COURTCWDS IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY GENERAL DIVISION WILCOX J HRNG Trade Practices - Alleged misleading conduct - Television advertisement for insect spray - Allegation that advertisement suggests a connection with another manufacturer - Presenter previously endorsed applicant's product - Whether advertisement sufficiently conveys that he is now endorsing another company's product.
Trade Practices Act 1974, s.52 ORDER SYDNEY, 5 and 7 September 1994
#DATE 14:10:1994 #ADD 23:5:1995 Counsel for the Applicant: D K Catterns QC and R Cobden Solicitors for the Applicant: Tress Cocks and Maddox Counsel for the Respondent: T Simos QC, D M Yates and R Alkadamani Solicitors for the Respondent: Blake Dawson Waldron JUDGE1 THE COURT ORDERS THAT:
1. The Application be dismissed. 2. The applicant pay the respondent's costs. NOTE: Settlement and entry of orders is dealt with in Order 37 of the Federal Court Rules. WILCOX J This case is a sequel to earlier litigation between the same parties decided by Davies J: see R and C Products Pty Limited v S C Johnson and Sons Pty Limited (1993) 42 FCR 188.
2. Both parties manufacture and distribute insect sprays. R and C trades as "Samuel Taylor". Its product is called "Mortein". S C Johnson produces "Raid". "Mortein" has been on the market for many years. It has been the subject of many television advertising campaigns. During the period 1969 to 1981, R and C used a radio personality, John Laws, in many of its television commercials. These commercials featured shots of Mr Laws demonstrating the use of "Mortein" whilst uttering laudatory observations. Each commercial ended with Mr Laws saying: "When you are on a good thing, stick to it". 3. It is clear, both from the evidence in this case and the findings of Davies J, that Mr Laws' "Mortein" advertisements lingered in the public memory. S C Johnson decided to capitalise on the association by using Mr Laws in television commercials for "Raid". R and C commenced the earlier proceeding, arguing that the "Raid" advertisements were misleading. S C Johnson altered the advertisement by deleting certain words and substituting others. However, R and C maintained that the alterations did not go far enough; that the text would give viewers the impression that there was an association between "Raid" and the manufacturer and distributor of "Mortein". That was not, of course, the fact; there is no association between S C Johnson and R and C. 4. The question whether there was an implied association was the issue Davies J had to determine. He was asked to do so for the purposes of both s.52 of the Trade Practices Act 1974 and the law of passing off. Davies J dealt with both causes of action, although he said at 189 that, in the particular case, it was doubtful whether there is "any practical difference between the operation of the provisions of s.52 of the Trade Practices Act and the operation of the common law principles of passing off". "What is essential", he said at 192, "before it can be said that there is a misrepresentation caused by the appropriation of concepts developed by a trader, is that those concepts or elements thereof have been identified in a special way with that trader in the minds of the members of the public". At 197 Davies J set out the script of the advertisement that S C Johnson wished to use, the words all to be spoken by Mr Laws: "'Raid', it's fast, it's effective and that's why I've switched to new Raid Fast Knock-down. University tests prove that nothing kills flies faster than Fast Knock-down Raid. Raid gives you maximum killing power for family protection against disease carrying flies, and this accurate trigger cap leaves absolutely no mess on your fingers, which makes new Raid Fast Knock-Down a better product. So when you find a better thing, switch to it." 5. At 197-198 Davies J said "there can be no real doubt that Mr Laws is associated in the minds of many members of the public with 'Mortein' and thereby with the business and goodwill of its manufacturer and distributor. This was precisely why Mr Laws was chosen by the respondent to present the advertisments for 'Raid'. It wished to obtain the benefit of an explicit or implicit statement from Mr Laws that 'Raid', and not 'Mortein', was his preferred insect spray". 6. Davies J went on to refer to evidence concerning the use of the tag: "When you are on a good thing, stick to it." He commented, at 199, that he was satisfied that two elements of the "Raid" advertisement, the use of Mr Laws as presenter and the play upon the "Mortein" slogan, "intruded into elements of 'Mortein's' advertising that were peculiarly associated with 'Mortein' in the minds of at least a significant proportion of the public". He said at 200 that the "intent was not to portray 'Raid' as 'Mortein'", but "to use elements of 'Mortein's' advertising such that would cause the public to transfer its loyalty from 'Mortein' to 'Raid'". Dealing with the critical issue, at 201, Davies J pointed out that the proposed script contained: "no explicit attack upon 'Mortein'. It seems to me to be the type of advertisement which the manufacturer or distributor of 'Mortein' might be expected to produce had it developed a new product which it wished to put upon the market. The terms of the presentation are not incompatible with an advertisement which could be put out by the manufacturer and distributor of 'Mortein'. On the whole, it appears to me that, through the use of John Laws as a presenter and the play upon the 'Mortein' slogan, the advertisements evoke a connection with the manufacturer and distributor of 'Mortein' and would thereby be likely to mislead or deceive a significant number of consumers." 7. His Honour restrained S C Johnson from advertising in that form. 8. S C Johnson subsequently revised the script of its proposed advertisements. It maintained its wish to use Mr Laws in the commercials. The advertising agents' reports and internal memoranda that are in evidence show this was for the reason identified by Davies J. These documents also reveal that, whilst S C Johnson and its advertising agents realised that the script must distance Mr Laws from "Mortein", they were anxious not to evoke viewer sympathy for "Mortein" by "rubbing in" Mr Laws' desertion of the product he had so long fulsomely endorsed. In the end, they settled on a script for a 30 second commercial that took this form: "Last summer Raid became the fastest growing brand of insect killer in Australia ... just as I believed it would. SC Johnson showed me the university tests .... that clearly prove that nothing can knock down filthy disease carrying flies faster than .... (bug) Raid. .... Raid Fast Knockdown .... it's one of the reasons I switched companies. And Raids accurate trigger cap leaves absolutely no mess on your fingers ... and that's ... maximum family protection. So when you find a better thing ... switch to it." 9. S C Johnson also adopted a script for a 15 second commercial that reproduces the essential features of the 30 second advertisement, including the last line. Counsel agree that nothing turns on the differences between the two advertisements; they stand or fall together. 10. R and C commenced this proceeding on 17 November 1993, shortly after Samuel Johnson commenced to use the new script. After the proceeding was commenced, R and C instructed a market research company to conduct a survey. This was done over four weekends in May and June 1994, 200 Sydney residents being interviewed in their homes. The procedure adopted by the interviewers was to show the interviewee a 12 minute videotape containing items from the previous Wednesday night's television news interspersed with five commercials, one of which was that for "Raid". The interviewee was then asked a series of questions. The responses of the interviewees were aggregated into findings set out in a report compiled for R and C by the market research company. 11. The report reveals that 96% of the respondents recalled the "Raid" advertisement when questioned immediately after viewing the videotape - 76% spontaneously and 20% after prompting. But only 87% of them remembered it as a "Raid" advertisement; 2% thought it was a "Mortein" advertisement; 3% named another brand of insect spray; and 8% could not name a brand. Respondents who recalled the advertisement were asked to describe everything they remembered seeing or hearing. Seventy-four percent mentioned Mr Laws. Many recalled particular things said or done by him. Five percent referred to him changing from "Mortein"; 4% mentioned that he switched companies; 1%, apparently two people, were unkind enough to suggest he did this to get more money. One percent saw the "Raid" advertisement as "anti-Mortein". 12. The people who correctly identified the commercial as one for "Raid" were asked what other fly sprays the manufacturer made. The form of the question was objectionable because it suggested that the manufacturer did in fact make other fly sprays; a suggestion that was incorrect in relation to "Raid". Even so, only 5% of respondents thought that the manufacturer of "Raid" also made "Mortein". Four percent named other brands. Eight percent, said "none" and 83% did not know. 13. The people who thought that the manufacturer of "Raid" also made "Mortein" were asked their reasons. Two of them said: "John Laws did the Mortein ad". One said: "That's what they do - if a brand falls off, they change the name". The other five gave reasons irrelevant to this case. 14. Counsel for R and C say that the question I have to decide is whether the changes from the advertisement that was considered by Davies J are sufficient to remove the misleading impression existing in the earlier version. In practice, the issue comes down to that. But I agree with counsel for S C Johnson that it is more correct to say that the issue in this case is the same as that considered by Davies J: does the advertisement convey the impression that "Raid" is associated with "Mortein"? 15. Counsel for R and C submit that the subject advertisement still does not sufficiently divorce "Raid" from "Mortein". They say even this advertisement, to use the words of Davies J, "could be put out by the manufacturer and distributor of Mortein". Counsel contend that the oral reference to S C Johnson, and a visual "turn up" at the end of the advertisement showing the company's name, are neutral; few members of the public would know the identity of either manufacturer. The change in the script from switching products to switching companies is too subtle and legalistic to affect consumers, they say; especially when, what counsel call, the "powerful slogan" at the end refers to products. 16. There is no evidence concerning consumer awareness of the identity of either manufacturer. In the absence of evidence, I would not assume a high awareness rate. Consequently, I agree with counsel that the references to the name, S C Johnson, do little to dispel any impression that the advertisement might otherwise convey as to an association between "Raid" and the manufacturer of "Mortein". But I do not think that, in its present form, the advertisement does convey that impression. 17. The advertisement makes no direct reference to "Mortein". The only reference is an indirect one, through Mr Laws. It arises because of his close association with "Mortein" from 1969 to 1981. Because of public recollection of this association, once S C Johnson decided to use Mr Laws, to avoid public misunderstanding, it had to make plain that there was no connection between "Mortein" and "Raid". Davies J held that the previous advertisement did not do this. But I think the new advertisement does. In contrast to the previous advertisement, where Mr Laws spoke of switching to a particular new product, this script has Mr Laws saying he "switched companies". These words convey, as clearly as words can, the information that he has deserted one client in favour of another. 18. I am conscious of the fact that spoken words may convey an impression different to one gained from reading the words in transcript. Important words may be missed by viewers, perhaps because they are spoken too softly or badly articulated. Although counsel had shown a videotape of the advertisement in court, with these matters in mind I replayed it in chambers. The replaying confirmed my recollection that the statement, "I switched companies", is clearly audible. I think any viewer paying normal attention to the advertisement would pick up this statement and realise that Mr Laws was saying he was now promoting the product of a different company. 19. Of course, not all viewers pay normal attention to television commercials. There was evidence of a couple of viewers being confused. Counsel for R and C also rely on the three people who thought the manufacturer of "Raid" made "Mortein", for reasons involving Mr Laws. But the question whether a particular advertisement constitutes misleading or deceptive conduct, or a passing off, is not to be answered by reference to the confusion suffered by a handful of people. Gibbs CJ observed, in Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd (1982) 149 CLR 191 at 199, that s.52 does not specify "what persons or class of persons should be considered as the possible victims for the purpose of deciding whether conduct is misleading or deceptive or likely to mislead or deceive". But he went on: "It seems clear enough that consideration must be given to the class of consumers likely to be affected by the conduct. Although it is true, as has often been said, that ordinarily a class of consumers may include the inexperienced as well as the experienced, and the gullible as well as the astute, the section must in my opinion by regarded as contemplating the effect of the conduct on reasonable members of the class." 20. A Full Court of this Court quoted this passage in Sutton v A J Thompson Pty Ltd (1987) 73 ALR 233 at 240, adding the observation that the Chief Justice was speaking of an allegation that the respondent's conduct had been such as to mislead the buying public and that, in such a case, "although the reaction of individual customers may be relevant, the ultimate test must be objective". 21. The present case, of course, is one where the allegation is that the television advertisement is such as to mislead the buying public. Accordingly, I must assess the allegation in an objective way, having regard to its effect on normally attentive viewers of the advertisement. I must take into account that this class of viewers includes the inexperienced and gullible. Nonetheless, if the position is, as I believe, that the advertisement will mislead only those viewers who fail to pay ordinary attention to its contents, it cannot be regarded as misleading. 22. The application should be dismissed. The applicant must pay the respondent's costs.