Chemist Warehouse loses appeal against Direct Chemist Outlet

(L) Chemist Warehouse, (R) Direct Chemist Outlet

Owners of one of Australia’s largest discount pharmacy chains had 19 grounds of appeal dismissed by the Federal Court

Chemist Warehouse (CWH) owners Mario Verrocchi and Jack Gance had previously brought Direct Chemist Outlet (DCO) owner Ian Tauman to court in 2015, claiming that the smaller discount chain’s use of a yellow, red and blue colour scheme similar to CWH was “misleading and deceptive conduct”.

They claimed the CWH brand relied upon the colour scheme in addition to white and black writing, a narrow blue band along the base of the storefront, and their large logo, and argued that DCO was deceiving customers by passing its stores off as CHW.

CHW began trading under their current name in 2002, while Tauman had decided to re-brand his own pharmacies in a discount chemist format in early 2005.

In his original ruling, Justice John Middleton found that CWH had failed to be consistent in their storefront design and could not claim the visual features as a common identity for their brand.

He found that while there was evidence DCO had indeed copied elements of CWH styling, it was not enough to prove intention to mislead.

“Mr Tauman had been aware of Chemist Warehouse since around 2002 as high volume chemists, and was aware of the market’s perception of value or low price and its use of a yellow, blue and red colour scheme,” said Justice Middleton.

However, he found “there is nothing novel, unusual or unexpected in the way in which the applicants used colour… A number of discount retailers (including discount chemists) use that colour as part of their storefront and many retailers use yellow to promote sales.”

After losing the case, Verrocchi and Gance brought 19 grounds of appeal before a Federal appeals panel of three judges.

In their 16 August ruling, the judges found Justice Middleton had not erred in any of his original findings.

“We agree with the respondents that any store has to use a combination of colours so that signs stand out against the background. Primary colours such as yellow, blue and red are commonly used in high visibility street signs.

“Discount retailers use these colours to grab attention and the presence of yellow communicates that the products are low-priced items,” they said, echoing the original judge’s statements.

“Chemist Warehouse does not have a monopoly in functional colours simply because it started using those colours first for pharmacies.”

“Further, DCO storefronts were not as cluttered as those of Chemist Warehouse. The DCO storefront get-up could be characterised as clear and lifestyle photo-based. Contrastingly, Chemist Warehouse storefronts were consistently “loud” and “cluttered” with slogan-bearing banners.”

The appeals panel dismissed all 19 grounds of appeal, and ordered Verrocchi and Gance to pay costs to Tauman.

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1 Comment

  1. Leah Rosevear

    I am glad Direct Chemist Outlet are allowed to use the colours they chose to appeal to the public – they have as much right as anyone.

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