October 2004
Brand Protection
Recent Cases On Brand 'Piracy'
A brand may consist of a combination of different features - business names, trade marks, shapes, distinctive colour schemes and labelling used to market products or services. Brands are used to distinguish and differentiate goods and services of traders in the market. Famous brands include: Nike, Disney, IBM, Coca Cola and BMW.
A brand and associated goodwill may be the most valuable asset of the business. Effective brand protection strategies are essential for the maintenance of brand equity. This month's newsletter reviews two recent cases of the Federal Court of Australia involving disputes between competitive businesses over the use of similar brands.
Some practical steps that a business can take to protect its brand are also considered.
The Crazy Ron's case (6 August 2004) - The Federal Court of Australia considered whether the use of the words 'Crazy Ron' infringes the CRAZY JOHN trade mark.
The Full Federal Court of Australia held that the 'Crazy Ron' mark is not deceptively similar to a composite picture mark of which the words 'Crazy John' form only one of several prominent elements. The Court held that the subsequent registration of the word trade mark "Crazy John" was invalid and ordered that the trade mark be cancelled on the basis that the Trade Marks Office acted beyond the scope of its authority in amending details of ownership of the trade mark pursuant to section 65 of the Trade Marks Act 1995.
The Melbourne Chinese Press case (10 August 2004) - The Federal Court of Australia considered the deceptive similarity between the Chinese characters used in the mastheads of rival newspapers.
The Full Federal Court of Australia held that the use of a masthead using deceptively similar Chinese characters in a particular style of calligraphy constituted a breach of trade mark. The Court also held that the use of pre-existing computer generated material can amount to a breach in copyright if such material is used to 'copy' a distinctive form or style of calligraphy.
Recent Cases
Crazy Ron's Communications Pty Limited v Mobile World Communications Pty Limited [2004] FCAFC 196 (6 August 2004)
The Full Federal Court of Australia held that the 'Crazy Ron' mark is not deceptively similar to and does not infringe a composite trade mark of which the words 'Crazy John' form only one of several prominent elements.
These proceedings were an appeal from a judgment of a single Judge of the Federal Court of Australia.
Mobile World Pty Limited has carried on business as a retailer of mobile phones under the name 'Crazy John' since 1993 and operates stores in five States and the ACT. Mobile World registered a trade mark in 1995 which incorporates the words 'Crazy John' as part of a picture of a person astride a globe with, what the trial Judge described as a 'deranged look' on his face (the "1995 CRAZY JOHN trade mark"). A second trade mark featuring only the words 'Crazy John' in haphazard block letters was registered by Mobile World in 1999 (the "1999 CRAZY JOHN trade mark").
The appellant, Crazy Ron's Communications Pty Limited, has carried on business as a mobile phone retailer on the Gold Coast under the name 'Crazy Ron's' since late 1996. The Crazy Ron chain of stores expanded to south-east Queensland and Tweed Heads in 1997 and further expanded to Sydney and Melbourne in 2003.
In mid-August 2003 Mobile World commenced proceedings in the Federal Court to restrain the appellant from using the name 'Crazy Ron' in relation to its business. By orders made by the trial judge on 23 December 2003 the appellants were restrained from using the name 'Crazy Ron's' so as not to infringe two trade marks registered by Mobile World. The injunction did not apply in relation to the appellants existing stores in south-east Queensland where, His Honour held, the appellants had developed their own brand reputation.
On appeal the appellants challenged:
(i) the findings of the trial Judge that they had infringed the CRAZY JOHN trademarks by using the name 'Crazy Ron'; and
(ii) the trial Judge's rejection of the contention that Mobile World's 1999 CRAZY JOHN trade mark had been incorrectly registered and should be removed from the register.
The 1995 CRAZY JOHN trade mark
In their Reasons for Judgment, Moore, Sackville and Emmett JJ approved of the trial Judge's view that the question of deceptive similarity of marks is not to be judged on a side-by-side comparison. Their Honours also agreed with the judgment of Latham CJ in Jafferjee v Scarlett [1] in which His Honour held that:
"it is important to remember that the purchaser in that market will not ordinarily have an opportunity of comparing the marks side by side. They will compare the actual mark which they see upon the goods which are offered to them with their memory of the other mark, which they will retain in a more or less distinct form."
Their Honours held that in deciding whether there was a reasonable probability of deception or confusion between the Crazy Ron name and the 1995 CRAZY JOHN trade mark, one must have regard to whether an ordinary person, having an imperfect recollection of the trade mark, might entertain a reasonable doubt.
The resemblance and likelihood of deception between two marks were to be considered with regard to the essential features of the trade mark as well as to the trade mark as a whole. On comparing the words 'Crazy Ron' with the 1995 CRAZY JOHN trade mark, a mark which also included a picture of a person astride a globe holding a mobile phone, their Honours held that the words 'Crazy John' were not of themselves an essential feature of that trade mark. Their Honours reasoned that the 1995 CRAZY JOHN trade mark was a composite mark of which the words 'Crazy John' were only one of several prominent features. Their Honours also held that the other features of the 1995 CRAZY JOHN trade mark, including the person astride the globe, provided significant additional points of dissimilarity between it and the 'Crazy Ron' mark especially when having regard to the consumers 'imperfect recollection' of those marks. Accordingly their Honours held that the trial Judge erred in finding that the 'Crazy Ron' mark was deceptively similar to the 1995 CRAZY JOHN trade mark. The 1999 CRAZY JOHN trade mark
Their Honours had no difficulty in holding that the similarities in the pronunciations between the expressions 'Crazy John' and 'Crazy Ron' could lead to customer confusion. Their Honours then considered the issue of whether the 1999 CRAZY JOHN trade mark was validly registered. Crazy Ron Communications argued that the application for the 1999 CRAZY JOHN trade mark was amended contrary to the provisions of the Trade Marks Act 1995 (Cth) ("Trade Marks Act").
Shortly after making the application for the 1999 CRAZY JOHN trade mark, Mobile World requested that the Trade Marks Office amend the application by substituting the applicant's name with that of a related company, Crazy John Pty Ltd. The application was amended by the Trade Marks Office on 12 November 1999. The appellants argued that Trade Mark Office's amendment to the application was beyond its discretion under Section 65(5) of the Trade Marks Act, which allowed for the amendments of minor errors in an application but did not extend to substituting one applicant for another.
Their Honours agreed and held that Section 65(5) should not operate so as to allow a change in the identity of the applicant by reason of a 'mistake'. The Trade Mark Office's discretion should not have been exercised to place the substituted applicant in a better position than if it had filed its own application.
Accordingly their Honours held that the appeal should be allowed and that the registration of the 1999 CRAZY JOHN trade mark be cancelled.
Melbourne Chinese Press Pty Ltd v Australian Chinese Newspapers Pty Ltd [2004] FCAFC 201 (10 August 2004)
The Full Federal Court of Australia held that the use of a masthead using deceptively similar Chinese characters in a particular style of calligraphy constitutes a trade mark infringement.
These proceedings were an appeal from a single Judge of the Federal Court of Australia. The parties to the proceedings are publishers of rival Chinese language newspapers sold in Australia both of which feature Chinese and English language titles as part of their masthead.
The respondent, Australian Chinese Newspapers is the registered owner of a trade mark for their masthead, which consists of four Chinese characters written in a distinctive Li Shu style of calligraphy. The Chinese characters may be translated to mean 'Australian New Report'.
From November 1997 the appellant, Melbourne Chinese Press, adopted a masthead also consisting of four Chinese characters, which translate as 'Australian Daily Newspaper'. Three of the four Chinese characters used in the appellant's masthead were the same as the characters used by the respondent.
In September 2000 the appellant changed its masthead's font to the same style of Chinese calligraphy as that used in the respondent's masthead. The factual findings made by the trial Judge were that Melbourne Chinese Press had changed its masthead with the intention of deceiving or confusing prospective buyers with a view to attracting their patronage. The evidence accepted by the trial Judge was that after the change of the appellant's masthead in September 2000, some customers accidentally purchased the Australian Daily Newspaper believing it to be the Australian New Report. His Honour held that this was the result of both mastheads being of a similar size, using the same red colour and the same style of distinctive font. His Honour also found that Chinese buyers purchasing the newspaper would only 'scantily' examine the content of the masthead and instead be guided by its impact and layout rather than examining each individual character within it.
The appellant's assertions as to the error of the trial Judge focused on the arguments:
(i) that the use of the third character in the masthead of the appellant distinguished it from the appearance, sound and meaning of the respondent's trade mark; and
(ii) that the calligraphy used in the appellant's masthead was computer generated and therefore different from the artistic calligraphy used in the respondent's masthead.
In their Reasons for Judgment the Full Court of the Federal Court (Wilcox, Kiefel and Bennett JJ) held that when evaluating whether a logo or sign is substantially identical with or deceptively similar to a trade mark, one must examine its effect as a whole bearing in mind the points of resemblance as well as the points of dissimilarity.
Their Honours cited with approval the judgement of Dixon and McTiernan JJ in Australian Woollen Mills Ltd v F.S. Walton & Co Ltd [2] :
"In deciding this question (of comparing the two marks) the marks ought not, of course, to be compared side by side. An attempt should be made to estimate the effect or impression produced on the mind of potential customers by the mark or device for which the protection of an injunction is sought."
Their Honours held that a judgment of deceptive similarity is generally a matter of first impressions rather than meticulous comparison and that the overall image created by the four characters was important in deciding whether the appellant's masthead was deceptively similar to that of the respondent's trade mark.
Their Honours held that the visual impact of the appellant's masthead was such as to be deceptively similar to the respondent's trade mark and therefore a trade mark infringement.
The appellant also argued that the use of a pre-existing computer generated font in the appellant's masthead could not of itself amount to an infringement of the copyright in the Chinese characters in the respondent's masthead. Whilst their Honours considered that the mere adoption of Liu Shu style calligraphy could not amount to a breach of copyright, they did agree with the trial Judge in holding that there was an objective similarity between the two mastheads that could be attributed to the appellant intentionally copying the characters in the respondent's masthead. Accordingly their Honours held that the appellant had infringed the copyright in the Chinese calligraphy characters featured in the respondent's masthead. Their Honours also held that the use of a computer as the means of copying does not preclude a breach of copyright.
Accordingly their Honours held that the appeal be dismissed.
Protecting Your Brand and Associated Goodwill
Unscrupulous competitors who imitate a company's brand to sell their products and services can have a serious effect on the profitability and the long-term success of the company's business. Products and services that are sold using the same or similar names or which are advertised using similar advertising themes or slogans can cause confusion in the market and allow competitors to benefit from the goodwill associated with the company's brand. If, as is often the case, the competitors' 'imitation' products or services are of inferior quality, they may also serve to erode consumer confidence in the genuine article.
There are a number of practical measures that a business can take as part of its brand protection strategy to protect the brand against unscrupulous competitors:
- Ensure that the company's registered trade marks form the core of its branding strategy.
- Ensure that the company's business name and domain names are registered.
- As part of the branding strategy, develop brands that are 'distinctive' and unique to the company's goods and services. Avoid branding that is 'descriptive' or generic to the type of goods and services the company is offering. This will help consumers differentiate between the company's products and services and those of its competitors.
- Maintain secrecy in relation to the development of new brands. Both external contractors and key staff involved in the development of the brand should execute suitable confidentiality agreements.
- When developing a new brand name, conduct searches of the trade mark and business names registries to determine whether that name has already been registered by a competitor. Conduct name searches using a variety of internet search engines to start your investigations.
- Do not allow competitors to use elements of the company's branding. Allowing competitors to use elements of the company's branding will erode its rights to use those elements on an exclusive basis. If a competitor using similar branding elements to the company's own can demonstrate to the court that the use of those branding elements are commonly used in relation to a category of products and services (rather than being unique to the company's products and services) then a court may stop the competitor from using elements of the brand.
- If the company's brands are to be developed by contractors (or any other third parties) such as advertising or design agencies, ensure that they assign the intellectual property rights in the brand to the company.
- Ensure that registered trade marks are used only in the format in which they have been registered.
- Before moving into new territories, ensure that the company is able to obtain appropriate protection for the trade marks and other key elements of its brand in that territory.
© Stephens Lawyers & Consultants, October 2004
[1] (1937) 57 CLR 115 at 121.
[2] (1937) 58 CLR 641 at 658.