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MOORGATE TOBACCO CO. LIMITED v. PHILIP MORRIS LIMITED AND ANOTHER (1984) 156 CLR 415

Trade Marks - Contract - Equity - Tort

COURT
High Court of Australia
Gibbs C.J. (1), Mason (2), Wilson (3), Deane (4) and Dawson (5) JJ.
HRNG
1983, November 15-18; 1984, November 22. #DATE 22:11:1984
JUDGE1
GIBBS C.J.  I would dismiss this appeal for the reasons given by Deane J.,
which I have had the advantage of reading, and with which I agree.

JUDGE2
MASON J.  I would dismiss the appeal for reasons to be given by Deane J.

JUDGE3
WILSON J.  I have had the advantage of reading the reasons for judgment
prepared by my brother Deane.  I agree with those reasons and the conclusions
to which they lead.  There is nothing that I wish to add.

JUDGE4
DEANE J.   This appeal is another skirmish in the hostilities between two
large United States-controlled corporate groups over entitlement to use the
words "Golden Lights" as a trade mark in relation to cigarettes.  The
hostilities are, so the Court was told, being waged on a number of different
national fronts. They have surfaced twice before in this Court: on a question
of jurisdiction (see Moorgate Tobacco Co. Ltd. v. Philip Morris Ltd. (l980)
145 CLR 457) and on a question of competency (see Moorgate Tobacco Co. Ltd. v.
Philip Morris Ltd. (1983) 46 ALR 400).  The present appeal raises questions of
substantive right.

2.  The appellant, Moorgate Tobacco Co. Limited ("Moorgate") which is a member
of the "British American Tobacco Group", claims that the first respondent,
Philip Morris Limited ("Philip Morris") which is a member of the "Philip
Morris Group", acted in breach of fiduciary obligation, in abuse of
confidential information, tortiously ("unfair competition") and in breach of
contract when, on 12 July 1977, it made an application to the Australian Trade
Marks Office to register the trade mark "Golden Lights" in respect of tobacco
and tobacco products.  The second respondent, Philip Morris Inc. ("P.M. Inc.")
which is the holding company of Philip Morris, is a party to the proceedings
by reason of an assignment by Philip Morris to it of that mark.  Moorgate's
action in the Supreme Court of New South Wales for declaratory, injunctive and
consequential relief was dismissed by the learned trial judge (Helsham C.J. in
Eq.) whose decision was upheld by a unanimous New South Wales Court of Appeal
(Moffitt P., Hope and Glass JJ.A.).  Moorgate now appeals, as of right, to
this Court from the judgment and order of the Court of Appeal.

3.  All of Moorgate's propounded causes of action have their alleged basis in
a common substratum of fact.  Those facts fall within a narrow compass.  It is
convenient to refer to them before turning to consider the various claims to
relief.  The starting point is an agreement ("the licence agreement") which
was made on 1 December 1963 between a New Jersey corporation, P. Lorillard
Company ("Lorillard"), and a Victorian company, Godfrey Phillips International
Pty. Ltd. ("Godfrey Phillips").

4.  Lorillard was the manufacturer and distributor of the "KENT" brand of
"King Size Filter" cigarettes.  Those cigarettes, which were and are
well-known in Australia and other countries, incorporate what is known as a
"MICRONITE" filter.  Lorillard was registered in Australia as the proprietor
of the trade mark "MICRONITE" and had applied for, and was subsequently to
obtain, registration of the trade mark "KENT".  By the licence agreement,
Lorillard granted to Godfrey Phillips "a license under the Trademarks Rights"
to make and sell "the internationally famous 'KENT' cigarettes with
'MICRONITE' filters" in the "License Area" which consisted of Australia and
its overseas territories. The licence agreement provided that, in the event
that the licensor decided to licence "the use of any of its other cigarettes
or tobacco products trade marks, in the License Area", the licensor agreed to
offer to the licensee, on such terms as the licensor "shall deem reasonable,
the right of first refusal of such license or licenses".  At the time it
entered into the licence agreement, Godfrey Phillips also entered into a
related agreement ("the technical assistance agreement") with an associated
company of Lorillard which provided for the purchase by Godfrey Phillips of
"flavouring" and MICRONITE "filter rods" for use in the manufacture of KENT
cigarettes and which also provided for the supply of technical information and
assistance to Godfrey Phillips.  Both agreements were for a term of seven
years from 1 December 1963.  In accordance with their respective provisions,
they were later extended for a further period of seven years expiring on 1
December 1977.

5.  Subsequent assignments and novations brought about a number of changes in
the parties to the two agreements.  The changes in parties to the technical
assistance agreement reflected the changes in parties to the licence agreement
and it is convenient to refer only to changes in the parties to the latter
agreement.  In 1969, Loew's Theatres, Inc. ("Loew's") acquired Lorillard's
business in relation to KENT cigarettes and became the owner of the KENT and
MICRONITE trade marks in Australia and the licensor under the licence
agreement. After that acquisition, Lorillard's former business was carried on
by what was known as the "Lorillard Division" of Loew's and, in correspondence
and discussions, executives of Loew's commonly referred to "Lorillard" as if
it remained the relevant corporate entity.  On or about 7 April 197O,
consequent upon an assignment made to it by the then licensee with the consent
of Loew's, Philip Morris became the licensee under the licence agreement.
After that assignment and until the expiry of the two agreements on 1 December
1977, Philip Morris manufactured and marketed in Australia cigarettes under
the KENT trade mark.  At all relevant times, Philip Morris also manufactured
and marketed other tobacco products including cigarettes under the trade mark
"Marlboro".

6.  About the middle of 1975, Loew's decided to test the United States market
for a new type of cigarette with a reduced tar and nicotine content under the
brand name "KENT Golden Lights".  That brand name was what is known in the
tobacco industry, at least in Australia and the U.S.A., as a "line extension"
of the "parent" mark "KENT", that is to say, a brand name that adds to a
"parent" name either other words or a device so that it can be used to give an
individual identity to a new product while retaining the advantage of the
goodwill or reputation associated with the "parent" name.  In October and
November 1975, a market test of those new cigarettes under that brand name was
conducted in the United States.  At about the same time, a market test of the
same or a similar product was conducted in Belgium under the name "KENT
Special Mild".  Between November 1975 and November 1976, there were
discussions between representatives of Loew's and Philip Morris about the
possible manufacture and marketing by Philip Morris of the new cigarettes in
Australia under one or other of those two brand names.  It should be
mentioned, by way of background to those discussions, that Philip Morris was
already manufacturing and marketing its own "low tar and nicotine" cigarettes
in Australia under the name "Marlboro Lights" and that it appears to have been
common ground that the manufacture and marketing of the new KENT cigarette in
Australia would not be within the licence to manufacture and market contained
in the existing licence agreement.  Since it is largely upon those
discussions, and upon documents and actions associated with them, that
Moorgate relies to make good its claims for relief, it is appropriate to refer
to them in a little detail.

7.  The first of the discussions took place in New York in November 1975
between Mr. Orcutt of Loew's and Mr. Hurley of Philip Morris.  It was in the
course of negotiations about a further licence agreement to commence when the
existing one expired in late 1977.  Mr. Orcutt gave evidence of what was said
about the new cigarettes:

    "... I said words to the following effect:  'We
    have test marketed a low tar and nicotine cigarette
    recently.  The cigarette is known as KENT GOLDEN
    LIGHTS and the test market has shown a high degree
    of acceptance for this product under that name.
    You have advised us and we are aware that our
    license agreement will soon terminate.  We both
    desire the development of an ongoing relationship
    under a new license agreement.  Lorillard
    considers, as a basic part of a new license
    agreement, the introduction by Philip Morris
    Australia of a product that would be compatible to
    our understanding of the consumer interest in
    Australia for reduced tar and nicotine cigarettes.
    We feel that the acceptance of KENT GOLDEN LIGHTS
    in the U.S. would make it a strong entry to
    interest new consumers and strengthen the KENT
    franchise in Australia.'
    Hurley replied in substance:
    'That is very interesting.  We'd certainly be
    pleased to look into it and let you have our
    impressions.'
    I replied:
    'We would be only too pleased to give you any
    assistance that we can.  I'll ask Paul Clark (an
    employee of Loew's based in Hong Kong), Tom Jones,
    John Howley, and John Roberts (employees of Loew's
    based in America) to keep in touch with you about
    the matter and give you any assistance they can'."


8.  On 18 December 1975, Mr. Orcutt wrote to Mr. Hurley canvassing a number of
matters that had been discussed in the November meeting.  After introductory
pleasantries, the letter confirmed that Loew's was "prepared to re-negotiate
the License Agreement with Philip Morris (Australia) Limited, which would
embrace the changes we discussed". There followed a list of "elements" on
which it was said that agreement "in principle" had been reached "subject to
final framing". Under the heading "royalty", it was noted that Philip Morris
had proposed an increase in "the existing rate from Australian $0.3O to
Australian $0.35 per thousand" cigarettes and that Loew's proposed "that the
new agreement provide for a royalty of Australian $0.45 per thousand". The
reference to the new low nicotine and tar cigarettes came immediately before a
further reference to the "minimum royalty rate".  It read:

    "In accordance with our conversation, attached to
    this letter is a position paper on the proposed
    line extension for KENT in Australia.  After you
    have had a chance to review the paper, we would be
    most interested to receive your proposal for the
    launch of a 'SPECIAL' KENT, which would include the
    marketing support that Philip Morris (Australia)
    would be prepared to commit to this product, as
    well as the remaining pertinent information.
    As we discussed, the support of this line extension
    for KENT would in no way affect Philip Morris'
    marketing endeavours or continuing emphasis on
    regular KENT;  i.e. KENT KING and KENT BOX."

The "attached ... position paper" was in the form of an internal Loew's
memorandum addressed to Mr. Orcutt.  Its contents indicate that it had been
prepared as a document to be forwarded to Philip Morris to help persuade
Philip Morris of the advantages which it would derive from manufacturing and
marketing the "low tar and nicotine line-extension of KENT in Australia" under
licence from Loew's.  After setting out arguments favouring the introduction
of the product in Australia and referring to test marketing in the United
States and Belgium, the document concluded:

    "The old cliche of 'strike while the iron is hot'
    was never more valid when discussing marketing
    opportunities in the low T&N segment.
    I believe that the opportunity obviously exists.
    The brand has inherent strengths in the white pack
    and health association, Lorillard has the
    technological capability to blend a good tasting,
    easy drawing cigarette within the acceptable range
    of numbers, and most importantly a KENT line-
    extension will give Philip Morris Australia another
    entry in the low T&N segment which appears to be
    dominated by their competitors."

The "position paper" referred to the fact that in Europe the word "Mild
(Milde)" is the universally accepted name that signifies a low tar and
nicotine category whereas in the United States "Lights" is the word that
signifies that category. It stated that "a carton each of the U.S. and Belgian
product, package flats and tear sheets of the advertising campaigns" were
enclosed.  The evidence, while inconclusive, indicates that this material was
forwarded to Philip Morris.

9.  Subsequent discussions relating to the introduction of a KENT low tar and
nicotine cigarette in the Australian market took place between representatives
of Loew's and Philip Morris at meetings in April, June and August 1976.
Neither those discussions nor documents associated with them greatly advanced
the project.  The evidence in relation to them discloses that Loew's continued
to seek to arouse enthusiasm on the part of Philip Morris for the introduction
by Philip Morris, under licence, of the proposed new cigarette in Australia
and that Philip Morris was somewhat unresponsive to those efforts.  Thus, in
the April 1976 discussion, Mr. Hurley indicated that Philip Morris was
studying the possibilities but that he feared that any such marketing would
not increase the overall volume of sales of KENT cigarettes.  In the June
discussion, Mr. Hurley expressed the view that the low tar and nicotine
cigarette market in Australia was a "God-dam leaky bucket".  In the August
discussion, he indicated that "he was still very much negative about the
project" for the reason "that he would prefer to get the parent brand healthy
again".  It is possible that the apparent enthusiasm for the new product on
the part of representatives of Loew's and the apparent lack of it on the part
of Mr. Hurley are explained by the fact that the parties were still engaged in
negotiations about the rate of royalty to be paid by Philip Morris under any
"ongoing licence agreement".  One factor which did emerge from those
discussions was a growing conviction on the part of Loew's that the new
product should, if introduced into the Australian market, be under the mark
"KENT Golden Lights".  In that regard, it is relevant to mention that a
successful "national launch" of the low tar and nicotine cigarette under that
mark had taken place in the United States during March and April 1976.

10.  From 6 to 9 November 1976, there was a number of meetings in Melbourne
between a representative of Loew's and executives of Philip Morris, including
Mr. Hurley.  In the course of discussion, Mr. Hurley raised the subject of
"KENT Golden Lights".  He stated that Philip Morris was aware of what was
needed to market the product and that he would be visiting New York around 13
November and would "call" Mr. Orcutt.  On 16 November, there was a meeting, in
New York, between Mr. Hurley and two senior executives of Loew's (Mr. Howley
and Mr. Roberts).  The discussion is summarized in a Loew's internal document
headed "Minutes of Meeting". These "Minutes" indicate that a large part of the
"Meeting" consisted of discussions about a new licence agreement after the
expiry of the current agreement and that Loew's maintained its position that
the royalty under the new agreement should be $A0.45 per thousand units while
Mr. Hurley indicated that Philip Morris would be prepared to raise the royalty
rate from the then current $A0.3O per thousand units to $A0.40.  The Minutes
summarize the discussion about "KENT Golden Lights" as follows:

    "    Mr. Hurley stated that the Philip Morris
    Marketing Department is starting work on the
    details of a marketing plan for a low tar and
    nicotine version of KENT.  When the plan is
    completed and approved by Australian management,
    Philip Morris will open discussions with Lorillard
    to obtain the appropriate licences.
         It was stated that Philip Morris should pursue
    development of the U.S. GOLDEN LIGHT pack and not
    the European Special Mild design.  Mr. Hurley
    agreed and stated that Philip Morris marketing will
    start out by determining the proper name for the
    product, GOLDEN LIGHTS or SPECIAL MILD.  Philip
    Morris, Australia is now conducting research on the
    Marlboro Lights name and what it means.  Current
    thinking is that Mild appears to be more acceptable
    to Australian consumers than Lights."

That discussion must, of course, be understood in the context that Loew's had,
throughout, been attempting to persuade a seemingly reluctant Philip Morris to
manufacture and market the new product in Australia under a licence agreement
involving the payment of a royalty to Loew's.  In that context, the reference
to Philip Morris "starting work on the details of a marketing plan" would
appear to be a reference to Philip Morris preparing a marketing plan
essentially for its own purposes and setting out its own market assessment and
intentions.  That this was so is confirmed by the next statement attributed to
Mr. Hurley in the above extract, namely, that, when the plan was completed and
"approved by Australian management" of Philip Morris, Philip Morris would take
steps "to obtain the appropriate licences".

11.  In the absence of objection, Mr. Orcutt was permitted at the trial to say
that Loew's "felt" that Philip Morris "had given ... an obligation to deliver"
to Loew's the above-mentioned "marketing plan".  Mr. Orcutt was, however, not
present at the discussion of 16 November 1976 which was the only occasion on
which it is suggested that such a proposed plan was mentioned:  "the details"
of that discussion had been reported to him by Mr. Howley.  Mr. Howley's
direct evidence and the contemporaneous record of the discussion contained in
the "Minutes", which are plainly to be preferred to Mr.  Orcutt's evidence on
the point, indicate that no such "obligation" had, in fact, been expressly
undertaken by Philip Morris.  In the context of previous statements that
Philip Morris would let Loew's have its "impressions" and that Loew's would be
interested to "receive" a "proposal" from Philip Morris, it is possible that
there was a common understanding that Philip Morris would provide Loew's with
information about its marketing plans when it "opened discussions with Loew's
to obtain the appropriate licenses" to manufacture and market the new product
in Australia.  Be that as it may however, there is no basis in the evidence
for a finding that Philip Morris either undertook to act on behalf of Loew's
or was in fact so acting in relation to the preparation of that marketing plan
and there is no finding to that effect in any of the judgments in the courts
below.  To the contrary, the evidence plainly indicates that the marketing
plan was to be prepared by Philip Morris' acting on its own behalf so that it
might be placed before its own "Australian management". The proper conclusion
from all the evidence is that expressed by Hope J.A. in the Court of Appeal,
namely, that the discussions and communications "in respect of the project of
selling the new cigarettes in Australia" were and remained business
discussions and communications "between business people dealing, in this
regard, at arms length".

12.  The above extract from the "Minutes" of the 16 November 1976 conversation
indicates that the question of the name to be used for the new product, if
introduced in Australia, remained an open one.  While the combination of
"Golden" and "Lights" had been devised by Loew's, both words were well known
descriptive words in the trade.  Thus, the Australian Register of Trade Marks
includes, in respect of tobacco products, many instances of the use of the
word "golden" including such evocative examples as "Golden Throat", "Golden
Shag", "Golden Arrow" and "Golden Teens":  the evidence is that the word
"golden" was understood to refer to the "richness" of the product rather than
the colour of nicotine stain.  The word "Lights" was, as both sides well knew,
already being used by the Philip Morris group in Australia in relation to the
"Marlboro Lights" low tar and nicotine cigarettes.  More importantly, P.M.
Inc.  was registered in Australia as the proprietor of the trade mark "Lights"
in respect of cigarettes and was, while it remained so registered, in a strong
prima facie position to prevent either the registration or use of "Golden
Lights" as or as part of a trade mark in respect of cigarettes by any one
other than itself.

13.  In March 1977, negotiations commenced between Loew's and the British
American Tobacco Company Group ("B.A.T.") for the acquisition by B.A.T. of the
"International Sales business" of Loew's in cigarettes "and the goodwill
associated therewith".  Included in the proposed sale were the Australian KENT
and MICRONITE trade marks and the benefit of the Licence Agreement.  The
evidence indicates that the view was taken by those executives of Loew's who
customarily dealt with Philip Morris in relation to the licence agreement
that, if the sale went through, it was likely that B.A.T. would itself,
through one of its subsidiaries, commence the manufacture and marketing of
KENT products in Australia.  In other words, there would be no "ongoing
licence agreement" with Philip Morris.  On the other hand, Loew's plainly did
not desire summarily to terminate the discussions with Philip Morris about a
new licence agreement and the new cigarettes while there was any possibility
that the proposed sale to B.A.T. would fall through.  To use the phraseology
of senior counsel for the respondents, Loew's "began to keep house" and to
avoid any discussions with representatives of Philip Morris.  Nothing was done
to alert Philip Morris to the possibility that any work it was doing or money
it was expending in relation to the proposal that it manufacture and market
the new product in Australia was likely to be or might be wasted.  To the
contrary, on 20 April 1977 Loew's wrote to Philip Morris advising that the
"long delayed trip to Australia still seems to be delayed" and stating that
"(o)ur feeling is now if we are not able to negotiate a new licence agreement
prior to the date of expiration of the existing agreement (November) we should
extend this existing agreement by 6 months or until a new one can be
executed".

14.  In early June 1977, Mr. Hurley of Philip Morris received information that
B.A.T. was negotiating with Loew's for the acquisition of the Loew's tobacco
and tobacco products business outside the United States.  On 7 June 1977, he
called on Mr. Orcutt in New York.  He expressed to Mr. Orcutt his
understanding that the Loew's "international cigarette business" was "being
sold" and said that, if the sale did not go through, Philip Morris "would be
very interested in purchasing the KENT brand".  Mr. Orcutt refused to comment
on Mr. Hurley's statement.  On 22 June 1977, Moorgate and Loew's entered into
a formal agreement for the sale to Moorgate of Loew's business outside the
United States "in cigarettes, and the goodwill associated therewith".  The
purchase became effective at l0 a.m. (New York time) on that day.  Included in
the sale were Loew's' Australian trade marks, trade names and rights relating
thereto.  It is common ground that, pursuant to the assignment of assets
effected by that agreement, Moorgate became the licensor under the licence
agreement. Thereafter, Loew's moves out of the picture.  Its place is taken by
Moorgate of the B.A.T. Group which was and is a leading competitor of the
Philip Morris Group in the Australian market.

15.  Internal communications within the Philip Morris Group indicate that
Philip Morris did not abandon all hope of continuing to manufacture and market
KENT cigarettes in Australia after the expiry of the licence agreement until
21 September 1977 when Mr. Hurley met with Mr. Sheehy, the Chairman of
Moorgate, in Miami.  Mr. Sheehy informed Mr. Hurley that it was not "worth
going over" matters that were in the past and that "we had bought this asset
in order to develop it world wide, and that it was clearly more beneficial for
us as a group to have it manufactured by a group company rather than not,
wherever this was possible". Mr. Hurley asked about the possibility of
purchasing the KENT business in Australia and was informed that Moorgate was
not interested in such a sale.  Mr. Hurley expressed his acceptance of the
position that Philip Morris would be unable either to obtain a new licence
agreement for Australia or to purchase the KENT name or business in Australia.

16.  As has been mentioned, the application by Philip Morris for registration
in Australia of the trade mark "Golden Lights" was made on 12 July 1977, that
is, about three weeks after Loew's had disposed of its Australian interests in
the KENT business and the associated trade marks to Moorgate. The assignment
by Philip Morris to P.M. Inc. of its interest in the trade mark "Golden
Lights" was made around 21 December 1977, that is, some three weeks after the
expiry of the licence agreement.  On 25 July 1977, P.M. Inc. became
registered, as from 8 May 1975, as the proprietor in Australia of a trade mark
which included the words "Marlboro Lights".  The marketing by P.M. Inc. or an
associated company of low tar and nicotine cigarettes in Australia under the
mark "Marlboro Lights" continued, unsuccessfully, until early 1978 when the
mark "Marlboro Golden Lights" commenced to be used.  The latter mark was in
use at the commencement of the present proceedings in August 1978.  The
evidence discloses that, in applying for registration in Australia of the
trade mark "Golden Lights" and in commencing to market product under the name
"Marlboro Golden Lights", Philip Morris and P.M. Inc. had the related
objectives of seeking to obtain and preserve the marks "Golden Lights" and
"Lights" for the Philip Morris Group and of preventing B.A.T. from marketing
product under the marks "Golden Lights" or "KENT Golden Lights".  There was no
marketing of "KENT Golden Lights" cigarettes in Australia until about August
1978 when there was "a trade mark exercise" involving some marketing by B.A.T.
within Australia of imported cigarettes under that name.

17.  In argument in this Court, primary emphasis was placed by Moorgate on its
claims based on alleged breach of fiduciary duty and abuse of confidential
information.  It is, however, convenient to commence the examination of
Moorgate's claims to relief with a consideration of those based on the
provisions of the licence agreement.  It has already been mentioned that it
appears to have been assumed by both Philip Morris and Loew's, in their
discussions about the new low tar and nicotine cigarettes, that the
manufacture and marketing of those cigarettes in Australia was not within the
licence to manufacture and market contained in the licence agreement.  In my
view, that assumption was, as a matter of construction of the licence
agreement, correct. Since I agree generally with what was said in the judgment
of Hope J.A. in the Court of Appeal on the point, it is unnecessary that I do
more than indicate in summary form the reasoning which leads to that
conclusion.

18.  The licence to manufacture and market which was contained in the licence
agreement was expressly limited to the manufacture and marketing of "Licensed
Products".  The definition of "Licensed Products" is found in the first
sentence of the licence agreement which recites that the licensor
"manufactures and sells throughout the world, various tobacco products
including, inter alia, the internationally famous 'KENT' cigarettes with
'MICRONITE' filters (which filter cigarettes are hereinafter called the
'Licensed Products')".  Plainly enough, that description referred to the
regular or standard "King Size" filter cigarettes which were marketed in more
than one packet ("Soft Pack" and "Crushproof") and apparently under more than
one name ("KENT KING" and "KENT BOX") but which, notwithstanding some minor
variations in composition between products in the different packages, were and
are all regarded as being the "regular KENT" cigarette (see, e.g., the extract
from the letter of 18 December 1975 set out above).  The low tar and nicotine
cigarette was a new and different product which was not, either at the time of
the original licence agreement or at the time of its renewal, included among
the "tobacco products" which the licensor "manufactures and sells" and which
was clearly distinguishable, both in the trade and by consumers, from the
"internationally famous" regular or standard filter cigarettes.  Even if sold
under a trade mark including the word "KENT" as well as other words, that new
cigarette would not be included in the KENT filter cigarettes which the
licence agreement identified as constituting the "Licensed Products".  It
follows that Moorgate cannot successfully rely upon those provisions of the
licence agreement which are restricted to protecting the rights of the
licensor in relation to "Licensed Products".

19.  Moorgate's case based on the licence agreement does not, however,
necessarily fail with the conclusion that the new low tar and nicotine
cigarettes were not "Licensed Products" for the purposes of that agreement.
Two distinct arguments based on the licence agreement remain to be considered.
First, it is submitted that Loew's and, by assignment, Moorgate "had the right
in Australia to the trade mark KENT GOLDEN LIGHTS".  That right was, it is
said, a "Trademark Right" for the purposes of the licence agreement which
Philip Morris was under an express obligation imposed by the agreement (Art.
VI) to respect and to assist Moorgate "in all ways in securing and
maintaining".  The application for registration of the "Golden Lights" mark
was, so the argument proceeds, in breach of that obligation.  Secondly, it is
submitted that it was an implied term of the licence agreement that Philip
Morris "would do nothing to hinder or prevent the development of any line
extension or other right in respect of the trade mark Kent" and that the
application for registration of the mark "Golden Lights" was in breach of that
implied term.

20.  The starting point of the first argument is the proposition that, at the
time when Philip Morris applied for registration of the trade mark "Golden
Lights", Moorgate had "the right in Australia to the trade mark 'KENT GOLDEN
LIGHTS'".  It is conceded that, unless that proposition is made good, Moorgate
can obtain no protection in respect of the mark "Golden Lights" from the
provisions of the licence agreement protecting the "Trademark Rights" of the
licensor. The only basis upon which Moorgate seeks to make good its claim to
such a "right" in Australia is that Loew's had become the proprietor of the
trade mark "KENT Golden Lights" for the purposes of s.4O(l) of the Trade Marks
Act 1955 (Cth) with the result that it was entitled to apply for registration
of the mark and to resist the application of any one else who purported to
apply for registration of it as "the proprietor".  It was conceded by Moorgate
that it could not claim to have become the proprietor of the mark as an unused
mark during the currency of the licence agreement since it did not apply for
registration of the mark until more than two weeks after the licence agreement
had expired. That being so, Moorgate's claim to have become "the proprietor"
of the mark "KENT Golden Lights" must, of necessity, be based upon prior use
(see The Kendall Co. v. Mulsyn Paint and Chemicals (1963) 109 C.L.R 300, at pp
3O4- 3O5).

21.  The prior use of a trade mark which may suffice, at least if combined
with local authorship, to establish that a person has acquired in Australia
the statutory status of "proprietor" of the mark, is public use in Australia
of the mark as a trade mark, that is to say, a use of the mark in relation to
goods for the purpose of indicating or so as to indicate a connection in the
course of trade between the goods with respect to which the mark is used and
that person (see, generally, The Shell Co. of Australia Ltd. v. Esso Standard
Oil (Australia) Ltd. (1963) 1O9 CLR 407, at pp 423-424;  Re The Registered
Trade Mark "Yanx"; Ex parte Amalgamated Tobacco Corporation Ltd. (1951) 82 CLR
199, at pp 204-205; and the definition of "trade mark" in s.6(1) of the Trade
Marks Act).  The requisite use of the mark need not be sufficient to establish
a local reputation and there is authority to support the proposition that
evidence of but slight use in Australia will suffice to protect a person who
is the owner and user overseas of a mark which another is seeking to
appropriate by registration under the Trade Marks Act.  In such a case, the
court "seizes upon a very small amount of use of the foreign mark in Australia
to hold that it has become identified with and distinctive of the goods of the
foreign trader in Australia" (see The Seven Up Co. v. O.T. Ltd. (1947) 75 CLR
203, at p 211; Aston v. Harlee Manufacturing Co. (1960) 103 CLR 391, at p
4OO).   In so far as the trade mark "KENT Golden Lights" is concerned, Loew's
was the author, owner and user of that mark in the United States.  Assuming,
in its favour, that evidence of but slight use in the course of trade in
Australia would suffice to establish its status as proprietor of the mark, as
distinct from merely precluding another from establishing local authorship,
the question arises whether there was evidence of even such slight use.  For
Philip Morris, it is submitted that there was no evidence at all of any
relevant use.  That submission accords with the conclusion reached by Helsham
C.J. in Eq., at first instance, and by Glass J.A. who was the only member of
the Court of Appeal who found it necessary to determine the question.

22.  To establish prior use of the mark in Australia, Moorgate relies upon
evidence that, during or in connection with discussions between Loew's and
Philip Morris about the introduction of the low tar and nicotine cigarette in
Australia, packets of cigarettes and associated advertising material
displaying the name "KENT Golden Lights" were handed personally, or in one
instance sent by mail, to representatives of Philip Morris in Australia.  That
evidence indicates that there were at least three occasions on which such
cigarette packets and advertising material were so delivered.  At the times
when those items were so delivered, there was no intention on the part of
Loew's that it would itself trade in the goods in Australia.  Nor, for that
matter, had it been decided what name would be used if Philip Morris were,
under licence from Loew's, to commence to manufacture and market the goods in
Australia at some indefinite future time.

23.  The Court was referred to a large number of cases and to some
administrative decisions in which consideration has been given to what
constitutes a use or user of a trade mark for the purposes of the statutory
notion of proprietorship of the mark before registration.  The cases establish
that it is not necessary that there be an actual dealing in goods bearing the
trade mark before there can be a local use of the mark as a trade mark.  It
may suffice that imported goods which have not actually reached Australia have
been offered for sale in Australia under the mark (Re The Registered Trade
Mark "Yanx"; Ex parte Amalgamated Tobacco Corporation Ltd., at pp 204-205) or
that the mark has been used in an advertisement of the goods in the course of
trade (The Shell Co. of Australia  v. Esso Standard Oil (Australia) Ltd., at p
422). In such cases however, it is possible to identify an actual trade or
offer to trade in the goods bearing the mark or an existing intention to offer
or supply goods bearing the mark in trade.  In the present case, there was
not, at any relevant time, any actual trade or offer to trade in goods bearing
the mark in Australia or any existing intention to offer or supply such goods
in trade. There was no local use of the mark as a trade mark at all;  there
were merely preliminary discussions and negotiations about whether the mark
would be so used.  The cigarette packets and associated advertising material
were delivered to Philip Morris to demonstrate what Loew's was marketing in
other countries and what Philip Morris might market, under licence from
Loew's, if it decided to manufacture and trade in the goods in Australia and
to use the mark locally at some future time.  There was no relevant trade in
the goods in Australia and the delivery of the cigarette packets and
associated material to Philip Morris did not, in the circumstances, constitute
a relevant user or use in Australia of the mark "KENT Golden Lights" for the
purpose of indicating or so as to indicate a connection in the course of trade
between the new cigarettes and Loew's. It follows that Moorgate has failed to
establish proprietorship of the mark "KENT Golden Lights" either at the time
Philip Morris applied to register the mark "Golden Lights" or at the time when
the licence agreement expired. It is unnecessary to consider whether, if
Moorgate had succeeded in establishing such proprietorship, its rights in
respect of the mark "KENT Golden Lights" would have been protected by the
provisions of Article VI of the licence agreement notwithstanding that the new
low tar and nicotine cigarettes were not "Licensed Products" under that
agreement or whether, even if its rights in the mark "KENT Golden Lights" were
within the protection of Article VI, that protection extended to preclude
Philip Morris from applying for registration of the mark "Golden Lights".   It
should, perhaps, be mentioned that Moorgate did not argue in this Court that
the fact that advertisements of the United States "KENT Golden Lights"
cigarettes came into Australia via American magazines meant that there had
been a relevant use or user of the name in Australia (see The Seven Up Co. v.
O.T. Ltd., at p 211).

24.  The argument that Philip Morris' application for registration of the
trade mark "Golden Lights" was in breach of an implied term of the licence
agreement may be briefly disposed of.  The express provisions of the agreement
protect the licensor's right and interest in the trade mark KENT itself.  The
suggested implied term is to the effect that "during the agreement (the
licensee) would do nothing to hinder or prevent the development of any line
extension or other right in respect of" that trade mark.  As a matter of
internal linguistics, there is nothing in the agreement itself to indicate
that any such term was assumed to exist.  Viewed against the factual matrix of
the agreement (see Prenn v. Simmonds (1971) 1 WLR 1381, at p 1383-1384), such
a term would have surprising consequences.  It would, for example, preclude
the licensee from seeking to maintain or protect its own trade marks,
regardless of how long they had been owned and of the circumstances in which
they had been acquired, if the maintenance or protection of them would "hinder
or prevent" the development of "any line extension or other right in respect
of the trade mark 'Kent'".  Unless qualified, it would, for example, preclude
Philip Morris from seeking to hinder or prevent the introduction by the
licensor of a line extension under the name "KENT Lights" or, to take an
extreme case, under the name "KENT MARLBOROS" notwithstanding the fact that
"Lights" and "Marlboro" were registered trade marks of the Philip Morris
group.  It would preclude any competition at all between the licensor and
licensee for acquisition or use of a name which the licensor might wish to use
as a "line extension" of KENT notwithstanding the fact that the proposed "line
extension" related to a product which was not covered by the terms of the
licence agreement.  Plainly, the implication of such an unqualified term
cannot be justified on the basis that it would make the agreement correspond
with some evident underlying intention of the parties.  Nor is it warranted by
any need to give the agreement the business efficacy which the parties to it
must have intended.  It follows that there is no basis for the implication of
the suggested term (see, generally, B.P. Refinery (Westernport) Pty. Ltd. v.
President, Councillors and Ratepayers of Shire of Hastings (1977) 52 ALJR 20,
at pp 26, 30;  Secured Income Real Estate (Australia) Ltd. v. St. Martins
Investments Pty. Ltd. (1979) 144 CLR 596, at pp 605-606;  Codelfa
Constructions Pty. Ltd. v. State Rail Authority of N.S.W. (1982) 149 CLR 338,
at pp 351-352, 404). If there be, on established principle, any basis for the
implication of a provision in the licence agreement precluding the licensee
from hindering or preventing the development of a line extension in respect of
the KENT trade mark, it must be confined to a more limited provision applying
only to a line extension which was or would be itself a "Licensed Product"
under the licence agreement.  Philip Morris' application for registration of
the trade mark "Golden Lights" would not have constituted a breach of any such
more limited provision since, as has been seen, the proposed line extension
"KENT Golden Lights" was not in respect of cigarettes which were or would be
included in the "Licensed Products" under the licence agreement.  I turn to
Moorgate's claim that Philip Morris was in breach of some fiduciary duty.

25.  The general relationship between licensor and licensee under the licence
agreement and the technical assistance agreement was neither that of
partnership nor that of agency.  Nor was it fiduciary in its nature.  The
rights and obligations of the parties were as defined by the agreements and
neither party was under a general obligation to avoid any conflict between its
own interests on the one hand and the interests of the other party or the
joint interests of them both on the other or to prefer the interests of the
other party or the joint interests to its own interests if and when any such
conflict arose.  That does not, however, preclude the possibility that, within
or arising from that general relationship, duties of a fiduciary nature might
well exist.  Particular property, corporeal or incorporeal, might be held by
one party on behalf of the other;  particular provisions of one or other of
the two agreements might require the pursuit by one party of the interests of
the other without regard to its own; one party might undertake to act on
behalf of the other in relation to a particular matter arising within or
outside the area governed by the two agreements.  The continuing relationship
between the parties under the agreements - involving shared objectives,
accounting obligations and the provision of information - provided a context
in which it would be easier to imply an undertaking by one party to act on
behalf of the other in relation to a particular matter or venture than would
be the case if that relationship had not existed.

26.  The necessary starting point of Moorgate's claim of breach of fiduciary
duty is the identification of some fiduciary duty on the part of Philip Morris
which precluded Philip Morris from seeking to obtain for itself the benefit of
registration of the mark "Golden Lights".  It is not suggested that any such
fiduciary duty flowed from the general relationship of licensee and licensor.
What is submitted is that, in the context of that general relationship, Philip
Morris "undertook the fiduciary duty of acting for or in its licensor's
interest in respect of the brand and mark KENT GOLDEN LIGHTS".  As I read the
judgments of Helsham C.J. in Eq., at first instance, and of Hope J.A. (with
whom Moffitt P. was in general agreement) in the Court of Appeal, that
submission, which essentially is one of fact, is in conflict with the findings
of both the trial judge and the Court of Appeal.  Its basis is an assertion
that Philip Morris undertook to act on behalf of Loew's in preparing the
marketing plan mentioned in the discussion between Mr. Hurley (of Philip
Morris) and Messrs.  Howley and Roberts (of Loew's) which took place in New
York on l6 November l976 and which has been already examined in some detail.
As has been seen, that assertion is not supported by the evidence and must be
rejected.  The effect of its rejection is that the submission that Philip
Morris was under a fiduciary duty to act on behalf of Loew's in respect of the
brand mark "KENT Golden Lights" is bereft of any factual basis and Moorgate's
claim of breach of fiduciary duty must fail. It is unnecessary to consider
whether, if Philip Morris had undertaken a fiduciary duty to act on behalf of
Loew's with respect to the investigation of the marketability of the new
cigarettes in Australia, the content of that fiduciary duty would, in the
circumstances of the present case, have precluded Philip Morris from pursuing
its own interests by seeking to register the mark "Golden Lights" after Loew's
had, by assignment to Moorgate, deprived itself of any ability to enter into
any arrangement with Philip Morris for the manufacture or marketing in
Australia of the proposed cigarettes.

27.  Moorgate relied in two distinct ways on the alleged confidentiality of
certain of the information which Loew's communicated to Philip Morris.
Firstly, it was said that that allegedly confidential information had been
obtained by Philip Morris as a result of its having undertaken the fiduciary
duty of acting for Loew's in relation to the proposed introduction of the new
cigarette in the Australian market.  If Philip Morris had acquired
confidential information by use or by reason of such a fiduciary position or
of opportunity or knowledge resulting therefrom, it would, on well established
principles, be precluded from using the information to its own advantage or to
the detriment of Loew's.  As has been said however, Moorgate has failed to
establish that Philip Morris undertook any such fiduciary duty.
Alternatively, it was submitted that the effect of the combination of the
confidential nature of the relevant information and the circumstances in which
it was communicated was that Philip Morris was under a duty, enforceable in
personam by equitable remedies, not to disclose or make use of the
confidential information other than for the purposes for which it was
communicated to it (see, e.g., Saltman Engineering Co. Ltd. v. Campbell
Engineering Co. Ltd. (1947) 65 RPC 203, at p 215; Interfirm Comparison
(Australia) Pty. Ltd. v. Law Society of New South Wales (1975) 2 NSWLR 104, at
pp 117ff; Talbot v. General Television Corporation Pty. Ltd. (1980) VR 224, at
p 230).

28.  It is unnecessary, for the purposes of the present appeal, to attempt to
define the precise scope of the equitable jurisdiction to grant relief against
an actual or threatened abuse of confidential information not involving any
tort or any breach of some express or implied contractual provision, some
wider fiduciary duty or some copyright or trade mark right.  A general
equitable jurisdiction to grant such relief has long been asserted and should,
in my view, now be accepted (see The Commonwealth v. John Fairfax & Sons Ltd.
(1980) 147 CLR 39, at pp 50-52). Like most heads of exclusive equitable
jurisdiction, its rational basis does not lie in proprietary right.  It lies
in the notion of an obligation of conscience arising from the circumstances in
or through which the information was communicated or obtained.  Relief under
the jurisdiction is not available, however, unless it appears that the
information in question has "the necessary quality of confidence about it"
(per Lord Greene M.R., Saltman, at p.215) and that it is significant, not
necessarily in the sense of commercially valuable (see Argyle v. Argyle (1967)
Ch 302, at p 329) but in the sense that the preservation of its
confidentiality or secrecy is of substantial concern to the plaintiff.  That
being so, the starting point of the alternative argument must be the
identification of the relevant confidential information.  Again, the argument
breaks down at the threshold.

29.  The allegedly confidential information is identified by Moorgate as being
the "marketing results, advertising, position paper and the knowledge that
(Loew's) wanted to introduce the brand in Australia".  Putting to one side for
the moment information about what Loew's desired or intended to do,
examination of the designated material discloses that it consisted of the type
of general information and argument that one would expect a company desiring
to license the manufacture and marketing in Australia of a new type of
cigarette under a "line extension" of its parent mark to communicate to an
"arms-length" potential licensee which already manufactured and marketed a
competing product.  In particular, the evidence did not establish that any of
the material was in fact regarded as confidential by Loew's or that Loew's at
any time requested Philip Morris to treat or regard it as confidential.  In
argument, senior counsel for Moorgate tended to restrict the suggested
confidential information to the information that Loew's wanted to introduce
the new cigarettes in Australia under the brand mark "KENT Golden Lights".  In
that regard however, the evidence established neither that any such
information was communicated to Philip Morris nor that, if it had been, it was
even accurate.  All that the evidence indicated was that Loew's was anxious
that Philip Morris agree to manufacture and market the new cigarettes,
possibly under the name "KENT Golden Lights", in Australia under an agreement
which would provide for the payment by Philip Morris to Loew's of a royalty
upon sales.  It is probably implicit in the material in evidence that Loew's
would have wished, in the event that Philip Morris was not interested, to
obtain some other licensee but the evidence is quite silent as to whether
Loew's ever had any desire or intention itself to manufacture or market the
new product here.  If the allegedly confidential information is restricted to
the information that Loew's desired to obtain a licensee who would manufacture
and market the new product in Australia, there was nothing in the evidence nor
in the nature of that information that established that it was regarded by
Loew's as confidential or that it was in fact confidential.  In the result,
the evidence failed to establish that any part of the designated information
possessed the necessary element of confidentiality or secrecy or that the
preservation of its confidentiality or secrecy was of substantial concern to
Loew's.  Indeed, senior counsel who then appeared for Moorgate expressedly
conceded, in his final address on the trial, that the information acquired by
Philip Morris from Loew's in relation to the possible introduction of the new
cigarettes in the Australian market was "non-confidential".

30.  It should be mentioned that the claim that Philip Morris acted in abuse
of confidential information appears to have been abandoned at first instance.
Moorgate was, however, allowed to rely on the claim in the Court of Appeal
apparently without objection by Philip Morris.  That being so, I consider that
Moorgate was entitled in this Court to attack the decision which the Court of
Appeal gave against it on the question.  The failure to establish the
confidentiality of the relevant information means, however, that that attack
must fail.  It is unnecessary to consider whether, if Philip Morris had been
under an enforceable obligation to observe the confidentiality of any
information that Loew's "wanted to introduce the brand (KENT Golden Lights) in
Australia", its application for registration of the mark "Golden Lights" would
have constituted a breach of that obligation.

31.  Moorgate's final claim against Philip Morris is based upon what is
described as the "tort" of "unfair competition".  In Moorgate's written
outline of argument, the "necessary ingredients" of such a tort are stated to
be that Philip Morris acted unfairly to the disadvantage of Moorgate.  The
question arises whether the law of this country knows any such general tort.

32.  The phrase "unfair competition" has been used in judgments and learned
writings in at least three distinct ways, namely, (i) as a synonym of the
doctrine of passing off;  (ii) as a generic name to cover the range of legal
and equitable causes of action available to protect a trader against the
unlawful trading activities of a competitor; and (iii) to describe what is
claimed to be a new and general cause of action which protects a trader
against damage caused either by "unfair competition" generally or, more
particularly, by the "misappropriation" of knowledge or information in which
he has a "quasi-proprietary" right. The first and second of the above uses of
the phrase are liable to be misleading in that they may wrongly imply that the
relevant action or actions are restricted to proceedings against a competitor.
The second use is also liable to imply that there exists a unity of underlying
principle between different actions when, in truth, there is none. The third
use of the phrase is, in an Australian context, simply mistaken in that
"unfair competition" does not, in itself, provide a sufficient basis for
relief under the law of this country.  It is in that third and mistaken sense
that "unfair competition" was called in aid of Moorgate's case in the present
appeal.

33.  The genesis of the notion of a general cause of action for "unfair
competition" is to be found in the majority judgment of the United States
Supreme Court in International News Service v. Associated Press (1918) 248 US
215 (63 Law Ed 211).  As the name would indicate, that case was concerned with
published news or information.  The complainant, a co-operative association of
newspaper publishers, gathered news which it telegraphed to its member
publishers throughout the United States.  The defendant was a corporation
which was engaged in the business of gathering news for other publishers.  The
defendant made a practice of obtaining news from the early publications of the
complainant's members and sending it by telegraph to its own customers thus
enabling them, in some parts of the United States, to publish news gathered by
the complainant for its members as soon as or even earlier than it was
published in the newspapers published by those members.  The majority
judgment, delivered by Pitney J., denounced (248 U.S., at p.240 (63 Law Ed.,
at p. 221)) the actions of the defendant as "an unauthorized interference with
the normal operation of complainant's legitimate business precisely at the
point where the profit is to be reaped, in order to divert a material portion
of the profit from those who have earned it to those who have not; with
special advantage to defendant in the competition because of the fact that it
is not burdened with any part of the expense of gathering the news".  That
fulsome description of the defendant's actions was immediately followed by the
conclusion that the "transaction speaks for itself and a court of equity ought
not to hesitate long in characterising it as unfair competition in business".

34.  The majority judgment in International News Service assumed, rather than
sought to establish, that such "unfair competition in business" was, in
itself, an actionable wrong.  The "underlying principle" was stated to be
"much the same as that which lies at the base of the equitable theory of
consideration in the law of trusts - that he who has fairly paid the price
should have the beneficial use of the property.  Pom. Eq. Jur.  981".  That
equitable principle is, however, applicable to determine beneficial ownership
of property which is capable of being the subject of a trust (see Pomeroy's
Equity Jurisprudence, 5th ed. (1941), vol.3,  981) and cannot logically either
found a conclusion that published news, as distinct from copyright in its
presentation or arrangement, itself constitutes property, or provides any
basis for a general cause of action for unfair competition.  The judgment went
on to assert (248 U.S., at p.242 (63 Law Ed., at p.222)) that the "news
matter" should be regarded as "the mere material from which (the) two
competing parties are endeavouring to make money" and be treated as
"quasi-property for the purposes of their business because they are both
selling it as such" and that, so regarded and treated, the "news material" had
been "misappropriated" by the defendant.  It is not explained why the
information which had been published should have been regarded by the majority
of the Supreme Court as "mere material from which" a party was endeavouring to
make money, why that information should have been "treated" as
"quasi-property" when it had long been the common law that, in the absence of
rights of patent, trade mark or copyright, information and knowledge are not
the property of an individual, or why a person who had gathered and published
information about world events should be seen as owning the information in the
sense that the "unfair" use of it by another in competition in a manner that
was contrary to that party's business interests constituted
"misappropriation". In addition to misappropriation, the judgment (at p.242
(at p.222)) identified "elements of imitation - of false pretense - in
defendant's practices" but stated that "these elements, although accentuating
the wrong, are not the essence of it".  It is difficult to know whether
"misappropriation" of "news material" should be regarded as a separate basis
of the decision or as but one instance of the general wrong of "unfair
competition in business" to which the judgment had earlier referred.  Either
way, one searches in vain in the majority judgment for any identification of
the ingredients of that general wrong.

35.  Not surprisingly in a Court of which Holmes J. and Brandeis J. were
members, the muddled birth of the new action was not an occasion for
unanimity. Holmes J., in what was essentially a dissenting judgment, held that
the complainant was entitled to but limited relief on the basis of inverse
passing off and that any entitlement to wider relief was a matter for the
legislature and not for the court.  Brandeis J. filed a strong dissent in
which he considered relevant United States and English authorities and
concluded that the law did not recognize any general proprietary right in
knowledge or information or any general action for unfair competition.

36.  Subsequent decisions of United States courts have tended to isolate
rather than develop the doctrine of a general action for unfair competition
enunciated in the International News Service Case.  In Kellogg Co. v. National
Biscuit Co. (1938) 305 US 111, at p 123 (83 Law Ed 73, at p 81), the Supreme
Court reversed decrees of the Third Circuit Court of Appeals which, inter
alia, restrained the Kellogg Company from using the term "shredded wheat" in
relation to biscuits on the ground that its use constituted "unfair
competition".  The Supreme Court, in a majority judgment delivered by Brandeis
J., implicitly refuted any general doctrine of unfair competition and
restricted the relevance of "fairness" to a passing off context:  "Fairness
requires that it be done in a manner which reasonably distinguishes its
product from that of the plaintiff" (305 U.S., at p.120 (83 Law Ed., at
p.79)).  In words reminiscent of Brandeis J.'s previous dissent, the majority
commented (305 U.S., at p.122 (83 Law Ed., at p.80)):

    "    Kellogg Company is undoubtedly sharing in the
    goodwill of the article known as 'Shredded Wheat';
    and thus is sharing in a market which was created
    by the skill and judgment of plaintiff's
    predecessor and has been widely extended by vast
    expenditures in advertising persistently made.  But
    that is not unfair.  Sharing in the goodwill of an
    article unprotected by patent or trade-mark is the
    exercise of a right possessed by all - and in the
    free exercise of which the consuming public is
    deeply interested".

In Sears, Roebuck & Co. v. Stiffel Co. (1964) 376 US 225 (11 Law Ed 2d 661)
and Compco Corp. v. Day Brite Lighting, Inc. (1964) 376 US 234 (11 Law Ed 2d
669), the Supreme Court reaffirmed the approach which it had adopted in the
Kellogg case.

37.  Nor has the doctrine of a general action for unfair competition
enunciated in International News Service evoked general enthusiasm in
subordinate United States courts.  In cases where the broad concept of "unfair
competition" has been applied, as distinct from cases where the phrase has
been used as a synonym of passing off, the attempts to define it have tended
to involve resort to high-sounding and uninformative generalizations such as
"fundamental rules of honesty and fair dealing" and "acts that shock judicial
sensibilities" (see V.L. Knight, "Unfair Competition: A Comparative Study of
It's Role in Common And Civil Law Systems", Tulane Law Review, vol.53 (1978)
164, at pp.168-169).  The general, though by no means universal, trend in
lower courts has been to follow the approach adopted by the Second Circuit
Court of Appeals and to restrict the decision in International News Service to
its particular facts.  That approach was most strongly expressed in Cheney
Bros. v. Doris Silk Corporation (1929) 35 F(2d) 279, at p 280 in a judgment
delivered by Learned Hand J:

    " ... we think no more was covered than situations
    substantially similar to those then at bar.  The
    difficulties of understanding it otherwise are
    insuperable.  We are to suppose that the court
    meant to create a sort of common-law patent or
    copyright for reasons of justice.  Either would
    flagrantly conflict with the scheme which Congress
    has for more than a century devised to cover the
    subject-matter".

As Professor Morison has remarked ("Unfair Competition at Common Law",
University of Western Australia Law Review, vol.2 (1951-3) 34, at p.37), the
decision in International News Service, which was hailed in the United States
as a "landmark" in the law of unfair competition, has been seen even in that
country to be more properly described as an island.  Indeed, in a recent
United States case (Jacobs v. Robitaille (1976) 406 F Supp 1145, at p 1151),
the "legal concept" of unfair competition was described as a "child of
confusion" which has "spawned a body of law that lacks in judicial definition
and scope".

38.  The notion of a general action for "unfair trading" or "unfair
competition" has received little encouragement in either the House of Lords or
this Court. In so far as the House of Lords is concerned, it suffices to refer
to the recent decision in Warnink v. Townend & Sons (Hull) (1979) AC 731.  In
that case, their Lordships were concerned to decide whether the appellants had
a cause of action against the respondents who had, in Lord Diplock's words (at
p.740), engaged in "unfair, not to say dishonest trading".  It was held that
the question fell to be answered not by reference to any general notion of
unfair trading or competition but by reference to what Lord Diplock (in a
speech with which Viscount Dilhorne, Lord Salmon and Lord Scarman agreed)
identified as the "five characteristics which must be present in order to
create a valid cause of action for passing off" (at p.742).  Lord Diplock
pointed out (at p.742) that, while it is true that the presence of those five
characteristics "indicates what a moral code would censure as dishonest
trading", it did not follow that all factual situations which present them
"give rise to a cause of action for passing off" in an "economic system which
has relied on competition to keep down prices and to improve products".  He
added that "(t)he market in which the action for passing off originated was no
place for the mealy mouthed; advertisements are not an affidavit;  exaggerated
claims by a trader about the quality of his wares, assertions that they are
better than those of his rivals even though he knows this to be untrue, have
been permitted by the common law as venial 'puffing' which gives no cause of
action to a competitor even though he can show that he has suffered actual
damage in his business as a result" (at p.742).

39.  In so far as this Court is concerned, one need go no further than the
decision in Victoria Park Racing and Recreation Grounds Co. Ltd. v. Taylor
(1937) 58 CLR 479. In that case, a majority of the Court, in confirming the
dismissal of an action to restrain a radio station broadcasting descriptions
of horse races conducted on the plaintiff's land made from a platform erected
on adjoining land for that purpose, expressed conclusions which correspond
closely with those of Brandeis J. in the International News Service Case.
Dixon J. (at p.509) commented that the reasons of Brandeis J. substantially
represented "the English view" which he described (at pp.508-509) in terms
which involved a rejection of the reasoning underlying the majority judgment
in International News Service:

    " (t)he fact is that the substance of the
    plaintiff's complaint goes to interference, not
    with its enjoyment of the land, but with the
    profitable conduct of its business.  If English law
    had followed the course of development that had
    recently taken place in the United States, the
    'broadcasting rights' in respect of the races might
    have been protected as part of the quasi-property
    created by the enterprise, organization and labour
    of the plaintiff in establishing and equipping a
    racecourse and doing all that is necessary to
    conduct race meetings.  But courts of equity have
    not in British jurisdictions thrown the protection
    of an injunction around all the intangible elements
    of value, that is, value in exchange, which may
    flow from the exercise by an individual of his
    powers or resources whether in the organization of
    a business or undertaking or the use of ingenuity,
    knowledge, skill or labour.  This is sufficiently
    evidenced by the history of the law of copyright
    and by the fact that the exclusive right to
    invention, trade marks, designs, trade name and
    reputation are dealt with in English law as special
    heads of protected interests and not under a wide
    generalization."

His Honour added (at p.509) that the judgment of Brandeis J. contained "an
adequate answer both upon principle and authority to the suggestion that the
defendants are misappropriating or abstracting something which the plaintiff
has created and alone is entitled to turn to value".  Dixon J. identified that
answer as being that "it is not because the individual has by his efforts put
himself in a position to obtain value for what he can give that his right to
give it becomes protected by law and so assumes the exclusiveness of property,
but because the intangible or incorporeal right he claims falls within a
recognized category to which legal or equitable protection attaches".

40.  The rejection of a general action for "unfair competition" or "unfair
trading" does not involve a denial of the desirability of adopting a flexible
approach to traditional forms of action when such an approach is necessary to
adapt them to meet new situations and circumstances.  It has not, for example,
prevented the adaptation of the traditional doctrine of passing off to meet
new circumstances involving the deceptive or confusing use of names,
descriptive terms or other indicia to persuade purchasers or customers to
believe that goods or services have an association, quality or endorsement
which belongs or would belong to goods or services of, or associated with,
another or others (see, e.g., Warnink v. Townend & Sons, at p 739ff;
Henderson v. Radio Corporation Pty. Ltd. (1960) 60 SR (NSW) 576).  The
rejection of a general action for "unfair competition" involves no more than a
recognition of the fact that the existence of such an action is inconsistent
with the established limits of the traditional and statutory causes of action
which are available to a trader in respect of damage caused or threatened by a
competitor.  Those limits, which define the boundary between the area of legal
or equitable restraint and protection and the area of untramelled competition,
increasingly reflect what the responsible Parliament or Parliaments have
determined to be the appropriate balance between competing claims and
policies.  Neither legal principle nor social utility requires or warrants the
obliteration of that boundary by the importation of a cause of action whose
main characteristic is the scope it allows, under high-sounding
generalizations, for judicial indulgence of idiosyncratic notions of what is
fair in the market place.

41.  In the result, Moorgate has failed to establish any right to relief in
Loew's or itself by reference to any recognized cause of action.  That being
so, its suit against Philip Morris was rightly dismissed.  It is unnecessary
to consider whether, if it had been established that Philip Morris had acted
in breach of some fiduciary or other non-contractual duty which it had
initially owed to Loew's, it was also established that the benefit of the duty
owed or the right to sue for its breach had been effectively assigned to
Moorgate.

42.  The appeal should be dismissed with costs.
JUDGE5
DAWSON J.  I have had the advantage of reading the reasons for judgment of
Deane J.  I agree with those reasons and with the conclusions which he
reaches.  There is nothing which I can usefully add.
ORDER
  Appeal dismissed with costs.