Australia: How Sweet It Is? Wonderment, Confusion And The Relevance Of Expert Evidence

Cadbury Schweppes Pty Ltd v Darrell Lea Chocolate Shops Pty Ltd (No 8) [2008] FCA 470

• The use of the colour purple on a rival confectionary product not misleading in circumstances where Cadbury's brand name used prominently.
• Evidence of opinions based on market research and expert appreciation of consumer behaviour would rarely be of assistance in litigation.
• Experts all lacked practical experience in the retail confectionery market and there was no evidence that they had observed actual consumer behaviour.

This hopefully will be the final chapter in this protracted and hard-fought litigation which shows how strongly companies will act to protect their brand identity. For the second time, Justice Heerey has now decided that use the colour of the colour purple by Darrell Lea is legally permissible, as long as it does not convey to the reasonable consumer that it had some connection with Cadbury.

Each decision will depend upon its facts. In this case, the evidence established that consumers knew that purple was connected with a number of brands, that Darrell Lea's name appeared on its product and that consumers seeing chocolate products in purple wrapping in a Darrell Lea shop would not be misled into thinking it was a Cadbury product.

The history of the litigation

Cadbury brought proceedings against Darrell Lea alleging that the use by Darrell Lea of a shade of the colour purple in connection with its chocolate products amounted to the tort of passing off and also misleading and deceptive conduct in contravention of sections 52 and 53(c) and (d) of the Trade Practices Act.

A subsequent decision favour of Darrell Lea in Cadbury Schweppes Pty Ltd v Darrell Lea Chocolate Shops Pty Ltd (No 4) (2006) 69 IPR 23 (the earlier judgment) was appealed to the Full Court which held that evidence sought to be adduced by Cadbury from three expert witnesses was wrongly excluded: Cadbury Schweppes Pty Ltd v Darrell Lea Chocolate Shops Pty Ltd (2007) 72 IPR 261 (Full Court I ). Cadbury sought a new trial but the Full Court directed that it be remitted back to the trial judge for further hearing. Cadbury applied to the High Court for special leave to appeal against the Full Court's remission of the matter to the primary judge. The application was refused: Cadbury Schweppes Pty Ltd v Darrell Lea Chocolate Shops Pty Ltd [2007] HCA Trans 468.

The further hearing

At the further hearing, Justice Heerey thought that a convenient way to proceed would be to revisit his findings of the earlier judgment, which he stressed were not legally binding and did not create any presumptions. These findings were:

• there is wide awareness amongst Australian consumers of the use by Cadbury of a dark purple colour particularly on Cadbury Dairy Milk and as a corporate colour;
• Cadbury does not have an exclusive reputation in the use of this dark purple colour in connection with chocolate. Other traders have, with Cadbury's knowledge, for many years used a similar shade of purple;
• Cadbury markets many chocolate products which have little or no purple in their packaging. Cadbury products, regardless of the use of purple in the packaging, always bear the Cadbury name in a distinctive script. Cadbury's use of purple is seen by consumers to be, inextricably connected with the brand name Cadbury.
• Darrell Lea is a name well known in connection with chocolate although though not as well known as Cadbury. The names Darrell Lea and Cadbury are quite distinct in sound and appearance. Darrell has since at least Christmas 2000 used in its marketing, packaging, promotion and point of sale presentation a purple colour much like that used by Cadbury. Most of Darrell Lea's retailing occurs in premises which it owns or occupies. Darrell Lea does not sell moulded block chocolate. Darrell Lea uses its name in a distinctive script widely and consistently in marketing, packaging and point of sale presentation;
• colour recognition or attraction can play an important part in consumer decisions to purchase chocolate. Consumer decisions to purchase chocolate are often made quickly and on impulse but not necessarily irrationally. Price and brand recognition can play an important part;
• Cadbury and Darrell Lea are competitors in the retail chocolate market, yet they each have distinctive product lines which are sold from different sorts of premises under distinctive trade names. They have distinct identities in the market place; and
• Cadbury does not own the colour purple and does not have an exclusive reputation in purple in connection with chocolate. Darrell Lea is entitled to use purple, or any other colour, as long as it does not convey to the reasonable consumer the idea that it or its products have some connection with Cadbury.

At the further hearing Cadbury called its three experts who gave evidence as to possible misidentification, misinference, and misassociation. Misidentification would occur when consumers seeking to buy Cadbury chocolate mistakenly identify a Darrell Lea product as a Cadbury product. Misinference is when consumers, in trying to make sense of the common use of purple by Darrell Lea and Cadbury, draw mistaken inferences about one or both of the brands. Misassociation is when consumers mistakenly link Cadbury brand associations with Darrell Lea, and vice versa, as a result of the two brands' associative networks.

Notwithstanding their evidence, however, Justice Heerey remained unconvinced that Darrell Lea had engaged in any passing off or misleading or deceptive conduct. The court stressed that mere confusion, or consumers being "caused to wonder", does not amount to misleading and deceptive conduct " within the meaning of the statute. Justice Heerey thought that much of the evidence as to misinference and misassociation would seem to be examples of the "caused to wonder" reaction by consumers.

He thought it important that it was established that shoppers were never presented at the point of sale with Cadbury's product (whether incorporating use of the colour purple in the packaging or otherwise), without the name Cadbury prominently displayed. The ordinary, reasonable consumer would be aware of this when confronted with the allegedly misleading product of Darrell Lea.

Further, in the particular circumstances of this case, the Federal Court found the expert evidence of no real assistance. Justice Heerey stated that evidence of opinions based on market research and expert appreciation of consumer behaviour would rarely be of assistance in litigation where the court's primary concern is with the behaviour to be expected of, and the judgments likely to be made by, ordinary (even if it might be thought, somewhat credulous) members of the community intent on making a relatively modest purchase in a conventional way. The experts all lacked practical experience in the retail confectionery market and there was no evidence that they had observed actual consumer behaviour.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.