HEARING CARE MANAWATU LIMITED AND ANOR V NATIONAL HEARING CARE (NEW ZEALAND) LIMITED HC AK CIV 2009-404-8506

HEARING CARE MANAWATU LIMITED AND ANOR V NATIONAL HEARING CARE (NEW ZEALAND) LIMITED HC AK CIV 2009-404-8506 31 March 2010IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY CIV 2009-404-8506BETWEEN HEARING CARE MANAWATU LIMITED First Plaintiff AND HEARING CARE WELLINGTON LIMITED Second Plaintiff AND NATIONAL HEARING CARE (NEW ZEALAND) LIMITED Defendant Hearing: 17 March 2010 Counsel: I Finch and C A Tompkins for Plaintiffs M J Gavin and K L Mullarkey for Defendant Judgment: 31 March 2010JUDGMENT OF HEATH JThis judgment was delivered by me on 31 March 2010 at 2.15pm pursuant to Rule 11.5 of the High Court RulesRegistrar/Deputy RegistrarSolicitors: James & Wells, Private 11907, Ellerslie, Auckland Hudson Gavin Martin, PO Box 105-900, AucklandThe application[1] Hearing Care Manawatu Ltd and Hearing Care Wellington Ltd (the Hearing Care companies) seek an interim injunction to restrain National Hearing Care (New Zealand) Ltd (National Hearing) from interfering with claimed intellectual property rights. 1 Causes of action based on breach of s 9 of the Fair Trading Act 1986 (the Act), the tort of passing off and rectification of the Trade Marks Register are pleaded. For the purpose of the interim injunction application, the Hearing Care companies rely only on their claims under the Act and in passing off.Background to the dispute[2] The Hearing Care companies and National Hearing each carry on business as audiologists. Clinics are operated by all three companies in various parts of New Zealand. The dispute concerns the combined use of stylised logos and descriptive words to market the respective companies' businesses. While the main area of competition is in Manawatu and Wellington, there is the potential for direct competition in Northland, in the near future. [3] The Hearing Care companies began to use a mark incorporating the words HEARING CARE, together with a swirl logo, in 2005. 2 National Hearing entered the audiology market, in New Zealand, in March 2009. Its operations are directed from Australia, through Mr Mirabelle, the Chief Executive officer of NHC Group Pty Ltd (NHC Group), National Hearing's parent company. In Australia, that company has traded for some years as "National Hearingcare" and, for trading purposes, also uses a swirl logo, incorporating the words "hearingcare". 3[4] The Hearing Care companies are directed by Mr Winton. He is an audiologist who qualified in 1992 and set up his first clinic in Whangarei in 1994. Mr Winton is the director of three companies that provide audiology services:1 The terms of the order sought are set out at [30] below.2 The mark appears at [9] below.3 The mark appears at [10] below.Northland Hearing Clinic Ltd, Hearing Care Manawatu Ltd and Hearing Care Wellington Ltd. Mr Winton operates his clinics on the principle of "clinical independence", meaning that he strives to obtain a product that best meets the needs of a patient, rather than aligning his business to a major commercial supplier. [5] In 2004, Mr Winton spoke to Mr Williams (an audiologist from Gisborne) about opening a clinic in Palmerston North. They were aware of only one such clinic in that city and that the proprietor was fully booked for six to eight weeks in advance. Mr Winton was familiar with Palmerston North, having been born and having studied there. [6] An existing company incorporated by Mr Williams, Central Audiology Ltd, was used to begin the venture. Eventually, its name was changed to Hearing Care Manawatu Ltd. [7] Hearing Care Manawatu has operated the Palmerston North clinic since April 2005. That company also operates clinics in Wanganui and Masterton; those clinics were established in May 2007 and 2008 respectively. All three clinics trade under the HEARING CARE banner. Hearing Care Wellington Ltd was established in late 2006. That company has been used to operate a permanent clinic in Johnsonville and, from 2007, "visiting clinics" in Levin and in Upper Hutt. The Upper Hutt clinic became permanent in April 2009. Those clinics also trade under the HEARING CARE brand. Until early February 2009, both Mr Winton and Mr Williams were directors of the Hearing Care companies. [8] In 2004, Mr Winton and Mr Williams decided to protect their trading name through a stylised logo and use of the words HEARING CARE. A trade mark application was filed on 19 October 2005. As at the date of filing, Mr Winton was shown as the registered proprietor of the mark. Subsequently, he provided a licence to the Hearing Care companies to use it. In December 2009, ownership of the mark was transferred to Hearing Care Wellington. [9] The mark used by the Hearing Care companies is in the following form:An alternative form of that mark is also used for trading but, for the purposes of the present application, nothing turns on its precise form. [10] NHC Group adopted the name National Hearing Care and a logo in October 2006. That logo has been used in Australia since that time. It is in the following form:[11] The name NATIONAL HEARING CARE was adopted in Australia because it was similar to NHC Group's existing business name, NATIONAL HEARING CENTRES. While the new name maintained the word "national", the word "care" was considered softer than the word "centres". The name was changed to "indicate a sense of caring". [12] In late 2007, NHC Group became interested in entering the New Zealand market. A meeting was held between its main private equity shareholder and Mr Williams, in December 2007. NHC Group was interested in acquiring the Northland Hearing Clinic, the Manawatu Hearing Clinic, the Wellington Hearing Clinic and the Eastland Hearing Clinic. [13] The Manawatu and Wellington clinics were owned by Hearing Care Manawatu and Hearing Care Wellington respectively. Both Mr Winton and Mr Williams were shareholders of those two companies. The Northland Clinic was owned by Mr Winton and his then wife. Eastland was owned by Mr Williams and his wife. [14] In January 2008, Mr Mirabelle met with Mr Williams and Mr Winton. The first meeting was in Melbourne. Another meeting followed, in Auckland. As theyear progressed, the discussions became more detailed. Due diligence was undertaken by NHC Group, in respect of each of the Hearing Care companies. [15] National Hearing began to use the name "Hearing Care New Zealand" or "HearingCare New Zealand" in about July 2008. Mr Winton became aware of use of that name when he saw a booklet called "Super Gold" which had been published as part of an initiative by the New Zealand First leader, Hon Winston Peters, aimed at those over 50 years of age. Mr Winton did nothing about that use because he was in the midst of a matrimonial separation and negotiations were continuing with Mr Mirabelle, in respect of the possible sale of the New Zealand clinics. [16] At the end of August 2008, NHC Group decided to proceed and acquire the whole of Mr and Mrs Williams' interest in the Eastland clinic. At that time, that business had an informal licence to use the HEARING CARE mark. [17] NHC Group believed it was about to consummate arrangements to acquire the remaining clinics. However, on 12 December 2008, their New Zealand solicitors received a short facsimile from solicitors in Whangarei, representing Mr Winton, making it plain that Mr Winton did not intend to proceed with transactions involving the sale of the remaining clinics. The letter stated:Re: Hearing Care New Zealand Ltd – R W WintonWe give you notice that our client has instructed us to withdraw from all further negotiations for the sale of his shareholdings in Hearing Care Manawatu Ltd and Hearing Care Wellington Ltd to your client. ....No reasons for that stance were given. [18] The facsimile was received at 1.49pm on 12 December 2008. Mr Mirabelle attempted to contact Mr Winton to discuss the situation, but was unable to do so. [19] Later that day, at 4.44pm, Mr Mirabelle sent an email to Mr Williams, Mr Veale (a senior audiologist who worked at Hearing Care Manawatu and was a shareholder of that company) and Ms Smith (an employee and shareholder ofHearing Care Wellington). Mr Mirabelle put forward three options. "Plan B", which was ultimately put in place, read:3c: Put Plan B in place immediately• [Mr Veale] and [Ms Smith] resign today effective 90 days from now as per your contracts – this starts the clock ticking!• I formally withdraw our offer to effective as of Monday evening, at 5:00PM.• Life Audiology will offer you each a contract to open new clinics in the same locations on terms as already agreed with an additional bonus structured around meeting over the next 15 months the same proceeds as would have been paid for your interest in the two businesses• Life Audiology will offer an additional incentive to [Mr Williams] to replicate what he would have received for his interest in the two businesses• Life Audiology will make a firm offer to every employee of [Health Care Manawatu] and [Health Care Wellington] to join us in 90 days time in new siteso Audios will be able to avail themselves of the new Incentive Scheme• Life Audiology will start next week to identify new sites ready to be opened in 90 days time• Life Audiology will indemnify you three (only) for any personalexposure you may have with respect to ongoing lease obligations. My preference is for the 3c in parallel with other activities as you see fit. [Mr Winton] will not do anything reasonable unless he feels the dollars are at risk. One of two things will happen – he'll respond or he won't. His call but we cannot wait any longer. .... (Mr Mirabelle's emphasis)I observe that, in the email, Mr Mirabelle refers to "Life Audiology" to describe his interests. [20] On 10 February 2009, Mr Winton purchased Mr Williams' shares in the Manawatu and Wellington companies. On the same day, Mr Veale resigned from Hearing Care Manawatu and went to work for National Hearing; the company set up, on Mr Mirabelle's directions, to undertake NHC Group's audiology services in New Zealand.[21] On 19 March 2009, National Hearing filed an application to use NHG Group's mark, 4 in New Zealand. On 20 March 2009, two further applications for trade marks were filed:[22] On 12 March 2009, the present solicitors for the Hearing Care companies wrote to National Hearing, at its Browns Bay clinic, on a "without prejudice" basis. Other letters, of the same genre, were sent on 13 and 24 March 2009. [23] National Hearing opened a clinic in Browns Bay in May 2009. Clinics in the area covered by the Eastland franchise were opened in June (Gisborne) and July 2009 (Havelock North) respectively. Thereafter, between June and December 2009 respectively, National Hearing opened clinics in Lower Hutt, Wanganui, Napier, Palmerston North, Pakuranga, Henderson, Whangaparaoa, Papatoetoe and Papakura. [24] The Hearing Care companies allege that National Hearings' use of a brand name incorporating "hearingcare" has caused confusion5 and has damaged its reputation. That is the basis on which their claims are brought. [25] Despite having first raised the issue in early March 2009, the Hearing Care companies took no active steps to prevent continued trading by National Hearing until 3 November 2009. At that time, their solicitors wrote:...Previous correspondence5. On receipt of our earlier correspondence you changed your company and trading names respectively from "Hearingcare New Zealand Ltd" and "Hearingcare" to "National Hearing Care (New Zealand) Limited" and "National Hearing Care". You also made changes to4 See the mark set out at [10] above.5 Compare the marks at [9] and [10] above.your on-line listings in the White Pages and changed your domain name from "hearingcarenz.co.nz" to "nationalhearingcare.co.nz". 6. At the time that you made those changes, we advised you that our client did not consider that the changes went far enough to ensure that there would not be confusion between your business and that of our client. We said that use of the trading name NATIONAL HEARING CARE or the corporate name "National Hearing Care (New Zealand) Limited", especially in the context of your previous deliberately infringing conduct, was, and would remain, wholly unsatisfactory – as was your continued use of the swirl device.Examples of confusion...9. As well as the various examples of confusion set out above, our client has also been made aware that welcome letters relating to a free check up in Palmerston North were sent by you to a large number of our client's clients. The address provided was our client's address and the letters were sent prior to the opening date of your Palmerston branch. Members of the public have contacted, and continue to contact, our client's Palmerston branch in response to welcome letters sent by you as they believe that they were sent by our client.[26] National Hearing did not respond favourably to that correspondence. On 9 November 2009, the Hearing Care companies' solicitors advised the solicitors for National Hearing that injunction proceedings would be taken if no substantive response to the letter of 3 November 2009 was received by 13 November 2009. [27] The present proceeding was filed on 22 December 2009.The competing contentions[28] Mr Finch, for the Hearing Care companies, submitted that the use of the words "hearingcare" within the National Hearing brand has caused confusion within relevant markets and damaged the goodwill or reputation of the Hearing Care companies. Three types of confusion are alleged: a) To consumers of their services, b) To suppliers of products to the companies andc) To other industry insiders, such as medical practitioners who might refer patients to an audiologist. [29] Mr Gavin, for National Hearing, submitted that the words "hearing care" are descriptive and have not acquired any secondary meaning, associated with the Hearing Care companies' business. Put at its highest, Mr Gavin's submission is that if a party commences business by using a brand with a descriptive name, it bears the risk that a subsequent entrant to the market will use the same name.Interim injunction principles[30] The order sought by the Hearing Care companies is in the following terms:Restraining the [National Hearing], its servants, contractors or agents, and any other company or person, subsidiary to, or any closely related entity of, the [National Hearing], and their servants, contractors or agents, from trading under or by reference to the name HEARING CARE, or any other name or mark which is confusingly similar to the [the Hearing Care companies] HEARING CARE name and mark or from otherwise misrepresenting to the public that the [National Hearing's] clinics are those of [the Hearing Care companies] and/or have the sponsorship, approval or endorsement of the [the Hearing Care companies].[31] In Klissers Farmhouse Bakeries Ltd v Harvest Bakeries Ltd6 the Court of Appeal explained the approach to be taken to determine interim injunction applications, in the context of an action for passing off. The dispute was between two bakeries and concerned "get-up", in the form of bread packaging used by each. The Court of Appeal emphasised that the refusal or grant of an interim injunction was discretionary in nature and was not to be determined by a rigid application of any formula. 7[32] Delivering the judgment of the Court of Appeal, Cooke J articulated a framework for analysis involving three elements. 8 The first is whether a plaintiff has raised a serious question to be tried. The second is an assessment of the balance of convenience. Having marshalled relevant considerations under those headings, the6 [1985] 2 NZLR 129 (HC) and (CA).7 Ibid, at 142.8 Ibid, at 142.Court proceeds to the ultimate question: namely, whether the overall interests of justice require grant or refusal of an interim injunction. The Court of Appeal was careful to make clear that marshalling considerations under the first two headings was no more than an aid to determining where the interests of justice lie. [33] Given the nature of an interim injunction hearing and the need for any order to enure only pending determination of the substantive proceeding, I intend to say as little as possible about the merits of the competing claims. They will need to be determined at a trial, when all material witnesses can be cross-examined on their affidavits.Analysis[34] In my view, it is sufficient to approach the application for interim injunction by reference to the cause of action under s 9 of the Act. There are wide powers of enforcement available under the Act, suggesting that any claim of the type brought by the Hearing Care companies is unlikely to succeed in passing off, if not also successful under s 9. 9 Accordingly, I consider whether a seriously arguable case exists, in relation to the s 9 cause of action. [35] Section 9 of the Act provides:9. Misleading and deceptive conduct generallyNo person shall, in trade, engage in conduct that is misleading or deceptive or is likely to mislead or deceive.[36] Section 9 is designed to ensure that members of the public are not misled about persons or entities with whom they are dealing. 10 The words of s 9 are simple. Problems arising out of its application are "more of fact and degree". 11 For example, in Neumegen v Neumegen & Co12 two solicitors (both named Neumegen) intended to practise in Auckland, under the firm name "Neumegen and Neumegen". There was9 See Fair Trading Act 1986, ss 41(3) and (4) and 42.10 Taylor Bros Ltd v Taylors Group Ltd [1988] 2 NZLR 1 (HC and CA) at 40, per Cooke P.11 Ibid. See also Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd (1982) 149 CLR 191 (HCA).12 [1998] 3 NZLR 310 (CA) at 316-317.another firm of lawyers in Auckland, "Neumegen & Co", who objected to that name. That name had been used by the objectors' firm for many years, though no partner had borne the "Neumegen" name since April 1993. Despite the fact that the two Neumegens intended to do no more than to use their own surnames to describe their firm, a majority in the Court of Appeal13 held that the use of the new firm's proposed name was likely to mislead or deceive. The Court of Appeal upheld a High Court Judge's decision to grant interim relief. [37] Blanchard J, delivering the majority judgment in Neumegen, set out a number of propositions that are relevant to the present case: 14a) Section 9 is designed to protect consumers from unfair trading practices. Protection is afforded by prohibiting conduct, in trade, that is likely to mislead or deceive. When a trade name is in issue, s 9 will prohibit any use which may affect the recognition or identification of the relevant goods or services. b) A defendant's conduct will not generally be misleading or deceptive unless it amounts to a misrepresentation. Any false representation may be express or may arise from conduct or silence. It need not be intentional. c) No misrepresentation will arise from the adoption of a trading name, unless the name has acquired a reputation, among a class of consumers, as referring to the goods or services of another trader. That is because only members of that class of consumers will likely be mistaken in inferring that goods or services are connected with the business of the other trader. The more unusual the name, the more likely it will be that its use by another trader has given rise to a "secondary signification".13 Richardson P and Blanchard J; Thomas J dissenting.14 Neumegen v Neumegen & Co [1998] 3 NZLR 310 (CA) at 316-317.d) It is unnecessary to prove that any particular consumer has suffered economic loss. Nor need it be proved that a rival trader has lost custom because of the defendant's conduct. However, if the number of affected members of the public is, or will be, very small and the impact upon those persons is, or will be, minimal, a Court may be justified in taking the view that, in the round, the conduct of the defendant cannot properly be characterised as likely to mislead or deceive. In that situation, the Court's discretion may be exercised against the granting of a remedy. [38] The approach to a s 9 cause of action was considered further in Red Eagle Corporation Ltd v Ellis.15 Building on cases such as Taylor Bros Ltd v Taylors Group Ltd,16 Neumegen v Neumegen & Co,17 AMP Finance NZ Ltd v Heaven18 andGoldsbro v Walker,19 the Supreme Court emphasised the need to objectively determine, objectively, whether particular conduct was deceptive or misleading, in the context of the characteristics of the person or persons alleged to be affected. Delivering the judgment of the Supreme Court, Blanchard J said: 20[28] ... Conduct towards a sophisticated businessman may, for instance, be less likely to be objectively regarded as capable of misleading or deceiving such a person than similar conduct directed towards a consumer or, to take an extreme case, towards an individual known by the defendant to have intellectual difficulties. ... The question to be answered in relation to s 9 in a case of this kind is accordingly whether a reasonable person in the claimant's situation – that is, with the characteristics known to the defendant or of which the defendant ought to have been aware – would likely have been misled or deceived. If so, a breach of s 9 has been established. It is not necessary under s 9 to prove that the defendant's conduct actually misled or deceived the particular plaintiff or anyone else. If the conduct objectively had the capacity to mislead or deceive the hypothetical reasonable person, there has been a breach of s 9. If it is likely to do so, it has the capacity to do so. Of course the fact that someone was actually misled or deceived may well be enough to show that the requisite capacity existed.15 [2010] NZSC 20.16 [1988] 2 NZLR 1 (CA).17 [1998] 3 NZLR 310 (CA).18 (1997) 8 TCLR 144 (CA).19 [1993] 1 NZLR 394 (CA).20 Red Eagle Corporation Ltd v Ellis [2010] NZSC 20 at [28]. See also Hornsby Building Information Centre Pty Ltd v Sydney Building Information Centre Ltd (1978) 140 CLR 216 (HCA) at 228, Annand Thompson Pty Ltd v TPC (1979) 40 FLR 165 (FCA) at 176.[39] The Supreme Court, in a footnote, 21 accepted that the position may be different where conduct is directed towards a wide section of the community, through an advertisement. The Court seemed to approve a passage from Taco Co of Australian Inc v Taco Bell Pty Ltd,22 in which Deane and Fitzgerald JJ considered that conduct should be analysed by reference to all who come within the ambit of the section "including the astute and the gullible, the intelligent and the not so intelligent, the well educated as well as the poorly educated, men and women of various ages pursuing a variety of vocations". 23[40] Mr Finch identified potential consumers, service providers and other industry insiders 24 as (potentially) being confused and misled into dealing with National Hearing, at the expense of the Hearing Care companies. He identified conduct which he submitted had exacerbated confusion arising from the "inherent similarities" of the respective names and logos: a) In or about March 2009, National Hearing began to promote its audiologist services from a website accessible at www.hearingcarenz.co.nz. The "locations" tab of that website featured three of Hearing Care companies' clinic addresses: at Johnsonville, Palmerston North and Masterton. As at March 2009, National Hearing was yet to open a clinic in New Zealand under its own name. 25b) On or about 3 July 2009, National Hearing sent a mailout to many of the Hearing Care companies' patients, inviting them to an appointment for a free hearing check for the opening of the National Hearing's clinic in Palmerston North. The letter gave the appointment address as 7 Victoria Avenue (Hearing Care Manawatu's address). The letter pre-dated the opening of National Hearing's clinic in Palmerston North, on 13 July 2009. Unsurprisingly, this letter21 Red Eagle Corporation Ltd v Ellis [2010] NZSC 20 at fn 15.22 (1982) 42 ALR 177 (FCA).23 Ibid, at 202.24 See [28] above.25 See [23] above.resulted in confusion and upset to patients of Hearing Care Manawatu, who believed they were to receive a free consultation. c) National Hearing operates its clinic in Wanganui from premises which Hearing Care Manawatu previously occupied: 35 Dublin Street. In February 2009, Mr Veale, one of the Hearing Care companies' head audiologists and the "face" of Hearing Care Manawatu, in Wanganui, joined National Hearing. He practises from those premises. d) In November 2009, one of Hearing Care Manawatu's patients (Mr Purcell) received a letter from Hearing Care Manawatu reminding him of the need to "refresh" his hearing aids. He made an appointment for 12 November 2009 at 8.30am. The day before the appointment, Mr Purcell received a telephone call from someone saying they were from "Hearing Care" and advised that free hearing tests were being offered. Mr Purcell says that he commented that was ironic because he had an appointment for the next day and "it would be good to get a free test". He recalls that there was something said about the caller's principal having no note of that. When Mr Purcell went to Hearing Care Manawatu, in Palmerston North, expecting the appointment to be free, he was disappointed. He deposed that the people at the Palmerston North clinic were "taken aback" when told of the call, while he was "unhappy because [he] had to pay for [an] appointment when [he] was led to believe it was going to be free". [41] To demonstrate confusion among suppliers of the Hearing Care companies, Mr Finch referred to invoices that had been incorrectly addressed. He submitted that most of the examples were derived from a tendency, on the part of National Hearing, to refer to that company as "Hearing Care" rather than "National Hearing". Mr Finch also referred to other communications being "muddled up" and sent to the wrong company. [42] Mr Finch submitted that the most significant incident of confusion involved the Accident Compensation Corporation changing the Hearing Care companies'vendor numbers to National Hearing. That occurred even though advice had been given previously to ACC that the Hearing Care companies and National Hearing were not the same entity. [43] Mr Gavin's retort was that the actual evidence of confusion by consumers and suppliers was slight. He submitted also that the nature of the goods and services involved in this claim were critical to determining whether any alleged misrepresentation or deception had or was likely to affect market participants. Mr Gavin emphasised the descriptive nature of the words used, the different colourings in the marks utilised for trading purposes and the ability, 26 through advertisements, for potential patients in the areas in which confusion might arise, to readily identify an address at which a particular company was located if they intended to use the Hearing Care companies in preference to National Hearing. [44] In my view, the three component parts of the market identified by Mr Finch must be separated out. The possibility of consumers being misled or deceived is considerably higher than suppliers or other industry "insiders". 27[45] I deal first with suppliers and industry insiders. I do not accept there is a serious question to be tried, under s 9, with regard to those parts of "the public". 28[46] Suppliers and "industry insiders" 29 must be regarded as sophisticated entities. 30 If there were any confusion in billing or other processes, it is in the interests of the protagonists to co-operate in order to ensure that communications are directed to the correct company. Communications from the Accident Compensation Corporation are a prime example. Those are matters within the control of the companies concerned. The use of particular trading marks does not affect suppliers and "industry insiders" in a manner that would engage s 9. Section 9 is not concerned with muddled record-keeping.26 Compare [9] and [10] above.27 See the discussion of Taco Co of Australia Inc v Taco Bell Pty Ltd (1982) 42 ALR 177 (FCA) at 202, at [39] above.28 As that term is used in s 9 of the Act; set out at [35] above.29 See [28](c) above.30 See Red Eagle Corporation Ltd v Ellis [2010] NZSC 20 at [28].[47] In order to establish a seriously arguable case under s 9, the Hearing Care companies must point to conduct, on the part of National Hearing, that amounts to a misrepresentation. No misrepresentation will arise from the adoption of a trading name that has not acquired a reputation among a class of consumers as referring to the services provided by a competitor. 31[48] The evidence points to isolated incidents that suggest some confusion has arisen among patients (particularly) in Palmerston North. 32 Although the evidence is relatively sparse, the conduct spans the period of competition, pre-dating it in one instance. 33 The nature of the conduct suggests that the words "HEARING CARE", have caused confusion among existing patients of the Hearing Care companies, at least in the area covered by the Manawatu company. [49] There is less evidence to suggest that new patients who learnt of Hearing Care Manawatu and/or Hearing Care Wellington by reputation (through word of mouth) may have been similarly confused. Although advertisements placed in newspapers have tended to include the physical address of the relevant clinic, the use of the stylised logo and name is something that should be taken into account in determining whether a misrepresentation exists. I am required to make my own determination on that topic. As Lord Devlin observed in Parker-Knoll Ltd v Knoll International Ltd34 "[the court's] decision does not depend solely or even primarily on the evaluation of [consumer] evidence. The court must in the end trust to its own perception into the mind of the reasonable man". 35[50] Although colouring is different and the way in which the marks are configured is not the same, there are distinctive aspects of the marks that give rise to a potential for confusion. Both contain a similar swirl. Both contain the words31 See Neumegen v Neumegen & Co [1998] 3 NZLR 310 (CA) at 316-317. See also the summary at [36] above.32 See [40] above.33 See [40](a) above. See also [40](b), in relation to the Palmerston North clinics.34 [1962] RPC 265 (HL) at 291-292.35 See also at 285, per Lord Hodson and Spalding and Bros v Gamage Ltd (1915) 32 RPC 273 (HL) at 286.HEARINGCARE. The green colouring of "care" in National Hearing's mark suggests an emphasis on that part of the mark, rather than the word "National". 36[51] If marketing by National Hearing had focussed on the words NATIONAL HEARING, as opposed to references to HEARINGCARE, 37 there would be less room for confusion. It is clear that even National Hearing regarded the use of its chosen mark as having the potential to cause confusion; otherwise, there was no need to file an application the day after that name was sought to protect the names NATIONAL HEARING and NATIONAL HEARINGCENTRES. 38[52] I consider that the nature of the marks and the broad range of consumers (many elderly, some of whom may be vulnerable by reason of their age) gives rise to a seriously arguable case under s 9. In reaching that conclusion I have regard both to my own assessment of the comparative elements of the competing marks and to the evidence of confusion on which the Hearing Care companies rely. 39 That evidence cannot be gainsaid, in the context of an interim injunction application. [53] In considering market context, I have regard to Taco Co of Australia Inc v Taco Bell Pty Ltd40 because advertisements placed in newspapers and signage inside and outside the parties' clinics are designed to attract business from all people within the community who may require audiology services, including the elderly. 41[54] This is not a case of applying s 9 to a person described as "quite unusually stupid"42 but of taking account of those who are vulnerable to potentially misleading advertising, due to circumstances beyond their control. The risk of confusion among relevant consumers was exacerbated by Mr Mirabelle's decision to undertake an aggressive stance when entering the New Zealand market and competing with the Hearing Care companies. 4336 See [10] above.37 See [40] above.38 See [21] above.39 See the evidence summarised at [40] above.40 (1982) 42 ALR 177 (FCA) at 202.41 See [52] above.42 See Annand Thompson Pty Ltd v TPC (1979) 40 FLR 165 (FCA) at 176, as so described in Red Eagle Corporation Ltd v Ellis [2010] NZSC 20 at fn 15.43 See [19] and [20] above.[55] The order sought by Hearing Care companies is broad. It purports to restrain National Hearing from trading by reference to the name HEARING CARE or any other name or mark "confusingly similar" to that used by the Hearing Care companies. It seeks that order to extend throughout the country, notwithstanding that the primary areas of competition are limited to Palmerston North, Wanganui and Wellington. [56] While there is a real risk of the clinics operated by National Hearing in Palmerston North, Wanganui and Johnsonville being confused with audiology services offered by the Hearing Care companies in those areas, that argument cannot be extended beyond the boundaries of what might ordinarily be expected to be the catchment area for patients of those clinics. In my view, any interim order must be tailored to deal specifically with the interests of consumers in the Palmerston North, Wanganui and Wellington districts. [57] Balance of convenience factors will influence the precise terms of any interim injunction that might be issued to ensure that the parties' interests in pursuing their respective positions can be preserved pending a substantive hearing of the Hearing Care companies' proceeding. [58] No issue was taken with National Hearing's ability to pay damages. Rather, Mr Finch submitted that damages would not be an adequate remedy for the Hearing Care companies in the event that their claims were ultimately successful. He called in aid observations made by Hugh Williams J in New Zealand Rugby Football Union (Inc) v Saint Publishing Ltd:44[76] The assertion that damages will be an adequate remedy for the plaintiff is one commonly made in injunction proceedings. It is justifiable in many cases, particularly those arising out of breach of contract or employment relationships where damages are readily quantifiable and almost wholly occur out of the relationship between the parties. But, in intellectual property cases, as the decisions in the Champagne cases earlier discussed exemplify, there is a danger in accepting a defendant's plea that damages will be an adequate remedy for a plaintiff. That danger is that owners of intellectual property have rights to exploit that property not just between the parties to the dispute but in the public arena. In such an arena, if erosion of goodwill and reputation which those rights are designed to44 (HC Auckland M1458/01, 2 October 2001) at [76].protect is allowed, the erosion will be on many fronts perhaps, in a case such as this, in relation to every purchasing decision of a calendar by or for those who are interested in rugby. In this Court's view, the adequacy of damages for a plaintiff owning intellectual property rights occupies less importance than in many another injunction case. Those owning intellectual property rights should not have a de facto licensing regime forced upon them by those who infringe those rights and then assert, in justification of their conduct, that owners' rights can be adequately compensated in damages. It is for the owner of those rights to decide how best to utilise them and to reap the rewards. It is not for infringers to dictate that result.[59] In short, Mr Finch submitted that damage to or dilution of the distinctiveness of the Hearing Care companies' trading name and reputation would be difficult to quantify, particularly given the use of different business models. Mr Finch referred (on the one hand) to the Hearing Care companies' "cultured reputation" for independence, 45 as opposed to (what he described as) the "sales orientated corporate business" of National Hearing. Mr Finch suggested that the losses occasioned by the need for any re-branding on the part of National Hearing will be minimal, compared to the potential for detriment on the interests of the Hearing Care companies. [60] Mr Gavin's position was that relief should be refused because of dilatory conduct on the part of Hearing Care companies, citing Fisher J's judgment inMartin v Ryan,46 in which the Judge observed that if an applicant is "content to let time run it also calls into question the genuineness of the alleged emergency itself". 47[61] Mr Gavin also submitted that the Hearing Care companies conduct amounted to acquiescence and, therefore, disentitled it from equitable relief. 48[62] In my judgment, an interim injunction is justified, though it will be fashioned to ensure that the minimum amount of protection is granted, pending resolution of substantive disputes. This will ensure that both parties have an incentive to bring the substantive proceeding to a prompt conclusion, or to resolve their differences.45 See [4] above.46 [1990] 2 NZLR 209 (HC).47 Ibid, at 228.48 See Farmers Build Ltd v Carrier Bulk Materials Handling Ltd [1999] RPC 461 (CA) at 487 andIntellectual Property Development Corporation Pty v Primary Distributors New Zealand Ltd (2008) 8 NZBLC 102,274 (HC).Standing back, as required by Klissers Farmhouse Bakeries Ltd,49 I am of the view that the interests of justice require a solution based along those lines. [63] I do not accept Mr Gavin's argument that interim relief should be refused on grounds of delay and/or acquiescence. Mr Winton, in explaining delay, focussed on the need to ascertain whether confusion had, in fact, resulted from the way in which National Hearing had conducted its own business. He referred also to personal difficulties (into which I need not go) which contributed to the delay in dealing with business issues. If interim relief were otherwise appropriate, I would not regard any delay that has occurred as disentitling conduct. [64] Direct competition exists in Palmerston North, Wanganui and the Wellington region. The Wellington region is slightly more problematic. Hearing Care Wellington operates in Johnsonville and Upper Hutt, while National Hearing's clinic is based in Lower Hutt. My orders are designed to ensure that promotional material in those areas of competition will differentiate National Hearing from the Hearing Care companies sufficiently, pending determination of substantive disputes. [65] While telephone directories (including Yellow Pages) have been published, there is nothing to prevent directions being given by National Hearing to ensure on- line versions are amended to the extent required by my orders. Nothing can be done about advertisements in the print media, on radio or on television (if any) to date, but National Hearing will need to ensure appropriate differentiation of the businesses, pending trial. No order will be made in respect of Northland, as I consider that Mr Winton must await resolution of substantive issues before he seeks to change thestatus quo in that region. [66] Signage and the use of logos are the main areas in which injunctive relief is necessary. It would not be a serious imposition to require the clinics operated by National Hearing to remove the current signage (inside and outside the clinic) and to replace it with signs that maintain the difference between the names used by the Hearing Care companies and National Hearing.49 [1985] 2 NZLR 129 (HC and CA) at 142.[67] There is little other disadvantage to National Hearing because it contends that the word NATIONAL is a mechanism by which it is identified. In addition, either of the alternative marketing brands that have been sought as trade marks 50 may be used to differentiate the respective companies' activities. [68] Website details will also need to be changed to ensure that references to Palmerston North, Wanganui and Lower Hutt clinics do not breach the orders I intend to make.Orders[69] Pending further order of the Court, National Hearing, its employees, contractors or agents are restrained from using the mark depicted at para [10] above for the purposes of external and internal signage and promotion of its activities in the Manawatu, Wanganui and Wellington regions. The injunction shall operate within the geographic area beginning at Latitude 39º 45' South, to the bottom of the North Island. For the avoidance of doubt, either of the stylised logos depicted at para [21] above may be used for signage and promotional purposes, within that geographic region. [70] All reasonable steps shall be taken by National Hearing, its employees, contractors or agents to ensure that on-line versions of advertisements and any relevant websites are changed to meet the requirements of this order, pending determination of the substantive proceeding. [71] Leave to apply is reserved, should any ancillary orders be sought. As I go on sabbatical leave this evening, any application under the leave reserved shall be referred to the Duty Judge, in the first instance. [72] Counsel were agreed that costs should follow the outcome of the application. Costs are awarded in favour of the Hearing Care companies on a 2B basis, together with reasonable disbursements. Those costs and disbursements shall be fixed by the Registrar. I certify for second counsel.50 See [21] above.[73] It is desirable that the substantive proceeding be set down for hearing as soon as practicable. The Registrar shall list the proceeding for a case management conference before a Judge on the first available date after 16 April 2010. [74] After receiving notification of the conference date, memoranda shall be filed and served by each party, to advise the Court of the directions required to bring the proceeding for hearing promptly: a) Any memorandum filed on behalf of the Hearing Care companies shall be filed and served not later than five working days prior to the conference; and b) any memorandum from counsel for National Hearing shall be filed not later than two working days before the conference. [75] I thank counsel for their assistance. ____________________________ P R Heath J Delivered at 2.15pm on 31 March 2010.