Case Notes, Passing Off, Trade practices

Phone book wars – Round 12 to PDC

The seemingly never-ending battle between Telstra and PDC over phone directories has been the subject of four published decisions of the Trade Marks Office, seven of the Federal Court (including one appeal to the Full Court) and one unsuccessful application for special leave to the High Court.  If only all litigants were this persistent!

Earlier fights have concerned whether copyright subsists in phone directories (it doesn’t) and whether certain trade marks of the parties were registrable in relation to directories including YELLOW and YOU’RE LOCAL, WE’RE LOCAL (they’re not).

The latest round concerned the use by PDC of certain trade indicia (in particular the colour yellow) on its print directories, its website and a mobile phone app which Telstra claimed amounted to passing off and breaches of the relevant trade practice legislation.

PDC, by cross-claim, alleged that Telstra had itself engaged in misleading or deceptive conduct in some comparative advertising in which it (Telstra) claimed that only 2% of consumers used the relevant PDC directory while 57% used the Yellow Pages.  That cross-claim was successful but is not discussed any further in this post.

Telstra’s claims were dismissed

Murphy J was not satisfied that the use of the relevant indicia gave rise to the impression that PDC was, or was associated with (etc – you know the usual claims), Telstra.

His Honour considered that while Telstra had some reputation in the colour yellow, the association in the minds of consumers was not strong.  He listed four primary reasons for this finding (at [15]):

“(a) yellow is not distinctive in itself, being a colour widely used on products and services;

(b)     yellow is internationally recognised as a standard colour of classified directories and to some extent was so recognised by Australian consumers;

(c)     Telstra only ever used the colour yellow coupled with its well-recognised Yellow Pages Trade Marks including the Walking Fingers, and never independently; and

(d)     Telstra’s use of yellow on its directory covers after 1996 was inconsistent and declined over time.”

His Honour did not accept that the adoption of a yellow cover for the PDC directories was a deliberate attempt to deceive consumers.  He considered PDC did “enough” to distinguish its directories from those of Telstra.

The initial judgment  omitted full consideration of the Telstra’s claims insofar as they related to the PDC website and mobile app.  This was addressed in a supplementary set of reasons at [2014] FCA 741.  Those claims were dismissed for essentially the same reasons.

A couple of interesting points arise from the judgment:

A significant proportion of the relevant class must be misled

In making these findings, Murphy J noted a difference in the authorities as to whether there was a requirement that “a significant number of the members of the target class were misled or deceived.”  He referred to Finkelstein J’s decision in .au Domain Administration Ltd v Domain Names Australia Pty Ltd (2004) ALR 521 where his Honour said, at [21]-[26], that this requirement had been wrongly imported from the law of passing off and is not relevant to s 52 of the TPA.  Murphy J, while attracted to Finkelstein J’s view, noted that there had been several Full Court decisions since then which “maintained the approach that it is necessary to establish that a ‘not insignificant’ proportion of the class are likely to have been misled or deceived.”  He considered this is consistent with the High Court’s decision in Campomar Sociedad, Limitada v Nike International Ltd (2000) 202 CLR 45.

Intention is relevant

It is now uncontroversial that the intention of respondents is relevant to the question of whether impugned conduct amounted to passing off or was likely to mislead or deceive.  Its relevance, however, is confined to an evidentiary role.  That is, the fact of an intention to deceive is evidence pointing to the fact (or likelihood) of deception – but its only the latter that matters.  Deception (or the likelihood of it) is enough, even without intention: see, for example, Google Inc v ACCC (2013) 294 ALR 404 at [9] per French CJ, Crennan and Kiefel JJ.

The respondents “took yellow from the get-up of Telstra’s directories” in an effort to attract legitimacy

In what is likely to be considered a controversial aspect of his decision, Murphy J found that PDC:

a. understood that using yellow covers on its directories would make them look more similar to Telstra’s directories;

b. considered that yellow was an essential part of Telstra’s get up and understood that Telstra had a substantial reputation in yellow (c.f. the judge’s own findings regarding that reputation set out above); and

c. after struggling to achieve credibility in the market for two years, decided to adopt to colour yellow to make their directories appear more orthodox and official.

His Honour considered that the evidence of PDC’s directors that they had no regard to Telstra’s use of yellow covers when they adopted yellow for their own directories was “implausible.”

He considered that the evidence supported three reasons for PDC’s adoption of yellow.  First, yellow was widely used by similar directories in the United States and in Australia and they considered yellow to be a “natural choice” for directories.  Secondly, PDC wanted to have a “more consistent and cleaner look” on their directory covers (though it is unclear from the judgment why this led to the adoption of yellow.  Thirdly, PDC wanted “to attract some of the legitimacy of yellow as an element of Telstra’s get up.”  He said: “In part the respondents took yellow from the get up of Telstra’s directories in an effort to attract the legitimacy that might bring to its directories.”

Adopting yellow covers for its directories in these circumstances did not, however, amount to an intention to deceive.  His Honour pointed out that the “authorities are replete with examples where traders ‘sail close to the wind’ by copying elements of a competitor’s get up, but maintain sufficient differences such that misleading or deceptive conduct or passing off cannot be made out.”

Indeed they are.  Telstra joins a long list of applicants who have failed in passing off/trade practices claims against respondents who have (sometimes deliberately) appropriated some elements of their trade indicia but have done enough to avoid confusion.  See, for example,  Nutrientwater Pty Ltd v Baco Pty Ltd (No 2) [2010] FCA 304; Yarra Valley Dairy Pty Ltd v Lemnos Foods Pty Ltd (2010) 191 FCR 297; Mars Australia Pty Ltd v Sweet Rewards Pty Ltd (2009) 81 IPR 354, and on appeal [2009] 84 IPR 12.

This case highlights, yet again, the significant hurdles faced by applicants in passing off / breach of ACL cases based on similar trade indicia.




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