A coffee free-for-all and a trade mark cancellation

Last month, the Full Court overturned the trial Judge’s ruling that Modena had infringed Cantarella’s registered trade marks for ORO and CINQUE STELLA for coffee. Instead, revoking the registrations on the basis that they were not capable of distinguishing. Barrister Sue Gatford provides another guest post explaining why.

In 2000 Cantarella, the vendor of Vittoria coffee, applied for and obtained registration in Australia and elsewhere of the Italian words ORO and CINQUE STELLE as trade marks. Translated into English ORO means GOLD and CINQUE STELLE means FIVE STAR. Cantarella had used these words (and others) in Australia for various of its coffee blends for a very long time.

An Italian company, Molinari, had used ORO and CINQUE STELLE for its coffee for a similarly long time, and since 1997 had imported that coffee into Australia. Many other coffee companies, including Lavazza and Coffee Mio, use ORO to describe one or more of their coffee products. On the evidence, no-one other than Cantarella and Molinari appear to have used CINQUE STELLE.

In 2011 Cantarella sued Modena, Molinari’s Australian importer. It alleged that the Café Molinari Oro and Café Molinari Cinque Stella products that Modena imported and sold in Australia were infringing Cantarella’s registered trade marks. The Federal Court initially agreed. Last month though, the Full Court overturned that decision and ordered the cancellation of Cantarella’s trade marks.

The judgment revisits the long standing and often quoted test, set out by Kitto J in Clark Equipment, for determining when a mark is inherently adapted to distinguish, viz:-

[T]he question whether a mark is adapted to distinguish [is to] be tested by reference to the likelihood that other persons, trading in goods of the relevant kind and being actuated only by proper motives — in the exercise, that is to say, of the common right of the public to make honest use of words forming part of the common heritage, for the sake of the signification which they ordinarily possess — will think of the word and want to use it in connexion with similar goods in any manner which would infringe a registered trade mark granted in respect of it.[1]

In Clark Equipment registration of the word MICHIGAN for tractors that came from Michigan, USA was refused. The High Court considered that as Michigan was a well known manufacturing centre at a later time other traders might, without improper motive, want to use the word Michigan in describing other tractors they wanted to sell.

Similarly, the Full Court said that Italy being a common source of coffee and the Italian language having invaded the English language in the coffee sphere with words such as cappuccino, cafe latte and the like, it was likely that other traders would, without improper motive, be likely to want to use descriptive Italian words, including ORO and CINQUE STELLE, in relation to their coffee.

The Full Court considered that the trial judge put too much emphasis on the fact that Australian consumers generally (the so called “ordinary English-speaking people in Australia”) were unlikely to know what ORO and CINQUE STELLE meant. Rather, the Court said, the proper enquiry was whether other traders would want to use those words. The Full Court was less concerned than the trial judge with whether the English meaning of the words was widely understood (How many people who order a cappuccino know what the word cappuccino means in English?) but did point out that Italian was the second most widely spoken language in Australia in any event.

In terms of the appropriate legal test, the Full Court said that the reference to “the common right of the public” by Kitto J in Clark Equipment was a reference to the common right of other traders as a sub-section of the public.[2] Crucially, they found that the evidence supported a finding that ORO and CINQUE STELLA were:-

“known in the coffee trade according to their ordinary signification as words descriptive of the quality of coffee products and have been used in that sense, although not as trade marks, for a significant period of time extending well before Cantarella’s registration of its marks and afterwards”.[3]

Interestingly, the Court did not differentiate between the evidence of the use by other traders of ORO (there were many) and the evidence as to the use by other traders of CINQUE STELLE (there were none). This is perhaps because the test is what other traders might want to do, not what they have actually done. So while proof of actual use is convincing proof of a (fulfilled) desire to use, an absence of actual use is equivocal – it may just mean that other traders haven’t as yet decided to use the particular word or words, not that they won’t ever decide to use them.

So it would seem that the Australian coffee world can resume use of the descriptive splendour of the Italian language without fear of trade mark infringement for the time being. The Clark Equipment test as clarified by the Full Court in Modena is also alive and well.

Modena Trading Pty Ltd v Cantarella Bros Pty Ltd [2013] FCAFC 110 (Mansfield, Jacobson & Gilmour JJ)


  1. Clark Equipment Company v Registrar of Trade Marks (1964) 111 CLR 51 at 514.  ?
  2. Modena at [74].  ?
  3. Modena at [97].  ?

Assigning rights in future copyright – Bollywood style

Typically, a composer or lyricist who becomes a member of a performing right society (well, at least a performing right society in the British tradition) assigns the copyright insofar as it relates to “performing rights”[1] to the collecting society including all rights to Works they might make in the future.

Messrs Salim and Suleiman Merchant are apparently renowned composers of music for the soundtracks of Bollywood movies. In 1996 and 1998, respectively, they became members of the Performing Right Society, the PRS, the collecting society in the UK. As part of the terms of becoming members, they each agreed to assign to the PRS:

“absolutely for all parts of the world the rights which belong to you on the date of this Agreement or which you may acquire or own whilst you remain our member”.

However, in 2008, they signed up to compose the music for a film called Kurbaan. One of the terms of their contract with the producers, Dharma Productions Private Limited, was that all copyright in any music they wrote vested in Dharma Productions on creation.

Kurbaan was subsequently broadcast on B4U, apparently a broadcaster that specialises in all things Bollywood, including the Merchants’ music composed for the film. B4U refused to pay licence fees to the PRS.

B4U’s argued that the terms of the agreement with Dharma Productions meant that s 11 of the CDPA 1988[2] operated so that the Merchants never became the owner of any copyright in the Kurbaan music since it vested eo instanti on creation in Dharma Productions. Therefore, the Merchants never had any copyright in the music which could be assigned to the PRS.

Nice try!

The Court of Appeal said that the assignment to the PRS, being the first in time, took priority so s 91 of the CDPA[3] operated to assign the copyright to the PRS, on creation, and the Merchants had nothing to assign to Dharma.

Formally, the Court of Appeal focused on the wording in the PRS agreement that assigned any copyright that the composer may acquire while a member. Moses LJ treated this as sufficient to cover situations where, but for the agreement with Dharma Productions, the Merchants would have acquired copyright.

B4U Network (Europe) Limited v Performing Right Society Limited [2013] EWCA Civ 1236

Lid dip: Peter Clarke


  1. The APRA membership form defines these, with some exceptions, as the right to perform the work in public and to communicate it to the public.  ?
  2. Corresponding in effect to s 35(6) of our Act.  ?
  3. Corresponding to s 197 of our Act.  ?

Winnebago 2: the disclaimer

Back in June, the Full Court, upheld the trial Judge’s conclusion that Knott was engaging in misleading or deceptive conduct, and passing off, by using the Winnebago “logos” to promote RVs of its (Knott’s) manufacture that had nothing to do with Winnebago USA. Because the breach was in the nature of “passing off” rather than trade mark infringement and because Winnebago USA had sat on its hands for 25 years allowing Knott to build up some goodwill of its own, however, the Full Court was prepared to grant an injunction only to restrain use of WINNEBAGO and the Winnebago logos by Knott which did not adequately disclaim association with the USA.
The Full Court has now handed down its decision about the form of that disclaimer:

without:

(f) where the name, mark or logo is used on one or more vehicles or in a document (including any print advertisement or webpage), stating in any relevant document (including any print advertisement or web page) or on any vehicle, clearly and prominently, and reasonably proximate to any name, mark or logo:

(i) (where the name, or mark or logo is used on or in relation to a single vehicle) “This vehicle was not manufactured by, or by anyone having any association with, Winnebago of the United States”; or …

In addition, radio and television commercials must have a prominent voiceover of no less than 10 seconds’ duration stating:

These vehicles were not manufactured by, or by anyone having any association with, Winnebago of the United States.

Also, Knott will be required to obtain a signed acknowledgement from each purchaser, hirer etc. that he or she has been informed the vehicles was “not manufactured by, or by anyone having any association with, Winnebago of the United States.”

Given the 25 year delay, the Full Court was not prepared to countenance allowing Winnebago USA to take an account of Knott’s profits.

The Full Court did, however, remit the matter back to the trial judge on the question of damages (limited to the six years before the proceeding was brought), but with an important rider.

Winnebago USA wants to argue that its damages should be a reasonable royalty on the use of its rights. The Full Court noted that other Full Court authority [1] appeared to stand in the way of that approach, but there might be scope for that to be revisited in light of the New South Wales Court of Appeal’s consideration of remedies for the unauthorised use of property in the context of conversion.[2]

The rider: before Winnebago USA gets to try this argument, it has to satisfy the trial Judge that there is “some prospect of a substantial (that is, real) award.”

Knott Investments Pty Ltd v Winnebago Industries, Inc (No 2) [2013] FCAFC 117


  1. Aristocrat Technologies Australia Pty Ltd v DAP Services (Kempsey) Pty Ltd (in liq) [2007] FCAFC 40; 157 FCR 564 at 569 [27]-[28].  ?
  2. Bunnings Group Ltd v CHEP Australia Ltd [2011] NSWCA 342; 82 NSWLR 420 at 464–470 [166]-[186].  ?

Getting back domain names

Bromberg J has now made orders arising from his Honour’s finding that the use of real1.com.au infringed REA Group’s registered trade mark. Amongst other things, these included orders that the disputed domain names be transferred to REA Group. An expensive exercise in trying to generate value from “real 1”.

On the other hand, Middleton J has rejected Vendor Advocacy Australia’s attempts to get domain names like:

  • http://www.vendoradvocacy.com;
  • http://www.vendoradvocacyaustralia.com;
  • vendoradvocacymelbourne.com;

from a former employee (or contractor), Mr Seitanidis notwithstanding his Honour’s findings about much Mr Seitanidis’ conduct.

Vendor advocates are apparently much in the market these days. A Mr Ian Reid had been operating a vendor advocacy business for a number of years. Some of his advertising did include:

Vendor Advocacy Australia
Vendor Advocacy Australia

but the corporate stationery and much of the other advertising took this form:

Corporate logo
Corporate logo

and the radio advertising also emphasised the personality of Mr Reid.

Vendor Advocacy Australia did not have any registered trade marks and was forced to fall back on misleading or deceptive conduct.

After a detailed discussion of the cases on descriptive terms and secondary meaning, Middleton J held:

…. The phrase “vendor advocacy” is descriptive and was generally used by various traders in the same line of business. I am not satisfied that the words or brand relied upon in this proceeding by VAA have any secondary distinctive meaning. VAA has primarily promoted itself by reference to the persona of Ian Reid. I do not consider that any consumer which assume that a reference to vendor advocacy, or Australian Vendor Advocacy, would be associated with VAA or Ian Reid. In fact, because Ian Reid has been so much at the front of the promotion of VAA, without his presence the consumer may well assume it is not associated with him or VAA. Any imperfect recollection of consumers would arise from VAA’s adoption of a name consisting of descriptive words. The lack of recall will be as a result of the promotional activity adopted by VAA, by reference to the descriptive words ‘vendor advocacy’.

 And so Vendor Advocacy Australia did not get orders for the transfer of the domain names.

One interesting consequence of this is that there may be an inquiry on the undertaking as to damages given for an interlocutory injunction preventing the use of some of the domain names.

Middleton J was willing to take at [257] a fairly robust view about consumers’ familiarity with the use of similar domain names by different companies. His Honour also thought any momentary or transitory confusion which might arise from the use of the domain names would not rise to the level of misleading or deceptive conduct. As his Honour reminded:

In circumstances where a trader adopts a descriptive trade name the use by another trader of a trade name that also uses those descriptive elements will not generally (in itself) constitute misleading or deceptive conduct.

His Honour also joined the growing band of judges who don’t think consumers pay much attention to whether domain names end in .com or .com.au or the like.

 

REA Group Ltd v Real Estate 1 Ltd (No 2) [2013] FCA 968

Vendor Advocacy Australia Pty Ltd v Seitanidis [2013] FCA 971

Patenting computer programs or business methods in Australia

At the end of August, Middleton J overturned the Commissioner’s refusal to grant an innovation patent for RPL’s computerised method entitled ‘Method and System for Automated Collection of Evidence of Skills and Knowledge’. Instead, his Honour held that the method was a manner of manufacture and, novelty and inventive step having been satisfied, patentable.

What the claimed invention was

In essence, the claimed invention allowed a user to access a single point of entry (for example, over the internet using his or her browser), retrieve information about particular qualifications, which was presented in the form of questions to the user, then provide answers and supporting documentation (still for example over the internet), which was then processed by a relevant certifying institution and, if the relevant criteria were satisfied, the relevant qualification would be awarded or, if not, the user could be presented with information about what further steps needed to be undertaken to satisfy the necessary criteria.[1]

This bald summary hardly does justice to what was involved. For example, there are a large number of registered training organisations or TAFEs (RTOs). Collectively, they offer some 3,500 different qualifications and some 34,000 Units of Competency. Any individual RTO therefore offered only a very small set of qualifications or units. RPL’s method, first, circumvented the need for an individual user to identify which RTO was appropriate as RPL’s method retrieved all the necessary information from online databases. Then, RPL’s method converted the criteria into a form of questions which the user could answer. So, to take an example from the judgment, the element of competency required for a particular unit relating to aged care:

demonstrate an understanding of the structure and profile of the aged care sector

became:

Generally speaking and based upon your prior experience and education, how do you feel you can demonstrate an understanding of the structure and profile of the aged care sector?

and a particular performance criterion associated with that:

all work reflects an understanding of the key issues facing older people and their carers

was converted in RPL’s method to:

How can you show evidence that all work reflects an understanding of the key issues facing older people and their carers?[2]

for enabling individuals to get their competency or qualifications recognised under the nationally accredited Unit of Competency scheme.

The specification identified the advantages flowing from this method with its single point of contact:[3]

Individuals are provided with a service which simplifies the identification of relevant Units of Competency, and the gathering of associated assessment information to enable [recognition of prior learning] to be performed. Training organisations are relieved of much of the administrative cost associated with performing [recognition of prior learning]. By the time the training organisation is contacted, the relevant Unit of Competency has already been identified, and required information associated with each of the assessable criteria has already been gathered and packaged in a form enabling an efficient assessment in relation to the [recognition of prior learning] process.

Why this constituted a (patentable) manner of manufacture

Middleton J noted at [127] that the test for “manner of manufacture” laid down in NRDC, CCOM and Grant required that the claimed invention result in an artificially created state of affairs in which a new and useful effect may be observed. This had to be of utility in practical affairs or be of an industrial, commercial or trading character and belong to the useful arts, not the fine arts, so that its value lay in a field of economic endeavour.

These criteria were satisfied. The results of the method were useful because at [129] it overcame difficulties involved in seeking out education providers and enabled recognition of prior learning. This was relevant to a field of economic endeavour: the education sector of the economy and thus had the necessary industrial, commercial or trading character.

While the information about RTOs and particular Units of Competency could be accessed individually in undifferentiated form over the internet, the method provided a single point of entry. In addition to the single point of entry:

[141] The computer programmed in accordance with the Patent further operates to process the retrieved information and to automatically generate data comprising an alternate means of presentation. This alternate means comprises a series of questions which can be presented to an individual user along with user interface elements which implement an online form suitable for the receipt of responses to those questions. An assessment server is programmed, again according to the teaching of the Patent, to present the form to the computer of an individual user, who preferably requires only conventional web browser software to access the assessment server via the internet. In particular, the form provides not only for user-entered responses, but also for upload of one or more files stored on the user’s computer which may comprise, for example, evidence of the user’s competency with regard to the recognised qualification standard. This access to an online form occurs as a result of the retrieval, processing and presentation steps being conducted according to the teaching of the Patent.

The various stages in this process each gave rise to the physical effect required under Grant in the various changes of state in the computer’s memory.[4] Grant itself of course involved no such transformation since it did not involve any use of any computer – just a scheme for the use of a trust.

The Commissioner had recognised that such a transformation did take place, but it was not sufficient. In a line of decisions beginning with Invention Pathways, the Commissioner had ruled that: [5]

the “concrete effect or phenomenon or manifestation or transformation” referred to must be one that is significant both in that it is concrete but also that it is central to the purpose or operation of the claimed process or otherwise arises from the combination of steps of the method in a substantial way. Consequently while the step of building a house involves a concrete physical effect it is peripheral to the method of acquiring a house and indeed could hardly be said to characterise the subject matter of the method such that it is considered an artificially created state of affairs. I consider the same to apply to a business scheme implemented in some part by computer and do not believe the patentability of such a method can arise solely from the fact that, in a general sense, it is implemented in or with the assistance of a computer or utilises some part a computer or other physical device in a incidental way.”

The Commissioner argued that the use of the computer here was not central to the method, being merely a “common mechanism to carry out the method in a convenient way.”

At [147], Middleton J rejected the Commissioner’s view that NRDC, CCOM and Grant required the requirement of substantiality or centrality of a physical effect in the sense the Commissioner contended for.

In addition, Middleton J rejected the Commissioner’s argument that the claimed invention could not be a manner of manufacture as it could be performed without the use of a computer. His Honour rejected this as a matter of principle at [157]: it was not an appropriate way to approach the assessment required under NRDC, CCOM and Grant. In any event, as a matter of fact, the magnitude of the task meant it wasn’t practicable without the use of a computer:

[158] … as a matter of fact I accept that the magnitude of the task performed by the invention (as previously described) and the express terms of the claims themselves mean that the computer is an essential part of the invention claimed, as it enables the method to be performed.

While his Honour accepted that US cases could be persuasive, he noted he was required to apply the tests developed under Australian law and did not find any assistance in the present context.[6]

At [171] – [172], Middleton J distinguished the recent rejection by Emmett J of Research Affiliates claims for a method of generating an index of securities and assets. In Middleton J’s view the central difference was that the specification in Research Affiliates “contained virtually no substantive detail about how the claimed method was to be implemented by a computer”.[7] In contrast, there was detailed information about these matters in RPL’s specification and the computer was central to the method’s working.

RPL Central Pty Ltd v Commissioner of Patents [2013] FCA 871


  1. The terms of claim 1 are set out here.  ?
  2. Taken from [21] and [24] of the Reasons.  ?
  3. At [42] of the Reasons.  ?
  4. At [143] – [144].  ?
  5. Myall at [53].  ?
  6. While his Honour did not put it this way, that is perhaps unsurprising given the rather uncertain state of the US case law, e.g.  here and here.  ?
  7. An application for leave to appeal from Emmett J’s decision has been filed: NSD328/2013.  ?

When do 4 stripes infringe 3?

adidas has successfully sued Pacific Brands for infringing its “3 stripes” trade mark through the sale of three styles of shoes with 4 stripes; but failed in respect of six other styles. Three other styles settled before action, 2 without admissions.

adidas relied on 2 registered trade marks, TM No 131325 dating from 1957 and TM No 924921 dating from 2002. (If you have been on Mars for the last 50 years) you get the basic picture from TM No 924921:

TM 924921
TM 924921

registered for “footwear including sport shoes and casual shoes” in class 25. There is also an endorsement:

Trade Mark Description: The trademark consists of three stripes forming a contrast to the basic color of the shoes; the contours of the shoe serves to show how the trademark is attached and is no component of the trademark. * Provisions of subsection 41(5) applied.*

First, accepting that the stripes played a decorative role, Robertson J nonetheless found that Pacific Brands used all the stripe combinations on the shoe styles in issue as trade marks. In reaching this conclusion, his Honour was heavily influenced at [64] by the evidence [1] that sports shoe manufacturers typically placed their trade marks on the side of the shoe. Consistently with orthodoxy, it was nothing to the point that consumers might not know which manufacturer was actually behind the product or that other trade marks such as “Grosby” also appeared on the shoe.

The Airborne Shoe illustrates why Robertson J held some styles infringed:

Airborne shoe
Airborne shoe

The fact that there were 4 stripes rather than 3 tended against a finding or infringement. However, that was outweighed by the overall impression conveyed. At [235], his Honour explained:[2]

this shoe is deceptively similar to the applicants’ trade marks. I note in particular the parallel equidistant stripes of equal width (with blue edgings) in a different or contrasting colour to the footwear, running from the lacing area to the instep area of the shoes.

In contrast, the shoes found not to infringe were all found not to convey the sense of equidistant stripes against a contrasting background, let alone a sub-set of three “parallel” stripes.[3]

Perhaps, most strikingly, the Basement style at [282] conveyed the idea of two sets of two stripes rather than three or four equidistant stripes.

Basement shoe
Basement shoe

Next, the Boston shoe:

Boston shoe
Boston shoe

did not convey the idea of a group of stripes against a contrasting background:

there are four stripes rather than three and an obvious slightly wider gap between the second and third stripes. That is the first point. I do not conclude that there are two groups of two stripes. In addition, the inclusion of panels in the shoe of a similar colour to the stripes (black or close to black), and the stitched-in element of contrasting colour (white) extending behind the stripes, mean that as a matter of impression there is no deceptive similarity with the applicants’ trade marks. There is no sufficiently clear impression of the stripes forming a contrast to the basic colour of the shoes or being a colour different from that of the article of footwear to which the stripes were applied.

The idea of four stripes with the central pair “bridged” extended through into the Apple Pie Pink style at [296]:

Apple Pie shoe
Apple Pie shoe

Robertson J also found that the Stingray Black style did not infringe:

Stingray Black shoe
Stingray Black shoe

At [305], his Honour explained:

there are four “stripes”; the stripes taper to a narrower end towards the sole of the shoe and are therefore not of equal width; the gaps between the stripes are not equal and taper towards the top of the shoe at the lacing; and the four stripes have a curved element and are therefore not parallel. The features of the applicants’ trade marks relied on by the applicants in relation to this shoe are not those which give rise to the dominant visual impression of the trade marks as three parallel equidistant stripes of equal width. This shoe does not create the visual impression of three parallel equidistant stripes of equal width.

A couple of other points

First, Robertson J did not buy adidas’ invitation to infer an intention to infringe, or at the very least “to sail too close to the wind”[4] from an alleged pattern of copying. Pacific Brands withdrew two shoe styles said to be the foundation of this pattern without any admission of liability. A third style, the Stringray boot was withdrawn with an admission, but his Honour regarded that matter as resolved.

Secondly, adidas made an interesting attempt to bolster its case on infringement by the use of a survey. The survey purported to show that some 14%, 34% and 19% of those shown three different styles “similar” to Pacific Brands’ styles identified adidas as the source of the product because of the presence of stripes.

The survey was conducted online. Each participant was shown one of four images of a leg with a shoe style on its foot. (Three were intended to be versions of Pacific Brand styles; one, the control, was unmarked.) The participants were then asked a series of questions including:

B1. Who do you think makes this shoe?

B2. Why do you say that? Please be specific and explain the reasons for your answer in question B1.

Robertson J, however, accorded the survey little weight in making his assessment. There were a variety of reasons for this. These included, first, at [196] that the showing of the images online did not sufficiently replicate or correspond to the experience of the consumer in the market place (apparently this is known as “ecological validity”). Secondly, at [205] question B1 was impermissibly leading. Thirdly, at [210]-[211] the “control leg” was inadequate for the purpose because the absence of decoration signalled to some consumers that it was not sourced from a major brand.

adidas AG v Pacific Brands Footwear Pty Ltd (No 3) [2013] FCA 905 (version with images here)


  1. Referred to at [54].  ?
  2. Likewise, the Stingray shoe at [293] and the Apple Pie at [296].  ?
  3. At [217], his Honour found these features constituted the dominant impression conveyed by the registered trade marks.  ?
  4. Invoking the well-known formulation from Australian Woollen Mills at 658.  ?