Best Australian trade mark cases of 2013-2014
Published on 04 Jun, 2014
In 2013 the Federal Court of Australia has provided useful guidance on some key aspects of trade mark infringement and protection including:
- how registrability of trade marks consisting of foreign language words should be assessed (but stay tuned because this case has now gone to the High Court)
- the Court’s attitude to survey evidence (don’t bother?)
- when an application will be considered to be lodged in bad faith; and
- application of the infringement defence of use of own name in good faith to an Australian importer.
Unlike the bumper year of 2012, there were no cases addressing the vexed issue of parallel importation and application of the trade mark with the owner’s consent. We hope you enjoy our annual roundup of the key cases for 2013, with a small foray into decisions in early 2014.
1. Distinctiveness test for foreign language marks (Modena Trading v Cantarella Bros (2013) 215 FCR 16 (FCAFC))
Cantarella was the registered owner of trade mark no. 829098 for the word ORO and 878231 for the words CINQUE STELLE in respect of a variety of coffee products. In the Italian language, the word “oro” means “gold” and the words “cinque stelle” mean five stars. Modena imported coffee in packaging bearing the words “oro” and “cinque stelle”. That coffee was produced by Caffè Molinari SpA, an Italian company. Cantarella sued Modena for infringement of its ORO and CINQUE STELLE trade marks. At first instance, the trial judge rejected Modena’s challenge to the validity of the trade marks based on non-distinctiveness and upheld Cantarella’s trade mark infringement claim.
On appeal, the Full Court of the Federal Court held that the trial judge erred in adopting a test that distinctiveness for foreign language marks should be assessed by the probability that ordinary persons would understand the foreign words. The Full Court affirmed the classic test of distinctiveness stated by Justice Kitto in Clark Equipment v Registrar of Trade Marks, namely: “[T]he likelihood that other persons, trading in goods of the relevant kind and being actuated only by proper motives – in the exercise, that is to say, of the common right of the public to make honest use of words forming part of the common heritage, for the sake of the signification which they ordinarily possess – will think of the word and want to use it in connexion with similar goods in any manner which would infringe a registered trade mark granted in respect of it.” That test requires a practical evaluative judgment about the effects of a trade mark in the real world. Whether consumers know the meaning of a foreign word is only relevant insofar as it informs the likelihood of traders wanting to use a particular word; consumer knowledge is not the focus of the inquiry.
The Full Court held that the relevant trade was the trade of coffee products from Italy. The relevant traders include Italian exporters, local importers and local distributors. Applying the test in Clark Equipment, the Court held that the ORO and CINQUE STELLE marks were not distinctive, having regard to the following factors:
- the meaning of “oro” and “cinque stelle” as signifying a product of the highest quality
- Australian preference for Italian-style coffee
- the large population of Italian speakers in Australia
- Cantarella uses the ORO and CINQUE STELLE marks on its highest quality coffee products
- other traders have used the words “oro” and “cinque stelle”, the earliest since 1955
- Caffè Molinari SpA have exported coffee with the words “oro” and “cinque stelle” before the filing dates of the trade mark applications for ORO and CINQUE STELLE
- word marks including the word “oro” had been filed well before the filing date of the trade mark application for ORO
- Trade Mark Office decisions have held that the English words “gold” and “five stars” are not distinctive.
Accordingly, the Full Court dismissed Cantarella’s trade mark infringement claim and ordered that the ORO and CINQUE STELLE trade marks be cancelled for non-distinctiveness.
Appeal to the High Court
In March 2014, the High Court granted Cantarella special leave to appeal from the Full Court’s decision. At the time of writing, the appeal has not yet been heard by the High Court. The bottom line The take home message from this case is that distinctiveness for foreign language trade marks is assessed primarily by whether other traders in the relevant market would want to use the words, rather than whether the general public understands what the words mean.
2. Interlocutory injunction refused in trade mark infringement case (Snack Foods v Premier 1st (2013) 99 IPR 629 (FCA))
A US company, Medora, had sold POPCORNERS snack foods in the US since early 2010. Medora was the registered owner of a US trade mark for the word POPCORNERS.
Snack Foods became aware of Medora’s products around February 2011. It began to develop its own similar “popped” corn chip product under the name POPPED CORNERS for sale in Australia.
In June 2011, Snack Foods filed and subsequently became the registered owner of trade mark no. 1430770 for the words POPPED CORNERS for snack foods. However, it had not yet released any products under that name.
Meanwhile, in March 2011, another Australian company, Premier began to negotiate with Medora to import the latter’s POPCORNERS products into Australia.
Between October 2011 and November 2012, Premier extensively marketed and promoted POPCORNERS products to supermarkets.
In late 2012, the supermarket chain Woolworths agreed to stock POPCORNERS products. The first shipment of POPCORNERS products arrived in Australia in October/November 2012. They were due to be delivered to Woolworths on 26 November 2012.
Snack Foods’ lawyers issued a cease and desist letter to Premier requiring it to cease using the POPCORNERS name and promoting the corresponding product. Various exchanges of correspondence between the parties’ attorneys ensued over a 7 week period.
Following Premier’s failure to comply with the cease and desist letter, Snack Foods applied to the Federal Court for interlocutory relief to stop Premier from trading in POPCORNERS products until final decision in the matter.
In deciding whether to grant interlocutory relief, the Federal Court (Justice Foster) applied the principles stated by the Full Court in Samsung Electronics Co Ltd v Apple Inc (2011) 286 ALR 257. Those principles require the Court to assess:
- the strength of the parties’ respective cases;
- the harm to the plaintiff, if relief were refused, compared with the harm to the defendant, to third parties and to the public, if relief were granted; and
- whether the harm to the plaintiff can be adequately compensated with damages.
The Court held that Snack Foods had established a strong case for trade mark infringement given the similarity between the POPPED CORNERS and POPCORNERS trade marks. However, the Court also accepted that Premier and Medora had a real prospect of invalidating Snack Foods’ trade mark and establishing a valid defence to infringement arising from Medora’s prior use of and reputation in the POPCORNERS trade mark. The Court further held that the harm to Premier, if relief were granted, was “real and significant”. If Premier could not deliver its products to Woolworths on time, Woolworths would almost certainly abandon Premier’s products. This would be catastrophic to Premier’s trading viability. On the other hand, Snack Foods had not released its POPPED CORNERS product into the market. Any harm Snack Foods would suffer by Premier’s trading activity was “almost entirely speculative”. The Court also had regard to the availability of another unrelated POPCORNERS product sold by a third party, who withdrew the product after being challenged by Snack Foods. The Court also criticised Snack Foods’ 7-week delay in initiating proceedings while it debated the matter with Premier through legal correspondence. The Court also criticised Snack Foods’ choice to seek interlocutory relief rather than an early final hearing. Taking the above factors into account, the Court refused to grant interlocutory relief. The parties subsequently settled their dispute. The bottom line The bottom line from this case is that if a party wishes to seek urgent injunctive relief, it must act very promptly and not allow itself to be tied up with lengthy exchanges of correspondence with the other party. Of course, this creates practical issues because such correspondence may be the very means by which the dispute can be resolved.
3. “Superman” is descriptive, but “superman workout” filed in bad faith (DC Comics v Cheqout Pty Ltd (2013) 212 FCR 194 (FCA))
Cheqout applied to register the trade mark “superman workout” in class 41 for conducting exercises classes etc. DC Comics, the owner of registered device marks containing the word “superman” for various goods and services, opposed the application. The Registrar of Trade Marks dismissed DC Comics’ opposition. DC Comics appealed to the Federal Court. It was noted that DC Comics was not the inventor of the word “superman”. No likelihood of deception or confusion DC Comics argued that Cheqout’s application should be refused on the ground in s.60 of the Trade Marks Act 1995 (Cth), which provides that the applicant’s trade mark may be opposed on the ground that another trade mark had acquired a reputation in Australia before the priority date of the application and, because of that reputation, use of the applicant’s trade mark would be likely to deceive or cause confusion. The Court noted that DC Comics’ registered marks consist of the word “superman” together with other devices, and do not consist of the word alone. There was no dispute that the Superman character was well-known and recognised by the public at large. The Court referred to dictionary definitions of “superman”, which suggest that the word had entered the English language to connote more than the superhero character, and had become descriptive. The Court held that, where “superman” is used without reference to the well-known indicia associated with the superhero character, there is no likelihood that use of the trade mark would be likely to deceive or cause confusion. Accordingly, the ground in s.60 was not established. “Superman workout” mark filed in bad faith
The Court restated the principle that, to determine whether a trade mark application was filed in bad faith within the meaning of s.62A of the Trade Marks Act 1995 (Cth), the relevant question is whether the filing of the application fell short of the standards of acceptable commercial behaviour observed by reasonable and experienced persons in the particular area. The sole director and secretary of Cheqout gave evidence that “superman workout” was not used to associate Cheqout’s services with the Superman character. This was at odds with Cheqout’s use of the BG shield device (below right), which was similar to the DC Comics’ Superman shield device (below left), six months after the filing of the application. The colours used in each device were similar. The Court held that use of DC Comics’ indicia was a relevant circumstance in determining whether there was bad faith.
The Court held that use of the word “superman” together with the BG shield device in the context of male fitness and strength, was evidence that Cheqout had filed its trade mark “superman workout” in bad faith. Accordingly, Cheqout’s application was refused under s.62A. The bottom line In summary, a court will take into account related conduct of the applicant in assessing bad faith (and in this case, even though the conduct occurred after the application had been filed).
4. Survey evidence not useful in trade mark infringement case (Adidas AG v Pacific Brands Footwear Pty Ltd (No 3) (2013) 103 IPR 521 (FCA))
Adidas was the registered owner of two trade marks for three parallel stripes in contrasting colour to the colour of the footwear to which the marks were applied (depicted below). Since 2006, Pacific Brands imported and supplied a number of low cost shoes which bore four stripes. Adidas sued Pacific Brands for trade mark infringement.
The Court gave minimal weight to an internet survey commissioned by Adidas. The survey participants were shown photographs of Pacific Brands’ shoes and asked a series of questions. Among other reasons, the Court criticised the question “Who do you think makes this shoe?” as suggesting that the participant should determine the origin of the shoe from the photograph. Most of Pacific Brands’ shoes did not infringe Adidas’ trade marks Because of visual differences, the Court found the following shoes did not infringe Adidas’ trade marks. In reaching its decision, the Court considered whether consumers would mistake the Pacific Brands’ shoes as Adidas shoes based on their imperfect recollection of the Adidas marks. The Court’s decision suggests that it considered that the number of stripes was much less important than whether or not the stripes were parallel and situated on a background of contrasting colour.
The Court found the following shoes did infringe Adidas’ trade marks.
The bottom line
The take home from this case is that the costs associated with obtaining survey evidence need to be balanced against the strong likelihood that the Court will give little weight to that evidence.
5. A real monopoly over domain name trade marks (REA Group Ltd v Real Estate 1 Ltd (2013) 102 IPR 1 (FCA))
REA was the registered owner of the trade marks containing “realestate.com.au” and “realcommercial.com.au” (depicted below) for various real estate services.
REA was able to demonstrate a very strong reputation in the realestate trade mark in the form of evidence showing that 50% of users typed “realestate.com.au” directly into their browser, indicating an awareness of the website. The websites received over 6.7 million unique visitors each month. Real Estate 1 (RE1) used “realEstate1.com.au” and “realCommercial1.com.au” in three forms:
- as the logos and
- as the words “realEstate1.com.au” and “realCommercial1.com.au”;
- as the domain names www.realestate1.com.au and www.realcommercial1.com.au.
However, RE1’s use of the word “realEstate1.com.au” and the domain name www.realestate1.com.au did infringe REA’s mark because, when a domain name is used as a brand, consumers are likely to read the whole of the domain name, and may miss the “1” in “realEstate1.com.au” and www.realestate1.com.au.
The Court held that use of the logo , the word “realCommercial1.com.au” and the domain name www.realcommercial1.com.au infringed REA’s mark because each use contained the dominant feature of REA’s mark, “realcommercial”. The realcommercial trade mark was found to be more distinctive than the realestate trade mark and therefore a lower infringement threshold applied. Hence the positive finding of infringement in relation to RE1’s realcommercial1 logo, in contrast to the finding that RE1’s realestate logo did not infringe REA’s realestate logo.
The Court described its decision on the mark as “troubling” as it gave an effective monopoly over two highly descriptive terms used in combination with the second-level domain .com.au. The Court conceded, however, that unless REA’s trade mark was successfully challenged, it was entitled to its statutory monopoly. The bottom line The key message from this case is that it is possible to achieve an effective monopoly over a rather generic domain name via a registered trade mark if the necessary reputation can be established.
6. Court estimates infringer’s profits in trade mark infringement case (Bugatti GmbH v Shine Forever Men Pty Ltd (2013) 103 IPR 574 (FCA) and  FCA 171)
Bugatti was the registered owner of a number of trade marks for the word BUGATTI for clothing. Shine Forever imported and sold clothing bearing the trade mark BUGATCHI UOMO. Bugatti sued Shine Forever for trade mark infringement.
Use of BUGATCHI UOMO infringes the BUGATTI marks
The Court observed that the first two syllables of BUGATCHI and BUGATTI were the same, and the third syllables (“CHI” and “TI”) were visually and aurally similar. The word UOMO did not differentiate the trade marks. Applying the traditional test, the Court held that BUGATCHI UOMO was deceptively similar to BUGATTI. Shine Forever therefore infringed the BUGATTI marks. Section 122 defences – entitled to registration of the trade mark Shine Forever argued that it had defences to infringement under sections 122(1)(f) and 122(1)(fa) of the Trade Marks Act. Under these defences, it argued that the overseas manufacturer of the clothing, BUA, would be entitled to obtain registration of BUGATCHI UOMO mark if BUA applied for it. The Court held that “the person” in section 122(1)(f) and 122(1)(fa) referred to the alleged infringer, Shine Forever, not their supplier. Thus, the defences did not assist Shine Forever as it would not have been entitled to register the BUGATCHI trade marks.
Court estimates Shine Forever’s profits
Following the judgment on liability, the Court ordered Shine Forever to disclose the quantities of BUGATCHI UOMO clothing it sold and its estimated profits. Shine Forever failed to comply with those orders. It said it did not make any profit on the sale of the clothing. Bugatti sought an order for an account of Shine Forever’s profits. It estimated that Shine Forever had made profits of over $550,000 using audited sales revenue figures tendered as evidence in the proceeding and the expense figures asserted by Shine Forever. While the Court acknowledged that the process of calculation was far from ideal, once the sales revenue figure was established, Shine Forever bore the burden of persuading the Court that expenses should be deducted. Because Shine Forever failed to do so, the Court ordered an account of profits of over $550,000.
The bottom line
There are two main lessons from this case. Firstly, an Australian importer cannot rely on the trade mark registration entitlement defence, only the manufacturer can. Secondly, it is critical for the respondent to actively participate in the damages/profits assessment stage of infringement proceedings. Failure to do so may result in a large award being made by the court in the absence of evidence being brought by the respondent as to its profit.
7. An unhappy family’s trade mark dispute (Bob Jane Corporation Pty Ltd v ACN 149 801 141 Pty Ltd (2013) 97 ACSR 127 (FCA))
In 2011, Bob Jane, the founder of Bob Jane T-Marts, the well-known tyre business, left the company in unhappy circumstances and set out to establish competing businesses. Bob Jane T-Marts was the registered owner of the BOB JANE word mark, the BOB JANE T-MARTS device mark and the JANE FLEET device mark. Mr Jane’s new businesses used a number of trade marks containing the words BOB JANE and JANE. Bob Jane T-Marts sued Mr Jane’s new businesses for trade mark infringement.
“Own name” defence did not apply
The Court held that use of trade marks containing the words BOB JANE infringed the BOB JANE word mark and the BOB JANE T-MARTS device mark. The Court also held that use of trade marks containing the word JANE infringed the JANE FLEET device mark because the word JANE was a significant word within JANE FLEET. The Court made some remarks about the “own name” defence in section 122(1)(a) of the Trade Marks Act. That defence only applies if the person’s conduct was in good faith. The Court found that Mr Jane approached Bob Jane T-Mart’s suppliers, chose names for his new business containing the words BOB JANE and JANE and made other attempts to leverage off the reputation of Bob Jane T-Marts. In the absence of any evidence in support of the defence (the defendants did not take part in the trial), the Court held that the defence did not apply.
The bottom line
From this case, it is clear that the use of own name infringement defence goes only so far, particularly in the context of a former owner establishing a business which competes with the legitimate owner of the relevant trade marks.
8. DIGITAL POST AUSTRALIA not deceptively similar to AUSTRALIA POST (Australian Postal Corporation v Digital Post Australia  FCAFC 153)
Australia Post was the registered owner of various marks for the words AUSTRALIA POST in respect of electronic mail, financial and telecommunications services. In 2012, Digital Post Australia launched a digital mail service under the mark DIGITAL POST AUSTRALIA. Australia Post sued Digital Post Australia for trade mark infringement. The trial judge held that DIGITAL POST AUSTRALIA was not deceptively similar to AUSTRALIA POST and, accordingly, there was no infringement. Australia Post appealed to the Full Court of the Federal Court. DIGITAL POST AUSTRALIA not deceptively similar to AUSTRALIA POST On appeal, the Full Court upheld the trial judge’s conclusion that DIGITAL POST AUSTRALIA was not deceptively similar to AUSTRALIA POST. However, the Full Court criticised the trial judge’s view that the likely consumers of digital mail services were “technologically competent” and “internet savvy” and held that the likely consumers were the general public at large. Despite this criticism, the Full Court held that trial judge’s analysis of deceptive similarity was uncontroversial and the conclusion reached was correct. Accordingly, Australia Post’s appeal was dismissed.
The bottom line
This case demonstrates the limitations of trade marks which are reasonably generic. While it may be possible to obtain registration of such marks, it is not so easy to prevent others from using somewhat similar marks. We hope you have enjoyed our discussion of the key trade mark cases from 2013. Stay tuned for our 2014 instalment.