Businesses launching a new brand in the Australian market need to consider the competitive landscape of existing brands, and the risk of a competitor seeking an urgent interim injunction against them, if they stray too close to an existing registered trade mark.
In RB (Hygiene Home) Australia Pty Ltd & Anor v Henkel Australia Pty Ltd, Reckitt Benckiser (RB), the maker of Finish dishwashing products, has landed an early blow in restraining Henkel Australia’s sale of Somat dishwashing products that feature an image (the Somat logo) bearing similarities to the Finish ‘Powerball’ logo trade marks (the Powerball marks).
The Federal Court of Australia granted this interim injunction in circumstances where RB claimed the ongoing sale of Somat products would diminish Finish’s competitive advantage in the dishwashing market, and the trade mark infringement proceedings would not be determined for months (including because Henkel filed a cross-claim alleging that one of RB’s trade marks had never been used “as a trade mark”). As part of the injunction, Henkel is restrained from using the Somat logo or any other mark deceptively similar to the Powerball marks in its marketing and packaging.
The dishwashing market in Australia is dominated by Finish, which holds approximately two-thirds market share. The decision, however temporary, to restrain the sale of products bearing the Somat logo, has afforded further protection of this market share. To secure this remedy, RB had to give the usual undertaking as to damages (ie if they fail at the final hearing, they will be required to compensate Henkel for any loss resulting from the interim injunction), and an undertaking to take the first available final hearing date.
Interim injunctions can be a very effective remedy in trade mark cases, and are awarded to the trade mark owner to grant interim relief, while seeking to preserve the legal status quo between the parties until the final hearing. The Court will take into account the “balance of convenience” between the parties, as well as the strength of the infringement case in terms of whether there is at least a prima facie case to be answered. In simple terms, the Court weighs up whether the downside to the trade mark owner of not obtaining the injunction, is greater than the downside to the alleged infringer if the injunction is granted.“Balance of convenience”
RB argued that over the past 20 years, RB has invested millions of dollars to develop Finish’s reputation in Australia, which is inextricably tied to the Powerball logo marks. Henkel had consciously marketed their product with these images in mind so as to benefit from the reputation of the Finish brand, such that the risk of an injunction halting sale of the products was one that Henkel would have anticipated.
Henkel’s launch was made “with its eyes wide open” given previous similar litigation against it in Germany. Allowing Henkel to continue selling the Somat products with the allegedly infringing logo would devalue the Powerball marks in an unquantifiable manner.
In response, Henkel sought to downplay the projected reputational loss to the Finish brand and contended that enabling Finish to disrupt the launch of further Somat products in Australia would amount to an unfair competitive advantage for Finish. Henkel outlined the significant damage that would be caused by the granting of an interlocutory injunction:
- a disruption and loss of momentum for the launch of the whole Somat range, given that the dishwashing capsules are its flagship lead product;
- unquantifiable damage to its reputation with its retailer based customers and distributors such as Coles and IGA;
- costs incurred and delays suffered in designing new packaging and having existing products repackaged;
- loss of efficacy in the promotional effect of the redesigned packaging because customers would have no way of knowing what the product they were considering buying looked like; and
- sunk costs in ceasing its marketing campaign and redesigning campaign materials.
Justice Halley granted the interim injunction in RB’s favour. In doing so, he found that:
- there was a prima facie case that the Somat logo was being used as a trade mark – the “clear and dominant” use of “SOMAT” above the logo did not dictate a conclusion that the Somat logo itself cannot also operate as a trade mark;
- there was a prima facie case, but not a “strong” prima facie case, that the Somat logo is deceptively similar to the Powerball marks. Justice Halley had particular regard to the visual impression created by the juxtaposition of the bright blue, red and white colours on the dishwashing tablet and the impression of the Somat Logo on consumers of ordinary intelligence and imperfect recollection; and
- the balance of convenience favours the grant of an injunction to restore the status quo pending final determination of the applicants’ claims for trade mark infringement – for this finding, Justice Halley gave weight to RB’s established reputation and the potential unquantifiable diminution in the value of their trade marks, noting that Henkel’s arguments as to potential harm in reputation as a new entrant to the market are unsubstantiated given their lack of established reputation in the Australian market. Additionally, the injunction would not prevent Henkel from proceeding with its launch of the remaining range of Somat products.
The decision means that Henkel will be restrained from selling dishwashing products through use of the Somat logo and any other mark that is deceptively similar to the Powerball marks. This will have effect until final judgment is handed down by the Federal Court of Australia. In practice, Henkel will be required to halt sale of its dishwashing products featuring the logo and potentially delay launch of any further Somat products in Australia. The effect of this will be significant, including wasted launch expenditure, costs in redesigning packaging as well as marketing campaigns and materials, and any cost involved with re-negotiating contracts with distributors.
- Businesses need to be aware of their competitors’ brands and reputation, before launching their brand in Australia.
- This case is an example of the powerful option of seeking an urgent interim injunction to seek to protect the strength and value of an established brand, and to protect market share.