Mitre 10 Australia Pty Ltd v Masters Home Improvement Australia Pty Ltd [2011] VSC 343 (Macaulay J)

The Victorian Supreme Court has refused to grant Mitre 10 an interlocutory injunction to restrain Masters from launching its hardware stores using a blue, white and grey get-up. Masters is a joint venture between Woolworths and the American hardware business, Lowe's.

Mitre 10 sought the injunction on the basis that its own use of blue, white and grey meant that the Masters get-up would mislead and deceive consumers in breach of provisions of the Competition and Consumer Act 2010 (Cth) (the Australian Consumer Law) and amount to passing off.

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The decision

In the decision handed down on 16 July 2011, Justice Macaulay held that Mitre 10 had not made out a prima facie case against Masters. His Honour also considered that the balance of convenience favoured Masters and the damage to Mitre 10 would be relatively confined.

While each case will depend on its own facts, the decision indicates the difficulty with claims based solely on get-up where the combination of features is not sufficiently distinctive and the other party has prominently used its own branding in conjunction with a similar get-up.

Masters opened its first store using its blue, white and grey get-up in Braybrook, Victoria on 1 September 2011.

Legal test for the granting of an interlocutory injunction

Justice Macaulay set out the following three questions to be answered in the affirmative before the Court will grant an interlocutory injunction:

  1. Does the plaintiff have a prima facie case against the defendant? In other words, does the plaintiff have a sufficient likelihood of success at trial to justify putting in place the injunction pending the trial?
  2. Would damages be an inadequate remedy if the injunction was refused and the plaintiff was successful at trial?
  3. Does the balance of convenience favour the plaintiff? In other words, is there is a lower risk of injustice in granting the injunction than not granting the injunction?

In stating the first requirement as the need for a "prima facie case", Macaulay J relied on the judgment given by Gummow and Hayne JJ in Australian Broadcasting Corporation v O'Neill (2006) 227 CLR 57. His Honour did not use the more traditional expression of the test as "a serious question to be tried" which was used by Gleeson CJ and Crennan J in that case. Courts have, however, held that either expression is appropriate provided that, when assessing the probability of success that is necessary to justify an injunction, the nature of the rights the plaintiff asserts and the practical consequences likely to flow from the injunction are considered (following Beecham Group Laboratories Ltd v Bristol Laboratories Pty Ltd (1968) 118 CLR 618).

No prima facie case

Justice Macaulay held that Mitre 10 had not discharged the onus of proving a prima facie case against Masters. There were a number of reasons why his Honour had "real reservations" about Mitre 10's cause of action, including that each trader's quite different name and logo would appear prominently in conjunction with the colour scheme. It was also significant that only around 50% of Mitre 10's stores used the colour scheme, with the remaining stores still using a variety of older get-ups. His Honour did not consider that there was a sufficient likelihood that the "ordinary or reasonable" consumer would mistakenly believe that a Masters store was affiliated with Mitre 10.

His Honour distinguished the case from the decision of Goldberg J in Intellectual Property Pty Ltd v Mygroups Pty Ltd [2006] FCA 15 where an injunction had been granted in favour of Clark Rubber to stop a competitor from using a bright yellow background with red and blue lettering for its stores. In that case, Clark Rubber was held to have a prima facie case because the colour scheme was used on 65 of its 70 stores and his Honour considered that the combination of colours was quite distinctive and "idiosyncratic". In this case, Masters had presented evidence that white lettering on a blue background was common-place in the hardware industry, and Macaulay J found that the colours had a relatively low degree of distinctiveness as a secondary brand for Mitre 10. His Honour therefore held that Mitre 10 had not demonstrated a sufficient likelihood of success to justify the injunction.

Balance of convenience favoured Masters

In any event, Macaulay J held that the balance of convenience favoured Masters because the risk of damage to the goodwill of Mitre 10 was outweighed by the risk of damage to Masters if its well publicised launch in the Australian market were delayed.

Damage to Mitre 10 would be confined

His Honour did not specifically reject Mitre 10's argument that "damage would be virtually impossible to quantify" but he did consider that the damage to Mitre 10 would be relatively confined because only a small number of Masters stores would be opened before the matter could be heard and finally determined.

Comment

Justice Macaulay's "real reservations" about Mitre 10's case are consistent with recent decisions of the Federal Court rejecting trade practices claims based solely on similarities in get-up, where the get-up is used together with a different and distinctive trading name and/or logo: see for example, Mars Australia Pty Ltd v Sweet Rewards Pty Ltd (2009) 81 IPR 354 upheld on appeal at (2009) 84 IPR 12. Where the distinguishing feature of the plaintiff's get-up is its well-known primary brand, and particularly where the defendant is also using a different and distinctive primary brand, it is very difficult to establish that "ordinary and reasonable" consumers would be deceived. To succeed, the plaintiff needs to establish that its get-up is or has over time become a distinctive secondary brand in its own right such that it can be considered "idiosyncratic".

However, in relation to claims based solely on get-up, the Full Court of the Federal Court (Greenwood and Tracey J, Buchanan J dissenting) in Bodum v DKSH Australia Pty Limited [2011] FCAFC 98 recently allowed Bodum's appeal after recognising its "very significant" reputation in the features and shape of its coffee plungers, outside of its BODUM trade mark. The majority of the Full Court held that the use by DKSH of substantially the same get-up, without its own distinctive branding, was likely to mislead or deceive consumers into believing the product was a Bodum product. The Full Court decision in Bodum will be reported in the September 2011 edition of the Davies Collison Cave e-Mag.