ON 22 JULY 1982, the Federal Court of Australia delivered Re Taco Company of Australia Inc; Taco Bell v Taco Bell Pty Limited; Denbrad Management Pty Limited; Robert Francis; Eric Baillie Francis [1982] FCA 136 (22 July 1982).

http://www.austlii.edu.au/au/cases/cth/FCA/1982/136.html

Taco Bell Pty Ltd (the first respondent) was incorporated in NSW, Australia and had for several years operated a business in Bondi called Taco Bell’s Casa and in 1974 registered the business names of Taco Bell and Taco Casa. Taco Company of Australia Inc (the appellant) was incorporated in the United States with the intention to establish Taco Bell restaurants in Australia and from 1981 operated a Taco Bell restaurant in Sydney.

The respondents sued the appellant for misleading and deceptive conduce under s52 and s53 of the Commonwealth Trade Practices Act 1975 and for passing off. The appellant made similar counter-claims.

At trial, the first respondent was successful in establishing a breach of s52 and passing off.

An appeal was dismissed and injunctions were granted in favour of the respondents restraining the appellant from, within the Sydney metropolitan area (1) using the name Taco Bell or (2) passing off goods and services as being that of the respondents.

A number of observations and principles come from this case.

Representation

At 202, Deane and Fitzgerald JJ observed that a finding on whether or not conduct is a representation is “a question of fact to be decided by considering what [was] said and done against the background of all surrounding circumstances”.

and

“In some cases, such as an express untrue representation made only to identified individuals, the process of deciding that question of fact may be direct and uncomplicated. In other cases, the process will be more complicated and call for the assistance of certain guidelines upon the path to decision.”

The doctrine of erroneous assumption

At 200, Deane and Fitzgerald JJ held:

“no conduct can mislead or deceive unless the representee labours under some erroneous assumption”.

and

“Such an assumption can range from the obvious, such as a simple assumption that an express representation is worthy of credence, through the predictable, such as the common assumption in a passing-off case that goods marketed under a trade name which corresponds to the well-known trade name of goods of the same type have their origins in the manufacturer of the well-known goods, to the fanciful, such as an assumption that the mere fact that a person sells goods means that he is the manufacturer of them.”

When determining whether conduct should be categorised as misleading or deceptive or as likely to mislead or deceive, the nature of the erroneous assumption “will be a relevant, and sometimes decisive, factor”

Misconception

There must be a misrepresentation, not mere tendency to cause confusion or uncertainty.  At 201, Deane and Fitzgerald JJ accepted that the “question whether particular conduct causes confusion or wonderment cannot be substituted for the question whether the conduct answers the statutory description contained in s 52”.

Injunctions

At 207, Deane and Fitzgerald JJ said “Injunctive relief granted to restrain contravention of s52 of the [TP Act] should plainly be limited to what is necessary in the circumstances of the particular case.”

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