N.Z. BREWERIES v. GROGAN

Grey River Argus, 30 April 1931, Page 8

N.Z. BREWERIES v. GROGAN

I IMPORTANT VERDICT : I —~ ' I Text of the Judgment I I I The following is the full text of the i I.judgment in the case between New I Zealand Breweries Limited, plaintiffs, i and Andrew Grogan, defendant, heard I at the Supreme Court, Groymouth, on I March sth last, when Mr A. T. Don- ' ■ nelly (Christchurch) appeared for. ■ plaintiff, and Mr J. W. Hannan (Grey- j : mouth) for defendant:—- I JUDGMENT OF KENNEDY J. The plaintiff is a brewer manufacturing and selling i n New Zealand fermented liquors, while the defendant is an aerated water manufacturer carrying on that business at Greymouth. The plaintiff is the proprietor of a trade mark consisting of the letters “N.Z.B. Ltd.” registered in class 15 in respect of bottles and of an identical trade mark registered in class 43 •in respect of fermented liquor. These trade marks appear upon bottles of beer manufactured by the plaintiff I and sold to three wine and spirit mer- i chants who sell the bulk of plaintiff’s ' beer consumed on the West , 1 Coast. The plaintiff recovers some of | its empty bottles by return from mer- ■ i chants, but, chiefly from accredited ■ I bottle-gatherers who: pay a sum, usually 1/- per dozen, i n respect of the | bottles they receive and who them-| selves, on returning the bottles, re- I | reive from the plaintiff up to 2/6 per i dozen. There is a normal wastage estimated at 1 in 8, but the number recovered on the West Coast by the I plaintiff from the year 1923 up to the commencement of the year 1929 was , unusually small. Many empty beer j bottles were collected by the defend- . ant and used with appropriate labels to contain aerated waters manufactured and sold by him. In December, 1928, the plaintiff advertised in Grey- ’ I mouth a notice which was headed “Warning” and which ran, “As it has bften brought to the notice of New ' Zealand Breweries, Ltd., that bottles . bearing our registered brand are bejing il-egally u:e<l bv other persons, i and such actio n constitutes an in-, fringeiuent of our rights, we hereby l i give warning that if the practice does I not cease, and empty bottles returned to us immediately, action, will be .taken against offende.s.” After this notice a greater number of bottles ■ were returned to the plaintiff, iuclud- j ing a great number of bottles which ■ the defendant returned. A largo pro- I portion of "‘those returned through j bottle gatherers had labels showing I I that they had been used by the defend- j ant. The defendant subsequently ceased to return bottles and sold his aerated waters in bottles bearing the above trade marks upon terms which ensured their return to him and Prevented them from coming into the control of bottle-gatherers collecting the plaintiff’s bottles. The defendant has done this, claiming a right so to deal with such bottles. At first he put his own name on the label or on the cap- , sule, but, before the hearing of this action, he was vending, aerated waters in bottles with labels which described the contents obviously enough as aerated water so that the contents were not all likely to t’e mistaken by any person for beer or fermented liquor, but which did not refer to the : defendant as the manufacturer. In the circumstances the plaintiff asks for an injunction for infringement of , ■ ills trade marks, or for passing off, .goods, not of the plaintiff’s manufac-1 ture. as or for goods of the plaintiff ■ and au account of profits or an cm! quiry as to damages and an injunctin restraining the defendant from col-1 Icetrig or using glass bottles tho pro- : perty of the plaintiff. The registration of the trade mark. 1“N.Z.8. Ltd.” in respect of glass bottles and alro in respect of fermented liquors is in accord with the stat- | ute which provides that a trade mark must be registered in respect of part ticular goods or classes of goods. Such registration, if valid—and registration is prinia facie evidence of validity gives to the plaintiff tho exclusive right to the use of that trade mark i 'upon or in connection with the goods j in respect of which it is registered: , The Patents, .Deigns, and Trade-marks ■ Act, 1921-22 section 104. In so enacting, the statute is merely declaring the earlier law. As Lord Westbury said in “Hall v. Barrows” ,1863) 4 De. G. J. and C. 150. “There can be no right to the exclusive ownership 1 of any symbols o r mark universally in i the abstract; thus, an iron founder who uses a particular mark for his j manufactures in iron could not restrain the use of the same mark when impressed on cotton 'or woollen goods; for a trade mark consists in the ex-1 elu-dve right to the use of some name or symbol as applied to: a particular j manufacture or vendible commodity ” | The use of the mark In respect of the contents of the bottles is an infringement of the plaintiff’s trade ■ mark registered in respect of ferment-1 ed liquor, but neither registered nor used in respect ot aerated waters which the plaintiff doe? manufac- , ture or sell If the defendant had soldJ fermented liquor in bottles bearing the plaintiff’s trade mark or if the trade mark had not bec n registered ■ in respect of aerated waters, the I plaintiff’s trade mark would have been: infringed: “Thompson v. Phillips” 14 NZ.L.R. 29. The registration of a| trade mark for one class of goods does | not enable the registered proprietor to.' prevent another person from using the i mark in connection with goods included i u a different class; “Jay v. Ladler”: (1889) 40 Ch. D. 649 ad “Hart v. I Colley” (1890) 44 Ch. D. 193 and see' also “Edwards v. Deunis” Ch. D. 474. J The trade mark on the boftl.es is the i same for bottles and for contents, if ( fermented liquor but if the bottles be I filled, not with fermented liquor, but 1 with aerated water, tho mark then ap-( plies to U class of liquid—aerated water —in respect of which the mark) is not registered. In such application j there is no infringement, although it ) may in particular circumstances be passing off.

If the plaintiff had sold the bottles used by the defendant there was no infringement of the plaintiff’s trade mark relating to bottles. The trade mark was a symbol for the purpose of indicating that the goods, on or in connection with which it was used, were the goods of the. proprietor of the trade mark by virtue of manufacture selection certification dealing I with, or offering for sale. Its function, h:id been discharged on sale. But ■ whether the plaintiff r.old its bottles

or not, they were marked as they had been by or for the plaintiff itself. Whatever the trade mark affixed t O, ’ the bottles by or for the plaintiff indicated, it continued to indicate whe- | the i\. the bot-Hcs were in the plaintiff’s i possession or in the possession of the I defendant. The the mark upon goods., to constitute infringement, | mffst be a use upon goods which are

: not the genuine goods to which the ' mark might be or was properly ap- ! plied; for as it is said in “Kcrly on Trade marks” sth. Edn. 457, “InI fringement is the use by the defendjant, for trading purposes upo n or i-i I connection with goods of the kind for j which the pliiintiff’s right of exclusive use exists (i.e., goods in respect of ! which his mark i? registered), n ot be•ing goods of the plaintiff, of a mark identical with the plaintiff’s mark or I comprising some of its essential feat|ures or ccJourably resembling it. so as to be calculated to cause goods to be ■ taken by ordinary purchasers for the ’goods of the plaintiff.” As that learned author points out, tho use which is relied upo.i as an infringement must be a use upon goods, which arc not the genuine goods, for anyone may use the plaintiff’s mark on the plaintiff’s goods since that cannot cause the deception which is the test of infringement. The mark may not be applied to the wrong goods? It may be applied by anyone t 0 the right goods. A retailer of the plaintiff’s g<ods ■.may lawfully place or renew the proper labels upon them and may even have sufficient labels printed for thatj 'purpose: “Condy and Mitchell v. Tay‘lor and Co.” 56 L.T. 891 and “Farine |v. Silverlock” 6 De G-M- and G. 214. > The use of the plaintiff’s trade mark 'on the plaintiff’s own bottles was not an infringement of the plaintiff’s trade mark in respect of bottles. If the [bottles are still the property of the I plaintiff, the real complaint is of trespass or of conversion and not of infringement of its trade mark relating to bottles.

In deference to the plaintiff’s sub- ! mission pressed in respect of the trade mark relating to bottles, it is neces-, I sary to refer to certain cases. But i 'first I should say that that part of the ■plaintiff’s case, in which it asked for 'an injunction restraining the infringement of its trade mark, was based 1 upon an allegation of the infringement of its rights conferred by the registration of the trade mark and not i upon any allegation of the commission by the defendant cf any offences under the provisions of the Patents. Designs, and Trade-marks Act, 1908 sections 82 .to 97 which correspond in England I with the provisions of the Merchandise Marks Act, 1887. Although autho--1 ritie's upon the irfterpretation of that statute were referred to, they were cited to show that there was in fact [a n infringement of the trade marks. I On the pleadings and on the case as ! presented to the Court, there does not I arise for decision whether there was I a breach of the provisions of the Pai tents, Designs, and Trade-marks Act, 1 1908 sections 82 to 97 nor, upon the ’assumption that there was, whether in I addition to the penalties thereby provided, the defendant might be restrained by injunction: see “Thwaites and Co. v. M’Evilly” 21 R.P.C. 397 and ”J. Donohoe Ld. v. Cherry Bros. Ld” 26 R.P.C. 545 at the bottom of p. 553 and “Dalys Ltd. v. Israel and Son” (1919) 40 N.L.R. 360.

In “Rose v. Loftus” 47 LJ. N.S. Ch. 576 and in “Allen v. Richards” 26 Sol. J. 658 both plaintiff and defendant dealt in the same class of aerated water and the real wrong was in passing off the contents as the manufacture of the person who formerly owned the bottles. I n ‘‘Barr and Co. v. Mair and Dougall” 21 R.P.C. 665, lit is not stated in the report whether the trade marks used were in respect of waters of the kind contained in the I bottles. The complaincrs ’ plea, inter alia, was that the respondents had (“Illegally and unwarrantably, both at : common law and by breach of the provisions of the Merchandise Marks Act, i 1887, used, and been in the habit of ■ so- using, bottles and syphons belonging to the coniplainci's which had impressed, moulded, engraved, or other- , wise marked thereon their name a?>cl registered trade mark.” Lord Kyllachy merely stated his impression that there was an illegal use of the complainers’ trade marks and decided the case on other grounds.

“Christie. Manson, and Woods v. I Cooper” (1900) 83 L.T. 54 and “Stone v. Bum ” (1910) 103 L.T. 540 were de-1 ci'sions on the Merchandise Marks Act, 1887. In “Christie. Manson and Woods v. Cooper” (Supra) the real question was as to the interpretation ■ ! of the words “acted innocently” where used in that Act. In “Stone v. Burn” (supra) the facts were that Stoae bottled Bass’ ale and Guinness’ stout in bottles moulded with the name •of the F. Brewery Company but with a Bass’ or Guinness’ label attached bearing the words “Bottled by Horatius Stone.” He was charged with sell-, ing goods to which a false trade description had been applied in virtue of a section of that Act which provided that a person shall be deemed to apply a trade description to goods who- places any goods in any covering to which a trade description has becn applied. In “Thwaites and Co. v. I M’Evilly” 21 R.P.C. 397 it appeared 1 that the defcndazits put mineral water of their own manufacture into bottles embossed with the plaintiff’s name registered as trade mark but with. labels attached bearing their own name and address 1 as manufacturers. Plaintiff manufactured and sold mineral water in those bottles. I n this case the sp-lj enquiry was not whether the defendants had infringed the plaintiff’s rights conferred by the registration of the trade mark, but whether the defendants had done an act which • was an offence against the Merchandise Marks Act, 1887, particularly in view of its definition of an offence in, ;thc following words: “Every perscu who sells, ox has in his possession for .any purpose of trade, any goods to j which any trade mark is falsely applied, ” and of scctio n 5 defining cir- i . cumstances in which a person is deeni'cd to apply a trade mark to goods. “J. Donohoe Ld. v. Cherry Bros. ( Ld.” 26 R.P.C. 545 was a similar case i of infringement of the Merchandise Marks Act, 1887. I There is. I think, no conflict between [these cases and “Jay,, v. Ladler.” | “Hart v. Colley” and Edwards v. Dennis” (supra). Acts may b c i n breach of sections 82_ to 97 of the Patents, i Designs, and Act, 1908 which are- not infringements of registered trade marks, not even examples of passing off. There remains the claim to restrain passing off. This was not pressed but it was not abandoned. While the plaintiff sold fermented liquor, the defendant sold only aerated waters in the bottles. A defendant’s acts arc in general not considered as calculated to deceive unless he is selling goods of a class which the plaintiff sells or such as in the course of hi s trade the plaintiff might he supposed to be sell-

ing: 27 “Halsbury” 769. There is no reason to believe that any person has been, or would ever be likely to be -.deceived into* believing that the bottles f?old by the defeudant contained the plaintiff’s beer.

The substantial contest in this action was whether in fact, when a sale was made by the plaintiff to merchants and others on the West Coast, the sale was only of beer and not cf the bottle, or whether the sale was both of the bottle and of the beer with a promise to rc-buy returned bottles at so much per dozen. Each of the plaintiff’s bottles bears upon it the words, “This bottle is the property of New Zealand Breweries Limited” and a director of the plaintiff company said, in the bottle business they charge so much for the beer and so much for the bottles and direct that the bottles be returned to the company. “We allow,” he said, “2/- a dozen to the trade for the battles and also a commission of 2/4 tc- 2/6 to the bottle-gatherer. In our original cjjarge to our customers, we charge 2/- per dozen so as to secure the return of the bottles. . . When uiy Company sells the beer in the bottles. we do not sell the bottles.” The plaintiff depends upon the bottle-gath-erers and merchants to rctur n its bottles. The plaintiff sells another class of beer in bottles, not its property, but of a bottle company and in that case the invoices arc endorsed with a notice that the bottles a re the property of the bottle company. In my judgment, the permanent moulding of the notice on the bottles, for those who are aware of it, is as effective as if a notice to that effect had been endorsed in invoices delivered on sale of the beer. The warning notice inserted in pauers circulating on the West Coast ”ay be said to be not very explicit as to- the nature of illegal user alleged but. in its demand for the return of empty bottles, it indicated clearly enough that the plaintiff claimed the property in the bottles and its right to recover them whan the contents had been consumed and I cannpt doubt that the defendant and others in the trade were well aware of what was referred to.

Price lists circulated by the plainjiff did~«not contain any reference to the retention of the property in the bottles and no definite. warning was issued to- the merchants. Representatives of the three firms of wine and I spirit merchants, already referred to, were all aware that 'the plaintiff stamped its bottles with a ■notice claiming the retention of the property theifin and it appeared that local breweries adopted a similar practice. They were all aware of a n arrangement or undertaking to pay a certain sum in respect of bottles returned, but gave evidence as to what they considered was the position When they bought and as to their practice in selling. I think, having regard to the fact that they no doubt passed 011 what they paid in respect of bottles, it was largely a matter of indifference to them whether they bought outright o r wheher the property in the bottles was retained and to their expression of what they said was the legal result, ■jo special importance is to be attached. The facts are before the Court and it may interpret their legal effect. Clearly the merchants were under no obligation physically to return the bottles but this is a very different thing from buying the If in fact they purported to sell the bottles to hotelkeepers, there was no evidence that the plaintiff was aware of this practice or was iu any way estopped, if it had not parted with the property in the buttles to the mcrcjiants, from claiming them. Nor upon the evidence do there arise for decision several of the difficult questions of law referred to in certain of their Lordships Judgments in “Leitch and Co. Ltd. v. Lcydon” 47 T.L.R. 81. but ia that ease, as in this, not requiring determination.

I think the proper inference to draw from the notice stamped on the bottle and from the arrangement or understanding in respect cf retur.is, vague though it was, is that, on a sale to the wholesale wine and spirit merchants, the property in the bottles did not pass but the bottles were bailed with no obligation on the purchasers of the liquor actually to return the bottles although they might not resist or prevent return when the beer had been consumed.

. The notice is in much stronger terms (than the mere addition to the bottle 'of the vendor’s name which I should regard as a colourless notice. A notice so unusual and so explicit as “this I buttle is the property of New Zealand Breweries Limited” and so at variance (with an unrestricted power of disposition by the person receiving it with knowledge, calls for some explicit negation by a person who claims that the notice docs not affect him and that his transaction is other than the notice declares it to be. So long as that notice iis not obliterated, it constantly pro!claims, to those aware of its existence, that, that to which it is affixed is the property of the plaintiff. This must have been abundantly clear to any person in the trade, who knew of the published warning. The defendant, judged by his actions, had no doubt as to its imeaning. He did not give evidence and I did not ’explain where his bottles came from, and, in arriving at the damages hereinafter mentioned, an allowance is made for a source other than through ,the wholesale merchants. If in fact some bottles were purchased by other than the wholesale firms from the plaintiff in ignorance of the notice stamped on the bottles, such bottles would comprise only a part of the bottles in actual use upon the West Coast. Subsequent to the warning notice, or even before that notice, I do not think that there was any conduct (certainly there was no evidence of it) stopping the plaintiff from asserting its proper’y in

bottles which it had parted with to its, merchants and accordingly, in respect of beer acquired by them and disposed I of- in bottles on the West Coast, the, plaintiff is entitled to an injunction re- ; straining actions in derogation of its j property in the bottles. The terms of j the bailment must be ascertained by ■ fair inference from th * circumstances i pnd this may be affirmed that, whatever rights the wholesalers might confer on » i those to whom they sold the beer, they could confer no right to sell or part | with the bottles to the defendant to boused for bottling his aerated waters and | to be delivered by him in the course of' his business upon terms of being retained Until the consumption of the con-| tents and then returned to him notwithstanding that they might bo called for by bottle-gatherers collecting the p\

Stiff’s bottles. The collection by the dej fondant of the plaintiff's bottles and !their disposal and retention and use in I his business as described, whs a con- < version. There may be a conversion I even though the loss or deprivation of {possession is not permanent: See Sal- . mond on Torts 7th end. P. 387 and Bald twin v. Cole (1704), 6 mod. 212. The I detention of any retained and not d— I’livered to customers in the course of business was also adverse. Reference ■may be made, for a recent ease of conversion of bottles in the aerated water !trade, to Cantrell ami Cochrane Ltd.. (v. Neeson 1826, N.I. 107 citing Barlow .and Coy., and Ors v. Jlanslin 1926, N.I. 1113 N. ’

' The usual method of showing that the j I detent ion is adverse is to show that the plaintiff demanded the delivery of the •chattel and that the defendant refused to comply with the demand. But in I this case there was, from the conduct of the defendant following the notice, (and from his reported conversation . With the bottle dealer, clear evidence ( [that the plaintiff did not intend to de- ■ ’liver but asserted, as he did at the hear-' ling of this action, the right to retain bottles acquired by him. In ! respect of bottles not disposed of, ' -I think no demand was necessary to constitute conversion. As Sir John, Salmond said in his torts 6th. edn. p., 379 “It is submitted, however, that demand and refusal is not the sole method in which adverse detention may be proved.—Presumably any conduct of I the defendant which shows that he not. merely possesses the goods, but intends to hold them in defiance of the plain-, tiff, and to deprive him of the possession of them, is sufficient to constitute a conversion, even though there has been; no formal demand of restitution.’’ S‘c also Philpott v. Kelley (1835) 3 A. and E. 106. The defendant has acted 'in deliberate disregard of the plaintiff’s rights. In January and in July of the year 1929 the defendant returned 850 dozen bottles. In 1929 and 1930, in all. ap- ■ proximately 5,000 dozen were returned, , o f which roughly 2,500 dozen bore de-' .fendant’s labels. Consequently, it • may be inferred that 1,650 dozen, apart from the 850 dozen were used by the defendant. Since July 1029 nobottles have been returned by the de- i fondant but from the sales and from the of the bottle-gatherer, who could not collect because of the arrangement made by the defendant, it appars that the defendant has been collecting bottles the property of the plaintiff and disposing o f them in his business. In the circumstances, although it is difficult to ascertain the I exact damage suffered, the attempt I must be made and damages must be ■ assessed upon the evidence. Making 1 allowance for possible purchases other than through the merchants and not ascribing to the defendant responsibil!itv for all unreturned hotties, I am of | opinion that plaintiff has proved damage of at least £25: and it will have judgment for that sum. , The plaintiff is also entitled in respect of the second cause of action to the injunction asked for. The defendant. his agents and servants will acI eordingly be restrained from collecting from others empty glass bottles, the I property of the plaintiff, bearing upon ) them the trade marks numbers 20887 and 20889. or either of them, and the i words, “This bottle is the property of New Zealand Brekeries Limited.’’, :or from filling such bottles so c°lI looted with aerated waters and sending 1 them out in his^ business of . aerated | water manufacturer. The .plaintiff has i not succeeded in respect of the first I cause of action but has succeeded on the second. The defendant will be allowed as costs upon the first cause of 1 action, the sum of £lB IS/-, and the i plaintiff will be allowed, in respect of I the second cause of action, costs as 011 the lowest scale with witnesses’ ex-

penses and disbursements to bo tixec by the Registrar. I certify that the action was a proper one to bring in the Supreme Court.

Solicitor for plaintiff: K. Neave, Esq., Solicitor, Christchurch.

Solicitors for defendant: Messrt Hannan and Seddon, Solicitors, Greymouth.