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Federal Court: Snack Foods' interlocutory injunction application unsuccessful in trade mark infringement case

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Snack Foods Limited v Premier 1st Pty Ltd [2013] FCA 135

On 23 November 2012, Justice Foster of the Federal Court dismissed an application for injunctive relief by Snack Foods Limited against its competitor, Premier 1st. Snack Foods was planning to launch a proposed new corn chip product under the mark "Popped Corners". In its application for injunctive relief, it sought to restrain Premier 1st from importing and selling a similarly named popped corn chip product in Australia called "Popcorners". In his reasons, handed down on 25 February 2013, Justice Foster held that despite finding that a prima facie case of infringement had been established, the balance of convenience and justice favoured refusing Snack Foods' application for injunctive relief.

Snack Foods' "Popped Corners" trade mark

Snack Foods claimed that in late 2010, it began to develop a popped corn chip product for Australian consumers to be marketed under the trade mark "Popped Corners". In June 2011, it filed an application to register the "Popped Corners" mark, which was subsequently registered in January 2012. According to Snack Foods, in late November 2012, the product was at an advanced stage and ready for release to the Australian market in March 2013.

According to Premier 1st, it started negotiating a distribution agreement in or about March 2011 and subsequently entered into an arrangement with Medora Snacks (also a respondent in the proceeding), to import and distribute a popped corn product manufactured in the United States by Medora and sold under the name "Popcorners". Medora owns the trade mark for "Popcorners", which was registered in the United States in March 2010.

After learning of Premier 1st's plans, Snack Foods sought to restrain Premier 1st from importing, selling, offering for sale, distributing, advertising or promoting the "Popcorners" product in Australia on the basis that the "Popcorners" mark was substantially identical or deceptively similar to the "Popped Corners" registered mark.

General principles regarding interlocutory injunctions

In deciding whether to grant an interlocutory injunction, Justice Foster referred extensively to the Samsung Electrics Co Ltd v Apple Inc case.1 In that case, the Federal Court set down some general questions to consider, which were:

  1. is there a serious question to be tried (or has the applicant made out a prima facie case)?;
  2. does the balance of convenience favour the granting of an injunction? One of the matters a Court must consider in assessing the balance of convenience is whether the applicant would suffer irreparable harm (for which damages would not be an adequate remedy), if an injunction were not granted.2

Was there a serious question to be tried?

Premier 1st accepted that Snack Foods had established a prima facie case of infringement of its "Popped Corners" trade mark due to the similarity of the trade marks.3 However, Justice Foster held that Premier 1st also had reasonable prospects of defending the infringement action and of securing the cancellation of the "Popped Corners" mark4 on the basis of its arguments that:

  1. Snack Foods was not the true owner of the trade mark when it applied in June 2011 for registration in Australia; and/or
  2. the use of the "Popped Corners" trade mark in Australia was likely to mislead or deceive and cause confusion on the basis of Medora and Premier 1st's prior reputation in Australia; and/or
  3. Premier 1st had a defence of honest concurrent use.5

The balance of convenience and justice

Justice Foster referred extensively to the Samsung v Apple case.6 In considering where the balance of convenience lay, the court in that case said that:

The assessment of harm to the plaintiff, if there is no injunction, and the assessment of prejudice or harm to the defendant, if an injunction is granted, is at the heart of the basket of discretionary considerations which must be weighed as part of the court's consideration of the balance of convenience and justice.7

Justice Foster considered a range of discretionary factors, most of which were in Premier 1st's favour. His Honour took into account the following:

  • Whereas the potential harm to Snack Foods if the injunction was not granted was almost entirely speculative,8 for Premier 1st, there was a real and significant potential loss that would be caused if an injunction were granted. In this regard, Premier 1st put forward evidence regarding its extensive marketing campaign of the "Popcorners" products, the potential damage to its supply relationship with Woolworths if it were not able to supply the product, and the potential risk of liquidation to the company if it were unable to sell its "Popcorners" stock. In reviewing this information, Justice Foster held that there would be almost certain prejudice to Premier 1st if the injunction was granted.9
  • It appeared that Snack Foods was aware of Medora's registered trade mark as early as February 2011 and it could be reasonably inferred that Snack Foods made the trade mark application for "Popped Corners" in circumstances where it was well aware of Premier 1st's and Medora's businesses and the "Popcorners" registration in the United States.10
  • Snack Foods' delay in bringing the application after hearing of the intentions of Premier 1st to import and sell in Australia the "Popcorners" products.11 His Honour noted that Snack Foods could have pressed for an early final hearing but instead chose to pursue interlocutory relief on a contested basis.12
  • Since at least January 2012, a third party, Dainty Food Australia Pty Ltd, had imported into Australia and supplied to retailers such as Coles and Woolworths, kosher popped corn products bearing the "Popcorners" trade mark, yet Snack Foods had made no contact with Dainty until 1 November 2012.13 This further highlighted Snack Foods' delay in acting.

After considering all these matters, Justice Foster concluded that the balance of convenience and justice favoured the refusal of interlocutory relief to Snack Foods.14

Issues to consider in applications for interlocutory relief

Snack Foods is yet another case where an intellectual property rights holder has been refused interlocutory relief, even though it has established that it has a prima facie case of infringement. This case highlights the difficulties of obtaining an interlocutory injunction and matters that a court will take into account when assessing the discretionary considerations going to the issue of the balance of convenience, including whether:

  • a respondent has a good defence to infringement and any prospects of having the trade mark(s) which it has allegedly infringed cancelled;
  • an applicant has delayed in applying for interlocutory relief;
  • an applicant has "clean hands" when making the application (for example, whether the applicant knew of any pre-existing trade marks, any similar products or any other rights of third parties and had done nothing); and
  • a respondent has established the likelihood of irreparable or certain damage should the injunction be granted.

Lessons for trade mark owners

  • This case serves as a reminder that trade mark owners should regularly monitor their competitors' products, and act quickly when potentially infringing products are discovered in the marketplace. This may assist rights holders in successfully obtaining interlocutory relief to restrain the sale of those products, pending a full trial.
  • In addition, when applying for urgent injunctive relief, trade mark owners should ensure that the validity of their mark is likely to withstand an attack by an infringing party.

Endnotes

  1. ^ Samsung Electronics Co Ltd v Apple Inc (2011) 286 ALR 257.
  2. ^ Ibid at [57], [61]-62].
  3. ^ Snack Foods Limited v Premier 1st Pty Ltd [2013] FCA 135, [25]. At [31], Justice Foster also accepted that a prima facie case had been established by the Applicants.
  4. ^ Snack Foods Limited v Premier 1st Pty Ltd [2013] FCA 135, [61].
  5. ^ Ibid [26] – [28].
  6. ^ Samsung Electronics Co Ltd v Apple Inc (2011) 286 ALR 257.
  7. ^ Ibid [62].
  8. ^ On the question of damages, his Honour considered that any potential harm to Snack Foods was almost entirely speculative as its "Popped Corners" product was not yet on the market, and any comparisons of the impact of the "Popcorners" products on Snack Foods' products were purely hypothetical (Snack Foods Limited v Premier 1st Pty Ltd [2013] FCA 135, [52], [62]).
  9. ^ Snack Foods Limited v Premier 1st Pty Ltd [2013] FCA 135, [63].
  10. ^ Ibid [53] – [55].
  11. ^ Ibid [65] – [66].
  12. ^ Ibid [66].
  13. ^ After which Dainty gave an undertaking not to supply the kosher "Popcorners" products pending the determination of the proceeding (Snack Foods Limited v Premier 1st Pty Ltd [2013] FCA 135, [11] – [12]).
  14. ^ Snack Foods Limited v Premier 1st Pty Ltd [2013] FCA 135, [67].

Filed under: Legal briefing Trade Marks IP Law Litigation