May 2006
INFRINGING TRADE MARKS WITH DESCRIPTIVE STATEMENTS
A recent Federal Court decision in Christodoulou v Disney Enterprises Inc [1] confirms that the bona fide use of a mark for descriptive purpose may be relied upon as a defence to claims for trade mark infringement. This newsletter provides an overview of this decision and also other cases as they relate to the use of a mark in a descriptive sense as an effective defence against infringement of a registered trade mark.
INFRINGEMENT
Australian trade mark holders ought to be aware that infringement of their registered trade mark can only occur when another person uses as a trade mark a sign which is substantially identical or deceptively similar to the registered mark and which is being used in relation to goods or services specified in the registration. [2] The Trade Mark Act 1995 (Cth) (" the Trade Mark Act") provides clear guidelines that enable registered trade mark owners to enforce their rights without having to prove that they have a reputation in the mark that they are seeking to protect.
An unregistered trade mark can be protected under the common law of passing off, or if the defendant's unauthorized use of the trade mark constitutes misleading or deceptive conduct or representation, under ss 52 and 53 of the Trade Practices Act 1974 (Cth).
T o succeed in an action for passing off, the plaintiff must establish that a misrepresentation has been made by a trader in the course of trade to his prospective customers or ultimate consumers of his goods or services. Such misrepresentation is calculated to injure the business or goodwill of the plaintiff and has caused or will probably cause damage to the business or goodwill of the plaintiff. [3] Accordingly, in a passing off action, the unregistered trade mark owner must prove sufficient reputation, misrepresentation, and damage before relief will be considered.
Establishing a reputation is not a specified prerequisite for an action under ss 52 and 53 of the Trade Practices Act. Such an action is frequently commenced by a plaintiff to prevent the conduct of a rival trader which is believed to be misleading or deceiving the plaintiff's customers and thus damaging the plaintiff's business.
Where there is an unauthorized use of a registered trade mark, the registered owner of the trade mark, in addition to claiming trade mark infringement under the Trade Mark Act, also claims passing off at common law as well as contravention of ss 52 and 53 of the Trade Practices Act. For registered trade mark owners, the registration of the mark will in all likelihood be considered sufficient evidence of the required reputation in a passing off action.
Further, in an action of passing off arising out of the unauthorized use of a registered trade mark, damages may not be granted to the plaintiff if the court is satisfied that at the time when the defendant began to use the trade mark, he or she was unaware and had no reasonable means of finding out, that the trade mark of the plaintiff was in use; and that once the defendant became aware of the existence and nature of the plaintiff's registered trade mark, the defendant immediately stopped using it. [4]
Trade mark use and Defence against infringement
An infringement of trade mark will occur where it can be established that:
§ a person has used 'as a trade mark' a sign (the infringing mark)
§ that is substantially identical or deceptively similar to the registered trade mark
§ in relation to goods or services in respect of which the trade mark is registered
A trade mark is a sign used, or intended to be used, to distinguish goods or services dealt with or provided in the course of trade by the trade mark owner from goods or services so dealt with or provided by any other person. [5] In this regard, the court has described a trade mark as being used as a badge of origin of the goods indicating a connection in the course of trade between the goods and the person who applies the mark to the goods. [6]
The Trade Mark Act specifically provides that infringement of a registered trade mark will not arise if a person uses a sign in good faith to indicate the kind, quality, quantity, intended purpose, value, geographical origin or some other characteristics of that person's goods or services. [7] This statutory defence against trade mark use is also supported by a series of cases decided by the courts over the years. [8]
For example, the court has held that a word or a phrase, which is claimed to be used as a trade mark, is capable of being read as descriptive of a characteristic, quality or function of the goods in relation to which it is used. [9] Therefore, if a person uses the mark not as a badge or trade origin, but merely for a descriptive or functional purpose, for instance, to describe a characteristic, quality or function of the goods or services in question, there is no trade mark use and therefore no infringement of the registered mark.
DESCRIPTIVE USE OF A SIGN IN GOOD FAITH
The Hunchback of Notre Dame Case
The recent Federal Court decision in Christodoulou v Disney Enterprises, Inc affirms that an infringement can only occur if the infringing mark is used 'as a trade mark', whereas a bona fide descriptive use of words constituting a registered trade mark does not amount to trade mark use.
In this case, Mr Christodoulou ("the applicant") was the proprietor of an Australian trade mark 'THE HUNCHBACK OF NOTRE DAME'. The trademark was registered in 1994 with an endorsement on the Trade Mark Register that "Registration gives no right to the exclusive use of the words NOTRE DAME".
In 1996, Walt Disney Pictures released an animated cinematic version of the French novel " Notre Dame de Paris". In 2002, it released an animated sequel in a 'straight to video' version entitled The Hunchback of Notre Dame I (" the Disney fil ms"). Walter Disney Pictures used the words "THE HUNCHBACK OF NOTRE DAME' on its products associated with the films including DVDs, videos, soundtrack albums in cassette and compact disc format, books and sheet music (" the associated products").
Mr Christodoulou claimed that Walt Disney Pictures infringed his registered trade mark under s 120 of the Act, by way of using a sign (the words "THE HUNCHBACK OF NOTRE DAME' ) as a trade mark in respect of the distribution and sale of the Disney films and the associated products. T he preliminary issue for the Court to determine was whether the words 'THE HUNCHBACK OF NOTRE DAME' were used by the respondents as a trade mark or merely as a description of a well-known story.
Justice Crennan found that the words 'THE HUNCHBACK OF NOTRE DAME' were not used as a trade mark indicating a relevant connection in the course of trade or to distinguish the respondents' goods from those of other traders. The source of the respondents' products was clearly identified through the constant use of DISNEY, WALT DISNEY PICTURES or similar signs. The words 'THE HUNCHBACK OF NOTRE DAME' referred to the story told in the products promoted, [10] and such use was "apt to the name of the product, not a trade mark". [11]
Further, Justice Crennan found that the applicant's case appeared to be an attempt to obtain a monopoly over the words used to describe a lawful product. Her Honour said that the words used by the respondents were a use of an established title of the story portrayed. A recognised title of an adaptation or cartoon version of a well-known story was descriptive and the descriptive meaning was established well before the applicant applied for registration of his trade mark . [12]
As a result, Justice Crennan rejected Mr Christodoulou's infringement claim on the ground that there was no trade mark use of the words 'THE HUNCHBACK OF NOTRE DAME'. Rather, the words were used to describe the respondents' products accurately so as not to mislead the customers.
Justice Crennan in her judgment cited with approval the statement made by Lord Nicholls in R v Johnstone in relation to the connection between trade mark rights based on the function of a trade mark and the infringement:
" . . . the exclusive rights granted to the proprietor of a registered trade mark are limited to use of a mark likely to be taken as an indication of trade origin. Use of this character is an essential prerequisite to infringement. Use of a mark in a manner not indicative of trade origin of goods or services does not encroach on the proprietor's monopoly rights.' " [13]
The above statement emphasizes the important distinction between trade mark use of a sign indicative of trade origin and the use of a sign for bona fide purposes other than indicating trade origin. Only the former type of use will give rise to potential infringement claim under the Trade Mark Act.
In her judgment, Justice Crennan considered and applied the principles contained in a series of authorities concerning what constitutes "use as a trade mark". Two of the cited authorities, the Shell Oil Drop Case and the Kettle Chips' case, are discussed below. The cases indicate that what constitutes trade mark use is critical in the context of an infringement action under the Australian law.
The Shell Oil Drop Case
One of the leading cases on the question of use as a trade mark is Shell Co of Australia Ltd v Esso Standard Oil (Australia) Ltd, [14] where Esso had a registered trade mark consisting of a caricature of a person with a big oil drop head. Shell produced a television advertisement for its petroleum product and the advertisement depicted an animated oil drop cartoon character.
On some occasions during the course of the 60-second Shell advertisement the oil drop figure changed into something resembling the figures registered by Esso as trade marks and Esso complained that their registrations had been infringed and sued Shell, claiming an infringement of their trade mark by Shell.
Although there were strong similarities between the registered trade mark of Esso, the court found that the use by Shell was not 'as a trade mark' but rather to describe the attributes of the petrol.
The KETTLE Chips' Case
Infringement of a registered trade mark can be avoided when a word or phrase constituting the registered mark is only used in a descriptive sense. This is affirmed in the Full Federal Court decision in Pepsico Australia Pty Ltd & Anor v The Kettle Chip Company Pty Ltd (" the Kettle Chips' case"). [15]
In the Kettle Chips' case, the Full Federal Court considered whether Pepsico had used the word "Kettle" descriptively on the packaging of their potato chips product, or as a trade mark so as to amount to infringement of the registered trade mark of the Kettle Chip Company.
The Kettle Chip Company was the registered proprietor of the mark "Kettle" in respect of potato-based goods. It had manufactured potato chips using the batch cooking method that involved slow cooking over a "kettle". The word "Kettle" featured prominently in the marketing and promotion of the chips. Pepsico launched a range of chips called "Thins" with the packaging bearing the words " Double Crunch Kettle Cooked Potato Chips".
At first instance, Lindgren J found that the trade mark KETTLE had acquired a secondary meaning and that the use of the word by Pepsico constituted an infringement of the Kettle Chip Company's registered trade mark. His Honour further held that no contravention of the Trade Practices Act 1974 (Cth) or passing off were made out as it was clear from the layout of Pepsico's packaging that the manufacturer was the manufacturer of "Thins".
On appeal, the Full Federal Court held that Pepsico had not used the word "Kettle" as a trade mark and therefore there had been no infringement of the Kettle Chip Company's registered trade mark. [16] In reaching this conclusion, the Court held that the phrase " Double Crunch Kettle Cooked Potato Chips" should be read in the context of the packaging as a whole. The Court found that the phrase on the packaging described the process by which the "Thins" potato chips were produced. It also described the particular feature of the product as "Double Crunch". The Court therefore concluded that the word "Kettle" contained in the phrase was not used as a trade mark indicative of the trade origin of Pepsico's chips. Rather, it was descriptive of the process by which the "Thins" product was produced and of the end product.
This case indicates that, no matter how thorough a trade mark proprietor may be in using its own trade mark to emphasise that it is a trade mark and not a mere descriptive statement, it may be vulnerable to exploitation. On the other hand, provided that the third party merely uses the mark for a bona fide descriptive or functional purpose, it will not infringe the right of the registered proprietor of a trade mark.
Conclusion
It is clear that in both the Shell Drop Oils case and the Kettle Chips' case, the courts demonstrated a reluctance to afford statutory monopoly over descriptive words that constitute a registered trade mark. Further, as was indicated by Justice Crennan in the Hunchback of Notre Dame case, the descriptive use of words does not necessarily preclude the inclusion of the same words in a registrable trade mark.
Accordingly, where words or a sign constituting a registered trade mark are used in good faith by a person other than its registered owner, for a descriptive purpose within the meaning of s122 of the Trade Mark Act, such use will generally be deemed as a descriptive use which will not give rise to infringement under s120 of the Trade Mark Act.
However, the finding for a bona fide descriptive use of a registered mark depends on the circumstances of each case. Accordingly, care must be taken by the person who is using or intends to use the mark descriptively, in order to avoid any potential claims for passing off or contravention of the Trade Practice Act which might be brought by the owner of the registered mark in question.
For further information contact:
Stephens Lawyers & Consultants
Level 3
530 Lonsdale Street
Melbourne VIC 3000
Telephone: +61 3 8636 9100
Fax: +61 3 8636 9199
Email: stephens@stephens.com.au
Website: www.stephens.com.au
All correspondence to:
PO Box 13286
Melbourne Law Courts
Melbourne VIC 3000
* Written by Linda Huan and Richard Goldsmith. Edited by Katarina Klaric.
© Stephens Lawyers & Consultants, May 2006
Disclaimer :
This newsletter is not intended to be a substitute for obtaining legal advice.
[1] 66 IPR 595; (2006) AIPC ¶92-142; [2005] FCA 1401
[2] Trade Mark Act 1995 (Cth) s 120;
[3] Erven Warnink Besloten Vennootschap v J Townend & Sons (Hull) Ltd [1980] RPC 31 (the Advocaat case)
[4] Trade Mark Act 1995 (Cth) s230
[5] Trade Mark Act 1995 (Cth) s 17
[6] Johnson & Johnson Australia Pty Ltd v Sterling Pharmaceuticals Pty Ltd (1991) 21 IPR 1 at 10 per Lockhart J; Top Heavy Pty Ltd v Killin (1996) 34 IPR 282 at 285 per Lehane J.
[7] Trade Mark Act 1995 (Cth) s 122(1)(b)
[8] Mark Toys Ltd v Davies Coop & Co Ltd (1956) 95 CLR 190; Johnson & Johnson Australia Pty Ltd v Sterling Pharmaceuticals Pty Ltd (1991) 21 IPR 1; Top Heavy Pty Ltd v Killin (1996) 34 IPR 282; Pepsico Australia Pty Ltd v Kettle Chip Co Pty Ltd (1996) 33 IPR161;
[9] Top Heavy Pty Ltd v Killin (1996) 34 IPR 282 at 286 per Lehane J
[10] Christodoulou v Disney Enterprises Inc, above n1, at [59]
[11] Ibid at [56], referring to British Sugar Plc v James Robertson & Sons Ltd (1996) RPC 281
[13] [2003] 3 All ER 884 at 889, referred to in Christodoulou v Disney Enterprises Inc at para [31]
[14] (1963) 109 CLR 407; 1A IPR 484
[16] Ibid at 163 per Lockhart J; at 170 per Sheppard J; at 188 per Sackville J