Cadbury Schweppes Pty Ltd (ACN 004 551 473) v Darrell Lea Chocolate Shops Pty Ltd (ACN 000 498 386)

• Jurisdiction: Australia Federal only
• Judgment Date: 21 May 2007
• Neutral Citation: [2007] FCAFC 70
• Court: Full Federal Court (Australia)

FEDERAL COURT OF AUSTRALIA

Cadbury Schweppes Pty Ltd (ACN 004 551 473) v Darrell Lea Chocolate Shops Pty Ltd (ACN 000 498 386) [2007] FCAFC 70

EVIDENCE – Admissibility of opinion evidence – not admissible unless opinion based on specialised knowledge – whether rule excluding opinion evidence as to matter of common knowledge is applicable – operation of s 80 Evidence Act 1995 (Cth) (‘the Act’) - requirement to consider probative value of opinion evidence – whether evidence might cause or result in undue waste of time – discretion to exclude evidence under s 135 the Act

TRADE PRACTICES – competitors in retail chocolate market – use of colour purple – principles relating to passing off – whether exclusive reputation required under Part V Trade Practices Act 1974 (Cth) – whether use of colour purple likely to mislead or deceive consumers

Federal Court of Australia Act 1976 (Cth), s 28(1)(f)

Evidence Act 1995 (Cth), ss 55(1), 56(1), 76(1), 79, 80, 135

Trade Practices Act 1974 (Cth), Part V

Cat Media Pty Ltd v Opti-Healthcare Pty Ltd [2003] FCA 133 cited

Domain Names Australia Pty Ltd v .au Domain Administration Ltd [2004] FCAFC 247 cited

Makita (Australia) Pty Ltd v Sprowles (2001) 52 NSWLR 705 cited

Reckitt and Colman Products Ltd v Borden Inc (1990) 17 IPR 1 cited

Transport Publishing Co Pty Ltd v The Literature Board of Review(1956) 99 CLR 111 cited

The Law Reform Commission, Evidence, Interim Report, No. 26 (1985), [743]

CADBURY SCHWEPPES PTY LTD (ACN 004 551 473) v DARRELL LEA CHOCOLATE SHOPS PTY LTD (ACN 000 498 386)

VID774 OF 2006

BLACK CJ, EMMETT & MIDDLETON JJ

21 MAY 2007

MELBOURNE

IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY	VID774 OF 2006

ON APPEAL FROM A SINGLE JUDGE OF THE FEDERAL COURT OF AUSTRALIA

BETWEEN:	CADBURY SCHWEPPES PTY LTD (ACN 004 551 473) Appellant
AND:	DARRELL LEA CHOCOLATE SHOPS PTY LTD (ACN 000 498 386) Respondent

JUDGES:	BLACK CJ, EMMETT & MIDDLETON JJ
DATE OF ORDER:	21 MAY 2007
WHERE MADE:	MELBOURNE

THE COURT ORDERS THAT:

1.The appeal be allowed.

2.The orders of the Court made on 27 April 2006 and 6 July 2006 be set aside.

3.The matter be remitted to the trial judge for further hearing.

4.The parties within 14 days file and serve written submissions to the Court on the question of the costs of the appeal.

Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY	VID774 OF 2006

ON APPEAL FROM A SINGLE JUDGE OF THE FEDERAL COURT OF AUSTRALIA

BETWEEN:	CADBURY SCHWEPPES PTY LTD (ACN 004 551 473) Appellant
AND:	DARRELL LEA CHOCOLATE SHOPS PTY LTD (ACN 000 498 386) Respondent

JUDGES:	BLACK CJ, EMMETT & MIDDLETON JJ
DATE:	21 MAY 2007
PLACE:	MELBOURNE

REASONS FOR JUDGMENT

THE PROCEEDING.. 2

THE QUESTIONS IN THE APPEAL. 2

PRIMARY QUESTION: ADMISSIBILITY OF THE DISPUTED EVIDENCE. 4

The Evidence Act4

Cadbury’s Case Before the Primary Judge. 4

Dr Gibbs’ Evidence. 8

Relevant Basic Principles and Background Issues. 10

1. The Brand Concept And Brand Equity:10

2. Nature And Storage Of Brand Associations In Memory:10

3. Role of Packaging as a Marketing Communication:11

4. Importance and Impact of Colour:12

5. Convenience Goods and Consumer Involvement:13

The Cadbury and Darrell Lea Brands. 13

The Consumer Information-Processing Errors. 14

The Primary Judge’s Ruling on Admissibility. 16

The Primary Judge’s Reference to Section 135. 22

SECONDARY QUESTION: WHETHER DARRELL LEA’S USE OF PURPLE REPRESENTED AN ASSOCIATION BETWEEN CADBURY AND DARRELL LEA.. 26

The Primary Judge’s Findings. 26

Contentions on Appeal29

NEW TRIAL. 29

Need For Exclusivity. 30

Weight of the Disputed Evidence. 33

Conclusion As To New Trial35

COSTS. 36

CONCLUSION.. 39

THE PROCEEDING

1The appellant, Cadbury Schweppes Pty Ltd (Cadbury), claims that the use by the respondent, Darrell Lea Chocolate Shops Pty Ltd (Darrell Lea), of a shade of purple in connection with its chocolate confectionary business has the consequence that consumers might mistakenly conclude that Darrell Lea products are Cadbury products or that there is some connection between the respective chocolate confectionary businesses of Darrell Lea and Cadbury. Cadbury says that, therefore, by such use of purple, Darrell Lea has engaged in conduct that is misleading and deceptive, in contravention of provisions of Part V of the Trade Practices Act 1974 (Cth) (the Trade Practices Act). Cadbury also says that Darrell Lea’s conduct constitutes passing off of its chocolate confectionary business and products as a business or products of, or connected or associated with, Cadbury.

2On 27 April 2006, a judge of the Court ordered that Cadbury’s claims be dismissed. On 6 July 2006 the primary judge made orders for costs, including an order that Cadbury pay certain of Darrell Lea’s costs of the proceeding on an indemnity basis. Cadbury has appealed to the Full Court from all of those orders.

THE QUESTIONS IN THE APPEAL

3The principal question in the appeal is whether the primary judge erred in refusing, on 31 March 2006, in the course of the trial, to admit certain evidence (the disputed evidence) that Cadbury sought to adduce from:

·Brian John Gibbs, Associate Professor of Marketing and Behavioural Science in the Melbourne Business School at the University of Melbourne;

·Constantino Stavros, Senior Lecturer in the School of Economics, Finance and Marketing of RMIT University, Melbourne; and

·Timothy Raymond Riches, the managing director of FutureBrand FHA Pty Ltd, a branding and design consultancy within the world’s largest marketing services group.

4The primary judge characterised the issues in the proceeding as being concerned with the making of consumer decisions for the purchase of items of commerce, namely, chocolate. His Honour considered that those issues are not outside the knowledge or experience of ordinary persons. His Honour found that the disputed evidence consisted of opinions as to the knowledge or experience of ordinary persons and, accordingly, held that, as a matter of law, the disputed evidence was not admissible. Cadbury says that his Honour erred in making that ruling.

5In relation to Dr Gibbs’ evidence, his Honour also concluded that, even if the evidence were admissible, his Honour would have refused to admit it under s 135 of the Evidence Act 1995 (Cth) (the Evidence Act), because its probative value was substantially outweighed by the danger that it might cause or result in undue waste of time. Cadbury says that any such rejection would have involved a miscarriage of the discretion conferred by the Evidence Act. His Honour expressed no such view in relation to the evidence of Mr Stavros and Mr Riches: it was not necessary for his Honour to do so, having concluded that the disputed evidence was not admissible.

6The primary judge ultimately held, on the basis of the evidence that his Honour admitted, that the use of purple by Darrell Lea did not convey to the reasonable consumer the idea that its business or its products have some connection with Cadbury. A nominal secondary question in the appeal is whether the primary judge erred in that conclusion.

7Cadbury asks, if it succeeds on the principal question, that there be a new trial. If it fails on the principal question but succeeds on the secondary question, Cadbury asks the Full Court to grant appropriate relief. It is convenient to deal with the evidentiary question first.

PRIMARY QUESTION: ADMISSIBILITY OF THE DISPUTED EVIDENCE The Evidence Act

8Under s 56(1) of the Evidence Act, except as otherwise provided by that Act, evidence that is relevant in a proceeding is admissible in the proceeding. Section 55(1) relevantly provides that evidence that could rationally affect the assessment of the probability of the existence of a fact in issue in a proceeding is relevant in that proceeding. It is not disputed that the disputed evidence was relevant in the proceeding.

9Section 76(1) of the Evidence Act otherwise provides that evidence of an opinion is not admissible to prove the existence of a fact about the existence of which the opinion was expressed. That principle is defined as the opinion rule. However, under s 79 of the Evidence Act, if a person has specialised knowledge, the opinion rule does not apply to evidence of an opinion given by that person about the existence of a fact in issue that is wholly or substantially based on that knowledge. The specialised knowledge, however, must be based on the person’s training, study or experience. Section 80(b) relevantly provides that evidence of an opinion is not inadmissible only because it is a matter of common knowledge.

10However, even if particular opinion evidence is not excluded by the operation of the opinion rule, the Court has an overriding discretion under s 135 of the Evidence Act to refuse to admit evidence in certain circumstances. In particular, the Court may do so if the probative value of the evidence is substantially outweighed by the danger that the evidence might cause or result in undue waste of time. For the purposes of the Evidence Act, probative value of evidence means the extent to which the evidence could rationally affect the assessment of the probability of the existence of a fact in issue.

Cadbury’s Case Before the Primary Judge

11The disputed evidence consists of opinions about the existence of facts in issue in the proceeding. Darrell Lea contends that the relevant facts in issue are as follows:

·Cadbury had exclusive repute in the colour purple;

·Darrell Lea, by its use of the colour purple, represented that its products originate from or are associated with Cadbury.

12In order to place the disputed evidence in its context, it is necessary to explain the case that Cadbury wished to mount against Darrell Lea. Essentially, Cadbury claimed an exclusive...