E & J Gallo failed in its action against Lion Nathan alleging that BAREFOOT RADLER for beer infringed Gallo’s registration of BAREFOOT for wine. Worse news for Gallo, its trade mark was ordered to be removed for non-use …
The case is a relatively rare consideration by the Court of “goods of the same description” and even rarer consideration of the s 120(2) defence. It also repays close attention to why the Gallo’s trade mark was removed for non-use even though there had been sales of the product in Australia in the relevant period. In this post, I am only going to look briefly at the infringement question.
On the infringement issue, Flick J found that the mark BAREFOOT RADLER was deceptively similar to Gallo’s trade mark, but beer and wine were not goods of the same description. The claim under s 120(2) failed as there was no likelihood of confusion in the circumstances.
The deceptive similarity analysis is, with respect, fairly conventional. The main twist was whether or not Lion Nathan’s trade mark was BAREFOOT RADLER or BAREFOOT RADLER with footprint device.
One might have thought that Gallo had to show what mark Lion Nathan was in fact using, but Lion Nathan was precluded from relying on its composite mark because its pleadings did not properly disclose its contention that the trade mark in use was the composite mark, not just the word mark itself. The point had the potential to be significant as Flick J would not have found the composite mark deceptively similar to Gallo’s trade mark.
(As an aside, one wonders what fun there could have been if the evidence showed that, in addition to the composite mark, Lion Nathan also used the word mark as a trade mark. One often sees composite marks or logos displayed prominently on materials, but just the words being used in a trade mark sense in the advertising and promotional text.)
Flick J analysed the issue of goods of the same description very carefully. His Honour acknowledge that there were factors which could lead to a finding that beer and wine were goods of the same description :
(i) both products were alcoholic beverages for human consumption;
(ii) both products were generally distributed by the same major wholesalers;
(iii) Barefoot Radler beer was intended to appeal to both “core” and “marginal” beer drinkers and, in the latter category, particularly intended to appeal to wine drinkers;
(iv) both brands were intended primarily for consumption in the summer months; and
(v) wine and beer were both frequently sold by the same retailers.
Looked at from a business point of view, however, these factors were overriden by other considerations:
(a) they were made in different manufacturies, using different processes and ingredients – water, a fermentable source such as starch (often malting barley) and yeast and a flavouring such as hops for beer; crushed grapes and yeast for wine [77 - 78]
(b) the manner in which beer and wine were sold may be different [80 - 82]: in restaurants, beer was sold by strength and brand and, apparently, beer drinkers usually limited themselves to 3 or 4 brands; wine was sold by reference to the wine list
in retail outlets, wine was usually sold be categories further divided into wine type and country of origin, with 80% of product being on the shelves; the main selling area for beer was the coolroom, in which beer accounted for 80% of products, and it was not usually displayed in any particular order or categories;
apparently, beer producers also rely heavily on brand signage.
(c) the way in which the products were consumed was different  – beer is apparently consumed for its thirst quenching properties, but wines and spirits are for sipping; beer also has an important role in, er, male bonding
(d) although both Lion Nathan and Foster’s both produced both wine and beer, wine and beer production, marketing and sales were separate from each other [84 - 85]. This included evidence that Foster’s had originally tried marketing both beer and wine through the same sales force, but had subsequently resorted to separate, specialised sales forces. The other main brewers in Australia did not carry wine.
The fact that Lion Nathan deliberately sought to entice wine drinkers with its Barefoot Radler product did not lead to any different conclusion as beer and wines are not commonly used as substitutes or alternatives.
Flick J also found that Lion Nathan had successfully established the defence under s 120(2) [94 - 95] having regard to the way both products were displayed for sale.
E & J Gallo Winery v Lion Nathan Australia Pty Ltd  FCA 934, final orders  FCA 1005.