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Advice to Trop Nosh and its Managing Director Regarding Breaches of Law

Question

‘Trop Nosh’

It is September 2015. Trop Nosh Pty Ltd has been operating a chain of fast food restaurants (named ‘Trop Nosh’) in Darwin for 15 years. Trop Nosh makes and serves various combinations of fried chicken, chicken burgers, chips and salad wrap express meals for walk-in customers. Over the last 10 years, Trop Nosh has successfully developed and promoted a renowned menu item, its Sichuan-style spicy chicken burger called the “Sichuan Burger” (sold and served in a bright red box with the black letters “TNSB” on the top of the box lid). The “Sichuan Burger” is a well–known local product in Darwin (popular with some tourists who are told by locals to try it when they visit Darwin).

For the month of August 2015, Trop Nosh stores advertised a ‘special customer deal’ where customers who purchased a ‘maxi-size’ value meal (ie, a burger/wrap and large chips with a large drink) could also purchase a ‘mini-music player’ for just a dollar ($1). Some customers visited Trop Nosh’s restaurant in response to the advertising campaign and inquired about the offer – it seems that some customers thought they could buy a cheap MP3 player. In fact, Trop Nosh was offering small pocket radios for $1 as part of the ‘special customer deal’ (Trop Nosh’s Managing Director has previously stated that he thought that the advertisement was reasonable because “radios can play music”). Trop Nosh obtained (imported) the pocket radios from a Brazilian manufacturer at a discounted price (Trop Nosh had nothing to do with their manufacture or assembly). Unfortunately, several customers who took up the deal later complained of minor injuries sustained by using the pocket radios. It appears that a manufacturing defect caused some of the radios to overheat and produce minor scalding (small burns) when the radio came into contact with the user’s skin.

Trop Nosh has a new competitor in Darwin, Captain Chicken Pty Ltd (‘CC’) which just opened three stores located near each of Trop Nosh’s stores. In early August 2015, Trop Nosh’s Managing Director was approached by the CEO of CC. CC’s CEO asked Trop Nosh’s Managing Director if he would be prepared to agree that both Trop Nosh and CC increase their existing prices by 10% during lunch hours (12noon to 2pm) on weekdays (Monday to Friday). Trop Nosh’s Managing Director agreed with CC’s request and implemented the arrangement immediately.

In late August 2015, Trop Nosh’s Managing Director became aware of a new CC menu item advertised in Darwin’s media and sold in CC’s outlets, called the “Tropical Sichuan Burger” (also a Sichuan-style spicy chicken burger), which is sold and served in bright red paper bearing the black letters “TSB”). Trop Nosh’s business has suffered a slight downturn in the last couple of weeks and Trop Nosh’s Managing Director thinks that this is because CC’s new burger is taking customers away from Trop Nosh.

Task: By reference to the Competition and Consumer Act 2010 (Cth), Australian intellectual property law and associated case law, advise Trop Nosh - and its Managing Director personally where relevant - as to their respective legal positions in respect of the above matters. Your advice should address any potential breaches of the law and the consequences. If more information is required to provide complete advice, state what that information is and why it is relevant.

Summary

This question belongs to business law and discusses about case study on Australian intellectual property law and associated case law.

Total word count: 2240

 

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