Finish brand owner Reckitt Benckiser (RB) has been granted interim injunctive relief restraining Henkel from continuing the launch of its Somat brand of dishwashing tablets in Australia pending the final hearing of RB's case against Henkel.
RB alleges that Henkel's use of a stylised dishwashing tablet (on the left below) infringes two of its registered trade marks (in the middle and on the right below) and amounts to passing off (though RB's application for interlocutory relief was premised only on trade mark infringement):
Henkel denies the allegations and has filed a cross-claim, seeking revocation of RB's Registered Trade Marks on the basis of non-use.
Relevant principles
An interlocutory injunction is a form of interim relief that does not conclude or determine any rights. Rather its object is to maintain the status quo pending the hearing and final determination of the issues in dispute. The relevant status quo to be protected, particularly in a case where the conduct complained of has already commenced, is the state of affairs during the period immediately preceding the commencement of the proceedings, or put another way, the "state of affairs before the last change".
The Court is required to consider whether:
- the applicant for the interlocutory injunction has made out a prima facie case; and
- the balance of convenience favours the grant of the interlocutory injunction.
An applicant for an interlocutory injunction will almost always be required to give the "usual undertaking as to damages" being an undertaking to pay compensation to any person (whether or not a party to the proceedings) affected by the operation of the injunction if it turns out at final hearing that the interlocutory injunction ought not have been granted. Aside from having given this undertaking, RB was also required to undertake to take the earliest possible date for the final hearing of the proceedings.
Prima facie case
An applicant for an interlocutory injunction does not need to show that it is more probable than not that it will succeed at the trial. It is enough to show a sufficient likelihood of success to justify the preservation of the status quo pending trial. While the relative strength of an applicant's case that needs to be demonstrated will vary from case to case, the nature of the rights asserted and the practical consequences of the injunction are relevant to determining how strong the applicant's case must be shown to be.
Here, Justice Halley of the Federal Court had to determine two issues for the prima facie case; whether the Somat Device was being used as a trade mark and, if so, whether it is deceptively similar to either of RB's Registered Trade Marks.
As regards the first issue, his Honour did not accept Henkel's argument that the Somat Device was in effect no more than a depiction of the product itself, consistent with how other traders used images of dishwasher tablets on their packaging. Nor did his Honour accept that the Somat Device did not function as a trade mark because the SOMAT brand was clearly displayed above the Somat Device. Given the prominence the Somat Device was given on the product packaging, his Honour was satisfied that RB had established, on a prima facie basis, that the Somat Device had been used as a trade mark.
As regards the second issue, his Honour was also satisfied that RB had established a prima facie case of deceptive similarity at least in relation to the RB trade mark depicting a tablet. However, this was not considered to be a "strong" prima facie case of deceptive similarity as RB had posited.
While Henkel had also sought to rely on its cross-claim for non-use to argue that RB had not established a prima facie case, his Honour concluded that it was not possible on the limited evidence before the Court to reach any view as to the merits of the challenge to RB's Registered Trade Marks. His Honour therefore proceeded on the basis that the marks have the status of registered trade marks.
Balance of convenience
Having concluded that RB had established a prima facie case, Justice Halley then considered the relative inconvenience to the parties that would arise from the grant of the injunction. This requires a comparison between the inconvenience RB would suffer if the injunction was not granted and the inconvenience Henkel would suffer if the injunction was granted.
Here, his Honour concluded that the balance of convenience favoured RB, noting:
- the relief sought would not be decisive in resolving the dispute between the parties. That is, Henkel could still recommence the launch of its products at a later date if successful at final hearing;
- RB has an established reputation and substantial goodwill in the RB Registered Trade Marks given the length of time it had used the trade marks (albeit that is the subject of challenge by Henkel), its dominant market share and the quantum of revenue it had generated from goods bearing the trade marks. This is to be contrasted with Henkel, which had no established reputation or goodwill in Australia for the sale of dishwashing products, having only just commenced selling in a limited range of stores;
- the relief sought would not preclude Henkel from launching a substantial proportion of its SOMAT range as the challenge, and therefore the injunction only related to the dishwashing tablet products;
- RB would face "considerable, if not insurmountable, hurdles" in seeking to quantify the loss in value of its trade marks if Henkel was permitted to continue to use the Somat Device pending the determination of the proceedings;
- on the other hand Henkel could quantify and recover at least a majority (even if not precisely) of any financial harm it might suffer pursuant to the usual undertaking that RB proffered as a condition of the grant of relief. This included the loss of benefit of investments that retailers might have made which might be lost as a result of the grant of relief;
- absent a competition analysis (which was not advanced) his Honour did not place any significant weight on the alleged harm to competition that Henkel alleged the relief might cause by precluding them from entering the market. Further, the relief sought would not preclude Henkel from entering the market with its Somat range using different branding pending the final determination of the proceeding. In any event, the relevant inquiry is not whether the relief would be harmful to the Australian market for dishwashing products but rather, whether RB established a prima facie infringement case and the balance of convenience favoured the grant of the injunction is sought.
Taken together, his Honour considered that the balance of convenience strongly favoured the grant of an interlocutory injunction. But for this, RB would not likely have been entitled to interlocutory relief.
Not quite Finished yet
This outcome demonstrates the significant commercial benefit that a business might obtain by taking swift action to restrain a competitor from infringing its registered trade mark rights. It also demonstrates the importance of businesses undertaking proper due diligence when developing and launching new products to ensure against infringing a rival's intellectual property rights. If a risk of infringement arises then it is important to be aware of the potential for that risk to scuttle the best laid plans. This is particularly poignant given that Justice Halley made specific reference to Henkel's "eyes wide open" attempt to enter the dishwashing tablet market.
Please contact Clayton Utz if you would like any assistance or advice conducting trade mark due diligence or are concerned that another trade may be infringing your trade mark rights.