LEGAL UPDATE

TRADE MARKS CASES REVIEW 2006

1) REMOVAL OF TRADE MARK FOR NON-USE

McDougall v Deckers Outdoor Corporation (2006) 68 IPR 322 (Australian Trade Marks Office - 16 January 2006 )

This was a decision of the Australian Trade Marks office wherein the Registrar directed that the trade mark " UGH-BOOTS" be removed from the Register on the basis that its registered owner, Deckers Outdoor Corporation (" Deckers"), had not demonstrated any use of the " UGH-BOOTS" mark in Australia during the relevant period.

Background

On 30 December 2003, McDougall (" the applicants") made an application for removal of the trade mark " UGH- BOOTS " (No. 245662), claiming that during the period 30 November 2000 and 30 November 2003 ("the relevant period "), the said trade mark was not used or used in good faith by either Deckers or its authorised user. The applicants further submitted that in using the terms "UGH", "UGH BOOTS" (without hyphen), "UGG", "UGG Australia" or "UGG BOOTS", neither Deckers nor its predecessor had used the "UGH- BOOTS " mark as a trade mark. Rather, they had only used a generic term for the sheepskin boots in question. [1]

On 7 May 2004, Ugg Holdings Inc, a predecessor in business of Deckers (" the opponent "), filed notice of opposition to the removal of trade mark No. 245662, on the single ground that during the relevant period, the opponent had used the trade mark in its variations which were all alterations or additions which did not substantially affect the identity of its trade mark.

The Registrar's decision

The Hearing officer found that " UGH-BOOTS" was an exceptionally weak trade mark in terms of its inherent capacity to distinguish the opponent's goods, and that whatever identity the term " UGH-BOOTS" might have as a trade mark, must derive from the hyphenated nature of that expression. [2] Accordingly, any loss of the hyphen from the trade mark or misspelling (or other variation from the registered trade mark) by Deckers, which rendered the mark to become " Ugh Boots" or " Ug Boots" or " Ugg Boots", must necessarily involve a change to the identity of the trade mark since these terms were all generic. [3] The Hearing Officer also said that changes to words which were inherently non-distinctive and lacked any capacity to distinguish, were absolute and did not necessarily confer rights in the words from which the registered trade mark was derived. [4]

Implications

The case indicates that in order to avoid opening up any grounds for a third party to seek revocation of a registered trade mark, the trade mark must be used in consistency with the form and style in which the trade mark was registered.

2) OPPOSITION TO REGISTRATION

Hope v Reme Pty Ltd (2006) 68 IPR 189 (Australian Trade Marks Office - 14 December 2005)

In this case, the Registrar dismissed Hope's opposition to the registration of the application mark on the basis that it did not establish the grounds of opposition under either Sections 58 or 60 of the Trade Marks Act 1995 (Cth) ( "Trade Marks Act").

Background

On 24 October 2003, Reme Pty Ltd (" Reme") filed an application for registration of the trade mark " Soilmaster" in relation to landscaping, gardening, horticultural forestry, agricultural and scientific research services. The application was accepted and advertised on 26 February 2004 . On 18 May 2004, Kenneth and Pauline Hope (" the opponents") filed a notice of opposition to the acceptance of Reme's application. The opponents claimed ownership of the trade mark on the basis of their nine years' usage of their registered business name " Soil Master" since 9 February 1994 . They also claimed that their "Soil Master" mark had a reputation such that Reme's use of the trade mark was likely to lead to deception or confusion.

The Registrar's decision

The Hearing Officer found that Reme's " Soilmaster" was substantially identical to Hope's " Soil Master" and that the opponents had used " Soil Master" as a trade mark. [5] However, the Hearing Officer was not satisfied that the opponents had first used its " Soil Master" mark before Reme's use of its " Soilmaster" mark in Australia in relation to the same kind of goods/services. Accordingly, the opponents failed to establish the ownership ground of opposition under Section 58 of the Trade Marks Act. The Hearing Officer also found that the opponents had not shown sufficient reputation in their " Soil Master" mark in order to satisfy the ground of opposition under Section 60 the Trade Marks Act. [6]

As the opponents failed to establish both grounds of opposition, the Hearing Officer directed that the opposition should be dismissed and Reme's trade mark should proceed to registration.

Implications

This case illustrates that unless registered as a trade mark, a registered business name does not give its owner the same protection as that conferred by trade mark registration. Without substantial evidence of first use of and/or reputation in a business name, a registered business name cannot prevent a subsequent user registering that name or a similar name as a trade mark. This will result in the owner losing valuable goodwill accumulated in the business name.

3) COMPETING RIGHTS IN TRADE MARKS

Colorado Group Ltd v Strandbags Group Pty Ltd (2006) 67 IPR 628 (Federal Court of Australia - 28 February 2006)

This case raised the issue of proprietorship of the " Colorado " trade mark, in circumstances where the disputing parties had concurrently used the trade mark "Colorado" for more than 15 years.

Background

In 1982, Colorado Group started using the " Colorado" trade mark for backpacks in Australia. From around 1988 the word " Colorado" was used in Australia in conjunction with a mountain motif and from 1991 in conjunction with a stylized mountain logo. The trade mark was applied to shoes in 1987 and around 1992 Colorado Group further expanded its product range and opened separate Colorado brand stores to sell clothing, footwear, belts, bags and wallets. From 1998, the mark used by Colorado Group was commonly the word " Colorado" alone. On 16 February 2001, Colorado Group applied for and registered " Colorado" as a word mark for various classes of goods including bags, wallets, purses, backpacks and belts in class 18.

Strandbags' predecessor in business first used the trade mark " Colorado" for handbags in 1991. Between about 1995 and 1998 it started using " Colorado" as a trade mark for backpacks, briefcases and other associated products, and opened a number of stores trading as 'The Colorado Bag Co'.

In 2004, Colorado Group sued Strandbags for trade mark infringement, contravention of section 52 of the Trade Practices Act 1974 (Cth) ( "TPA") and passing off in respect of its word mark " Colorado ". Strandbags Group raised as a defence a counterclaim seeking an order for the removal of the " Colorado " trade mark.

The Decision

Finkelstein J of the Federal Court found Colorado Group was entitled to maintain registration of the " Colorado" trade mark only in respect of backpacks and that Strandbags had infringed the said trade mark by using it on its backpacks because its use was not a prior use. His Honour therefore held that Strandbags should cease its sale of backpacks under the " Colorado" trade mark, but was otherwise free to continue using the trade mark for other goods.

Finkelstein J also found that by September 1998 when Strandbags purchased the business from its predecessor and commenced using the "Colorado" trade mark, both Colorado Group and Strandbags had a strong reputation in the mark. This finding put an end to the passing off claim because in circumstances where two traders had a reputation in the same or similar names that were concurrently being used, " neither of them can be said to be guilty of any misrepresentation. Each represents nothing but the truth, that a particular name or mark is associated with his goods or business." [7] His Honour also held that the claim for contravention of Section 52 must also fail on the same basis as the passing off claim had failed.

Colorado Group Ltd v Strandbags Group Pty Ltd (No.2) (2006) 69 IPR 281 (Federal Court of Australia - 7 July 2006)

This was a second decision by Finkelstein J in the "Colorado" trade mark cases. The issues which remained to be resolved were whether Colorado Group was the proprietor of the " Colorado" trade mark in respect of wallets and purses by reason of its later use of the word in relation to wallets and purses; and whether Colorado Group could rely on Section 120(2) of the Trade Marks Act to support a finding that Strandbags had infringed the "Colorado" trade mark by using it on handbags, wallets and purses.

The Decision

Finkelstein J found that Colorado Group was not the proprietor of the word mark "Colorado" in respect of bags, wallets and purses because its use of the word " Colorado" in combination with the mountain motif was not use of the word as a trade mark. The requirement for a word mark to be used as a trade mark would be met if it was used as a word alone. It was not sufficient if the word was used in combination with other words or with a device. [8]

Finkelstein J found that Strandbags was the proprietor of the "Colorado" mark in respect of handbags because of first use. His Honour further held that wallets and purses were goods of the same kind as handbags. Therefore, Strandbags would not infringe Colorado's word mark when it applied the mark to wallets, purses as well as handbags.

Implications

It is important for business retailers to note that in this case, Finkelstein J does not accept that the use of the word as a storefront name will constitute trade mark use of the word in relation to goods. The use of a word or device as a trade mark must involve its use in connection with particular goods, whereas a storefront name will not serve that purpose particularly where a variety of goods and brands are sold in that store.

It is also interesting to note that Finkelstein J, in considering the test for assessing goods/services being " of the same description", expressed the view that because of the modern marketing methods, correspondence in trade channels (ie, that the goods are sold from the same trade channels) is no longer a very helpful line of inquiry in relation to many goods.

4) COMPETING RIGHTS IN USE OF TRADE NAMES

Ferrari Furniture & Cabinet Makers Pty Ltd v Ferrari Furniture Pty Ltd [2006] WASC 139 (Supreme Court of Western Australia - 20 July 2006)

This was an interlocutory decision wherein the Court refused to grant an interim injunction sought by the applicant in respect of its claims against the defendant company for alleged misleading and deceptive conduct and passing off. The case raised the issue as to competing rights of persons (companies) to conduct business under their own names.

Background

The plaintiff company was engaged in the design and manufacture of furniture, cabinet and shelving since its incorporation in 1994. Its principal director was Peter Ferrari. The plaintiff company was commonly referred to as "Ferrari Furniture" by its customers and suppliers.

The defendant company was incorporated on 5 September 2005 and its principal director was Gavin Ferrari. It was solely engaged in retail sales of furniture dealing directly with members of the public.

The plaintiff claimed that the similarity between the names of the parties had caused some customers and other people dealing with it to become confused, and that the defendant was passing off of its business as that of the plaintiff's (as distinct from passing off of goods). The plaintiff sought permanent and interlocutory injunctions to restrain the defendant from using the name "Ferrari Furniture" or otherwise passing itself off as the plaintiff. The defendant, on the other hand, asserted a right to conduct the business under the name of "Ferrari Furniture Pty Ltd" because the name was based upon the surname of its principal director.

Use of Own Name as Defence

The Court found that there were ample authorities to show that an individual may trade honestly in his/her own name regardless of the damage that may cause to a competitor trading with a similar name. [9]

However, the law appeared to be unsettled where a company traded under a name which was based upon the name of a natural person who was its proprietor. The Court referred to the authorities which lend support to the proposition that it is no defence to claims for passing off and/or misleading and deceptive conduct if a n individual company used a name consisting of the name of its proprietor. [10] Having regarding to the evidence of confusion caused by the use of similar trade names and given the unsettled nature of the law in this area, the Court found there was a serious issue to be tried for the purposes of an injunction.

Passing off and Section 52 Claim

The Court held that in an action for passing off of a business, the plaintiff must prove actual or probable damage to its proprietary interest in the goodwill of the business, [11] whereas in an action for a Section 52 claim, the plaintiff must show that the defendant's adoption of a similar name was " conduct that is misleading or deceptive or is likely to mislead or deceive". It was not necessary to prove damage in order to be entitled to an injunction under Section 80 of the TPA. [12]

The Court found that there was no evidence for actual damage to the plaintiff's goodwill as a result of the alleged passing off. On the other hand, if an interlocutory injunction were granted, the defendant company would be severely compromised in its trading if it was to be restrained from using its own name. On the balance of convenience, the Court refused to grant interim injunction sought by the plaintiff.

5) REGISTRABILITY OF COLOUR MARKS

Colour can be an important means of distinguishing a trader's brand of goods or services. The Trade Marks Act specifically provides for a colour, either separately or in combination with another sign, to be registered as a trade mark to distinguish a person's goods or services provided in the course of trade. [13] The Courts in the following cases consider the issues relating to registrability of colour marks.

Cadbury Schweppes Pty Ltd v Darrell Lea Chocolate Shops Pty Ltd (No.4) [2006] FCA 446; (2006) 69 IPR 23 (Federal Court of Australia - 27 April 2006)

Background

Cadbury Schweppes Pty Ltd (" Cadbury") sued Darrell Lea Chocolate Shops Pty Ltd (" Darrell Lea") for alleged contravention of Sections 52, 53(c) and 53(d) of the TPA and for passing off by Darrell Lea. Cadbury claimed that Darrell Lea had used in their chocolate confectionary business a shade of purple in which Cadbury claimed it had "a substantial, exclusive and valuable reputation and goodwill". [14] In a related Trade Marks Office hearing on 27 April 2006, the Registrar had allowed Cadbury to proceed to register a particular shade of purple in relation to the specific Cadbury goods, namely, block chocolate and boxed chocolate. [15]

The central issue in this case was whether the use of a particular colour shade by Darrell Lea in product packaging constituted misleading or deceptive conduct or passing off.

The Court Decision

The Court held that Cadbury did not have an exclusive reputation in the use of the shade of purple in connection with chocolate. It was found that other traders had, for many years and with Cadbury's knowledge, used a similar shade of purple and that Cadbury had not consistently enforced its alleged exclusive reputation. [16] The Court also found that Cadbury's use of purple in marketing, advertising and promotion was, and was seen by consumers to be, inextricably bound up with the well known name "Cadbury" in its distinctive script. Cadbury had never used the colour purple in isolation as an indicium of trade. [17]

The Court further held that the names Darrell Lea and Cadbury were quite distinct in sound and appearance (especially with the respective scripts the parties have adopted) and not likely to be mistaken for each other. Darrell Lea did not adopt the colour purple with the intention of leading consumers to believe its products were Cadbury products or that it, or its products, had some kind of association with Cadbury. [18]

The Court concluded that Darrell Lea was entitled to use purple, or any other colour, as long as it did not convey to the reasonable consumer the idea that it or its products had some connection with the applicant. The Court held that on the evidence this had not occurred and the application should be dismissed. [19]

(This decision is now subject to an appeal to the Full Court lodged by Cadbury on 14 July 2006.)

Woolworths Ltd v BP plc [2006] FCAFC 132 (Full Federal Court - 4 September 2006) Woolworths Ltd v BP plc [2006] FCAFC 160 (Full Federal Court - 13 November 2006)

In BP plc v Woolworths Ltd, [20] Finkelstein J of the Federal Court upheld BP's right to register the colour green as a trade mark in association with service stations. Woolworths appealed against this decision to the Full Court and on 4 September 2006, the Full Federal Court overruled Finkelstein J's decision and held that BP's two registered trade marks for the colour green should be removed.

The Issue

BP's original two trade mark applications were limited to register the colour green alone. BP subsequently amended its applications prior to registration so that the endorsements accompanying the two applications referred to colour green as the "predominant colour" without specifying any other colour that is to be used as the subsidiary. [21]

The issues subject to this appeal concerned whether the amendments to the original applications were permitted under the Trade Marks Act and whether BP's trade marks described in the amended applications were registrable by reason of its prior use pursuant to Section 41(6) of the Trade Marks Act. The Full Court decided both issues against BP.

The Full Court Decision

With respect to the distinctiveness of BP's colour marks, the Full Court found that for Section 41(6) to apply to a colour mark, it was necessary to show that the use of the colour green described in the applications had, prior to the date of application, constituted use of the colour as a trade mark, and that because of the extent of that prior use, the colour mark distinguished the designated goods or services as those of BP. [22] The focus of the inquiry should be use of the marks applied for, rather than use of the colour as part of the get-up or packaging of goods generally. [23]

The Full Court found that the evidence showed that any trade mark use of the colour by BP at the relevant times had been green as the dominant colour in conjunction with yellow as the subsidiary colour. [24] This was contrary to BP's amended applications which claimed green as the predominant colour applied to the various parts of the service station identified, with the subsidiary colour or colours of the trade mark unidentified. [25] The Full Court concluded that BP had not established the trade mark use of the colour applied for pursuant to Section 41(6). In addition, the Full Court emphasized that BP's amended trade mark applications were not for the colour green alone, so the survey evidence relating to the use of colour of green alone was not helpful to BP's case.

Upon considering the other issues on appeal, the Full Court held that BP's two registered trade marks for the colour green should be removed. On 13 November 2006, the Full Court made orders that BP's registration of trade marks Nos. 559837 and 676547 be cancelled. The order was stayed pending the hearing and determination of any application by BP for special leave to appeal to the High Court of Australia.

Implications of the Court Decisions in Colour Mark Cases:

It is well recognized by traders that colours can play an important part in business branding. However, the colour itself may not be the only trade mark feature that will cause an ordinary and reasonable customer to recognise the trade mark owner's designated goods or services. In the Cadbury Schweppes v Darrell Lea case, the fact that Cadbury has never used the colour purple in isolation to signify Cadbury products is crucial to the finding that Cadbury does not own the colour nor does it have exclusive reputation in purple in connection with chocolate.

The Woolworth v BP plc case illustrates the importance of avoiding any ambiguous description of the applied-for colour mark as this ambiguity can be fatal to the registration of that colour mark. Further, if it is necessary to rely on evidence of prior use of a colour mark to establish its capacity to distinguish the designated goods or services, the trade mark applicants must ensure that the supporting evidence accurately reflects the use or intended use of the applied-for colour mark as a trade mark . The case also indicates that trade mark applicants should be careful in making any amendments to their original applications so that such amendments will not affect the identity of the trade mark originally applied for.

6) INFRINGEMENT OF TRADE MARKS

Starr Partners Pty Ltd v Dem Prem Pty Ltd (No.2) [2006] FCA 1269 (Federal Court of Australia, 25 September 2006)

In this case, the Court dismissed the Applicant's claims for injunctive relief against the respondent for alleged trade mark infringement on the ground that the parties' trade marks were not substantially identical or deceptively similar.

Background

The Applicant carried on a real estate business in New South Wales under the name " Starr Partners ". In 1999, it registered the trade mark " Starr Partners " and the star logo in respect of various classes of goods and services including class 36 for real estate services and class 35 for advertising related to real estate.

The respondent carried on a real estate business in the northern suburbs of Brisbane under the name " Star Realty ". The respondent used the trade name " Star Realty " as part of the its unregistered mark which was depicted together with the star logo.

The substantive issue was whether the respondent's " Star Realty " mark was substantially identical with and/or deceptively similar to the Applicant's " Starr Partners " trade mark, such that the respondent's use of its mark constituted trade mark infringement under section 120(1) of the Trade Marks Act.

Starr Partner's Arguments

The Applicant argued that a side by side comparison demonstrated that the essential features of the two marks, namely, the star logo and the word " Starr" and the star logo and the word " Star", were substantially identical to each other and the differences did not detract from the total resemblance of the two marks. The Applicant also argued that based on a general recollection of the two marks, " Star Realty " was deceptively similar to " Starr Partners ". The Applicant further argued that little significance should be placed on the words "Partners" and "Realty" because "Partners" was ordinary English word used in many businesses and enterprises and "Realty" was common place to the real estate industry. Therefore, the words were not distinctive of the party.

The Court Decision

Applying the criteria as set out in Shell Co of Australia Ltd v Esso Standard Oil (Australia) Ltd (1961) 109 CLR 407, the Court held there was no identity nor substantial similarity, either visually or aurally, between the two marks. The Court found that the difference between the two trade marks coupled with the difference between "Starr" and "Star", were sufficiently significant to militate against any conclusion that they were substantially identical.

The Court further held that the established authorities were quite clear that the marks have to be considered as a whole in determining whether another mark so nearly resembles a registered trade mark that it is likely to deceive or cause confusion. The Court concluded when considering the trade marks as a whole, the visual and aural differences between the two marks in question were too great for there to be a real and tangible danger of deception or confusion occurring.

Louis Vuitton Malletier SA v Toea Pty Ltd [2006] FCA 1443 (Federal Court of Australia - 7 November 2006)

This case raised the issue as to whether a market owner and operator was a joint tortfeasor in trade mark infringement by stallholders who sold counterfeit goods at the market.

Background

Toea operated and controlled a market in Carrara, Queensland and Mr Rosenlund was the manager of the market and a director of Toea (" the respondents"). Toea granted licence to occupy a specific stall to approximately 400 permanent stallholders for a weekly fee. The licence provided that the licencee whilst in occupation must not carry on any illegal trade or engage in activity detrimental to the reputation of the market. Toea also allocated stalls to casual stallholders for trading on weekends without a licence to occupy.

Over a period of two years, Louis Vuitton retained private inquiry agents to make trap purchases from offending stallholders at the market. The items purchased included counterfeit Louis Vuitton scarves, handbags and wallets. Louis Vuitton sought to rely on the common law principles as to tort liability and commenced proceedings against the respondents, alleging that their failure to effectively prevent trade mark infringement from occurring on their premises constituted infringement of Louis Vuitton's registered trade marks by the respondents. In its further amended statement of claim, Louis Vuitton claimed that the conduct of the offending stallholders was conduct undertaken with the concurrence of the respondents and pursuant to their common design. [26]

The Decision

The Federal Court held that it was impossible to conclude that the market operator was to be held liable for the stallholders' infringement. In making the decision, the Court held that in order to hold the respondents liable for the stallholders' infringement of the "Louis Vuitton" trade marks, '... there must be a concurrence in the act or acts causing damage, not merely a coincidence of separate acts which by their conjoined effect cause damage', and that in order to satisfy that test in the present case, it is necessary to show that the respondents acted in concert with each stallholder in 'committing the tort'. [27] On the facts, the Court did not accept that the respondents' control of the market premises would justify an inference that the respondents shared a common purpose with any of the infringing stallholders. In any event, it would have been virtually impossible for the respondents to control stallholders so as to prevent infringement, save in the case of most blatant misconduct. [28] The Court concluded that there was no common purpose between the stallholders and the respondents and the latter were not liable for stallholders' trade mark infringement.

Note

This Federal Court decision contrasts with the decisions in several trademark infringement cases brought by Louis Vuitton in China against the local market operators. In April 2006, in a lawsuit brought by Louis Vuitton, Prada, Chanel, Gucci and Burberry against the owner and operator of the Beijing Silk Street Market for infringement by stallholders, the Beijing People's High Court upheld a previous ruling by a lower court which had found the market owner infringed the applicants' respective trade marks by knowingly renting space to stallholders selling counterfeit products. As a result of this finding, the luxury brand owners were awarded damages against the local market operators who had failed to take effective measures to prevent counterfeits.