Australian Trade Marks Law Blog : Australian Trademarks Lawyer & Attorneys : Nicholas Weston Law Firm : Copyrights, Intellectual Property

When the matter came before the Full Court, it was uncontroversially held that the offer for sale and selling, by an Australian retailer, of the bottles of wine which bore the registered trade mark constituted "use" of the trade mark in Australia within the meaning of s 7(4) of the Trade Marks Act 1995 (Cth) but on the question of whether this use was by the registered owner as a consequence of use by the retailer as authorised user found against Gallo. (The Full Court also held that beer and wine are ‘goods of the same description’, overturning the first instance finding and suggesting, like Justice Kirby, that Their Honours need to get out a bit more, but that issue was not agitated before the High Court). The Australian Trade Marks Law Blog reported the Full Court decision HERE.

So the principal issue that did come before the High Court in E. & J. Gallo Winery v Lion Nathan Australia Pty Limited [2010] HCA 15 (19 May 2010) turned on whether that use was use by the registered owner in circumstances where 60 cases of the branded wine had been sold to a German company with the manufacturer having no intention or awareness of its on-sale to Australia. The High Court found that the registered owner’s ‘intention’ was beside the point and held [using the sama paras] that:

42. “Whilst that definition (section 17) contains no express reference to the requirement, to be found in s 6(1) of the Trade Marks Act 1955 (Cth) that a trade mark indicate "a connexion in the course of trade" between the goods and the owner, the requirement that a trade mark "distinguish" goods encompasses the orthodox understanding that one function of a trade mark is to indicate the origin of "goods to which the mark is applied”. Distinguishing goods of a registered owner from the goods of others and indicating a connection in the course of trade between the goods and the registered owner are essential characteristics of a trade mark. There is nothing in the relevant Explanatory Memorandum to suggest that s 17 was to effect any change in the orthodox understanding of the function or essential characteristics of a trade mark.

43. “In Coca-Cola Co v All-Fect Distributors Ltd[19] a Full Court of the Federal Court of Australia said:

"Use 'as a trade mark' is use of the mark as a 'badge of origin' in the sense that it indicates a connection in the course of trade between goods and the person who applies the mark to the goods ... That is the concept embodied in the definition of 'trade mark' in s 17 – a sign used to distinguish goods dealt with in the course of trade by a person from goods so dealt with by someone else."

"That statement should be approved.”

51. “The capacity of a trade mark to distinguish a registered owner's goods from those of others, as required by s 17, does not depend on whether the owner knowingly projects the goods into the Australian market. It depends on the goods being in the course of trade in Australia. Each occasion of trade in Australia, whilst goods sold under the trade mark remain in the course of trade, is a use for the purposes of the Trade Marks Act. A registered owner who has registered a trade mark under the provisions of the Trade Marks Act can be taken, in general terms, to have an intention to use that trade mark on goods in Australia. It is a commonplace of contemporary international trade that prior to consumption goods may be in the course of trade across national boundaries.”

65. “A commercial quantity of wine, some 144 bottles, was imported and offered for sale under the registered trade mark by Beach Avenue during the statutory period. Some 41 sales during that time were proven by reference to invoices and tax paid. There was no suggestion in the evidence that the offering for sale and selling either overseas or in Australia was for any purpose other than making profit and establishing goodwill in the registered trade mark. It was not contended that the use was fictitious or colourable. In all the circumstances the use was genuine and sufficient to establish use in good faith for the purposes of Lion Nathan's application for removal.”

69. “… The addition of the device to the registered trade mark is not a feature which separately distinguishes the goods or substantially affects the identity of the registered trade mark because consumers are likely to identify the products sold under the registered trade mark with the device by reference to the word BAREFOOT. The device is an illustration of the word. The monopoly given by a registration of the word BAREFOOT alone is wide enough to include the word together with a device which does not substantially affect the identity of the trade mark in the word alone. So much is recognised by the terms of s 7(1), which speak of additions or alterations which "do not substantially affect the identity of the trade mark". Except for a situation of honest concurrent use, another trader is likely to be precluded from registering the device alone while the registered trade mark remains on the Register. The device is an addition to the registered trade mark that does not substantially affect its identity. Accordingly, the use of the registered trade mark with the device constitutes use of the registered trade mark in accordance with s 7(1).”

So what?

Following the result, a Lion Nathan spokesman released a statement that said: “We are disappointed by today’s High Court ruling, which represents a substantial change to Australian trade mark law.”

It does not. It correctly recognises that an overseas owner can maintain registration of its Australian trade marks and protect them from ‘non-use’ applications even where they hardly use the relevant  trade mark in Australia or are unaware the trade mark was being used in Australia. Overseas owners can probably run their Australian trade marks portfolios, even while 'hammered', and let the parallel importers handle distribution. Nothing new in that.

The decision also provides useful guidance on when to register a ‘device’ or logo separately from a word mark, and underscores the point that, when selecting a mark, a search must cast its net widely to scrutinise related classes, trade channels and potential uses.

Nick Weston

In the course of HUGGIES’s rise to fame, its range of products broadened to include other baby products such as “absorbent underpants, toilet training pants, baby wipes, pyjamas and swimwear for babies and toddlers, changing pads, wash cloths, bath washes, powders and lotions”.

The respondent failed to attend the hearing due to ‘medical reasons’. On 11 August 2008, the respondent filed some unsworn evidence with the Court and it could not be tested anyway, due to the respondent’s absence. Therefore, Justice Jagot proceeded with the hearing in the respondent’s absence and without taking into account the inadmissible evidence which she had submitted.

The applicant asserted that registration of the respondent’s trade mark must be rejected on any one of the following grounds under the following statutory provisions of the Act:

• under s 42 of the Act, that use by the respondent would be contrary to law;
• under s 44, that the respondent’s trade mark is deceptively similar to the applicant’s trade mark in respect of similar goods or closely related services OR the priority date of the respondent’s registration is not earlier than the priority date of the (applicant’s) or the other trade mark in respect of similar goods or closely related service;
• under s 59, that the respondent does not intend to use, or authorize the use of the trade mark in Australia;
• under s 60, that the respondent’s trade mark is registered under a particular goods or services that is deceptively similar to the applicant’s trade mark, that before the priority date for the registration of the respondent’s trade-mark in respect of those goods or services, the applicant’s trade mark had acquired a reputation in Australia AND because of the reputation of the applicant’s trade mark, the use of the respondent’s trade mark would be likely to deceive or cause confusion.

Held

The Court held, inter alia, that the respondent’s trade mark in respect of its services is deceptively similar to the applicant’s trade mark in respect of its goods. The main reason is pertinent to the form of marketing or sale of the respondent’s goods, in particular, the words, ‘direct selling’. Accordingly, Justice Jagot at 30 said:

“I do not construe the activity of direct selling as limited to door-to-door sales. That is one method of direct selling but there are others…including, for example, internet sales (whether from a website maintained by the respondent or via links from other websites to the respondent’s website), sales from market stalls, sales from a HUGGIE MUMMY branded shop, as well as sales to end consumers under arrangements with other retailers (for example, by lease or licence of part of the space or a counter within a shop or through factory outlet centres or, as the opponent (in this case, the applicant) submitted, by canvassing at places frequented by those responsible for caring for babies and toddlers”.

Furthermore, Justice Jagot held that there is a ‘substantial overlap’ between the applicant’s trade channels and the ‘normal and fair use’ of the respondent’s trade marks permitted by direct selling. Justice Jagot at 31 said:

“The methods of sale within the scope of “direct selling” are more restrictive than the retail channels used by the opponent. Nevetheless, normal and fair use of the respondent’s mark in accordance with the rights to use conferred by registration (in contrast to any particular use) involves substantial overlap with the opponent’s trade channels, particularly in terms of the locations within which sales may occur and marketing of the products. For example: - (i) links to methods of purchase to the products of both the respondent and the applicant may appear on common websites (such as those used by the opponent to sell its goods, particularly those with a focus on babies and toddlers) and (ii) the products may appear for sale close to each other in stores and outlets (even if the selling arrangements is direct by the respondent from her own counter or area and through an intermediary by the opponent”.

Even so, the court had also taken into account the usual principles set down in the legislation to assess whether or not the respondent’s trade mark should proceed to registration. This includes considering the respondent’s trade mark as a whole.

The court found for the applicant under ss. 42, 44, 59 and 60 of the Act, allowed the appeal, ordered that the respondent’s trade mark registration be rejected, that the respondent pay the applicant’s costs of appeal and for the opposition proceeding before the Registrar.

So what?

Consider this quote:

[At 42] “These products are likely to be bought quickly, on a recurrent basis, without much thought (at least after the first occasion for purchase) and, in the case of sales of the opponent’s goods, by reference to the essential brand identifier.”

Fighting with multinationals is good fun but it helps to have: (a) deep pockets; and (b) correctness on your side. One wonders what the applicant was smoking when she decided that applying for HUGGY MUMMY would be a good idea.

Look at it from a marketer’s point of view. The marketing of consumer goods sold on a low value high volume basis is all about peer approval and acceptance, fashion and trust because the ‘switching cost’ of changing brands is minimal. Mass selling is expensive and a multi-national such as Kimberley Clark throws buckets of money at the marketing required to support its brands. Put aside, for a moment, its natural inclination to protect that investment.

Because Kimberley-Clark spent lots of money on marketing, the HUGGIES brand was well known for the goods, so the consumer’s ‘imperfect recollection’ was also taken into account. If consumers are familiar with a mark, its use in relation to particular goods or services is a relevant consideration. There was a ‘real likelihood that some people will wonder’ whether the respondent’s direct selling of the HUGGY MUMMY goods had, as its source, Kimberley-Clark. These are the tests to apply and the commercial considerations when deciding whether to springboard off a large company’s brand.

The admissions from the respondent [at 50] that her trade mark was “only…a business idea at his stage” and was “still a long way off from doing anything” was not a defence: it showed a lack of intention to use the trade mark and was another reason HUGGY MUMMY nappies idea was poo-pooed and has now been disposed of.

Background in Brief

Darrell Lea applied to suspend opposition proceedings for Cadbury’s trade mark application No’s 1120614, 1120615 and 1120621 each of which seeks to protect a discrete shade of purple for goods in Class 30.  Darrell Lea succeeded and the following direction was made:  

"[T]he present oppositions be suspended until the Federal Court decision in the passing off proceeding is handed down. If there is no appeal from that decision, the present oppositions shall be lifted from suspension, and further directions given such that the opposition will continue through the evidence stages in accordance with normal practice and procedure."

Cadbury sought judicial review of this decision under the Administrative Decisions (Judicial Review) Act 1977.  The Registrar of Trade Marks was made a party to these proceedings but played a non-partisan role.

The Decision

Justice Finkelstein commenced the substantive part of his decision by pointing out that both parties had failed to do their case homework. He attributed blame to both parties for not having referred the delegate to the relevant authorities and said that this was the reason she had arrived at an incorrect decision. Consequently both parties were left to bear their own costs.

The legal basis for Justice Finkelstein setting aside the delegate’s decision was two fold:

1.         The decision amounts to a refusal by the delegate to hear the opposition proceedings

Justice Finkelstein went through the Registrar's powers and duties.  He noted that the Registrar (or his delegate) has the power to adjourn a hearing, Reg 21.15 (9) and although the Regulations do not contain an express power to suspend or temporarily stay opposition proceedings, the Registrar has control over procedures of opposition proceedings and can presumably do so. He decided that this power had not been properly exercised.

Justice Finkelstein found that a case should not be adjourned for an indefinite period and referred to Geelong Football Club Ltd v Clifford [2002] VSCA 212 (Geelong)  and City of Sydney Council v Satara [2007] NSWCA 148 in support  He noted that one exception would be an appeal to the High Court which would resolve a dispute between inconsistent authorities binding on a trial court (identified by Ormiston JA in Geelong).

Overall, he found that the “suspension of the opposition proceedings for an indefinite period amounted to a denial of justice”.

2.         The delegate put too much significance on findings of fact by the Federal Court

Justice Finkelstein noted that the delegate correctly found that the outcome of the Federal Court proceedings (in the related passing off proceedings brought by Cadbury) was important since it could resolve issues which would require determination in the opposition proceedings.   However, Justice Finkelstein held that the delegate had gone too far and had placed too much significance on the public interest of avoiding inconsistent fact finding.  He found that “there is a real risk that the delegate was not going to decide for herself the issues that must be decided to dispose of the opposition proceedings”.

Related News

Also, hot off the press: Justice Heerey’s Orders on costs handed down on 31 July 2008 in relation to the passing off and breach of Section 52 proceedings brought by Cadbury Schweppes against Darrell Lea (Cadbury Schweppes Pty Ltd v Darrell Lea Chocolate Shops Pty Ltd (No 9) [2008] FCA 1115). For a comprehensive discussion of this part of the chocolate wars, see Mark Davison’s article published by the Australian Trade Marks Law Blog here.

Cadbury is seeking leave to appeal the judgment...Of course.

Lea Lewin