Telstra continues to see red over competitors’ use of yellow for phone directories

Peter Heerey AM, QC, Tom Cordiner & Alan Nash
Correspondents for South Australia, Victoria and Western Australia

Note: Where any of the barristers were involved in a case reported below and the matter is still running, or potentially so, the other correspondents have taken the role of reporting that case.

Telstra Corporation Limited v Phone Directories Company Pty Ltd [2014] FCA 568 30 May 2014

Telstra and, more recently, Sensis have published the well known Yellow Pages phone directories since 1975, and also used the “Walking Fingers” logo since shortly after that date.  The applicants’ more recent online directories and mobile applications similarly have featured a yellow theme.  Yellow has been a strong theme in the applicants’ marketing from an early date.

Telstra and Sensis brought claims of misleading and deceptive conduct and passing off against three publishers of print and online phone directories (the PDC respondents).  The relevant publications had yellow covers and yellow pages in the case of the print publications, and yellow icons, background and other visual elements in the case of online directories and mobile applications.

Telstra contended that by reason of its promotional efforts it had achieved by 1996 a secondary reputation in the colour yellow, which had become associated in the minds of consumers with Telstra (and later also Sensis) as the producer of the Yellow Pages directories and associated products.  Accordingly, the use by the PDC respondents of yellow for their competing products was argued by Telstra to convey the false representation that those products had some connection with it.

There was voluminous evidence before Justice Murphy as to the advertising and promotion by the applicants and PDC respondents over a considerable period, as well as use of the colour yellow by third parties both in Australia and overseas.

His Honour accepted that Telstra had a secondary reputation in the colour yellow, but did not consider the relevant association in the minds of consumers to be strong.  His Honour did not consider yellow to be distinctive in and of itself, and the evidence showed that its use for telephone directories was an international trend that had started in 1975.  Further, Telstra had never used the colour yellow independently, only in conjunction with its Yellow Pages and other marks.

Accordingly, his Honour considered that from the relevant date for the proceedings, namely June 2005, the PDC respondents had done enough to distinguish their directories from those of Telstra and Sensis.  He found that the alleged representations were not conveyed, and none of the claims of misleading or deceptive conduct and passing off were made out.

Although Telstra’s claims focused on conduct from June 2005, a large amount of evidence also dealt with the PDC respondents’ initial entry into the market and activities from 1996.  In that respect, contrary to Telstra’s assertions, his Honour was not satisfied that the respondents had set out to deceive consumers when they adopted yellow covers for their products in 1996 and continued their use of yellow thereafter.  Indeed, the evidence was that from 1996 Telstra changed the appearance of some of its products in a way that made them “somewhat more similar in appearance” to those of the respondents.

The PDC respondents’ cross-claim for misleading and deceptive conduct was made out.  That claim focused on advertisements by Telstra to the effect that independent research showed the majority of consumers surveyed relied on the Yellow Pages product, with only a small number using the PDC respondents’ products.  Those assertions were misleading because a number of the participants in the survey did not live in an area covered by the PDC respondents’ directories, or if they did the product was differently branded.

Finally, the PDC respondents’ cross-claim for unjustified threats of copyright infringement were not made out.  Although the PDC respondents were successful in defending Telstra’s copyright infringement claim (the subject of an earlier and separate question determined by Gordon J and then the Full Court), Telstra’s threats were justified because, at the time they were made, the prevailing law as set out in the Full Court Desktop Marketing case supported the view that the PDC respondents’ conduct was a copyright infringement.

Peter Heerey QC – CommBar profile

Alan Nash – CommBar profile

Tom Cordiner – CommBar profile

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