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

An appeal to the Full Federal Court was successful but only in respect of the admissibility of the expert evidence. The Full Court held that the matter should be remitted to the primary judge for further trial. So Justice Heerey proposed to have a re-hearing restricted purely to the issue of the expert evidence that he had originally held to be inadmissible. Cadbury objected to that interpretation of the Full Court’s judgement and sought an order from the Full Court that a completely new trial be held.  The Full Court rejected Cadbury’s claim  and so the limited re-hearing proceeded although that only happened after the High Court declined to grant Cadbury leave to appeal against the Full Court’s ruling.

It is also worth noting that the big prize that Cadbury failed to obtain here is not just victory in this passing off case but a big step towards Cadbury successfully registering purple as a trade mark for chocolate. See the article by Lea Lewin in the Australian Trade Marks Law Blog on 11^th February, 2008. If Cadbury can’t convince a Federal Court that use of purple by other chocolate makers is misleading or deceptive, its prospects of obtaining that registration on the basis that its use of purple has led to purple being distinctive of its chocolates will be severely diminished.

The re-hearing revolved around the evidence of three expert witnesses who claimed that Darrell Lea’s use of purple on some of its chocolate wrapping was deceptive or misleading. Obviously, after the Full Court’s decision, the evidence was admissible. The questions were really what weight should be given to the evidence and was it of  such significance as to alter the original first instance decision. The answers were ‘none’ and ‘no’ although Justice Heerey put them somewhat more delicately than that.

The real problem with the evidence was that the three experts basically gave their views on the issue of passing off and deception based on only some of the evidence before the trial judge. Since they were in no better position than the judge to comment on these matters and, in fact, were in a vastly worse position to express an opinion, it was no great surprise that the judgment said, in part,

"I consider it appropriate to record that in the particular circumstances of this case, which is concerned with the packaging of a product intended to appeal to a wide segment of the general public, I have found the expert evidence of no real assistance. … It seems to me that evidence of opinions based on market research and expert appreciation of consumer behaviour will rarely be of assistance in litigation where the court’s primary concern is with the behaviour to be expected of, and the judgments likely to be made by, ordinary (even if it might thought, somewhat credulous) members of the community intent on making a relatively modest purchase in a conventional way."

Some of the deficiencies in the expert evidence were significant, especially given that the evidence has now been a critical part of the subject of two first instance hearings, two Full Court hearings and an application for leave to appeal to the High Court.

Several important matters were apparently not revealed to the experts when writing their affidavits. One expert was not aware that Darrell Lea did not sell block chocolate. Others did not know about Darrell Lea’s use of ‘boysenberry’ for ten years without objection by Cadbury, the extent of sales of Cadbury without the colour purple (more than 50% of its sales) and the fact that Darrell Lea was rarely sold side by side with Cadbury. There were many other matters in evidence before the Court which it seemed were not in the minds of the experts when giving their evidence in chief.

One expert’s evidence extended over 90 pages of affidavits and involved a detailed explanation of concepts such as ‘misidentification’, ‘miscuing’, ‘misinference’ and ‘misassociation’. For example, ‘miscuing’ was described, in part, in these terms:

"… in this capacity the colour can function as a decision-heuristic [a shorthand decision rule or “rule of thumb” functioning to reduce decision-making effort while maintaining an adequate level of accuracy] cue, an operant-conditioning [a form of learning in which modification of behaviour is brought about by the consequences that followed upon the occurrence of the behaviour in the past (for example, reward)] cue, or a behaviour instigating cue."

One possible interpretation of the above statement is that consumers saw purple on chocolate wrappers, thought the chocolate was from Cadbury for that reason and then bought it.

In contrast to the exhaustive and possibly exhausting explanations of consumer behaviour contained in those affidavits, Heerey J made this somewhat shorter but possibly more accessible statement:

"The hypothetical reasonable chocolate consumer could think along these lines: Purple makes me think of Cadbury chocolate. But I know that other chocolate makers’ products such as Violet Crumble use purple. So Cadbury does not have a monopoly in the use of purple for chocolate. Seeing chocolate in a purple wrapper with Darrell Lea’s name on it in a Darrell Lea shop does not make me think it comes from Cadbury."

The judgment is an interesting example of a Federal Court judge declining to delegate the making of conclusions of fact on mundane matters to experts, especially when the experts do not have access to the array of evidence available to that judge. One can only hope that when Cadbury inevitably appeals this case that the Full Court will not depart from heurism in its consideration of the desirable approaches of trial judges and that it will not generate operant-conditioning which creates a reward for trial judges avoiding making decisions on straightforward matters.

Finally, the real problem here (apart from 90 pages of affidavits with instructions to Federal Court judges on how to suck eggs and our tax dollars being spent paying judges to read them) is s41(6) of the Trade Marks Act 1995 (Cth) which permits distinctiveness to be proven through use alone. Cadbury is chasing the big prize of exclusive property rights in the colour purple in respect of chocolate. One can understand its desire to obtain such a prize in respect of a colour traditionally associated with luxury and opulence. It can only do so by demonstrating extensive trade mark use of purple resulting in distinctiveness. In its push, the court system has been now been subjected to two first instance hearings, two Full Court hearings, one High Court application and there is more to follow. Obviously, Cadbury believes that the benefit to it of such action is significant. The real questions though are “What is the benefit to the community?’ of exclusive rights in single colours, even assuming that Cadbury is ultimately successful, and ‘Does that benefit justify the transaction costs and the costs to competitors and consumers?”. Perhaps the answers are ‘none’ and ‘no’.

Mark Davison

In a separate proceeding, Cadbury and Darrell Lea are also in dispute over the registration of series trade mark application No. 779336.  In April 2006, a decision by the Registrar of Trade Marks gave Cadbury permission to register the colour mark, albeit for only one shade of purple and only in respect of moulded block chocolate and boxed chocolates.  Darrell Lea has appealed this decision and Cadbury has cross-appealed ("the Federal Court opposition").  A decision in this proceeding is not expected any time soon.

The present Trade Marks Office decision relates to an application by Darrell Lea requesting suspension of opposition proceedings for Cadbury's trade mark application No's 1120614, 11206155 and 1120621('the present oppositions') each of which seeks to protect a discrete shade of purple for goods in Class 30.  Worth noting is that Cadbury has applied for a further 11 trade marks for different shades of purple covering various chocolate goods.

Submissions of both Parties

Darrell Lea sought to have the oppositions suspended pending final determination of the passing off proceeding and/or the Federal Court opposition.  They made submissions based on the similarities between the passing off proceeding and the three present oppositions, pointing out that findings of fact which concern Cadbury's reputation, at a similar time, in the colour purple 'will very likely be determinative of similar issues of fact before the Trade Marks Office'.

Darrell Lea also argued that the result of the Federal Court opposition may render the present oppositions pointless and that findings of fact in that proceeding would be relevant in a determination of factual distinctiveness in the present oppositions. 

Additionally, Darrell Lea sought to rely on both evidentiary concerns (costs and time restraints), as well as third party interests (avoid duplication of evidence), to support their suspension application.

As expected, Cadbury argued that the passing off proceeding was not sufficiently relevant to the present oppositions.  They made submissions as to differences in the nature of each proceeding as well as the fact that resolution in the passing off proceeding may be some time off. 

With respect to the Federal Court Opposition, Cadbury made the point that actual differences between the trade marks the subject of the present oppositions and trade mark application No. 779336, most relevantly an 8 year time gap, meant that the Federal Court opposition would not resolve the issue of factual distinctiveness in the present cases.  A real prejudice to their interests caused by grant of a suspension was also raised.

The Decision 

In determining the issue of whether the three oppositions should be suspended using its powers under Regulation 5.16 Trade Marks Regulations 1995 , the Delegate considered the 'balance of convenience' between Darrell Lea and Cadbury measured by the degree to which both the passing off proceeding and the Federal Court opposition are relevant.  The crucial issue in the three oppositions was whether the Cadbury marks had acquired factual distinctiveness by June 2006.

Regarding the Federal Court opposition, the Delegate acknowledged that 'a finding that trade mark application No. 779336 was factually distinctive of Cadbury by 25 November 1998 would influence any decision regarding factual distinctiveness' of the present later applications.  However, of greater significance was the fact that  'final determination of the Federal Court opposition may contribute little or nothing to the resolution of the present opposition'.  That is, a finding against factual distinctiveness in the Federal Court opposition would only be of limited value or potentially the issue of factual distinctiveness may not be considered. 

The Delegate also raised the prospect of considerable delay in the Federal Court opposition and concluded that the Federal Court opposition does not warrant suspension of the three pending oppositions. 

On the other hand, in considering the significance of the passing off proceeding the Delegate found that the 'balance of convenience' favoured Darrell Lea.  The fact that the passing off proceeding was likely to be resolved relatively soon (the further hearing is set for March) was a factor in the Delegates decision.  But of greater weight was the Delegate's view that the passing off proceeding would assist in deciding the three oppositions.

"The determination of passing off or breach of the Trade Practice Act would not bind the Registrar in the determination of the present oppositions.  However, the trial judge must investigate the reputation of Cadbury in the colour purple.  This enquiry necessitates an investigation into similar evidence which would be useful in establishing factual distinctiveness for section 41(6) of the Trade Marks Act".

Suspension would also ensure a more efficient administration of the trade marks register and 'avoid inconsistent fact finding'.

 Other relevant outcomes:

• that evidence properly served and filed in relation to opposition proceedings for any one of trade mark application No's 1120614, 11206155 and 1120621 would be considered as evidence in each (but not necessarily evidence for the potential oppositions which may arise from Cadbury's further 11 purple applications);
• that evidence filed in the opposition proceeding before the Registrar in relation to trade mark application No. 779336 be taken as served and filed in the present oppositions; and 
• that evidence adduced in the passing off proceeding be considered evidence in the present oppositions, with restrictions.

And so the battle goes on as Cadbury continue to relentlessly seek protection for that sacred purple wrapping.

Lea Lewin