u r v e y m a y b e a d v i s a b l e t o i r o n o u t i m m e d i a t e p r o b l e m s , s u c h a s a m b i g u o u s q u e s t i o n s . 1 4 4 I n t h e Big Mac c a s e , F r a n k i J . w a s c r i t i c a l o f t h e f a c t t h e r e w a s n o p r o v i s i o n f o r r e c o r d i n g t h e p r e c i s e a n s w e r s o f t h o s e i n t e r v i e w e d . 1 4 5 S u r v e y s i n o t h e r c a s e s h a v e f o u n d e r e d o n a v a r i e t y o f b a s e s , i n c l u d i n g , f o r e x a m p l e , t h a t t h e s a m p l e i s 1 4 3 (1990) A T P R 41-061, at p. 51,807. Refer also Sterling Pharmaceuticals Pty. Ltd. v Johnson & Johnson Pty. Ltd. (1990) 96 A L R 277, per French J. at pp. 291-296, where His Honour reviewed the Australian and New Zealand authorities and determined that the law confined the admissability of survey evidence to surveys which show a contemporaneous state of mind or feeling, subject to the relevance of that state of mind or feeling, to a matter in issue in the case; Interlego AG v Croner Trading Pty. Ltd. (1992) 111 A L R 577, per Gummow J. at pp 616-622. 1 4 4 [1984] R.P.C. 293, 302-303. In Customglass Boats, supra, note 132, Mahon J stressed that the weight to be attached to survey evidence wi l l depend on whether: (a) the questions were formulated in such a way as to preclude a weighted or conditioned response; (b) there is clear proof the answers were faithfully and accurately recorded; (c) there is evidence the answers were drawn from a true cross section of the class of the public or trade whose impression or opinion is relevant to the matter in issue. Refer also J. Guy Potvin and Alain M Leclerc Survey Evidence - A Tool of Persuasion [1993] 9 Can. I.P.R. 157, esp. at pp. 164-167. 1 4 5 Refer S. Bigger, Notes From Other Nations - Australia - Action Under Federal Trade Practices Act - Admissability of Survey Evidence (1980) 70 T . M . R . 77, 77-80. 1 2 1 * u n r e p r e s e n t a t i v e , 1 4 6 t h e q u e s t i o n s a r e w e i g h t e d o r u n r e a l i s t i c , 1 4 7 t h a t t h e i n t e r v i e w e r s a r e i n e x p e r i e n c e d o r h a v e d e p a r t e d f r o m p r e s c r i b e d p r o c e d u r e s , o r t h a t t h e i d e n t i t y o f t h e p a r t y c o m m i s s i o n i n g t h e s u r v e y h a s b e e n d i s c l o s e d t o i n t e r v i e w e e s . 1 4 8 O t h e r m a t t e r s t h e c o u r t s m a y c o n s i d e r i n a s s e s s i n g w e i g h t i n c l u d e w h e t h e r t h e s u r v e y w a s c a r r i e d o u t u n d e r a r t i f i c i a l o r n a t u r a l c o n d i t i o n s a n d w h e t h e r o p e n o r c l o s e d q u e s t i o n s w e r e u s e d . 1 4 9 I t w i l l a l w a y s b e e s s e n t i a l f o r t h e p e r s o n w h o o r g a n i s e d t h e s u r v e y t o f i l e a n a f f i d a v i t a s t o h o w i t w a s c a r r i e d o u t , h o w t h e r e s u l t s w e r e a n a l y s e d a n d t h e c o n c l u s i o n s w h i c h m a y b e d r a w n . A s a l r e a d y n o t e d i n p a r t B , i n c a s e s u n d e r s e c t i o n 1 6 o f t h e T r a d e M a r k s A c t , m u c h g r e a t e r w e i g h t i s g i v e n t o e v i d e n c e f r o m m e m b e r s o f t h e p u b l i c a n d f r o m p e r s o n s a c c u s t o m e d t o d e a l i n g i n t h e m a r k e t i n w h i c h t h e p r o d u c t i n i s s u e i s b o u g h t a n d s o l d . T h e f a c t t h a t s e c t i o n 16 a n d s e c t i o n 9 o f t h e F a i r T r a d i n g A c t a r e b o t h c o n c e r n e d p r i m a r i l y w i t h c o n s u m e r p r o t e c t i o n m a k e s t h e d i s t i n c t i o n i l l o g i c a l . W h e r e t h e a p p r o p r i a t e p r o c e d u r e s h a v e b e e n f o l l o w e d , s u r v e y e v i d e n c e w i l l o f t e n 1 5 0 r e p r e s e n t t h e b e s t a v a i l a b l e e v i d e n c e a n d , i n t h e c o n t e x t o f c a s e s u n d e r s e c t i o n s 9 a n d 5 2 , o u g h t t o b e 1 4 6 E.g. Chase Manhattan Corp., supra, note 4. 147 Scott Ltd. v Nice-Pak Products Ltd. [1989] F.S.R. 100. 148 State Government Insurance Corporation v Government Insurance Officce of New South Wales (1991) 101 A L R 259, per French J. at p.293: His Honour formed the view that he could draw no conclusions fromn the survey evidence as to "the behaviour of the people surveyed or the likely behaviour of the general population or any segment of it". 1 4 9 Those two factors appear to have been significant in U.S. Federal Trade Commission cases - refer I.L. Preston, supra, note 134, at pp.687-689. 1 5 0 Though not always. For example, in Taylor Bros., supra, note 10, there was so much evidence of misleading of trade representatives and members of the public that taking of a survey in that case would have been otiose and an unnecessary expense; refer also P. Weiss The Use of survey Evidence in Trademark Litigation: Science, Art or Confidence Game? (1990) 80 T . M . R . 71, 84, Part IV: The Future of Surveys. 1 2 2 t r e a t e d m u c h m o r e d e t e r m i n a t i v e l y t h a n i t p r e s e n t l y i s . T h e w r i t e r c a n d o n o b e t t e r t h a n t o a d o p t t h e w o r d s o f H i l l J . i n Sterling Pharmaceuticals Pty. Ltd. v Johnson & Johnson Pty. Ltd.151 I n t h e c o u r s e o f t h a t T r a d e M a r k s d i s p u t e , H i s H o n o u r o b s e r v e d t h a t : " T h e r e i s m u c h t o b e s a i d , h o w e v e r , f o r t h e v i e w t h a t i n t h e t w e n t i e t h c e n t u r y w h e r e i m p o r t a n t c o m m e r c i a l a n d p o l i t i c a l c o n s i d e r a t i o n s a r e m a d e b y r e f e r e n c e t o m a r k e t a n d o t h e r s u r v e y s c o n d u c t e d i n r i g i d l y c o n t r o l l e d c i r c u m s t a n c e s , e v i d e n c e o b t a i n e d f r o m s u r v e y s s i m i l a r l y c o n d u c t e d a n d f o r t h e e x p r e s s p u r p o s e o f o b t a i n i n g e v i d e n c e f o r t h e p r o c e e d i n g s s h o u l d b e a d m i s s a b l e i f r e l e v a n t t o a m a t t e r i n i s s u e . T h i s i s p a r t i c u l a r l y s o w h e r e s t a t i s t i c a l a n a l y s i s c a n c o n f i r m t h a t t o a s p e c i f i e d d e g r e e o f p r o b a b i l i t y a n d s u b j e c t t o a s p e c i f i e d e r r o r r a t e , t h e r e s u l t c a n b e p r o j e c t e d t o t h e w h o l e o r a d e f i n e d s e c t i o n o f t h e p o p u l a t i o n . T h e c o m m u n i t y m i g h t r i g h t l y r e g a r d e v i d e n c e f r o m s u c h s u r v e y s a s m o r e i n h e r e n t l y l i k e l y t o b e r e l i a b l e t h a n e v i d e n c e w h i c h i s s u b j e c t e d t o c r o s s - e x a m i n a t i o n . T h e y m a y w e l l r e g a r d t h e r e j e c t i o n o f t h a t e v i d e n c e a s , t o u s e t h e w o r d s o f D e a n e J . i n Walton, c o n f o u n d i n g j u s t i c e o r c o m m o n s e n s e a n d p r o d u c i n g " t h e c o n s e q u e n c e t h a t t h e l a w w a s u n a t t u n e d t o t h e c i r c u m s t a n c e s o f t h e s o c i e t y w h i c h i t e x i s t s t o s e r v e . " " F. THE COMMON FIELD OF ACTIVITY RULE T h e c r e a t i o n , d e v e l o p m e n t a n d r e j e c t i o n o f t h i s r u l e , i n t h e c o n t e x t o f p a s s i n g o f f i n E n g l a n d a n d N e w Z e a l a n d h a s a l r e a d y b e e n t r a c e d , i n c h a p t e r t h r e e . 1 5 2 T h e A u s t r a l i a n c o u r t s h a v e i m p o r t e d a c o m m o n f i e l d o f a c t i v i t y r e q u i r e m e n t i n t o t h e i r d e c i s i o n s u n d e r s e c t i o n 5 2 . T h e m o s t s t r i k i n g e x a m p l e i n v o l v e s t h e L e g o l i t i g a t i o n i n Supra, note 143, at p. 293. Supra, pp. 8-11 inclusive. 1 2 3 E n g l a n d a n d A u s t r a l i a . I n b o t h c o u n t r i e s , t h e m a n u f a c t u r e r o f t h e f a m o u s L e g o b u i l d i n g b l o c k t o y s s o u g h t t o r e s t r a i n a c o m p a n y f r o m s e l l i n g c o l o u r e d p l a s t i c i r r i g a t i o n e q u i p m e n t u n d e r t h e s a m e n a m e . T h e A u s t r a l i a n c a s e 1 5 3 w a s b r o u g h t u n d e r s e c t i o n 5 2 a n d t h e p l a i n t i f f f a i l e d o n t h e b a s i s o f t h e c o u r t ' s v i e w t h a t i t w a s u n l i k e l y t h e r e w o u l d b e m u c h o v e r l a p i n t h e p e r s o n s a w a r e o f t h e t w o p r o d u c t s a n d t h a t , w h e r e t h e r e w a s a n o v e r l a p , s u c h p e r s o n s w o u l d n o t b e l i e v e t h e r e w a s a c o m m o n s o u r c e , b e c a u s e of t h e d i f f e r e n c e s b e t w e e n t h e t w o p r o d u c t s . T h a t w a s i n s p i t e o f e v i d e n c e o f a c t u a l m i s l e a d i n g o r d e c e p t i o n . 1 5 4 T h e E n g l i s h L e g o c a s e 1 5 5 w a s b r o u g h t i n p a s s i n g o f f a n d t h e p l a i n t i f f s u c c e e d e d . T h e c o u r t r e j e c t e d t h e i d e a t h a t t h e q u e s t i o n o f a c o m m o n f i e l d o f a c t i v i t y w a s d e c i s i v e a n d d i s t i n g u i s h e d t h e A u s t r a l i a n d e c i s i o n o n t h e f a c t s a n d a s a m a t t e r a r i s i n g u n d e r s t a t u t e . T h e c o m m o n f i e l d of a c t i v i t y t e s t h a s b e e n e n d o r s e d i n a n u m b e r of s u b s e q u e n t A u s t r a l i a n c a s e s . I n Cue Design Pty. Ltd. v Playboy Enterprises Pty. Ltd.156, t h e m a n u f a c t u r e r a n d r e t a i l e r o f ' C u e ' w o m e n s c l o t h i n g f a i l e d i n a s e c t i o n 5 2 a c t i o n a g a i n s t a p a r t y o p e n i n g ' T h e C u e R e s t a u r a n t ' . R e l i e f b o t h u n d e r s e c t i o n 5 2 a n d i n p a s s i n g o f f w a s d e n i e d o n t h e b a s i s t h a t t h e r e w a s n o o v e r l a p p i n g o f t h e t w o b u s i n e s s a c t i v i t i e s . 1 5 7 Lego Australia Pty. Ltd. v Paul's (Merchants) Pty. Ltd. (1982) 42 A L R 344. Ibid, p. 540. Lego System Aktieselskab, supra, note 140. (1982) 45 A . L . R . 535. Ibid, p. 540. 1 2 4 I n t h e VISA c a s e , 1 5 8 Abundant Earth Pty. Ltd. v R& C Products Pty. Ltd.159 a n d t h e INXS c a s e 1 6 0 t h e c o u r t h a s h e l d i n f a v o u r o f t h e a p p l i c a n t s o n l y a f t e r s a t i s f y i n g i t s e l f t h a t t h e r e w a s a s u f f i c i e n t l y c o m m o n f i e l d o f a c t i v i t y b e t w e e n t h e p a r t i e s . E v e n i n Chase, w h e r e W i l c o x J . s e t o u t t h e p r i n c i p l e s t o b e a p p l i e d i n s e c t i o n 5 2 c a s e s , t h e a p p l i c a n t f a i l e d i n i t s c l a i m t h a t p o t e n t i a l b u s i n e s s a s s o c i a t e s w o u l d b e m i s l e d , b e c a u s e " t h e e v i d e n c e i n d i c a t e s t h a t t h e r e i s n o w * a n d t h e r e i s l i k e l y t o b e i n t h e f u t u r e , v e r y l i t t l e c o m m o n f i e l d o f a c t i v i t y " b e t w e e n t h e p a r t i e s . 1 6 1 T h e a u t h o r s o f o n e t e x t h a v e s u g g e s t e d t h e A u s t r a l i a n c o u r t s h a v e t a k e n a m o r e l i b e r a l a p p r o a c h t h a n t h e i r E n g l i s h c o u n t e r p a r t s i n t h i s a r e a . 1 6 2 I n t h e w r i t e r ' s v i e w , t h e a u t h o r i t i e s do n o t s u p p o r t t h a t p r o p o s i t i o n . T h e y r e v e a l t h a t t h e A u s t r a l i a n c o u r t s h a v e n o t o n l y i m p o r t e d t h e c o m m o n f i e l d o f a c t i v i t y t e s t i n t o s e c t i o n 5 2 c a s e s , b u t h a v e m a d e t h e e x i s t e n c e o f a c o m m o n f i e l d of a c t i v i t y v i r t u a l l y d e t e r m i n a t i v e o f s u c c e s s f o r p l a i n t i f f s . T h a t c a n b e c o n t r a s t e d w i t h t h e s i t u a t i o n i n E n g l a n d , w h e r e t h e t e s t i s a p p l i e d e v e n i n p a s s i n g o f f w i t h l e s s r i g o u r 158 VISA International Service Assn. v Beiser Corporation Pty. Ltd., supra, note 23: the owner of V I S A credit cards objected to use of the name 'World Visa Travel Service' for a travel agency. Beaumont J. found for the applicant, holding there were at least overlapping business activities. 159 Supra, note 36: the appellant used the name 'Pure and Simple' on vegetable oi l sold in aerosol form. The respondent sought to use the same words on a variety of foodstuffs. Complaint was limited to use of the phrase in connection with the respondent's jars of mustard. The lower court (p.215) held the case was distinguishable from Lego as not involving products far removed from one another. The F u l l Court (p. 216) held "the lack of a common field of activity" is a material consideration "to be taken into account when considering the application of section 52" and agreed there was a common field. 160 Hutchence v South Seas Bubble Co. Pty. Ltd. (1986) 64 A L . R . 330: the appellant pop group members complained of the respondent's selling of 'bootleg' T-shirts and other merchandise bearing their name and image. In finding for the appellants, the court discussed in some detail the fact that they carried on a subsidiary business activity of licensing sale of merchandise (p. 337). Ironically, the court also specifically held that there is no need for a common field of activity between the plaintiff and defendant in passing off (p. 340). 161 Supra, note 4, p. 359. 1 6 2 McKeough and Stewart Intellectual Properly in Australia, Butterworths Australia Pty. Ltd. , Sydney, p. 314. 1 2 5 t h a n i n A u s t r a l i a n s e c t i o n 5 2 c a s e s . T h e s e c t i o n i s s u p p o s e d t o b e a c o n s u m e r p r o t e c t i o n p r o v i s i o n a n d t h e p o s i t i o n n o t e d i s t o b e d e p l o r e d . I n N e w Z e a l a n d , i t i s m o r e d i f f i c u l t t o s a y w h a t i s t h e a p p r o a c h o f t h e c o u r t s t o t h i s i s s u e . T h e r e h a v e n o t y e t b e e n a n y c a s e i n w h i c h t h e r e h a s b e e n a n y s i g n i f i c a n t d i f f e r e n c e b e t w e e n t h e b u s i n e s s o f t h e p l a i n t i f f a n d t h a t o f t h e d e f e n d a n t . I n Taylor Bros., M c G e c h a n J . h e l d i n t h e H i g h C o u r t a n d i n c o n n e c t i o n w i t h p a s s i n g o f f , t h a t ' c o m m o n f i e l d o f a c t i v i t y ' i s n o t a t e r m o f a r t a n d n o t d e c i s i v e . 1 6 3 B u t t h e C o u r t o f A p p e a l h e l d t h a t t h e p r i n c i p l e c a n n o t b e t a k e n t o o f a r : " T a y l o r s W e l l i n g t o n c o u l d n o t , w e t h i n k , r e s t r a i n t h e u s e i n W e l l i n g t o n o f t h e n a m e T a y l o r s f o r , s a y , f o o d s t u f f s . " I n t h e Prudential c a s e 1 6 4 t h e a p p e l l a n t ' s e x p a n s i o n o f i t s s p h e r e o f a c t i v i t i e s t o i n c l u d e f i n a n c i a l s e r v i c e s , a n a r e a t h e r e s p o n d e n t h a d b e e n o p e r a t i n g i n f o r s o m e t i m e , w e r e h e l d t o h a v e g e n e r a t e d t h e d i f f i c u l t i e s t h a t l e a d t o t h e c o u r t c a s e . C l e a r l y t h e s i m i l a r i t y o r o t h e r w i s e o f t h e t w o b u s i n e s s e s w a s a f a c t o r t h e c o u r t a t t a c h e d s o m e i m p o r t a n c e t o , t h o u g h i t m a y b e g o i n g t o o f a r t o s a y t h a t h o l d i n g i n v o l v e d a c l o a k e d a p p l i c a t i o n o f t h e c o m m o n f i e l d o f a c t i v i t y r u l e . T h e C o u r t o f A p p e a l ' s h o l d i n g i n Taylor Bros. Ltd. i s o f g r e a t e r p o t e n t i a l c o n c e r n , t h a t b e i n g t e m p e r e d b y t h e f a c t s t h a t i t w a s n o w s o m e t i m e a g o , o b i t e r a n d i n c o n n e c t i o n w i t h p a s s i n g o f f r a t h e r t h a n s e c t i o n 9 . Supra, note 10, per Bisson J. at p. 659. Supra, note 18, per Bisson J. at p. 569. 1 2 6 G. CONCLUSIONS A t t h e s t a r t o f t h i s c h a p t e r , t h e r e i s a q u o t e f r o m a t e x t , w h i c h s u m m a r i s e s t h e d i f f e r e n t o p t i o n s a v a i l a b l e t o t h e c o u r t s i n i n t e r p r e t i n g a n d a p p l y i n g s e c t i o n 9 . T h a t i n c l u d e d t h a t t h e c o u r t s m i g h t t a k e a ' r o b u s t a t t i t u d e ' s o t h a t t h e s t a t u t e w o u l d p r o v i d e a n a l t e r n a t i v e w e a p o n . I t a l s o i n c l u d e d t h a t t h e s t a t u t e m i g h t b e ' r e a d d o w n ' , w i t h a p p l i c a t i o n o f i n a p p r o p r i a t e p a s s i n g o f f p r i n c i p l e s . E x a m i n a t i o n o f d e c i s i o n s o f t h e c o u r t s i n N e w Z e a l a n d a n d A u s t r a l i a s h o w t h e l a t t e r a p p r o a c h h a s p r e v a i l e d . T h e c o u r t s h a v e r e c o g n i s e d t h a t t h e t w o a c t i o n s h a v e d i f f e r e n t p o l i c y r a t i o n a l e s , b u t t h e y h a v e n o t g i v e n e f f e c t t o t h a t d i f f e r e n c e . I n s t e a d o f d e v e l o p i n g n e w d e f i n i t i o n s , t e s t s a n d s t a n d a r d s t o b e a p p l i e d i n s e c t i o n 9 c a s e s , t h e c o u r t s h a v e b e e n c o n t e n t t o a p p l y p r i n c i p l e s d e v e l o p e d i n p a s s i n g o f f . T h e y h a v e r e f u s e d p r o t e c t i o n o f d e s c r i p t i v e n a m e s , i g n o r e d o r g i v e n o n l y m i n i m a l w e i g h t t o e v i d e n c e o f a c t u a l d e c e p t i o n , w i t h h e l d r e m e d i e s f o r i m i t a t i o n o f g e t - u p , r e q u i r e d p l a i n t i f f s t o e s t a b l i s h r e p u t a t i o n o f a k i n d m o r e c l o s e l y a l l i e d w i t h t h e p a s s i n g o f f c o n c e p t o f g o o d w i l l t h a n a n y e l e m e n t o f s e c t i o n 9 a n d i m p o s e d a c o m m o n f i e l d o f a c t i v i t y r u l e w h e r e n o n e i s r e q u i r e d . T h e r e i s a s i g n i f i c a n t c o n t r a s t i n t h e a p p r o a c h u n d e r s e c t i o n 9 a n d t h e a p p r o a c h u n d e r s e c t i o n 1 6 o f t h e T r a d e M a r k s A c t . N o t w i t h s t a n d i n g t h e c o n s u m e r p r o t e c t i o n r a t i o n a l e c o m m o n t o b o t h s e c t i o n s , t h e a p p r o a c h o f t h e c o u r t s t o t h e m h a s b e e n s i g n i f i c a n t l y d i f f e r e n t . F u r t h e r e f f e c t s o f t h e d e f i c i e n c i e s i d e n t i f i e d i n c h a p t e r t w o , a n d t h e a p p r o a c h t a k e n b y t h e c o u r t s , a r e d e t a i l e d i n c h a p t e r f i v e . CHAPTER FIVE 117 THE EFFECTS FOR CONSUMERS INTRODUCTION I n c h a p t e r t w o , s o m e theoretical d i f f i c u l t i e s i n t h e a b i l i t y o f s e c t i o n 9 t o g i v e e f f e c t t o t h e c o n s u m e r p r o t e c t i o n a n d e f f i c i e n c y l i m b s o f t h e p u b l i c p o l i c y r a t i o n a l e w e r e i d e n t i f i e d . I n c h a p t e r f o u r , d e f i c i e n c i e s i n t h e a p p r o a c h o f t h e c o u r t s w e r e a d r e s s e d . T h i s c h a p t e r f o l l o w s o n f r o m t h e c o n c l u s i o n s r e a c h e d i n t h o s e t w o c h a p t e r s a n d d e t e r m i n e s w h a t , i f a n y , a r e t h e e c o n o m i c e f f e c t s f o r c o n s u m e r s . I n p a r t A , t h e f r a m e w o r k f o r t h e a n a l y s i s ' i s e s t a b l i s h e d . I t h a s t h r e e s e c t i o n s : o n e , a d i s c u s s i o n o f s u b s t a n c e v e r s u s i n s t i t u t i o n a l f r a m e w o r k ; t w o , e x p l a n a t i o n o f t h e c a s e e x a m p l e a n d t h e g e n e r a l i t y o f t h e r e s u l t s o b t a i n e d b y u s e o f i t ; a n d , t h r e e , d e s c r i p t i o n o f t h e f o u r c o n s u m e r s . T h e a n a l y s i s i s u n d e r t a k e n i n p a r t B , a s f o l l o w s : 1. t h e e f f e c t o f B ' s t r a d e o n t h e f o u r c o n s u m e r s a n d o n A ; a n d 2. t h e e f f e c t o f a n a c t i o n p u r s u a n t t o s e c t i o n 9 : ( a ) c o m p e n s a t i o n f o r l o s s o r d a m a g e a l r e a d y s u f f e r e d ; a n d ( b ) t h e e f f e c t o n t h e f u t u r e p u r c h a s i n g o f t h e f o u r c o n s u m e r s . 128 A. THE FRAMEWORK A n u m b e r o f p o i n t s n e e d t o b e m a d e b y w a y o f s e t t i n g t h e f r a m e w o r k f o r t h e d i s c u s s i o n . 1. Substance versus institutional framework I n e v a l u a t i n g t h e e f f e c t i v e n e s s o f a l e g a l m e a s u r e t h e r e a r e t w o c o n s i d e r a t i o n s : t h e s u b s t a n t i v e r e m e d y a n d t h e i n s t i t u t i o n a l f r a m e w o r k b y w h i c h i t i s i m p l e m e n t e d . T h e i n s t i t u t i o n a l f r a m e w o r k f o r i m p l e m e n t a t i o n o f s e c t i o n 9 i s t w o f o l d : o n e , a r e g u l a t o r y f r a m e w o r k f u l f i l l e d b y t h e F a i r T r a d i n g d i v i s i o n o f t h e C o m m e r c e C o m m i s s i o n , p u r s u a n t t o w h i c h i t r e c e i v e s c o m p l a i n t s f r o m a g g r i e v e d p a r t i e s ( b o t h c o n s u m e r s a n d t r a d e r s ) a n d e n c o u r a g e s o f f e n d i n g t r a d e r s t o c o m p l y w i t h t h e A c t ; a n d , t w o , t h e c o u r t s , w h i c h b e c o m e i n v o l v e d w h e n t h e C o m m i s s i o n 1 o r a n y o t h e r p e r s o n i s s u e s p r o c e e d i n g s . O n l y t h e s e c o n d f r a m e w o r k i s d i s c u s s e d i n t h i s P a r t a n d t h e d i s c u s s i o n i s o f t h e r e m e d y t h a t i s i m p l e m e n t e d t h e r e , n o t t h e f r a m e w o r k i n w h i c h i t i s i m p l e m e n t e d . T h e p a p e r d o e s n o t a d d r e s s t h e i s s u e o f w h e t h e r t h e c o u r t s . a r e t h e b e s t i n s t i t u t i o n a l f r a m e w o r k f o r i m p l e m e n t a t i o n o f t h e r e m e d y b e c a u s e t h a t i s a s e p a r a t e i s s u e . 2 T h e q u e s t i o n t h e r e f o r e is w h e t h e r s e c t i o n 9 is t h e b e s t a v a i l a b l e c o u r t - i m p l e m e n t e d r e m e d y . 1 Pursuant to its power under section 41 of the Act. 2 For a discussion of which refer AJ.Duggan and L.W.Darvell , Consumer Protection Law and Theory, 1980, The Law Book Company Ltd. , Sydney, pp. 200-225. 1 2 9 2. Use of a case example E f f e c t i v e n e s s of s e c t i o n 9 , i n t e r m s o f i t s p u b l i c p o l i c y r a t i o n a l e , i s e v a l u a t e d b y a p p l i c a t i o n t o n i n e v a r i a t i o n s o f a c a s e e x a m p l e , w h i c h i s l o o s e l y b a s e d o n t h e d e c i s i o n of t h e H o u s e o f L o r d s i n Erven Warnink B. V. v J. Townend & Sons Ltd} C a s e s i n t h i s a r e a t r a v e r s e a w i d e r a n g e o f f a c t s 4 a n d t h e c o n c l u s i o n s d r a w n b y r e f e r e n c e t o t h e e x a m p l e w i l l n o t n e c e s s a r i l y b e v a l i d f o r o t h e r f a c t s . N e v e r t h e l e s s , t h e d i s c u s s i o n w i l l p r o v i d e a g e n e r a l g u i d e o r m o d e l , w h i c h c a n t h e n b e a d j u s t e d a s r e q u i r e d t o f i t t h e f a c t s o f o t h e r c a s e s . I n t h e f a c t p a t t e r n , A m a k e s a n d s e l l s A d v o c a a t , a l i q u o r m a d e f r o m e g g y o l k s , s u g a r a n d b r a n d y . A w a s t h e s o l e e n t r a n t i n t h e m a r k e t f o r m a n y y e a r s a n d i t s l i q u o r h a s a c q u i r e d a s u b s t a n t i a l r e p u t a t i o n a s a d i s t i n c t a n d r e c o g n i s a b l e b e v e r a g e . I t c o s t s A $ 5 0 p e r b o t t l e t o p r o d u c e a n d i t s e l l s f o r $ 6 0 p e r b o t t l e . B s t a r t s m a k i n g a d r i n k m a d e f r o m d r i e d e g g p o w d e r a n d s h e r r y a n d s e l l i n g i t a s ' A d v o c a a t ' , i n a b o t t l e n e a r l y i d e n t i c a l t o t h a t o f A . B ' s p r i c e ( s o m e t i m e s $ 7 0 , s o m e t i m e s $ 6 0 a n d s o m e t i m e s $ 5 0 ) a n d q u a l i t y ( s o m e t i m e s h i g h e r , s o m e t i m e s t h e s a m e a n d s o m e t i m e s l o w e r ) v a r y i n e a c h o f t h e n i n e v a r i a t i o n s . T h e e f f e c t s o f e a c h o f t h e n i n e p o s s i b l e q u a l i t y / p r i c e c o m b i n a t i o n s o n e a c h o f t h e f o u r c o n s u m e r s w i l l b e c o n s i d e r e d . T h e c o m b i n a t i o n s a r e w h e r e t h e p r o d u c t s o l d b y B i s , c o m p a r e d t o t h e p r o d u c t o f A : 3 [1979] A . C . 731 (the Advocaat case). 4 As has been seen in the preceeding chapters. 130 ( a ) l o w e r q u a l i t y / h i g h e r p r i c e ( b ) l o w e r q u a l i t y / s a m e p r i c e ( c ) l o w e r q u a l i t y / l o w e r p r i c e ( d ) s a m e q u a l i t y / h i g h e r p r i c e ( e ) s a m e q u a l i t y / s a m e p r i c e ( f ) s a m e q u a l i t y / l o w e r p r i c e ( e ) h i g h e r q u a l i t y / h i g h e r p r i c e ( f ) h i g h e r q u a l i t y / s a m e p r i c e ( g ) h i g h e r q u a l i t y / l o w e r p r i c e 5 T o t e s t t h e e f f e c t i v e n e s s o f s e c t i o n 9 i n c a s e s w h e r e c o n s u m e r s a r e m i s l e d , i t w i l l b e a s s u m e d t h a t t h e d i f f e r e n c e i n q u a l i t y b e t w e e n t h e t w o p r o d u c t s i s n e v e r s o g r e a t t h a t a n u n s o p h i s t i c a t e d c o n s u m e r c a n t e l l t h e t w o p r o d u c t s a p a r t o n t h e b a s i s o f q u a l i t y . 6 I t w i l l a l s o b e a s s u m e d t h a t a l l f o u r c o n s u m e r s p l a c e a g r e a t e r v a l u e o n g e t t i n g q u a l i t y t h a n o n g e t t i n g a g e n u i n e p r o d u c t . 7 5 The situation of the infringing trader having a product of higher quality has arisen in only one reported case, Tot Toys v Mitchell [1993] 1 N Z L R 325. Despite its rarity, it wi l l be considered for the sake of completeness. 6 If all consumers could tell the two products apart then no-one would ever be misled and there would never be any successful actions pursuant to section 9. 7 Brand name purchasing is a recognised phenomenon but, in the writer's view, only because brand- names tend to be associated with quality, especially among less educated and sophisticated consumers who may derive a sense of security among the profusion of products available, of whose attributes they are ignorant: J. Mart in and G.W. Smith, The Consumer Interest, 1968, Pall M a l l Publishing Ltd. , London, pp. 63 and following. One author has suggested that consumers feel that the largest, best advertised merchandisers can least afford to adulterate or misbrand their products, but that proposition is very much open to debate: G .E . and P .E . Rosden, 2 The Law of Advertising, 1984, Mathew Bender, New York , New York , paras. 17.01[2] and 17.01[3][a]; E . Scott Moynes Decision Making For Consumers: An Introduction to Consumer Economics, 1976, MacMil lan Publishing Co. Inc., New York , pp. 271-275. The writer acknowledges, however, that, price and quality being equal, consumers who can tell the two products apart on those two bases are more likely to buy the established brand name product. 131 A s u e s u n d e r s e c t i o n 9, o n t h e b a s i s t h a t B ' s u s e o f t h e n a m e ' A d v o c a a t ' w o u l d m i s l e a d c o n s u m e r s i n t o t h i n k i n g t h a t B ' s A d v o c a a t i s t h a t o f A . 8 A c o r o l l a r y i s t h a t s o m e c o n s u m e r s w i l l t h i n k t h a t t h e A d v o c a a t s o l d b y t h e t w o t r a d e r s i s e q u a l i n e v e r y r e s p e c t , e s p e c i a l l y q u a l i t y . 3. The four consumers T h o s e e v e n t s a f f e c t c o n s u m e r s i n o n e o f f o u r w a y s , d e p e n d i n g o n t h e a f f l u e n c e a n d c o m p e t e n c e o f t h e c o n s u m e r : consumer one ( c a n a f f o r d , c a n t e l l ) : - c a n t e l l t h e g e n u i n e p r o d u c t f r o m a n i m i t a t i o n a n d c a n a l s o t e l l a h i g h e r q u a l i t y p r o d u c t f r o m a l o w e r q u a l i t y o n e . S h e c a n a f f o r d a n d p r e f e r s t o b u y g e n u i n e p r o d u c t s a s l o n g a s t h e y a r e s u p e r i o r i n q u a l i t y a n d / o r p r i c e ( f o r t h i s c o n s u m e r , t h e i n t a n g i b l e v a l u e o f g e n u i n e n e s s i s n o t a s s i g n i f i c a n t a s t h e a c t u a l v a l u e s o f p r i c e a n d q u a l i t y - b e c a u s e s h e h a s p e r f e c t k n o w l e d g e , s h e d o e s n o t n e e d t o r e l y o n a n d t a k e c o m f o r t i n b r a n d n a m e s ) ; consumer two ( c a n n o t a f f o r d , c a n t e l l ) : l i k e c o n s u m e r o n e , s h e c a n t e l l a g e n u i n e p r o d u c t f r o m a n i m i t a t i o n a n d c a n a l s o t e l l a h i g h e r q u a l i t y p r o d u c t f r o m a l o w e r q u a l i t y o n e . A l s o l i k e c o n s u m e r o n e , 8 Or that they would think there is some connection between A and B , such as that A has given B permission to use the name 'Advocaat'. 1 3 2 s h e w o u l d p r e f e r t o b u y t h e g e n u i n e p r o d u c t , a s l o n g a s i t i s s u p e r i o r i n q u a l i t y a n d / o r p r i c e . U n l i k e c o n s u m e r o n e , c o n s u m e r t w o c a n n o t a f f o r d t o b u y t h e b e s t a n d t h e m o s t s h e c a n a f f o r d t o s p e n d o n a b o t t l e o f A d v o c a a t i s $ 5 0 . S h e w i l l m a k e d o w i t h a n i m i t a t i o n b u t w i l l k n o w i t i s t h a t ; consumer three ( c a n a f f o r d , c a n n o t t e l l ) : l i k e c o n s u m e r s o n e a n d t w o , c o n s u m e r t h r e e p r e f e r s t o b u y a q u a l i t y p r o d u c t a n d , q u a l i t y b e i n g e q u a l , p r e f e r s t o b u y g e n u i n e p r o d u c t s . L i k e c o n s u m e r o n e , s h e c a n a f f o r d t o b u y t h e b e s t , b u t , u n l i k e c o n s u m e r s o n e a n d t w o , s h e c a n n o t t e l l a g e n u i n e p r o d u c t f r o m a n i m i t a t i o n o r a h i g h e r q u a l i t y p r o d u c t f r o m a l o w e r q a l i t y o n e ; consumer four ( c a n n o t a f f o r d , c a n n o t t e l l ) : l i k e c o n s u m e r s o n e , t w o a n d t h r e e , c o n s u m e r f o u r p r e f e r s t o b u y q u a l i t y , g e n u i n e p r o d u c t s , t h e e m p h a s i s b e i n g o n q u a l i t y . L i k e c o n s u m e r t h r e e , s h e c a n n o t t e l l t h e g e n u i n e p r o d u c t f r o m t h e i m i t a t i o n , n o r a h i g h e r q u a l i t y p r o d u c t f r o m a l o w e r q u a l i t y o n e . L i k e c o n s u m e r t w o , s h e c a n n o t a f f o r d t o b u y t h e b e s t a n d t h e m o s t s h e c a n a f f o r d t o s p e n d o n a b o t t l e o f A d v o c a a t i s $ 5 0 . 9 9 Price and quality are chosen as the variables because they tend to be the variables in passing off cases. The imitation product is usually cheaper and of lower quality, but for an example of where the reverse was true refer Tot Toys v Mitchell, supra, note 5. Other variables considered by the writer that are not used in the analysis were availability (allowing the imitating trader to sell its product wi l l result in greater availability of that kind of product), safety and distinctiveness (usually in relation to clothing, furnishings and similar products), all of which can be important variables in consumer related matters, but which do not usually feature in passing off cases, althought it wi l l be seen that availability is sometimes an important consideration for consumers two and four, because they cannot afford the genuine product and wi l l derive a benefit from B's activities when its product is cheaper than A's . Refer D . A . Rice, Toward a Theory and Legal Standard of Consumer Unfairness, [1984] 5 Journal of Law and Commerce, p. 119. 133 I n t h e o r y , t h e r e i s o n e o t h e r c o n s u m e r , s h e w h o c a n a f f o r d t o a n d w i l l p a y a n y p r i c e a n d who d o e s n o t c a r e a b o u t w h e t h e r t h e p r o d u c t i s g e n u i n e o r n o t , b u t t h a t c o n s u m e r w i l l n o t b e c o n s i d e r e d h e r e b e c a u s e i t i s t h e w r i t e r ' s v i e w t h a t a n e g l i g i b l e n u m b e r o f c o n s u m e r s e x h i b i t t h o s e c h a r a c t e r i s t i c s . B. THE ANALYSIS 1. Results of B's activities T h e r e s u l t s a r e p r e s e n t e d i n t a b l e o n e . T A B L E O N E cons, one cons, two cons. cons, three four B 1. low quality / high price 2. low quality / same price 3. low quality / low price 4. same quality / high price 5. same quality / same price 6. same quality / low price 7. high quality / high price 8. high quality / same price 9. high quality / low price key: misled and makes loss r n I i misled and l l l l i no loss misled and makes gain not misled no loss i>s^~—| not misled I makes gain loss 13 gam 1 3 4 T h e r e a s o n i n g o n w h i c h t h o s e r e s u l t s a r e b a s e d i s d e t a i l e d i n A p p e n d i x O n e . I n s u m m a r y : ( a ) f o r c o n s u m e r s i n d i v i d u a l l y : ( i ) c o n s u m e r s o n e a n d t w o a r e n e v e r m i s l e d ; m a k e a g a i n 4 o u t o f 9 a n d 3 o u t o f 9 t i m e s r e s p e c t i v e l y a n d a r e o t h e r w i s e u n a f f e c t e d b y B ' s a c t i v i t i e s ; ( i i ) c o n s u m e r t h r e e i s m i s l e d 6 t i m e s o u t o f 9 ; m a k e s a l o s s 3 t i m e s , a g a i n o n c e a n d n e i t h e r a l o s s o r a g a i n o n t h e o t h e r t w o o c c a s i o n s ; ( i i i ) c o n s u m e r f o u r i s m i s l e d 3 t i m e s o u t o f 9 a n d m a k e s a n e t g a i n o n a l l t h r e e o c c a s i o n s . B ' s c o n d u c t t h e r e f o r e h a s t h e g r e a t e s t n e g a t i v e i m p a c t o n c o n s u m e r t h r e e , w h o h a s m o r e m o n e y t h a n a b i l i t y t o j u d g e q u a l i t y a n d g e n u i n e n e s s ; ( b ) f o r c o n s u m e r s c o l l e c t i v e l y : B ' s a c t i v i t i e s h a v e n o e c o n o m i c e f f e c t o n 2 0 o f t h e 3 6 o c c a s i o n s ( 4 c o n s u m e r s x 9 s c e n a r i o s ) , c a u s e s l o s s e s i n 3 o u t o f 6 a n d g a i n s o n 1 1 o u t o f 3 6 o c c a s i o n s ; ( c ) f o r A , t h e r e s u l t s a r e w o r s t - a l o s s o n 7 o u t o f 9 o c c a s i o n s . B ' s c o n t r a v e n t i o n o f s e c t i o n 9 t h e r e f o r e a c t u a l l y r e s u l t s i n a n e t g a i n f o r c o n s u m e r s b e c a u s e g a i n s o u t n u m b e r l o s s e s e l e v e n t o t h r e e . E v e n a d d i n g t h e l o s s e s i n c u r r e d b y A s t i l l l e a v e s g a i n s a h e a d e l e v e n t o t e n , a l t h o u g h A ' s l o s s e s w i l l u s u a l l y b e l a r g e r t h a n e i t h e r t h e l o s s e s o r g a i n s m a d e b y a n y c o n s u m e r . F a c t o r i n g i n t h e n e g a t i v e i m p a c t o n c o m p e t i t i o n a n d i n n o v a t i o n ( w h i c h c a n n o t b e q u a n t i f i e d ) m a y d o n o m o r e t h a n b a l a n c e t h e s c a l e s . I f o n e r e m o v e s t h e s c e n a r i o s ( 1 , 4 a n d 9 ) i n w h i c h t h e i m i t a t i n g p r o d u c t i s m o r e e x p e n s i v e t h a n t h e g e n u i n e o n e , t h e , m o r e r e a l i s t i c , r e s u l t s a r e e v e n m o r e t e l l i n g f o r c o n s u m e r t h r e e : 1 3 5 ( a ) f o r c o n s u m e r s i n d i v i d u a l l y : ( i ) c o n s u m e r s o n e a n d t w o a r e n e v e r m i s l e d . E a c h b e n e f i t s o n 3 o f 6 o c c a s i o n s a n d i s o t h e r w i s e u n a f f e c t e d ; ( i i ) c o n s u m e r t h r e e i s m i s l e d o n e v e r y o c c a s i o n ; m a k e s 3 l o s s e s , 1 g a i n a n d i s u n a f f e c t e d o n 2 o c c a s i o n s ; ( i i i ) c o n s u m e r f o u r i s m i s l e d a n d m a k e s a g a i n 3 o f 6 t i m e s a n d i s u n a f f e c t e d o n t h e o t h e r 3 o c c a s i o n s . ( b ) f o r c o n s u m e r s c o l l e c t i v e l y B ' s a c t i v i t i e s h a v e n o e c o n o m i c e f f e c t o n 1 1 o f 2 4 o c c a s i o n s , c a u s e l o s s e s i n 3 o f 2 4 a n d g a i n s i n 1 0 o f 2 4 . ( c ) f o r A , t h e r e s u l t i s 6 l o s s e s i n 6 s c e n a r i o s . C o l l e c t i v e l y , t h e p o s i t i o n i s a g a i n s t i n t e r v e n t i o n a n d i t i s t h e r e f o r e d i f f i c u l t t o j u s t i f y i n t e r v e n t i o n o n t h e g r o u n d s o f e f f i c i e n c y a l o n e . I t h a s b e e n s h o w n , h o w e v e r , t h a t t h e p u b l i c p o l i c y r a t i o n a l e i s n o t l i m i t e d t o e f f i c i e n c y , b u t e x t e n d s t o p r o t e c t i o n o f c o n s u m e r s , b o t h c o l l e c t i v e l y a n d a s c l a s s e s . B ' s a c t i v i t i e s h a v e t h e m o s t a d v e r s e e f f e c t f o r c o n s u m e r t h r e e a n d t h e g r e a t e r t h e p r o p o r t i o n o f c l a s s t h r e e c o n s u m e r s i n a m a r k e t , t h e m o r e a d v e r s e t h e r e s u l t s o f B ' s t r a d e . T h e i s s u e i s w h e t h e r i n t e r v e n t i o n c a n b e j u s t i f i e d o n t h a t b a s i s o r w h e t h e r , i n s t e a d a n d i n t h e w o r d s o f M r . S p o c k , t h e n e e d s o f t h e m a n y o u t w e i g h t h e n e e d s o f t h e f e w . T o r e s o l v e t h a t i s s u e , o n e m u s t c o n s i d e r t h e e f f e c t s o f a n a c t i o n p u r s u a n t t o s e c t i o n 9 . 1 3 6 2. Action Pursuant to Section 9 S e c t i o n 9 i s a i m e d p r i n c i p a l l y a t p r o v i d i n g r e l i e f f o r p a s t l o s s o r d a m a g e , b u t a l s o a t d e t e r r i n g t r a d e r s f r o m i n f r i n g i n g a n d c a u s i n g f u t u r e l o s s o r d a m a g e . 1 0 F o r t h a t r e a s o n , t w o m a t t e r s w i l l b e c o n s i d e r e d i n t h i s s e c t i o n ; f i r s t a n d m o s t i m p o r t a n t , t h e e f f e c t s s e c t i o n 9 h a s f o r c o n s u m e r s m i s l e d o r d e c e i v e d p r i o r t o t h e d a t e o f j u d g e m e n t ; a n d , s e c o n d l y , t h e e f f e c t o n c o n s u m e r s o f B ' s r e g u l a t e d a c t i v i t i e s a f t e r j u d g m e n t , o f w h i c h t h e r e a r e t w o p o s s i b i l i t i e s : ( a ) t h a t B w i l l c o n t i n u e t o t r a d e b u t i n a w a y t h a t i s n o t m i s l e a d i n g o r d e c e p t i v e ; o r ( b ) t h a t B w i l l c e a s e t o t r a d e . I n t h e f a c t e x a m p l e , t h e c o s t s o f i d e n t i f y i n g 1 1 a n d c o m m u n i c a t i n g w i t h c o n s u m e r s w i l l o u t w e i g h t h e i n d i v i d u a l l o s s e s , e v e n w i t h o u t t h e c o s t s o f p r o s e c u t i n g a n a c t i o n . A c c o r d i n g l y , t h e o n l y p a r t y l i k e l y t o b r i n g a n a c t i o n i s A . (a) Up to the date of judgment 1 0 Evidence of the latter includes that the remedy most often ordered is an injunction regulating the future activities of the defendant. Pursuant to section 41, injunctions may be granted for contravention, attempted contravention, inducement or attempted inducement of any other person to contravene, or being knowingly directly or indirectly concerned in a contravention by any other person. Pursuant to section 41(4), the court may grant an injunction to restrain a person from engaging in conduct of a particular kind "whether or not the person has previously engaged in conduct of that kind and whether or not there is any imminent danger of substantial damage to any person if the first-mentioned person engages in conduct of that kind". In the Advocaat case, supra, note 3, the court granted an injunction restraining the defendant from calling its product Advocaat. Other remedies available for breach of the Act include: (a) an order to disclose information or to publish advertisement(s) - section 42. That remedy is available only when the court is satisfied there has been a contravention. (b) orders, in relation to a person who has, or is likely to suffer loss or damage as a result of the contravening conduct: (i) declaring the contract void, in whole or in part - section 43(2)(a); (ii) varying the contract - section 43(2)(b); (iii) directing B to refund money or return property - section 43(2)(c); (iv) directing B to pay each affected consumer the amount of his or her loss or damage - section 43(2)(d). 1 1 Where that is possible from transaction records including credit card details and cheques. 1 3 7 T h e r e s u l t s o f a n a c t i o n p u r s u a n t t o s e c t i o n 9 a r e p r e s e n t e d i n t a b l e t w o , a n d t h e n s u m m a r i s e d b e l o w i t . T A B L E T W O cons, one cons, two cons. cons, three four B 1. low quality / high price 2. low quality / same price 3. low quality / low price , 4. same quality / high price 5. same quality / same price 6. same quality / low price 7. high quality / high price 8. high quality / same price 9. high quality / low price X key: action successful loss recovered action successful loss not recovered action unsuccessful loss not recovered I n v a r i a b l e s 2 , 3 , 5 , 6 , 8 a n d 9 a c o n s u m e r ( s ) w a s / w e r e m i s l e d . T h e c o u r t t h e r e f o r e f i n d s t h a t B h a s i n f r i n g e d s e c t i o n 9 a n d i n j u n c t s i t f r o m s e l l i n g i t s p r o d u c t u n d e r t h e n a m e A d v o c a a t . (i) Consumer three W a s m i s l e d a n d s u f f e r e d l o s s e s i n s c e n a r i o s 2 , 3 a n d 5 b u t i t i s u n l i k e l y t h a t s h e w i l l b e c o m p e n s a t e d i n t h e d e c i s i o n s i n a n y o f t h o s e c a s e s . S h e i s e n t i t l e d t o r e l i e f b u t w i l l o b t a i n i t o n l y i f s h e c o m e s f o r w a r d a n d l e a d s e v i d e n c e o f h e r l o s s . S a t i s f y i n g t h e c o u r t o f t h e l o s s w o u l d n o t b e d i f f i c u l t b u t h a v i n g a m e c h a n i s m t h a t w o u l d e n s u r e t h a t 1 3 8 c o n s u m e r t h r e e c a m e f o r w a r d w o u l d . T h e r e w o u l d b e a r e c o r d i f s h e p a i d b y c r e d i t c a r d o r c h e q u e a n d s h e c o u l d b e i n d i v i d u a l l y c o n t a c t e d b u t , f i r s t , t h e t r a n s a c t i o n c o s t s w o u l d b e p r o h i b i t i v e , a n d , s e c o n d l y , t h a t d o e s n o t h e l p i f s h e p a i d b y c a s h . S i n c e n e t s o c i a l w e l f a r e i s a c o n c e r n , a s w e l l a s t h e e c o n o m i c e f f e c t f o r c o n s u m e r t h r e e , t h e o p t i m u m p o s i t i o n i s t h a t c o n s u m e r t h r e e b e a r h e r o w n l o s s a n d t h a t i s a l m o s t i n e v i t a b l y w h a t h a p p e n s . (ii) Trader A S u f f e r e d l o s s e s i n s c e n a r i o s 2 , 3 , 5 , 6 , 7 , 8 a n d 9 . M a n y o f t h e c a s e s a r e d i s p o s e d o f o n t h e b a s i s o f a n i n t e r l o c u t o r y a p p l i c a t i o n f o r a n i n t e r i m i n j u n c t i o n a n d a n y c l a i m f o r d a m a g e s , t h a t w o u l d h a v e b e e n h e a r d a t t h e s u b s t a n t i v e h e a r i n g , i s n e v e r d e a l t w i t h . T h e f a c t t h a t p l a i n t i f f s r a r e l y p u r s u e t h e i s s u e o f d a m a g e s m a y s u g g e s t t h a t t r a n s a c t i o n c o s t s a r e t o o g r e a t . N e v e r t h e l e s s , A i s e n t i t l e d t o d a m a g e s a n d , i f i t c h o o s e s t o p u r s u e t h e i s s u e , w i l l r e c o v e r o n a m e a s u r e t h e s a m e a s t h a t a p p l y i n g i n t o r t , n a m e l y t h e m e a s u r e b y w h i c h t h e p l a i n t i f f h a s s u f f e r e d d a m a g e t o i t s g o o d w i l l . N o c o n s u m e r w a s m i s l e d i n s c e n a r i o 7 a n d , a c c o r d i n g l y , A w i l l n o t r e c o v e r t h e l o s s i t s u s t a i n e d t h e r e . 1 2 1 2 In Dominion Rent A Car Ltd. v Budget Rent A Car Systems (1970) Ltd. [1987] 2 N Z L R 395, Cooke P. examined revenue figures for the parties over the relevant period in reaching the view that the plaintiff had probably benefited from any confusion between its business and that of the defendant and that therefore the plaintiffs claim for passing off must fail. However, it is not necessary to lead such precise evidence and more subtle forms of damage have been recognised by the courts. In Taylor Bros. Ltd. v Taylors Group Ltd. [1988] 2 N Z L R 1, McGechan J. in the High Court considered evidence in relation to diversion of trade, damage to reputation caused by lapses on the part of the defendants and inundation or" dilution of the plaintiffs goodwill in the name "Taylors" to the point where the plaintiff would no longer be recognised by its own name and the sale price of the name would be sharply diminished. His Honour found there to be sufficient evidence of damage of the second and third kinds. The Court of Appeal agreed, holding that: "[I]n some cases it is legitimate to infer damage from a tendency to impair distinctiveness." The Court said the principle must, however, be applied with caution in two respects: (a) there are cases where confusion with a larger organisation may be to the benefit of a party so damage may not be assumed and would be required to be proved; (b) the principle cannot apply to give a party a practical monopoly in a relatively common name. In Comite Interprofessionel du Vin de Champagne v Wineworths Ltd. [1992] 2 N Z L R 327, the Court of Appeal affirmed that damage from goodwill can be inferred from a tendency to impair distinctiveness in finding for the plaintiff. They cast doubt, however, on whether loss of ability to license use of a name may be enough. Refer also Gates v City Mutual Life Assurance Society Ltd. (1986) A T P R 40-666; Toteff v Antonas (1952) 87 C L R 647, 650. 1 3 9 I n s u m m a r y , l o s s e s w i l l b e r e c o v e r e d : ( a ) b y c o n s u m e r t h r e e , o n z e r o o u t o f t h r e e o c c a s i o n s ; ( b ) b y A o n 6 o u t o f 7 o c c a s i o n s . A s f a r a s p a s t l o s s e s a r e c o n c e r n e d , t h e s e c t i o n i s s a t i s f a c t o r y f r o m A ' s p o i n t o f v i e w b u t , n o t f r o m t h e p o i n t o f v i e w o f c o n s u m e r t h r e e , t h u s c o n f i r m i n g t h a t t h e t h e o r e t i c a l d e f i c i e n c i e s o f s e c t i o n 9 a r e a l s o d e f i c i e n c i e s i n p r a c t i c e . I n c h a p t e r s t w o a n d f o u r , i t w a s r e c o m m e n d e d t h a t t h e A c t b e a m e n d e d i n t h r e e w a y s , t o r e c t i f y t h o s e t h e o r e t i c a l d e f i c i e n c i e s . T h e f i r s t , t h a t t h e c o u r t s b e r e q u i r e d t o t a k e t h e i n t e r e s t s o f c o n s u m e r s i n t o a c c o u n t i n a l l a c t i o n s u n d e r s e c t i o n 9 , i s u n l i k e l y t o h e l p c o n s u m e r 3 , b e c a u s e t h e c o u r t s a r e u n l i k e l y t o e v e r k n o w w h a t p r o p o r t i o n o f t h e m a r k e t a r e c l a s s 3 c o n s u m e r s . E v e n i f t h a t w e r e k n o w n , i t w a s a l s o s e e n t h a t i t w o u l d b e n e i t h e r e f f i c i e n t n o r i n t h e i n t e r e s t s o f c o n s u m e r s f o r B t o b e f i n e d , e x c e p t w h e n B h a d n o r e a s o n a b l e b a s i s f o r a b e l i e f t h a t i t s c o n d u c t w o u l d n o t a m o u n t t o p a s s i n g o f f . T h a t l e a v e s t h e t h i r d o p t i o n , f o r j u r i s d i c t i o n o f t h e D i s p u t e s T r i b u n a l s t o b e e x t e n d e d t o i n c l u d e a c t i o n s p u r s u a n t t o s e c t i o n 9 . I n t h e f a c t p a t t e r n , t h a t i s u n l i k e l y t o b e o f a s s i s t a n c e t o c o n s u m e r t h r e e , b e c a u s e h e r m a x i m u m l o s s i s $ 1 0 a n d t r a n s a c t i o n c o s t s w i l l p r e c l u d e a n a c t i o n e v e n i n t h e D i s p u t e s T r i b u n a l . B u t e v e n i f i t i s n o t o f a s s i s t a n c e i n t h i s f a c t p a t t e r n , t h e d i s c u s s i o n i n P a r t B s h o w e d t h a t i t w o u l d e n h a n c e e f f i c i e n c y a n d c o n s u m e r p r o t e c t i o n a n d t h e w r i t e r t h e r e f o r e r e m a i n s o f t h e v i e w t h a t a m e n d m e n t o f t h e A c t i s n e c e s s a r y . (b) After the date of judgment A s n o t e d , t h e r e a r e t w o p o s s i b i l i t i e s : o n e , t h a t B w i l l c o n t i n u e t o t r a d e b u t i n a m a n n e r t h a t i s n o t m i s l e a d i n g o r d e c e p t i v e ; a n d , t w o , t h a t i t w i l l c e a s e t o t r a d e . T h e p o s i t i o n 1 3 Although issue of an injunction wil l often mean that B wil l have to reduce the price of its product, because it no longer has attached the goodwill of the passed off product, nor does B have to make the investment in the development / maintenance of that goodwill that requires the higher price charged by A . It is therefore unlikely that issue of an injunction wil l ever, of itself, put B out of business. B may, however, voluntarily cease to trade, particularly i f it was deliberately passing off its goods. In that case, an effect of an injunction will be that B can no longer make the inflated profits it previously enjoyed (inflated because it gets the benefit of A 's goodwill without having to pay for it). That may therefore suggest that, if B ceases to trade following issue of an injunction, then its passing off was deliberate. A corollary is that if B continues to trade, then the price of its product is likely to drop, thus benefiting 1 4 0 i s s u m m a r i s e d b e l o w a n d t h e r e a s o n i n g o n w h i c h t h a t s u m m a r y i s b a s e d i s d e t a i l e d i n A p p e n d i x T w o . ( a ) I f , a f t e r t h e d e c i s i o n s , B c o n t i n u e s t o t r a d e , t h e n a l l f o u r c o n s u m e r s w i l l b e b e t t e r o f f t h a n i f B w a s n o t i n t r a d e . C o n s u m e r o n e w i l l b u y f r o m B i n s c e n a r i o s 6 t o 9 i n c l u s i v e a n d c o n s u m e r t w o i n s c e n a r i o s 3 , 6 a n d 9 . C o n s u m e r t h r e e w i l l n o t b e m i s l e d , w i l l t h e r e f o r e m a k e i n f o r m e d p u r c h a s i n g d e c i s i o n s a n d n o t s u f f e r l o s s e s . C o n s u m e r f o u r w i l l c o n t i n u e t o b u y f r o m B i n s c e n a r i o s 3 , 6 a n d 9 , w h e r e s h e p r e v i o u s l y m a d e a g a i n a n y w a y b u t i n f u t u r e w i l l n o t b e m i s l e d . ( b ) I t c a n b e s e e n f r o m f i g u r e o n e t h a t i n t h e 3 6 v a r i a b l e s ( 9 s c e n a r i o s t i m e s 4 c o n s u m e r s ) c o n s u m e r s w e r e u n a f f e c t e d ( e c o n o m i c a l l y ) o n 2 2 o c c a s i o n s , b e t t e r o f f o n 1 1 o c c a s i o n s a n d w o r s e o f f o n 3 o c c a s i o n s . I t w o u l d t h e r e f o r e b e a g a i n s t t h e i n t e r e s t s o f c o n s u m e r s i f B c e a s e d t o t r a d e . A w a s w o r s e o f f i n 7 o u t o f 9 s c e n a r i o s a n d i t w o u l d t h e r e f o r e b e i n A ' s i n t e r e s t i f B c e a s e d t o t r a d e , b u t s o l o n g a s B i s n o t m i s l e a d i n g o r d e c e i v i n g c o n s u m e r s , t h e i n t e r e s t s o f c o n s u m e r s a n d e f f i c i e n c y s h o u l d p r e v a i l . W h i l e t h e v a l u e o f s e c t i o n 9 i n r e l a t i o n t o p a s t l o s s e s i s a m b i v a l e n t , i t s v a l u e i n t e r m s o f e n h a n c i n g f u t u r e e f f i c i e n c y a n d t h e f u t u r e i n t e r e s t s o f c o n s u m e r s i s m u c h m o r e c l e a r . A s l o n g a s B c o n t i n u e s t o t r a d e a f t e r t h e a c t i o n , t h e r e w i l l b e g r e a t e r c o m p e t i t i o n a n d l e s s d e c e p t i o n , r e s u l t i n g i n i n c r e a s e d l e v e l s o f e f f i c i e n c y a n d c o n s u m e r p r o t e c t i o n . consumers. CHAPTER SLX SUMMARY OF CONCLUSIONS AND RECOMMENDATIONS T h e r e a r e f o u r p r i n c i p a l l i m b s t o t h e p u b l i c p o l i c y r a t i o n a l e f o r s e c t i o n 9 o f t h e F a i r T r a d i n g A c t 1 9 8 6 . T w o o f t h e m , c o m p l i a n c e w i t h C E R o b l i g a t i o n s a n d t o c o m p l i m e n t t h e C o m m e r c e A c t 1 9 8 6 , a p p e a r t o b e a d e q u a t e l y a d v a n c e d b y t h e A c t . T h e r e m a i n i n g t w o l i m b s , p r o m o t i o n o f e f f i c i e n c y a n d p r o t e c t i o n o f c o n s u m e r s , a r e n o t a d e q u a t e l y a d v a n c e d . T h e f i r s t o f t h e t w o r e a s o n s f o r t h a t l i e s i n t h e p r o v i s i o n s o f t h e A c t i t s e l f , w h i c h s h o u l d b e a m e n d e d t o : ( a ) r e q u i r e t h e i n t e r e s t s o f c o n s u m e r s t o b e t a k e n i n t o a c c o u n t i n s e c t i o n 9 c a s e s ; ( b ) r e q u i r e i m p o s i t i o n o f a f i n e i n a n y c a s e w h e r e a d e f e n d a n t h a d n o r e a s o n a b l e b a s i s f o r a b e l i e f t h a t i t s c o n d u c t w o u l d n o t b e m i s l e a d i n g o r d e c e p t i v e ; ( c ) g i v e j u r i s d i c t i o n t o t h e D i s p u t e s T r i b u n a l s , s u b j e c t o n l y t o a m a x i m u m m o n e t a r y v a l u e ; ( d ) i n c l u d e " c o n f u s i o n " i n s e c t i o n 9 . T h e s e c o n d r e a s o n l i e s i n t h e a p p r o a c h o f t h e c o u r t s a n d , i n p a r t i c u l a r , t h e i r i m p o r t a t i o n o f p a s s i n g o f f p r i n c i p l e s i n t o c a s e s u n d e r s e c t i o n 9 . T h e p u b l i c p o l i c y r a t i o n a l e f o r 1 4 2 p a s s i n g o f f i s v e r y d i f f e r e n t f r o m t h a t u n d e r s e c t i o n 9 a n d s u c h i m p o r t a t i o n i s t h e r e f o r e i n a p p r o p r i a t e . T h e c o u r t s i n N e w Z e a l a n d a n d A u s t r a l i a o u g h t t o : ( a ) p u t i n t o p r a c t i c e t h e i r t h e o r e t i c a l s t a t e m e n t s o n t h e d i f f e r e n c e b e t w e e n t h e t w o c a u s e s o f a c t i o n ; ( b ) c e a s e t o t r e a t t h e d e s c r i p t i v e n e s s o r o t h e r w i s e o f n a m e s a s d e t e r m i n a t i v e a n d l o o k , i n s t e a d , t o t h e a c t u a l e f f e c t o n c o n s u m e r s ; ( c ) a l l o w p r o o f o f c o n f u s i o n t o b e e n o u g h u n d e r s e c t i o n 9 , t h u s e n s u r i n g c o n s i s t e n c y w i t h o t h e r c o n s u m e r p r o t e c t i o n p r o v i s i o n s , s u c h a s s e c t i o n 1 6 o f t h e T r a d e M a r k s A c t , o r , a t l e a s t , s i g n a l a n e e d f o r l e g i s l a t i v e a c t i o n i n t h a t r e g a r d ; ( d ) t a k e a m o r e l i b e r a l a p p r o a c h t o c l a i m s b a s e d o n g e t - u p ; ( e ) i m p o s e a h i g h e r s t a n d a r d o n s e c o n d i n t i m e m a n u f a c t u r e r s , i n t e r m s o f d i s c l a i m e r s ; ( f ) a c c e p t t h a t , i n m o d e r n t i m e s , r e p u t a t i o n i n t h e j u r i s d i c t i o n s u f f i c i e n t t o m i s l e a d v c o n s u m e r s c a n a r i s e w i t h o u t a n y t r a d i n g t h e r e ; ( g ) a c c e p t t h a t s u r v e y e v i d e n c e i s f r e q u e n t l y t h e b e s t e v i d e n c e a v a i l a b l e i n t h e s e c a s e s a n d f o c u s o n p r o v i d i n g c l e a r g u i d e l i n e s o n t h e f a c t o r s w h i c h a f f e c t t h e 1 4 3 p r o b i t y o f t h e s a m e ; ( h ) c e a s e i m p o s i n g t h e i r o w n v i e w o f w h a t i s m i s l e a d i n g o r d e c e p t i v e , o r l i k e l y t o m i s l e a d o r d e c e i v e a n d , i n s t e a d , r e l y o n a c t u a l e v i d e n c e ; ( i ) c e a s e t o r e q u i r e a c o m m o n f i e l d o f a c t i v i t y b e t w e e n p a r t i e s , a s a p r e - r e q u i s i t e t o a s u c c e s s f u l a c t i o n . A l l o f t h o s e t h i n g s c o u l d b e a c h i e v e d i f t h e c o u r t s w o u l d s i m p l y b e m i n d f u l o f t h e f a c t t h a t t h e p o l i c y r a t i o n a l e f o r s e c t i o n 9 i s t o p r o t e c t c o n s u m e r s a n d t o p r o m o t e e f f i c i e n c y . T h e d i s c u s s i o n i n c h a p t e r f i v e p r o v i d e s a n e x a m p l e o f h o w t h a t m a y b e d o n e , o r , a t l e a s t , t h e s o r t o f f a c t o r s t h a t n e e d t o b e t a k e n i n t o a c c o u n t . T h e w r i t e r a c k n o w l e d g e s t h a t t h e u t i l i t y o f t h e a p p r o a c h t a k e n t h e r e c o u l d o n l y b e e v a l u a t e d b y a r e t r o s p e c t i v e a n a l y s i s o f c a s e s i n w h i c h t h e a p p r o a c h w a s f o l l o w e d . M o d i f i c a t i o n s a n d r e f i n e m e n t s w o u l d n o d o u b t b e n e c e s s a r y . T h e p o i n t t h e w r i t e r h a s e n d e a v o u r e d t o m a k e i n t h i s t h e s i s i s t h a t a n a n a l y s i s o f c a s e s s i n c e t h e F a i r T r a d i n g a n d T r a d e P r a c t i c e s A c t s w e r e p a s s e d s h o w s t h a t t h e a p p r o a c h t a k e n t o d a t e d o e s n o t a d v a n c e t h e p u b l i c p o l i c y r a t i o n a l e a s w e l l a s i t c o u l d a n d s h o u l d b e a d v a n c e d . T h e l e g i s l a t u r e s h o u l d a m e n d t h e A c t a n d t h e c o u r t s s h o u l d a m e n d t h e i r a p p r o a c h . APPENDIX ONE REASONING FOR TABLE ONE Consumer one ( c a n a f f o r d , c a n t e l l ) (a) Lower quality I n s c e n a r i o s 1 , 2 a n d 3 , c o n s u m e r o n e b u y s f r o m A b e c a u s e s h e p r e f e r s a q u a l i t y p r o d u c t . S h e c a n t e l l t h e g e n u i n e p r o d u c t f r o m t h e i m i t a t i o n a n d , t h e r e f o r e , i s n o t m i s l e d . S h e s u f f e r s n o l o s s a n d h a s n o r i g h t t o r e l i e f u n d e r s e c t i o n 9 . (b) Same quality C o n s u m e r o n e b u y s f r o m A i n s c e n a r i o 4 ( h i g h e r p r i c e ) b e c a u s e i t i s a g e n u i n e p r o d u c t a t a l o w e r p r i c e a n d i n s c e n a r i o 5 ( s a m e p r i c e ) b e c a u s e , e v e n t h o u g h p r i c e a n d q u a l i t y a r e t h e s a m e , A ' s p r o d u c t h a s t h e i n t a n g i b l e a d v a n t a g e o f b e i n g t h e g e n u i n e p r o d u c t . I n s c e n a r i o 6 ( l o w e r p r i c e ) s h e b u y s f r o m B b e c a u s e t h e i n t a n g i b l e b e n e f i t a t t a c h i n g t o t h e f a c t t h a t A ' s p r o d u c t i s g e n u i n e i s o u t w e i g h e d b y t h e a c t u a l b e n e f i t a t t a c h i n g t o p r o d u c t B b y v i r t u e o f i t s l o w e r p r i c e . I n a l l t h r e e v a r i a b l e s , c o n s u m e r o n e i s n o t m i s l e d , s u f f e r s n o l o s s a n d i s n o t e n t i t l e d t o r e l i e f u n d e r s e c t i o n 9 . (c) Higher quality I n s c e n a r i o s 7 , 8 a n d 9 , c o n s u m e r o n e b u y s f r o m B , s i m p l y b e c a u s e i t s p r o d u c t i s 1 4 5 b e t t e r . S h e i s n e v e r m i s l e d a n d h a s n o e n t i t l e m e n t t o r e l i e f u n d e r s e c t i o n 9 . I n d e e d , t h e f a c t " t h a t B i s i n t r a d e h a s g e n e r a t e d a n a d v a n t a g e f o r t h i s c o n s u m e r , i n t h a t s h e g e t s t o b u y a h i g h e r q u a l i t y p r o d u c t t h a n w a s p r e v i o u s l y a v a i l a b l e . Consumer two ( c a n n o t a f f o r d , c a n t e l l ) (a) Higher price, same price W h e r e a s t h e d i s t i n g u i s h i n g f a c t o r f o r c o n s u m e r o n e i s q u a l i t y , f o r c o n s u m e r t w o i t i s p r i c e . S h e i s u n a f f e c t e d b y s c e n a r i o s 1 , 4 a n d 7 ( h i g h e r p r i c e ) o r b y s c e n a r i o s 2 , 5 a n d 8 ( s a m e p r i c e ) b e c a u s e s h e c a n n o t a f f o r d e i t h e r p r o d u c t . (b) Lower price I n s c e n a r i o s 3 , 6 a n d 9 B ' s p r i c e i s $ 5 0 . C o n s u m e r t w o c a n a f f o r d t h a t p r i c e a n d b u y s f r o m B . S h e i s n o t m i s l e d a n d i s n o t e n t i t l e d t o r e l i e f u n d e r s e c t i o n 9 . I n d e e d , t h e f a c t t h a t B i s i n t r a d e h a s g e n e r a t e d a n a d v a n t a g e f o r t h i s c o n s u m e r , i n t h a t s h e g e t s t o b u y a p r o d u c t t h a t s h e w o u l d n o t o t h e r w i s e b e a b l e t o a f f o r d . T h e q u a l i t y o f t h a t p r o d u c t v a r i e s a c c o r d i n g t o t h e s c e n a r i o , b u t c o n s u m e r t w o i s n e v e r m i s l e d a s t o t h e q u a l i t y o f t h e p r o d u c t s h e b u y s . Consumer three ( c a n a f f o r d , c a n n o t t e l l ) (a) Higher price 1 4 6 I n s c e n a r i o s 1 , 4 a n d 7 , w h e r e B ' s p r o d u c t i s m o r e e x p e n s i v e t h a n A ' s , c o n s u m e r t h r e e b u y s f r o m A , b e c a u s e i t s p r o d u c t i s c h e a p e r . S h e i s n o t m i s l e d , s u f f e r s n o l o s s a n d i s n o t e n t i t l e d t o r e l i e f u n d e r s e c t i o n 9 . (b) Same price W h e r e B ' s p r o d u c t i s t h e s a m e p r i c e , t h e r e i s a f i f t y p e r c e n t p r o b a b i l i t y t h a t c o n s u m e r t h r e e w i l l b u y f r o m B . I n s c e n a r i o 2 ( l o w e r q u a l i t y ) c o n s u m e r t h r e e w i l l , i f s h e b u y s f r o m B , s u f f e r a l o s s e q u a l i n v a l u e t o t h e d i f f e r e n c e i n q u a l i t y b e t w e e n t h e t w o p r o d u c t s . T h e r e i s a f i f t y p e r c e n t p r o b a b i l i t y t h a t s h e w i l l b e m i s l e d a n d s u f f e r a l o s s . I f s h e d o e s , t h e n s h e w i l l b e e n t i t l e d t o r e l i e f u n d e r s e c t i o n 9 . I n s c e n a r i o 5 ( s a m e q u a l i t y ) s h e w i l l , i f s h e b u y s f r o m B , s u f f e r a n i n t a n g i b l e l o s s e q u a l t o t h e v a l u e t h a t s h e p l a c e s o n g e t t i n g a g e n u i n e p r o d u c t . 1 A g a i n , t h e r e i s a f i f t y p e r c e n t c h a n c e t h a t s h e w i l l b e m i s l e d a n d t h a t s h e w i l l s u f f e r a l o s s . W h e r e s h e d o e s , s h e w i l l b e e n t i t l e d t o r e l i e f u n d e r s e c t i o n 9 . I n s c e n a r i o 8 ( h i g h e r q u a l i t y ) c o n s u m e r t h r e e w i l l , i f s h e b u y s f r o m B m a k e a g a i n e q u a l t o t h e v a l u e o f t h e d i f f e r e n c e i n q u a l i t y b e t w e e n t h e t w o p r o d u c t s . I f s h e b u y s f r o m B , t h e n s h e h a s b e e n m i s l e d b u t w h e t h e r o r n o t s h e b u y s f r o m B , s h e s u f f e r s n o l o s s a n d i s n o t e n t i t l e d t o r e l i e f u n d e r s e c t i o n 9 . 1 She does not suffer that kind of loss in scenario one because the desire to get a genuine product stems only from the perceived correlation between genuineness and quality and, therefore, the factor of genuineness wi l l only have a value when quality is the same. 1 4 7 (c) Lower price I n s c e n a r i o s 3 , 6 a n d 9 , c o n s u m e r t h r e e b u y s f r o m B , b e c a u s e i t s p r o d u c t i s c h e a p e r . S h e w i l l b e u n d e r t h e m i s t a k e n i m p r e s s i o n t h a t s h e i s g e t t i n g a g e n u i n e p r o d u c t o f t h e b e s t q u a l i t y . I n s c e n a r i o 3 ( l o w e r q u a l i t y ) s h e g e t s a n i m i t a t i o n p r o d u c t o f l o w e r q u a l i t y a n d s u f f e r s a l o s s e q u a l t o t h e v a l u e o f t h e d i f f e r e n c e i n q u a l i t y b e t w e e n t h e t w o p r o d u c t s . S h e h a s b e e n m i s l e d , s u f f e r s a l o s s a n d i s e n t i t l e d t o r e l i e f u n d e r s e c t i o n 9 . ' I n s c e n a r i o 6 ( s a m e q u a l i t y ) s h e g e t s a n ( a l b e i t i m i t a t i o n ) p r o d u c t o f e q u a l q u a l i t y a t a l o w e r p r i c e . S h e h a s b e e n m i s l e d , b u t s u f f e r s n o l o s s a n d i s n o t e n t i t l e d t o r e l i e f u n d e r s e c t i o n 9 . I n s c e n a r i o 9 ( h i g h e r q u a l i t y ) , s h e i s m i s l e d b u t m a k e s n o l o s s ; r a t h e r s h e m a k e s a g a i n e q u a l t o t h e d i f f e r e n c e i n v a l u e . S h e i s n o t e n t i t l e d t o r e l i e f u n d e r s e c t i o n 9 . (d) Summary C o n s u m e r t h r e e s u f f e r s a l o s s i n t h e f o l l o w i n g c i r c u m s t a n c e s : ( a ) a f i f t y p e r c e n t c h a n c e o f s u f f e r i n g a l o s s w h e r e p r i c e i s t h e s a m e a n d q u a l i t y i s l o w e r ; ( b ) a f i f t y p e r c e n t c h a n c e o f s u f f e r i n g a l o s s w h e r e p r i c e a n d q u a l i t y a r e t h e s a m e ; ( c ) a o n e h u n d r e d c h a n c e o f s u f f e r i n g a l o s s w h e r e p r i c e a n d q u a l i t y a r e l o w e r . 1 4 8 Consumer four ( c a n n o t a f f o r d , c a n n o t t e l l ) (a) Higher price, same price L i k e c o n s u m e r t w o , c o n s u m e r f o u r i s u n a f f e c t e d b y s c e n a r i o s 1 , 2 , 4 , 5 , 7 a n d 8 , b e c a u s e s h e c a n n o t a f f o r d e i t h e r p r o d u c t . (b) Lower price I n s c e n a r i o s 3 , 6 a n d 9 , w h e n B ' s p r i c e i s $ 5 0 , c o n s u m e r f o u r b u y s f r o m B , u n d e r t h e m i s t a k e n i m p r e s s i o n t h a t s h e i s g e t t i n g a g e n u i n e p r o d u c t . I n s c e n a r i o 3 ( l o w e r q u a l i t y ) s h e s u f f e r s a l o s s e q u a l i n v a l u e t o t h e d i f f e r e n c e i n q u a l i t y b e t w e e n t h e t w o p r o d u c t s . A t t h e s a m e t i m e , s h e m a k e s a g a i n i n t h e f o r m o f t h e o p p o r t u n i t y t o b u y a p r o d u c t s h e w o u l d n o t o t h e r w i s e b e a b l e t o a f f o r d ( a n ' o p p o r t u n i t y g a i n ' ) . T h e q u e s t i o n i s w h e t h e r t h a t r e p r e s e n t s a n e t l o s s o r g a i n . W e k n o w t h a t t h e q u a l i t y d i f f e r e n c e b e t w e e n t h e t w o p r o d u c t s i s n o t s o g r e a t t h a t t h i s c o n s u m e r c a n t e l l t h e m a p a r t o n t h a t b a s i s . T h e r e i s a r e l a t i v e l y s i g n i f i c a n t ( $ 1 0 ) p r i c e d i f f e r e n c e a n d t h a t a l l o w s c o n s u m e r t h r e e t o b u y t h e p r o d u c t . I n t h e p r e s e n t c i r c u m s t a n c e s , t h o s e f a c t o r s i n d i c a t e a n e t g a i n . I n s c e n a r i o s 6 ( s a m e q u a l i t y ) a n d 9 ( h i g h e r q u a l i t y ) , c o n s u m e r f o u r m a k e s a n o p p o r t u n i t y g a i n . 2 2 If she was able to afford A 's product, then she would also make a gain equal to the difference in value between the two products but, beccause she cannot afford that product, it is difficult to argue she is getting a product of higher quality than she would otherwise have got because she would not otherwise have got that product. She therefore does not make this quality gain. APPENDIX TWO REASONING FOR CONCLUSIONS ON EFFECT IF B CEASES TO TRADE Consumer one D e c i s i o n s 1 t o 5 i n c l u s i v e a r e o f n o i n t e r e s t t o c o n s u m e r o n e , b e c a u s e s h e w a s u n a f f e c t e d b y t h e c o n d u c t t h a t g a v e r i s e t o t h e m . S h e m a d e a g a i n i n s c e n a r i o s 6 , 7 , 8 a n d 9 a n d w i l l t h e r e f o r e b e w o r s e o f f i n d e c i s i o n s 6 , 8 a n d 9 . N o c o n s u m e r w a s m i s l e d i n s c e n a r i o 7 a n d A ' s a c t i o n p u r s u a n t t o s e c t i o n 9 w i l l t h e r e f o r e f a i l , m e a n i n g t h a t c o n s u m e r o n e w i l l b e u n a f f e c t e d b y t h a t d e c i s i o n . Consumer two D e c i s i o n s 1 , 2 , 4 , 5 , 7 a n d 8 d o n o t a f f e c t c o n s u m e r t w o . S h e m a d e a g a i n i n s c e n a r i o s 3 , 6 a n d 9 a n d w i l l t h e r e f o r e b e w o r s e o f f o n t h o s e t h r e e o c c a s i o n s . Consumer three C o n s u m e r t h r e e w a s n o t a f f e c t e d b y t h e c o n d u c t g i v i n g r i s e t o d e c i s i o n s 1 , 4 o r 7 a n d i s t h e r e f o r e u n a f f e c t e d b y t h o s e d e c i s i o n s , w h i c h w i l l b e a g a i n s t A ' s c l a i m b e c a u s e n o c o n s u m e r w a s m i s l e d i n a n y o f t h o s e s c e n a r i o s . S h e m a d e a l o s s i n s c e n a r i o s 2 , 3 a n d 5 a n d i t m i g h t b e t h o u g h t t h a t s h e w o u l d h a v e a n i n t e r e s t i n B c e a s i n g t o t r a d e i n t h o s e t h r e e s c e n a r i o s . H o w e v e r , i f B c o n t i n u e s t o t r a d e 1 5 0 a f t e r t h e d e c i s i o n s , i t w i l l b e i n a w a y t h a t i s n o t m i s e a d i n g o r d e c e p t i v e a n d c o n s u m e r t h r e e w i l l n o t b u y f r o m B . S h e i s t h e r e f o r e i n d i f f e r e n t t o w h e t h e r o r n o t B c o n t i n u e s t o t r a d e . I n s c e n a r i o s 6 a n d 9 , c o n s u m e r t h r e e w a s m i s l e d b u t m a d e n o l o s s a n d i s t h e r e f o r e i n d i f f e r e n t t o w h e t h e r o r n o t B c o n t i n u e s t o t r a d e i n t h o s e s c e n a r i o s t o o . I n s c e n a r i o 8 , c o n s u m e r t h r e e m a d e a g a i n a n d w i l l t h e r e f o r e b e w o r s e o f f w h e n B g o e s o u t o f b u s i n e s s . Consumer four I s u n a f f e c t e d b y a l l d e c i s i o n s o t h e r t h a n 3 , 6 a n d 9 , i n w h i c h s h e w a s m i s l e d a n d m a d e a g a i n . I f B c e a s e s t o t r a d e , s h e w i l l b e w o r s e o f f i n t h o s e t h r e e s c e n a r i o s . L e g i s l a t i o n L i s t 1 . N e w Z e a l a n d C o n s u m e r I n f o r m a t i o n A c t 1 9 6 9 D i s p u t e s T r i b u n a l A c t 1 9 8 8 F a i r T r a d i n g A c t 1 9 8 6 M e r c h a n d i s e M a r k s A c t 1 9 5 4 T r a d e M a r k s a c t 1 9 5 3 T r a d e P r a c t i c e s A c t 1 9 5 8 2 . A u s t r a l i a T a r d e M a r k s A c t 1 9 5 5 T r a d e P r a c t i c e s A c t 1 9 7 4 3 . U n i t e d S t a t e s o f A m e r i c a F e d e r a l T r a d e C o m m i s s i o n A c t 1 5 U . S . C . 4 5 ( 1 9 1 4 ) N e w Y o r k S e s s . L a w s 1 9 0 3 , c . 1 3 2 , s s . 1 - 2 a s a m n d . 1 9 2 1 T r a n s - A l a s k a P i p e l i n e A u t h o r i z a t i o n A c t ( 1 5 U . S . C . 5 3 ( b ) ) W h e e l e r - L e a A c t , 5 2 S t a t . 1 1 4 ( 1 9 3 8 ) U . S . C . 5 2 ( 1 9 5 8 ) 4 . C a n a d a B r i t i s h C o l u m b i a P r i v a c y A c t , R . S . B . C . 1 9 7 9 , c . 3 3 6 M a n i t o b a P r i v a c y A c t , S . M . 1 9 7 0 , c . 7 4 N e w f o u n d l a n d P r i v a c y A c t , S . N . 1 9 8 1 , c . 6 1 5 2 S a s k a t c h e w a n P r i v a c y A c t , R . S . S . 1 9 7 8 , c . P - 2 4 T r a d e M a r k s A c t o f C a n a d a , R . S . , c . T - 1 0 Case List 1 5 3 1 . N e w Z e a l a n d Allied Liquor Merchants Ltd. v Independent Liquor (N.Z.) Ltd., unreported, High Court, Auckland, 20 December 1989, CP 2614/89, Gault J. Artifakts Design Group Ltd. v N P Rigg Ltd. [1993] 1 N Z L R 196 Cardmember Wines Ltd v The Wine Society Ltd.. (1992) 4 T C L R 556 Cerebos Greggs Ltd. v Unilever New Zealand Ltd., unreported, High Court, Auckland, 3 June 1994, C L 71/93, Fisher J. Comite Interprofessionel du Vin de Champagne v Wineworths Ltd. [1992] 2 N.Z.L.R. 327 (the 'Champagne' case) Commerce Commission v Telecom Corporation of New Zealand Ltd., unreported, District Court, Wellington, 9 October 1990, Ongley J.; Customglass Boats Ltd. v Salthouse Bros. Ltd [1976] 1 N Z L R 36 Dominion v Mutual, unrptd, High Court, Auckland, 8 November 1984, A 9/84, Vautier J. Dominion Rent A Car Ltd. v Budget Rent A Car Systems (1970) Ltd. [1987] 2 N Z L R 395 (CA.) . Foodtown Supermarkets Ltd. v Commerce Commission [1991] 1 N Z L R 466 Frank M. Winstone (Merchants) Ltd. v Plix Products Ltd. [1985] 1 N Z L R 376 (CA. ) Granny May's Management Pty. Ltd. v Whitcoulls Group Ltd. (1993) 5 T C L R 148 Goldsbro v Walker [1993] 1 N Z L R 394 (H.C.) Griffin &. Sons Ltd. v Regina (1988) Ltd., unreported, High Court, Dunedin, 01 August 1989, CP 72/89, Fraser J; (1989) 15 B.C.L. 1559. Keg Restaurants Ltd. v Brandy's Restaurant Ltd. (1983) 1 NZIPR 453. Klissers Farmhouse Bakeries Ltd. v Harvest Bakeries Ltd. [1985] 2 N Z L R 143 Levi Strauss v Kimbyr Investments [1994] 1 N Z L R 332 McBean's Orchards (Australia) Pty. Ltd. v McBean's Orchards Ltd. (1982) 1 NZIPR 406 1 5 4 Marcol v Commerce Commission [ 1 9 9 1 ] 2 N Z L R 5 0 2 ( H . C . ) Mills v United Building Society [ 1 9 8 8 ] 2 N Z L R 3 9 2 Mutual v Dominion, u n r p t d , H i g h C o u r t , A u c k l a n d , 9 A u g u s t 1 9 8 2 , A 1 6 5 4 / 7 7 , M o l l e r J . Noel Leeming Television Ltd. v Noel's Appliance Centre Ltd. ( N o . 2 ) , u n r e p o r t e d , H i g h C o u r t , C h r i s t c h u r c h , 2 7 A u g u s t 1 9 8 5 , A 1 0 2 / 8 5 , H o l l a n d J . Pioneer Hi-Bred Corn Co. Ltd. v Hy-Line Chicks Pty. Ltd [ 1 9 7 8 ] 2 N Z L R 5 0 Pitstop Exhaust Ltd. v Alan Jones Pitstop International Ltd. ( 1 9 8 8 ) 2 N Z B L C 1 0 2 , 9 6 8 . Prudential Building and Investment Society of Canterbury v Prudential Assurance Company of New Zealand Ltd. [ 1 9 8 8 ] 2 N Z L R 6 5 3 Rheem v Commerce Commission, u n r e p o r t e d , H i g h C o u r t , A u c k l a n d , 2 9 J u l y 1 9 9 1 , A P 1 6 6 / 9 1 , B a r k e r J . ; ( 1 9 9 1 ) B . C . L . 1 9 7 4 The Scotch Whisky Assoc. v Norman James Eade, u n r e p o r t e d , H i g h C o u r t , C h r i s t c h u r c h , C P 2 0 4 / 9 0 , 4 J u l y 1 9 9 0 , H o l l a n d J . ; u n r e p o r t e d , C o u r t o f A p p e a l , C A 1 7 7 / 9 0 , 2 0 A u g u s t 1 9 9 0 Sterling Pharmaceuticals (N.Z.) Ltd. v Boots Co. (N.Z.) Ltd. (No. 2) [ 1 9 9 1 ] 2 N Z L R 6 3 4 ( H . C . ) Sunshine Leisure Products (NZ) Ltd. v Great Outdoors Co. Ltd. [ 1 9 8 6 ] 2 N Z L R 1 8 3 Taylor Bros. Ltd. v Taylors Group Ltd. [ 1 9 8 8 ] 2 N Z L R 1 Theodorus Couwenberg & Son Ltd. v Diesil Progress NZ Ltd. ( 1 9 8 8 ) 2 N Z B L C 1 0 2 , 9 7 6 . Tony Blain Pty. Ltd. v Splain [ 1 9 9 3 ] 3 N Z L R 1 8 5 Tot Toys v Mitchell [ 1 9 9 3 ] 1 N Z L R 3 2 5 Trust Bank Auckland Ltd. v ASB Bank Ltd. [ 1 9 8 9 ] 3 N Z L R 3 8 5 UPL v Dux Engineers [ 1 9 8 9 ] 3 N Z L R 1 3 5 • Watson v Dolmark Industries Ltd. [ 1 9 9 2 ] 3 N Z L R 3 1 1 2 . A u s t r a l i a Abundant Earth Pty. Ltd. v R and C Products Pty. Ltd. ( 1 9 8 5 ) 5 9 A L R 2 1 1 . 1 5 5 Argy v Blunts & Lane Cove Real Estate Pty. Ltd. ( 1 9 9 0 ) 9 4 A L R 7 1 9 Bradmill Industries Ltd. v B &S Products Pty. Ltd. ( 1 9 8 0 ) A . T . P . R . 4 0 - 1 9 6 Brock v The Terrace Times Pty. Ltd ( 1 9 8 2 ) 1 T . P . R . 2 4 Cadbury-Schweppes Pty. Ltd. v Pub Squash Co. Pty. Ltd. [ 1 9 8 1 ] 1 W . L . R . 1 9 3 ( P r i v y C o u n c i l , o n a p p e a l f r o m A u s t r a l i a ) . Chase Manhattan Overseas Corporation v Chase Corporation Ltd. ( 1 9 8 5 ) 6 3 A . L . R . 3 4 5 Comite Interprofesionel du Vin de Champagne v N.L. Burton Pty. Ltd. ( 1 9 8 1 ) 1 T . P . R . 1 2 8 ConAgra Inc. v McCain Foods (Aust.) Pty. Ltd. ( 1 9 9 2 ) 3 3 F . C . R . 3 0 2 Cue Design Pty. Ltd. v Playboy Enterprises Pty. Ltd. ( 1 9 8 2 ) 4 5 A L R 5 3 5 Dairy Industry Marketing Authority v Southern Farmers Co-Operative Ltd. ( 1 9 8 2 ) 1 T . P . R . 6 4 . Dairy Vale Metro Co. Operative Ltd. v Brownes Dairy Ltd. ( 1 9 8 1 ) 3 5 A . L . R . 4 9 4 , 5 0 1 Dial-An-Angel Pty. Ltd. v Sagitaur Services Pty. Ltd. ( 1 9 9 0 ) 9 6 A . L . R . 1 8 1 . Elders TXL Ltd. v Australian Estates Pty. Ltd ( 1 9 8 7 ) 1 0 I . P . R . 5 7 5 Esanda Ltd. v Esanda Finance Ltd. [ 1 9 8 4 ] F . S . R . 9 6 ( H C ) . Fletcher Challenge Ltd. v Fletcher Challenge Pty. Ltd. ( 1 9 8 2 ) 8 F . S . R . 1 Gates v City Mutual Life Assurance Society Ltd. ( 1 9 8 6 ) A T P R 4 0 - 6 6 6 Happy Landings Pty. Ltd. v Magazine Promotions Pty. Ltd. ( 1 9 8 4 ) A T P R 4 0 - 4 5 9 Hornsby Building Information Centre Pty. Ltd. v Sydney Building Information Centre Ltd. [ 1 9 7 7 - 7 8 ] 1 4 0 C . L . R . 2 1 6 ( H . C . A u s t . ) Hunt Contracting Co. Pty. Ltd. v Roebuck Resources NL ( 1 9 9 2 ) 1 1 0 A . L . R . 1 8 3 Hutchence v South Seas Bubble Pty. Ltd. ( 1 9 8 6 ) 6 4 A . L . R . 3 3 0 Interlego AG v Croner Trading Pty. Ltd. ( 1 9 9 2 ) 1 1 1 A L R 5 7 7 Irish Distillers Ltd. v S. Smith & Son Pty. Ltd ( 1 9 8 7 ) A . T . P . R . 4 0 - 7 5 6 . Lego Australia Pty. Ltd. v Paul's (Merchants) Pty. Ltd. ( 1 9 8 2 ) A . T . P . R . 4 0 - 3 0 8 , 4 3 - 8 0 5 1 5 6 LSKMicrowace Technology Pty. Ltd. v Rylead Pty. Ltd. ( 1 9 9 0 ) 1 6 I . P . R . 1 0 7 ( F . C . A . ) . McWilliams Wines Pty. Ltd. v McDonalds System of Australia Ltd. [ 1 9 8 0 ] 4 9 F . L . R . 4 5 5 ( t h e Big Mac c a s e ) Mobil Oil Corporation v Registrar of Trade Marks ( 1 9 8 3 ) 1 5 A L R 7 3 5 Moorgate Tobacco Co. Ltd. v Philip Morris Ltd. ( 1 9 8 4 ) 5 6 C . L . R . 4 1 4 . Motorcharge Pty. Ltd. v Motorcare Pty. Ltd ( 1 9 8 2 ) 4 2 A . L . R . 1 3 6 Murray Gouldbum Co-Operative Co. Ltd. v New South Wales Dairy Corporation ( 1 9 8 9 - 9 0 ) 2 4 F C R 3 7 0 . Parkdale Custom Built Furniture Pty. Ltd. v Puxu Pty. Ltd. ( 1 9 8 1 - 8 2 ) 1 4 9 C . L . R . 1 9 1 ( H . C . A u s t . ) Peter Isaacson v Nationwide News ( 1 9 8 4 ) 5 6 A . L . R . 5 9 5 Phelps v Western Mining Corporation Ltd. ( 1 9 7 8 ) A T P R 4 0 - 0 7 7 R & C Products Pty. Ltd. v Hunters Products Pty. Ltd. ( 1 9 8 8 ) A T . P . R . 4 0 - 8 3 9 R&C Products Pty. Ltd. v S C Johnson & Sons Pty. Ltd. ( 1 9 9 3 ) 1 1 3 A . L . R . 4 8 7 Rent A Ute Pty. Ltd v Golden 214 Pty. Ltd. ( 1 9 8 7 ) A T . P . R . 4 0 - 8 0 0 . Rolls Royce Motors Ltd. v D.I.A. {Engineering) Pty. Ltd. ( 1 9 8 1 ) 5 0 F . L . R . 3 4 0 Shoshana Pty. Ltd. v 10th Cantonae Pty. Ltd. ( 1 9 8 7 ) 1 1 I P R 2 4 9 Snoid v C.B.S. Records Australia Ltd. ( 1 9 8 1 ) 5 4 F . L . R . 2 0 2 . Starcross Pty. Ltd. v Liquidchlor Pty. Ltd. ( 1 9 8 1 ) 1 T . P . R . 1 0 3 . State Government Insurance Corporation v Government Insurance of New South Wales ( 1 9 9 1 ) 1 0 1 A . L . R . 2 5 9 Sterling Pharmaceuticals Pty. Ltd. v Johnson & Johnson Pty. Ltd. ( 1 9 9 0 ) 9 6 A L R 2 7 7 Taco Company of Australia Inc. v Taco Bell Pty. Ltd. ( 1 9 8 2 ) 4 2 A L R 1 7 7 Toteff v Antonas ( 1 9 5 2 ) 8 7 C L R 6 4 7 VISA International Services Assoc. v Beiser Corporation Pty. Ltd. ( 1 9 8 3 ) 6 T P R 8 2 . 1 5 7 Weitmann v Katies Ltd. ( 1 9 7 7 ) 2 9 F . L . R . 3 3 6 . World Series Cricket Pty Ltd. v Parish ( 1 9 7 7 ) 1 6 A . L . R . 1 8 1 3 . U n i t e d S t a t e s o f A m e r i c a Elliot Knitwear, Inc. 59 F T C 8 9 3 ( 1 9 6 1 ) . El Mow Cigar Co. v FTC, 1 0 7 F . 2 d . 4 2 9 ( 4 t h C i r . 1 9 3 9 ) . FTC v Raladam Co. 2 8 3 U . S . 6 4 3 ( 1 9 3 1 ) International News Service v The Associated Press ( 1 9 1 8 ) 2 4 8 U S 2 1 5 Roberson v Rochester Folding Box Co. ( 1 9 0 2 ) 1 7 1 N . Y . 5 3 8 , 6 4 N . E . 4 4 2 Standard Brands, Inc. v Smidler, 1 5 1 F . 2 d . 3 4 ( 2 d . C i r . 1 9 4 5 ) . Standard Oil Co. of New York v United States 2 2 1 U . S . 1 ( 1 9 1 1 ) . 4 . U n i t e d K i n g d o m A G Spalding & Bros, v A. W. Gamage Ltd. ( 1 9 1 5 ) 3 2 R . P . C . 2 7 3 Annabel's (Berkerly Square) Ltd. v G. Shock [ 1 9 7 2 ] R . P . C . 8 3 8 Argyllshire Weavers Ltd. v A. Macaulay Tweeds Ltd. [ 1 9 6 4 ] R . P . C . 4 7 7 . Associated Newspapers pic v Insert Media Ltd. [ 1 9 9 1 ] 3 A l l E . R . 5 3 5 Athletes' Foot Marketing Associates v Cobra Sports Ltd. [ 1 9 8 0 ] R . P . C . 3 4 3 . Alain Bernardin et Cie v Pavilion Properties Ltd. [ 1 9 6 7 ] R . P . C . 5 8 1 ( t h e "Crazy Horse" c a s e ) Blanchard y Hill ( 1 7 4 2 ) 2 6 E . R . 6 9 2 Bollinger v Costa Brava Wine Co. Ltd. [ 1 9 6 0 ] C h . 2 6 2 Bourne v Swan & Edgar Ltd. [ 1 9 0 3 ] 1 C h . D . 2 1 1 Bristol Conservatories Ltd. v Conservatories Custom Built Ltd. [ 1 9 8 9 ] R . P . C . 4 5 5 1 5 8 Byron (Lord) v Johnson ( 1 8 1 6 ) 3 5 E . R . 8 5 1 Canham v Jones ( 1 8 1 3 ) 3 5 E . R . 3 0 2 Consorzio del Prosciutto di Parma v Marks & Spencer pic, U n r e p o r t e d , 2 9 N o v e m b e r 1 9 9 0 ( t h e Parma ham c a s e ) ' Crutwell v Lye ( 1 8 1 0 ) 3 4 E . R . 1 2 9 . Dean v Steel ( 1 6 2 6 ) L A t . 1 8 8 ; 8 2 E . R . 3 9 Erven Warnink B.V. v / Townend & Sons (Hull) Ltd. [ 1 9 7 9 ] A C . 7 3 1 Hogg v Kirby ( 1 8 0 3 ) 3 2 E . R . 3 3 6 Illustrated Newspapers Ltd. v Publicity Services (London) Ltd. [ 1 9 3 8 ] 1 A l l E . R . 3 2 1 Imperial Group pic v Philip Morris Ltd. [ 1 9 8 4 ] R P C 2 9 3 Inland Revenue Commissioners v Muller & Co's. Margarine Ltd. [ 1 9 0 1 ] A C . 2 1 7 Lego System Aktieselskab v Lego M Lemelstrich Ltd. [ 1 9 8 3 ] F S R 1 5 5 ( t h e E n g l i s h Lego c a s e ) Lonrho Ltd. v Shell Petroleum Ltd. [ 1 9 8 2 ] A C . 1 7 3 . Lyngstad v Annabas Products Ltd. [ 1 9 7 7 ] F . S . R . 6 2 ( t h e ABBA c a s e ) McCulloch v Lewis A. May (Produce Distributors) Ltd. [ 1 9 4 7 ] 2 A l E . R . 8 4 5 Mirage Studios v Counter-Feat Clothing Ltd. [ 1 9 9 1 ] F . S . R . 1 4 5 ( t h e Ninja Turtles c a s e ) . Morgan-Grampian v Training Personnel Ltd. [ 1 9 9 1 ] F . S . R . 2 6 7 Reckitt & Colman Products Ltd. v Borden Inc. [ 1 9 9 0 ] 1 A l E . R . 8 7 3 Reddaway (Frank) & Co. Ltd. v George Banham & Co. Ltd. [ 1 8 9 6 ] A . C . 1 9 9 ( H . L . ) . Scott Ltd. v Nice-Pak Products Ltd. [ 1 9 8 9 ] F . S . R . 1 0 0 . Shaw Bros. (HK) Ltd. v Golden Harvest (HK) Ltd. [ 1 9 7 2 ] R . P . C . 5 5 9 Singleton v Bolton ( 1 7 8 3 ) 9 9 E . R . 6 6 1 Southern v How ( 1 6 1 8 ) C r o . J a c . 4 6 8 1 5 9 Stringfellow v McCains Foods ( G B ) L t d . [ 1 9 8 4 ] R . P . C . 5 0 1 . Sykes v Sykes ( 1 8 2 4 ) 1 0 7 E . R . 8 3 4 Tavener Rudedge v Trexapalm Ltd. [ 1 9 7 5 ] F . S . R . 4 7 9 ( t h e Kojak c a s e ) . Vine Products Ltd. v Mackenzie & Co, Ltd. [ 1 9 6 9 ] R . P . C . 1 . Walker (John) & Sons Ltd. v Henry Ost & Co. Ltd. [ 1 9 7 0 ] 1 W . L . R . 9 1 7 . Webster v Webster ( 1 7 9 1 ) 3 6 E . R . 9 4 9 William Edge & Sons Ltd. v William Nicholls & Sons Ltd. [ 1 9 1 1 ] A . C . 6 9 3 Wombles Ltd. v Wombles Skips Ltd. [ 1 9 7 5 ] F . S . R . 4 8 8 ( t h e Wombles c a s e ) World Athletics Ltd. v ACM Webb [ 1 9 8 1 ] F . S . R . 2 7 4 . C a n a d a Athans v Canadian Adventure Camps Ltd. ( 1 9 7 8 ) 8 0 D . L . R . ( 3 d ) 5 8 3 ( O n t . H . C . J . ) Canada Safeway Ltd. v Manitoba Food and Commercial Workers, Local 832 ( 1 9 8 3 ) 2 5 C . C . L . T . 1 ( M a n . C A . ) Ciba-Geigy Ltd. v Apotex Inc. [ 1 9 9 2 ] 3 S . C . R . 1 2 0 Dowell v Mengen Institute ( 1 9 8 3 ) ' 7 2 C . P . R . ( 2 d ) 2 3 8 ( O n t . H . C . J . ) Institut National des Appelations d'Origine des Vines et Eaux-de-Vie v Andres Wines Ltd ( 1 9 9 0 ) 7 1 D . L . R . ( 4 t h ) 5 7 5 ( t h e C a n a d i a n Champagne c a s e ) Krouse v Chrysler Canada Ltd. ( 1 9 7 4 ) 4 0 D . L . R . ( 3 d ) 1 5 ( O n t . C A . ) Multivision Films, Inc. v McConnell Advertising Co. Ltd. ( 1 9 8 3 ) 6 9 C . P . R . ( 2 d ) 1 Orkin Exterminating Co. v Pestco Co. of Canada [ 1 9 8 5 ] 1 9 D . L . R ( 4 t h ) 9 0 ( O n t . C A . ) Parke Davis & Co. v Empire Laboratories Ltd., [ 1 9 6 4 ] S . C . R . 3 5 1 Seiko Time Canada Ltd. v Consumers Distributing Co. Ltd. ( 1 9 8 4 ) C C L T 2 9 6 B i b l i o g r a p h y 160 1 . 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L t d . , S y d n e y Duggan, The Economics of Consumer Protection: A Critique of the Chicago School Case Against Intervention, 1 9 8 2 , A d e l a i d e L a w R e v i e w A s s o c i a t i o n , U n i v e r s i t y o f A d e l a i d e , 6 D u g g a n a n d D a r v e l l , Consumer Protection Law and Theory, 1 9 8 0 , T h e L a w B o o k C o m p a n y L t d . , S y d n e y G o l d r i n g a n d M a h e r , Consumer Protection Law in Australia, 2 d e d . 1 9 8 3 , B u t t e r w o r t h s , S y d n e y House of Representatives Parliamentary Debates, v o l . 1 8 - 2 0 , p . 2 7 3 3 , 2 5 O c t o b e r 1 9 7 3 ( A u s t . ) J . G . S t a r k e Q . C . , Trade names - Passing off action - Right to exclusive use of trade description -Impact of legislation on principles applicable [ 1 9 8 0 ] 5 4 A . L J . 7 4 5 . 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G r a f v o n d e r S c h u l e n b u r g & G S k o g h ( e d s . ) Law and Economics and the Law of Economic Regulation, 1 9 8 6 , K l u w e r A c a d e m i c P u b l i s h e r s , H i g h a m , M a s a c h u s s e t t s , 3 9 . B a k e r a n d B a u m , Section 5 of the Federal Trade Commission Act: A Continuing Process of Redefinition ( 1 9 6 2 ) 7 V i l l . L . R . 5 1 7 , 5 2 0 . D i e t r i c h , The Federal Trade Commission and Consumer Protection [ 1 9 7 3 ] 1 A . B . L . R . 2 0 4 , 2 0 6 - 2 0 7 . 1 6 2 E v a n s a n d G u n n , Trademark Survey Evidence ( 1 9 9 0 ) 2 2 I . P . L . R . 2 8 9 H a n d l e r , The Control of False Advertising Under the Wheeler-Lea Act [ 1 9 3 9 ] 6 L a w a n d C o n t e m p o r a r y P r o b l e m s 9 1 H e a r i n g s o n S . 3 7 4 4 b e f o r e t h e H o u s e C o m m i t t e e o n I n t e r s t a t e a n d F o r e i g n C o m m e r c e , 7 4 t h C o n g r e s s , 2 d . S e s s i o n 1 4 , 7 9 - 8 0 , 8 5 - 8 6 , 8 8 - 9 1 . K i n t n e r , Federal Trade Commission Regulation of Advertising [ 1 9 6 6 ] 6 4 M i c h . L . R . 1 2 6 9 , 1 2 7 7 . L e g i s l a t i o n N o t e , The Federal Trade Commission Act of 1938 [ 1 9 3 9 ] 3 9 C o l u m . L . R . 2 5 9 ; M i l l s t e i n , The Federal Trade Commission and False Advertising [ 1 9 6 4 ] 6 4 C o l u m . L . R . 4 3 9 , 4 5 0 Minda, The Law and Economics and Critical Legal Studies Movements in American Law i n N . M e r c u r o ( e d . ) Law and Economics, K l u w e r A c a d e m i c P u b l i s h e r s , B o s t o n , 8 7 . M o n t a g u e , Unfair Methods of Competition [ 1 9 1 5 ] 2 5 Y a l e L J . 2 0 . N o t e , Corrective Advertising Orders of the Federal Trade Commission [ 1 9 7 1 ] 8 5 H a r v . L . R . 4 7 7 , 4 7 9 Pattison, Market Research Surveys - Money Well Spent? The Use of Survey Evidence in Passing Off Proceedings in the U.K. [ 1 9 9 0 ] 3 E . I . P . 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F r a n c e Consumer Policy in OECD Countries, 1 9 8 5 - 1 9 8 6 a n d 1 9 8 7 - 1 9 8 8 , 1 9 8 7 a n d 1 9 8 9 , P a r i s , O E C D 7 . G e r m a n y K a u f m a n n , Passing off and Misappropriation, 9 S t u d i e s i n I n d u s t r i a l P r o p e r t y & C o p y r i g h t L a w , T h e M a x P l a n c k I n s t i t u t e F o r F o r e i g n a n d I n t e r n a t i o n a l P a t e n t , C o p y r i g h t a n d C o m p e t i t i o n L a w , M u n i c h , 1 9 8 6

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