Passing off: The Donaghys case

The recent High Court decision in Donaghys Industries Ltd v ITW NZ Ltd demonstrates the dangers of adopting a get-up for a product that is just too close to that used by a rival.

In this case, the plaintiff, Donaghys, sought an interim injunction that would restrain the defendants, ITW, from manufacturing, marketing, promoting or selling a builders' line product in a get-up that it alleged was similar to its own product's get-up.

The case involved builders' line, which is used by builders and others to achieve straight lines when building, laying bricks and doing other tasks.

Donaghys' builders' line had for many years been identified by a predominantly blue label wrapped around the line that itself had been wrapped on to a black plastic stick. ITW initially entered the builders' line market by selling cord wound onto a reel, but in 1993 choose to market a product that was wound onto a plastic stick.

In September 2003, Donaghys became aware that ITW's product was being sold wound onto a black plastic stick and with a label wound circumferentially around the middle of the line. The predominant background colour of the ITW label was blue.

Donaghys objected to this form of get-up and sought an interim injunction based on allegations of passing off and breach of section 9 of the Fair Trading Act 1986 (misleading and deceptive conduct in trade).

Justice Nicholson expressed the view early in the hearing of the injunction application that he considered that Donaghys had satisfied him that there was a serious issue to be tried on both causes of action relied upon and that, on applying the usual balance of convenience and overall interests of justice considerations, an interim injunction should be issued because of the similarity in appearance of the labels used by Donaghys and ITW.

However, Nicholson J went further and indicated that he considered that a blanket prohibition on the sale of builders' line by ITW was inappropriate if the label on the product was altered to reduce the likelihood of confusion and misrepresentation by changing the background colour from blue to red and changing the colour of the black stick on which the line was wound from black to grey.

What is unusual about this particular case is not the fact that ITW was restrained from engaging in conduct that was potentially misleading and/or deceptive, but rather that the Judge at an interlocutory stage of the proceeding gave his views as to the necessary steps that the defendant could take to avoid the likelihood of any confusion between the respective products at issue.

It has often been thought unwise for a Court to attempt to predict whether a particular course of conduct (e.g. use of a particular get-up) is likely to be confusing. The usual reason why it is said that Judges should not make such suggestions was outlined by Harman J in Britain Publishing Co (London) Ltd v Trade & Commercial Press, namely:

"It is very difficult to tell what is right and what is not until you can see whether there is confusion or is not confusion . . . . The Court cannot in advance say what will be enough and will not be enough because it is very difficult to know how pig-headed the public may be".

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For more information on trade mark law, please email or call Garry Williams on 64 9 916 8661.