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

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MATTER OR MIRAGE?: THE  PUBLIC POLICY RATIONALE FOR  SECTION 9 OF THE FAIR TRADING ACT  1986 (N.Z.)  by C H R I S T O P H E R B R I A N H L1.B. (Hons.), T h e University of Ot Dipl.P.L. Studies, T h e University of Victoria Barrister a n d Solicitor of the H i g h C o u r t  A  A L L ago, 1987 at Wellington, 1988 of N e w Zealand  T H E S I S S U B M I T T E DI N P A R T I A LF U L F I L L M E N T 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 (Faculty of L a w )  S T U D I E S  W e a c c e p t this thesis as c o n f o r m i n g to the r e q u i r e d standard  T H E  U N I V E R S I T YO F B R I T I S HC O L U M B I A January ©Christopher  1995  Brian Hall,  1995  O F  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  DE-6 (2/88)  IT? 5"  11 Abstract  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 Table of  Contents  Abstract  ii  Table of Contents  iv  List of Tables  vi  Acknowledgment  vii  Introduction  1  Chapter O n e : Identification of the public policy rationale section 9 of the FairT r a d i n g A c t  for 5  Introduction Cure defects in the previous legislation C o m p l y with C E R obligations C r e a t e a m o r e efficient m a r k e t Protect consumers S u m m a r y Chapter Two: Theoretical evaluation of public policy rationale Introduction : Efficiency and consum To regulate or to not Recommendations . .  .  5 6 9 10 15 22  the 24  . er protection: consistent? regulate .  24 26 28 39  Chapter Three: Identification of the public policy rationale for the tort of passing off  44  Introduction Origins and early development T h e Advocaat case T h e tort today E x p a n s i o n into other torts T h e public policy rationale  44 46 53 58 74 76  Chapter Four: T h e approach of the courts Introduction T h e courts o n section 9 a n d passing off Protection of descriptive n a m e s  81  .  81 82 88  V  Chapter  five:  Get-up Reputation Evidence of deception T h e c o m m o n field o f activity rule Conclusions  94 102 109 122 126  T h e effects for c o n s u m e r s  127  Introduction T h e framework T h e analysis  127 128 133  C h a p t e r six: S u m m a r y o f conclusions  a n d recommendations  A p p e n d i x O n e : Reasoning for table one Appendix T w o : Reasoning for conclusions effect if B ceases to trade  141 144  o n 149  L e g i s l a t i o n list  151  C a s e list  153  Bibliography  161  vi List of Tables  T a b l e O n e : Results of B's passing off o n c o n s u m e r s o n e to four:  133  T a b l e T w o : Results of a n action pursuant to section 9  137  vn Acknowledgment  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 Y o u  CBH 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  Sections 10, 11 and 12 of the A c t contain more specific prohibitions on misleading or deceptive conduct in relation to goods, services and employment respectively. Section 14 is a similar provision i n relation to dispositions of land. Section 10 would apply to the fact example used i n 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 will also be prohibited by section 9. 1  2 o f p a s s i n g off.  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 is 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 is  a d v a n c e d as w e l l as it m i g h t  be.  A f t e r this i n t r o d u c t i o n , the thesis h a s six chapters. c h a p t e r s one, t w o a n d five. identified, by reference Australian legislation  not  T h e first h y p o t h e i s is a d d r e s s e d  in  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 is  to three  classes of document:  on which the Fair Trading  one,  the  United States  A c t and section 9 were  and  generally  modelled; two, the N e w Z e a l a n d legislation that p r e c e d e d the Fair Trading Act; and, three,  the  policy and  other  documents  that  preceded  passing  of the  Act.  Those  d o c u m e n t s s h o w that there are a n u m b e r of limbs to the public policy rationale, including to cure defects in the previous legislation; fulfill obligations u n d e r the N e w Z e a l a n d Australia C l o s e r E c o n o m i c Relations Trade A g r e e m e n t ; create a m o r e efficient and protect consumers. section  market;  T h e latter two are the principal limbs of the policy rationale for  9.  I n c h a p t e r t w o , t h e r e is 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 appropriate for advancement of the policy rationale identified in chapter one.  In section  o n e , t h e r e is 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  policy  rationale, p r o m o t i o n of efficiency a n d protection of consumers, are even consistent capable of being advanced simultaneously. they are and they can be. desirable  to  regulate  is  or  It is 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 ,  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 it is  for efficiency  and  consumer  protection  is c o n s i d e r e d .  c o n c l u d e d t h a t it is 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  It  is and  3 should be a m e n d e d in several  respects.  T h e second hypothesis, that the courts have confused the policy rationales for  passing  o f f a n d f o r s e c t i o n 9, is 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 is 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 is 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  England,  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 . It is 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  tort  is 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  the  g o o d s o f s o m e b o d y e l s e . It is 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  the  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 is t o p r e v e n t / c o m p e n s a t e f o r  that  damage.  tort.  T h e r e is 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  It is 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 is, 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  interests  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 is, a g a i n , p r o t e c t i o n o f t r a d e r s . It is a l s o c o n c l u d e d t h a t , because the two actions are based u p o n different public policy rationales, the should take different a p p r o a c h e s to  courts  them.  I n c h a p t e r f o u r , t h e r e is 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 u n d e r s e c t i o n 9, w h i c h s h o w s that, 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  cases  standards  in cases u n d e r the section, the courts have i m p o r t e d principles developed in passing  off.  T h e r e is 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  Trade  Practices Act, principally because; one, that A c t has b e e n in effect longer a n d a  m o r e  substantial jurisprudence has b e e n generated; and, two, the N e w Z e a l a n d courts  have  indicated that the Australian decisions are a n d will b e of assistance to the N e w courts, which have  followed  most  of the  general  principles generated  in  Zealand Australia.  4 Examination  of the  cases  shows  that  the  courts  in both  countries  have  expressly  recognised the c o n s u m e r protection flavour of section 9 b u t h a v e failed to give effect  to  it.  is  T h e importation of passing off principles h a p p e n s primarily in five areas; e a c h  considered  separately.  In c h a p t e r five, practical aspects o f the deficiencies identified i n c h a p t e r s t w o a n d  four  are evaluated, b y considering the effect of section 9 o n four classes of c o n s u m e r ,  using  nine variations of a fact example.  It 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  a p p r o a c h of the courts are particularly telling for o n e class o f c o n s u m e r , n a m e l y w h o a r e less able to tell the difference b e t w e e n it, a n d b e t w e e n  the those  a genuine product and an imitation  a higher quality product and a lower quality  of  one.  C h a p t e r six contains a s u m m a r y o f the 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 the c h a p t e r s p r e c e e d i n g it, 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 least three respects, a n d the courts should alter their a p p r o a c h to cases b r o u g h t s e c t i o n 9, i n at l e a s t n i n e  respects.  under  CHAPTER IDENTIFICATION OF RATIONALE FOR  THE  SECTION 9 OF THE  ONE  s  PUBLIC POLICY FAIR TRADING ACT  1986  INTRODUCTION  In this chapter, the public policy rationale for section 9 o f the Fair T r a d i n g A c t  is  identified, b y reference to historical a n d other factors in three jurisdictions: N e w Z e a l a n d , Australia a n d the U n i t e d States of A m e r i c a .  D o c u m e n t s created by the N e w Z e a l a n d G o v e r n m e n t and by interested parties that two limbs of the policy rationale were: one, to cure defects in the N e w legislation that p r e v a i l e d p r i o r to the A c t b e i n g passed; a n d , two, to fulfill pursuant to trade agreements, entered into b y N e w  1  suggests Zealand  obligations  Zealand and Australia, and,  particular, obligations to h a r m o n i s e e c o n o m i c policies a n d practices.  Those limbs  in are  considered in parts A and B.  Historical factors in Australia a n d the U n i t e d States are significant b e c a u s e section 9 of  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. 1  6  the Fair T r a d i n g A c t was (Australia), which was  modelled on section 52 of the T r a d e Practices A c t  itself heavily i n f l u e n c e d b y  section 5 of the Federal  1974 T r a d e  C o m m i s s i o n A c t 1914 (U.S.). T h o s e historical factors, in conjunction with other material, suggest that two further limbs of the policy rationale for section 9 are: three, to efficiency in the market-place; and, four, protect the e c o n o m i c interests of  advance  consumers.  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 it is s e e n t h a t t h e s e c t i o n is a i m e d r e m o v i n g two significant barriers to those objectives, n a m e l y concentrations of p o w e r a n d unfair or deceptive acts or  A.  at  economic  practices.  CURE DEFECTS IN THE PREVIOUS LEGISLATION  Prior to the Fair T r a d i n g A c t , the l a w in N e w Z e a l a n d relating to trade practices  was  contained in a n u m b e r of statutes, principally the M e r c h a n d i s e Marks  the  Trade Practices A c t 1958 and the C o n s u m e r Information A c t  A c t 1954,  1969.  T h e T r a d e Practices A c t established a T r a d e Practices a n d Price Commission,  2  whose  f u n c t i o n s i n c l u d e d to " 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 av i e w to d e t e r m i n i n g w h e t h e r such practices w e r e contrary to the public interest."  2  Section 3.  3  Sections 8(a) and 16.  3  T h e 'public interest' was  any  defined  7  i n t e r m s o f its c o n s e q u e n c e s the unreasonable goods  to  4  and included unreasonable increases in prices  limitation of competition  consumers.  8  T h e  7  Commission  or profits,  or limitation or prevention of supply h a d  discontinuance or non-repetition of offending  T h e Merchandise Marks  5  power  practices.  to  m a k e  orders  1 0  9  A c t dealt with applications of trade descriptions to  U n d e r s e c t i o n 10, it w a s a n o f f e n c e t o a p p l y  "figures, words, or m a including a trade m a r k goods are the manufact whose manufacture or  rks, or or not, ure or m merchan  of  directing  goods,  including n u m b e r , quantity, weight, quality, place or country of production a n d m o d e manufacture.  6  of  any:  arrangement or combination thereof, whether as are likely to l e a d persons to believe that the erchandise of s o m e person other than the person d i s e they really are."  Penalties for infringement i n c l u d e d a fine, i m p r i s o n m e n t a n d forfeiture o f p r o p e r t y in relation to w h i c h the offence was  committed.  1 1  T h e C o n s u m e r Information A c t was to m a k e provision for informative labelling  4  Section 20.  5  Section 20 (b).  6  Section 20 (c).  7  Section 20 (d).  8  Section 20 (e).  9  Section 19.  10  Section 2.  11  Section 18.  and  8  m a r k i n g of g o o d s a n d to prevent quantity  In  1 3  or price  addition  to  1 4  deceptive or misleading practices  of goods or quantity of ingredients of  the  T r a d e Practices  protection legislation was  Price  Commission,  goods.  1 2  in relation  1 5  enforcement  of  carried out by the C o n s u m e r Council a n d the  Institute, b o t h established u n d e r the C o n s u m e r C o u n c i l A c t 1966.  to  consumer Consumers'  T h e Council was a  policy-making body, charged with protecting a n d promoting the interests of  consumers  "by w h a t e v e r m e a n s a p p e a r to b e expedient" a n d to "encourage the i m p r o v e m e n t  and  development  day  activities,  of industry and commerce".  including  receiving  and  1 6  acting  T h e Institute carried out the d a y to on  complaints  f r o m  consumers,  holding  discussions a n d reaching agreements with traders a n d helping t h e m draft contracts other documents  designed to place the c o n s u m e r a n d the trader in positions of  and equal  strength, 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 tests a n d m o n i t o r i n g the practical effects consumer  legislation.  of  1 7  12  Long title.  13  Section 4.  14  Section 10.  15  Section 5, but only in relation to certain goods or classes of goods, as specified by regulation.  16  Section 16.  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. F o r a comparison of the New Zealand Consumer Council with similar bodies in other jurisdictions refer Martin and Smith, The Consumer Interest, 1968, The Pall M a l l Press Ltd., London, chp. 15. M u c h 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. F r o m 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. 17  9  T h e M e r c h a n d i s e Marks A c t a n d the C o n s u m e r Information A c t w e r e both repealed the  Fair Trading A c t because  they proved unsatisfactory  as  consumer  by  legislation.  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 at 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 "little  guidance  to traders about their obligations, a n d n o redress to consumers affected b y  offending  conduct."  1 8  T h e 1977 W o r k i n g Party o n consumer policy advised the G o v e r n m e n t that there was a n e e d for r e f o r m of the legislation relating to trade practices a n d c o n s u m e r A  protection.  n u m b e r of defects in the prior legislation w e r e identified, including a lack of  1 9  clear  enforceable standards of trading conduct, aneed for readily accessible remedies and a need for effective consumer safety provisions.  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 into f o r c e o n 1J a n u a r y 1983. a n d procedures in the two  18  Parliamentary Debates, vol.  Article 21 p r o v i d e d for h a r m o n i s a t i o n of customs, countries and for a review of the agreement  powers  in 1988  to  472, p. 2499, 1 July 1986.  Brown and Grant, The Law of Intellectual Property in New Zealand, 1989, Butterworths, Wellington, para. 7.2. F o r 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. 19  10  consider the harmonisation of government economic policies a n d  practices.  2 0  In introducing the Fair T r a d i n g Bill, the Minister of C o n s u m e r Affairs said that  the  i n c l u s i o n i n it 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]ill bring the country's trading law into line with that applying in Australia, recognising the desirability of progressively harmonising market-place laws b e t w e e n our two countries." 2 1  T h e courts have recognised that policy of harmonisation w h e n interpreting the a n d held that "consistency in the application of the legislation in the C E R s h o u l d clearly b e a i m e d at so far as r e a s o n a b l y practicable"  2 2  statute countries  a n d that the Australian  authorities w o u l d b e a n i m p o r t a n t guide to interpretation of the N e w Z e a l a n d A c t .  2  3  C. CREATE A MORE EFFICIENT MARKET  T h e  forebears  20  of the  N e w  Z e a l a n d Fair T r a d i n g A c t are the  U.S. Federal  T r a d e  A Memorandum on the Harmonisation of Business L a w between the two countries was signed in  1988. 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. 21  22  Taylor Bros. Ltd. v Taylors Group Ltd. [1988] 2 N Z L R 1, per Cooke P. at p. 39 (C.A.).  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." 23  11  Commission Act  Section 9of the  N e w  Zealand A c t was modelled o n section 52 of the Australian Act, which m a y not have  been  2 4  a n d the Australian Trade Practices A c t 1974.  modelled on, but was  certainly influenced by, section 5 of the U . S . Act.  provisions w e r e enacted primarily to a d v a n c e efficiency in the  1. U.S.  Federal Trade Commission Act (the "FTC  Those  two  marketplace.  Act")  T h e h i s t o r y o f t h e F T C A c t is 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 , the two  Acts being passed b y the s a m e Congress.  2 5  U n d e r the S h e r m a n Act,  D e p a r t m e n t of Justice was charged with attacking; one, combinations a n d in restraint of trade; and, two, monopolisation a n d attempts to monopolise.'  the  conspiracies T h e  A c t  was passed in response to aperceived threat arising f r o m concentration of business  and  economic p o w e r in the hands of a few businesses during a n d after the Civil W a r  It  was  considered  impractical and  unenforceable  from  the  start  2 8  and  2 6  was  2 7  shortly  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 it 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 that was  24  caught by the A c t but only 'unreasonable'  restraints  2 9  A result was  the  15 U . S . C . 45 (1914).  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. 25  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. 26  27  R.M.  Dietrich, The Federal Trade Commission and Consumer Protection [1973] 1 A . B . L . R . 204, 206-  207. 28  Baker and Baum, supra, note 26.  29  Standard Oil Co. of New York v United States 221 U . S . 1 (1911).  12  passing of the F T C A c t in 1914. over enforcement  3 0  Its 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  dissatisfaction  of the S h e r m a n Act, to address Congress' concerns over  economic  concentration a n d m o n o p o l i s a t i o n a n d to counter the inefficiencies that arise f r o m same.  the  It is 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  trade a n d that Congress never h a d that issue in mind.  3 1  in  Section 5was the k e y provision  of the A c t , p r o v i d i n g that:  "Unfair methods of competition in c o m m e r c e are hereby declared unlawful."  2. The  Australian Trade Practices Act  1974  (the  3 2  "Trade Practices Act")  T h e history of federal regulation of trade practices in Australia, prior to 1974, was  not  a very happy one.  the  3 3  T h e Australian Industries Preservation A c t 1906, m o d e l l e d o n  A detailed account of events leading up to passing of the A c t can be found at Baker and Baum, supra, note 26. M  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. F o r a summary and analysis of the Senate debates, refer G.H.Montague, Unfair Methods of Competition [1915] 25 Y a l e L.J. 20. 31  A s 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. 32  L i k e the FTC Act, the T P A c t regulates only interstate, and not intrastate, trade. In Australia, there are state laws relating to matters also dealt with i n Part V of the T P A c t , but it is generally considered that their impact has been negligible, mainly due to poor enforcement. Only the federal law will 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 A c t and regulate intrastate trade; two, Australia is a single 33  13  U.S. S h e r m a n A c t , w a s given avery n a r r o w interpretation b y the courts, fell into  disuse  and was repealed in 1965.  which,  like  the  F T C  monopolisation. to  address  efficient, consumers  Act, 3 5  It 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  3 4  was  intended  t oa d d r e s s  restrictive  trade  practices  Its s u c c e s s i n t h a t r e g a r d is d e b a t a b l e a n d it w a s s o o n d i s c o v e r e d  adequately competition exploited.  all the  practices  interfered  with;  by which trade small  businesses  could be  restricted;  discriminated  of inflation. A 1971 OECD  of  Trade  Practices  free,  3 6  and  3 7  m i n d of the legislature, the Bill h a d another important p u r p o s e in relation to the  3 8  not  against  W h i l e protection of consumers f r o m unfair practices was clearly large in the  competition policy  and  the  control  r e c o m m e n d a t i o n o n action against inflation in the field  was followed b y areport tabled in Parliament b y the to  collective  effect  that  restrictive  trade  practices  of  Commissioner  inhibit  effective  market and the T P A c t 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 A c t is modelled on the T P A c t 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., N o r t h Ryde, N.S.W., para. 112; Donald and Heydon, 1 Trade Practices Law, 1978, The Law B o o k C o . L t d . , 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.  35  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  competition a n d m a k e control of inflation m o r e  difficult.  3 9  W h e r e a s the Australian T r a d e Practices A c t deals with b o t h restrictive trade  practices  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 is 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 in the C o m m e r c e A c t 1986.  4 0  former  T h e Fair T r a d i n g Bill was said to b e a " c o m p a n i o n  or  counterpart" to the C o m m e r c e A c t :  "Whereas the C o m m e r c e Billpromotes workable a n d effective competition markets of N e w Z e a l a n d b y controlling restrictive trade practices a n d 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 is d e s i g n e d t o consumers to take advantage of the increased competition b y m a k i n g sur they receive accurate information that allows t h e m to m a k e rational choices the goods a n d services available."  in the antienable e that about  4 1  T h e Fair T r a d i n g A c t and the C o m m e r c e A c t are both administered by the  C o m m e r c e  Commission.  39  Ibid, p. 2912, 7 November 1973.  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. F o r 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 . C A u s t . ) , per Mason J. at pp. 204-205. 40  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 i n higher productivity and higher incomes, it also leads to monopolisation and restrictive trade practices. Since World War II, Governments i n many developed nations have enacted legislation to address that issue. 41  15  D. PROTECT CONSUMERS  Notwithstanding the legislative intent, false advertising f r o m the outset.  4 3  the U.S. Federal T r a d e C o m m i s s i o n  Its ability 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  o f t h e d e c i s i o n i n FTC v Raladam Co.,  in which a unanimous S u p r e m e Court  44  that false advertisements competitors  could be prohibited by the F T C only where  of the respondent,  attacked  regardless  Congress passed the W h e e l e r - L e a Act,  4  5  of deception  they  of the public.  a m e n d i n g section 5to provide  In  form held  affected response,  that:  " 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 that, f r o m t h e t i m e o f its e n a c t m e n t , C o m m i s s i o n c o u l d c e n t r e its 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  deception.  E v i d e n c e that such was intended can be seen, for example, in the fact that the  42  Supra, note 31 and text.  43  Refer Millstein, supra, note 31, p. 451.  44  283 U.S. 643 (1931).  45  52 Stat. 114 (1938) U.S.C. 52 (1958).  the 4 7  new  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 46  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; Commission Regulation of Advertising [1966] 64 Mich. L.R. 1269,  E.W. Kintner, Federal Trade  1277.  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. 47  16  injunctive r e m e d y was available only w h e n the C o m m i s s i o n h a d r e a s o n to believe  that  an injunction would  'unfair'  and  'deceptive' w e r e b o t h intended to h a v e w i d e m e a n i n g s a n d to b e flexible to m e e t  new  be  "to t h e  conditions and perceptions. as one's o w n  5  0  interest of the  public."  T h e  4 8  words  D e c e p t i o n has b e e n held to include using another's  4 9  a n d falsely representing  covering the scope of passing  that a product has  a certain origin,  n a m e 5 1  thus  off.  R.M. Dietrich, G e n e r a l Counsel for the U . S . Federal T r a d e C o m m i s s i o n , assisted with drafting of the Australian A c t section 5 of the F T C Act.  5  3  5  2  a n d s e c t i o n 52, i n p a r t i c u l a r , is s a i d t o b e m o d e l l e d  Section 52 provides  "A corporation shall not, in trade misleading or deceptive."  T h e  relationship  between  sections  5 and  that:  or commerce,  52  on  was  engage  considered  in conduct  that i s  i n Hornsby Building  Information Centre Pty. Ltd. v Sydney Building Information Centre Ltd. ,  54  Stephen J held  Section 13. T o 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 A c t (15 U.S.C. 53(b)) the power of the Commission to obtain injunctions was extended to all subject matters under its jurisdiction. 48  Hearings on S. 3744 before the House Committee on Interstate and Foreign Commerce, 74th Congress, 2d. Session 14, 79-80, 85-86, 88-91. 49  50  E.g. Standard Brands, Inc. v Smidler, 151 F.2d. 34 (2d. C i r . 1945).  51  E.g. El Moro Cigar Co. v FTC, 107 F . 2d. 429 (4th Cir. 1939).  52  R . M . Dietrich, supra note 27.  53  F o r example, Goldring and Maher, supra, note 33, para. 708.  54  [1977-1978] 140 C . L . R . 216 ( H . C A u s t . ) .  17  that the two sections w e r e "significantly different b o t h in f o r m a n d in origin" b e c a u s e  the  U . S . p r o v i s i o n , w h e n first e n a c t e d , w a s exclusively 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  of  competition in commerce"  or  and was  not concerned with "unfair or deceptive acts  practices in c o m m e r c e " until a m e n d e d in 1938. H e further held  that:  " S e c t i o n 5 2 o f o u r A c t is 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 . It 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 prohibition of conduct which misleads or deceives." 5 5  With  respect,  the  writer disagrees that the  consumer protection.  section was  exclusively  concerned  It is 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  with 52  w a s also a i m e d at r e d u c i n g inefficiency.  'Unfairness' w a s deliberately left out o f section  5 2 , it  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 it w o u l d ,  being the opinion of the Trade  Australian conditions, result in "a considerable transactions."  degree of uncertainty in  in  commercial  5 6  In 1976, the T r a d e Practices A c t was reviewed b y the 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 view that there continued to b e a n i m b a l a n c e of bargaining p o w e r b e t w e e n sellers a n d buyers, to the benefit of the former, a n d r e c o m m e n d e d a n u m b e r of a m e n d m e n t s strengthen  55  the  consumer  protection  provisions.  5 7  Many  of  the  to  Committee's  Ibid, p.226.  Trade Practices Review Committee, Report to the Minister of Business and Consumer Affairs, August 1976, Australian Government Publication Service, Canberra. 56  The Committee was also of the view that uncertainties of interpretation were causing some difficulties and could be inhibiting innovation; refer CCH Guidebook to Australian Trade Practices Law, supra, note 33; Brown and Grant, supra, note 19, para. 7.2. 57  18  r e c o m m e n d a t i o n s w e r e effected b y the T r a d e Practices A m e n d m e n t A c t 1977, substitution of awider definition of "consumer",  5 8  including  removal of the imprisonment  creation of wider powers for the grant of injunctions  5 9  a n d p o w e r to o r d e r  disclosure or corrective advertising, subject to am a x i m u m  expenditure.  penalty,  affirmative  6 0  It 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 "initiate c o n s u m e r l a w r e f o r m " a n d to "ensure the o u t l a w i n g o f inhibiting o r advertising,  wasteful  or  deceptive  packaging,  and  worthless  enforcement of fair product safety a n d information provisions."  guarantees  to  misleading and  the  T h e Fair Trading A c t  6 1  sought to establish a fairer balance b e t w e e n traders a n d consumers, particularly those on lower incomes  and for w h o m  English was  n o t a first l a n g u a g e .  6 2  A s far as  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 is 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 protecting consumers f r o m misleading and deceptive advertising, A u s t r a l i a n A c t h a s p r o v i d e d its c h i e f b e n e f i t s .  6 3  an area in which  this at the  6 4  Section 4B. The term was deliberately left undefined i n the New Zealand A c t because the Government wanted the A c t 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. 58  59  Section 80.  60  Section 8 0 A  61  Parliamentary Debates, vol.  472, p. 2499, 1 July 1986.  62  Ibid, vol. 467, p. 7888, 7 November 1985.  63  Ministry of Consumer Affairs, Guide to the Fair Trading Act 1986, p.3.  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. 64  19  It h a s b e e n s a i d t h a t s e c t i o n 9 is 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  It h a s  been  h e l d t h a t it is 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 enables  i t t oachieve  "...members dealing".  its  purposes",  6 6  and  that  the  effect  of  the  section  of the public h a v e a right not to b e misled a b o u t with w h o m  that  i s that they  are  6 7  A suggestion that aplaintiff m u s t s h o w that the conduct c o m p l a i n e d of has a quantifiable impact o n the interests of consumers has b e e n expressly rejected, the Court of  A p p e a l  holding that such attempts to "...add agloss to the Act..." should b e discouraged a n d that one  m u s t always return* to the ordinary w o r d s of the section a n d apply t h e m to  facts.  6 8  the  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 is c l e a r a n d u n a m b i g u o u s a n d , at 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 as this, 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 is 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 expects that in general, h o n e s t p e o p l e m a y b u y a n d sell w h a t they please." 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  65  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.  that:  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, C P 2614/89, Gault J. 67  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, i n relation to the argument that only point of sale confusion would attract liability. It was held that the protection of the A c t is available to potential, as well as actual, purchasers. 68  69  [1988] 2 N Z L R 392, per Casey J. at p. 413.  20  "As to w h e n exegesis can section; a n d must always  c o n d u c t is t o b e c h a r a c t e r i s e d as 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 d o little at a g e n e r a l level to 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 o b v i o u s l y it 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 r e t u r n to t h e m a n d a p p l y t h e m to the particular facts." 7 0  I n Taco Company of Australia Inc. v Taco Bell Pty. Ltd.,  71  Australia  held  if i tc 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 it 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  by  considering  that  what  circumstances".  7 2  conduct  i ssaid  will only b e  and  done  misleading  against  the  or  t h e F e d e r a l C o u r to f  deceptive  background  o fall  surrounding  T h e Australian courts a p p e a r to have resiled f r o m that position  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 ti sa t l e a s t a r g u a b l e t h a t  to the  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 is 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 under section  52.  7 3  T h e N e w Z e a l a n d courts h a v e not r e q u i r e d plaintiffs to point to amisrepresentation 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. causative defendant's  link between conduct.  any  to  Instead, they require plaintiffs to establish a  misapprehension  on  the  part  of  the  public  and  the  7 4  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". 70  71  (1982) 42 A L R 177, 202  See also D . A . Rice, Toward a Theory and Legal Standard of Consumer Unfairness [1984] 5 Journal of Law & Commerce, 111. 72  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. 73  cf. Cerebos Greggs Ltd. v Unilever New Zealand Ltd., unreported, H i g h Court, Auckland, 3 June 1994, C L 71/93, Fisher J. 74  21  It 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 is 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 equally to corporations dealing with one  another in trade or commerce.  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 is t h e u s u a l  applicant.  F i n a l l y , it is 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 )  7  5  applies A rival  7 6  a n d (2),  7 7  the court has a discretion  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 it 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 is 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  as  the culpability of third parties, the gross carelessness of the consumer, a n d the m i n o r role of the contravenor of section 9m a y persuade the court that justice does not require contravenor to b e a r the f u l l loss sustained b y the consumer.  7 8  I n Tot Toys v Mitchell  19  it 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 interests  of  consumers  injunction was refused.  and  competition,  s ot h a t  plaintiffs  application for  T h e c o u r t c a u t i o n e d t h a t it w o u l d b e a n ' e x c e p t i o n a l ' c a s e  which ar e m e d y w o u l d be denied on that ground.  75  the  the  the an in  8 0  Artifakts Design Group Ltd. v N P Rigg Ltd. [1993] 1 N Z L R 196, 223-224.  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. 76  77  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.  79  [1993] 1 N Z L R 325.  80  Ibid, p.370.  22  E. SUMMARY  T h e r e is 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 is a m i x rationales which m a y or m a y not be  of  complimentary.  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 is 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 rationalises, a n d potentially gives affected consumers direct rights of redress.  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 is 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 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 is, 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  and  absence  of definition of terms including 'consumer' a n d 'trade' a n d b e c a u s e the boundaries w h a t c o n d u c t is ' m i s l e a d i n g ' o r ' d e c e p t i v e ' a r e left t o t h e c o u r t s t o d e c i d e . have ordinary meanings, whether  however,  T h e  words  a n d it 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  sense  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 is  similar to that of another.  of  deceptively  Further, the decisions of the Australian courts under  section  52 of that country's T r a d e Practices A c t have b e e n a n d will continue to b e of significant assistance.  To the extent that competition law a n d trade law go h a n d in hand, the Fair T r a d i n g A c t complements the C o m m e r c e A c t a n d together the two Acts represent compliance  with  N e w Zealand's C E R obligations a n d bring N e w Z e a l a n d trade practices law into  line  with Federal Australian trade practices law.  T h e y w e r e designed to p r o m o t e  effective  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. 81  23  competition a n d a n efficient m a r k e t a n d to enable c o n s u m e r s to take a d v a n t a g e of that, with afocus on both domestic and Trans-Tasman  T h e  extent to w h i c h  section 9 has  the  markets.  8 2  potential for advancing  p r o t e c t i n g c o n s u m e r s is c o n s i d e r e d i n c h a p t e r t w o .  efficiency  and  T h e extent to w h i c h the courts  i n fact, 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 is in chapter four.  The body of water between New Zealand and Australia is called the Tasman Sea.  for have,  considered  CHAPTER  TWO  THEORETICAL EVALUATION OF THE  PUBLIC POLICY RATIONALE  INTRODUCTION  I n c h a p t e r o n e , it w a s  established that the two principal limbs of the public policy  rationale for section 9 are to p r o m o t e efficiency a n d to protect consumers.  In  this  c h a p t e r , t h e r e is 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 is a n a p p r o p r i a t e m e a n s of advancing those twin goals.  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 is a d d r e s s e d a n d it is 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 is w h e t h e r r e g u l a t i o n is 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 goals.  B e c a s u e ' e f f i c i e n c y ' i n this 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 is  carried out including b y alaw a n d economics analysis. U n l i k e m o s t law a n d  economics  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 is 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  efficient  allocation of resources but, rather, whether they have the e c o n o m i c effects the public policy rationale promoted.  T h e f o c u s is 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  society,  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 for society as aw h o l e , a l t h o u g h efficiency a n d net social welfare d o figure in the public policy rationale. T h a t raises the issue of distribution, o n  25 w h i c h m o r e is s a i d i n c h a p t e r  T h e  writer concludes  five.  that, while  t h e r e is d e b a t e o v e r w h e t h e r  a n d to w h a 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 is t h e r e f o r e d e s i r a b l e , t h e in favour of regulating for consumer protection are persuasive.  extent  arguments  A s a result of  the  theoretical discussion, s o m e potential deficiencies in section 9a n d the A c t are identified, n a m e l y that; one, the A c t lacks a d e q u a t e  deterrence to infringing traders; two,  lacks  r e m e d i e s accessible to c o n s u m e r s ; a n d , three, fails to p r o t e c t less c a p a b l e c o n s u m e r s arguably those the legislature h a d in m i n d w h e n passing the  Act.  In Part C , suggestions are m a d e o n h o w the A c t should b e a m e n d e d to give better  effect  to 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 are; first, f o r the courts to b e r e q u i r e d to take the interests of c o n s u m e r s into account in  actions  brought b y traders ; secondly, for the disputes tribunals to b e given jurisdiction to 1  hear  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  be  imposed in cases where  its  the defendant h a d no reasonable basis for a belief that  conduct w o u l d not a m o u n t to passing  1  off.  Which is discussed further in chapters four and five.  26 A. EFFICIENCY AND CONSUMER PROTECTION: CONSISTENT?  This Part contains  a discussion of the extent to w h i c h the c o n s u m e r  protection  efficiency l i m b s o f the rationale for section 9are consistent, if at all. I n e c o n o m i c  and terms,  p r o t e c t i o n o f c o n s u m e r s is 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 redistribution to c o n s u m e r s f r o m the traders w h o w o u l d otherwise h a v e profited their purchasing errors.  from  D i s t r i b u t i o n is 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  e c o n o m i c s , w h i c h has c o n c e r n e d itself only w i t h net social welfare.  and  It is c o n c e r n e d  with  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 is d i s t r i b u t e d a m o n g m e m b e r s suggests two  or groups in society, unless that has a n i m p a c t o n efficiency.  things:  one,  that p r o m o t i o n of efficiency  does not necessarily  protection of consumers; and, two, that protection of consumers p r o m o t e efficiency.  does not  That  2  require  necessarily  I n s u m , t h e r e is 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  two.  T h e a p p r o a c h of disregarding distribution has b e e n questioned recently, o n the basis that the results of a n a p p r o a c h b a s e d purely o n efficiency m a y well offend m a n y notions social justice: " A m o v e t o w a r d the economically o p t i m u m m a y well b e am o v e a w a y the socially o p t i m u m as m a n y w o u l d u n d e r s t a n d the  term."  of  from  3  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, i n 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. 2  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. 3  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 is 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 value uses.  higher  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 (if t h e r e is s u c h a t h i n g ) is o n e i n w h i c h  all  resources have gravitated to their m o s t highly valued use, such that n o p e r s o n c a n  be  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 off. M a r k e t e f f i c i e n c y is  enhanced  as m o r e i n f o r m a t i o n a n d m o r e accurate i n f o r m a t i o n gets into the m a r k e t p l a c e i n f o r m a t i o n is, 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  Because buyers need  and  reliable  p r o d u c t i n f o r m a t i o n to m a k e i n f o r m e d p u r c h a s i n g decisions, lack o f i n f o r m a t i o n will result in poorly i n f o r m e d buyers w h o are not able to m a k e rational, i n f o r m e d purchasing decisions.  T h e y will b u y products they w o u l d not have b o u g h t if fully i n f o r m e d , will not  buy products they otherwise would have otherwise would have.  and m a y pay m o r e for products than  they  Lack of i n f o r m e d buyers will, in turn, result in less incentive  sellers to c o m p e t e o n price a n d quality a n d less incentive for t h e m to innovate.  for  A result  will b e that s o m e resources will m o v e to uses not m o r e highly v a l u e d a n d the m a r k e t will not work  efficiently.  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 is, h o w e v e r , s u b j e c t t o t h e  proviso  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 is, i n f o r m a t i o n that reduces the possibility of consumers being misled or deceived about the source, any attribute, of a product. should be generated. must be weighed  It 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  or  information  A s with a n y other resource, i n f o r m a t i o n c o m e s at acost. T h a t cost  against the cost, to c o n s u m e r s  consumers misled and deceived.  a n d to society generally, of  having  A s f a r as t h e e f f i c i e n c y r a t i o n a l e is c o n c e r n e d ,  one  E . Thomas Sullivan & Brian A . Marks, The FTC's Deceptive Advertising Policy: A Legal and Economic Analysis [1986] 64 Oregon L . R . 593, 620. 4  28 ought to seek the generation of only that v o l u m e of i n f o r m a t i o n that imposes acost less than or equal to the cost i m p o s e d b y not regulating for the provision of imformation.  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 is l i m i t e d i n t h e  way  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 is p r o b l e m a t i c . Participants in the discussion of the issues that arise can, broadly, b e labelled as w h o favour regulation and those w h o do  those  not.  B. TO REGULATE OR TO NOT REGULATE  Introduction  I n t h i s p a r t , t h e r e is 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 generate  the information required to ensure  efficient  or not market forces alone  will  operation of the market  and  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 , it is n e c e s s a r y a n d to regulate. regulation. remedies  In section Much  o n e , t h e r e is a s u m m a r y o f t h e a r g u m e n t s  for and  of the debate centres a r o u n d the extent to w h i c h existing  and consumer  remedies  are effective.  Those  remedies  efficient against  competitor  are examined,  sections two a n d three, a n d the writer concludes that they d o not go far enough.  in That  leads to consideration of the potential role o f a regulatory body, in section four. I n section five, the matters a l r e a d y raised are c o n s i d e r e d in relation to section  9.  29 1. The  arguments  O p p o n e n t s of regulation argue that m a r k e t a n d competitive forces result in the efficient  flow of information.  information part of the  5  also argue that regulating to  provide  is 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 is  neo-classical  T h e y therefore  most  school  of economic  principally at the U n i v e r s i t y o f C h i c a g o .  6  theory that  developed  in the  1970's,  A c c o r d i n g to neo-classical e c o n o m i c  theory,  all individuals are fully informed, rational maximisers of their o w n  self interest  a c c o r d i n g l y , t h e r e is 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  and,  economically  efficient allocation of resources in society, such that n o p e r s o n c a n b e m a d e better  off  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 off.  be  P a r e t o o p t i m a l o r P a r e t o efficient.  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 is s a i d t o  F o r e x a m p l e , s t e e l is u s e d i n p r o d u c t i o n o f  both  s t e a m rollers a n d cars. A c c o r d i n g to the theory, the process of free e x c h a n g e will result in the m o s t efficient s t e a m roller / car m i x of production.  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 with respect to information.  S i n c e t h e r e is a l w a y s a  cost in providing information, the m a r k e t will proceed, according to neo-classical  theory,  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 is t h a t w h i c h  the  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. 5  G . Minda, The Law and Economics and Critical Legal Studies Movements in American Law i n N . Mercuro (ed.), Law and Economics, supra, note 2, pp. 87 and 111, note 3. 6  7  Mackaay, supra, note 3, p. 24.  8  Duggan, supra, note 2, p. 5.  30 m a r k e t is 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 the  neo-classical  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 it will prevent p r o d u c t i o n of m o r e highly valued resources a n d thus m o v e the m a r k e t 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 it m a y o r w i l l i n c r e a s e b e y o n d the level which m a r k e t forces w o u l d  away  consumerism  dictate.  It is 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 , of concern for their m a r k e t shares, expose the  out  untruths;  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 for regulatory action, including taking their future business  need  elsewhere.  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 validity o f t h e a s s u m p t i o n s ; first, that individuals in society are fully i n f o r m e d ; secondly, maximisers; optimality.  9  and, thirdly, that In the  present  the  market  by  that  all individuals are  itself p r o c e e d s  c o n t e x t , it w o u l d b e  to  argued that the  all  rational  a state of  Pareto  assumption  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 is 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 off actions in w h i c h plaintiffs have s u c c e e d e d o n the basis that c o n s u m e r s h a v e  that  passing been  misled; that failure of the s e c o n d a s s u m p t i o n follows because, if c o n s u m e r s are frequently misled, t h e n their self interests are not m a x i m i s e d ; a n d that, given the untenability  of  t h o s e t w o a s s u m p t i o n s , the third m u s t fall as well.  H . Simon, Economics, Bounded Rationality and the Cognitive Revolution, 1992, Edward Elgar Publishing Ltd., Aldershot, England, pp. 186-189. 9  31  2. Competitors remedies  T h e argument that competitors  of a p r o d u c e r m a k i n g misleading claims will, out  of  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 , is 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 passing off type cases.  N o - o n e has a greater interest in exposing the deceptive  trader  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 is b e i n g p a s s e d o f f a n d t h a t is r e f l e c t e d i n t h e f a c t all reported section 9 cases involving passing off have been brought by the  that  offended  trader.  T h e r e will, however, b e cases w h e r e the offended trader d o e s not e x p o s e the trader n o r b r i n g a n y court action, s u c h as w h e n offending conduct,  1 0  it d o e s n o t b e c o m e  offending  aware  w h e r e t h e i n f r i n g e m e n t is o f s h o r t d u r a t i o n , w h e r e t h e  of  transaction  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 it, o r a s e t t l e m e n t is n e g o t i a t e d b e t w e e n t h e  E v e n where the trader does take action,  parties.  1 2  the  where  1 1  it is 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  interests of the traders w h o are parties to the action.  A s will be seen in chapters  the four  10  Quite likely if it occurs other than in relative proximity to the offended trader's area of operation.  11  F o r a discussion of the economics of negotiating settlements, refer G Tullock, Negotiated Settlement, Graf von der Schulenburg, supra, note 3, p.39.  in J.M.  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 i n the former but not in the latter. That difference may, however, be more apparent than real, given that i n 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). 12  32 a n d five, the interests o f c o n s u m e r s  are likely to b e  overlooked a n d the  consumer  protection rationale unfulfilled. T h e protection afforded consumers b y virtue of the that competitors have remedies will therefore often b e  fact  illusory.  3. Consumer remedies  T h e argument that consumers have avenues of recourse including taking their business elsewhere,  and  that  these will give rise to  efficient  l e v e l s o f i m f o r m a t i o n , is  superficially attractive. T h e rational c o n s u m e r will never seek to b e absolutely  also  informed  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 is a r e s o u r c e w h i c h is b o u g h t sold in the s a m e w a y as other c o m m o d i t i e s .  T h e acquisition of information, as w i t h  and most  o t h e r c o m m o d i t i e s , is 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 the last p i e c e o b t a i n e d will b e considerably less t h a n the first.  1 3  T h e m o r e  of  resources  a c o n s u m e r devotes to acquiring information, the less she will h a v e for the p u r c h a s e  of  other items.  to  T h e rational c o n s u m e r will continue to search for i n f o r m a t i o n only u p  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 is 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 of information would bring.  1 4  F o r products that are not complex, or w h e r e the  price  o f t h e p r o d u c t is l o w a n d is 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 is 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 the potential a d v e r s e c o n s e q u e n c e s o f aw r o n g c h o i c e a r e  13  not  Duggan, supra, note 2, p. 29.  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. 14  33 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 is 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 ) it m a y b e safe to let 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  themselves.  therefore  1 5  W h i l e the ability to take future c u s t o m elsewhere m a y b e asatisfactory r e m e d y in cases involving arelatively inexpensive p r o d u c t p u r c h a s e d relatively frequently, for other kinds of p u r c h a s e the costs of the learning curve m a y b e unacceptably high a n d the ability to put that education to use limited. the d e c e p t i o n at s o m e  It 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  time subsequent  t o t h e p u r c h a s e b u t t h a t is n o t i n e v i t a b l e  of in  passing off cases. C o n s u m e r s m a y p u r s u e actions, s u c h as t h o s e u n d e r the Sale o f G o o d s Act  1908,  description,  which 1 6  provides  fitness  for  consumers purpose,  1 7  with and  rights  of  redress  merchantable  in  quality.  cases 1 8  T h e  of  sale first  by two  remedies are unlikely ever to b e of assistance to consumers deceived in passing off a n d the third only rarely -the infringing product will sometimes b e of lower quality than  the  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 it is, 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 breach of the Act.  Alternatively, a c o n s u m e r m a y s e e k to h a v e the contract set aside o n the basis that  she  This is the heart of caveat emptor - let the buyer beware - a doctrine which makes the buyer responsible for protecting herself and assumes she will 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 i n the case of fault or deception: D . Swann, Competition and Consumer Protection, 1979, Penguin Books Ltd., Harmondsworth, England, p. 369, note 15  3. 16  Section 15.  17  Section 16(a).  18  Section 16(b).  34 e n t e r e d i n t o it 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 genuine article.  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 is s m a l l a n d t h e c o s t s  pursuing a n action outweigh the possible benefit. significant p r o b l e m for consumers  w h o  action.  possible  because the individual contributions to the cost of proceedings will b e small e n o u g h to p r o c e e d as a g r o u p .  that  F o r a plaintiff in a class  action, there will b e extra costs, including those in relation to locating a n d  communicating  with others affected a n d o n m a k i n g collective decisions including o n prosecution of claim a n d negotiation of any settlement.  will  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 is 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  it 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  of  In fact, transaction costs will b e a  suffer other than substantial losses a n d  probably preclude any individual bringing an  the  the  T h e two variables that are critical in relation  to transaction costs o f aclass action, therefore, are the n u m b e r o f claimants a n d the size of the individual losses.  2 0  T h e r e is a n a s s u m p t i o n i n a l l o f this t h a t d e c i s i o n s  are m a d e  solely o n the basis  of  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 A c t , for example, the transaction costs are a l l those associated with bringing and proving the claim and enforcing any remedy awarded. F o r 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 i n P.Burrows & Cento G . Veljanovski, The Economic Approach to Law 1981, Butterworth & Co. Publishers L t d . , London, chp. two; O.E.Williamson, Transaction Cost Economics, address to Y a l e L a w School, 10 January 1986, L a w & 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. 19  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, will be the number of claimants and the average loss. 20  35  whether or not the expected benefit(s) is a n e l e m e n t  of the neo-classical  outweigh the expected transaction cost(s).  economic  theory that all individuals are  That  rational  maximisers of their o w n self interest; that they will not, for example, bring ac l a i m u n d e r section 9 unless the expected benefits  outweigh the expected  costs.  Experience  and  c o m m o n s e n s e s u g g e s t t h a t is 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 initiate court proceedings. l i t i g a t i o n is  not.  Impulse  b u y i n g is a w e l l k n o w n  phenomenon,  to  impulse  2 1  T h e foregoing discussion leads to the view that consumers w h o suffer small losses  have  n o effective m e a n s o f obtaining ar e m e d y so that, in those circumstances, c o n s u m e r s will not b e protected a n d the m a r k e t will not w o r k efficiently.  If there are a sufficient  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 class action m a y b e feasible. c h a p t e r five, w h e r e  A s will be seen  small losses are inolved, the transaction costs will m a k e  uneconomic, no matter h o w m a n y consumers have been  affected.  in  a suit  2 2  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 i n generalisations, the exceptions can safely be ignored. F o r judicial recognition of the reasonable forseeability of impulse buying, refer Griffin & Sons Ltd. vRegina (1988) Ltd., unreported, High Court, Dunedin, 01 August 1989, C P 72/89, Fraser J; (1989) 15 B . C . L . 1559. 21  To date, there have been no class actions in New Zealand or Australia. Section 23 of the Federal Trade Comission A c t 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. 22  36  4. Regulatory body  It is 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 it take action o n b e h a l f o f all affected c o n s u m e r s .  If u s e d in conjunction with  m a y  competitor  a n d c o n s u m e r r e m e d i e s , it 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  suffer  losses too small to justify individual action a n d w h e r e the genuine trader d o e s not  pursue  any action.  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 is t h a t t h e r e w i l l b e  an  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 its 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 . Traders involved in short-term passing off m a y remain unpunished.  However,  given  sufficient resources, the delay should not b e significantly greater t h a n that involved if the c o n s u m e r w e r e to seek private legal advice a n d issue private  proceedings.  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 , it 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 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 all ( w h e r e t h a t is e v e n  agency  possible).  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 is t o i m p o s e af i n e o n t h e o f f e n d i n g t r a d e r , ar e m e d y  that  would:  (a) b e efficient a n d w o u l d a d v a n c e net social welfare, a l t h o u g h n o t h a v i n g optimal distibutional  the  results;  (b) s e r v e as 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 it w o u l d h a v e a deterrent  effect.  2 3  P. Burrows & C . G . Veljanovski, The Economic Approach to Law, 1981, Butterworth & C o . Publishers Ltd., London, pp. 130-131. 23  37 It is 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 ; it 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 .  In the U n i t e d States,  there are constitutional difficulties with enacting criminal penalties w h e r e there are clearly defined  standards  of conduct.  2 4  I ti sc o n s i d e r e d  that  to  impose  not  criminal  sanctions o n aparty w h o m a y have b e e n unaware that she was infringing, that lack  of  awareness arising f r o m imprecision in the language of the statute, w o u l d simply b e unfair. T h e t e r m ' d e c e p t i v e ' is 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 is w h y t h e r e  are  n o c r i m i n a l penalties for b r e a c h o f section 5o f the F T C A c t .  A  similar concern w o u l d b e justified in the N e w Z e a l a n d context.  reported decision  involving a defendant  T h e r e is o n l y  acting deliberately, with knowledge  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 its c o n d u c t m i g h t a m o u n t t o off.  2 6  In all other cases except o n e  2 7  the defendant was  b u t b e l i e v e d its 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 off.  aware of the relevent  the  passing facts  In about two-thirds of those  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 is w h e t h e r c o n s u m e r s b e r e q u i r e d to b e a r the losses arising f r o m the m i s t a k e n belief o r whether, the infringing trader should bear  of  one  should  alternatively,  them.  G . E . & P . E . Rosden, 2 The Law of Advertising, 1984, Mathew Bender, New Y o r k , New Y o r k , para. 17.01[3]. 24  25  Supra, chapter one, part D .  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. 2 6  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. 27  38  Points favouring consumers bearing the loss include  that:  (a) the losses are thereby s p r e a d t h r o u g h o u t the c o m m u n i t y , in m u c h the  same  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 it; (b) placing the risk o n traders m a y  stifle c o m p e t i t i o n  and therefore  reduce  efficiency; (c) p l a c i n g the risk o n traders m a y also h a v e a n e g a t i v e i m p a c t o n A l t h o u g h a p r o d u c t t h a t is 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 p r o d u c t , it 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 (d)  affected  consumers  cannot be  transaction costs of doing so are too  directly compensated  innovation.  off of  another  product; anyway, because  the  high;  (e) p l a c i n g the risk o n traders w o u l d p r o b a b l y c a u s e t h e m to raise prices, c o n s u m e r s w o u l d effectively b e funding their o w n  so  remedy.  Points favouring the infringing trader bearing the loss include that a  (a) will a d v a n c e net social welfare a n d indirectly c o m p e n s a t e  fine:  consumers;  (b) c a n b e u s e d to f u n d c o n s u m e r education, thus helping to prevent future losses and advancing (c) m a y advancing  efficiency;  serve as a deterrent, thus also helping to p r e v e n t future losses  and  efficiency.  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 , it is 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  only  39 serve the public policy rationale a n d only b e fair in cases w h e r e the defendant h a d 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 its 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 off.  no That  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 )  reasonable  reliance 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) the or default of another person (who m u s t b e n a m e d ) or to a n accident or to s o m e  act other  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 exercised d u e diligence to avoid the  contravention.  and  2 8  C. RECOMMENDATIONS  Section 9requires traders to disclose only accurate i n f o r m a t i o n as to the s o u r c e o f their products, so as to not deceive c o n s u m e r s .  T h e principal economic effect of  deception  is t o c a u s e ar 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 . Distribution has sometimes been considered a matter outside the scope of law 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 is n o t as p r e v a l e n t as it o n c e  was.  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 , it is c l e a r t h a t l a c k o f a c c u r a t e will adversely  affect the  economic  interests of s o m e  and  consumers  or s o m e  information classes  of  F o r 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. 28  40 c o n s u m e r s , w h i c h will, in t u r n , adversely affect efficient o p e r a t i o n o f the m a r k e t . T o extent, the two limbs of the public policy rationale are  consistent.  T h e arguments for a n d against regulation to c o m p e l provision of accurate have been canvassed.  information  T h e arguments against centre o n notions of efficiency a n d o n  notion that m a r k e t forces will p r o v i d e either all r e q u i r e d i n f o r m a t i o n or, a n efficient level of information.  that  alternatively,  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 is  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 it is a r g u e d t h a t w i l l b e  the  generated,  a n efficient level  of  deception a n d that deceived consumers will have remedies available without the n e e d for regulation compelling disclosure of information. c h e a p e r to cure than to  I n p l a i n w o r d s , it is a r g u e d t h a t it is  prevent.  A g a i n s t a l l o f t h a t , it is 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 its d i s t r i b u t i v e effects, prejudices  consumers  or some  classes of consumer,  because  they have  no  a c c e s s i b l e r e m e d y ; t h a t is, t h e r e is n o c u r e . If, 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  are  i n e f f e c t i v e , t h e n it 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 is efficient, resulting in a n inefficient m a r k e t as well as in lack o f protection for  On  balance,  ineffective  it is t h e  writer's view  in a significant  that  the  remedies  available  proportion of cases involving passing  arguments in favour of regulation are persuasive. that, to b e effective, ingredients of a regulation  2 9  to  consumers  off a n d  It a l s o f o l l o w s f r o m t h e  should:  That conclusion is borne out by the discussion in chapter five.  consumers.  that  are the  discussion  41 (a) r e q u i r e the interests o f c o n s u m e r s to b e t a k e n into a c c o u n t in actions by traders.  brought  T h o s e interests m a y be taken into account in section 9 cases,  t h e A c t d o e s n o t r e q u i r e it a n d o u g h t t o b e a m e n d e d  but  3 0  accordingly;  (b) include a m e c h a n i s m to allow a regulatory b o d y to take action, especially cases w h e r e the individual losses to consumers are small. satisfies that criterion;  T h e Fair Trading  A c t  3 1  (c) c o n t a i n ap r o v i s i o n allowing i m p o s i t i o n o f afine in cases w h e r e the  defendant  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 its c o n d u c t w o u l d n o t a m o u n t t o off.  in  T h e A c t lacks such aprovision a n d should be a m e n d e d  passing  accordingly;  (d) give standing to consumers, to allow t h e m to take their o w n actions provide an accessible forum.  T h e f o r m e r is a c h i e v e d u n d e r t h e A c t w h i c h  not, however, go far e n o u g h with respect to the  does  latter.  In recognition of the high cost of court proceedings, jurisdiction was given to Disputes Tribunals to h e a r disputes a n d m a k e certain orders p u r s u a n t to 43 of the Fair Trading Act.  and  the  section  T h e Tribunals have jurisdiction in cases where  the  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. 30  Idem.  42 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 is n o t m o r e t h a n  $3000,  3 2  although the parties m a y agree in writing to extend jurisdiction u p to $5000. I t costs a p p r o x i m a t e l y N Z $ 1 0 to m a k e a claim v a l u e d u n d e r $ 1 0 0 0 a n d $20 for a claim of alarger amount.  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 is t h a t t h e p a r t i e s  e n c o u r a g e d to a p p e a r for themselves engaging  T h e  a n d thus avoid the costs associated  with  counsel.  jurisdiction given  contraventions  to  Disputes  o f s e c t i o n 9.  Tribunals does  not,  however,  extend  T r i b u n a l s to  answer,  'misleading' or 'deceptive'.  to  T h a t e x c l u s i o n is p r o b a b l y b a s e d o n a v i e w  decisions under the section involve questions of law that are b e y o n d the of the  are  in particular the  question  of w h e n  C o n s u m e r s m a y bring actions  in the  that  abilities  conduct  is  courts  but  transaction costs are significantly higher there, principally because of the n e e d  to  e n g a g e counsel, a n d will in m a n y cases b e prohibitive. T h e fact that there are  no  cases involving c o n s u m e r plaintiffs suggests that c o n s u m e r s simply d o not cases to the  courts.  It a p p e a r s , t h e r e f o r e , method  take  that m a n y  o f o b t a i n i n g direct relief.  relatively unsophisticated  consumers  a r e left w i t h o u t  In the writer's view,  Tribunals m a k i n g decisions  any  meaningful  it is b e t t e r  than to have  deprived of a n accessible f o r u m a n d the A c t should b e a m e n d e d to give  Disputes Tribunal A c t 1988, sec. 10(3).  to  have  consumers Disputes  43 T r i b u n a l s j u r i s d i c t i o n to 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.  T h i s c o n c l u d e s the first stage o f c o n s i d e r a t i o n o f the writer's first hypothesis, that  section  9 a n d the A c t are deficient in s o m e respects a n d therefore require a m e n d m e n t .  T h e  discussion r e s u m e s in c h a p t e r five, w h e r e practical effects o f the deficiencies  identified  in this chapter, along with further deficiencies identified in c h a p t e r four, are  evaluated.  In chapters three a n d four, the discussion turns to the writer's second  hypothesis.  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. 33  CHAPTER THREE IDENTIFICATION OF THE RATIONALE FOR  THE  PUBLIC POLICY  TORT OF PASSING OFF  INTRODUCTION  T h e focus n o w turns to the writer's s e c o n d hypothesis, that the courts h a v e not  given  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 9a 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 tort o f p a s s i n g off.  It w i l l b e s e e n t h a t n o t o n l y is 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 it w e r e  not,  the courts h a v e a p p l i e d s e c t i o n 9i n am a n n e r that itself t h w a r t s s u c h  I n this 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 is i d e n t i f i e d .  advancement.  T o that end,  the  d e v e l o p m e n t o f p a s s i n g o f f is r e v i e w e d , w i t h af o c u s o n t h e e v i l ( s ) it w a s d e s i g n e d t o c u r e a n d o n the requirements for successfully prosecuting the  Parts Aa n d Baddress the origins a n d early development  action.  of the tort, a n d the  c a s e oi Erven Warnink B.V. v J. Townend & Sons (Hull) Ltd., r e s p e c t i v e l y , 1  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 is w h e r e t h e t o r t o r i g i n a t e d .  seminal and  deal  It w i l l b e s e e n  that  it 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 is 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  any  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 . It is a s s u m e d t h a t  such  1  [1979] A C .  731 (H.L.) (the Advocaat case).  45  representations  damage  the  goodwill  of the  designed to prevent / c o m p e n s a t e for that  plaintiffs business  2  and  the  action i s  damage.  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 is c o n s i d e r e d b y r e f e r e n c e t o its  three  principal elements: goodwill, misrepresentation a n d damage. N e w Z e a l a n d cases feature, showing that the tort has a short but relatively substantial history there.  A s the law  in  N e w Z e a l a n d has developed, there has b e e n less reliance o n E n g l i s h authorities b u t l a w i n t h e t w o c o u n t r i e s is 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 arising f r o m the special economic relationship b e t w e e n N e w Z e a l a n d a n d  the  difference Australia.  T h e cases in b o t h jurisdictions emphasize that the issues to b e addressed in a n action for 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 its o w n u n i q u e facts. fluid a n d has  continuously developed  p r o m o t i n g g o o d s a n d services.  to m e e t n e w  methods  T h e t o r t is  of m a k i n g , selling  and  F o r t h a t r e a s o n , it is 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 the l a w a n d this 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 the outer limits o f  the  l a w o f p a s s i n g o f f i n s o m e o f its 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 comprehensive statement of the  law.  3  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 will usually suffer loss of custom - or where the defendant's product is inferior in quality - the plaintiff will usually suffer loss of reputation. 2  F o r 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 L a w Book Co., Melbourne, for a statement of the Australian law. 3  46 I n P a r t D , t h e r e is 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 passing off into am o r e general tort of unfair competition. of the  chapter,  consideration  of commentaries  on  Part E contains a s u m m a r y  the  nature  of the  public  policy  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 it 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 is c i r c u m s c r i b e d , t o a m o d e s t extent, b y the interests of  A.  consumers.  ORIGINS AND EARLY DEVELOPMENT  1. In the beginning  T h e tort of passing off dates b a c k to at least 1618. of other torts,  4  out of the tort of deceit.  5  It 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  W h a t is 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  p a s s i n g o f f c a s e is u n r e p o r t e d a n d u n n a m e d .  Its e x i s t e n c e is k n o w n o n l y b y v i r t u e  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 How a n d Dean v Steel? I t 6  to h a v e b e e n a n action b r o u g h t b y a clothier, w h o h a d "great reputation for his  4  first of  appears making  Slander of title, slander of goods and injurious falsehood.  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 Y o u n g 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 . 5  6  (1618) Cro. Jac. 468.  7  (1626) Lat. 188; 82 E.R.  39.  47  of his cloth", against a n o t h e r clothier w h o u s e d the plaintiffs m a r k o n his o w n 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 " . It 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 lie".  "ill-made  8  T h e r e were a n u m b e r of cases reported in the remainder of the eighteenth dealing with similar facts.  9  century,  In t h e m , passing off c o n t i n u e d to b e treated as a f o r m  deceit for w h i c h p r o o f of b a d faith or a n intention to deceive was necessary.  T h e  to p r o v e b a d faith was gradually r e m o v e d d u r i n g the course o f the nineteenth a n d is 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 .  of  need  century  1 0  2. Thefirstunambiguous 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  plaintiff m a d e Patent".  a n d sold shot-belts a n d p o w d e r flasks m a r k e d with the w o r d s  T h e  "Sykes  H i s goods w e r e of high quality a n d enjoyed a "great reputation" with  the  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. 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. 9  Bourne v Swan & Edgar Ltd. [1903] 1 C h . D . 211 per Farwell J at p.223: "The first point is that it certainly is not now, and since L o r d Cottenham's decision i n Millington v Fox (1838) 3 M y . & Cr. 338 never was in the old Court of Chancery or i n 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..." 10  (1824) 107 E.R.  834.  48  public.  T h e defendant adopted the same n a m e o n similar but inferior goods  1 2  m a d e  b y h i m , causing d a m a g e to the plaintiffs reputation a n d preventing h i m f r o m selling a great quantity of his o w n goods. T h o u g h the retailers to w h o m the d e f e n d a n t sold  k n e w  the g o o d s w e r e not m a d e b y the plaintiff, they w e r e sold to t h e m for the p u r p o s e  of  resale to the public a n d with the intention that the public should believe they w e r e  the  g o o d s o f t h e p l a i n t i f f . It 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 public to s u p p o s e the articles w e r e m a d e b y the plaintiff a n d that h e s h o u l d not  be  allowed  be  to  do  so.  T h e  three  critical elements  misrepresentation, goodwill and damage. action  of  the  action  were  said  T h e y a r e still t h e t h r e e critical e l e m e n t s o f t h e  today.  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 development  significant  o f t h e tort, its 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  by Lord Halsbury L . C .and Lord  Herschell.  T h e plaintiff h a d for s o m e years m a d e  m a d e  1 3  m a c h i n e b e l t i n g a n d s o l d it a s ' C a m e l  Belting', an a m e w h i c h h a d c o m e to m e a n in the trade the plaintiffs belting a n d  12  to  Hair  nothing  Idem.  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. 13  49  e l s e , a l t h o u g h it 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  defendant  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 it ' C a m e l H a i r B e l t i n g ' , s o 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 it w a s e n d e a v o u r i n g thus to pass off his g o o d s as the plaintiffs. L o r d H e r s c h e l l L . C .stated the l a w as  the plaintiffs  In finding for the  as  belting, plaintiff,  follows:  " 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 is, that n o b o d y has a n y right to represent his g o o d s as the g o o d s o f s o m e b o d y else. H o w far the use o f particular w o r d s , signs, o r pictures d o e s o r d o e s n o t c o m e u p to the proposition w h i c h I h a v e enunciated in e a c h particular case m u s t always be a question of evidence, a n d the m o r e simple the phraseology, the m o r e like it is 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 proof; b u t if the p r o o f establishes the fact the legal c o n s e q u e n c e a p p e a r s to follow". 1 5  H i s L o r d s h i p said that his initial view w o u l d h a v e b e e n that the description ' C a m e l Belting' in relation to belting m a d e of c a m e l hair w o u l d have suggested  Hair  a "difficulty of  p r o o f but accepted the juries finding that the description denoted goods of the plaintiff a n d accepted also that the finding was supportable o n the  evidence.  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  as  'classic passing off, p r o v i d i n g relief o n l y w h e r e the 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 use o f the plaintiffs name, m a r k or get-up.  From  that base, the tort was gradually extended  to  provide relief against am u c h broader range of misrepresentations which could infringe  14  A finding of fact by the jury at first instance: per L o r d Herschell at p. 201.  15  Idem.  16  Ibid, p. 205.  50 a  trader's  plaintiff.  1 8  goodwill,  including  T h e latter was  appearance  of  goods,  1 7  and  goods  m a d e  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  by  the  reaffirmed,  however, that the tort protects the "property in the business or goodwill likely to  be  injured by the representation" rather than any property in the goods themselves  or  feature of them.  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 is 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  property in the n a m e , m a r k or get u p w o u l d b e to e n c r o a c h o n the d o m a i n s of copyright, t r a d e m a r k a n d patent law w h i c h are governed b y statute.  B y restricting the tort in that  way, the c o m m o n law also favours free competition over the private interests of a trader in obtaining protection in ap r o d u c t  design.  2 0  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 i n 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 i n 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. 17  AG 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. L o r d Parker referred to the principle, stated i n 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 i n 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). 1S  Ibid, p. 284. F o r a discussion of the prior theories on the nature of the interest protected refer Ricketson, supra, note 3, para. 24.4. 19  20  31.  M.B.  Clark, Passing Off and Unfair Competition - The Regulation of the Marketplace [1990] 6 IPJ 1,  51 4. The  commonfieldof 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 decision  of the tort was  greatly limited by  the  i n McCulloch v Lewis A. May (Produce Distributors) Ltd. , i n w h i c h 21  the  plaintiff w a s ab r o a d c a s t e r k n o w n as ' U n c l e M a c ' ; the d e f e n d a n t the m a n u f a c t u r e r of a breakfast cereal called 'Uncle Mac's Puffed Wheat'.  Wynn-Parry  J. canvassed  previous  authorities a n d t o o k the v i e w that all the cases in w h i c h the court h a d i n t e r v e n e d h a d a c o m m o n factor, n a m e l y that there w a s a c o m m o n field o f activity, in w h i c h , remotely, both the plaintiff a n d the defendant w e r e engaged.  however  H e h e l d t h a t it w a s  presence of that factor that g r o u n d e d the jurisdiction of the court.  T h e  2 2  plaintiffs  claim in passing off failed o n the basis there was n o c o m m o n field of activity in the parties were engaged.  the  which  T h e rationale was that unless the parties w e r e in the  same  line of business, there w o u l d b e n o possibility of confusion of the public as to connection b e t w e e n the plaintiff a n d the  defendant.  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 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  21  [1947] 2 All  22  Ibid, p. 851.  any  2 4  and  In the latter,  the  E . R . 845.  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 23  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.  25  [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 builder of the defendant  famous  L e g o building blocks  obtained  an injunction restraining  f r o m selling coloured plastic irrigation e q u i p m e n t  under the L e g o  the  name.  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 ' is 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 is 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 facts, there w a s a real risk that a substantial n u m b e r o f p e r s o n s a m o n g the  the  relevant  s e c t i o n o f the 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 ab u s i n e s s c o n n e c t i o n b e t w e e n the plaintiff and defendant.  2 6  T h e r u l e m a y still 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 to 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 it 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 it d o e s carry o n business in the  country.  not  2 7  In N e w Zealand, the m o r e similar the businesses of the plaintiff a n d defendant, e a s i e r it 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 .  the  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 for ac o m m o n field of activity as conclusive a n d o n e that d i d not.  H e took the view  h e was c o m m i t t e d to neither a p p r o a c h a n d "without hesitation" a d o p t e d the  need that  latter:  " A p p r o a c h e s w h i c h regard the existence of a so called c o m m o n field of a c t i v i t y a s d e c i s i v e , a n d its 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 is w h e t h e r a n activity o n the part o f the defendant m a y m i s l e a d potential 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 is t h a t o f t h e p l a i n t i f f . " 2 8  26  Ibid, pp. 187-188.  11  Infra, part C.l(c); Athletes' Foot Marketing Associates v Cobra Sports Ltd. [1980] R . P . C . 343.  [1988] 2 N Z L R 1, 20. H i s 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. 28  53  In the  Court of Appeal, C o o k e  that  the  p r i n c i p l e , t h a t an a m e m a y b e distinctive i n ag 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  give  a party apractical monopoly n a m e is n o t  P. approved  that a p p r o a c h but cautioned  of arelatively c o m m o n p l a c e  n a m e  in afield w h e r e  the  distinctive:  "Taylors Wellington could not, w e think, restrain the use in Wellington of the n a m e T a y l o r s f o r , say, f o o d s t u f f s . It 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 degree." 2 9  B. THE ADVOCAAT CASE  Up  until about  1960,  misdescription  of goods or misuse of a descriptive  considered  to b e outside the s c o p e o f the tort.  challenged  that view.  From  term  that date, a n u m b e r of  T h e f i r s t w a s Bollinger v Costa Brava Wine Co. Ltd.,  in  31  it 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  was cases which  defendants  f r o m describing a n d selling wine, not p r o d u c e d in the C h a m p a g n e region of F r a n c e , 'Spanish  Champagne'.  That case was  followed  by others involving Sherry,  3 2  as  Harris  Ibid, per Cooke P. at p.38. His Honour referred to the English Lego decision as "...perhaps an extreme case." 29  30  Supra, note 1.  31  [1960] Ch. 262.  32  Vine Products Ltd. v Mackenzie & Co, Ltd. [1969] R.P.C. 1.  54  T w e e d  3  3  and Scotch Whisky  i n t h e Advocaat c a s e .  3  4  and culminated in the decision of the H o u s e of L o r d s  In that, seminal, C o m m o n w e a l t h case o n passing off L o r d s  3 5  Diplock a n d Fraser reviewed a n d rationalised the previous authorities a n d general statements of principle that r e m a i n the cornerstones of the  formulated  action.  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 it t o a n d s o l d it i n B r i t a i n . m a d e  of egg yolk, sugar a n d a spirit called B r a n d e w i j n .  It  was  I ta c q u i r e d a s u b s t a n t i a l  reputation in B r i t a i n as adistinct a n d recognisable drink. T h e defendants started m a k i n g a n d selling a drink called "Keeling's O l d English Advocaat". p o w d e r a n d Cyprus s h e r r y .  It w a s m a d e o f d r i e d  3 6  It c o u l d n o t b e s h o w n it w a s m i s t a k e n f o r t h e  A d v o c a a t , b u t it 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 . brought  an  defendants unless  action  alleging  passing  off  and  sought  an  plaintiffs  T h e plaintiff  injunction restraining  (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  i tc o n s i s t e d  of  spirit a n d  eggs  and  did not  egg  include  wine;  and  the n a m e  (2)  f r o m  T h e c a s e d i f f e r e d f r o m 'classic' p a s s i n g o f f c a s e s b e c a u s e ; first, t h e plaintiff h a d n o  cause  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 is A d v o c a a t .  o f a c t i o n i n its 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 else, since they c o u l d not p r o v e a n y p u r c h a s e r of the defendant's  somebody  drink was misled  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 it 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 it  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.  36  A t a price significantly lower than the plaintiffs.  or was  55  Dutch Advocaat of any make; the actions of the defendants  3  7  and, secondly, the plaintiffs w e r e traders claiming interfered with their shared goodwill.  T h e passing  that off  c o m p l a i n e d of was tied to the p r o d u c t generally, not to the plaintiffs' p r o d u c t specifically, so the question was w h e t h e r the H o u s e should a p p r o v e the extended concept a p p l i e d in  t h e Champagne, Sherry a n d Scotch Whisky c a s e s .  Lords Diplock and Fraser delivered speeches on behalf of aunanimous House. Diplock held that the previous  3  8  authorities:  " [ M ] a k e it 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 to c r e a t e av 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 off: (1) am i s r e p r e s e n t a t i o n , (2) b y at r a d e r i n the c o u r s e o f trade, (3) to p r o s p e c t i v e c u s t o m e r s o f his o r u l 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 is c a l c u l a t e d t o the business or goodwill of another trader (in the sense that this 3 9  37  Lord  order m a d e timate injure is a  Supra note 1, per L o r d Diplock at p. 739 and per L o r d Fraser at p. 750.  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 L o r d Diplock. While it focuses on the actions of the defendant, L o r d Fraser's formulation focused on what the plaintiff had to prove to be successful: 38  "It is essential for the plaintiff i n 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 i n the minds of the public, or a section of the public, i n 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 i n the present case, I consider that the plaintiff is entitled to protect himself by a passing off action." L o r d 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 L o r d Diplock's has been applied more often. Which H i s Lordship described as a broad concept and cited with approval L o r d MacNaghten i n 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 39  56 r e a s o n a b l y foreseeable 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 to 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 is b r o u g h t o r ( i n a q u i a timet action) will p r o b a b l y d o so." 4 0  H i s L o r d s h i p w a s at 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 its o w n and that while all passing off actions present those characteristics, all factual  facts  situations  presenting t h e m w o u l d not necessarily give rise to a cause of action for passing He  off.  further h e l d that the case before the H o u s e presented the five characteristics,  there was no ground of public policy requiring the with-holding of aremedy the injunction overturned by the C o u r t of A p p e a l should be restored. reached the same  4  3  Lord  and  4 2  that that  Fraser  view.  L o r d D i p l o c k ' s t e s t is 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 to h a v e b e e n a p p l i e d include a c o m b i n a t i o n of the tests of L o r d s D i p l o c k a n d Fraser,  4 4  brings in custom." Supra, note 1, p. 741. 40  Ibid, p. 742.  41  Ibid, p. 748.  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 i n consequence of inaccurate statements of whatever kind that may be made by rival traders about their own wares." 42  Relying principally on what he saw as a progressive intervention by Parliament i n 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. F o r 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. 43  Although Todd The Law of Torts in New Zealand, 1991, Sydney, The L a w 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 will approve and apply both sets of tests. Rather, the cases reflect a selection of one or the other or, alternatively, one 44  57  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  the  Challenge Pty. Ltd. , 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 , 4S  Reckitt & Colman Products Ltd. v Borden Inc.,  47  4 6  the test  from  or a combination of s o m e of  W h a t e v e r t e s t is 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 three ingredients r e q u i r e d to b e satisfied to successfully prosecute a n action for  them.  the  passing  off are misrepresentation, goodwill a n d d a m a g e and, to that extent, the laws in E n g l a n d and N e w Z e a l a n d are the  same.  of the other tests referred to i n this Part. Exceptions to that include Klissers Farmhouse Bakeries Ltd. v Harvest Bakeries Ltd. [1985] 2 N Z L R 143,146 where, i n the H i g h 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 L o r d 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. [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 a l l probability w i 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) i n consequence, the plaintiff has suffered, or is likely to suffer, injury in his trade or business. Brown & Grant cite a number of cases i n which that test has been applied but are all are H i g h Court decisions and it has never been adopted by the Court of Appeal: supra, note 3, para. 3.6, note 3. 45  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 i n which that test has been applied. 46  [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. 47  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 its o w n facts, 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 . been  in relation to  Although  fewer  in  the  there  have  the tort has  continued  In most instances, the extensions  kinds of product or device  number,  4 8  also  been  in which goodwill m a y cases  in which  the  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 fall w i t h i n the a m b i t o f the tort h a v e b e e n  have reside.  kinds  of  expanded.  Goodwill  1.  (a) Generally T h e s c o p e o f t h e t o r t is 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 p r e p a r e d to give to the concept of goodwill.  T h e defendant's misrepresentation  relate to s o m e t h i n g w h i c h the plaintiff has a right to  are must  protect:  " 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 is that he must s h o w an invasion of that intangible right of property c o m p e n d i o u s l y described as goodwill w h i c h c a n only exist in N e w Z e a l a n d w h e n attached to a business h a v i n g s o m e c o n n e c t i o n with this country. 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 itself is n o t s u f f i c i e n t - t h e r e c a n  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 . Elliot, Recent Developments in English Law. Passing Off: A Change of Emphasis? [1992] 1 Scots L a w Times 164,165. That is a classic illustration of the struggle at common law to balance the demands for certainty and flexibility. 48  59 b e n o d a m a g e other than to a right o f property."  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 is 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  the  defendant m u s t b e distinctive a n d the distinctive feature m u s t b e l i n k e d with the plaintiff. I n r e l a t i o n t o a n a m e , it 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 it is t h e l e s s l i k e l y t h a t it w i l l b e  distinctive.  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 it r e s e m b l e s t h e g e t - u p 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 it w i l l b e t o e s t a b l i s h T h e  question  of what  is r e q u i r e d t o  establish  52  to sell a w o o d e n  distinctiveness.  distinctiveness of a product that  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.  of  T h e defendant  5 1  is  proposed  toy identical to that o f the plaintiff, in the s h a p e o f a b e e a n d  with  wheels that m a d e the wings rotate w h e n pulled along b y a string. Fisher J. held that if 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 is f u n c t i o n a l , it 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 it is:"... 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 it h a s b e e n expressed".  F e a t u r e s will b e m o r e likely to qualify as get-up if they are fanciful,  original, u n u s u a l or selected f r o m a vast range of available possibilities  rather  than  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 al i m i t e d r a n g e . O n t h e facts, it w a s h e l d t h a t the d e f e n d a n t w a s free to m a r k e t toys r e s e m b l i n g those of the plaintiff as l o n g as  49  Dominion Rent A Car, supra, note 2, per Somers J. at p. 420.  50  Ibid, per Cooke P. at 408 in relation to use of the name 'Budget'.  they  F o r 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 . 51  52  Supra, note 47, at p. 344.  60 w e r e adequately distinguished f r o m the plaintiffs toys (which they were).  I n Levi Strauss v Kimbyr Investments, ' 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  the  53  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 its j e a n s . T h e c o u r t s h a v e reluctant to grant protection in this 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 those u n d e r trademarks or design legislation  5 4  5 5  available  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  fact the court h a d already held the defendant's trademark.  been  tab infringed the plaintiffs  the  registered  A g a i n s t that, W i l l i a m s J. also stated that h e w o u l d h a v e u p h e l d the  claim  for passing off e v e n if h e h a d h e l d that the plaintiffs trade m a r k s w e r e limited to the  tab  in o n e position o n the left o f the right r e a r pocket, the effect b e i n g to give the plaintiff wider protection in passing off than under the Trade Marks  Act.  (b) Recent extensions Significant extensions to the concept of goodwill h a v e i n c l u d e d goodwill in relation to  the  possibility of being able to e x p a n d into m a k i n g a n d selling of another kind of product,  5 6  [1994] 1 N Z L R 332 (the Levi Strauss case). F o r a comprehensive review of cases i n this area, refer Brown & Grant, supra, note 3, paras. 3.62 - 3.65 inclusive. 53  54  Refer, for example, Starcross Pty. Ltd. v Liquidchlor Pty. Ltd. (1981) 1 T.P.R. 103.  55  Supra, note 53, pp. 346-377.  The English Lego case, supra, note 26. Note that a case involving the plaintiffs Australian licensee and virtually identical facts as Lego was brought i n Australia, although it was argued on a cause of action pursuant to section 52 of the Trade Practices A c t 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. 56  61 a s l o n g a s t h e r e is 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 goodwill  in relation  to  expanding  the  nature  of the  plaintiffs  present  damage; business;  5  7  5 8  g o o d w i l l i n slogans o r visual i m a g e s a s s o c i a t e d w i t h ap r o d u c t i n a n advertising c a m p a i g n , provided they have b e c o m e part of the product;  5 9  goodwill in relation to  photographs  of the plaintiffs products, so that adefendant was restrained f r o m using photographs 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 its ( 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 , t h o u g h it 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 w o u l d associate any conservatory with the plaintiff;  6 0  of  even  photographs  and goodwill in the n a m e  of a  publication, a departure f r o m the previous a n d consistently held view that a plaintiff  57  Stringfellow v McCains Foods ( G B ) L t d . [1984] R . P . C . 501.  The defendant in Associated Newspapers pic v Insert Media Ltd. [1991] 3 All 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 i n the Lego case that a plaintiff may have goodwill i n 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 i n 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 i n 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 i n 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. F o r 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. 58  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. 59  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 L o r d Diplock in Advocaat were present so it is debatable whether the case actually extended the law. F o r a comment, refer C. Morcom, Developments in the Law of Passing Off [1991] 13 E I P R 380, 383. 60  62 could not have goodwill in such c o m m o n , descriptive  words.'  S i g n i f i c a n t a r e a s t o w h i c h it 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  reputation  as to the m e t h o d o f presentation at retail sale so as to p r e v e n t o t h e r traders f r o m  using  a different m e t h o d of presentation of the s a m e product, s u c h as selling the plaintiffs  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 its h a m h a d a r e p u t a t i o n f o r sold w h o l e or else sliced in front of the  customer.  being  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 it. 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 courts on a n u m b e r of occasions.  Zealand  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  distinctive  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. MorganGrampian 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 i n 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 i n their attempt to prevent publication of 'Athletics Monthly'. The court held that the differences i n size, price, frequency of publication, content and layout would sufficiently distinguish the two magazines. 61  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 i n slices cut i n 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 i n front of the customer could not be sold i n Italy as Parma ham did not mean that such ham ceased to be Parma ham. 'Parma ham' simply meant ham as treated i n a particular manner, however it was sold following treatment. 62  63 a p p r o a c h to the question of w h a t level of activity in N e w  Z e a l a n d aforeign  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 it h a v e g o o d w i l l t h e r e .  plaintiff T h e  6 3  c o u r t d i d little to alter that situation, p r e f e r r i n g to say that e a c h c a s e h a d to d e p e n d its o w n  facts.  on  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 is p u b l i c i t y o f t h e  fact  that the plaintiff i n t e n d e d to set 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 steps toward that end,  6 5  although, where the plaintiff has a n international reputation  which  extends to N e w Z e a l a n d , not m u c h in the w a y o f activity in N e w Z e a l a n d will 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 it 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 tantamount to  goodwill.  almost  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 Zealand, then goodwill m a y transcend national boundaries.  6 7  Despite the  N e w  statements  Supra, note 2, per Cooke P. at p. 405. F o r a helpful review of earlier authorities, refer Esanda Ltd. v Esanda Finance Ltd. [1984] F.S.R. 96 ( H C ) . 63  64  65  Idem. Keg Restaurants Ltd. v Brandy's Restaurant Ltd. (1983) 1 N Z I P R 453.  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 i n 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. 66  Supra, note 2, p. 406. A n d , at p. 407, after referring to Halsbury's Laws of England (4th ed.), para. 179 i n 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 67  64 of principle, there has not b e e n any case in which the plaintiff has established  goodwill  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 its A u s t r a l i a n activities a n d w i t h o u t a l s o h a v i n g  s o m e  business activity in N e w Z e a l a n d . T h e a p p r o a c h to A u s t r a l i a n traders m a y therefore b e as different f r o m the a p p r o a c h to foreign traders generally as those statements  not  might  imply.  I n Fletcher Challenge Ltd. v Fletcher Challenge Pty. Ltd.,  68  the S u p r e m e C o u r t of  South W a l e s considered the requirements for establishment of business goodwill  N e w  there,  b y aN e w Z e a l a n d trader. T h e plaintiff w a s i n c o r p o r a t e d as ah o l d i n g c o m p a n y for three substantial N e w Z e a l a n d companies.  T h o s e three h a d an u m b e r of trading subsidiaries,  s o m e o f w h i c h w e r e registered in N e w S o u t h W a l e s as foreign c o m p a n i e s a n d w e r e  well  k n o w n in Australia. N e w s of the a m a l g a m a t i o n was released to the N e w Z e a l a n d  and  S y d n e y stock e x c h a n g e s a n d articles a p p e a r e d in A u s t r a l i a n n e w s p a p e r s  and  financial  journals. O n the s a m e day, the natural defendants lodged an application for reservation of the 'Fletcher Challenge' name.  P o w e l l J . h e l d t h a t it w a s l e g i t i m a t e , a t t h a t s t a g e  the proceeding, to treat the a n n o u n c e m e n t of the p r o p o s e d a m a l g a m a t i o n a n d  of  proposed  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 i n subsequent cases, although even with that liberal approach the plaintiff will sometimes fail to establish a goodwill i n New Zealand; for example, Watson v Dolmark Industries Ltd. [1992] 3 N Z L R 311, especially at p. 320. Supra, note 45. Refer also the decision of the F u l l Federal Court of Australia i n 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 i n 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. 68  65 n e w c o m p a n y n a m e as creating an e w reputation w h i c h p r e c e e d e d the l o d g m e n t o f defendant's  application by a few hours.  T h e case has b e e n cited as a n e x a m p l e of a  m o r e liberal a n d flexible a p p r o a c h to the establishment of goodwill in light  the  6 9  but must be  seen  of:  (a) the p r e c e e d i n g a n d alternative finding o f the court, that the plaintiff 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 its t h r e e c o n s t i t u e n t  companies;  7 0  (b) the fact that the evidence tendered to support the existence of reputation not challenged by the defendant, even under  (c)  the  finding  that  the  natural defendants  cross-examination;  h a d  conspired  was  7 1  to  deliberately  appropriate the c o m m e r c i a l reputation of the plaintiff a n d w e r e guilty of conspiracy.  was  civil  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 , it is 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 diversion f r o m the traditional a p p r o a c h to establishment of goodwill for the purposes  of  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  F o r example, by the authors of McKeough & Stewart Intellectual Property in Australia 1991, Butterworths, Sydney, para. 1715. 69  70  Supra, note 45, p. 12.  71  Ibid, pp. 12-13.  72  Ibid, pp. 13-14.  66 (Aust.) Pty. Ltd., 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 73  Kong, C a n a d a , the U n i t e d States, N e w Z e a l a n d a n d Australia  7 4  a n d h e l d that, in  view  of the sophistication of m o d e r n communications a n d advertising a n d the frequent travel 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 , it is 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 is it n e c e s s a r y t h a t its g o o d s b e s o l d t h e r e : "It is s u f f i c i e n t i f h i s g o o d s h a v e whether  residents or otherwise,  a reputation in this c o u n t r y a m o n g of a sufficient  degree to  establish  persons  here,  that there  is a  likelihood o f deception a m o n g c o n s u m e r s a n d potential c o n s u m e r s a n d o f d a m a g e to his reputation".  7 5  H i s H o n o u r f u r t h e r h e l d that, to m e e t that test, a plaintiff w o u l d  to s h o w that a substantial n u m b e r product.  7 6  of people  in the jurisdiction were  need  aware  of  T h e plaintiff, w h i c h w a s b a s e d in the U n i t e d States, failed to satisfy  c o u r t o n t h a t t e s t a n d it 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 the next step a n d h o l d that anon-trading plaintiff has asufficient  its the take  reputation.  (d) Concurrent rights N e w Z e a l a n d courts h a v e h e l d that aplaintiff 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 rights in the goodwill attaching to a n a m e  or other distinctive feature.  e x a m p l e i s t h e Dominion Rent A .Car c a s e  7 3  (1992) 33 F . C . R . 302  74  Ibid, pp. 310-344.  7 5  Ibid, p. 344.  7 6  Ibid, p. 346.  77  Supra, note 2.  7 7  T h e most  where, in separate H i g h C o u r t  notable actions,  7 8  67 the plaintiff a n d defendant both obtained injunctions against each others use of the w o r d 'Budget' in relation to the car rental business.  T h e Court of A p p e a l resolved the  case  o n the basis that the parties h a d concurrent rights in the goodwill attaching to the  w o r d  a n d c o u l d b o t h c o n t i n u e to u s e it.  It is c l e a r t h a t t i m i n g is o f t h e e s s e n c e , s o  7 9  concurrent rights will b e m o r e likely to arise w h e r e the s e c o n d entrant to the e n t e r s w i t h i n a short t i m e o f the first  entrant.  market  8 0  C o n c u r r e n t use m a y not only give rise to concurrent rights but, finally in relation goodwill, by acquiescing in the defendants altogether.  that  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 its  to  goodwill  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  to plastic storage trays w h i c h the  defendant  initially m a d e  from  the  plaintiff. T h e licence w a s later cancelled b u t the d e f e n d a n t c o n t i n u e d to m a k e a n d  sell  the trays.  any  T h e plaintiffs claim for passing off was  under licence  dismissed o n the basis that  goodwill attached to the n a m e of the product was eclipsed b y the defendant's m a r k e t i n g u n d e r its o w n  name.  8  permitted  1  Mutual v Dominion, unreported, High Court, Auckland, 9 August 1982, A 1654/77, M o l l e r J.; Dominion v Mutual, unreported, High Court, Auckland, 8 November 1984, A 9/84, Vautier J. 78  79  Supra, note 2, per Cooke P. at p. 408, per Somers J. at p. 421 and per Casey J. at p. 427.  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. 80  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 i n the get up of the diaries." 81  68 2. Misrepresentation  T h e e s s e n c e o f p a s s i n g o f f is 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 plaintiffs goodwill.  the  I n its 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  or  services of the d e f e n d a n t are those of the plaintiff, or are k n o w n o f a n d a p p r o v e d b y  the  plaintiff. T h e r e q u i r e m e n t is 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  the  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 is l i k e l y t o c a u s e  It h a s  been  advertisements  held  that  misrepresentation  confusion.  will occur w h e r e  between the pages of national newspapers  8 2  the  defendant  inserted  published by the  plaintiff,  b e c a u s e the public w o u l d perceive that the inserts f o r m e d part of the paper, connected  with the publishers of the paper a n d were advertisements  publishers accepted responsibility;  8 3  for which  where the defendant m a d e a n d sold goods  were the  bearing  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 it w a s h e l d t h a t t h e p u b l i c  was  aware the characters h a d b e e n licensed a n d that there was therefore a misrepresentation  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 will 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 i n 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. 82  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 All E.R. 803), that the placing of advertising inserts would necessarily involve a misrepresentation that the inserts were connected with the plaintiff. 83  69 that the defendants' goods w e r e licensed b y the plaintiffs;  8 4  a n d that to sustain a cause  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 it is e n o u g h i f t h e r e is 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 it, s u c h advertisers in atrade  A  magazine.  as  8 5  related issue arises w h e n the plaintiffs g o o d s are sold not to the public, but to  an  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 is 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  the  public by doctors and pharmacists.  the  It 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  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 i n the goodwill sought to be protected, and, two, there is no property i n 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 i n the business or goodwill and not any property i n 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, i n 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 i n terms that the plaintiffs' solicitors could serve any person found at the relevant time to be in breach and the case is unusual i n that respect). The case is consistent with the Ninja Turtles decision, especially in that the court looked for some proprietary right i n 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. 84  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; i n 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. 85  70 p u b l i c is 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 includes the patients w h o ultimately consume them.  8 6  T h a t is i n l i n e w i t h e a r l y  passing  o f f c a s e s s u c h a s Sykes v Sykes 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  the  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  of  87  his o r ultimate c o n s u m e r s o f g o o d s o r services s u p p l i e d b y  him."  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 its g o o d w i l l r e s u l t i n g f r o m t h e  misrepresentation.  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  parties  over the relevant period in reaching the view that the probability was that Mutual  had  benefited  that  f r o m a n y c o n f u s i o n b e t w e e n its 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  therefore Mutual's claim for passing off must fail.  H o w e v e r , it is n o t n e c e s s a r y  to  lead such precise evidence a n d m o r e subtle forms of d a m a g e have b e e n recognised  by  the courts.  8 9  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  diversion of trade, d a m a g e to reputation caused b y lapses o n the part of the  to  defendants  a n d inundation or dilution of the plaintiffs goodwill in the n a m e 'Taylors' to the  point  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 its o w n n a m e a n d t h e s a l e p r i c e o f  Refer Wadlow, supra, note 3, para. 6-53. O n that authors comment on the Canadian decision i n 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. 86  87  Supra, note 11.  88  Supra, note 1.  89  Supra, note 2, p. 412.  71 the n a m e w o u l d b e sharply diminished. T h e C o u r t f o u n d there to b e sufficient of damage  of the second a n d third kinds a n d was  tendency to i m p a i r distinctiveness. with  caution in two  evidence  p r e p a r e d to infer d a m a g e  f r o m a  It 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  applied  r e s p e c t s : first, t h e r e  are cases where  confusion with a larger  organisation m a y b e to the benefit of aparty so d a m a g e m a y not b e a s s u m e d a n d  would  be required to b e proved; and, secondly, the principle cannot apply to give a party a practical m o n o p o l y in arelatively c o m m o n  I n t h e Champagne  91  name.  9  0  case, the C o u r t of A p p e a l affirmed, in finding for the plaintiff,  d a m a g e f r o m goodwill can b e inferred f r o m atendency to i m p a i r distinctiveness. cast doubt, however, enough.  on whether  loss of ability to license use  of a n a m e  m a y  that T h e y be  9 2  90  Supra, note 28, per Cooke P. at pp. 37-38.  91  Supra, note 80.  It will 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 i n 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. i n 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. 92  72  4. Disclaimers  T h e courts have also considered the issue of whether  a purported disclaimer can  be  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., it 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  approved  b y the plaintiff, w e r e ineffective o n o n e or b o t h o f two bases: one, the representation  was  m a d e at 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 it w o u l d  not  c o m e to the purchaser's attention until s o m e t i m e after sale; or, two, the p r e s e n c e o f the unauthorised inserts alongside authorised inserts a n d advertisements was a representation that they w e r e part of the publication issued b y the plaintiffs. T h e disclaimer c o u l d convert that false representation into a true one.  T h e c o u r t h e l d t h a t it m i g h t  suggest s o m e arrangement or collaboration between the plaintiff a n d  T h e  holding that  a disclaimer could never be  effective  in the  defendant.  even 9 3  circumstances  represent a significant extension of the protection a f f o r d e d b y the tort, b u t m a y also a decision limited to the u n u s u a l facts of that particular case. from prior authority.  m a y be  It is c e r t a i n l y  divergent  of disclaimers.  Although  9 4  O n l y five N e w Z e a l a n d cases h a v e considered the effectiveness  n o n e has p r o v i d e d adetailed discussion o n the point, the law here s e e m s to b e the  93  not  same  Supra, note 58, pp. 812-813.  Especially Illustrated Newspapers Ltd. v Publicity Services (London) Ltd. [1938] 1 All 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. 94  73 as 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 it p r e v e n t s t h e c o n f u s i o n 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 is s o e f f e c t i v e is a q u e s t i o n fact.  9 5  T h e courts a p p e a r to b e suspicious about the effectiveness of disclaimers  therefore impose ahigh standard.  91  High  defendant  to use  Court,  granted  the n a m e  of and  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., J. in the  that  a conditional interim injunction which  M c G e c h a n  allowed  'Taylors' only in accordance with a range of  the  conditions  including relating to h o w the telephone should b e answered, w h a t should b e said in oral  In Noel Leeming Television Ltd. v Noel's Appliance Centre Ltd. (No. 2), unreported, H i g h Court, Christchurch, 27 August 1985, A102/85, Holland J., a notice: 'Please note that this is not a N o e l Leeming Appliance Store' was held to be effective to distinguish the defendant's business from that of the plaintiff; the defendant i n 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 i n those conditional terms rather than i n 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 i n the words complained of ('Sunshine' for the plaintiff, 'Sunline' for the defendant); i n 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 i n clear words i n a prominent place that it was not i n any way associated with the plaintiff. It also ordered that the defendant use the word in Canterbury: (a) only i n conjunction with its full registered name; and (b) not in the typeface used by the plaintiff; i n 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. 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 i n 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. 96  Supra, note 28.  74 discussion, the style o f lettering to b e u s e d in c o r r e s p o n d e n c e , advertising and promotional material, telephone requiring the defendant  business  documents,  a n d post office b o x directories  to advise any customer w h o  m i s t a k e n l y c o n t a c t e d it o f  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 it 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 the  granted by the court was in absolute  terms.  the  substantive  hearing, he expressed doubt about whether disclaimers "...would prove workable in real w o r l d o n the f a c t o r y o r office f l o o r a n d drivers seat..." a n d the final  and  the  injunction  9 9  D. EXPANSION INTO OTHER TORTS  In the Canada  98  United States of America 1  0  1  and, m o r e  recently  a n d to  a lesser  extent,  there has b e e n a m o v e to e x p a n d the tort of passing off to a m o r e  in  general  F o r the full terms of the injunction, refer to the Court of Appeal decision, ibid, pp. 34-35.  [1990] 1 N Z L R 19, 32; restraining the defendant from using the name i n any business offering or providing drycleaning, laundry, linen hire, or garment hire services i n the wider Wellington region. The court was partly influenced by the fact the defendant had breached the interim injunction i n several respects. 99  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 i n the area of personality merchandising. The need for a privacy tort was first advocated by Warren and Brandeis i n 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 A c t 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. 100  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. CA.) 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 101  75 tort of unfair competition. against  damage  knowledge  caused  U n d e r that cause of action, a trader obtains  either  by  unfair competition  or  the  protection  misappropriation  or information in w h i c h she has a quasi-proprietary right.  of  T h e need  to  e s t a b l i s h g o o d w i l l , w h i c h is 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 , is n o t n e c e s s a r y i n t h e u n f a i r competition  complaint.  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, strictly o n e o f passing off. case  1 0 5  1 0 3  I n t h e Sherry c a s e ,  1 0 4  but that case  is  C r o s s J s u g g e s t e d t h a t t h e Champagne  w e n t : "...well 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 off into the u n m a p p e d  of 'unfair trading' or unlawful competition...", but that idea was quashed b y the o f L o r d s i n Shaw Bros. (HK) Ltd. v Golden Harvest (HK) Ltd.  106  In English  area H o u s e law,  passing off does not provide rights of publicity or privacy, n o r of m i s a p p r o p r i a t i o n of personality or character a n d there are n o separate torts giving protection in those  areas  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 i n Dowell v Mengen Institute (1983) 72 C.P.R. (2d) 238 (Ont. H.C.J.). Rights of privacy have been given statutory protection i n 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 L o r d Diplock i n the Advocaat case were, however, present i n that case, so the comments of the court appear to be strictly obiter. 102  Supra, note 1.  103  Albeit i n an expanded, rather than the classic, sense.  104  Supra, note 32, p. 146.  105  Supra, note 31.  106 ^972] R . p . c . 559, 562-563. F o r a discussion, refer D . Vaver The Protection of Character Merchandising -A Survey of Some Common Law Jurisdictions [1978] 9 I P C L 541.  76 or for unfair  competition.  I n McBean's Orchards (Australia) Pty. Ltd. v McBean's Orchards Ltd.,  108  Jeffries J. held  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  and  m a y b e m o v i n g t o w a r d ag e n e r a l u n f a i r c o m p e t i t i o n action, b u t h e also h e l d that the  case  at b a r w a s n o t s u c h a case.  T h e r e has b e e n n o other case giving recognition to such  action. B e c a u s e section 9does not require the plaintiff to establish goodwill or to d a m a g e , it 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  Zealand.  an  prove 1  0  9  E. THE PUBLIC POLICY RATIONALE  O p i n i o n s o n w h a t is 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  diverse.  It 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 its 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  N o r 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 i n 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 i n 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. F o r an argument that a tort of appropriation of personality is already known to the common law refer R . G . H o w e l 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. 107  108  (1982) 1 N Z I P R 406.  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. 109  77 public  1 1 0  ;  between  that two  competition, others";  1 1 2  it p r o t e c t s conflicting  the  competing  objectives;  on  the  trader; one  1 1 1  or,  h a n d  represents the  a  compromise  public interest  in  free  o n the other the protection of a trader against unfair competition  or, "protects  o r , is " b r o u g h t b y t h e  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 trader whose  misrepresentation m a d e to  goodwill has been  consumers..."  consumers";  i n j u r e d , b u t is b a s e d  on a  complaints  Traders have interests in protecting investments in  d e v e l o p m e n t of n e w products a n d ideas; they h a v e aconflicting interest in preserving ability of traders to c o m p e t e a n d not allow o n e trader to gain am o n o p o l y in a n y C o n s u m e r s also have  1 1 3  1 1 4  T h e l a c k o f u n i f o r m i t y is 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 affect b o t h traders a n d consumers.  by  interests in c o m m u n i t y access to intellectual progress  the area.  and  in  p r o m o t i n g competition that will usually result in lower prices; they have a conflicting interest in allowing s o m e protection to innovators, w h o m a y not b e inclined to innovation in the absence of s o m e protection of the end  product.  S o m e elements of the tort suggest afocus o n the interests of the rival trader, including  110  The 1986,  Max  P. J. Kaufmann, Passing off and Misappropriation, 9 Studies in Industrial Property & Copyright Law, Planck Institute F o r Foreign and International Patent, Copyright and Competition Law, Munich, at p. 3.  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". 111  112  Dominion Rent A Car, supra, note 2, per Somers J. at p. 420.  113  Todd, supra, note 44, at p. 619.  114  D . Shanahan, The Trademark Right: Consumer Protection or Monopoly?, (1982) 72 T M R 233, 234.  78  that:  (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 its e a r l y d e v e l o p m e n t ,  was  a i m e d at p r e v e n t i n g deceit of the rival trader;  .  (ii) it is n o w  necessary to p r o v e  deception  of the  public only because  that  establishes d a m a g e to the plaintiff, for example, that the plaintiff will suffer loss of sales if her customers b u y a competitor's p r o d u c t in the m i s t a k e n belief  that  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 connection with the  product;  (iii) it is 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 is t h e s u b j e c t o f t h e  action;  (iv) t h e p r o t e c t i o n is 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 b e c a u s e t h e l a t t e r is 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 as t h a t r e l a t i n g t o patent and  her  simply  trademarks,  copyright;  (v) the p r o t e c t i o n a f f o r d e d b y the tort 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 in increased prices and/or lower  result  quality.  O t h e r elements give the action a c o n s u m e r protection flavour, including that:  (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  be  79 successful;  1 1 5  (ii) t h e c a u s e o f a c t i o n is 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 to a n y proprietary right in the n a m e , m a r k or get-up in issue.  than  It t h e r e f o r e  allows  a greater degree of imitation and competition than, for example, atrade  mark.  C o n s u m e r s are the beneficiaries of that greater degree of  competition;  (iii) a n i m i t a t o r w i l l h a v e ag o o d d e f e n c e if 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 f r o m those of the plaintiff.  T h a t also allows competition a n d thereby  goods benefits  consumers;  (iv) the 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 resisted d e v e l o p m e n t o f a tort unfair competition, thus limiting the protection afforded to traders, to the of  On  of  benefit  consumers.  b a l a n c e , it is 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 is 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  nor  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 , it d o e s not seem  possible to seriously argue otherwise.  W h i l e the existence of the tort  itself t o t h e i n t e r e s t s o f t r a d e r s , it 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  traders.  It 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 its 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 of product and new methods of manufacture and promotion.  Constraints on  owes  kinds  expansion  of the tort h a v e included the c o n c e r n of the courts not to grant a m o n o p o l y to  one  O r some other relevant body, such as the advertisers i n Morgan-Grampian v Training Personnel, supra, note 62. 11S  80  trader, thereby depriving other traders of a n opportunity to compete, c o n c e r n not to deprive c o n s u m e r s of the benefits of that competition.  1 1 6  but also  their  Having  said  that, in n o case has the court given the interests o f c o n s u m e r s priority o v e r those traders, in the sense of withholding ar e m e d y that w o u l d otherwise have b e e n T h e  writer concludes  existence a n d the  granted.  extent of the protection  are  concerned principally with the interests of traders a n d that the interests of consumers  are  very m u c h  that both the  of  secondary.  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, as i d e n t i f i e d chapter one.  It is 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  interests of traders. O n e w o u l d accordingly think that different tests a n d standards  in the  would  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 has not  happened.  Refer, for example, to L o r d Diplock's policy statement i n the Advocaat case, supra, note 1 and text.  CHAPTER THE  APPROACH  ei  FOUR  OF THE COURTS  INTRODUCTION  It 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 effect of the statute o n the development of the tort of passing off will largely d e p e n d o n the attitude taken b y the courts to the existence of a n alternative jurisdiction. T h e statutory 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 of, possibly inappropriate, passing off principles; and/or the extension or development of the passing off action m a y be circumscribed by the existence of a statutory parallel. O r there m a y be am o r e robust attitude taken with the result that the statute will provide agenuinely alternative a n d often c o m p l e m e n t a r y w e a p o n in the hands of the ethical rival trader." 1  In  chapter  one,  there  was  consideration  p r o t e c t i o n rationale for section 9.  2  of judicial statements  on  the  consumer  T h a t s h o w e d that, consistent with the public policy  rationale, the interests of consumers have b e e n foremost in judicial c o m m e n t a r y o n section.  the  A t t e m p t s b y counsel to limit the meanings of w o r d s in the section, a n d limit the  s c o p e o f t h e s e c t i o n itself, h a v e b e e n o v e r - r u l e d . I n d o i n g so, t h e c o u r t s h a v e ,  however,  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 it is 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 to s h o w that such interests are h a r m e d in o r d e r to b e successful.  A s well as  emphasizing  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 A c t was to provide a weapon for the use of consumers. 1  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  action  is 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  two.  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 . It is 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 9o f t e n a m o u n t s to little m o r e lip-service.  than  W h i l e emphasizing the different policy rationales for the two actions,  the  courts h a v e nevertheless a p p l i e d m a n y of the tests d e v e l o p e d in the tort of passing  off.  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 is t o p r o t e c t t r a d e r s , of the  tests in section  9 actions  is i n a p p r o p r i a t e a n d  prejudices  the  application interests  of  T h e importation of passing off principles into section 9 cases happens in relation  to  protection of descriptive names, get up, location a n d duration of reputation, evidence  of  consumers.  deception a n d the c o m m o n field of business activity rule.  3  Each  will be  considered  separately, in Parts B to 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  the  Those headings were first addressed by Michael Blakeney i n his article, Old Wine in New Bottles: Influence of the Common Law on the Interpretation of section 52 of the Trade Practices Act (1984) 58 316, 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 will be seen that the Australian courts continue to tread the wrong path and that the New Zealand courts have followed. 3  A.LJ.  83  following general principles, in relation to section 52 of the Trade  Practices  Act:  "(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 52, b e c a t e g o r i z e d as 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 it c o n t a i n s or conveys a misrepresentation...; ( b ) a s t a t e m e n t w h i c h is 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 deceptive...This will occur, for example, where the statement also conveys a s e c o n d m e a n i n g w h i c h is u n t r u e . . . ; (c) c o n d u c t is 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 is 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 it is l e s s o r m o r e t h a n fifty 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 is, o r is 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 is 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 itself, i n r e l a t i o n t o o n e o r m o r e identified sections o f the public, the c o u r t c o n s i d e r i n g all w h o fall w i t h i n a n identified section of the public including the astute a n d the gullible, the intelligent a n d the n o t so intelligent, the well e d u c a t e d as well as the p o o r l y e d u c a t e d , m e n and w o m e n of various ages pursuing a variety of vocations...Evidence of the 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 is 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) ordinarily, 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 will n o t suffice to 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 is 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 it m a y d e t e r m i n e w h e t h e r t h i s is b e c a u s e o f misleading or deceptive conduct o n the part of the respondent..." 4  T h e Australian courts have  emphasized  t h a t it is n o t a p p r o p r i a t e m e r e l y t o  passing off principles a n d c o n c e p t s into cases u n d e r section 52.  import  It h a s b e e n h e l d t h a t  to  d o so w o u l d likely b e "...productive of error a n d to give rise to a r g u m e n t s f o u n d e d  on  false assumptions".  the  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  tort of passing off are quite different in the sense  4  5  (1985) 63  ALR  345,  Taco Company Of  that:  354-355.  Australia Inc.  v Taco Bell Pty.  Ltd.  (1982) 42  ALR  177.  84 " . . . s e c t i o n 5 2 is 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 is 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 : it is n o t c o n c e r n e d merely with the protection of the reputation or goodwill of competitors in trade or commerce." 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  "...are 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 the tortious p r i n c i p l e s a r e p e r c e i v e d to  be  underlying" a n d that the m e r e fact that a plaintiff has a choice of r e m e d y does  not  require the statutory r e m e d i e s to b e c o n s t r u e d so as to a c c o r d with the c o m m o n 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  c l e a r t h a t s e c t i o n 5 2 is 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 requirements registered  for passing  designs.  off or by reference  to  law.  7  it  equitable  statutes dealing with patents  and  8  In s u m m a r y , therefore, the A u s t r a l i a n courts a p p e a r to h a v e b e e n u n a n i m o u s in their 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 , it is 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 principles to cases u n d e r section  6  52.  off  9  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.  (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. 8  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." 9  85  T h e  N e w  Z e a l a n d courts have  generally followed  the  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  v Kimbyr Investments Ltd. t h e  same  approach.  T h e y  have  a l t h o u g h i n Levi Strauss & Co.  Court of A p p e a l pointed  out  that  there  are  some  differences in emphasis between the N e w Z e a l a n d a n d Australian courts with respect 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 is t h a t it is n o t e n o u g h the  conduct  causes a state of w o n d e r  example, the identity or otherwise of two  or doubt in the  minds  of people  to that  about,  for  businesses:  " 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 is satisfied (on the balace of probabilities) that s o m e c o n s u m e r s will w o n d e r , it 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 this is n o t n e c e s s a r i l y so." 1 1  In Taylor Bros. Ltd,  12  t h e first civil 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  the  Court of A p p e a l both indicated that the principal difference between the two actions that only passing off requires aplaintiff to p r o v e injury or likelihood o f injury to his goodwill; the A c t thus having awider scope than the tort. du Vin de Champagne v Wineworths Group Ltd.,  14  1 3  is o w n  I n Comite Interprofessionel  G a u l t J. h e l d that, in that context  of  a dispute b e t w e e n rival traders, afinding o f b r e a c h o f the A c t a d d e d n o t h i n g in practical terms to the decision o n the passing off cause of action.  10  be  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. 11  T h a t m i g h t , o n its f a c e ,  [1994] 1 N Z L R 332, 381.  12  Supra, note 10 at p. 27.  13  Idem, per Cooke P. at p. 39.  14  [1992] 2 N Z L R 327 (the Champagne case) at p. 344.  86 c o n s t r u e d as afinding that the e l e m e n t s to b e satisfied a r e the s a m e for b o t h c a u s e s  of  action, but the c o m m e n t was, one, m a d e with particular reference to the fact that  the  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 plaintiff o n p a s s i n g off; a n d , t w o , d i r e c t e d to  the  r e m e d i e s available to the p a r t i c u l a r plaintiff as am a t t e r o f practicality, r a t h e r t h a n to  the  e l e m e n t s to b e p r o v e d as a m a t t e r o f policy o r principle.  A m o r e detailed analysis of the differences b e t w e e n / similarities of the two actions u n d e r t a k e n i n Tot Toys v Mitchell  w h e r e F i s h e r J. h e l d that in at least five  15  was  respects  it is 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  off:  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 and non-capricious get-up, which H i s H o n o u r previously drew in the context of passing off; 1 6  2. d a m a g e action;  t o t h e p l a i n t i f f is 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  statutory  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 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 is d i v e r s i o n  15  of of  [1993] 1 N Z L R 325, 367-368.  Ibid, pp. 335-347. H i s 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 will 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 will 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 i n passing off. 16  87 trade;  1 7  4. t h e r e goods;  i sn o  need  for the  plaintiff to prove  damage  to h i m or  his  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 deception, i m m e d i a t e correction at the point o f sale rectify the breach. In contrast, such correction m a y p a s s i n g off, if 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  t . I f t h e r e is i n i t i a l will b e too late to defeat a claim in has occurred.  H a v i n g set o u t t h o s e differences, H i s H o n o u r p r o c e e d e d to m a k e clear, h o w e v e r ,  that  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 is n o t t h e e n d o f t h e m a t t e r , a n d plaintiff u n d e r section 9 m u s t go o n to s h o w that one of the, discretionary,  the  remedies  ought to b e granted. F i s h e r J. h e l d that the five matters detailed a b o v e are also relevant to the question of w h e t h e r a n y r e m e d y should b e granted, the essential question  being:  " . . . 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 is l k e l y t o h a v e a s u f f i c i e n t l y serious impact u p o n customers rather than trade competitors." 1 9  T h e r e follows a discussion of areas in which the courts have ignored their o w n  advice  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.  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 will be made out only if the customer would not have purchased the defendant's product but for that misrepresentation. 17  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. 18  Ibid, p. 368.  88  B. PROTECTION OF DESCRIPTIVE NAMES  Descriptive names are those which indicate the nature, rather than the source, of Although  protection  Reddaway v Banham,  of descriptive 20  names  has  been  afforded in passing  goods.  off  since  Lord Herschell accepted the findings of the jury in that  case  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 its 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 . It 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  reluctant  to afford protection to descriptive n a m e s , the rationale b e i n g that the descriptiveness  of  the n a m e  its  ensures  t h a t it is 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  and hence  application to other like businesses will not ordinarily m i s l e a d the public.  2 1  In construing sections 9 a n d 52, the courts in 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 h e i s s u e o f w h e t h e r o r n o t an a m e is 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 .  " w w w  20  [1896] A.C.  The h o ord ord  treated  It h a s b e e n h e l d that:  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 is t o g i v e t o o n e appropriates to himself descriptive w o r d s a n unfair m o n o p o l y in those s a n d might even deter others from pursuing the occupation which the s describe." 2 2  199; refer, supra, chapter three, notes 13-17 and text.  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 All E.R. 213. 21  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 A c t and conceded that it might require prohibition of conduct in a way that would result in a limited monopoly i n the design of a product, but (1) that case involved a claim in relation to design of a product rather than i n relation to name; and (2) Mason J. considered the evidence not strong enough to demonstrate a protectable reputation in the plaintiffs design. 22  89 T h r e e p o i n t s a r i s e . T h e first is t h a t t h e r e is 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 those  names  Motorcard, Bell,  2 8  2  which Blue  4  Diesel  have and  & Turbo,  been Fresh, HIT,  2 9  2 5  3 0  protected  and  Pure  Simple,  and  Champagne  3  held not to b e purely descriptive a n d therefore pursuant Germain,  23  t osection 3  5  52.  Champagne,  3  Rent 6  Big Mac,  A Ute, 3  7  3 3  West  1  those 2 6  which Popular  and Scotch  have  not.  Coast  Whisky  3  2  Information  Cooler,  3 8  Visa,  Mechanics,  Pitstop  2 7  have  to b e capable of sustaining Building  between  all an  Centre, 3 9  and  3 4  the  2  3  T a c o been action Saint N e w  Visa International Service Assoc. v Beiser Corporation Pty. Ltd. (1983) 6 T.P.R. 82.  Motorcharge Pty. Ltd. v Motorcare Pty. Ltd (1982) 42 A . L . R . 136, but only i n Western Australia and not in New South Wales or Victoria. 24  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.  The Scotch Whisky Assoc. v Norman James Eade, unreported, H i g h Court, Christchurch, 4 July 1990, CP 204/90, Holland J.; unreported, Court of Appeal, 20 August 1990, C A 177/90. 32  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.  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). 36  37  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.  90 Zealand W i n e Society  4 0  have b e e n held to b e descriptive a n d not capable of  sustaining  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 is 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 is n o t , is 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 intended to protect.  T h e lack of logic a n d consistency b e t w e e n those n a m e s w h i c h  is  have  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 is 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  of  d e s c r i p t i v e n e s s as 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 is m i s l e a d i n g  or  d e c e p t i v e is u n j u s t i f i a b l e .  P e r h a p s the m o s t telling e x a m p l e of lack of r e g a r d for  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 , is c o n t a i n e d i n t h e d e c i s i o n o f J. in the N e w  Z e a l a n d W i n e Society case.  restrain the other f r o m using that n a m e .  4 1  Robertson  B o t h parties claimed a n injunction  His H o n o u r held  the  to  that:  "If 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 to persist 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 it 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 is 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 is 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 maintaining a c o m m e r c i a l reality w h i c h has the potential to confuse."  T h e a c k n o w l e d g m e n t that the activities o f the parties h a d the potential to c o n f u s e a reason for m a k i n g an injunction, not areason for with-holding one  T h e  second  names,  p o i n t is 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 r a w n a distinction between confusion or w o n d e r m e n t  4 2  dealing with  descriptive  o n the one h a n d  40  Cardmember Wines Ltd. v The Wine Society Ltd. (1992) 4 T C L R 556.  41  Idem.  was  and  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. 42  91 misleading or deception on the other. T h e former occurs w h e n the defendant's  activities  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 is a c o n n e c t i o n  between  the parties a n d does not a m o u n t to b r e a c h of the A c t .  T h e latter arises w h e r e  activities 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 is 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 of the  Act.  the  breach  4 3  A c o m p a r i s o n can b e m a d e with section 16 of the Trade Marks A c t 1953, w h i c h prohibits registration as a trade m a r k of a n y m a t t e r that w o u l d b e likely to deceive confusion. consumers  4 4  It h a s b e e n  held that section  a n d t h a t it is e n o u g h  1 6 is p r i n c i p a l l y a i m e d  if m e m b e r s  or  at protection  of the public are "caused to  whether the goods bearing the applicant's m a r k c o m e f r o m some other source. conceded  that the wording of section  16 m a k e s  it e a s i e r  cause of  wonder" 4 5  It is  to a p p l y a w i d e r test  of  d e c e p t i o n o r c o n f u s i o n a n d it 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 9is r e q u i r e d , t o i n c l u d e confusion.  I n c h a p t e r five, it 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 is n o t a b l e t o tell  the  difference  between  her  a genuine  product  and  purchasing decisions o n the basis of price.  an  imitation  o f it, s h e  will m a k 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 is  the  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. 43  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 i n 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. 44  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 A c t 1955 requiring proof of "deception or confusion". F o r 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. 45  92 s a m e , t h e r e is a fifty 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 is c h e a p e r , t h e r e is 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 it.  T h e i m p o r t a n t f a c t o r is t h e c o n s u m e r ' s i n a b i l i t y t o tell t h e t w o p r o d u c t s  apart.  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 is m e r e l y c o n f u s e d  then  she will n o t b e able to tell the 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 dsecisions will r e s u l t . It is 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 s e c t i o n 9.  T o m a k e that the s t a n d a r d w o u l d satisfy the c o n s u m e r protection  under  rationale  a n d w o u l d b e consistent with other c o n s u m e r protection legislation, s u c h as the Marks  Trade  Act.  It is 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  section  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 is d e l i b e r a t e a n d any inclusion of confusion m a y only come from Parliament. T h e r e would be s o m e in that view.  B u t the courts h a v e t a k e n a flexible a p p r o a c h u n d e r s e c t i o n 16,  that merit  holding  t h a t t h e c o n c e r n is 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  of  deception or confusion."  be  taken in section 9  4 6  F o r the reasons stated above, the s a m e approach should  cases.  T h e third point arises f r o m the reluctance (sometimes refusal) of the courts to  accord  any, or any significant, weight to evidence of actual misleading or deception of the public. In treating the deacriptiveness or otherwise of a n a m e as determinative, the courts no or minimal value on such evidence.  Pioneer Hi-Bred Corn, ibid, per  I n t h e Big  Richardson J. at  p.  Mac  76.  case, Smithers J. held  place  that:  93 "In mis for up in det  m y opinion evence of m e m b e r s of the public that they have b e e n l e d , i f it 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 , is 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 determination but merely of peripheral value. T h e court must m a k e its o w n m i n d a n d it is 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 , the circumstances o fthis matter, t om a k e a n objective ermination."  Conversely, in the suggesting  4 7  N e w  Z e a l a n d Champagne c a s e ,  4 8  there was  that the public w o u l d not be misled b y the defendant's  a mass  of  activities  Jeffries J. (whose conclusion was accepted b y the Court of A p p e a l ) held the  evidence 4 9  and  yet  defendant's  conduct to b e misleading or deceptive, without any explanation of w h y he preferred that view.  A n effect of the decision was  5 0  to deprive the c o n s u m i n g public of a greater  choice o f C h a m p a g n e style w i n e at asignificantly l o w e r cost t h a n the p r o d u c t by the plaintiffs members.  produced  T h e writer sees n o logical basis for the view that the  is 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  court actually  been misled.  Again, that a p p r o a c h can be contrasted with that taken u n d e r section  16  of the Trade  Marks  is  A c t , i n r e s p e c t o f w h i c h it 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  entitled to t a k e i n t o a c c o u n t his 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 as am e m b e r o f t h e p u b l i c , "evidence  of persons  accustomed  to delaing in that m a r k e t as to the likelihood  of  d e c e p t i o n o r c o n f u s i o n is 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 market.  5 1  T h i s i s s u e is 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.  94  C. GET UP  "Get-up" m e a n s the w h o l e visible external a p p e a r a n c e of goods in the f o r m in w h i c h they are likely to b e seen b y the public before purchase, including any packaging.  It is  5 2  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 is 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 its 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 ,  mark,  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 is d i s t i n c t i v e of the  plaintiff.  5 3  It 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 , 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 its g e t - u p d i s t i n g u i s h e s its p r o d u c t  the f r o m  those o f other traders in at least a section o f the p u b l i c so that; two, the plaintiff has 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 is l i k e l y to, d a m a g e to its 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  suffer  T h e difficulty facing  m o s t p l a i n t i f f s is 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 of their goods - most rely o n m a r k s a n d b r a n d  names.  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 is 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 it is  unnecessary  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 it w o u l d b e  52  C. Wadlow, The Law of Passing Off, 1990, Sweet & Maxwell, London, para. 6.39.  53  Supra, chapter three, part A 3 .  54  easier  Klissers Farmhouse Bakeries Ltd. v Harvest Bakeries Ltd. [1988] 1 N Z L R 16, per Somers J. at p. 23.  95 to 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 Australia have b e e n reluctant to grant protection of get-up.  T h e Australiancourts  have  t a k e n apaticularly h a r d line in this a r e a a n d , in cases in w h i c h get-up a l o n e w a s the basis o f as 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 it h a s b e e n s u c c e s s f u l ,  there  has b e e n an u m b e r of factors relied upon, including labelling, packaging a n d colour.  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. Ltd  56  a n d Parkdale Custom Built Furniture Pty. Ltd. v Puxu Pty.  Ltd.  51  In the former, the applicant's a n d respondent's cookery books were the same shape  a n d  size, w e r e similarly 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 lace, h a d glossy finishes a n d c o n t a i n e d similar line drawings a n d historical notes.  T h e trial judge  5 8  found contravention  section 52 but the majority in the Full Federal C o u r t allowed the appeal. t h a t it 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 b a s e d o n the shape a n d size of a book."  It w a s  of  held  distinctiveness  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  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. 55  56  (1982) 1 T.P.R. 24.  57  Supra, note 8.  5 8  Reported at (1981) 4 T.P.R. 356.  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.). 59  96 chairs of aquite distinctive design a n d a p p e a r a n c e w h i c h h a d a n established  reputation.  T h e d e f e n d a n t b e g a n to m a k e a n d sell a l m o s t identical l o u n g e suites, w i t h a t w o one-half inch square label attached and bearing the defendant's name.  T h e High  of Australia reversed the decision of the Federal Court a n d disharged the g r a n t e d b y it.  6 0  (a) G i b b s C J .  Court  injunction  It is 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  f l a w e d reasoning, as  and  applied  follows:  6  1  h e l d that; first, 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  should not be beneficially construed; and, secondly, the defendant's actions  should  b e c o n s i d e r e d in relation to 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 fail to 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 is n o j u s t i f i c a t i o n f o r t h e first p o i n t ; t h e  w h o  are u n a b l e to take  take  second  is 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 . s e e n i n c h a p t e r o n e , it is p e o p l e  and  care of their  A s o w n  i n t e r e s t s w h o a r e at 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 wil b e s e e n in c h a p t e r five, t h e y are the c o n s u m e r s w h o are m o s t affected  by  misleading  of  protection;  and  deceptive  conduct  and w h o  are  therefore  most  in need  6 2  The F u 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. 60  61  Supra, note 8, from p. 194.  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. i n 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. 62  97 (b) M a s o n J .  6  held that the essence of the case was w h e t h e r just m a k i n g a  3  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 is ab 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 all. 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 its product,  6 4  i tm u s t  follow  that  the  defendant's  whether the  conduct  misleading.  T h e real issue was  label was  misleading.  M a s o n J. devoted only one-half of one page  was  p r i m a  effective  to  facie  prevent  of his twelve  page  j u d g m e n t to consideration o f that issue, a n d h e l d that the label w a s effective.  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 it 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 either l o o k for a n d find the label or to inquire of asales person. T h e r e are flaws i n that r e a s o n i n g : firstly, the a p p l i c a t i o n o f a s t a n d a r d o f  h e l d in N e w Z e a l a n d that d e c e p t i o n at a n y t i m e constitutes ab r e a c h o f the In view of the  6 5  rectify  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 . It h a s a l r e a d y b e e n s e e n t h a t it h a s  6 6  two  reasonableness;  and, second, the implicit finding that discussion with a salesperson can  a n d correction at the point of sale c o m e s too late.  to  been A c t  consumer  protection rationale of the action a n d in view of the relative ease of distinguishing 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 , it is 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 is 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 particularlyinfluenced b y his view that a n injunction of  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.  98 the kind sought w o u l d give the plaintiff a monopoly, unlimited in time.  With  r e s p e c t , t h a t is 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  sought a n injunction restraining the d e f e n d a n t f r o m : "selling, offering for  sale,  dealing with, displaying or advertising any lounge  suites so as to m i s l e a d  deceive  lounges  the  public  that  they  are  lounge  suites,  or  lounge  chairs  m a n u f a c t u r e d b y the appellant". T h e effect o f a n injunction in those terms not  have  r e q u i r e d P a r k d a l e to  cease to m a n u f a c t u r e ;  it w o u l d  or  would  simply  have  r e q u i r e d it 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 its f u r n i t u r e . A l l o f is 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 is n o t h i n g i n s e c t i o n 5 2 t o the granting of injunctions that h a v e the effect of conferring  that  prohibit  monopolies.  ( d ) t h e c o u r t j u s t i f i e d its 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 evidence  that the defendant's  copying was deliberate.  That imports an  no  intent  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 is 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 , t h e e v i d e n c e , it is 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 than  deliberate.  6 8  In those circumstances,  it is n e c e s s a r y  to i m p o s e  on  other a high  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 its p r o d u c t is distinguishable f r o m that o f the first i n time.  A two and one-half inch  square  label u n d e r n e a t h the upholstery w h i c h c o u l d only b e s e e n if s e a r c h e d for 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 is n o t e n o u g h .  It is a n e v e n l o w e r s t a n d a r d  and than  The plaintiffs design was arrived at by a long process of trial and error and numerous modifications. Up 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 F u l l Federal Court, supra, note 58, at pp. 409-410. 68  99 that i m p o s e d b y the courts o n defendant's in passing off cases, w h e n they seek rely o n disclaimers. suspicious  It w a s s e e n i n c h a p t e r t h r e e  attitude to disclaimers there.  6 9  to  that the courts have taken a  F o r reasons  of the policy  rationales  involved, they o u g h t to b e m o r e , a n d n o t less, suspicious i n cases u n d e r  sections  9 a n d 52;  (e) finally, the c o u r t a p p e a r s to h a v e b e e n i n f l u e n c e d b y the fact that b o t h sold their p r o d u c t to retailers, rather t h a n direct to the public. chapter three that issue has been addressed in passing off too  7 1  7 0  It w a s s e e n i n  a n d that liability  m a y arise for representations to prospective customers o r to ultimate of goods or services supplied b y the defendant.  parties  F o r the policy reasons  consumers identified  i n this p a p e r , t h e r e is 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  of  the public u n d e r sections  is  9 a n d 52.  T h e reasoning of the Federal Court  therefore preferable to that of the H i g h C o u r t . T h e H i g h C o u r t of N e w  Zealand  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 is l i a b l e f o r :  "...the 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 is 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 conduct of the retailer if that conduct has not b e e n within the  69  Supra, part C.4.  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. 70  71  Supra, chapter three, part C.2.  100 reasonable contemplation of the  manufacturer.'  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  T h e headnote  manufacturer does not  contravene  section  case states that a  52 merely by m a k i n g a n d distributing a  product which, though properly labelled with the manufacturers name, very resembles  a n d is 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 product of  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 still is a d v e r t i s e d a n d m a r k e t e d . Z e a l a n d C o u r t of A p p e a l has held that there  closely another  T h e  N e w  is:  "[A] d a n g e r in a t t e m p t i n g to generalise in that w a y a n d [we] d o u b t w h e t h e r j u d g m e n t s w e r e i n t e n d e d to d o so..."  the  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 is 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 decision.  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 plaintiff in that case was the successor right-holder in respect  the design a n d m a n u f a c t u r e of a child's w o o d e n  toy, n a m e d " B u z z y Bee".  It r a n  of on  Cerebos Greggs Ltd. v Unilever New Zealand Limited, unreported, H i g h Court, Auckland, 3 June 1994, C L 71/93, Fisher J. 72  73  Taylor Bros. Ltd. v Taylors Group Ltd., supra, note 10, per Cooke P. at p. 40.  Supra, note 15. Klissers Farmhouse Bakeries v Harvest Bakeries Ltd., supra, note 54, involved the getup of bread packages, but was brought prior to the A c t coming into effect. UPL v Dux Engineers [1989] 3 N Z L R 135 (design, appearance and operating features of plastic lavatory seat, lid, 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 i n which a cause of action under section 9 could have been brought but was not. 74  101 wheels w h i c h caused the wings to rotate w h e n the toy w a s pulled along b y astring. 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 it " K i w i B e e " . T h e p l a i n t i f f s in passing off a n d for b r e a c h of section 9both failed.  T h e claims  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 .  found that there w e r e technical breaches but that the interests of the plaintiff in securing an injunction w e r e outweighed b y the interests of consumers against one. he relied on four  In doing  so,  factors:  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 at 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 as to source; 2. t h e d e f e n d a n t u n d e r t o o k to 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 c r e a t o r s w e r e still 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 toys; a n d  the  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 : "It is i n t h e p u b l i c interest that a n u n u s u a l l y ingenious w a y o f m a k i n g atoy b e e s h o u l d b e left in the public domain." 7 5  W h i l e the court's restraint i n the n a m e o f c o n s u m e r interests m a y , at first b l u s h ,  appear  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 effect of, t h e d e c i s i o n  shows  t h a t it 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 . a n d 2m a y b e valid in relation to c o n s u m e r s w h o a r e able to tell the difference 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 it b u t n o t a l l c o n s u m e r s c a n .  sue.  7 6  Application of factor  Ibid, pp. 370-371. Ibid, pp. 347-349.  4 contradicts  the  court's  between  Factor 3 appears  irrelevant a n d contradictory to the court's earlier finding, that the plaintiff h a d to  Factors 1  earlier ruling,  standing that  the  102 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 is r e l e v a n t o n l y i n p a s s i n g a n d not u n d e r section 9.  7 7  T o say, as F i s h e r J . does, that the m o r e ingenious a n  off idea  t h e l e s s p r o t e c t i o n it s h o u l d h a v e is 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 property law generally - to protect novel a n d original ideas.  In summary, and  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  with  principles  r e l e v a n t to p a s s i n g o f f to 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  such  is i n a p p r o p r i a t e .  D.  REPUTATION  It 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 it  goodwill in the jurisdiction; two, the courts in both Australia a n d N e w Z e a l a n d (and  has in  E n g l a n d a n d other jurisdictions) h a v e g r a p p l e d with the issue of w h a t level of activity in 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 it h a s g o o d w i l l t h e r e ;  three,  generally the courts require s o m e trading activity within the jurisdiction; four, the  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 is f r o m Australia and goodwill m a y transcend national boundaries;  7 9  but, five, there has  b e e n any case in which a plaintiff has established goodwill in N e w  Ibid, p. 367. Supra, chapter three, part C.l(c). As  will be seen, the position is the same in Australia.  Z e a l a n d solely  not by  103 v i r t u e o f its A u s t r a l i a n activities 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 Zealand. England,  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 is m o r e l i b e r a l t h a n 8 0  it 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  N e w in that  "In this case, o n the evidence, 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 activities w o u l d b e insufficient to establish agoodwill in N e w Z e a l a n d e v e n with the m o r e liberal a p p r o a c h to the establishment of goodwill reflected in recent cases." 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 is t h a t m e r e l y b e c a u s e  m e m b e r s of the public in  the  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 its 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 goodwill there.  I n t h e Athlete's Foot c a s e ,  8 2  for example, the fact that m e m b e r s of  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 it 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 its 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 it c o u l d n o t h a v e there.  8 3  A l l o f t h a t is 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 off,  the that  goodwill namely,  to protect the goodwill of the plaintiff trader.  U n d e r s e c t i o n s 9 a n d 52, it is 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  the  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. 8 0  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.  104 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 activity, it is n o t n e c e s s a r y t h a t b e a n y activity to satisfy the r e q u i r e m e n t s o f the statutory actions.  U n d e r those  there actions,  it is 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 is 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 e x p e c t t h a t it w o u l d b e e a s i e r f o r f o r e i g n plaintiffs t o s u c c e e d i n a c t i o n s u n d e r 9 a n d 5 2 t h a n i n p a s s i n g off, b u t t h a t is n o t t h e  would sections  case.  Australian decisions u n d e r section 52 h a v e consistently a p p l i e d the s a m e s t a n d a r d as in passing off a n d required some case,  8 5  T o o h e y  trading activity in the jurisdiction.  J. acknowledged  that  absence  of the  plaintiffs  8 4  I n t h e Dairy Vale product  W e s t e r n Australian m a r k e t was not necessarily fatal to a n a r g u m e n t b a s e d o n  f r o m  the  misleading  or deceptive conduct a n d lack of evidence of the extent to w h i c h the plaintiffs  product  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 its 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 . Nevertheless, the court applied the passing off test o f requiring trade in the jurisdiction 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 its  B r o w n &Grant  8  6  decision.  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  the contrasting requirements, in terms of reputation, between passing off a n d section It is 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  9.  u n d e r section 52 o n the basis of a  continuing public awareness of the n a m e 'Australian Estates C o m p a n y Ltd.',a n d failed in passing off because of alack of actual trading use of the n a m e since 1984.  However,  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. 84  85  Ibid - application for an interlocutory injunction.  86  Brown & Grant, supra, note 44, para. 7.14.  105 the decision was largely c o n c e r n e d with the extent to w h i c h there h a d b e e n of the goodwill in the c o m p a n y to the plaintiff.  Further, a n d m o r e i m p o r t a n t l y in this  context, the case did not involve aforeign plaintiff a n d was not about establishment of reputation or  goodwill.  assignment  extra-territorial  8 7  T h e r e is, 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 decision of B e a u m o n t  J . i n Peter Isaacson v Nationwide News.  T h e parties  88  the both  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 it the ' S u n d a y Territorian'. T h e p a p e r s w e r e l a u n c h e d at a b o u t the s a m e time. O n a c l a i m a n d cross-claim u n d e r section 52, b o t h parties w e r e o r d e r e d not to use the n a m e d i s t i n g u i s h i n g its 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 .  without  That course was adopted  by  the court so as to a d v a n c e "the p r i m a r y object o f s 52, b e i n g the p r o t e c t i o n o f  the  c o n s u m e r interest".  use  T h e decision, in the context of two parties c o m m e n c i n g to  e x a c t l y t h e s a m e n a m e at e x a c t l y t h e s a m e t i m e , is c l e a r l y c o r r e c t .  8 9  B u t it is a t is  least a r g u a b l e that, o n the facts, the s a m e decision 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  at the  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 is 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 it m i g h t at first a p p e a r t o  87  The decision is reported at (1987) 10 I P R 575.  88  (1984) 56 A . L . R . 595.  be.  9 0  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. 89  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. 90  106 T o b e g i n w i t h , it 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. Corporation v Midas Autocare Ltd. activity in N e w reputation. because point.  Zealand was  9 1  I n Midas International  the plaintiff argued that the question of  irrelevant as l o n g as there w a s  business  sufficient evidence  of  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 off,  and  argument on section 9was limited, the court did not m a k e a ruling o n  that  But Eichelbaum J. observed  that:  "...it 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 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 is s e e n as o t i o s e . "  the  9 2  T h a t opening has not b e e n taken u p and, regrettably, the courts continue to trading activity in the jurisdiction.  require  I n t h e Champagne a n d Scotch Whisky c a s e s , 93  94  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 it w a s h e l d t h e y reputation there.  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  the had the  A u s t r a l i a n d e f e n d a n t h a d ar 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 it d i d n o t  was  based  the  largely on a comparison of the  parties.  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.  duration a n d scale  of trading activity of  107 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  Robertson J. considered the plaintiffs claims in passing off a n d under section 9 together and held  that:  "While, with a n ever increasing flow in trade a n d activity across the T a s m a n , the threshold has b e c o m e lower, there m u s t b e s o m e identifiable business activity a n d i n m y j u d g m e n t n o n e existed." 9 7  I n Granny May's Management Ltd v Whitcoulls Group Ltd., 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 98  o p e r a t i o n w i t h o v e r fifty ' G r a n n y items.  M a y ' shops in Australia, selling stationery a n d  gift  It 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 its  Z e l a n d stores b u t those discussions w e r e not fruitful.  N e w  T h e plaintiff granted a master  franchise to another N e w Z e a l a n d party. T h e defendant took steps to change the  n a m e  o f s o m e o f its 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 for b o t h reputation a n d business activity a n d held there was sufficient evidence of both. T h e business  activity included advertising in N e w Z e a l a n d m a g a z i n e s  and  catalogues,  granting of the master franchise agreement, m a k i n g arrangements with bankers, the first store a n d substantial advertising i n r e l a t i o n to that  opening.  O n the section 9claim, counsel submitted there m u s t b e s o m e reputation.  T h e  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."  96  Supra, note 40.  97  Ibid, p. 561.  98  (1993) 5 T C L R 148.  99  Supra, note 45.  opening  court It  did  108 n o t , h o w e v e r , g o as f a r as 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 is n o t r e q u i r e d a n d t h e v i e w o n t h a t p o i n t is, at b e s t , u n c l e a r .  courts  B e c a u s e o f its f i n d i n g , i n p a s s i n g off, t h a t  the  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 is trading activity m a y or m a y not b e a r e q u i r e m e n t u n d e r section  9.  T h e position o n establishment of reputation c a n accordingly b e s u m m a r i s e d as 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 is w h a t p a s s i n g o f f p r o t e c t s . and N e w  Zealand, some  successful  passing off claim.  deceptive  conduct.  that  In both  follows. Australia  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 is a p r e - r e q u i s i t e  to a  T h e statutory causes of action prohibit misleading  R e p u t a t i o n is 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  and  without  t r a d i n g i n t h e j u r i s d i c t i o n . It is 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 the jurisdiction as a n e l e m e n t u n d e r the statutes. differences between  Judicial pronouncements  the two actions suggest that the courts recognise that.  on  the  T h e  courts  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 is 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  where  t h e r e is t r a d i n g activity.  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 as i n p a s s i n g o f f is i m p o s e d ,  a n d there has not b e e n any case in which a plaintiff has succeeded in the absence 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 it m a y b e k n o w n t h e r e .  In  of the  w r i t e r ' s v i e w , t h a t is t h e w r o n g a p p r o a c h . It 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 prevails under the Trade  Marks  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 it is  to the courts to a p p l y that s t a n d a r d in section 9 cases.  open  1 0 0  The Trade Marks legislation i n some jurisdictions, for example Canada (Trade-marks A c t 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. 100  109  E. EVIDENCE OF DECEPTION  1. Individual consumer evidence  It is 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 likely to mislead over evidence of actual misleading of m e m b e r s of the public. has already b e e n considered in relation to descriptive names.  1 0 2  is  That  1 0 1  T h e Big Mac c a s e  was  cited as a, p e r h a p s , e x t r e m e e x a m p l e o f the attitude o f the c o u r t s to e v i d e n c e o f a c t u a l misleading, S m i t h e r s J. describing e v i d e n c e f r o m m e m b e r s of the public as "merely peripheral  value".  of  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 is 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 off. It is 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 b e e n t a k e n to claims u n d e r sections 9 a n d 52.  Initially, that arose b e c a u s e the  applied the standard of the reasonable person in measuring the misleading or conduct.  1 0 4  has  courts  deceptive  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 is t o b e  judged  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 i n 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 i n 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.. 101  102  Supra, part B .  103  Supra, note 8.  104  F o r example, Parkdale Custom Built Furniture Ltd., supra, note 8, p. 199.  110 by  reference  to  persons  of  all levels  of  astuteness  and  intelligence,  but  1 0 5  continued to prefer their o w n j u d g m e n t to that o f the public a n d have,  they  accordingly,  continued to apply the passing off test and, de facto, to a p p l y the s t a n d a r d of reasonable person.  the  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 is s o c l e a r l y a i m e d  protection of consumers  is 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  1 0 6  at  evidence  f r o m c o n s u m e r s of the c o n s e q u e n c e s o f activities s u p p o s e d l y p r o h i b i t e d b y the 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 , published advertisements  1 0 7  M c W i l l i a m s Wines,  o f c e r t a i n o f its 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 litre  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 it t h e B i g M a c " .  wine  M c D o n a l d s  complained that use of the words 'Big M a c ' w o u l d mislead or deceive the public thinking that M c D o n a l d s sponsored or a p p r o v e d of the wine.  A lot of e v i d e n c e  into from  c o n s u m e r s was presented, to the effect that use of the w o r d s 'Big M a c ' caused t h e m w o n d e r whether there was aconnection b e t w e e n the parties. favour  of  M c D o n a l d s , not  on  the  basis  of  its  complaint  to  T h e trial judge f o u n d in but  on  the  basis  the  advertisements w o u l d mislead or deceive the public into thinking there was a business connection b e t w e e n the parties. appeal, for two reasons.  T h e Federal Court of Australia allowed Mc  F i r s t , it 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  to 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 ac o n n e c t i o n , r a t h e r t h a n to being misled or deceived.  William's  1 0 8  consumers  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 , it  105  Taco Bell, supra, note 5.  106  Supra, chp. two, part B.4.  107  Supra, note 8.  108  F o r a discussion on that point, refer part B , supra.  was  Ill  h e l d t h a t it is 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 is a l i k e l i h o o d r e l e v a n t will b e m i s l e d a n d that, in the present case, such w a s not likely.  1 0 9  A s to the  f r o m consumers, the court held that any actual deception arose not f r o m advertisement  but from consumers  connection between the parties  o w n erroneous assumptions  a n d that there was  evidence  McWilliams  that there was  therefore no  between the advertisement a n d the misleading or deception.  persons  causal  s o m e  connection  A s has been pointed  out,  a n y c o n d u c t t h a t is 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 the part of c o n s u m e r s a n d that to h o l d that a n erroneous a s s u m p t i o n b r e a k s the link rather begs the  question.  on  causal  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. held that a purchaser  w h o w a n t e d to b u y the aplicant's b r a n d c o u l d reasonably b e e x p e c t e d to find the or inquire of the sales person.  1 1 2  B r e n n a n J. held that any misleading or  label  deception  flowed not from conduct of the respondent but from an erroneous belief o n the part of consumers  that:  "...the m a n u f a c t u r e r w h o first establishes 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 in the manufacture a n d sale of goods of that kind...the event  109  Supra, note 8, per Smithers J. at p. 460.  110  Brown & Grant, supra, note 44, para. 7.13.  111  Supra, note 8.  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 will be likely to examine such things as labels on garments in a relatively casual and unwary manner." 112  112 flows f r o m amisconception of law."  In the writer's view, b o t h judges a p p l i e d the w r o n g tests. M a s o n J . clearly i m p o s e d 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 is i n t e n d e d t o p r o t e c t of all levels because  of intelligence  a n d ability.  1 1 4  A s  already noted,  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  consumers  B r e n n a n J . is  establishes  the  wrong  a reputation a  m o n o p o l y in g o o d s of that kind, at least to the extent o f b e i n g able to p r e c l u d e a n y  other  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 is d e c e p t i v e l y  similar.  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 ,  in which the court noted criticism of  1 1 5  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  incorrectly  interpreted.  O n the issue of evidence f r o m m e m b e r s of the public, the court  that  court)  i t(the  deceptive  1 1 6  has  the  role  of determining whether  conduct  affirmed  i sm i s l e a d i n g  or  a n d s a i d t h a t it 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  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." 113  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. 114  115  Supra, note 5, pp. 199-203 inclusive. Ibid, pp. 202-203.  113 m e m b e r o f the p u b l i c b u t d e t e r m i n e for itself w h e t h e r the m i s c o n c e p t i o n arises  f r o m  misleading or deceptive conduct o n the part of the respondent or, alternatively,  f r o m  s o m e other cause.  T h e evidence f r o m c o n s u m e r s w a s m u c h less substantial in that  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 prevail over the n e w c o m e r was probably the correct one.  case  should  T h e worrying feature of  the  d e c i s i o n is 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  the  p u b l i c is 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 applicant published cookery books  entitled 'The  Health  Revolution', 'The N e w Health Revolution' and 'The N e w Health Revolution Cookbook'. T h e respondent Cookbook'.  started publishing a cookery b o o k entitled 'The H e a l t h y  Revolution  O n application for a n interlocutory injunction, L o c k h a r t J. held that  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 it w a s n o t a s t r o n g c a s e ,  the  notwithstanding  "a considerable b o d y o f evidence, principally b y affidavit...including e v i d e n c e relating to k n o w l e d g e of m e m b e r s of the public with respect to b o t h  In this area, the N e w  publications."  1 1 8  Z e a l a n d courts have not b e e n inclined to m a k e statements  principle in terms quite as strong as their A u s t r a l i a n counterparts, b u t the  117  of  approach  (1984) A.T.P.R. 40-459.  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." 118  114 taken appears to b e the s a m e in b o t h jurisdictions. In three early a n d o n e m o r e  recent  N e w Z e a l a n d cases, there was substantial evidence of actual misleading or deception m e m b e r s of the public. A l l four decisions were in favour of the applicants, which  of  might  suggest the courts here find such evidence m o r e persuasive than the Australian courts do.  It is 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  that  the courts i m p o s e d their o w n judgment, which only h a p p e n e d to favour the view  that  misleading or deception was  likely.  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 tr e v i e w e d  a n d clearly relied o n the substantial evidence of confusion of consumers, in finding for the applicant.  T h e Court of Appeal  justified o n the evidence.  1  2  0  held that M c G e c h a n  It 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 is t o  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 is o n e facts.  J.'s f i n d i n g s w e r e  for the  court to determine  on  well be the  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  "reinforced  Supra, note 10. Taylor Bros, had been i n the dry-cleaning and garment hire businesses i n Wellington for many years. The respondent was involved i n similar businesses, but not i n 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 (CA). 119  120  Ibid, per Cooke P. at pp. 39-40. Ibid, p. 39, lines 52-55.  115 by s o m e  evidence  with  the  f i n d i n g s , w h i l e m a k i n g it 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 is t h e p r i m a r y d e t e r m i n a n t  and  t h e e v i d e n c e is  of actual confusion".  1 2 2  T h e  Court of -Appeal agreed  secondary.  I n Trust Bank Auckland Ltd. v ASB Bank Ltd.,  113  there was, again, evidence  suggesting  a "significant degree" of actual misleading or deception, including the results of  two  surveys of m e m b e r s  not  of the public a n d of b a n k staff.  1 2 4  T h e Court of A p p e a l did  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 it referred, with apparent approval, to the statement of Ellis J. in the H i g h C o u r t , that a c t e d "to n o s m a l l e x t e n t o n first i m p r e s s i o n a n d i n f e r e n c e " .  he  T h e C o u r t of A p p e a l also  c o u c h e d its 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 being misled and what m e m b e r s of the public "would reasonably suppose"  1 2 5  and  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 is p a s s i n g o f f o r b r e a c h o f Fair Trading A c t or T r a d e Mark  legislation depends  said the  "to a s p e c i a l d e g r e e o n j u d i c i a l  reaction, h o w e v e r full the evidence a n d the a r g u m e n t s of counsel."  It is a p p a r e n t  that  Supra, note 18 at p. 658. The English respondent was registered as an overseas company i n 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. 122  Supra, note 30: A S B operated a special high interest savings account, called a H I T acoount, i n Auckland. Other Trust Banks operated H I T accounts elsewhee. TBA commenced business i n Auckland and advertised a H I T account similar to A S B ' s . The latter sought an injunction, sueing i n passing off and under section 9. The High Court found i n favour of the applicant in both causes of action. The Court of Appeal confined itself to section 9 and dismissed the appeal. 123  124  Ibid, p. 388.  125  Ibid, p. 389, lines 42 and 53.  116 the court's view of what was likely carried m u c h greater sway than the evidence of had already  happened.  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 b e c o m e generic in N e w  what  case  1 2 7  was whether the w o r d 'Champagne'  Z e a l a n d o r w h e t h e r , i n s t e a d , it r e m a i n e d d i s t i n c t i v e o f  had wine  m a d e in the C h a m p a g n e region of F r a n c e a n d according to the C h a m p a g n e m e t h o d .  A s  far as the plaintiffs cause of action u n d e r section 9 w a s c o n c e r n e d , that translated  to  whether use of the w o r d in connection with wine not m a d e in C h a m p a g n e and/or  not  m a d e  T h e r e  was  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 is  not  according to the C h a m p a g n e m e t h o d was misleading or deceptive.  considerable evidence f r o m each side.  1 2 8  generic but offered n o insight into w h y he preferred the evidence in support of that or, 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 to the e v i d e n c e at all. H i s r e f e r e n c e to the of the w o r d on "ordinary, average N e w Zealanders for w h o m wine drinking  view  impact generally  plays n o significant p a r t i n their lives" suggests, h o w e v e r , that h e relied principally o n o w n view.  T h e court adopted the s a m e a p p r o a c h a n d the s a m e conclusion, in  his both  passing off a n d u n d e r section 9 - simply applying the passing off test u n d e r section  9,  without considering the different policy rationales for the two actions.  is  true of the C o u r t of A p p e a l , w h i c h a p p r o v e d the findings of Jeffries J .  126  Ibid, per Cooke P. at p. 387.  127  Supra, note 14.  T h e same  1 2 9  1  3  0  and held  that  Plaintiffs evidence reviewed i n the decision of the H i g h Court, reported at [1991] 2 N Z L R 439-440; defendant's evidence reviewed pp. 440-442; market research evidence reviewed p. 445. 128  129  Ibid, p. 452, line 52.  130  Ibid, p. 332.  117 it "is 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 respect of the elements of passing  Individual  witnesses  consumers  or entrapment  evidence from  in passing  all three  off."  groups:  1 3 1  off type  witnesses.  in  cases  are  usually  It i sc o n c e d e d  they have  no  either  that there  trade  witnesses,  are difficulties  particular qualifications,  with  other  than  b e l o n g i n g to the a p p r o p r i a t e class; will usually represent only a small fraction o f  the  class; will not necessarily b e representative o f the p r e d o m i n a n t view; a n d are o p e n to  the  suspicion that their evidence has b e e n coached.  Efforts to o v e r c o m e those  difficulties  m a y result in am 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 side, 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 cross examination, thus trying the court's patience  1 3 2  a n d adding significantly  to  the cost of litigation.  2. Survey evidence  An  alternative i savailable in the f o r m o f survey evidence,  which has already  referred to in connection with an u m b e r of the cases cited in this chapter.  131  T w o  been issues  Ibid, p. 345.  In Customglass Boats Ltd. v Salthouse Bros. Ltd [1976] 1 N Z L R 36, M a h o n 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 will be misleading if it will "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 i n New Zealand and never has. 132  118 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 : first, its 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 t o b e a t t a c h e d t o it i f a n d w h e n it is  admitted.  In the U n i t e d States, the courts h a v e accepted since at least 1961 that survey is a d m i s s a b l e i n d e c e p t i v e  advertising cases,  1 3 3  and have sometimes  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  In N e w  weight  Z e a l a n d , p r i o r t o 1 9 7 6 , it w a s  drawn  evidence.  inferences  1 3 4  c o n s i d e r e d t h a t it w a s h e a r s a y , a n d  inadmissable, for survey conductors to report o n the responses  evidence  therefore  of people, unless  respondents w e r e available to r e s p o n d personally, especially for cross T h a t c h a n g e d i n Customglass Boats Ltd. v Salthouse Bros. Ltd.,  136  those  examination.  1 3 5  where Mahon J. held  that either the hearsay rule does not apply to survey evidence or that a n exception to  the  rule allows survey evidence to b e admitted.  and  133  1 3 7  That position has been accepted  Elliot Knitwear, Inc. 59 F T C 893 (1961).  L . E . Evans Jr. and D . M . G u n n Trademark Survey Evidence (1990) 22 I.P.L.R. 289, esp. at pp. 315316. 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, i n 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. 134  F o r 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. F o r an explanation of the different considerations which will 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. 135  136  Supra, note 132.  H i s Honour held that survey evidence will, 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, H e 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 137  119 confirmed in subsequent N e w Z e a l a n d cases. the  position  taken  in  United  1 3 8  It h a d f o r s o m e t i m e p r e v i o u s l y  K i n g d o m trademark  subsequently accepted in the context of deceptive  and  patent  advertising.  cases  been  and  1 3 9  was  1 4 0  T h e Australian courts have b e e n m u c h slower to adopt that a p p r o a c h .  T h e  necessity  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 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 exception  to the hearsay rule but only because  specifically for the litigation.  1 4 2  the  in  survey was  not  m i n d  commisssioned  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 the basis that,  where  s u r v e y e v i d e n c e is 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 is 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 of biased questions and methods.  In the writer's view, those points will be relevant  to  the question of weight, but not to that of admissability. S u c h has b e e n a c k n o w l e d g e d  by  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 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 it is h e a r s a y it is " m o r e s e n s i b l e t o  court  concentrate  tending to prove the public state of mind (p. 41). 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. 138  139  Ibid, note 2.  140  Lego System Aktieselskab v Lego M Lemelstrich Ltd. [1983] F S R 155.  141  (1983) 51 ALR  142 (  1 9 g 7  )  u  jp  735. R  2 4 9 )  3  0  0  120 attention u p o n the necessity for, a n d the reliability of the survey  evidence..."  1 4 3  A s f a r a s w e i g h t is 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 is t o b e f o u n d i n  the  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) interviewees m u s t represent arelevant cross section o f the g e n e r a l p u b l i c a n d m u s t not b e a w a r e of the litigation; (b) the size o f the s a m p l e m u s t b e statistically significant; (c) the s u r v e y m u s t b e c o n d u c t e d fairly; (d) all the surveys carried out m u s t b e disclosed to the other party; (e) all a n s w e r s m u s t b e disclosed to the o t h e r party; (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) exact, 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 to the o t h e r p a r t y ; (h) all instructions to interviewers m u s t b e disclosed to the other party; (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 as a m b i g u o u s questions. 1 4 4  I n t h e Big Mac c a s e , F r a n k i J . w a s recording the precise foundered  on  critical of the fact there was  answers of those interviewed.  a variety  of  bases,  including,  for  1 4 5  no  provision  Surveys in other cases example,  that  the  for have  sample i s  (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 H i s H o n o u r 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 i n issue i n the case; Interlego AG v Croner Trading Pty. Ltd. (1992) 111 A L R 577, per Gummow J. at pp 616-622. 143  [1984] R . P . C . 293, 302-303. In Customglass Boats, supra, note 132, M a h o n J stressed that the weight to be attached to survey evidence will depend on whether: (a) the questions were formulated i n 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 i n 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. 144  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. 145  121 *  unrepresentative,  1 4 6  the questions are weighted  or unrealistic,  1 4 7  that the  interviewers  are inexperienced or have departed f r o m prescribed procedures, or that the identity the  party commissioning  the  survey has  been  disclosed  to  interviewees.  matters the courts m a y consider in assessing weight include whether  were used.  1 4 9  It 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  file a n a f f i d a v i t as to h o w it w a s conclusions which m a y be  Other  1 4 8  the survey  carried out u n d e r artificial or natural conditions a n d w h e t h e r o p e n or closed  questions  carried out, h o w the results w e r e analysed a n d  Act,  the  of the public a n d f r o m  m u c h persons  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 is b o u g h t a n 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 consumer  to  drawn.  g r e a t e r w e i g h t is 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  with  was  organised the survey  A s already noted in part B , in cases u n d e r section 16 of the T r a d e Marks  primarily  of  protection  makes  the  distinction  illogical.  appropriate procedures have b e e n followed, survey evidence will often  1 5 0  sold.  concerned W h e r e  the  represent  the  best available e v i d e n c e and, in the context of cases u n d e r sections 9a n d 52, ought to  146  E.g. Chase Manhattan Corp., supra, note 4.  147  Scott Ltd. v Nice-Pak Products Ltd. [1989] F.S.R. 100.  be  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". 148  Those two factors appear to have been significant i n U.S. Federal Trade Commission cases - refer Preston, supra, note 134, at pp.687-689.  149  I.L.  Though not always. F o r example, i n 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 i n 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 I V : The Future of Surveys. 150  122 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 it p r e s e n t l y is. T h e w r i t e r c a n d o n o b e t t e r 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. Pty.  Ltd.  151  Ltd.  than  v Johnson & Johnson  In the course of that T r a d e M a r k s dispute, H i s H o n o u r observed  that:  " T h e r e is 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 where important commercial a n d political considerations are m a d e b y reference to m a r k e t a n d other surveys c o n d u c t e d in rigidly controlled circumstances, evidence obtained f r o m surveys similarly conducted a n d for the express purpose of obtaining evidence for the proceedings should b e admissable if relevant to a m a t t e r i n i s s u e . T h i s is 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 to a specified d e g r e e of probability a n d subject to a specified error rate, the result c a n b e projected to the w h o l e or a defined section of the population. T h e c o m m u n i t y m i g h t rightly r e g a r d e v i d e n c e f r o m s u c h surveys as m o r e inherently 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 is 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 that e v i d e n c e as, to 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 it e x i s t s t o serve.""  F. THE  COMMON FIELD OF ACTIVITY RULE  T h e creation, development  a n d rejection of this rule, in the context of passing off in  England and N e w Zealand has already been traced, in chapter  three.  1 5 2  T h e A u s t r a l i a n courts have i m p o r t e d a c o m m o n field of activity r e q u i r e m e n t into decisions u n d e r section 52.  Supra, note 143, Supra, pp.  8-11  at  p.  their  T h e m o s t striking e x a m p l e involves the L e g o litigation  293.  inclusive.  in  123 England a n d Australia. In both countries, the manufacturer of the famous L e g o building b l o c k toys s o u g h t to restrain ac o m p a n y f r o m selling c o l o u r e d plastic irrigation e q u i p m e n t under the s a m e name.  T h e Australian case  1 5 3  was brought under section 52 a n d  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 it w a s u n l i k e l y t h e r e w o u l d b e overlap in the persons a w a r e of the two products a n d that, w h e r e there w a s a n 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 between the two deception.  products.  That was  the m u c h  overlap,  differences  in spite of evidence of actual misleading  1 5 4  T h e English L e g o case  1 5 5  was brought in passing off a n d the plaintiff succeeded.  T h e  court rejected the idea that the question of a c o m m o n field of activity w a s decisive distinguished the A u s t r a l i a n decision o n the facts a n d as am a t t e r arising u n d e r  T h e  c o m m o n  Australian  or  f i e l d of a c t i v i t y t e s t h a s  cases.  In  been  endorsed  in a n u m b e r  statute.  of s u b s e q u e n t  Cue Design Pty. Ltd. v Playboy Enterprises Pty. Ltd. , 156  manufacturer a n d retailer of 'Cue' w o m e n s clothing failed in asection 52 action a party opening 'The C u e Restaurant'.  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.  against  Relief both under section 52 a n d in passing  was denied on the basis that there was n o overlapping of the two business  Ibid, p. 540.  and  activities.  off 1 5 7  the  124  I n t h e VISA c a s e , INXS c a s e  1 6 0  1 5 8  Abundant Earth Pty. Ltd. v R& C Products Pty.  Ltd.  159  a n d the  the court has held in favour of the applicants only after satisfying  itself  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 . set o u t the p r i n c i p l e s to b e a p p l i e d i n s e c t i o n 52 cases, the f a i l e d i n its 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  applicant  misled, because  "the  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 is n o w * a n d t h e r e is 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  little  c o m m o n  have  field of activity" b e t w e e n  the  parties.  1 6 1  T h e  authors  of one  text  suggested the Australian courts have taken am o r e liberal a p p r o a c h than their English counterparts in this area.  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  proposition. T h e y reveal that the Australian courts have not only i m p o r t e d the  that  c o m m o n  field of activity test into section 52 cases, b u t h a v e m a d e the existence of ac o m m o n  field  of  with  activity virtually determinative of success for plaintiffs.  T h a t can be contrasted  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 is 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  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. 158  Supra, note 36: the appellant used the name 'Pure and Simple' on vegetable oil sold i n 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. 159  Hutchence v South Seas Bubble Co. Pty. Ltd. (1986) 64 AL.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 i n 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). 160  161  Supra, note 4, p. 359.  162  McKeough and Stewart Intellectual Properly in Australia, Butterworths Australia Pty. Ltd.,  p. 314.  Sydney,  125 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 is s u p p o s e d t o b e a c o n s u m e r 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 is t o b e  protection  deplored.  I n N e w Z e a l a n d , it is m o r e d i f f i c u l t t o s a y w h a t is t h e a p p r o a c h o f t h e c o u r t s t o issue.  T h e r e have  difference between  not yet b e e n  any case in which there has been  the business of the plaintiff a n d that of the  any  this  significant  defendant.  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 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 ' is 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 . of A p p e a l held that the principle cannot be taken too  1 6 3  B u t the  Court  far:  "Taylors Wellington could not, w e think, restrain the use in Wellington of n a m e T a y l o r s for, say, foodstuffs."  I n t h e Prudential c a s e  1 6 4  off,  t h e a p p e l l a n t ' s e x p a n s i o n o f its s p h e r e o f activities t o  financial services, a n area the respondent h a d b e e n operating in for s o m e held to h a v e g e n e r a t e d the difficulties that lead to the court case.  the  include  time,  were  Clearly the similarity  or otherwise of the two businesses was afactor the court attached some importance  to,  t h o u g h it 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  the  c o m m o n field of activity rule.  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 facts t h a t it w a s n o w s o m e ago, obiter a n d in connection with passing off rather than section  Supra, note 10, per Bisson J. at p. 659. Supra, note 18, per Bisson J. at p. 569.  9.  time  126 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 is a q u o t e f r o m a text, w h i c h s u m m a r i s e s t h e  different  o p t i o n s a v a i l a b l e to 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 the courts might take a 'robust attitude' so that the statute w o u l d provide a n weapon.  It 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  inappropriate passing off principles. Zealand  alternative  and Australia  the  latter a p p r o a c h has  prevailed.  T h e  N e w  courts  have  recognised that the two actions have different policy rationales, but they have not  given  effect to that difference.  show  Examination of decisions of the courts in  of  Instead of developing n e w definitions, tests a n d standards  b e applied in section 9cases, the courts have b e e n content to apply principles  to  developed  i n p a s s i n g off. 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  only  m i n i m a l weight to evidence of actual deception, withheld r e m e d i e s for imitation of  get-  up, r e q u i r e d plaintiffs to establish reputation of a kind m o r e  the  closely allied with  passing off concept of goodwill than any element of section 9 a n d i m p o s e d a c o m m o n field of activity rule w h e r e  none  is r e q u i r e d .  T h e r e is a s i g n i f i c a n t c o n t r a s t i n  a p p r o a c h u n d e r section 9 a n d the a p p r o a c h u n d e r section 16 of the Trade Marks Notwithstanding  the  consumer  protection  rationale  a p p r o a c h of the courts to t h e m has b e e n significantly  c o m m o n  to  both  sections,  five.  Act. the  different.  Further effects of the deficiencies identified in chapter two, a n d the a p p r o a c h taken the courts, are detailed in chapter  the  by  CHAPTER FIVE THE  117  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 c o n s u m e r protection a n d efficiency limbs of the public policy rationale were In chapter four, deficiencies in the a p p r o a c h of the courts were adressed.  the  identified.  This  chapter  follows o n f r o m the conclusions r e a c h e d in those two chapters a n d determines what, if any, are the e c o n o m i c effects for  consumers.  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 analysis' is e s t a b l i s h e d . discussion of substance  It h a s t h r e e s e c t i o n s : o n e , a  versus institutional framework; two, explanation of the  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 it; a n d , t h r e e , of the four  consumers.  T h e a n a l y s i s is u n d e r t a k e n i n p a r t B , a s  follows:  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 ; 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 (a)  and  9:  c o m p e n s a t i o n for loss or d a m a g e already suffered;  (b) the effect o n the future p u r c h a s i n g of the four  and  consumers.  case  description  128 A.  THE  FRAMEWORK  A n u m b e r of points n e e d to b e m a d e b y w a y of setting the f r a m e w o r k for the  discussion.  1. Substance versus institutional framework  In evaluating the effectiveness of a legal measure  there are two  considerations:  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 it is i m p l e m e n t e d .  the 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 is 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 fulfilled b y the Fair Trading division of the C o m m e r c e C o m m i s s i o n , pursuant t o w h i c h it 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 ) e n c o u r a g e s offending traders to c o m p l y with the A c t ; and, two, the courts, w h i c h involved w h e n  the  Commission  1  or any other person issues proceedings.  b e c o m e Only  s e c o n d f r a m e w o r k is 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 is o f t h e r e m e d y t h a t 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 it is i m p l e m e n t e d . address  the  issue  of whether  the  courts. are  the  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 is a s e p a r a t e i s s u 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  1  T h e paper does  best institutional 2  framework  T h e question  and  the is not for  therefore  remedy.  Pursuant to its power under section 41 of the Act.  For a discussion of which refer A J . D u g g a n and L.W.Darvell, Consumer Protection Law and Theory, 1980, The Law Book Company Ltd., Sydney, pp. 200-225. 2  129 2. Use of a case example  Effectiveness  of s e c t i o n 9 , i n t e r m s  o f its p u b l i c p o l i c y r a t i o n a l e ,  is e v a l u a t e d  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 is l o o s e l y b a s e d o n t h e of t h e H o u s e o f L o r d s i n Erven Warnink B. area traverse a wide range of facts  4  V. v J. Townend & Sons Ltd}  a n d the conclusions  e x a m p l e will n o t necessarily b e valid for other facts.  decision  C a s e s in this  drawn by reference  Nevertheless,  to  the  the discussion  will  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 as r e q u i r e d to fit t h e of other  by  facts  cases.  I n the fact p a t t e r n , A m a k e s a n d sells A d v o c a a t , al i q u o r m a d e f r o m e g g yolks, s u g a r 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 its l i q u o r h a s a substantial r e p u t a t i o n as adistinct a n d r e c o g n i s a b l e b e v e r a g e . t o p r o d u c e a n d it sells f o r $ 6 0 p e r  B  starts m a k i n g a d r i n k m a d e  and  acquired  It c o s t s A $ 5 0 p e r b o t t l e  bottle.  from dried egg powder  a n d s h e r r y a n d s e l l i n g it  as  ' A d v o c a a t ' , i n ab o t t l e n e a r l y identical to that o f A . B ' s p r i c e ( s o m e t i m e s $70,  sometimes  $60  same  and  T h e effects of each of the  nine  and  sometimes  $50)  and  quality (sometimes higher, sometimes  sometimes lower) vary in each of the nine variations.  the  possible quality /price combinations o n each of the four consumers will be  considered.  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 is, 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  A s has been seen in the preceeding chapters.  130 (a) l o w e r quality / h i g h e r  price  (b) lower quality / s a m e  price  (c) l o w e r quality / l o w e r  price  (d) s a m e quality / higher  price  (e) s a m e quality / s a m e  price  (f) s a m e q u a l i t y / l o w e r  price  (e) h i g h e r quality / h i g h e r (f) h i g h e r q u a l i t y / s a m e (g) h i g h e r quality / l o w e r  To  price price price  5  test the effectiveness of section 9 in cases w h e r e c o n s u m e r s  a r e m i s l e d , it w i l l  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 is n e v e r s o g r e a t an unsophisticated  c o n s u m e r c a n tell the t w o p r o d u c t s a p a r t o n the basis o f  It 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 than o n getting agenuine  product.  be that  quality.  6  quality  7  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 w i l l be considered for the sake of completeness. 5  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. 6  Brand name purchasing is a recognised phenomenon but, i n the writer's view, only because brandnames 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. Martin 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 Y o r k , New Y o r k , paras. 17.01[2] and 17.01[3][a]; E . Scott Moynes Decision Making For Consumers: An Introduction to Consumer Economics, 1976, M a c M i l l a n Publishing Co. Inc., New Y o r k , 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. 7  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 consumers  i n t o t h i n k i n g t h a t B's  use of the n a m e 'Advocaat' would  A d v o c a a t is t h a t o f A .  8  mislead  A c o r o l l a r y is t h a t  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 is e q u a l i n e v e r y especially  3. The  Those  s o m e respect,  quality.  four consumers  events affect consumers  c o m p e t e n c e of the  in one  of four ways,  depending  on the affluence  and  consumer:  consumer one ( c a n a f f o r d , c a n t e l l ) : c a n tell the 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 also tell a h i g h e r product f r o m a lower quality one.  S h e c a n afford a n d prefers to b u y  products as l o n g as they are superior in quality a n d / o r price (for this 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 is n o t as s i g n i f i c a n t price a n d quality -b e c a u s e she has perfect k n o w l e d g e ,  quality genuine  consumer,  as the actual v a l u e s  of  she d o e s not n e e d to  rely  like c o n s u m e r one, she c a n tell ag 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  also  tell a h i g h e r quality p r o d u c t f r o m a l o w e r quality one.  one,  on and take comfort in brand  names);  consumer two ( c a n n o t a f f o r d , c a n  tell):  A l s o like c o n s u m e r  O r 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'. 8  132 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 it is s u p e r i o r i n q u a l i t y and/or price. U n l i k e c o n s u m e r one, c o n s u m e r two cannot afford to b u y the  best  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 is $ 5 0 .  will  She  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 it is t h a t ;  consumer three ( c a n a f f o r d , c a n n o t  tell):  like c o n s u m e r s o n e a n d two, c o n s u m e r three prefers to b u y aquality p r o d u c t a n d , quality being equal, prefers to b u y genuine products. Like c o n s u m e r one, she afford to b u y the best, but, unlike c o n s u m e r s  one  can  a n d two, she c a n n o t tell 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 ah i g h e r quality p r o d u c t f r o m al o w e r qality one;  consumer four ( c a n n o t a f f o r d , c a n n o t  tell):  like consumers one, two a n d three, c o n s u m e r four prefers to b u y quality,  genuine  p r o d u c t s , the e m p h a s i s b e i n g o n quality. L i k e c o n s u m e r three, she c a n n o t tell the genuine product f r o m the imitation, nor ahigher quality product f r o m a lower quality one.  Like c o n s u m e r two, she cannot afford to b u y the best a n d the  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 is $ 5 0 .  most  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 will result in greater availability of that kind of product), safety and distinctiveness (usually i n relation to clothing, furnishings and similar products), all of which can be important variables i n consumer related matters, but which do not usually feature i n passing off cases, althought it will be seen that availability is sometimes an important consideration for consumers two and four, because they cannot afford the genuine product and will 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. 9  133 I n t h e o r y , t h e r e is 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 not be  c o n s i d e r e d h e r e b e c a u s e it is 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  consumers exhibit those  of  characteristics.  B. THE ANALYSIS  1. Results of B's activities  T h e results are presented in table  one.  TABLE ONE  cons, one  cons, two  cons. three  cons, 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  not misled no loss  rn I i misled and l l l l i no loss  misled and makes gain  i>s^~—| not misled  loss  I  makes gain  13  gam  134 T h e  reasoning  o n w h i c h those results  are based  is d e t a i l e d i n A p p e n d i x O n e .  In  (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  and  summary: (a) for c o n s u m e r s  individually:  3 out of 9 times respectively a n d are otherwise unaffected by B's  activities;  (ii) c o n s u m e r t h r e e is 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 once a n d neither a loss or a gain o n the other two  occasions;  (iii) c o n s u m e r f o u r is 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 three  occasions.  B's conduct therefore has the greatest negative impact o n c o n s u m e r three, has m o r e m o n e y than ability to judge quality a n d  w h o  genuineness;  (b) for c o n s u m e r s collectively: B's activities h a v e n o e c o n o m i c effect o n 20 o f the 36 occasions (4 c o n s u m e r s x 9 scenarios), c a u s e s losses i n 3 out o f 6 a n d gains 11 out o f 36  occasions;  (c) for A , the results a r e w o r s t - a loss o n 7 o u t o f 9  occasions.  B's contravention of section 9 therefore actually results in a net gain for because gains o u t n u m b e r losses eleven to three.  consumers  E v e n adding the losses incurred by  still l e a v e s g a i n s a h e a d e l e v e n to 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 the  losses or gains  m a d e  by any consumer.  Factoring in the  negative  A  either  impact  competition and innovation (which cannot be quantified) m a y do no m o r e than the  on  on  balance  scales.  If o n e  removes  the scenarios  (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 is  expensive  t h a n the g e n u i n e one, the, m o r e realistic, results are e v e n m o r e telling  consumer  three:  m o r e for  135 (a) for c o n s u m e r s  individually:  (i) c o n s u m e r s o n e  and two are never misled.  o c c a s i o n s a n d is o t h e r w i s e  Each  benefits  on 3 of  unaffected;  (ii) c o n s u m e r t h r e e is 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 is u n a f f e c t e d o n 2  (iii) c o n s u m e r  and  occasions;  f o u r is m i s l e d a n d m a k e s  unaffected o n the other 3  (b) for c o n s u m e r s  6  a gain 3 of 6 times  and  is  occasions.  collectively  B's activities h a v e n o e c o n o m i c effect o n 11 o f 24 occasions, cause in 3 of 24 a n d gains in 10 of  (c) f o r A , t h e r e s u l t is 6 l o s s e s i n 6  losses  24.  scenarios.  C o l l e c t i v e l y , t h e p o s i t i o n is a g a i n s t i n t e r v e n t i o n a n d it is t h e r e f o r e intervention o n the grounds of efficiency alone.  difficult to  justify  It h a s b e e n s h o w n , h o w e v e r , t h a t  the  p u b l i c p o l i c y r a t i o n a l e is 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 collectively a n d as classes. B's activities h a v e the m o s t a d v e r s e effect for  consumer  three a n d the greater the p r o p o r t i o n o f class three c o n s u m e r s in a m a r k e t , the adverse the results of B's trade.  T h e i s s u e is 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  that basis or whether, instead a n d in the words of M r . Spock, the needs of the outweigh the needs of the few. a n action pursuant to section  m o r e  m a n y  T o resolve that issue, o n e m u s t consider the effects 9.  on  of  136  2. Action Pursuant to Section 9 S e c t i o n 9 is 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 deterring traders f r o m infringing a n d causing future loss or damage. two matters will b e  F o r that  reason,  c o n s i d e r e d i n this section; first a n d m o s t i m p o r t a n t , the  effects  1  0  section 9 has for consumers misled or deceived prior to the date of judgement;  and,  secondly, the effect o n c o n s u m e r s o f B's regulated activities after j u d g m e n t , o f  which  t h e r e a r e t w o possibilities: (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 is misleading or deceptive; or (b) that Bwill cease to  In the fact example, the costs of identifying outweigh  the  at  individual losses,  even  1 1  without  trade.  and communicating with consumers the  not  costs  of  prosecuting  an  will  action.  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 is A .  (a) Up to the date of judgment  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 i n 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 i n 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: 10  (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). 11  Where that is possible from transaction records including credit card details and cheques.  137 T h e results of a n action pursuant to section 9 are presented in table two, a n d summarised below  then  it.  TABLE TWO cons, one  cons, two  cons. three  B  cons, four  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  X  9. high quality / low price  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 court  therefore  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 it f r o m s e l l i n g its p r o d u c t u n d e r n a m e  the  Advocaat.  (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 it is u n l i k e l y t h a t s h e w i l l b e compensated  in the decisions in any of those cases.  S h e is 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 it 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 . of the  loss w o u l d not b e  difficult b u t h a v i n g a m e c h a n i s m  Satisfying the  that w o u l d  ensure  court that  138 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 ar e c o r d if she p a i d b y credit 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 , first, t h e t r a n s a c t i o n costs w o u l d b e prohibitive, a n d , secondly, that d o e s not h e l p if she p a i d b y cash.  Since net  w e l f a r e is a c o n c e r n , a s w e l l as 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  social  o p t i m u m  p o s i t i o n is 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 is a l m o s t i n e v i t a b l y  what  happens.  (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  on  the basis of an interlocutory application for an interim injunction a n d any claim  for  damages,  t h a t w o u l d h a v e b e e n h e a r d at t h e s u b s t a n t i v e h e a r i n g , is n e v e r d e a l t  T h e fact that plaintiffs rarely p u r s u e the issue of d a m a g e s m a y suggest that costs are too great.  transaction  N e v e r t h e l e s s , A is e n t i t l e d t o d a m a g e s a n d , i f it c h o o s e s t o  the issue, will recover o n a m e a s u r e  with.  pursue  the s a m e as that a p p l y i n g in tort, n a m e l y  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 to its g o o d w i l l .  N o consumer  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 it s u s t a i n e d  the was  there.  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 H i g h Court considered evidence i n 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. H i s 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 i n two respects: 12  (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 i n 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 i n 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.  139 In s u m m a r y , losses will be  recovered:  (a) b y c o n s u m e r three, o n zero out o f three  occasions;  (b) b y A o n 6 out of 7 occasions.  A s f a r as 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 is 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 , not f r o m the point of view of consumer three, thus confirming that the  theoretical  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 , it w a s r e c o m m e n d e d deficiencies.  that the A c t be  a m e n d e d  in three ways,  to rectify those  theoretical  T h e first, that t h e c o u r t s b e r e q u i r e d to t a k e t h e interests o f c o n s u m e r s  into  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, is 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  courts  are unlikely to ever k n o w w h a t p r o p o r t i o n o f the m a r k e t are class 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 , it w a s a l s o s e e n t h a t it 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  interests  of c o n s u m e r s for B to b e fined, except w h e n B h a d n o reasonable basis for abelief  that  its 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 off. 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 to b e e x t e n d e d to i n c l u d e a c t i o n s p u r s u a n t to s e c t i o n 9. I n  the  f a c t p a t t e r n , t h a t is 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 is $ 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  Tribunal.  B u t e v e n i f it is n o t o f a s s i s t a n c e i n this 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 it 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 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 is  that  remains  necessary.  (b) After the date of judgment A s noted, there are two possibilities: one, that Bwill continue to trade b u t in a m a n n e r t h a t is 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 it w i l l c e a s e t o t r a d e .  T h e  position  Although issue of an injunction will often mean that B will 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 will 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 13  140 is 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 is b a s e d is d e t a i l e d Appendix  in  T w o .  ( a ) If, 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 better off than if B was not in trade.  C o n s u m e r one will b u y f r o m B in  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.  be  scenarios  C o n s u m e r three will  not be misled, will therefore m a k e i n f o r m e d purchasing decisions a n d not  suffer  losses. 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,  where  she previously m a d e a gain anyway but in future will not be  misled.  ( b ) It 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  consumers) consumers were unaffected (economically) o n 22 occasions, better  off  o n 11 occasions a n d w o r s e off o n 3 occasions.  It w o u l d t h e r e f o r e b e a g a i n s t  the  interests of consumers  A  if B  ceased to trade.  was  worse off in 7 out of  s c e n a r i o s a n d it 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 l o n g as B is 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  9 so  consumers  a n d efficiency should prevail.  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 is a m b i v a l e n t , its v a l u e i n t e r m s 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 is m u c h m o r e A s l o n g as B continues to trade after the action, there will b e greater c o m p e t i t i o n less deception, resulting in increased levels of efficiency a n d c o n s u m e r  consumers.  protection.  of  clear. and  CHAPTER SLX SUMMARY OF CONCLUSIONS AND  RECOMMENDATIONS  T h e r e are four principal limbs to the public policy rationale for section 9 of the T r a d i n g A c t 1986.  T w o of them, compliance with C E R obligations a n d to  Fair  compliment  the C o m m e r c e A c t 1986, a p p e a r to b e adequately a d v a n c e d b y the A c t . T h e  remaining  two limbs, p r o m o t i o n of efficiency a n d protection of consumers,  adequately  advanced.  are not  T h e first o f t h e t w o r e a s o n s f o r that lies i n t h e p r o v i s i o n s o f t h e A c t itself,  which should be a m e n d e d  to:  (a) r e q u i r e the interests o f c o n s u m e r s to b e t a k e n in to a c c o u n t in section 9 cases;  (b) require imposition of afine in any case w h e r e a defendant h a d n o b a s i s f o r a b e l i e f t h a t its 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  (c)  give jurisdiction to  monetary  the  Disputes  Tribunals,  subject  reasonable  deceptive;  only to  a  m a x i m u m  value;  ( 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 lies i n the a p p r o a c h o f the courts a n d , i n particular, their 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 public policy rationale  for  142 p a s s i n g o f f is 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 is inappropriate.  T h e courts in N e w Z e a l a n d a n d Australia ought  therefore  to:  (a) p u t into practice their theoretical s t a t e m e n t s o n the difference b e t w e e n  the  two causes of action;  (b) c e a s e to treat the descriptiveness o r o t h e r w i s e o f n a m e s as d e t e r m i n a t i v e look, instead, to the actual effect o n  (c)  allow  proof of confusion  to b e  consumers;  enough  under  s e c t i o n 9,  thus  ensuring  consistency with other c o n s u m e r protection provisions, s u c h as section 16 of Trade  Marks  impose  the  A c t , or, at least, signal a n e e d for legislative action in that r e g a r d ;  (d) take a m o r e liberal a p p r o a c h to claims b a s e d o n  (e)  and  a higher standard on second  get-up;  in time manufacturers, in terms  of  disclaimers;  (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  mislead  v consumers can arise without any trading there;  (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 is 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 cases and focus o n providing clear guidelines  o n the factors w h i c h affect  the  143 probity of the  same;  ( 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 is 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 mislead or deceive and, instead, rely o n actual  evidence;  (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 , as a to a successful  pre-requisite  action.  All of those things c o u l d b e a c h i e v e d if the courts w o u l d simply b e m i n d f u l o f the 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 is 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  fact  efficiency.  T h e discussion in c h a p t e r five provides a n e x a m p l e o f h o w that m a y b e d o n e , or, at least, the sort of factors that n e e d to b e taken into account.  T h e writer acknowledges that  the  utility of the a p p r o a c h t a k e n there c o u l d only b e evaluated b y a retrospective analysis  of  cases in which the approach was followed.  no  doubt be necessary.  Modifications and refinements would  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 is t h a t  an analysis of cases since the Fair Trading a n d Trade Practices A c t s w e r e passed  shows  that the a p p r o a c h t a k e n to d a t e d o e s n o t a d v a n c e the p u b l i c policy rationale as well it c o u l d a n d s h o u l d b e a d v a n c e d . should a m e n d their approach.  T h e legislature should a m e n d the A c t a n d the  as  courts  APPENDIX ONE REASONING FOR TABLE ONE  Consumer  one  ( c a n afford, c a n tell)  (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 product.  S h e c a n tell the g e n u i n e p r o d u c t f r o m the i m i t a t i o n a n d , therefore,  not misled.  is  S h e suffers n o loss a n d h a s n o r i g h t to 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 it is a g e n u i n e p r o d u c t at a l o w e r price a n d in scenario 5 ( s a m e price) b e c a u s e , e v e n  though  price and quality are the same, A's product has the intangible advantage of being the genuine product.  In scenario 6 (lower price) she buys f r o m B because  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 to t h e f a c t t h a t A ' s p r o d u c t is g e n u i n e is  the  outweighed  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 to p r o d u c t B b y v i r t u e o f its l o w e r p r i c e .  In all  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 is 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 is n o t e n t i t l e d  to  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 its p r o d u c t is  145 better.  S h e is 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  to relief u n d e r section  I n d e e d , t h e fact" t h a t B is 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 in that she gets to b u y a higher quality p r o d u c t t h a n was previously  9.  consumer, available.  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 is q u a l i t y , f o r c o n s u m e r it is p r i c e . S h e is 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 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  (b) Lower  two  scenarios  product.  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 is $ 5 0 . buys from B.  C o n s u m e r two can afford that price  S h e is n o t m i s l e d a n d is 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  I n d e e d , t h e f a c t t h a t B is 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  and 9.  consumer,  in that she gets to b u y a p r o d u c t that she w o u l d not otherwise b e able to afford. T h e quality of that product varies according to the scenario, but c o n s u m e r two n e v e r m i s l e d as to the quality o f the p r o d u c t she  Consumer three ( c a n a f f o r d , c a n n o t  (a) Higher  price  tell)  buys.  is  146 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 is m o r e e x p e n s i v e t h a n A ' s , t h r e e b u y s f r o m A , b e c a u s e its p r o d u c t is c h e a p e r .  consumer  S h e is n o t m i s l e d , s u f f e r s  no  l o s s a n d is 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 is t h e s a m e p r i c e , t h e r e is a fifty p e r c e n t p r o b a b i l i t y  that  consumer three will b u y f r o m B . In scenario 2 (lower quality) c o n s u m e r three will, if she b u y s f r o m B , suffer a loss equal in value to the difference in quality b e t w e e n the two products.  T h e r e is a  fifty p e r c e n t p r o b a b i l i t y that s h e will b e m i s l e d a n d suffer aloss. If s h e d o e s ,  then  s h e w i l l b e e n t i t l e d to r e l i e f u n d e r s e c t i o n 9. In scenario 5 ( s a m e quality) she will, if she b u y s f r o m B , suffer a n intangible equal to the value that she places o n getting a genuine product.  1  Again,  loss there  is a fifty 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 to r e l i e f u n d e r s e c t i o n 9. In scenario 8(higher quality) c o n s u m e r three will, if she b u y s f r o m Bm a k e a gain equal to the value of the difference in quality b e t w e e n the two products.  If  she  buys f r o m B, then she has been misled but whether or not she buys f r o m B,  she  s u f f e r s n o l o s s a n d is 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.  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 will only have a value when quality is the same. 1  147 (c) Lower  price  In scenarios cheaper.  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 its p r o d u c t  is  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 is g e t t i n g a g e n u i n e  product of the best quality. In scenario 3 (lower quality) she gets an imitation product of lower quality  and  suffers a loss equal to the value of the difference in quality b e t w e e n the  two  products. s e c t i o n 9.  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 is e n t i t l e d t o r e l i e f  under  '  In scenario 6 ( s a m e quality) she gets a n (albeit imitation) p r o d u c t of equal quality at a l o w e r price.  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 is n o t e n t i t l e d  to  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 is m i s l e d b u t m a k e s n o loss; r a t h e r s h e a gain equal to the difference in value.  S h e is n o t e n t i t l e d t o r e l i e f u n d e r  makes section  9.  (d)  Summary  C o n s u m e r three suffers a loss in the following  circumstances:  (a) a fifty 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 is t h e s a m e q u a l i t y is  lower;  (b) a fifty 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 loss w h e r e p r i c e a n d q u a l i t y the  and  are  same;  (c) a o n e h u n d r e d c h a n c e o f suffering a loss w h e r e p r i c e a n d q u a l i t y lower.  are  148 Consumer four ( c a n n o t a f f o r d , c a n n o t  tell)  (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 is 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 because she cannot afford either  8,  product.  (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 is $ 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 is g e t t i n g a g e n u i n e  product.  In scenario 3 (lower quality) she suffers aloss equal in value to the difference quality between the two products.  A t the same time, she makes  a gain in  f o r m of the opportunity to b u y a p r o d u c t she w o u l d not otherwise b e able  in the to  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 is w h e t h e r t h a t r e p r e s e n t s an 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 is n o t great that this c o n s u m e r c a n tell t h e m a p a r t o n that basis. significant  ($10)  price difference  product.  In the present  scenarios  6 (same  opportunity gain.  so  T h e r e is a r e l a t i v e l y  a n d that allows consumer  to b u y  the  circumstances, those factors indicate a net gain.  In  quality) a n d 9 (higher  quality), c o n s u m e r  three  four makes  an  2  If she was able to afford A ' s product, then she would also make a gain equal to the difference i n 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. 2  APPENDIX TWO REASONING FOR CONCLUSIONS ON EFFECT IF B CEASES TO TRADE  Consumer one D e c i s i o n s 1to 5inclusive a r e o f n o interest to c o n s u m e r o n e , b e c a u s e s h e w a s b y the conduct that g a v e rise to t h e m .  unaffected  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  scenario  7 a n d A ' s a c t i o n p u r s u a n t to s e c t i o n 9will t h e r e f o r e fail, m e a n i n g that c o n s u m e r o n e will b e unaffected b y that  decision.  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 . 3, 6 a n d 9 a n d will 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  She m a d e again in  scenarios  occasions.  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 is therefore  unaffected  b y those decisions, w h i c h will b e  against A's claim because  no  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 it 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  an  consumer was misled in any of those  scenarios.  interest in B ceasing to trade in those three scenarios.  H o w e v e r , if B continues to  trade  150 a f t e r t h e d e c i s i o n s , it w i l l b e i n a w a y t h a t is 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  consumer  t h r e e w i l l n o t b u y f r o m B . S h e is 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  to  trade.  In scenarios  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 is  indifferent to w h e t h e r or not B continues to trade in those scenarios  therefore  too.  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  goes  out of business.  Consumer four Is u n a f f e c t e d b y all 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 a gain.  If B ceases to trade, she will b e w o r s e off in those three  scenarios.  m a d e  Legislation  1. N e w  Zealand  Consumer Information A c t Disputes Tribunal A c t Fair Trading A c t Merchandise  1969  1988  1986  M a r k s A c t  Trade M a r k s act  1954  1953  Trade Practices A c t  2.  List  1958  Australia  Tarde M a r k s A c t  1955  Trade Practices A c t  1974  3. U n i t e d S t a t e s o f A m e r i c a Federal T r a d e C o m m i s s i o n A c t 15 U.S.C. 45  (1914)  N e w Y o r k S e s s . L a w s 1 9 0 3 , c. 1 3 2 , ss. 1-2 a s a m n d .  1921  Trans-Alaska Pipeline Authorization A c t (15 U.S.C.  53(b))  W h e e l e r - L e a A c t , 52 Stat. 114 (1938) U.S.C. 52  4.  (1958)  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 Privacy A c t , S . N . 1981, c.6  152 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. Trade Marks  A c t o f C a n a d a , R . S . , c.  T-10  P-24  Case List  1. N e w  1 5 3  Zealand  Allied Liquor Merchants Ltd. v Independent Liquor (N.Z.) Ltd., unreported, High Court, Auckland, 20 December 1989, C P 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 ( C A . ) 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 N Z I P R 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 N Z I P R 406  154  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. Court,  Christchurch,  Pioneer Hi-Bred Corn Co. Pitstop Exhaust Ltd.  Zealand Ltd.  Ltd.  102/85, Holland  v Hy-Line Chicks Pty.  ( N o . 2), unreported, High  J.  Ltd  [1978] 2 NZLR 5 0  v Alan Jones Pitstop International Ltd.  Prudential Building and of New  v Noel's Appliance Centre Ltd.  27 August 1985, A  ( 1 9 8 8 ) 2 NZBLC1 0 2 , 9 6 8 .  Investment Society of Canterbury v Prudential Assurance Company [1988] 2 NZLR 653  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 , 166/91, Barker J.; (1991) B.C.L. 1974  A P  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 CP 204/90, 4 July 1990, Holland J.;unreported, Court of Appeal, C A 177/90, 20 August 1990 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) Taylor Bros. Ltd.  Tot  Ltd.  [1986] 2 NZLR 183  [1988] 2 NZLR 1  v Diesil Progress NZ  Ltd.  (1988) 2 NZBLC102,976.  Toys v Mitchell [ 1 9 9 3 ] 1 N Z L R 3 2 5  v Dux  v ASB  Bank Ltd.  [1989] 3 NZLR 385  Engineers [ 1 9 8 9 ] 3 N Z L R 1 3 5 •  Watson v Dolmark Industries Ltd.  2.  Ltd.  Ltd.  v Splain [ 1 9 9 3 ] 3 N Z L R 1 8 5  Trust Bank Auckland Ltd. UPL  v Great Outdoors Co.  v Taylors Group Ltd.  Theodorus Couwenberg & Son Tony Blain Pty.  Ltd.  [1992] 3 NZLR 311  Australia  Abundant Earth Pty.  Ltd.  v R and  C Products Pty.  Ltd.  (1985) 59 A L R 211.  155  Argy v Blunts & Lane Cove Real Estate Pty. Bradmill Industries Ltd. Brock v The  v B &S  Products Pty.  Terrace Times Pty.  Cadbury-Schweppes Pty. Council, on appeal from  Ltd.  Ltd  (1990) 94 A L R 719 Ltd.  (1980) A.T.P.R. 4 0 - 1 9 6  ( 1 9 8 2 ) 1 T.P.R. 2 4  Ltd. v Pub Australia).  Squash Co.  Pty.  Ltd.  [1981] 1 W.L.R. 193  Chase Manhattan Overseas Corporation v Chase Corporation Ltd. Comite Interprofesionel du ConAgra Inc. Cue  Vin  de Champagne v N.L.  v McCain Foods (Aust.) Pty.  Design Pty.  Ltd.  Ltd.  Burton Pty.  (Privy  (1985) 63 A.L.R. 345 Ltd.  ( 1 9 8 1 ) 1 T.P.R. 1 2 8  (1992) 33 F.C.R. 302  v Playboy Enterprises Pty.  Ltd.  (1982) 45 A L R 535  Dairy Industry Marketing Authority v Southern Farmers Co-Operative Ltd.  ( 1 9 8 2 ) 1 T.P.R.  64.  Dairy Vale Metro Co. Dial-An-Angel Pty. Elders TXL Esanda Ltd.  Ltd.  Operative Ltd.  Ltd.  v Brownes Dairy Ltd.  v Sagitaur Services Pty.  v Australian Estates Pty.  v Esanda Finance Ltd.  Fletcher Challenge Ltd.  Ltd  Ltd.  [1977-78] 140 C.L.R. 216  (H.C.Aust.)  Hunt Contracting Co.  Ltd.  Ltd.  v Croner Trading Pty.  Irish Distillers Ltd.  v S. Smith & Son  Lego Australia Pty.  Ltd.  Ltd. Ltd. Pty.  ( 1 9 8 2 ) 8 F.S.R. 1  (1986) ATPR 40-666 Ltd.  (1984) ATPR 40-459  v Sydney Building Information Centre  v Roebuck Resources NL  Hutchence v South Seas Bubble Pty. Interlego AG  Ltd.  v Magazine Promotions Pty.  Hornsby Building Information Centre Pty. Pty.  (1990) 96 A.L.R. 181.  [1984] F.S.R. 96 ( H C ) .  v Fletcher Challenge Pty.  Ltd.  501  (1987) 10 I.P.R. 575  Gates v City Mutual Life Assurance Society Ltd. Happy Landings Pty.  (1981) 35 A.L.R. 494,  Ltd.  (1992) 110 A.L.R. 183  (1986) 64 A.L.R. 330 (1992) 111 A L R 577 Ltd  ( 1 9 8 7 ) A.T.P.R. 4 0 - 7 5 6 .  v Paul's (Merchants) Pty.  Ltd.  (1982) A.T.P.R. 40-308, 43-805  156  LSKMicrowace Technology Pty. McWilliams Wines Pty. ( t h e Big  Mac  Mobil Oil  Ltd.  Ltd.  v Rylead Pty.  Ltd.  (1990) 16 I.P.R. 107 (F.C.A.).  v McDonalds System of Australia Ltd.  [1980] 4 9 F.L.R. 4 5 5  case)  Corporation v Registrar of Trade Marks ( 1 9 8 3 ) 1 5 A L R 7 3 5  Moorgate Tobacco Co. Motorcharge Pty.  Ltd.  Ltd.  v Philip Morris Ltd.  v Motorcare Pty.  Murray Gouldbum Co-Operative Co.  Ltd Ltd.  (1984) 56 C.L.R. 414.  (1982) 42 A.L.R. 136 v New  South Wales Dairy Corporation ( 1 9 8 9 - 9 0 )  24 F C R 370.  Parkdale Custom Built Furniture Pty.  Ltd.  v Puxu Pty.  Ltd.  (1981-82) 1 4 9 C.L.R. 191  (H.C.Aust.)  Peter Isaacson v Nationwide News ( 1 9 8 4 ) 5 6 A . L . R . 5 9 5 Phelps v Western Mining Corporation Ltd.  (1978) ATPR 40-077  R & C Products Pty.  Ltd.  v Hunters Products Pty.  R&C  Ltd.  v S C Johnson & Sons Pty.  Rent A  Products Pty. Ute  Pty.  Ltd  v Golden 214  Rolls Royce Motors Ltd. Shoshana Pty.  Ltd.  v 10th  Pty.  Ltd.  Cantonae Pty.  Ltd.  v Liquidchlor Pty.  ( 1 9 8 8 ) AT.P.R. 4 0 - 8 3 9 Ltd.  (1993) 1 1 3 A.L.R. 4 8 7  (1987) AT.P.R. 40-800.  v D.I.A. {Engineering) Pty.  Snoid v C.B.S. Records Australia Ltd. Starcross Pty.  Ltd.  Ltd.  Ltd.  (1981) 50 F.L.R. 3 4 0  (1987) 11 I P R 249  (1981) 54 F.L.R. 202. Ltd.  ( 1 9 8 1 ) 1 T.P.R. 1 0 3 .  State Government Insurance Corporation v Government Insurance of New (1991) 101 A.L.R.  South Wales  259  Sterling Pharmaceuticals Pty.  Ltd.  Taco Company of Australia Inc.  v Johnson & Johnson Pty. v Taco Bell Pty.  Ltd.  Ltd.  (1990) 96 A L R 277  (1982) 42 A L R 177  Toteff v Antonas ( 1 9 5 2 ) 8 7 C L R 6 4 7 VISA International Services Assoc. v Beiser Corporation Pty.  Ltd.  (1983) 6 T P R 82.  157  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 States o f  America  Elliot Knitwear, Inc. 59 F T C 8 9 3  (1961).  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  (1931)  International News Service v The Associated Press ( 1 9 1 8 ) 2 4 8 U S  215  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" case)  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  158  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 case)  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  case)  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  159  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  Bibliography  1. 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