In the recent decision of Verrocchi v Direct Chemist Outlet Pty Ltd [2016] FCAFC 104, the Full Federal Court confirmed that Chemist Warehouse could not stop Direct Chemist Outlet from using the colour combination of yellow, red and blue, despite their concerns that use of these colours could cause confusion among their customers.

The appellants, who trade as Chemist Warehouse, alleged that Direct Chemist Outlet engaged in passing off and misleading or deceptive conduct in breach of the Australian Consumer Law by the use of certain colours and ’get-up‘ in its pharmacy store fronts.

As at May 2006, Chemist Warehouse had 38 pharmacies throughout Australia. Chemist Warehouse argued that customers were able to identify its pharmacies by their distinctive external visual appearance, which included a predominantly yellow storefront with the lesser use of red and blue. The signage also contained a red logo with white text stating ‘Chemist Warehouse’ and slogans such as ‘Is This Australia’s Cheapest Chemist?’

The second respondent, Mr Tauman, was aware of Chemist Warehouse and its use of a yellow, blue and red colour scheme. In 2005, he decided to rebrand his pharmacies to a discount chemist format. This resulted in the group of pharmacies that operate under the brand Direct Chemist Outlet.

The Direct Chemist Outlet stores mostly used the same primary colour palette of yellow, red and blue, and some had a yellow background. One of the key features of the visual appearance was the use of a red sunburst logo with the words ‘Direct Chemist Outlet’ in blue and white text. The signage also included use of the slogan ‘Who is Australia’s Cheapest Chemist?’. Chemist Warehouse argued that Direct Chemist Outlet had copied elements of its visual appearance and used the same colour palette, such that the branding created a perceived association between Direct Chemist Outlet and Chemist Warehouse.

The Full Federal Court disagreed. It considered that the primary colour palette used by Chemist Warehouse was not distinctive for the following reasons:

  1. There was considerable variability in the nature of the Chemist Warehouse get-up at each store. At best, there was only some consistency in the use of bright and primary colours including yellow, and the red ‘Chemist Warehouse’ logo.
  2. The colours had a functional aspect. Discount retailers use the colours yellow, red and blue to draw attention. The colour yellow was used to take advantage of the attributes of visibility and association with discount value. It could therefore not be said that Chemist Warehouse’s use of yellow denoted trade origin.

The Full Court was also of the opinion that the visual appearance of the Direct Chemist Outlet stores was sufficiently different to the Chemist Warehouse stores, and that Direct Chemist Outlet had developed its own brand recognition by reference to its logo.

The case highlights that it can be difficult to obtain rights in colours which serve a functional purpose. It also highlights the importance of having a consistent visual appearance throughout all stores, product ranges and promotional material, as this can assist the organisation in developing a strong reputation in the mind of its consumers.