19 September, 2018
What you need to know
The success of misleading and deceptive conduct and passing off claims rely on the plaintiff having established a reputation in Australia.
Without the presence of a reputation in Australia, it is unlikely that consumers will be taken to have been misled or deceived.
"Unfair competition" is not part of Australian law.
What you need to do
Make efforts to establish a reputation in whichever jurisdictions your business operates to successfully counter misleading or deceptive competitive behaviour.
South African corporation takes action against Woolworths supplier for similar labelling on similar product
The Real Thing Corporation (TRT) alleged that Media Tag engaged in misleading and deceptive conduct by representing to Woolworths that the goods it was supplying were those of TRT when they were not. TRT asserted that its business reputation was such that Woolworths was misled to purchase the non-TRT products from Media Tag.
TRT's goods were in fact supplied to Woolworths through Media Tag in 2013-2015 on a trial basis, but when TRT increased its prices, Media Tag sought similar products from another source.
In place of TRT's health supplements sourced from international raw materials, Media Tag began to supply Woolworths with health supplement products from locally sourced materials using the same names that were used for TRT's products during the trial supply by Media Tag.
Labelling
Media Tag had organised for TRT's product labels to be modified to comply with Australian labelling requirements in preparation for the Woolworths trials. While affixed to containers of different appearance with a different "get-up" and colour scheme, the general three-panel layout of the TRT labels along with the same product names were used by Media Tag on the subsequent non-TRT products. Further, the first two versions of the labels for the non-TRT products included the letters "TRT" or an unstylised "The Real Thing" respectively.
A director of Media Tag, Mr Meyerowitz, claimed that the reason that the letters "TRT" were included on the labels was for Woolworths' "internal record-keeping and logistical convenience." He gave evidence that despite his re-submission of Woolworths product forms detailing the updated names with no mention of TRT or related terms, such terms persisted to appear on order forms and invoices. Mr Meyerowitz submitted that he continued to include the terms on the labels to assist Woolworths in associating the new products with Media Tag – having confirmed that such terms were not owned by anyone in Australia on the Trade Marks Register and were merely "descriptive".
Misleading or deceptive conduct
To make a successful claim under section 18 of the Australian Consumer Law (ACL), TRT bore the onus of proving that Woolworths knew of TRT and knew that the products supplied during the trial were those of TRT.
Citing Katzmann J in Moroccanoil Israel Ltd v Aldi Foods Pty Ltd [2017] FCA 823, Justice Stevenson stated the importance of TRT's reputation: unless Woolworths was aware of TRT's products, "there was no prospect of them being misled or deceived by the conduct of an imitator."
TRT was unable to show that it had goodwill and reputation in Australia, and that such goodwill and reputation was known to Woolworths. TRT had not at any time taken steps to establish a reputation in the Australian market in relation to its trading activities or products, and there was no evidence indicating that Woolworths had any knowledge of TRT's identity – just that the goods supplied by Media Tag were "made in South Africa from imported products."
Additionally, evidence was adduced that Woolworths decided to purchase further product from Media Tag long before it saw the labelling used, and therefore any indication of TRT on the labelling could not have induced this decision. Justice Stevenson saw no basis to conclude that TRT itself had any reputation in Australia that could warrant a conclusion that Media Tag's labelling misled Woolworths into thinking that the products were connected to or emanated from TRT.
Orders
As each of misleading and deceptive conduct under s18 of the ACL and the tort of passing off rely on establishing reputation, and TRT failed to establish that it or its products had a reputation in Australia, both claims failed. The proceedings were dismissed with a costs order against TRT.
For further information, please contact:
Peter Chalk, Partner, Ashurst
peter.chalk@ashurst.com
