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Trademark

AUSTRALIA

Court finds no monopoly in colour purple for Cadbury
Cadbury Schweppes Pty Ltd. v. Darell Lea Chocolate Shops Pty Ltd. (No. 4)[2006] FCA 446

On 27 April 2006, the Federal Court held that the use by Darrell Lea of the colour purple in relation to chocolate packaging did not amount to passing off or misleading/deceptive conduct in contravention of section 52 of the Trade Practices Act 1974 (Cth), in light of Cadbury's use of the colour purple in the get up of its chocolate products.

Key reasons for the decision

In reaching this conclusion, the following matters were of significance to the court:

•  the CADBURY name features prominently and consistently throughout Cadbury's advertising, packaging, point of sale presentation and other marketing collateral, such that Cadbury's use of the colour purple is always associated with the name CADBURY;

•  a majority of Cadbury's total sales for chocolate confectionery products are constituted by products which do not prominently feature or are not promoted by reference to the use of the colour purple;

•  other traders, with Cadbury's knowledge (and sometimes consent), had for many years used a similar shade of purple as that used by Cadbury;

•  Darrell Lea and Cadbury chocolate products are sold in different trade channels (Cadbury products are concentrated in the retail trade through supermarkets and other shops;

•  Darrell Lea products are generally sold from their own stores or concession stands which exclusively sell Darrell Lea products); and

•  Darrell Lea did not adopt the use of the colour purple with the intention of misleading consumers to believe its products were Cadbury products or that it, or its products, had some kind of association with Cadbury.

The Cadbury story

Cadbury commenced proceedings against Darrell Lea alleging, among other things, that the use by Darrell Lea of purple and copper coloured get up on the packaging of its seasonal Christmas chocolate products amounted to passing off and misleading/deceptive conduct contrary to section 52 of the Trade Practices Act . Cadbury alleged that consumers would be misled or deceived into thinking that the use by Darrell Lea of a shade of purple similar to that used by Cadbury on its moulded block chocolate products and in a wide variety of marketing collateral would mean that the Darrell Lea products, or Darrell Lea itself, emanated from Cadbury or otherwise had some connection with Cadbury.

Cadbury asserted that it has a substantial, exclusive and valuable reputation and goodwill "in relation to a particular shade of purple used by it on the packaging of some of its moulded chocolate products and in a wide variety of marketing collateral". Cadbury holds 55 per cent by value of the chocolate confectionery market as a whole and Cadbury DAIRY MILK chocolate holds 73 per cent by value of the market for block chocolate. Cadbury has used purple wrapping for its DAIRY MILK product since the 1920s (other than during the Second World War), which was also when Cadbury commenced operations in Australia.

Cadbury products are sold through the retail trade in supermarkets, convenience stores, service stations, newsagents, tobacconists and milk bars, and also at fund raising and sporting events, cinemas, sporting venues and public vending machines. In 1998 there were approximately 86,000 outlets selling Cadbury products.

Cadbury products are sold with the CADBURY name (as a cursive script adopted from the signature of its founder) applied. Not all products include the colour purple in the get up: 56 per cent of Cadbury's total sales for chocolate confectionery products is constituted by products which do not prominently feature or are not promoted by reference to the use of the Cadbury purple shade.

Since the 1990s, Cadbury has pursued a marketing program which has seen the use of purple extended across its products, and also across a wide range of marketing collateral.

The Darrell Lea story

Darrell Lea commenced operations in Australia in 1927. In 2002, its share of the Australian confectionery market by value was 2.5 per cent, although this figure rises during peak seasonal periods for chocolate sales (Easter and Christmas). About 70 per cent of Darrell Lea sales are through its company operated and licensee stores. It also sells through free standing units placed in other shops such as newsagents and pharmacies.

Darrell Lea products are sold in a variety of get ups and colours. They usually have the name Darrell Lea printed on the box or wrapper or on a tag attached to the product. Between 2000 and 2004 Darrell Lea used a similar shade of purple to that used by Cadbury on a variety of products, and particularly in the packaging of its seasonal chocolate products at Christmas between 2000 and 2004.

The decision

The court did not uphold Cadbury's allegations for the following reasons.

The "comparison" reasons

It appears that Justice Heerey took the view that because Cadbury products are always sold by reference to the name CADBURY as well as the colour purple (and other devices such as the "glass and a half" device), the mere use of a similar shade of purple by Darrell Lea (whose products are always sold by reference to the name Darrell Lea as well) would not amount to passing off or misleading or deceptive conduct.

The "third party" reasons

Justice Heerey noted that many other confectionery products include the colour purple in their get up, in varying degrees of prominence. In particular, he referred to the VIOLET CRUMBLE and POLLY WAFFLE products, as well as a long list of other products. The Judge also noted that a co-existence agreement between Cadbury and Nestlé in relation to the use of the colour purple by Nestlé was inconsistent with Cadbury's assertion that it has the exclusive reputation and goodwill in the use of the colour purple in relation to chocolate products.

Cadbury also asserted that it "aggressively sought to take action to protect its brand" where other manufacturers of confectionery products used similar shades of purple to Cadbury. Justice Heerey found that this assertion did not follow a consistent pattern; letters of demand were sent by Cadbury, but the allegations made were not always pursued.

The "survey evidence" reasons

Cadbury tendered consumer survey evidence in support of its assertion that it had an exclusive reputation in the colour purple. The survey evidence tendered did not comply with the applicable Federal Court Practice Note, but was nonetheless admitted into evidence. Although the survey found that there was a very high association between the colour purple and Cadbury, Justice Heerey noted that there was also a high association between Cadbury and all other colours. This suggested to him that because Cadbury and chocolate are so dominant in the minds of consumers, then the colour used in get up may not be something to which the consumer pays much attention.

Justice Heerey regarded the survey evidence of only limited (if any) assistance. He referred to its geographical limitations (Melbourne metropolitan area only, a preponderance of female respondents and no children under 18) and also to the "rather clinical environment" in which the survey was conducted, which did not reflect the environment in which actual consumer purchasing decisions are made. Also, there was a concession in cross-examination made by the expert marketing witness called by Cadbury that a separate experiment would be required to see whether different answers were obtained if both brand name and colour were used. The Judge characterised the absence of brand name plus colour responses as a "serious deficiency".

The absence of actual evidence of confusion

Notwithstanding that many authorities have emphasised that neither section 52 of the Trade Practices Act nor the tort of passing off require as an element of proof of evidence of actual confusion, Justice Heerey said that it would have been useful to have had evidence of actual confusion, along the lines of statements from consumers to the following effect (for example): "I usually buy Cadbury chocolate. I know their chocolate from the purple wrappings and advertising. I saw some purple wrapped chocolate but when I got to the checkout I saw it was Darrell Lea's. But I was in a hurry so I bought it anyway."

The different trade channels

Justice Heerey placed much significance in the fact that Cadbury and Darrell Lea products do not regularly appear in the same trade channels - Cadbury products being almost exclusively sold in the retail trade, and Darrell Lea products sold through company owned shops or concessions.

The decision

Justice Heerey concluded that: "For all practical purposes, Cadbury's use of the colour purple in marketing, promotion, advertising, packaging, and point of sale is always associated with the famous name Cadbury. 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 marketplace. 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."

Implications

Two matters that Justice Heerey emphasised were that cases of this nature are very fact and circumstance specific, and that the questions to be answered are in the nature of "jury" questions. This will explain why some colour/get up cases succeed, and why some fail. To the extent that any consistent principle emerges from the cases, it is that material that will influence the resolution of the "jury questions" will often be critical to the outcome of the case.

For example, evidence of intention to mislead or deceive (or, put another way, to "get close" to the get up used by another market participant), and evidence of actual confusion will influence the outcome of colour passing off cases. Similarly, in markets for relatively undifferentiated products (such as confectionery or snack foods), it may be difficult, in the absence of such evidence, to succeed in a colour passing off case. This difficulty was illustrated in the older case of Cadbury Schweppes Pty Ltd v The Pub Squash Co Ltd [1981] RPC 429 where it was held that the use by The Pub Squash Co of a yellow coloured can for its lemon squash soft drink in circumstances where the market leader lemon squash soft drink (SOLO) also used a yellow can, did not amount to passing off.

Peter Chalk
BLAKE DAWSON WALDRON
Grosvenor Place, 225 George Street, Sydney NSW 2000
peter.chalk@bdw.com