Case: ConAgra Inc v McCain Foods (Aust) Pty Ltd [1992] FCA 159 ; (1992) 33 FCR 302
Outcome: followed
In ConAgra Inc v McCain Foods (Aust) Pty Ltd [1992] FCA 159 ; (1992) 33 FCR 302 the Full Court considered a case having some similarities with the present proceeding. 30 Both parties rely on the Full Court authority of ConAgra . It is useful to first refer to the salient facts of that case: &#8226; the applicant ConAgra had marketed its HEALTHY CHOICE frozen dinner product in the United States from January 1989 and had achieved sales of HEALTHY CHOICE products from January 1989 to March 1991 amounting to $US458,210,000, accounting for 7.6% of the overall frozen food, dinner and entr&eacute;e market in the United States; &#8226; ConAgra had obtained trade mark registration of HEALTHY CHOICE in the United States; &#8226; ConAgra had spent very substantial sums of money on advertising its HEALTHY CHOICE product in the United States; &#8226; ConAgra had not manufactured its HEALTHY CHOICE products other than in the United States, but had sold the products in Canada and Central America; &#8226; McCain had been manufacturing and marketing frozen food dinners in Australia; &#8226; in October 1989, the Australian marketing director of McCain travelled to the United States and Canada and noticed ConAgra's HEALTHY CHOICE product in supermarkets, obtained five examples of the packaging, took them back to Australia and reported to McCain senior management that ' The ... product 'Healthy Choice' (low cholesterol) is getting very favourable comments in the US. We should look closely at this one.'; &#8226; from May 1990, McCain conducted market research and product development for its own HEALTHY CHOICE product; &#8226; in July 1990, McCain applied for trade mark registration in Australia for HEALTHY CHOICE together with the McCain logo; &#8226; in February 1991, McCain launched three varieties of its HEALTHY CHOICE product in Australia; and &#8226; on 8 April 1991, ConAgra commenced proceedings against McCain in the Federal Court claiming that McCain's adoption of the name and get-up of ConAgra's products amounted to passing off or breach of ss 52 or 53 (c) of the TPA. 31 At first instance Hill J found that McCain's packaging suggested, to a person familiar with the ConAgra product, that there is a relationship of some kind between ConAgra and McCain or their respective products. However, both at first instance and on appeal to the Full Court, ConAgra failed to establish that McCain's sale of its HEALTHY CHOICE product in Australia amounted to passing off or breach of s 52 or s 53(c) of the TPA because ConAgra was unable to establish that there was a substantial or sufficiently substantial number of persons in Australia who were aware of ConAgra's products and for whom HEALTHY CHOICE would have signified ConAgra's product. 32 ConAgra's evidence of reputation included affidavits from ten people who had some recent connection with the United States. Some were United States citizens visiting or residing in Australia and others were Australian citizens who had spent time in the United States. To varying degrees, each deponent recognised ConAgra's HEALTHY CHOICE product. It was ultimately found that no extrapolation of any value could be made from those deponents to the Australian population in general (including foreign citizens in Australia) whether as likely buyers of frozen foods or as likely to be aware of ConAgra's product in the United States. 34 It was submitted by Bickfords that in the present case a proper analysis of the admissible evidence leads to a similar conclusion as reached by the trial judge and Full Court in ConAgra , to the effect that, at the time Bickfords launched its MONSTER ENERGY product: &#8226; there was not a sufficiently substantial number of persons in Australia who were aware of Hansen's MONSTER ENERGY product and for whom MONSTER would have signified Hansen's product; &#8226; what Bickfords really set out to do was to adopt the name and get-up of Hansen's MONSTER ENERGY product, without contravening the law, not because it wanted to have its product confused with that of Hansen, but because it was most impressed by the striking success of Hansen's product in the United States and sought to adopt it for its own products in Australia as a good idea and one likely to succeed here; and &#8226; such conduct does not amount to fraud but, in any event, a finding of fraud cannot improve Hansen's case if it cannot prove its claimed reputation. 35 On the other hand, Hansen submitted that the Court ought to find that the exposure relied upon in fact generated a substantial reputation in the MONSTER ENERGY mark in Australia. Hansen submits that the Court ought to so find on the basis: &#8226; of the extent of the exposure apparent from the evidence summarised in the form of the Schedules of Exposure before the Court; &#8226; that the strategy referred to above was in fact successfully implemented; &#8226; of evidence of the state of knowledge of members of the public; &#8226; of evidence of the efforts made by persons other than Bickfords to become involved in the distribution of the Hansen product in Australia; and &#8226; of Bickfords' own conduct and research. 36 It is clear from the principles stated in ConAgra that it is not necessary in a passing off case for an applicant to establish actual trade in the jurisdiction but, rather, it is sufficient if the applicant establishes a reputation in the jurisdiction. 37 Justice Lockhart stated in ConAgra 33 FCR at 343 that: ... it is still necessary for a plaintiff to establish that his goods have the requisite reputation in the particular jurisdiction, that there is a likelihood of deception among consumers and a likelihood of damage to his reputation. But reputation within the jurisdiction may be proved by a variety of means including advertisements on television or radio, or in magazines and newspapers within the forum. It may be established by showing constant travel of people between other countries and the forum, and that people within the forum (whether residents there or persons simply visiting there from other countries) are exposed to the goods of the overseas owner ... Certainly the law of passing off does not confer protection on the owners of goods who have no reputation in a particular jurisdiction, otherwise they would have an international monopoly with respect to the name, get-up or mark applied to their goods (and services) and may never intend to exploit it in the particular jurisdiction. It is the likelihood of deception among consumers and of damage to reputation that are the critical requirements to establish a case of passing off and they prevent any such unauthorised international monopoly being granted to a plaintiff. A quia timet injunction is a good illustration of this point for, in most cases, while such an injunction will be granted where the plaintiff has at the time of action no relevant business connection with the particular jurisdiction but has a reputation there and has established a likelihood of deception amongst consumers, he must go on to establish a likelihood of damage to his reputation and that he intends to establish in some way his business or sell his goods in that jurisdiction. 38 Justice Lockhart considered the existence of modern mass advertising, commenting at 342: It is no longer valid, if it ever was, to speak of a business having goodwill or reputation only where the business is carried on. Modern mass advertising through television (which reaches by satellite every corner of the globe instantaneously), radio, newspapers and magazines reaches people in many countries of the world. The international mobility of the world population increasingly brings human beings, and therefore potential consumers of goods and services, closer together and engenders an increasing and more instantaneous awareness of international commodities. This is an age of enormous commercial enterprises, some with budgets larger than sovereign states, who advertise their products by sophisticated means involving huge financial outlay. Goods and services are often preceded by their reputation abroad. They may not be physically present in the market of a particular country, but are well known there because of the sophistication of communications which are increasingly less limited by national boundaries, and the frequent travel of residents of many countries for reasons of business, pleasure or study. 39 As to the extent of the reputation required, his Honour said at 346: I said earlier that if a plaintiff establishes that it has a reputation in the jurisdiction then that would be sufficient to allow it to maintain an action in passing off. I have already discussed the various ways by which that reputation may be achieved, but it remains to define the extent or scope of reputation required. In my opinion the plaintiff must prove that there are within the jurisdiction in which the defendant is carrying on business a substantial number of persons who are aware of the plaintiff's product ... This was the test adopted by the primary judge (at 485 6) and in my opinion correctly. Further, it does not matter whether the persons within the relevant jurisdiction who are aware of the plaintiff's product, are resident or visitors from anywhere in the world. The reason for the requirement of a substantial number of persons is in my opinion that the reputation of a plaintiff in the forum is the source of his potential business there; his goods are known to people there who are his potential customers. For him to have in a practical and business sense a sufficient reputation in the forum requires something more than a reputation among a small number of persons, although the size and extent of the class may vary according to the circumstances of the case. Also, the law seeks to promote local competition and innovation and does not extend its protection to persons whose goods are not sufficiently known in the forum. 40 Justice French, at 377, said that: It is essential to the cause of action in passing off that the applicant's goods or services have a reputation with a substantial number of persons who would be potential customers were those goods or services to be marketed within the jurisdiction. 41 As to what is meant by the term 'substantial', his Honour said at 380: The term "substantial" is evaluative and relative to such factors as the size and distribution of the population of prospective consumers. 42 In relation to the operation of the TPA, Lockhart J (at 353) referred to the observation of Hill J that the threshold under the TPA may well be lower than it is for passing off, namely that a not insignificant number of persons could be misled. Justice Lockhart did not need to determine whether the threshold was different. Justice Gummow referred (at 372) to 'a reputation with a substantial number of persons who would be potential customers', but did not separately discuss the position under the TPA. 43 Justice French observed at 377 that the trial judge had used the term 'a not insignificant number of persons' to identify the threshold of public awareness of the applicant's mark or get up which, under the TPA, was required for the applicant to succeed. His Honour said (at 381) of the word 'insignificant': That word is normative but not for that reason inappropriate. Attention must be paid to the policy of the relevant provision which, as the heading to Pt V and many of its provisions indicate, is one of consumer protection. If the similarity complained of is commercially irrelevant having regard to the number of people who know of it, then it can be concluded that the use of the name and/or get-up complained of is not misleading or deceptive. 45 I make one further observation in relation to legal principle to be derived from ConAgra . In the absence of the establishment of reputation in Australia, fraud will not avail Hansen in its attempt to prove a case of passing off. Fraud may well be relevant in determining the relief Hansen would be entitled to, if reputation were otherwise established, or as an element in establishing the requisite misrepresentation (see ConAgra 33 FCR at 345 per Lockhart J). 46 Nevertheless, relevantly to this proceeding, deliberate copying may not always evidence an intention to deceive so as to constitute fraud in the relevant sense. 47 Justice Lockhart took the following view of McCain's deliberate adoption of the name and get-up of ConAgra's product, at 352: Merely to imitate the name of another trader or his product or his get-up does not establish a case of fraud. That appears clearly from the Pub Squash case. I have the distinct impression from my reading of the evidence in this case that what the respondent really set out to do was to apply to its own product and packaging so much of the name of the appellant's product "Healthy Choice" and get-up of its packaging as it could do, without contravening the law, not because it wanted to have its product confused with that of the appellant, but because it was most impressed by the striking success of the appellant's frozen food products in the United States and sought to adopt it for its own products in Australia as a good idea and one likely to succeed here. Nevertheless it seems the respondent wanted to sell its own product as a distinctive McCain product. ... As reputation in Australia has not been established by the appellant, for the reasons I gave earlier, the finding of fraud does not ultimately avail the appellant. 48 Justice Gummow viewed McCain's conduct similarly, at 374: ... like Lockhart J, my impression from the evidence is that there is much to be said for the view that [McCain] acted as it did, not to filch [ConAgra's] market or prospective market in Australia, but because it was impressed by the success of [ConAgra's] product in the United States and thought that a similar product was likely to succeed here. That would not amount to fraud in the required sense. Deliberate copying does not necessarily indicate fraud. 77 This can only be done through appropriate evidence. The Court must be satisfied, on the balance of probabilities, as to the existing reputation. As Gummow J reminded us, caution must be taken in treating findings found at an interlocutory level as if they would be findings which would suffice to establish reputation at trial (see ConAgra 33 FCR at 354). 231 Evidence was introduced by Bickfords in response to Hansen's claim, relevantly directed to Bickfords' own development and marketing of its product and mark. In view of my conclusion that Hansen has not demonstrated sufficient reputation to be entitled to the relief sought, it is not necessary for me to deal with these aspects of this evidence. The evidence relevant to the cross-claim I will deal with separately. However, it is convenient to make certain observations now that the Court has heard the evidence and received submissions by the parties, particularly on the question of fraud in the required sense as discussed by Lockhart and Gummow JJ in ConAgra . 232 Mr Kotses and Mr Bell gave evidence on behalf of Bickfords and were cross-examined. As I indicated previously, Mr Bell was Bickfords' Marketing Manager, and was asked by Mr Kotses to consider a brand for a new energy drink. An attack was made upon their evidence by Hansen. 233 One thing is clear which I accept from the evidence of Mr Kotses and Mr Bell, and the objective evidence; they both thought that Hansen did not have sufficient reputation in Australia in the MONSTER brand. The fact that Mr Kotses may have been aware that Hansen products were being promoted to young customers, and that he was probably aware that the Hansen mark was shown on pay TV, does not mean that he thought the mark MONSTER ENERGY had sufficient reputation in Australia. I accept his evidence in this regard when he says that he considered the public was not aware of Hansen's MONSTER ENERGY product in Australia prior to April/May 2006. Accordingly, by definition, Bickfords did not want to misrepresent the established reputation and goodwill of Hansen in Australia, as it was thought that none had thus far been established.