Posted on April 5, 2008 by NICHOLAS WESTON - AUSTRALIA

Importance of trade mark registration highlighted as MONSTER ENERGY case dismissed

In Hansen Beverage Company v Bickfords (Australia) Pty Ltd [2008] FCA 406 (31 March 2008) the success or otherwise of both the claim and the cross-claim turned on each party evidencing a sufficient reputation of its product amongst Australian customers by reference to the unregistered marks MONSTER and MONSTER ENERGY in the context of deciding whether there had been a passing off at common law or a contravention of s 52 of the Trade Practices Act 1974 (Cth) (TPA).

The applicant (Hansen) alleged that the adoption of the brand MONSTER ENERGY (the second biggest selling energy drink in the world, behind Red Bull), or its contraction MONSTER, for energy drinks by the respondents (Bickfords) conveyed a misrepresentation that the Bickfords product is the product of Hansen or is associated with Hansen. If not, then conversely the cross-claim required Bickfords to establish whether at the relevant time it had a sufficient reputation in Australia in the mark MONSTER ENERGY, or its contraction MONSTER to succeed in its own claim as against Hansen. The parties agreed that the similarities between the products could relevantly mislead or deceive for the purposes of the TPA and the tort of passing off.

Approach

The Court approached the question of the operation of s 52 of the TPA by requiring it to be established that a significant or substantial proportion of persons who would be potential customers within Australia would be likely to be misled.

Date of reputation

The Court held that the relevant date at which Hansen’s reputation was to be assessed is (up to) the date on which the relevant Bickfords’ products were available to consumers, on the basis that that consumers could not be misled or deceived until the product was available for purchase.

For Bickfords’ the relevant date was the date when Bickfords alleged that Hansen threatened the acts complained of in the cross-claim.

Evidence

Hansen relied on evidence of the ‘lay a foundation’ marketing strategy it had adopted to reach its target demographic primarily in other countries to demonstrate the relevant products’ exposure to persons in Australia, prior to the launch of the Hansen products here. Neither party sought to lead any expert or survey evidence as to the reputation in and public recognition of the Hansen product in Australia, although such evidence would be potentially admissible.

On the summaries of exposures provided by Hansen, Middleton J, stated:

"The Schedules of Exposure before the Court set out the extent of exposure, but it is the quality of the exposure that has been the major influence in the reaching of my decision. In fact, whilst in this proceeding Hansen has tendered much material to show references to the MONSTER or MONSTER ENERGY marks, via many media, this should not beguile one into thinking the marks are necessarily, on this basis alone, known to the required proportion of potential customers." (at para 104)

Bickfords’ evidence included a survey with only 264 respondents, conducted after its products had entered the market, posing the question ‘where have you heard/seen MONSTER ENERGY drink advertising’. The Court gave this material little or no weight as it was unclear whose product the survey was referring to.

OzTAM television ratings evidence held inadmissable

The Court held that the OzTAM television ratings data was inadmissible hearsay because the original makers of the representation that a person or persons are in the room where the television is on (the people pressing the buttons on the OzTAM device) were not in Court giving the evidence themselves. The Court held too that the 'business records' exception to the hearsay rule did not apply as these documents were a product of the OzTAM business rather than internal records. The Court chose not to exercise its discretion to admit the ratings data as evidence as it had aspects that fell into the category of opinion evidence and s 79 of the Evidence Act 1995 (Cth) had not been complied with.

Copying

The court found that Bickfords deliberately copied Hansen’s brand, but only in Australia where Hansen had no actual sales or direct promotion, and where Hansen did not have sufficient reputation of the quality and type it alleged. Bickfords knew this and acted accordingly in its own commercial interest. The Court accepted that these specific circumstances permitted Bickfords to seize a window of opportunity to enter the market in Australia by adopting the Hansen model and brand.

Reputation

Neither Hansen nor Bickfords established upon the evidence before the Court the reputation required by law to succeed in their respective claims. Both the claim and cross-claim were dismissed and no restraining orders were made.

His Honour Justice Middleton stated:

"both Hansen and Bickfords, to a lesser or greater degree, have only just commenced the development of a reputation in Australia, and neither has reached the stage of development such that the Court should make the orders sought in this proceeding." (at para 3)

So what?

Substantial sales and advertising of a product overseas does not necessarily translate to ‘reputation’ in Australia. Overseas companies that fail or neglect to protect their position by making early application to register their trade marks in Australia, may do so at considerable cost.

Nick Weston

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Posted on March 31, 2008 by NICHOLAS WESTON - AUSTRALIA

Procedural flexibity has its limits when evidence filed late

In Television Food Network, GP v Food Channel Network Pty Ltd [2008] FCA 378 (18 March 2008) counsel for the respondent, Food Channel Network Pty Ltd (FCN) sought leave of the Court to file two affidavits, one of which was only provided to counsel for the applicant, Television Food Network, GP (TFN) 10 minutes prior to Court resuming one morning during the trial. 

TFN objected to the admissibility of the affidavits in their entirety and made some of the following submissions:

  • no explanation as to the lateness of the evidence had been provided;
  • the proposed evidence sought to advance a new case for the respondent and contradicts earlier evidence; and
  • admission of such evidence would seriously prejudice the applicant.

The gist of the submissions made by FCN was that the affidavits did not contain new evidence but were merely a fuller explanation of previous material, and (creatively) that the need for the new evidence was as a result of the misrepresentation of their position by written submissions made by counsel for TFN.

The Court found both affidavits to be inadmissible. Justice Collier accepted that the TFN would suffer unfair prejudice if the evidence was allowed not only in view of its lateness but also because it contained “unsubstantiated argument” and “irrelevant material”. Regarding FCN’s submissions of misrepresentation, Justice Collier found that “the most obvious method of rebuttal is in the form of closing submissions”. 

The Court noted the need for procedural flexibility but found that to require a party to deal with new evidence at the time of the trial -- evidence that could have been produced at any time leading up to the trial -- and without any opportunity for testing went too far.

Lea Lewin
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Posted on January 29, 2008 by NICHOLAS WESTON - AUSTRALIA

Parallel Importing and s123 of the Trade Marks Act

A recent decision of Tamberlin J in the Federal Court of Australia has provided some interesting insights into the legality (or otherwise) of parallel importing of trade marked goods. See Brother Industries Ltd v Dynamic Supplies Pty Ltd [2007] FCA 490

When it comes to parallel importing of trade marked goods or grey imports, a key provision in the Australian legislation is s123 of the Trade Marks Act (Cth) 1995. Section 123 provides that:

a person who uses a registered trade mark in relation to goods that are similar to goods in respect of which the trade mark is registered does not infringe the trade mark if the trade mark has been applied to, or in relation to, the goods by, or with the consent of, the registered owner of the trade mark.

Tamberlin J’s decision makes it clear that the onus is on the defendant to establish the existence of the necessary application of the trade mark or consent to the application of the trade mark by the trade mark owner. In addition, and more importantly, his obiter comments made it clear that it is not sufficient to demonstrate that another member of the trade mark owner’s corporate group applied the trade mark or consented to the relevant application.

The facts of the case are relatively straightforward. Dynamic Supplies acquired, via the United States, some printer drum units which were made by the Australian trade mark owner, Brother Industries Ltd, a Japanese company, (Brother Japan). Importantly though, Brother Japan did not place its trade mark on these printer drum units. Such products are known as ‘original equipment manufacturer’ products (OEM’s). The OEM’s acquired by Dynamic Supplies via the United States were sold in packaging using the Brother Japan trade marks and which purported to be Brother packaging. Tamberlin J found that, in fact, the packaging was counterfeit and that packaging was neither made by or with the consent of Brother Japan.

Up to that point, the case was somewhat unremarkable. Brother Japan did not apply its trade mark to the goods or the related packaging and did not consent to such application. However, Dynamic Supplies claimed that the evidence suggested that the OEM’s had been sold via Brother International Corporation (Brother America), an American company that is part of the global Brother corporate group, and that the packaging originated from Brother America. Tamberlin J rejected that proposition as a matter of fact. But he then went on to state that even if Brother America had applied the trade mark to the packaging, s123 would not apply:

I am of the view that Brother Japan’s consent for the purposes of s123 of the Act is not to be implied from the fact that another member of the Brother corporate group may have, contrary to my finding, given its consent.

What remains unclear from the judgment is what else is required to demonstrate the existence of implied consent by the actual trade mark owner to the application of the trade mark. For example, in the English Court of Appeal decision of Revlon Inc v Cripps and Lee [1980] FSR 85, the majority found consent to use of the plaintiff’s trade mark (a different concept from consent to application) on the basis that the product in question, Revlon shampoo, was marketed internationally by the entire corporate group as a house mark. Consequently, use of the trade mark by one member of the corporate group was equivalent to use by another in the context of the evidence in that case.

In contrast, the third member of the Court, Lord Justice Templeman, found that it was sufficient in itself that the plaintiff and the company were part of the same corporate group and he regarded any use by one as necessarily use by another. Tamberlin J’s judgment clearly rejects Templeman LJ’s approach in so far as it might, by analogy, apply to s123 of the Australian Act. Whether Tamberlin J intended to go even further and suggest that evidence of the general corporate relationship between companies coupled with evidence of their international marketing strategy may also be insufficient to establish consent to the application of a trade mark is unclear.

The real effect of s123 will depend on the willingness or otherwise of Australian judges to imply the existence of consent to the application of a trade mark to or in relation to goods. This case suggests that s123 may not provide an easy legal ‘out’ for parallel importers who will certainly have to think carefully about the basis on which they claim that a trade mark owner has impliedly consented to the application of their trade marks. For more on the evidence required, see our discussion of the recent Cussons case here.

Mark Davison
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