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High Court of Fiji |
IN THE HIGH COURT OF FIJI
AT LAUTOKA
CIVIL JURISDICTION
CIVIL ACTION NO. HBJ0321 OF 2003L
BETWEEN:
CRYSTAL CLEAR MINERAL WATER (FIJI) LIMITED
Plaintiff
AND:
NATURAL WATERS OF VITI LIMITED
Defendant
AND:
FREZCO BEVERAGES LIMITED
2nd Defendant
AND:
P. MEGHJI & COMPANY LIMITED
3rd Defendant
Counsel for the Plaintiff: Mr. J. Sharma
Counsels for the Defendant: Mr. J. Apted & Ms.M. Moody
Date of Hearing: 17 February 2004
Date of Judgment: 26 February 2004
JUDGMENT
Application
This matter comes before the court by way of a Summons filed on behalf of the defendant wherein the defendant seeks pursuant to Order 18 Rule 18 of the High Court Rules and the inherent jurisdiction of the court that paragraph 7 of the plaintiff’s statement of claim be struck out.
The defendant contends that paragraph 7 and the relief sought in paragraph 5 and 6 disclose no reasonable cause of action; are scandalous, frivolous or vexatious; or otherwise an abuse of the process of the court.
These proceedings involve only the plaintiff and defendant and do not involve the 2nd or 3rd defendant.
Background
The defendant bottles and markets mineral water under the alleged brand names “FIJI” and “FIJI WATER” and done so since 1995. It has used its current packaging and labelling since 1997. The packaging and labelling has it appear from exhibits A and C to be a clear plastic bottle dominantly square in shape and having a transparent label affixed to the front and a back label affixed which has a waterfall which is then visible through the bottle and its contents. The front label has on it green foliage and some flowers together with the dominant word “FIJI” in white with a gold outline and underneath the word “FIJI” is written “NATURAL ARTESIAN WATER”.
The bottle has a dark blue cap. The 500ml bottle might be described as a square squat bottle.
The plaintiff in about 1999 commenced a pilot purified water project and in 2002 commenced extraction and bottling of mineral water for local consumption. In about November 2002 the company commenced exporting mineral water. The plaintiff has since it commenced marketing its product under the name “AQUA FIJI” used consecutively three “get-ups”. These three get-ups are all different. For the present purposes it is perhaps necessary to consider the get-ups as shown in exhibits B and C being the get-up currently in use by the plaintiff.
The plaintiff used P. Meghji & Company Limited, as distributors of its product within Fiji and used other distributors in America and Australia. The plaintiff filed its writ of summons after the defendant threatened the distributor, P. Meghji & Company Limited, with a claim for damages. They continued to stock, sell or distribute the “AQUA FIJI” product. The defendant alleging that “AQUA FIJI” was engaging in actionable passing off, misleading and deceptive conduct under section 54 of the Fair Trading Decree and actual or potential trademark.
The Claim
Paragraph 7 of the statement of claim states: -
“The defendant has by threatening the plaintiff’s distributors with legal action and by wrongfully advising them not to distribute the plaintiff’s product with the word FIJI in its label has unlawfully interfered with the plaintiff’s contract with its distributor, and has caused the plaintiff damages.”
It is this clause that is the subject of the application before the court together with the claims detailed in paragraphs 5 and 6 which are:-
“An injunction restraining the defendant, whether by its servants, agents, officers or otherwise interfering with the plaintiff’s contract with its distributor.
Seeks damages for interference with the contract.”
The defendant submits that the principles to be applied by the court when considering an application to strike out pleadings under Order 18 of the High Court Rules and the inherent jurisdiction of the court include: -
(a) A reasonable cause of action means a cause of action of with some chance of success when only the allegations and pleadings are considered – Lord Pearson in Drummond-Jackson v British Medical Association [1970] WLR 688.
Considering this principle, it is difficult to accept that when one looks at clause 7 and the relief sought pursuant to it on its own without more than the pleadings, that it does not provide for a reasonable cause of action.
(b) “Frivolous and vexatious” are said to mean cases which are obviously frivolous or vexatious, or obviously unsustainable – Lindley L.J. in Attorney-General of Duchy of Lancaster v L. & N. W. Ry [1892] UKLawRpCh 134; [1892] 3 Ch. 274 at 277.
To consider if claim in paragraph 7 of the writ is “obviously unsustainable”; requires a more detailed analysis of the law as to which see below.
(c) Abuse of process “connotes that the process of the court must be used bona fide and properly and must not be abused. The court will prevent the improper use of its machinery, and will, in a proper case, summarily prevent its machinery from being used as a means of vexation and oppression in the process of litigation” (see Castro v Murray [1854] EngR 673; (1875) 10 Ex. 213.
Again, to properly consider if the process of the court is being used bona fide, requires an analysis of the law of passing off and an application of the facts to that law as to which see below.
The defendant also quite correctly draws the court’s attention to the words of Lindley MR in Hubbuck v. Wilkinson [1898] UKLawRpKQB 176; [1899] 1 Q.B. 86 where he said: -
“It is only in plain and obvious cases that a recourse should be hard to the summary process under this rule.”
Clearly, great care must be taken in exercising the court’s jurisdiction to strike out the claim being made by the plaintiff against the defendant.
The plaintiff relevantly seeks an injunction against the defendant to restrain it from threatening its distributors with legal action for distributing its product, a cause of action that quite clearly could, if improperly taken, be used by the defendant to adversely interfere with the plaintiff’s business. The plaintiff seeks an injunction with respect to the intentional interference by the defendant with the plaintiff’s contractual relations with its distributor.
In James v Commonwealth [1939] HCA 9; (1939) 62 C.L.R. 339 at 373, Dixon J. said: -
“I do not think that a bona fide assertion as to the state of the law and an intention to resort to the courts made known to the third party can be considered a wrongful inducement or procurement...
To treat a proposal or threat to institute proceedings as a wrongful procurement of a breach of duty is to ignore the fact that, assuming bona fides, the law always countenances resort to the courts, whether by criminal or civil process, as the proper means of determining any assertion of right.
An intention to put the law in motion cannot be considered a wrongful procurement or inducement, simply because it turns out that the legal position maintained was ill founded.” (emphasis added).
The critical words in the extract quoted are clearly those that have been emphasized. The actions of the defendant must be bona fide.
There must be an honest and reasonable belief in the mind of the defendant in writing to the distributor and threatening legal action that there had been: -
(a) actionable passing off at common law;
(b) misleading and deceptive conduct under section 54 of the Fair Trading Decree;
(c) actual or potential trademark infringement.
It is necessary therefore to consider whether in the circumstances of this matter the defendant was acting bona fide in alleging passing off at common law, misleading and deceptive conduct and trademark infringements.
Passing Off
The defendant has referred the court to the landmark authorities with respect to passing off. Lord Halsbury in Reddaway the Banham [1896] UKLawRpAC 18; (1896) 13 RPC 218 at 224:-
“For myself, I believe the principle of law may be very plainly stated, and that is that nobody has any right to represent his goods as the goods of somebody else. How far the use of particular words, signs, or pictures does or does not come up to the proposition which I have enunciated in each particular case, must always be a question of evidence, and the more simple the phraseology, the more like it is to a mere description of the article sold, the greater becomes the difficulty of proof, but if the proof establishes the fact the legal consequence appears to follow.”
Clearly, the burden rests with the defendant to show that the plaintiff has in fact been guilty of representing the “AQUA FIJI” product as the goods of the defendant.
Lord Parker in A G Spalding & Bros v A W Gamage Ltd (1915) 32 RPC 273 said:-
“The basis of a passing off action being a false representation by the defendant, it must be proved in each case as a fact that the false representation was made. It may, of course, have been made in express words, but cases of express misrepresentation of this sort are rare. The more common case is, where the representation is implied in the use or imitation of a mark, trade name, or get-up with which the goods of another are associated in the minds of the public, or of a particular class of the public. In such cases the point to be decided is whether, having regard to all the circumstances of the case, the use by defendant in connection with the goods of the mark, name, or get-up in question impliedly represents such goods to be the goods of the plaintiff, or the goods of plaintiff of a particular class or quality, or as it is sometimes put, whether the defendant’s use of such mark, name or get-up is calculated to deceive. It would, however, be impossible to enumerate or classify all the possible ways in which a name may make a false representation relied upon.”
The essential element here of course is, it must be “calculated to deceive”. The burden must rest with the defendant to show that the plaintiff has devised each get-up and/or name in such a way as is calculated to deceive a consumer.
Trademarks Act
The word “FIJI” as appearing on the defendant’s label being a geographical name cannot be protected by virtue by section 8 of the Trademarks Act. However, section 60 of that Act provides that nothing in the Act affects the rights a party might have with respect to an alleged passing off of goods as those of another.
Misleading and Deceptive Conduct
Section 54 of the Fair Trading Act provides: -
“A person shall not, in trade or commerce engage in conduct that is misleading or deceptive or is likely to mislead or deceive.”
The provisions contained in the Fair Trading Decree are relevantly analogous to those in the respective provisions of the Australian Trade Practices Act and assistance might therefore be sought from the authorities, the Federal Court and High Court of Australia.
Perhaps the most relevant consideration is that in Equity Access Pty Ltd v Westpac Banking Corporation [1989] FCA 506; (1990) ATPR 40-994 where Mr. Justice Hill of the Federal Court of Australia summarized the principles as follows: -
“1. For conduct to be misleading or deceptive the conduct must convey in all the circumstances of the case a misrepresentation...
The Evidence
The dominant evidence before the court is that comprising exhibits A, B, C and D, that is, the respective get-ups of the defendant and the plaintiff.
The defendants get-up is, as stated earlier, a squat square bottle with a dark blue cap bearing a transparent front label with the words “FIJI” outlined in gold appearing very dominantly on the label. The label has some flowers and greenery. The back label is seen to the front label and the bottle contents and contains greenery, a waterfall and a body of water. The back label also contains other relevant material with respect to be analysis of the contents and the description of the origin of the contents.
The plaintiff’s get-up is, with respect to the 500ml bottle, a longer, thinner, square in part bottle with a pale blue cap. It bears a wrap around opaque label, dominantly dark blue in color bearing prominently on the top of the label the word “AQUA” and below that in about the center of the label in smaller and different font the word “Fiji”. The label depicts a body of water and land contains birds, butterflies and greenery. It bears on its front the words “NATURAL MINERAL WATER” and on various other aspects of the label other material as to the analysis of the contents and the description of the contents.
The comparisons that are made are made with respect to get-up No. 3 with respect to the plaintiff’s product. It is only this get-up that has been considered as it, is the current and relevant get-up.
Whilst on the defendant’s label the most prominent word is the word “FIJI” on the plaintiff’s label the most prominent word is the word “AQUA” with the word “FIJI” being quite secondary.
With respect to the website the evidence before the court is that the website has been significantly and materially altered and that the alleged plagiarized material has been removed.
The plaintiff submits that the website was prepared by the third party on behalf of the plaintiff and immediately it became known that allegations were being made by the defendant it caused it to be cleansed of the offending material. There is no evidence from the defendant in opposition to this submission.
Conclusion
For the defendant to obtain the right to threaten the plaintiff’s distributor with legal proceedings, it must be acting bona fide and in accordance with an honest and reasonable belief.
For a finding that was acting bona fide and for it to have an honest and reasonable belief, it is necessary for the court to be satisfied that the plaintiff was in fact passing off its product as that of the defendant and that the plaintiff was engaging in misleading and deceptive conduct in the marketing of its product and further that the plaintiff was actually or potentially infringing the defendant’s trademark in the marketing of its product.
In applying the required considerations of the court with respect to passing off, section 54 of the Fair Trading Decree and the provisions of the Trademarks Act, I am not satisfied that there is sufficient similarity between the labels and the get-up generally of the plaintiff with that of the defendant to be able to conclude that the plaintiff marketed its product in such a way that was calculated to deceive the public nor am I satisfied that the public was in fact deceived. The get-ups are in the opinion of the court, particularly with respect to the 500ml bottle, completely different. When reference is made to the plaintiff’s get-up reference is at all times made to get-up No. 3 that being the get-up currently in use.
The evolution that quite clearly went on with the packaging of the plaintiff’s product throughout 2003 has seen a get-up which is distinctive and, in the opinion of the court, not calculated to deceive the public as being the get-up of the defendant.
Orders
JOHN CONNORS
JUDGE
AT LAUTOKA
26 FEBRUARY, 2004
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URL: http://www.paclii.org/fj/cases/FJHC/2004/380.html