Barefoot Lion mauls competitor
In E. & J. Gallo Winery v Lion Nathan Australia Pty Limited [2008] FCA 934 (20 June 2008) , a decision covering a wide range of trade mark issues, Lion Nathan (Lion) has successfully resisted an infringement application and, at the same time, managed to have a competitor’s trade mark removed for non-use. The decision provides some interesting insights into infringement under s120(2), the defence in that provision, a discussion about goods of the same description and, finally, some interesting views on non-use and the exercise of the discretion to let a trade mark stay on the register despite non-use for three years being established.
Apart from that smorgasbord of legal issues, the case provides a wonderful gem of insight into how Lion Nathan develops its trade marks. On this occasion, the Consumer Insight Manager was at the races and noticed ‘Barefootonbondi’ as the name of one of the horses. The moral of the story is that if you want a cool job with less stress than litigating trade mark law, you should go to the races more often. But I digress.
The infringement argument
The stoush was about the Gallo Winery (Gallo) registered trade mark ‘Barefoot’ for wine. Lion started selling a beer that it calls ‘Barefoot Radler’ together with a device of a barefoot. So Gallo objected on the basis of s120(2), namely, that Lion was using a sign that was substantially identical with or deceptively similar to goods of the same description as those for which Gallo had the registered trade mark ‘Barefoot’. (BTW, if you are sick of reading ‘substantially identical with or’ see my comments on that point below.)
There was a dispute as to whether the sign it was using for the purposes of a s120(2) action was ‘Barefoot’, ‘Barefoot Radler’ or ‘Barefoot Radler’ in combination with the device of a barefoot. On this point, Lion made a bit of a blunder in its pleadings. It pleaded that it had used ‘Barefoot Radler’ as its sign but wanted to argue at trial that the sign was ‘Barefoot Radler’ plus the device of a bare foot. Bad luck, too late said the judge, noting that they could have just said in their pleadings ‘No, we did not use a sign substantially identical with or deceptively similar to your trade mark’ without identifying which sign they had used.
So it was ‘Barefoot’ v ‘Barefoot Radler’. No prizes for guessing these signs are not substantially identical. Put them side by side and there is a big difference that anyone could identify, even after a long day at the races. But, as we know, ‘deceptively similar to’ is a different test relying on the lasting impression of each sign. Again, no surprises here when the judge said that they were deceptively similar.
Which raises the point I mentioned above. Why do we bother with the test of substantial identity in infringement cases? If two signs are substantially identical they will invariably be deceptively similar but the reverse does not apply. So we waste time and effort with advocates and judges being required to address the issue, almost invariably dismissing it and then moving on to the real issue of deceptively similarity.
Anyway, with the victory on deceptive similarity, so far, so good for Gallo. Then it came unstuck on the issue of whether wine and beer are goods of the same description. This was a tricky one and not easily resolved. They’re both wet, they both have alcohol in them and, unlike methylated spirits and aftershave, they are both intended to be drunk. They are also sold in the same establishments at the same time. Yet there are also significant differences between the two products. They are made from different ingredients, aimed at different markets, sold in different parts of the liquor store and have their own individual production and marketing organisations. Apparently, according to Lion, beer is also a thirst quencher and refreshing. Those rare binge drinkers amongst you who have consumed more than four or more beers in one session will no doubt attest to how, on the following morning, your thirst has been slaked and how refreshed you feel when you get out of bed. In any event, the issue went Lion’s way and that was the end of the s120(2) infringement action.
The defence under s120(2) – a tense debate.
Even if wine and beer had been held to be goods of the same description, Flick J held that the defence in s120(2) would ‘kick in’. Various arguments were presented in relation to the defence that the way in which Lion used its sign 'is' not likely to cause deception or confusion’. Note the word ‘is’ and the lack of a ‘was’. I think it is important but I am not sure it was.
The reasons why Lion’s use was not likely to deceive or cause confusion included the shapes of the bottles, the ‘refreshing’ aspect to Lion’s marketing campaign for its beer and the fact that they are sold in quite separate parts of liquor stores with beer being sold primarily from the cold room.
There is a slight problem with some of these propositions. The comparison is not between how Lion used its sign and how Gallo has used its trade mark to date. This is where the ‘is’ and the lack of a ‘was’ come in. The comparison is between how Lion used its sign and how Gallo might use its trade mark in the future. There is no reason why Gallo cannot change the shape of its bottle. There is also no reason why it cannot market its wine as refreshing. Who, apart possibly from those of us who drank it, would want to forget some of the refreshing moselle and fruity lexia that graced refrigerators during the golden age of Australian whites? The defence might still get up if correctly applied but it is not an easy one to establish and it is certainly tougher than simply rebutting a claim of passing off.
Non-use
In any event, Gallo also lost the non-use argument. It was true that some Barefoot wine had been sold in Australia during the non-use period but that was little to do with Gallo’s predecessor in title. Some Barefoot wine made its way from the US to Germany and from there to Australia. But Gallo’s predecessor was in no way involved in the export to Australia and in no way controlled the sale of the wine in question. It had controlled the quality of the wine but only up to the point of sale in the US and, thereafter, had not ‘projected’ the wine into the Australian market.
Then there was a question of the exercise of discretion. Flick J rejected the proposition that there was an obstacle to the use of the trade mark because of an existing registration of a device mark of a barefoot. It simply did not prevent Gallo from using its trade mark.
As for the more general discretion to not remove a trade mark, Gallo had a few good points – and lost anyway. They had used the mark quite extensively since the period of non-use, it has some reputation in Australia, and the applicant’s elected to go to market with their trade mark without taking the step of first removing this trade mark from the register. In addition, Flick J noted that the test is one of reasonableness, not exceptional circumstances, a point that may be noted in future Trade Mark office decisions that frequently refer to the public interest and exceptional circumstances as being relevant grounds for exercising the discretion.
However, in the end, Flick J was unimpressed by Gallo’s failure to move reasonably quickly to use the trade mark that it had acquired in 2005. Its international campaign did not include Australia until 2007 and, as the starting point is to opt for removal and a case must be made for the exercise of the discretion, Gallo lost. The possibility of such a loss was obviously not ‘lost’ on Gallo. In July last year, they applied to register ‘Barefoot’ and, ‘Barefoot’ with a barefoot device for alcoholic beverages, except beer.
Since Lion has already claimed that its Barefoot Radler beers are not goods of the same description and that Barefoot is not deceptively similar (or, if we really must keep saying it, substantially identical), Lion presumably will not run a s44 opposition, at least in relation to registration for wine.
