Taco Bell v Taco Co - m&d Conduct

60 FEDERAL LAW REPORTS [1980

W.A.DIST. CT

1980

JUSTIN

SEWARD

PTY. LTD.

V.

COMMISSIONERS

OF RURAL

AND INDUSTRIES

BANK

Acting JudgeClarke

FED.CT

OF AUST.

GEN. DIVN

1981,SYDNEY,

Sept. 17-18;Oct. 13·15;Dec. 22.

EllicottJ.

I see no reason why principles applied to a case of restitutionshould not apply to the prior stage, of liability to honour a cheque.

I would give leave to defend.

Order accordingly.

Solicitors for the appellant: Parker & Parker.

Solicitors for the respondent: Ackland & Nowland.

P. NICHOLS

[FEDERAL COURT OF AUSTRALLA]

TACO BELL PTY. LTD. v.TACO COMPANY OF AUSTRALIA INC. *

Trade Practices - Unfair practices - Misleading and deceptiveconduct - Principles -"Taco Bell's Casa" - Meaning ofname in Sydney commerce - Whether relevant mark distinctive ofplaintiff's goods and services - Whether false representation of standard, quality, grade, sponsorship or approval Trade Practices Act 1974 (Cth), ss. 52,53.

Trade Practices - Passing off - Action - Remedyfor invasion ofproperty in goodwill - Plaintiff to show it had local goodwill.

The applicant, Taco Bell Pty. Ltd. a corporation incorporated in NewSouth Wales, had, for several years, conducted a Mexican food restaurantat Bondi, Sydney, under the name "Taco Bell's Casa". It had registered in1974 in New South Wales "Taco Bell" and "Taco Casa" as business namesand the applicant had commenced negotiations to establish similarrestaurants under the same name in other parts of Sydney. Therespondent, Taco Company of Australia Inc. was a corporation incorporated in the United States of America in 1980 for the purpose ofestablishing Taco Bell restaurants in Australia, restaurants which were tobe similar to some 1,300 distinctive restaurants operating under the name"Taco Bell" mainly in the United States of America. In Australia therespondent operated such a restaurant since 1981 in George Street,Sydney, and used the letters "T.M." in association with "Taco Bell" inadvertising its business. Some of the respondent's signs and advertisementsstated "Taco Bell is the trade mark of Taco Bell, a California corporation".In an action in the Federal Court of Australia the applicant claimed thatthe respondent was guilty of misleading and deceptive conduct in breach of

• [EDITOR'S NOTE: An appeal to the Full Court was dismissed.)

60 F.L.R.) FEDERAL LAW REPORTS 61

ss. 52 and 53 of the Trade Practices Act 1974 and guilty of passing off.The respondent counterclaimed making similar allegations.

Held: (I) The respondent was in breach of s. 52 of the Trade PracticesAct 1974 because the respondent by the use of the name "Taco Bell" in itsrestaurant operations did engage in trade and commerce that was likely tomislead and deceive and was misleading and deceptive in the local market.

Hornsby Building Information Centre Pry. Ltd. v. Sydney BuildingInformation Centre Ltd. (1978), 140 C.L.R. 216; Oertli v. E. J. Bowman(London) Ltd., [1957] R.P.C. 388, applied.

(2) That the respondent's licensor had operated or licensed a large chainof "Taco Bell" restaurants in the United States of America was no answerin the present case.

(3) The respondent, by using the name "Taco Bell" as it did, was passingoff its business in the Sydney metropolitan area as that of the applicant.The action for passing off was designed to protect the goodwill whichexists within the jurisdiction in question and the knowledge by people inSydney that a successful business under the name of "Taco Bell" was beingconducted in the United States of America did not, in this instance, givethat business a goodwill in Sydney.

Warnink v. J. Townend & Sons (Hull) Ltd., [1979] A.c. 731; StarIndustrial Co. Ltd. v. Yap Kwee Kor, [1976] F.S.R. 256, applied.

W & A. Gilbey Ltd. v. Continental Liqueurs Pry. Ltd. (1960), 103C.L.R. 406, distinguished.

(4) On the facts of this case the applicant was not entitled to succeedunder s. 53 of the Trade Practices Act 1974.

(5) The assertion "T.M." and "Taco Bell is the trade mark of Taco Bell, aCalifornia corporation" by the respondent on its signs was not to beregarded as a representation that "Taco Bell" was registered as a trademark in Australia.

ApPLICATION.

Application and counter-application to the Federal Court ofAustralia seeking orders restraining the parties from using certainbusiness names and from passing off.

A. M. Gleeson Q.C. and J. D. Heydon, for the applicant.

R. L. Hunter Q.C. and w: M. Gummow, for the respondent.

Cur. adv. vult.

FED.CTOF AUST.

1981

TACO

BELL

Prv. LTD.V.

TACO

COMPANVOF

AUSTRALIA

INC.

The following written judgment was delivered. DEc. 22.

ELLICOTT J. Taco Bell Pty. Ltd. (the applicant) has for severalyears conducted a Mexican food restaurant at Bondi under thename "Taco Bell's Casa". In January 1981 an American company,Taco Company of Australia Inc. (the respondent) opened a Mexicanfood restaurant at Granville. On 3rd September, 1981, it openedanother in George Street in the inner City of Sydney.

Since 3rd September each of the restaurants conducted by therespondent has traded under the name "Taco Bell". In advertising


FED.CT

OF AusT.1981

TACO

BELL

PTY. LTD.

V.

TACO

COMPANY

OF

AUSTRALIA

INC.

Ellicott J.

and on signs relating to its business it has used the letters "T.M." inassociation with the name "Taco Bell" and has stated "Taco Bell isthe trade mark of Taco Bell, a California corporation".

The applicant claims that the respondent is guilty of misleading ordeceptive conduct and of making false representations contrary toss. 52 and 53 of the Trade Practices Act 1974 (Cth) (the Act) and ispassing off the respondent's goods and services as the goods andservices of the applicant.

The respondent denies these claims and has itself lodged acounterclaim alleging misleading and deceptive conduct, falserepresentations and passing off by the applicant. For the purposes ofthese claims it has added as a cross-claimant another Americancompany, Taco Bell and as cross-respondents, directors and shareholders of the applicant.

I shall first set out the significant facts relevant to the determination of the claim and the cross-claim.

The applicant was originally incorporated on 13th March, 1973,under the Companies Act, 1961 (N.S.W.) as "B. & B. MexicanEnterprises Pty. Ltd.". On 7th December, 1976, B. & B. MexicanEnterprises Pty. Ltd. changed its name to Taco Bell Pty. Ltd. On 8thFebruary, 1974, the applicant registered the names "Taco Bell" and"Taco Casa" as business names under the Business Names Act, 1962(N.s.W.). At all material times since its incorporation the applicanthas conducted a Mexican food restaurant at Bondi. The originalowner of the restaurant was an American, Bill Chillcoate, whoopened it in September 1970. According to statements in documentswhich are in evidence before me it was the first Mexican foodrestaurant to be opened in Sydney. The restaurant was at first rununder the name "Taco Bill's" and "Taco Bill's Casa". Prior to June1977, the shares in the applicant were owned by James Bruce Bairdand James David Baird. During their ownership thereof the name ofthe restaurant was changed from "Taco Bill's" and "Taco Bill'sCasa" to "Taco Bell's Casa".

On 3rd June, 1977, the shares in the applicant were purchasedfrom the Bairds by Eric Francis & Co. Pty. Ltd. and DenbradManagement Pty. Ltd. which have been joined as cross-respondentsby the respondent. At that date the business was conducted by theapplicant in the restaurant under the name "Taco Bell's Casa". Thedirectors of the company are now Eric Francis and his son RobertFrancis who have also been added as cross-respondents. Eric Francis& Co. Pty. Ltd. is now the sole beneficial shareholder of theapplicant.

The restaurant at Bondi seats approximately ninety people and itsgross sales have increased from approximately $170,000 in the yearended 30th June, 1978, to approximately $306,000 in the yearended 30th June, 1981. It is estimated that it catered for between48,000 and 49,000 diners in the year ended 30th June, 1981. It

60 F.L.R.] FEDERAL LAW REPORTS 63

caters mainly for customers who wish to be served by a waiter anddine on the premises but also offers a facility for take-away food. Itsmeals are relatively inexpensive. The name "Taco Bell's Casa" isdisplayed on the awning and on the front window of the restaurantas well as on the menu. The name "Taco Casa" appears on a boardon the front window of the premises and this name has in the pastbeen used in connexion with the restaurant. I am satisfied, however,from the evidence, that despite any such use the restaurant is knownas "Taco Bell's Casa" or "Taco Bell's". The name "Taco Tucker"was also used after the take-away food operation was commenced.

The applicant's restaurant has since 1971 been advertised in theordinary and classified sections of the Sydney telephone directory.Since (but not including) the 1977 directory, it has been advertised ineach section under the name "Taco Bell's Casa". It has also beenadvertised in the Wentworth Courier, a newspaper circulating in theeastern suburbs of Sydney.

From time to time it has been mentioned in newspaper andmagazine articles and copies of these dating from February 1978 tillMarch 1981 are in evidence. In articles dated February 1978 andMarch 1980, it is referred to under the name "Taco Bill's Casa". Inthe National Times of September 1980 and the Sydney CityMonthly of March 1981 it is referred to as "Taco Bell's Casa".

Up to the time of the hearing the applicant had only establishedone restaurant, but Mr. Robert Francis, a director of the company,gave evidence that he had always been of the view after taking overthe restaurant in 1977 that, if the business proved successful, therestaurant should be expanded, by which I take him to mean theapplicant should open up other restaurants. He has also held theview that it might open up a restaurant in the inner city.

In October 1979, after instructing the manager to look for suitablepremises, a restaurant was inspected in Glebe. Since April 1980 anumber of real estate agents have been approached and inquirieshave been made concerning the availability of a suitable locationwhere a second "Taco Bell's Casa" restaurant might be established.Since October 1979 over eight premises have been inspected onbehalf of the applicant with a view to expansion. Sites have beenconsidered in the St. George, Parramatta, Hurstville, Glebe and DeeWhy areas.

In August 1981 negotiations were commenced to purchase arestaurant at Pittwater Road, Manly, in the name of a company ofwhose shares the applicant is part owner. In October contracts wereexchanged to purchase the goodwill and equipment of the restaurantfor $52,500. It is the intention of the purchasing company, when thesale is completed, to operate a Mexican food restaurant there similarto the one at Bondi under the name "Taco Bell's Casa".

The respondent was incorporated in the State of Delaware in theUnited States of America in 1980 for the purpose of establishing and

FED.CTOF AUST.

1981

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BELL

PTY. LTD.V.

TACO

COMPANYOF

AUSTRALIA

INC.

Ellicott J.


FED.CT

OF AusT.1981

TACO

BELL

PTY. LTD.

V.

TACO

COMPANYOF

AUSTRALIA

INC.

EllicottJ.

operating Taco Bell restaurants in Australia. It is a wholly-ownedsubsidiary of another American company, Pepsico Inc. of theUnited States. The cross-claimant, Taco Bell, is incorporated inCalifornia and is also a wholly-owned subsidiary of that Americancompany.

The restaurants which the respondent opened this year in GeorgeStreet and at Granville are, it is said, operated under licence fromthe cross-claimant, Taco Bell. This last-mentioned company operatesand franchises the operation of a large chain of Mexican foodrestaurants under the name "Taco Bell" in the United States,Canada and Guam. It is the intention of the respondent to open andoperate other "Taco Bell" restaurants in the Sydney metropolitanarea if it is successful in these proceedings. These would includerestaurants in the eastern suburbs. In the long term other personswould be franchised to operate such restaurants.

In 1962 a Mr. Glen Bell opened a Mexican food restaurant inCalifornia under the name "Taco Bell". He subsequently openedmore restaurants operated in the same style and under the samename and granted licences or franchises to others to operate similarrestaurants. There are at present some 1,366 restaurants operatedunder the name Taco Bell in forty States of the United States, inCanada and in Guam. The number of such restaurants has increasedfrom 325 in 1969 to 1,100 in 1979. In 1970 there were 232operating in California and 157 in other States of the United States.In 1980 there were 345 operating in California and 925 in otherStates. The number of restaurants operated by Taco Bell itselfpresently exceeds those operated by others under franchise from it.The whole chain employs ove~ 10,000 people. Taco Bell is theassignee of the rights in the name "Taco Bell" of the founder Mr.Glenn Bell.

Taco Bell restaurants have always had a distinctive appearance.There is a standard Mexican decor and architecture with adistinctive belltower and bell. The restaurant at Granville is typicalof the general style of Taco Bell restaurants elsewhere. The GeorgeStreet restaurant is also typical except for the fact that it was notpractical to change the style of architecture of the building toconform exactly to the "mission" style of the Taco Bell buildings.Evidence was given as to how the restaurants have been conductedin the United States.

Taco Bell restaurants in the United States are operated accordingto a standard system. The menu is the same. The food is prepared tothe same recipe and is presented in the same way. They are brightlylit and emphasize take-away food or a very quick sit-down meal.There is no table service and bookings are not accepted. Customersorder their food at the counter, receive it wrapped and either take itaway or eat it at the tables. Liquor is not sold on the premises and itis company policy not to allow the consumption of alcohol. There is


an emphasis on hygiene, cleanliness and tidiness. All staff wearuniforms. The general colour scheme of yellow, orange and brown isfollowed in packaging, signs and uniforms. The restaurants competedirectly with other chains of stores selling what is often referred toas fast-food such as McDonalds.

The required method of establishing, operating and promotingTaco Bell restaurants is specified in a number of manuals andhandbooks. There are standard requirements for decor, signs andpresentation. There is an operations manual dealing with customerservice, food preparation, menu preparation, packaging, multiplewindow service procedure, daily restaurant operations, records,restaurant security and control, accounting, safety, cleaning andmaintenance and franchise restaurants. There is a restaurantmanager's handbook, a local store marketing handbook, an operations proficiency training handbook and various other manualsdealing with all aspects of the operation and promotion of therestaurant. The central management of Taco Bell in the UnitedStates regularly circulates the restaurant managers and franchiseesmemoranda providing information about and making suggestionsfor improving operations and promotion.

Mr. Robert Francis, a director of the applicant, says that at thetime his family purchased the shares in 1977 he had never heard ofthe name "Taco Bell" in any other context. He says that he firstheard of the name in reference to restaurants in America in July1978 when he saw an article appearing in the Financial Review of3rd July announcing that Pepsico Inc. had completed its mergerwith Taco Bell Inc.

In fact no restaurant or other business under the name "TacoBell" had been carried on by the California corporation Taco Bell orits affiliates or franchisees in Australia prior to the commencementof business in George Street on 3rd September, 1981.

The American corporation, Pepsico Inc. is also the parentcompany of the Pizza Hut corporation which conducts a chain offast-food outlets in the United States and Australia. In August 1979Mr. Robert Francis was approached by a representative of the PizzaHut corporation inquiring whether he was interested in selling thename Taco Bell. Nine months later he was approached by anotherrepresentative of Pizza Hut on the same subject. These discussionsdid not lead to any agreement. On 24th November, 1980, Mr.Francis received another approach from the solicitors for theAmerican corporation but without result.

Around this time it was announced that Pepsico Inc. was about toset up in Australia a chain of Mexican fast-food outlets under thename "Casa Amiga". Newspaper articles to this effect dated January1981 are in evidence. In fact, the restaurant opened at Granville bythe respondent in January 1981 was opened under the name "Casa

FED.CTOF AUST.

1981

TACO

BELLPTY. LTD.

V.

TACO

COMPANY

OF

AUSTRALIA

INC.

Ellicott J.


FED.CTOF AusT.

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BELL

PTY. LTD.V.

TACO

COMPANYOF

AUSTRALIA

INC.

Ellicott J.

Amiga". It was conducted under this name until September lastwhen the name was changed to "Taco Bell".

There was some conflict in the evidence as to what was said in theconversations between Mr. Robert Francis and representatives ofthe respondent and its parent corporation. I do not think anythingturns on the detail of these conversations. They are relevant only inthe sense that they establish that the respondent and its parent andaffiliate companies were aware of the existence of the applicant'srestaurant at Bondi as early as 1979 and were willing to acquire thename "Taco Bell's Casa" from the respondent if a price could beagreed upon. It is also clear that they were aware of the applicant'sfirm intention to continue to use the name "Taco Bell's Casa".

Photographs of the respective restaurants at Bondi, Granville andGeorge Street are in evidence and I have had the benefit of a view ofthe George Street and Bondi restaurants. Also in evidence areexamples of the packaging and other literature used in therespondent's restaurants. They are apparently copies of the distinctive packaging and literature used in the American chain.

Copies have also been tendered of the menus and table mats usedin the applicant's restaurant over the years of its operation.

Taco is a word of Spanish derivation and one of its meanings is "asnack". Apparently it is frequently used in cookbooks, restaurantreviews and menus to denote a crisp folded corn wafer filled withother food, typically cooked ground beef, fresh lettuce, tomato andshredded cheese. The word "casa" means "house".

The cross-claimant, Taco Bell, is registered in the United States asthe proprietor of the trade mark "Taco Bell" in various manifestations. Copies of the certificates of registration are in evidence. Ithas also applied for registration of the trade mark "Taco Bell" inAustralia and these applications are pending.

As stated earlier, the applicant at present serves approximately48,000 or 49,000 diners in a year. These customers reside mainly inBondi, the eastern suburbs and other parts of Sydney.

A number of witnesses were called on behalf of the applicant toprove reputation and to establish deception or a likelihood ofdeception. In each case these witnesses formed views (variouslyexpressed) that on hearing of or seeing the respondent's newrestaurant they thought there was a connexion between it and theBondi restaurant conducted by the applicant. It also seems that ineach case, as a result of discussions with the applicant's staff thesefalse assumptions were corrected. The witnesses came from Bondi,other eastern suburbs and other suburbs of Sydney. Several knewthe director, Mr. Robert Francis.

Their reactions on hearing of or seeing the George Streetrestaurant of the respondent varied. One thought the Bondirestaurant had expanded to the city, another thought - "they musthave opened another one". Another, on hearing on the radio that


Taco Bell was opening Mexican food restaurants in Granville and inthe city, thought they were being conducted by "Taco Bell's Casa"of Bondi. Another thought "fancy him opening up in town and notletting me know". Others thought they were connected or that theBondi restaurant had expanded. Another assumed the restaurant atGeorge Street was a franchise of "Taco Bell's Casa" restaurant atBondi.

As stated earlier, all these views, which of course were false, werecorrected by the applicant's staff.

These witnesses, however, did not simply wonder about thematter or only become confused as to whether it was one business orthe other. They actually formed a view which was incorrect. Allexcept one were cross-examined and most agreed that they noticeddifferences between the respondent's restaurant in George Streetand that of the applicant. They had varying occupations such asnurse, dental surgeon, building supervisor, publisher, bank officer,computer operator, property manager and student.

A large number of affidavits (in excess of fifty) were filed onbehalf of the respondent from deponents who had come to know theTaco Bell chain of restaurants in the United States and who live inAustralia. Some learned of them while visiting that country, otherslearned of them whilst living there and later came to Australia tolive. Some of them learned of Taco Bell in the United States in theI960s and others more recently. Each of them gave evidence of thecircumstances in which they came to know the Taco Bell restaurantsoverseas. Each of them seemed to be aware of the nature of therestaurants as Mexican fast-food outlets and of their distinctivearchitecture as well as the use of a bell along with the name "TacoBell". Some of them were aware of the applicant's restaurant atBondi. Those who were, said they wouldn't connect it with theAmerican chain. Some of them had become aware of the respondent's restaurants at Granville and George Street and had immediately associated them with the restaurants with which they hadbecome familiar in the United States. Several of them who saw therestaurant at Granville when it was called "Casa Amiga", immediately associated it with the Taco Bell restaurants in the United States.

I think it is clear from this evidence that there is a significantgroup of people in the Sydney area who are aware of the Taco Bellchain of restaurants in the United States, of the use in relation tothem of the name "Taco Bell", of the distinctive nature of theirarchitecture and get-up used, of the use of a bell with the name"Taco Bell" and of the nature of the business they conduct. Suchpeople are most unlikely to be confused between the Taco BellAmerican chain and the Bondi restaurant of the applicant. Onseeing the Granville or George Street restaurants of the respondentor restaurants identical to them they would associate them with theAmerican chain. In other words, because of their previous experi-

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BELL

PTY. LTD.V.

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COMPANY

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AUSTRALIA

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Ellicott 1.


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PTY. LTD.V.

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AUSTRALIA

INC.

ElIicottJ.

ence, they would not be misled or deceived. If they visited theapplicant's restaurant at Bondi it is clear from the evidence of someof these witnesses that they would not regard it as associated withthe American food chain.

In my opinion, the facts I have outlined and the evidence whichsupports them, establish that the applicant has, since at least 1977,conducted a restaurant at Bondi under the name "Taco Bell's Casa"and that that restaurant has been patronized by people who comefrom various parts of the metropolitan area of Sydney. Over theperiod, its business has grown and at present approximately 48,000or 49,000 diners are catered for each year. I think a significantnumber of these people have come to know the restaurant as "TacoBell's Casa" or "Taco Bell's".

I also conclude from the evidence that a substantial number ofthose who have dined at the restaurant, who would themselves forma significant section of the public, would on seeing the respondent'srestaurant at George Street or Granville, form the view that in someway it was associated with the applicant and its restaurant. Theirviews might vary, for example, they may think it is "the samebusiness" or that it is a "franchisee" or is a "branch" of the businessconducted at Bondi. This would be so, in my opinion, notwithstanding the distinctive nature of the architecture and get-up of therespondent's restaurant and notwithstanding the obvious differencesin the style and manner of conducting them.

Indeed, the evidence before me of what customers of theapplicant's restaurant thought on seeing the respondent's supportsthe conclusion I would have drawn from the similarity between thetwo names - that is, that the ordinary member of the publicknowing of the Bondi restaurant would conclude that there wassome business connexion between the two establishments. I don'tthink there can be any real doubt on the evidence before me that thetruly distinctive feature of the applicant's restaurant which fixes inthe customer's mind is its name "Taco Bell's Casa". On seeing thename "Taco Bell" as the name of a fast-food outlet in George Street,I think it natural that a customer of "Taco Bell's Casa" would thinkthere was some business connexion between the two. The fact thatthe businesses are different and that the "Taco Bell" restaurantshave the distinctive features in their get-up etc. would not, in myopinion, prevent this conclusion from being drawn. Indeed somewho had been to "Taco Bell's Casa" might patronize the GeorgeStreet restaurant believing it to be so connected whether they saw itfirst themselves or heard of it from others. Others, not knowing"Taco Bell's Casa" and having patronized the George Streetrestaurant on seeing the restaurant at Bondi, or at some otherlocation, for example, Manly, might go there expecting the sametype of service as they received at George Street. In either case,


deceived by the similarity of the names, they could act to what theymight regard as their detriment.

It was submitted by counsel for the respondent that the ordinarymember of the public, who knew the applicant's restaurant and who,on seeing the respondent's, formed the view that it had a businessconnexion with the applicant's, would, if he or she patronized therespondent's, quickly realize it had no connexion because of theobvious differences and the emphasis on the American connexion inthe signs and literature used in the restaurant. There is a great dealof force in this argument.

However, having considered the relevant evidence, I am satisfiedthat there would be a significant section of the public whose initialmisconception, induced by the similarity between the names, wouldnot be removed in this way. There would be those who wouldn'tnotice the literature - remembering the restaurant is designed forpeople in a hurry - and there would be others who, even if theynoticed it, would not necessarily conclude that there was no businessconnexion between the two.

The ordinary public is educated to treat distinctive names like"Taco Bell" as representing the goods or services of particulartraders and if it is confronted by the use of very similar names, Ithink it takes a great deal to remove the assumption which thepublic naturally makes - that the goods or services in relation towhich they are used are the product of the same or a relatedbusiness. In any event, those who go into the "Taco Bell" restaurantin George Street or Granville, believing it to be connected with theBondi restaurant, would have acted on the faith of the misconception before they were confronted with the literature and othermaterial in question.

It was submitted that the words "Taco" and "Casa" were wellknown Mexican words and that the names "Taco Bell" and "TacoBell's Casa", although adapted to distinguish a particular restaurant,had a descriptive character about them. It is not clear to me fromthe evidence that the words are well known or that their meaningsare well understood here. However, I am prepared to assume thatsome members of the relevant public here would be aware of theirdescriptive character. Nevertheless when used in the name "TacoBell" or "Taco Bell's Casa" they are composite parts of names whichI am satisfied are quite apt to distinguish one restaurant fromanother.

It is equally clear, however, that there is a significant section ofthe public who would, on seeing the respective restaurants, not bedeceived in the manner I have described, because they are familiarwith the Taco Bell chain of restaurants in the United States. It islikely that they would know sufficient about that chain not to beconfused or deceived on confronting the different style of restaurantconducted by the applicant. These people would neither be misled

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70 FEDERAL LA\V REPORTS [1981

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nor confused. On the balance of probabilities, I am satisfied thatpeople who obtained this knowledge of the American chain exist asa significant section of the public in Sydney and so existed before theapplicant started using the name "Taco Bell's Casa" prior to 1977.

It is clear, of course, that neither the respondent nor Taco Bell,the California corporation, nor any of their United States affiliates,conducted any business activity here in relation to restaurants underthe name "Taco Bell" prior to September 1981. There were, forinstance, incidental references to Taco Bell as a United States foodoutlet in a film China Syndrome shown in Australia, in the DailyMirror newspaper (September 1979) and in a recording. It may havebeen referred to in financial articles such as those appearing in theFinancial Review. However, none of these uses of the name waspart of business activity conducted by the respondent, Taco Bell ofCalifornia, or their affiliates. There was no advertising in Australiaby or on behalf of the United States chain nor any other endeavourto attract Australian custom for their products or services.

All this evidence, the applicant claims, establishes that there hasbeen a breach of s. 52 and s. 53 of the Trade Practices Act by therespondent and a passing off by it of the applicant's business. Itasserts that, notwithstanding that there is a significant number ofpeople in the Sydney area who, by reason of their association withthe United States, have a knowledge of the United States "TacoBell" chain, this knowledge related to what occurred in the UnitedStates did not result from business activity here by or on behalf ofthe respondent or the Taco Bell corporation and was not the resultof any attempt to establish a business here. It submits that theUnited States corporation has no goodwill here by virtue of thisknowledge and that the only relevance of it is that it shows thatthere are some people in the community who would not be deceivedby the respondent's actions.

The applicant submits that it is not only its existing customerswho need protection from the likelihood of misleading and deception, but also those who may patronize its restaurants in the futureand those who come to its restaurant having been to the respondent's. All this misleading and deception, it is submitted, is the resultnot of the applicant's conduct but the respondent's and therefore therespondent should be restrained from continuing it. In a similar veinthe applicant asserts that it is entitled to a finding that therespondent has passed off its business as and for the applicant'sbusiness.

Were this simply a case of a respondent who or whose affiliateshad never been associated with "Taco Bell" restaurants, I do notthink there could by any real doubt that in commencing businesshere under that name it would be guilty of a breach of s. 52.However, this is not the case, and the proper determination of theissues raised by the parties depends, to a very large degree, on the


effect in law of my finding of fact that there is and has been sinceprior to the use of "Taco Bell's Casa" by the applicant, a significantsection of the public in the Sydney area who are aware, in themanner I have described, of the "Taco Bell" chain of restaurants inthe United States with which the respondent is now associated. Doesit mean that the respondent has a reputation here which it canprotect from passing off or which it can rely upon as a defence toany such action by the applicant?

In dealing with the effect of that fact, it is convenient to deal firstwith the alleged breach by the respondent of s. 52 of the Act.

In order for such a breach to be found it must be established bythe applicant that it is the respondent's conduct in trade orcommerce that has caused or is likely to cause any misleading ordeception (Hornsby Building Information Centre Pty. Ltd. v.Sydney Building Information Centre Ltd. (1)).

At first sight it does appear that it is the respondent's action inopening the restaurants which has caused or is likely to cause themisleading or deception. If it did not conduct them the deceptionwould not occur. However, similar arguments could have been usedagainst the Sydney Building Information Centre in the above case.The fact that in that case the respondent used descriptive words inits title caused a degree of confusion in the public mind but this hadto be accepted because the respondent was doing no more thandescribing its business. Here the words "Taco Bell" are notdescriptive. They are as I have found words clearly capable ofdistinguishing one trader's business from another. What is suggestedis that the respondent had an existing reputation in Australia andthat all it was doing was taking advantage of or expanding thatreputation.

The respondent claims that it is the applicant that has caused anydeception because it deliberately chose to use the name and takeadvantage of the international reputation of the American "TacoBell" chain. In my opinion, the evidence does not support thisconclusion. There is certainly no evidence that the applicant or itsthen directors knew of any existing reputation in Australia attachingto the American chain or decided to take advantage of it when thename "Taco Bell's Casa" was adopted. The restaurant was previously called "Taco Bill" and perhaps "Taco Bill's Casa" and thismay have derived from the Christian name of the original owner,Bill Chillcoate. In my opinion, the most that can be inferred is thatthe person who caused it to be adopted was an American and thathe adopted "Taco Bell's Casa" knowing it was the name of such achain. However, even if it was deliberately chosen it does not followthat it was the applicant and not the respondent who is guilty ofmisleading or deceptive conduct or passing off.

(I) (I 978)140 C.L.R. 216.

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If I am to hold that the respondent has infringed s. 52 of the Act,I must be satisfied that it has engaged in trade and commerce inconduct that is misleading or deceptive or is likely to mislead ordeceive. Passing off is a classic instance of deception in the marketplace and it has been held that in applying s. 52 assistance is to begained from cases relating to passing off. The law of passing offrecognizes a trader's right to protect the goodwill which attaches tohis business because a particular name etc. has become distinctive inthe market of or, to put it another way has come to mean his goodsor services. Clearly the use by one trader of a name which hasbecome distinctive of the goods of another can be as misleading anddeceptive in the market-place as a false statement made by a traderabout the goods of another. Basic to establishing such deception isproof that in the market-place the particular name etc. distinguishesor means to consumers the goods or services of an identifiabletrader.

The point is clearly made in the judgment of Jenkins L.J. (as hethen was) in Oertli v. E. 1. Bowman (London) Ltd (2) in thefollowing passage: "It is of course essential to the success of anyclaim in respect of passing-off based on the use of a given mark orget-up that the plaintiff should be able to show that the disputedmark or get-up has become by user in this country distinctive of theplaintiffs goods so that the use in relation to any goods of the kinddealt in by the plaintiff of that mark or get-up will be understood bythe trade and the public in this country as meaning that the goodsare the plaintiffs goods" (3). (Appeal to House of Lords dismissed (4).)

Section 52 in its application to this case is concerned with tradeand commerce in Australia and in particular trade and commerce inthe Sydney metropolitan area. By way of contrast, it is clearly notconcerned with conduct by an American company in trade andcommerce in the United States. The question therefore for thepurposes of s. 52 is what did the name "Taco Bell's Casa" as at 3rdSeptember, 1981, mean in trade and commerce in the Sydneymetropolitan area.

On the basis of the findings I have already made there was, at thatdate and, in my view, there still is, a significant number of membersof the public in the Sydney metropolitan area who, in my opinion,regard the name "Taco Bell's Casa" as denoting or meaning therestaurant business conducted by the applicant at Bondi and whowould on seeing that name or a name such as "Taco Bell" used inconnexion with a restaurant elsewhere within the Sydney metropolitan area believe that it was a restaurant which had a businessconnexion with the applicant's. Clearly enough if the restaurant was

(2) [I 957J R.P.C. 388.(3) [1957J R.P.C., at p. 397.

(4) [1959J R.P.C. 1.

60F.L.R.] FEDERAL LAW REPORTS 73

not conducted by the applicant or had no such connexion theywould thereby be misled or deceived.

Furthermore, in my opinion, a significant number of such peoplewould, on seeing the name "Taco Bell" as used by the respondent inconnexion with its restaurants in Granville and George Street,believe that it had some business connexion with the applicant.

However, there was also, as at 3rd September, 1981, a significantnumber of people in Sydney who knew the "Taco Bell" chain ofrestaurants in the United States and who knew that in the UnitedStates the name "Taco Bell" meant the restaurants that they hadcome to know there. They had noticed the distinctive character ofthose restaurants and when they saw a similar style of restaurantopen in Sydney on or after 3rd September last, they thought theAmerican chain had opened up here. They were clearly notdeceived.

Does this mean, therefore, that, as at that date, the name "TacoBell" or "Taco Bell's Casa" had no clear meaning in Sydney or that"Taco Bell's Casa" meant one trader and "Taco Bell" another? Is ittherefore deception of the public which has to be accepted? Is therespondent merely using its licensor's name and, so far as this secondgroup of people are concerned, taking advantage of its reputationhere?

In my opinion, the answer to this apparent dilemma lies in what Ihave already stated - that s. 52, for the purposes of its applicationto the present case, is concerned with the protection of the consumerin trade and commerce in the local market in the Sydneymetropolitan area and the question which arises is what did thewords "Taco Bell" mean to those consumers on 3rd September,1981. The evidence, I think, establishes quite clearly, that, at thattime, the words "Taco Bell" were part of a name "Taco Bell's Casa"which meant to those consumers a restaurant at Bondi in factconducted by the applicant. Neither the respondent nor its licensorhad previously conducted any restaurant business in Australia usingthe name "Taco Bell" nor had they attempted to attract the customof people in Sydney to their business outside Australia. In trade andcommerce in the local market the name, therefore, could not havehad a meaning to consumers which denoted them. To some peopleresiding here it had and has a meaning connected with them but thisrelates to what the name "Taco Bell" means in the United States.

Since s. 52 is concerned with consumers in the local market andsince "Taco Bell's Casa" at the relevant date meant to them, as Ihave found, the applicant's restaurant, any use in the restauranttrade in that market of the name "Taco Bell's Casa" or any namesimilar to it (such as a "Taco Bell'') which, contrary to the fact, ledor was likely to lead such consumers to believe that the person sousing it was connected in a business sense with the applicant, wouldbe deceptive or misleading conduct in trade or commerce and a

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breach of s. 52. The use by the respondent of the name "Taco Bell"in the manner complained of was such a use and in my opinion wasa breach of s. 52. It is no answer that the respondent's licensor hasoperated or licensed a large chain of "Taco Bell" restaurants in theUnited States and that a significant number of people in Sydneyknow of them for this is knowledge of what "Taco Bell" has meantin the United States. When they see the respondent's restaurants inSydney they may quickly relate this knowledge to those restaurantsbut when this happens the respondent is building on a reputationwhich exists, not in this market, but, in the United States market.

As I have said earlier, it is appropriate in applying s. 52 to haveregard to the principles relating to the action of passing off. Aconsideration of those principles shows, in my opinion, that the viewI take as to the application of s. 52 to the facts of this case isconsistent with them.

Jenkins L.J., in the passage I have quoted, pointed out that aplaintiff in such an action must show that the relevant mark by userin the local market has become distinctive of its goods or services.

There have, however, been cases where courts have tended toregard knowledge by people, in the local market, of the name ormark a foreign trader uses in a foreign market, as sufficient toestablish reputation in the local market for the purposes ofrestraining passing off. The respondent's argument relied heavily ona number of cases which, it was said, support this proposition (seeFletcher Challenge Ltd. v. Fletcher Challenge Pty. Ltd. (5);Westinghouse Electric Corporation v. Thermopart Pty. Ltd. (6);Poiret v. Jules Poiret (7); Panhard et Levassor v. Panhard-LevassorMotor Co. Ltd. (8); Sheraton Corporation of America v. SheratonMotels (9); Baskin-Robbins Ice Cream Co. v. Gutman (10); Maxim'sLtd. v. Dye (II); C. & A. Modes v. C. & A. (Waterford) Ltd. (12);Wienerwald Holding A.G. v. Kwan, Wong, Tan & Fong(l3);Metric Resources Corporation v. Leasemetrix Ltd. (14)).

The applicant, on the other hand, submitted that the reputationwhich a trader has to establish in order to sustain an action forpassing off must flow from business activity on that trader's partwithin the jurisdiction and a number of recent decisions were citedin support of this (see Globelegance v. Sarkissian (15); AlainBernardin et Compagnie v. Pavilion Properties Ltd. (16); AmwayCorporation v. Eurway International Ltd. (17); Athletes Foot

(5)[1981)1 N.S.W.L.R. 196.(6) [I968)W.A.R.39.(7) (1920) 37 R.P.C. 177.(8) [I901)2Ch.513.(9) (I 964) R.P.C. 202.

(10) (1976) F.S.R. 545.(11) (1977)1 W.L.R.1l5'5.

(12) (1978) F.S.R. 126.(13) (1979) F.S.R. 381.(14) (1979) F.S.R. 571.(15) (1974) R.P.C. 603.(16) [I967)R.P.C.581.(17) (1974)R.P.C.82.


Marketing Associates Inc. v. Cobra Sports Ltd. (18); LettuceEntertain You Enterprises Inc. v. Gaunts (9)).

In B. M Auto Sales Pty. Ltd. v. Budget Rent A Car System Pty.Ltd. (20) Gibbs J. (as he then was) referred to this problem (withoutdeciding it) in the following passage: "The main argument presentedon behalf of the appellants on this aspect of the case was that it hadnot been established that the name had become distinctive of therespondent's business in the Northern Territory at any materialtime. It was submitted that it was not enough that the name hadbecome distinctive of the respondent in (say) New South Wales orthat persons from New South Wales who had dealt with therespondent there, and who wished to hire a car from the respondentin Darwin, were confused by the similarity of names. It was saidthat it was not proved that the respondent had at any material timeacquired a reputation under its business name in Darwin and thatthe fact that it had acquired a reputation elsewhere was not enough.Particular reliance was placed on the decision in Alain Bernardin etCompagnie v. Pavilion Properties Ltd. (21). In that case, and in thelater case of Amway Corporation v. Eurway International Ltd. (22)it was held that in order for a plaintiff to succeed in maintaining inthe English courts an action for passing-off, the plaintiff must haveacquired a business reputation in the United Kingdom which wasentitled to be protected, that this could only be acquired by somesort of user in the United Kingdom, and that some knowledge of thename of the plaintiff, without any business activities of the plaintiff,in the United Kingdom, would not be sufficient. However, veryslight activities in England have been held to suffice; for example, itwas enough that the plaintiff took bookings in England (SheratonCorporation ofAmerica v. Sheraton Motels Ltd. (23)), or carried outorders in England (Poiret v. Jules Poiret Ltd. (24)). The judgments ofKnox c.J. and Dixon J. in Turner v. General Motors (Australia)Pty. Ltd. (25) are consistent with these authorities" (26).

In the Athletes Foot case (27) Walton J. considered most of thecases cited on behalf of the respondent and the applicant anddecided that a plaintiff cannot sue for passing off if he has nocustomers or nobody who is in a trade relation with him in thejurisdiction. He summarized his views in the following passage: "...it would appear to me that, as a matter of principle, no trader cancomplain of passing off as against him in any territory - and it willusually be defined by national boundaries, although it is wellconceivable in the modern world that it will not - in which he hasno customers, nobody who is in a trade relation with him. This will

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(18) [1980] R.P.C. 343.(19) Unreported-see E.I.P.R. (May

1980) 170.(20) (1976) 51 A.L.J.R. 254.(21) [1967] R.P.C. 581.(22) [1974] R.P.C. 82.

(23) [1964] R.P.C. 202.(24) (1920) 37 R.P.C. 177.(25) (1929) 42 C.L.R. 352.(26) (1976) 51 A.L.J.R., at p. 258.(27) [1980] R.P.C. 343.


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normally be expressed by saying that he does not carryon any tradein that particular country ... but the inwardness of it will be that hehas no customers in that country; no people who buy his goods ormake use of his services (as the case may be) there" (28).

In that case Walton J. refused to grant an injunction because theplaintiffs did not disclose "one single solitary transaction by way oftrade with anybody in this country at all".

Having considered all the authorities cited, I agree in generalterms with the conclusion which Walton J. reached. In order tosucceed in an action for passing off in relation to the Sydneymetropolitan area a plaintiff must show that it has a goodwill here.This can usually be established by proof that there has been someprior business activity here involving the use of the name or mark orget-up in question in relation to the plaintiffs goods or services. Thenature and degree of business activity will differ from case to case. Itdoes not follow from what Walton J. said that a single transactionwill always suffice. In some cases it may. Nor is it necessary that aplaintiff has established a place of business here. Its goods may havebeen imported and sold here under the relevant name or mark byanother. It may have licensed people to use its name or mark onproducts which are sold there. It may have advertised here to solicitorders by post from the public or to encourage the public to travel todo business at its premises in another country. In this time of fastcommunication it may even have solicited customers here to travellong distances to another country to use its services there.

Many of the cases cited on behalf of the respondent can, I think,be explained on this basis. For example, Poiret's case, PanhardLevassor's case, Sheraton's case, Maxim's case, C. & A. Modes caseand the Metric Resources case. In the Baskin-Robbins case andWienerwald's case no injunction was granted. The decisions in theFletcher Challenge case and the Westinghouse Electric Corporationcase, do not, in my view, support the broad proposition for whichthey were cited in argument. In each case there appears to havebeen some prior business activity involving use of the name. In theFletcher Challenge case Powell J. regarded the announcement hereof the proposed amalgamation and of the proposed new corporatename as creating a new reputation (29). In the WestinghouseElectric Corporation case the facts are not clear, but it appears thata representative of Westinghouse in Australia advertised"Laundromat" in newspapers and periodicals "circulating in Australia" and that there had, prior to the relevant date, been correspondence between that representative and the defendant's solicitors inWestern Australia in which the question of using "Laundromat" hadbeen discussed.

(28) (1980) R.P.C., at p. 350. (29) [19811 1 N.S.W.L.R., at pp.198-199.205.


In contrast the Alain Bernardin case (the Crazy Horse case), theAmway Corporation case and the Athletes Foot case clearly supportthe proposition that some prior business activity within thejurisdiction is usually necessary to found an action for passing off.Obviously business activity by a trader within the jurisdiction isstressed because it is this that creates goodwill and custom andencourages the public there to seek to do business with the trader.

The importance of proving the existence of a local goodwill tosuccess in an action of passing off is stressed in several recentauthoritative statements of the principles underlying the action. Ihave already referred to Oertli v. E. 1. Bowman (London) Ltd. (30).It is no accident that Jenkins L.J. said that the plaintiff should beable to show "that the disputed mark or get-up has become by userin this country distinctive of the plaintiffs goods" (emphasis added).In Warnink v. 1. Townend & Sons (Hull) Ltd. (31) Lord Fraser listedthe following facts as those which a plaintiff must prove in a passingoff action: "(1) that his business consists of, or includes, selling inEngland a class of goods to which the particular trade name applies;(2) that the class of goods is clearly defined, and that in the minds ofthe public, or a section of the public, in England, the trade namedistinguishes that class from other similar goods; (3) that because ofthe reputation of the goods, there is goodwill attached to the name;(4) that he, the plaintiff, as a member of the class of those who sellthe goods, is the owner of goodwill in England which is ofsubstantial value; (5) that he has suffered, or is really likely to suffer,substantial damage to his property in the goodwill by reason of thedefendants selling goods which are falsely described by the tradename to which the goodwill is attached" (32) (Emphasis added.) (Seetoo Cadbury Schweppes Pty. Ltd. v. Pub Squash Co. Pty. Ltd. (33);Testut Freres v. J. E. Lightbourne & Co. Ltd. (34).)

In Warnink's case (35) Lord Diplock also emphasized that theaction for passing off was designed to protect the property in thebusiness or goodwill likely to be injured by the misrepresentation.He had previously made the point in the following passage from hisjudgment in the Privy Council in Star Industrial Co. Ltd. v. YapKwee Kor (36): "Whatever doubts there may have previously beenas to the legal nature of the rights which were entitled to protectionby an action for 'passing off in the courts of law or equity, thesewere laid to rest more than 60 years ago by the speech of LordParker of Waddington in Spalding v. A. w: Gamage Ltd. (37) withwhich the other members of the House of Lords agreed. A passingoff action is a remedy for the invasion of a right of property not inthe mark, name or get-up improperly used, but in the business or

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(30) [19571 R.P.C., at p. 397.(31) [19791 A.C. 731.(32) [19791 A.C., at pp. 755-756.(33) [198012 N.S.W.L.R. 851.

(34) [19811 F.S.R. 458.(35) [1979IA.C.731.(36) [19761 F.S.R. 256.(37) (l918)35R.P.C.101.


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goodwill likely to be injured by the misrepresentation made bypassing off one person's goods as the goods of another. Goodwill asthe subject of proprietary rights, is incapable of subsisting by itself.It has no independent existence apart from the business to which itis attached. It is local in character and divisible; if the business iscarried on in several countries a separate goodwill attaches to it ineach. So when the business is abandoned in one country in which ithas acquired a goodwill the goodwill in that country perishes with italthough the business may continue to be carried on in othercountries" (38).

All these statements of the relevant principles, in my opinion,emphasize that the action for passing off is designed to protect thegoodwill which exists within the jurisdiction in question.

"Goodwill" has been said to be the benefit and advantage of thegood name, reputation and connexion of a business. It is theattractive force which brings in custom (see Inland RevenueCommissioners v. Muller & Co. 's Margarine Ltd. (39) per LordMacnaghten).

A business has goodwill attached to it in a particular place if thereis an attraction among people there to do business with it. Even if ithas no place of business the people residing there may neverthelessbe attracted to do business with it. For example, by buying goodswhich it produces and are sold there by importers, or by orderinggoods from it by mail or by travelling from their residence to itsplace of business in an adjoining country. This "attractive force" isusually created because there has been some business activity in thatplace on the part of the owner of the business or those dependent onit, intended to so attract people. One cannot, in logic, exclude thepossibility that it could exist because people who live there areprompted to seek out the business by a knowledge gained by themwhilst travelling or living in another country where the place ofbusiness exists (e.g. a Hong Kong tailor). However, one thing, in myopinion, is clear, namely, knowledge by people in Sydney that asuccessful business is being conducted in the United States under adistinctive name does not give that business a reputation or goodwillhere unless people in Sydney are attracted to do business with itdespite the distance separating them. Only then could it be said thatthere existed in Sydney "the attractive force which brings incustom". In many cases distance or the nature of the business willmake it highly improbable that anybody could be so attracted.

Here, the overseas business is operating or licensing the operationof Mexican fast-food restaurants in the United States under thename "Taco Bell". People living here have for some time been awareof that business because they have travelled or lived in the UnitedStates. But neither the proprietor of the business nor any person

(38) [19761 F.S.R., at p. 259. (39) [19011 A.C. 217, at pp. 223-224.


dependent on it has ever carried on business here. Nor have theysought by advertising or otherwise to attract customers from here topatronize its restaurants in the United States. Indeed, the verynature of the business - conducting fast-food outlets - and thegreat distances separating Sydney from that place makes it highlyimprobable that they would ever attempt to do so. This case, in thisrespect, is quite unlike the case of Maxim's Ltd. (40). It is possiblethat some of those people who have this knowledge, if they travel tothe United States, might patronize "Taco Bell" restaurants there, butclearly enough it would be absurd to suggest that they would resortthere for that purpose or while living in Sydney attempt to dobusiness with it.

It follows, in my view, that the knowledge of this section of thepublic in Sydney of "Taco Bell" restaurants in the United States isno evidence of relevant reputation nor of the existence of a goodwillhere which the respondent or Taco Bell of California is entitled toprotect by an action of passing off. Nor is it, in the circumstances ofthis case, any defence to an action for passing off by the applicantsince, having regard to the evidence, it did not, in my opinion,prevent the applicant from establishing a reputation for its restaurant under the name "Taco Bell's Casa".

The view I have formed as to the principles applicable in actionsfor passing off is, I think, fully consistent with a number of casesrelating to the registration of trade marks in which it has been heldby the High Court that a trade mark, which is well-known overseas,maY be registered here by another trader, if it has not been used hereby the foreign trader (see Seven Up Company v. 0. T. Ltd. (41); ReThe Registered Trademark "Yanx"; Ex parte AmalgamatedTobacco Corp. Ltd. (42); Aston v. Harlee Manufacturing Co. (43);cf. Blackadder v. Good Roads Machinery Co. Inc. (44)).

This conclusion does not mean, of course, that a knowledgeamongst a section of the public of the use of a name by a foreigntrader in another country is not relevant in determining what aparticular name or mark means in the market place here. Forinstance, in w: & A. Gilbey Ltd. v. Continental Liqueurs Pty.Ltd. (45), the plaintiff was unable to establish a reputation in thename "Smirnoff' in relation to vodka, at the relevant date, havingregard to the fact that the name "Smirnoff" vodka had long enjoyedan extensive reputation overseas and that the potential market forits product here was provided by immigrants to whom that overseasreputation was already well known. Clearly enough, if there is awidely held view that a particular name is used in another countryto denote the product or business of a particular trader, it may be

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(40) (1977]1 W.L.R. 1155.(41) (1947) 75C.L.R. 203.(42) (1951) 82C.L.R. 199.

(43) (1960) 103C.L.R. 391.(44) (1926) 38 C.L.R. 332.(45) (1960) 103 C.L.R. 406.


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difficult for another setting up business in Australia to establish areputation in that name for its own product.

However, this is not the case here. There is and has been, as Ihave held, a significant group of people in Sydney who know thename "Taco Bell" to be the name of a chain of American Mexicanfast-food restaurants. However, the applicant is not specificallyconducting its restaurant here with a view to attracting these people.It's restaurant is and has been conducted to attract custom frompeople throughout the Sydney metropolitan area and as a resultthere is, on the evidence, in my view, a significant section of thepublic in Sydney who regard the name "Taco Bell's Casa" asrepresenting the applicant's restaurant and who would, on seeing itor a name such as "Taco Bell" used on another restaurant inSydney, believe that that restaurant had some business connexionwith the applicant's.

In other words, there is a significant section of the public whowould be likely to be misled or deceived by the use of the name"Taco Bell" by the respondent in the manner proved by theevidence.

Some of those people, in my opinion, would be likely to act on thebasis of that misleading or deception. Such misleading or deception,for the reasons I have given, is the fault of the respondent not theapplicant. The respondent is therefore in breach of s. 52 of the Act.

There would as I have held, be some members of the public,because of their association with the chain in the United States, whowould not be deceived, but this does not prevent s. 52 from applyingto the facts of this case. It is pertinent to note that, so far as theevidence goes, these people would not be deceived by the applicant'sconduct either, because none of them, knowing the American chainand noting the differences between the two, would regard theapplicant's restaurant as being connected with the American chain.

It also follows in the light of my earlier findings, that, notwithstanding the knowledge of some people in Sydney of "Taco Bell"restaurants in the United States, the respondent, by using the name"Taco Bell" as it has, is, in my opinion, passing off its business in theSydney metropolitan area as that of the applicant.

The applicant has also claimed that the respondent is falselyrepresenting that the goods and services supplied by it are of thesame standard, quality or grade as those supplied by the applicant,that they have sponsorship or approval from the applicant and thatthe respondent so far as its operation of any restaurant in theSydney metropolitan area is concerned has a sponsorship from,approval of or affiliation with, the applicant. In making these claimsthe applicant relies upon s. 53 of the Act. In my opinion, theapplicant is not entitled to succeed on any of these grounds. It seemsto me that these provisions require proof of the precise representation alleged. Although I have held that the respondent's conduct is


likely to lead people to believe that its business is connected with theapplicant's I do not think it necessarily involves a representationabout the goods supplied by the respondent or that the association isof any particular character such as "sponsorship", "affiliation" or"approval".

The remaining ground relied upon is that the respondent isrepresenting that the name "Taco Bell" is registered as a trade markin Australia.

This ground relates to the assertion by the respondent on its signsand in its literature in association with the letters "T.M." that "TacoBell is the trade mark of Taco Bell, a California Corporation". I donot regard this as a representation that "Taco Bell" is registered as atrade mark in Australia or that Taco Bell (the corporation) isregistered as the proprietor of the mark in Australia. I think that tothe ordinary member of the public it is an assertion that "Taco Bell"is in the place where the representation is made the trade mark ofthe California corporation whether registered or not. This case isonly concerned with the Sydney metropolitan area. Within that areaTaco Bell of California is not, in my view, the owner of the trademark "Taco Bell" and, because I propose to restrain the respondentfrom carrying on business there under the name "Taco Bell", Iassume that it will cease to claim there that "Taco Bell" is the trademark of Taco Bell of California. If it did not, it would be, in myview, misleading or deceptive conduct.

The orders I would propose making are: (1) That the respondentby itself its servants or agents be restrained from operating anyrestaurant in the Sydney metropolitan area under the name "TacoBell" or under any name similar thereto which is deceptive ormisleading or which is likely to deceive or mislead. (2) That therespondent by itself its servants or agents be restrained from passingoff goods and services supplied in any restaurant in the Sydneymetropolitan area not supplied by the applicant as and for goods andservices supplied by the applicant. (3) That the respondent pay theapplicant's costs of this application including reserved costs. (4) Thateach party have liberty to apply on two days' notice.

I would make no order as to damages at this stage but theapplicant may apply in relation to this issue under liberty to apply.

Solicitors for the applicant: P. W Turk & Associates.

Solicitors for the respondent: Baker & McKenzie.

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Taco Bell v Taco Co - m&d Conduct

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