WICKED v WICKED SISTER – Deceptive Similarity, Ownership and Removal

There was no sweet victory for the owners of the WICKED SISTER trade mark, used mostly for dairy desserts, in their attempt to prevent use of the WICKED trade mark for dipping sauces and related products.

 

The recent Federal Court case of PDP Capital Pty Ltd v Grasshopper Ventures Pty Ltd [2020] FCA 1078 (30 July 2020), heard by Markovic J, involved numerous issues relating to competing registrations, infringement and validity, but ultimately PDP was unsuccessful in its claims against Grasshopper for trade mark infringement, misleading and deceptive conduct under the Australian Consumer Law and passing off under the common law.

PDP also failed in its claim to cancel Grasshopper’s trade mark registration, although it partially succeeded in its challenge to the registration on the basis of non-use.

Grasshopper’s cross claim to cancel the Wicked Sister registrations also failed, but it partially succeeded to restrict the registrations on the basis of non-use.

Background

PDP has manufactured and sold a range of chilled dairy desserts and snacks under the Wicked Sister brand since 2008.

PDP owns registrations for WICKED SISTER in plain word and stylised forms which cover various goods in classes 29 and 30 (collectively “the Wicked Sister marks”). The earlier stylised mark

dates from 2008 and is owned by PDP Fine Foods Pty Ltd (“PDP Fine Foods”). The later stylised mark

and plain word mark WICKED SISTER both date from 2016 and are owned by PDP Capital Pty Ltd (“PDP Capital”), a related IP holding company. PDP Capital’s marks achieved registration by consent from PDP Fine Foods.

Grasshopper is an IP holding company which has authorised the use by various entities selling dipping sauces since 2002 under the WICKED brand.

Grasshopper owns a registration dating from 2005 for

(“Wicked tail mark”) in class 30. The WICKED brand was modified in 2014 to

(“new Wicked mark”) with the original branding phased out by early 2016. Grasshopper also owns a pending application for the new Wicked mark, and an accepted application for the plain word WICKED (which has, since these proceedings, been successfully opposed by PDP in proceedings before the Trade Marks Office, on the basis of a lack of distinctiveness. In that case, the Hearing Officer expressed the view that “the ordinary signification of the trade mark is a colloquial word for ‘excellent’ and when applied to the goods there is an implication of decadence”).

Grasshopper extended its product range to include waffle dippers in 2018.

The Wicked Sister and Wicked products are sold through Coles supermarkets.

The products sold under the Wicked Sister marks are flavoured rice puddings, custard, tiramisu and panna cotta, made from fresh ingredients and found in the refrigerated section of the dairy aisle.

The Wicked dipping sauces are not made from fresh ingredients and therefore do not require refrigeration, although they are still sometimes placed with frozen berries in the fresh food section of the supermarket.

Common Issues

Markovic J initially considered two main issues common to the parties’ various claims in the proceedings:

»  whether the new Wicked mark is substantially identical or deceptively similar to the Wicked Sister marks; and

»  whether the goods covered by the respective marks are the same or of the same description.

The marks were not found to be substantially identical. In making her determination that the marks were also not deceptively similar, her Honour considered a number of factors including:

  • the new Wicked mark and the Wicked Sister marks are not visually or aurally similar;
  • the adjective “wicked”, when used on its own, is an abstract concept which could describe anything. In contrast, the word “wicked”, used in conjunction with the noun “sister”, is not a strongly distinguishing feature of the Wicked Sister marks;
  • despite her Honour agreeing that the goods are fast moving consumer goods sold at a low price point, based on the evidence, the goods are found in different parts of the supermarket, consumers are able to view the products and their associated trade marks, and confusion is unlikely; and
  • the evidence of confusion advanced by PDP was ultimately given little weight as it was not evidence of an “ordinary person”, but of people who have a personal or trade affiliation with PDP.

This conclusion had significant implications for a number of the claims brought by the parties, but perhaps most significantly meaning that there could be no finding of trade mark infringement.

Her Honour then determined that dipping sauces and waffle dippers are not similar to desserts, rice pudding or any of the other goods covered by the earlier stylised Wicked Sister mark owned by PDP Fine Foods. However, dipping sauces were specifically covered by the later Wicked Sister registrations owned by PDP Capital, and waffle dippers being bakery products, were also encompassed by those registrations.

Grasshopper’s cross-claim for rectification

Grasshopper sought rectification under section 88 of the Trade Marks Act for cancellation of the registration of the Wicked Sister marks.

There was a difference in ownership between the later WICKED SISTER registrations and the first registration, which was principally for tax minimisation reasons. This conflict was resolved at the examination stage by the owner of the earlier registration providing a letter of consent to the subsequent applicant. However, interestingly, her Honour upheld Grasshopper’s claim under the section 58 ownership ground finding that PDP Capital was not the owner of the later registered Wicked Sister marks because PDP Fine Foods, which owned the earlier registered Wicked Sister mark, was also the true owner of the later marks. Despite this finding, her Honour decided not to exercise discretion to cancel the registrations because there was no risk of consumer confusion due to the “unity of purpose” between PDP Fine Foods and PDP Capital being related companies [applying the principle enunciated in the Full Federal Court case of Trident Seafoods Corporation v Trident Foods Pty Ltd [2019] HCAFC 100]. This nevertheless leaves open the possibility of a similar claim in succeeding opposition proceedings, since the discretion exercised by the Court in this case does not exist in those proceedings.

Grasshopper’s non-use applications

PDP was able to establish use of the earlier stylised Wicked Sister mark for dairy desserts, yoghurt desserts, creamed rice, rice puddings, rice tapioca and cheesecakes. PDP also sought to rely on use of flavoured rice puddings to retain “sauces for rice”, but this was not accepted and these goods were removed together with all other goods for which use could not be shown.

Regarding the challenge to the later registered Wicked Sister marks under section 92(4)(a) for lack of intention to use, her Honour found evidence of actual use for various goods including, dairy products, dairy-based desserts panna cottas; crème caramels, custard, cheesecakes, cakes, frozen yoghurts, creamed rice. She also held that use of the marks for panna cotta was sufficient to retain the broad claim for “all other desserts in this class including prepared desserts”. However, as there was no intention to use or actual use of the trade marks for bakery products, confectionery, ice cream confections, dipping sauces and yoghurt products, these goods were removed.

PDP’s claim for trade mark infringement

For trade mark infringement, PDP needed to establish the threshold issue that the new Wicked mark is substantially identical or deceptively similar to the Wicked Sister marks and that dipping sauces and waffle dippers are the same as or of the same description as the goods for which the Wicked Sister marks are registered.

As the marks were not found to be substantially identical or deceptively similar, PDP’s infringement claim failed at the first hurdle and it was therefore not necessary to consider whether Grasshopper had any defences to infringement. However, in case her Honour was wrong in relation to her conclusions to PDP’s infringement claim, she went on to consider the threshold issue – whether Grasshopper’s authorised use of the new Wicked mark is capable of constituting trade mark infringement.

While Grasshopper did not deny that it authorised use of the new Wicked trade mark to other entities within the meaning of the Trade Marks Act, it argued that it could not be subject to direct liability for infringement under section 120 because there is no statutory tort of authorisation in the Act. Her Honour agreed and indicated that the threshold issue would have been decided in Grasshopper’s favour. She did add, however, that this does not mean that no cause of action could have succeeded against Grasshopper as a joint tortfeasor, had that been pleaded.

PDP’s claim under the Australian Consumer Law (ACL)

PDP alleged that Grasshopper’s conduct breached sections 18 and 29 of the Australian Consumer Law. Grasshopper argued that (1) as a mere IP holding company it could not have made any of the alleged misrepresentations and (2) there was no real likelihood of confusion. Her honour rejected Grasshopper’s first contention which indicates that Grasshopper could have been liable under the ACL if the marks were otherwise found to be sufficiently similar and PDP had an established reputation in the Wicked Sister marks as at 2014 when use of the new WICKED trade mark commenced. However, ultimately her Honour found that there was no real likelihood of confusion and, consequently, PDP’s claim under the ACL failed.

PDP’s claim for passing off

PDP’s passing off claim followed her Honour’s findings in relation to the ACL. While Grasshopper’s conduct may amount to conduct for the purposes of establishing passing off, PDP had not established a sufficient reputation in the Wicked Sister marks as at 2014, nor that a sufficient number of consumers were likely to be deceived by Grasshopper’s use of the new Wicked mark.

PDP’s non-use application

PDP sought removal of the Wicked tail mark on the grounds of non-use under sections 92(4)(a) and 92(4)(b). As her Honour had found that Mr Valentine had an intention to use the mark, the section 92(4)(a) ground was dismissed. In relation to the section 92(4)(b) ground, Mr Valentine could establish use during the non-use period for dips including chocolate dips, but conceded that the mark had not been used for dessert toppings and sauces and confectionery products. Despite this, her Honour exercised discretion to retain the registration for all goods except savoury dips.

Takeaways

When comparing marks for the purpose of determining deceptive similarity, whether the combination has a meaning that differs from that of the word alone can impact on whether that word is determined to be an essential feature of the mark.

The case also provides a timely reminder to business owners, who wish to protect and enforce their marks, to ensure that they are filed in the name of the legal entity who will use or authorise use of the mark. Further, it confirms that there is no statutory tort of authorisation in the Trade Marks Act with the result that an IP holding company which merely authorises use of a mark cannot be subject to liability for direct infringement, although it may be liable as a joint tortfeasor.