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Homart Pharmaceuticals Pty Ltd v Careline Australia Pty Ltd [2018] FCAFC 105 (5 July 2018)

Unsuccessful appeal by Homart against the judgement of the primary judge, Burley J restraining Homart’s use of misleading or deceptive packaging for a cosmetic product even where quite different trade marks were involved.

The decision of the primary judge is reported here

Background

Careline has, since 2008, manufactured and sold a bio-placenta cosmetic product sold in 3 and 6 ampoule containers under the trade mark CHANTELLE.  The packaging for this product had undergone some changes over the years, but Careline relied on packaging used after November 2014, an example of which is shown below:

Trademark Lawyer Chantelle Packaging Closed     Trademark Lawyer Chantelle Packaging Open

In February and March 2016, Homart commenced selling a directly competitive cosmetic product, also in 3 and 6 ampoule containers, under the trade mark CHERI. An example of the packaging is shown below:

Trademark Lawyer Cheri Packaging Closed     Trademark Lawyer Cheri Packaging Open

In May 2016 Careline’s solicitors sent letters to Homart, some of Homart’s customers and certain media outlets complaining about the CHERI product. Some employees of Careline also posted messages on WeChat.

Homart took objection to this and commenced proceedings on 13 May 2016 alleging Careline’s complaints constituted misleading or deceptive conduct. Careline filed its cross-claim on 17 May 2016 alleging Homart’s conduct in selling its CHERI product constituted misleading or deceptive conduct. At the trial, affidavits of 21 witnesses were read and most of them were cross examined with the assistance of an interpreter.

Careline primarily alleged that Homart intentionally adopted visual features for its packaging which closely resembled the CHANTELLE packaging, resulting in a representation to consumers that its product is the CHANTELLE product or made with the sponsorship or approval of the maker of the CHANTELLE product, and is otherwise associated with the CHANTELLE product or its makers.

Homart admitted that it was aware of and considered get up used by other manufacturers including Careline, but denied it intentionally adopted the visual features of the CHANTELLE product.

Primary judge

The primary judge concluded that the particular get up of the CHANTELLE product is unique and that this product had acquired a sufficient reputation in its get up (separately from the CHANTELLE brand name) amongst the relevant consumers by the time of the launch of the CHERI product. The get-up of Homart’s products contained within it a misrepresentation as to origin even though the CHÉRI Australia brand name on these products was different to the original CHANTELLE products which were replicated. The relevant misrepresentation is that a bio-placenta product with the get-up of the Homart product is the same as, or associated with, the manufacturer of the CHANTELLE bio-placenta product. The suggestion conveyed by the relevant get-up was not dispelled sufficiently by the use of the CHÉRI Australia brand name. The primary judge also found that Homart intentionally adopted a get-up for its product to gain a market advantage at the expense of Careline and for the purpose of appropriating part of the trade or reputation of Careline.

Appeal

Murphy, Gleeson and Markovic JJ found no error on the part of the primary judge and dismissed Homart’s appeal.

The primary judge gave proper attention to the level of care or attention that consumers were likely to give when considering purchase of the competing products and the Full Court did not accept the primary judge’s consideration of the price of the bio-placenta products involved error.

The absence of first-hand direct evidence of confusion from a consumer familiar with the CHANTELLE products was not significant in the circumstances of this case. It was a matter of speculation whether a complaint would have emerged during the period that the competing products were both in the market if there had been confusion. Further, the fact that the get-ups of the competing products were effectively identical apart from their brand names provides an obvious and plausible explanation for the absence of complaints.

The primary judge was entitled to find, based upon his Honour’s impression and evaluation of the evidence, that the CHANTELLE packaging was distinctive and, thus, to reject Homart’s case that Careline’s products were distinguishable by only their brand, in a sea of gold packaged cosmetic products. Indeed, the Full Court would have reached the same conclusion on the evidence. Homart did not establish any error on the part of the primary judge in reaching those conclusions based upon impression. Having identified distinctive features of that packaging, it was legitimate for his Honour to consider whether an ordinary reasonable consumer would differentiate that packaging from a range of other gold packaging. There was no error in the primary judge’s consideration of the particular features of the third party packaging and whether they exhibited the combination of distinctive features identified in the CHANTELLE packaging. The primary judge was not required to consider individual features of get-up.

The Full Court also rejected Homart’s contention that the primary judge erred in failing to take proper account of Homart’s use of the CHÉRI brand as distinguishing its bio-placenta products. It was open to the primary judge to find Careline’s packaging to be distinctive. Consequently, the primary judge was not required to find that the competing products “both were packaged in an unadorned rectangular gold prism of particular dimensions” or that the packaging was “entirely plain”. The Full Court did not accept the criticism that the primary judge’s findings confer on Careline a monopoly on unadorned coloured boxes of a particular size. Rather, it is a matter of impression whether the CHÉRI brand distinguished Homart’s products from the Careline products and it was open to the primary judge to conclude that the CHÉRI brand does not serve to differentiate Homart’s products. Indeed, having examined the packaging, the Full Court agreed with the primary judge’s impression and reasoning. The Full Court did not accept that the notion of customers seeing the “packaging but not the name” is necessarily unrealistic where the packaging bears so many similarities.

While the parties agreed that causes of confusion that are not a defendant’s fault or do not bear a sufficient connection between the impugned conduct and any confusion must be disregarded, the Full Court did not accept Homart’s contention that the primary judge should have disregarded the evidence of boxes being stacked horizontally and consumers occasionally viewing photos on mobile devices with small screens. Further, the primary judge’s references to some consumers referring to the CHANTELLE products by the shorthand “gold box” and the perceived habits of shoppers needed to be considered in their proper context. Hence, these aspects did not involve any error.

Homart contended the primary judge erred in applying the principle in the Australian Woollen Mills case that that Homart intentionally adopted the get-up for its product for the purpose of appropriating part of the trade or reputation of Careline. The Full Court indicated this argument must fail at the outset because, even if the primary judge erred in his application of Australian Woollen Mills, his Honour identified ample other bases for his conclusion that Homart had contravened section 18 of the Australian Consumer Law. The relevant principle is briefly summarised as “the rule that if a mark or get-up for goods is adopted for the purpose of appropriating part of the trade or reputation of a rival, it should be presumed to be fitted for the purpose and therefore likely to deceive or confuse, no doubt, is as just in principle as it is wholesome in tendency”. The Full Court noted there is no reason in principle why a finding of deliberate dishonesty is necessary for the application of that presumption. The borrowing of aspects of a competitor’s get-up may give rise to an inference of this kind. The Full Court found no error by the primary judge in finding by inference that Homart’s appropriation of the get-up of Careline’s product would enable Homart to gain a market advantage through its tendency to mislead or deceive consumers. While the Full Court agreed with Homart that there were errors by the primary judge in relation to some subordinate facts (particularly Homart’s change from a two tone colour scheme to one tone gold packaging), those errors were not significant as there were other matters which provided ample justification for the primary judge’s findings.

Finally, the Full Court found the primary judge had given proper consideration to the differences in the respective three-ampoule product and there was no error in the finding that Homart’s three-ampoule product was also misleading or deceptive. The Full Court did not accept that the primary judge was required to consider the hypothetical effect in the market place of an injunction affecting only the six-ampoule product before granting the injunctive relief which included the three-ampoule product.