Pacific (f)ale

Moshinsky J has rejected Stone & Wood’s attempt to block Thunder Road Pacific Ale and, instead, ruled that Stone & Wood made unjustified threats of trade mark infringement.[1]

In 2010, Stone & Wood renamed its Draught Ale product as Stone & Wood Pacific Ale. Stone & Wood has 3 other main products in its line up of beers, but the Pacific Ale makes up some 80 – 85% of its sales. These sales were mainly in the Northern Rivers area of NSW, south eastern Queensland, Sydney and Melbourne.

Pacific Ale was a name Stone & Wood coined for its product. At the time, Stone & Wood was based in Byron Bay and ‘Pacific’ was chosen partly to reflect Byron Bay’s location on the Pacific ocean and partly for its ‘calming, cooling emotional response’.

The second respondent, Elixir,[2] also started up in 2010, in Brunswick, Melbourne Victoria, which some people might consider far from the Pacific. One of its lines of beers is its Thunder Road range. In 2015, it added a Thunder Road Pacific Ale to that range.

misleading or deceptive conduct / passing off

This is what individual bottles of the competing products looked like:

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The Thunder Road logo is on the label around the neck. This is what a six pack of each looked like:

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Stone & Wood contended that Elixir’s use of Pacific Ale and/or the ‘similar’ green and orange colour scheme misrespresented that the Thunder Road product was Stone & Wood’s or in some way associated with it in contravention of s 18 or s 29 of the ACL or a passing off.

The essential problem with this type of claim is that whether or not there is a real possibility of misrepresentation falls to be determined in all the circumstances. What would the ordinary consumer of the relevant products think in all the circumstances. Moshinsky J’s reasoning is much more detailed than I am going to attempt here, but notwithstanding the large and prominent display of Pacific Ale on Elixir’s product:

  • the dominant element on Stone & Wood’s packaging and get-up was its name: Stone & Wood;
  • there was no use of Stone & Wood on the Thunder Road product;
  • the words Pacific Ale on the Elixir product was very closely associated with Thunder Road, itself a well-known brand amongst the discerning hipsters and others in the market for craft beers;
  • although Pacific Ale was not a technical ‘style’ recognised at beer shows, it had become by the time Elixir introduced its product, descriptive for many consumers of a beer made from Galaxy hops, a particular Australian variety which gave the beer a fruity or tropical flavour – this was reinforced by the reasons why Stone & Wood had adopted the name in the first place;
  • the colour schemes and get-up are, shall we say, pretty different.

Moshinsky J accepted that Elixir knew full well that Stone & Wood had a Pacific Ale product when it decided to launch its own Pacific Ale and was trying “to some extent” to take advantage of consumers’ recognition of the term Pale Ale. That was not the same thing, however, as trying to take advantage of the name Stone & Wood or trick people into thinking the Thunder Road product was the Stone & Wood product which was what Stone & Wood needed to show.

Stone & Wood also deployed expert evidence from the marketing expert, Professor Lockshin.[3] Prof. Lockshin argued that marketing theory posited consumers might have come to identify Stone & Wood’s product just by the sub-brand Pacific Ale. Moshinksy J was not prepared, however, to overlook the significance of the prominent use of Stone & Wood on Stone & Wood’s products and the other differences between the products in the absence of testing which showed how consumers actually reacted.

In an attempt to repeat Bodum’s rather surprising success against Euroline, Stone & Wood pointed to a blackboard in a bar which simply listed PACIFIC ALE as one of the beers on tap; the beer of course being Thunder Road, not Stone & Wood. Moshinky J was not prepared to infer that patrons ordering the beer from that listing were necessarily trying to order Stone & Wood Pacific Ale as opposed to a pacific ale. Also, Elixir should hardly be liable for the actions of an independent bar owner.

Trade Mark infringement

Stone & Wood has a trade mark, No. 1395188, registered in class 32 for beer:[4]

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The problem Stone & Wood confronted with its infringement case is that Pacific Ale is such a subsidiary feature of the trade mark. Moshinsky J was not prepared to find that the words Pacific Ale in that configuration were likely to be an essential feature of the mark. His Honour considered that the Crazy Ron case required him to assess the essentiality of a feature in the context of the trade mark as a whole. It would have been wrong to focus on part of the mark in isolation only.

Groundless threats

Section 129 provides someone threatened with an action for trade mark infringement to bring proceedings for unjustified threats. A declaration that the threat was unjustified can be obtained, injunctions against repetition and, if damage be suffered, damages.

The Trade Marks Act is rather curious in that it is a defence to such an action if the trade mark owner starts proceedings for infringement “with due diligence”, even if the infringement allegation ultimately fails.[5] Moshinsky J denied Stone & Wood’s reliance on this defence in this case.

Stone & Wood had sent a letter of demand which included allegations of trade mark infringement as well as misleading or deceptive conduct, and threatened proceedings. When the correspondence did not lead to a resolution of the dispute, it started proceedings against Elixir, but only for misleading or deceptive conduct / passing off. It did not bring proceedings for trade mark infringement. It only brought the infringement proceedings by way of amendment after Elixir cross-claimed for unjustified threats.

In that respect, Moshinsky J distinguished Stone & Wood’s position from the trade mark owner in the Montana case. There, Wilcox J had rejected reliance on the ‘with due diligence’ defence, but the Full Court overturned that on appeal. In Montana, TTS did bring the infringement proceedings by way of cross-claim. However, it did not start the proceedings with a misleading or deceptive conduct claim. Montana started the earlier proceedings with its claim against unjustified threats and TTS brought the cross-claim at the first available opportunity.

The matter will continue to ascertain whether Stone & Wood will have to pay any damages.

It is tempting to wonder whether Stone & Wood would have had more success if it had promoted Pacific Ale more prominently and independently of its name, Stone & Wood. Perhaps, but these types of sign are slippery and it doesn’t take much for them to slide into descriptiveness. CAPLETS, for example, was a coined word, but not infringed.

If you have a comment or a question, please feel free to post it in the comments section. Or, if you would prefer, email me.

Stone & Wood Group Pty Ltd v Intellectual Property Development Corporation Pty Ltd [2016] FCA 820


  1. His Honour’s reasons run for some 95 pages or 245 paragraphs, so I am not going to try and convey all the nuances which were explored before his Honour in a blog post such as this.  ?
  2. The operation is sufficiently crafty, or un-boutiquey, that the first respondent is the holder of the group’s intellectual property rights.  ?
  3. If his name sounds familiar, that is because he was unsuccessfully deployed by Henschke in the Hill of Grace case.  ?
  4. It also has a pending application for PACIFIC ALE, but that has been opposed by, you guessed it, Thunder Road.  ?
  5. Dowsett J has recently pointed out that the patents legislation used to have this defence, but it was repealed a long, long time ago.  ?