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 2006 Lion Nathan Australia Pty Limited (Lion Nathan) began to develop a new full strength, carbon-neutral beer with lemon and lime twist which they coined ‘BAREFOOT RADLER’.  Upon learning of Gallo’s ‘BAREFOOT’ trade mark they commissioned some investigations into the use of that mark. Lion Nathan’s investigations revealed no use and filed an action for removal in the Australian Trade Marks Office in May 2007. They proceeded to launch their beer product in January 2008.

The beer launch proved too much to, er, bear, and Gallo initiated proceedings in the Federal Court against Lion Nathan for trade mark infringement. Lion Nathan then brought itsremoval action to the Federal Court by way of a cross-claim. Both actions were heard together in April 2008. The decision was reported by the Australian Trade Marks Law Blog here. In that case, Flick J found in favour of Lion Nathan in both its defence to infringement and its counter-claim to have Gallo’s ‘BAREFOOT’ trade mark removed from the Register for non use.

In July 2008 Gallo appealed with respect to Flick J’s decision on (i) non use of the ‘BAREFOOT’ trade mark and (ii) whether the good in question, beer and wine, were ‘goods of the same description’. Lion Nathan’s cross-appeal concerned the date upon which the removal order should commence arguing that the date should be 8 May 2007 rather than 27 June 2008 (the date of the decision).

The Appeal Decision

The decision was broken up into two questions:

Was there use of the ‘BAREFOOT’ trade mark during the non use period for the purposes of Section 92(4)(b) of the Act?

The Court acknowledged that there was no direct authority on the issue of ‘whether, when a registered trade mark is used in Australia on, or in physical or other relation to the goods, which are offered for sale and sold here but manufactured overseas by an owner or authorised user of the mark who applied the mark to them, the use of the mark constitutes a use by the owner, even though that person may not know that the goods are being offered for sale or sold in Australia but rather sold them to a foreign distributor for resale without any limitation on where they might be resold’.

Along the same lines as the Trial Judge the Court rejected Gallo’s submissions and found that ‘use’ is not made out merely because goods to which a trade mark has been affixed by the owner, or an authorised user, are traded in the ordinary course of trade in Australia.  Rather, the ‘owner must have engaged in conduct of some type which the owner might reasonably contemplate would result in dealings with its goods marked with its mark in Australia while the goods were in the course of trade’.

The Full Court went further in its analysis to find that in order for the statutory scheme of the Act to be a cohesive one, the use to which Section 92 of the Act is directed ‘is use of the same character which would warrant registration of the trade mark in the first place. That is conduct, by or on behalf of the owner, associated with a witting or deliberate use of the trade mark in Australia.’ There was no course of trade as between Gallo and BAW or any other party in Australia.

Finding that the ‘BAREFOOT’ mark should be removed the Court then considered the cross appeal. The Full Court noted that Section 101(2) of the Act is clear because it is ‘an order directing someone to do something’. Accordingly, the act of the Registrar removing a trade mark from the Register can only be done after the order is made. An investigation into whether such an order can be made retrospectively was held to be a ‘false issue’. Infringement of a trade mark during the time that it remains on the Register is therefore possible.

Are beer and wine ‘goods of the same description’?

Rather than look at the question of whether beer and wine are ‘goods of the same description’ in isolation the Full Court found it was relevant to note the purpose or object of Section 120(2) as protecting the statutory monopoly a registered owner has to use their mark. In this context they found this requires a ‘consideration of what members of the consuming public might perceive as a result of the use of the alleged infringing mark on the goods in question and whether they might be led to believe they were goods of the registered owner’. When looked at through this prism, it is clear how late on a Saturday evening one might think that beer and wine are ‘goods of the same description’. The Full Court overturned Flick J’s finding on this issue.

The question of deceptive similarity between ‘BAREFOOT’ and ‘BAREFOOT RADLER’ was decided in the affirmative leading to the conclusion that Lion Nathan had infringed the ‘BAREFOOT’ mark from the time it launched its product in January 2008 until the date of the Federal Court decision.

So What?

By affirming Flick J’s decision on the issue of non-use, trade mark owners, particularly foreign ones, need to be conscious that Australian trade marks may be vulnerable if the owner does not put their products into the Australian market either directly or through an authorised user.

Also, the vibe of the recent major non-use cases is that trade marks clearance searches MUST include related classes and potential uses, even if the goods or services at issue face little risk of technological convergence with others. In the Pioneer decision (a convergence case) discussed by the Australian Trade Marks Law Blog here, Bennet, J., chose to exercise her discretion in allowing Pioneer to retain its trade mark in circumstances where some argue there had not been use in the broad category of ‘computer peripheral’  goods for a period of three years. In the Bing! software case (another convergence case) discussed by the Australian Trade Marks Law Blog here, a partial non-use application might have led to a different result. The vibe, and our recommendation , is to search widely when selecting a mark.

Lea Lewin