Woolworths’ “Honest to Goodness” campaign survives balancing act

Woolworths’ “Honest to Goodness” campaign survives balancing act

Woolworths’ “Honest to Goodness” campaign survives balancing act

In Organic Marketing Australia Pty Ltd v Woolworths Ltd [2011] FCA 2791, Katzmann J refused the application by Organic Marketing Australia (“OMA”) for an interlocutory injunction to restrain Woolworths from using the words “Honest to Goodness” in its latest advertising campaign, on the basis that the “balance of convenience” weighed heavily against such a measure.

Woolworths’ “Honest to Goodness” campaign

In early March this year, Woolworths launched a nationwide advertising campaign featuring celebrity chef Margaret Fulton, incorporating the phrase “Honest to Goodness”. In evidence, Woolworths claimed to have spent upwards of $3m promoting the campaign on television, in store, online and in newspapers and magazines.

Organic Marketing Australia’s trade mark

OMA is the registered owner in Australia of a composite trade mark (depicted directly below) consisting of the words “Honest to Goodness” in stylised font, together with an image of a tulip:

Honest to Goodness logo - Woolworths trade mark dispute

The trade mark is registered in respect of various products including meat, poultry, milk and milk products, jams, nuts and coffee, in addition to services including the retailing and wholesaling of health foods. Importantly, the words alone (i.e. “HONEST TO GOODNESS” without the stylised font and tulip device) are not currently registered as a trade mark.

According to the evidence, OMA authorised a closely related company, Purplebass Pty Ltd, to use the registered trade mark and the word mark “HONEST TO GOODNESS”  in its boutique health food business. Purplebass has selectively distributed products bearing the “Honest to Goodness” trade mark to over 350 speciality stores throughout Australia.

Interlocutory injunctions – General principles

Katzmann J confirmed that there are two main inquiries in any application for an interlocutory or temporary injunction:

  1. Whether the applicant has shown that there is a “serious question” to be tried: In this respect, the applicant must generally demonstrate a prima facie case, in the sense that the applicant has a sufficient likelihood of success in the circumstances to justify the preservation of the status quo pending the trial; and
  2. Whether the balance of convenience favours the granting of an injunction: A factor to be considered as part of this stage of the inquiry is whether damages could adequately compensate the applicant in the event that interlocutory injunctive relief is refused, but the claim ultimately made out.

Serious question to be tried

In connection with the first limb of the inquiry, Katzmann J recognised that two principal sub-issues required consideration, namely:

  • Whether Woolworths was using the “Honest to Goodness” phrase as a trade mark or “badge of origin” to distinguish its goods from those of other traders (as opposed to merely describing the goods); and
  • If so, whether the phrase is “substantially identical with” or “deceptively similar” to OMA’s registered trade mark.

In relation to the first sub-issue, Woolworths contended that:

  1. it was using the phrase purely in an adjectival or descriptive sense, and gave evidence of the dictionary definition of the phrase, Margaret Fulton’s explanation of the phrase in Woolworths’ television advertisements, and of the extensive use of the phrase by other traders;
  2. the sign it was using as a trade mark was not the words “HONEST TO GOODNESS” but either the words together with Margaret Fulton’s image or as a combination of the words “Margaret Fulton’s Honest to Goodness Family Meals”, and as such, Woolworths argued the phrase in suit could not be divorced from these accompanying branding elements.

Despite Woolworths’ submissions, Katzmann J held that there was at least a “prima facie” case that Woolworths was using the phrase as a trade mark, as the words “honest to goodness”:

  • appeared in a large script, together with “decorative flourishes in a way that might seen as a brand”, and all in Woolworths’ signature green colour;
  • are the target of the viewer’s attention; and
  • can be regarded as a “catchphrase” rather than merely a description of the meals.

Katzmann J held that Woolworths’ signs containing the words “HONEST TO GOODNESS” and OMA’s registered trade marks are “deceptively similar”. In reaching this conclusion her Honour held that it was “entirely feasible” that a consumer with an imperfect recollection would be caused to wonder about an association or affiliation between Woolworths and OMA. In rejecting Woolworths’ argument that there was nothing distinctive in the words “HONEST TO GOODNESS” alone, as distinct from the combination of the words and tulip device, Katzmann J agreed with the proposition that deceptive similarity can be established when an impugned mark uses an “essential” or “distinguishing” feature of the registered mark. Katzmann J accepted OMA’s argument that the words “honest to goodness” were the essential feature of OMA’s trade mark, as “it [was] reasonable to suppose that customers are likely to identify the products sold by reference to the words and not the [tulip] device”.

Having found that there was a serious question to be tried in relation to trade mark infringement Katzmann J moved to consider the second relevant limb of inquiry, namely, whether the balance of convenience favoured the granting of an injunction in this case.

Balance of Convenience

Despite finding that OMA had a prima facie case for trade mark infringement Katzmann J concluded that the balance of convenience weighed heavily against the grant of interlocutory relief in the circumstances as:

  • OMA had trouble identifying and quantifying the loss it could suffer without an injunction as a result of the continuation of Woolworths’ conduct, which might ultimately be held to be infringing;
  • The potential damage to Woolworths from an interlocutory injunction ultimately dissolved far outweighed the damage to OMA if no injunction was granted but its claim was ultimately successful. This damage included:
    • costs in relation to the cessation of its campaign;
    • loss of sales;
    • negative publicity;
    • loss of perishable stock;
    • loss of market share in the highly competitive supermarket industry; and
    • damage to its reputation (her Honour also accepted that Margaret Fulton might also suffer damage to her reputation should OMA’s claim not ultimately succeed).
  • Woolworths had the capacity to meet any award of damages that may be awarded in favour of OMA, whereas it was uncertain whether OMA could meet an award of damages. It was also relevant that OMA was not willing to offer any security for the undertaking; and
  • Damages would be a sufficiently adequate remedy.

On this basis, Katzmann J refused OMA’s application for an interlocutory injunction.

Since the hearing on 25 March, a mediation date of Monday 4 April 2011 has been fixed and a final hearing has been set for 18-22 July 2011. We will provide an update on these proceedings in due course.

Endnotes

  1. http://www.austlii.edu.au/au/cases/cth/FCA/2011/279.html