Hardware retailer Mitre 10 sought an interlocutory injunction to prevent future competitor Masters (backed by Woolworths, the retail conglomerate famous, among other things, for the 'Woolworths Green' dispute highlighted in Woolworths Limited v BP plc (No 2) [2006] FCAFC 132) using what is claimed to be a confusingly similar trade dress ... similar colours in badging of its stores and in advertising.
Mitre 10 alleged that if Masters uses that get-up there is a likelihood - in breach of Schedule 2 of the Competition and Consumer Act 2010 (Cth) - that consumers will believe that -
a) Masters’ stores are Mitre 10 stores;Mitre 10 claims that the confusion is deliberate: "Masters is proposing to pass off its stores as those of Mitre 10, and its business as having a connection or affiliation with Mitre 10".
b) Masters’ stores are advertised, promoted and operated with the licence or approval of Mitre 10; and
c) The Masters’ business is the Mitre 10 business which has the sponsorship or approval of Mitre 10 or is affiliated with it.
Mitre 10 contends that
its substantial investment in creating its brand by reference to the fourfold colour scheme would be eroded if Masters could enter the same market using the same scheme. It argues that damage would be virtually impossible to quantify, whereas damage to Masters, because it has not yet commenced trading and has no effective goodwill, would be much easier to quantify – that is, in terms of delay and alteration costs.Masters on the other hand
contends that its work for two and a half years in formulating its corporate livery would have to be revisited. Advertising and promotion already in train, and already booked, will have to cease or be cancelled. Employees engaged for the proposed first tranche of sites will still have to be paid whilst the delay occurs. Expected profits from the new stores will be deferred, meaning that recovery of incurred development and running costs will also be deferred. New development applications will need to be made to planning authorities for those stores where permissions have been granted. It further argues that the practical effect of an interlocutory injunction would be that Masters would need to alter its colour scheme pending final trial, and once it does so, it is unlikely to revert to its original, chosen scheme should it later succeed at trial. Thus it argues that an interlocutory injunction is likely to be final relief. Finally, it claims that a delay and the publicity accompanying an interrupted launch of its new venture will cause reputational damage to its nascent brand. It asserts that damages would be very difficult to assess and would not be an adequate remedy.Logan J comments that -
On the evidence before me, I entertain real reservations that the so-called fourfold colour scheme, said to comprise the 'Mitre 10 colours', is so distinctive in the minds of consumers of the Mitre 10 business, that its use by another trader in the same or similar goods is likely to mislead or deceive consumers in the way contended. ...
I think there is much force in Masters’ argument that, in the face of clearly different names and marks labelling the rival stores and their associated marketing, any misconception that a Masters’ store is a Mitre 10 store could not readily be attributed to the ‘ordinary and reasonable members of the classes of prospective purchasers’. Analysis of this issue, of course, is influenced by the matters set out above that point, in my view, to a relatively low degree of distinctiveness which the so-called Mitre 10 colours have probably acquired as a secondary brand of Mitre 10.
My view is further influenced by the real prospect that Masters’ entrance into the market will be accompanied by significant publicity making it plain to a large body of consumers that Masters is a new player in the market, and not merely a new emanation of an existing player, Mitre 10.
Mitre 10 emphasised the fact that many consumers are used to seeing, in the name of a Mitre 10 store, multiple names (ie. including the owner’s name, or locality) so that the appearance of ‘Masters’ will not dispel the assumption, engendered by the use of the fourfold colour scheme, that the store is affiliated with Mitre 10. I am not persuaded there is much force in this argument. Where it appears, ‘Masters’ is accompanied by a very distinctive logo and, obviously, it does not appear as a component of a multiple name which also includes ‘Mitre 10’, as is the case in Mitre 10 stores.
In all the circumstances, I am not persuaded that Mitre 10 has demonstrated a sufficient likelihood of success on its causes of action to justify the prevention by interlocutory injunction of Masters employing its proposed colour scheme on its stores and generally in its get-up. ...
Even if I were persuaded to a contrary view, but still assuming a likelihood of success at the lower end of the range, I do not consider that the balance of convenience favours the grant of an interlocutory injunction.
Mitre 10 contends that its substantial investment in creating its brand by reference to the fourfold colour scheme would be eroded if Masters could enter the same market using the same scheme. It argues that damage would be virtually impossible to quantify, whereas damage to Masters, because it has not yet commenced trading and has no effective goodwill, would be much easier to quantify – that is, in terms of delay and alteration costs.
Masters contends that its work for two and a half years in formulating its corporate livery would have to be revisited. Advertising and promotion already in train, and already booked, will have to cease or be cancelled. Employees engaged for the proposed first tranche of sites will still have to be paid whilst the delay occurs. Expected profits from the new stores will be deferred, meaning that recovery of incurred development and running costs will also be deferred. New development applications will need to be made to planning authorities for those stores where permissions have been granted. It further argues that the practical effect of an interlocutory injunction would be that Masters would need to alter its colour scheme pending final trial, and once it does so, it is unlikely to revert to its original, chosen scheme should it later succeed at trial. Thus it argues that an interlocutory injunction is likely to be final relief. Finally, it claims that a delay and the publicity accompanying an interrupted launch of its new venture will cause reputational damage to its nascent brand. It asserts that damages would be very difficult to assess and would not be an adequate remedy.
I do not propose to deal with this issue at length. But, in my view, the risk of damage to the goodwill of Mitre 10, should I not grant the injunction, is outweighed by the risk of damage to Masters through the probable delay that would occur to the well publicised launch of its new venture in the Australian market if I were to grant the injunction. I find the arguments raised by Masters on this question to be more persuasive than those of Mitre 10, in part because of the view I have formed as to the likely degree to which its goodwill is dependant upon its use of the ‘Mitre 10 colours’ to the exclusion of others.
