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Mainly intellectual property (IP) issues Down Under

IP Laws Amendment ( Productivity Commission Response Pt 1 etc) Bill 2018

On May 10, the Intellectual Property Laws Amendment (Productivity Commission Response Part 1 and Other Measures) Bill 2018 was referred to the Senate’s Economics Legislation Committee.

You may recall that, amongst other things, the Bill has another go at parallel imports and trade marks (which also entails repealing s 198A of the Copyright Act 1968), reduces the period before registered trade marks can be attacked for non-use, permits non-PBR-protected varieties to be declared as essentially derived varieties and a host of other reforms (Sch. 2 has 21 Parts)

The Senate committee is required to report on the bill by 22 June 2018.

If you are an agricultural organisation, medical research industry, an IP peak body (who is not going to INTA) or somehow at a loose end, you need to get your skates on as submissions must be made by 1 June 2018.

Bohemia Crystal shattered

Like MICHIGAN for farm equipment and OXFORD for books, Burley J has ordered that Bohemia Crystal’s trade marks, BOHEMIA and BOHEMIA CRYSTAL be revoked because they are not distinctive of “glassware”.

Bohemia Crystal (BCP) had been formed in 1975 to distribute in Australia Skloexport’s products. Skloexport was the State-owned entity responsible for the export of all crystal and glassware products made in Czechoslovakia. In 1999, Skloexport went into liquidation and BCP took an assignment of its Australian trade marks. The main trade mark BCP used in this period, which had been registered since 1962 was the stylised BOHEMIA Glass mark, TM No. 319701:

Versions of this mark were used with or without the words “Made in Czech Republic” or substituting the word “Glass” for “Crystal”.

On 5 October 2001, BCP applied for and successfully registered BOHEMIA CRYSTAL for glassware and on 2 May 2003 BCP applied for and successfully registered BOHEMIA for glassware.

Host is an importer and supplier of catering goods and equipment in Australia. The business was started in 1999. One range within its 2,500 product lines is its range of glassware sourced from another Czech supplier, Forincorp, marketed under BANQUET BY BOHEMIA [1] or:

Host started importing this line in 2015. BCP made the fateful decision to start proceedings for infringement of its registered trade marks and contravention of the Australian Consumer Law for false and misleading conduct.

Burley J held that BCP’s trade marks lacked any capacity to distinguish and had not been used in such a way as to have acquired secondary meaning for the purposes of s 41(6).[2] Burley J also dismissed BCP’s allegations of misleading or deceptive conduct.

It is not going to be possible in a blog post to do justice to Burley J’s 376 paragraphs. Instead five points particularly caught my eye.

First, Burley J (who was a very experienced intellectual property barrister before his appointment) pointed out that the High Court in Cantarella referenced both ordinary consumers and traders as the criterion for whether or not a sign was inherently adapted to distinguish.

BCP argued that the test focused on what ordinary consumers would think the sign meant. It had found an expert who opined that ordinary members of the public would think “bohemia” was a reference to persons with an artistic or unconventional lifestyle.

After analysing Cantarella from [86] on, his Honour concluded at [93]:[3]

in a case such as the present, it is necessary to consider the ordinary signification of the words “Bohemia” and “Bohemia Crystal” in the context of the “target audience”, being traders and consumers of the relevant goods, to determine whether at the relevant dates other traders might legitimately desire to use these words or something similar in connection with their goods, for the ordinary signification which they possess. …. (emphasis supplied)

Here, despite the evidence of BCP’s principle witness, the evidence was largely one way. It was beyond dispute that for many centuries the geographic region known as “Bohemia” which is now in the Czech Republic had a strong reputation for producing high quality crystal and glassware. There was evidence that between at least four and ten different manufacturers used the term “Bohemia” at an important annual glassware trade show to signify the geographic origins of their products. There was also evidence from a number of dealers that the term signified to the public glassware originating from the Bohemia region. BCP’s own registered user agreements for the use of Skloexport’s trade marks had also required it to promote its products as from the geographic region, Bohemia.

Burley J concluded that other traders who had glassware manufactured in the region formerly known as Bohemia legitimately and honestly wanted to use that word to describe the geographic origins of their products. The fact that Bohemia was no longer a separate country (and had not been since the World War I) and not even the contemporary name of the region was not significant.[4]

Second, Burley J found that the evidence of use of the BOHEMIA and BOHEMIA CRYSTAL did not establish that those terms had been used by BCP as trade marks or in such a way as to have acquired secondary meaning. There were three aspects to this conclusion.

Following BP v Woolworths, promotion and use is not enough. It had to be shown that the signs as registered had been used in some way to identify the signs as being trade marks.

Next, for the most part the relevant evidence showed that what BCP had been using as a trade mark was Skloexport’s composite mark, not the terms as registered. This was not use of either trade mark as registered. Moreover it was the combination of the elements in the signs as a whole which comprised the distinctiveness. These signs should not be dissected into their component parts:

228 I have some difficulty with the proposition that the words “Bohemia” or “Bohemia Crystal” should in this context be regarded as having separate trade mark signification beyond the combination in which they appear in the composite marks described above. In my view, it is the combination of elements that is distinctive. The trade mark should be viewed as a whole and not dissected into parts. Although this is likely to be a matter of fact for each case, it is notable that several cases have cautioned against the proposition that separate elements should be so distilled; see Diamond T Motor Car Company [1921] 2 Ch 583 at 588, Fry Consulting Pty Ltd v Sports Warehouse Inc (No 2) [2012] FCA 81; (2012) 201 FCR 565 at [61], [63].

229 To my eye, the whole of the 701 mark is to be regarded as creating a complicated image that taken collectively represents a sign, or badge of origin. I do not think that the elements within it may be dissected or that they would be dissected by an ordinary consumer of goods within the relevant classes. In any event, I consider that the words “Bohemia Crystal” and “Made in Czech Republic” within the 701 mark tend to reinforce the descriptive, geographical signification of those words. ….

The third factor is the way that evidence was advanced did not help BCP’s case. A lot of the evidence was vague, or general, rather than specific to what needed to be proved here: use of the signs as trade marks before the filing date. In this respect, his Honour’s discussion will repay careful study as it is not uncommon to see evidence prepared for the Office suffering from similar problems.

Third, BCP did not demonstrate any sufficient reason why its trade marks should not be removed from the Register. Burley J accepted that, Host having established the marks were invalidly registered, BCP bore the onus of satisfying the Court that there was sufficient reason not to order cancellation.

Here, the evidence did not establish that BCP had acquired distinctiveness in its signs. Importantly, allowing BCP to keep its registrations would give it an unfair advantage. At [248], his Honour explained:

…. The presence of the existing ground of revocation via the operation of subsection 88(2)(a) and s 41 indicates an intention on the part of the legislature to ensure that historical registrations should not remain on the Register where they should not have been granted in the first place. In the present case, to permit such a course would advantage the unmeritorious registrant who has incorrectly had the benefit of the monopoly since the relevant dates. BCP is able to apply to register the Bohemia marks now, should it choose to do so.

Of course, if it were to do so, it would run the risk of other traders wishing to use the terms opposing (if the Registrar got suckered into accepting the applications in the first place).

Fourth, if his Honour had not found BCPs trade marks invalidly registered, Host would have infringed. Its attempt to rely on s 122(1)(b) would have failed. This part of the case essentially turned on Host’s use being BANQUET by Bohemia (emphasis supplied) rather than BANQUET from Bohemia.

Burley J accepted that s 122 could be invoked to protect trade mark use, not just descriptive use. However, Host’s form of use showed that Host was trying to assert origin in some particular trade source rather than some geographical origin. At [301]:

…. Ms Flint and Mr Sullivan adopted this language, notwithstanding the obvious difficulty with the perception of “by” and with no knowledge of either BCP or the Bohemia marks. However, I find that they did not do so for the purpose of using “Bohemia” to designate the geographical origin of the goods, but to designate the trade origin of the goods lying in a particular entity (which was ultimately Forincorp). Accordingly, the use does not fall within the defence ….

Fifth, BCP’s allegations of misleading or deceptive conduct also failed. A number of factors contributed to this including the particular trade marks BCP had actually used and the good old-fashioned Hornsby Building Information Centre proposition.[5] In contrast to the trade mark case, in addition, it was highly significant that Host’s market and BCP’s market were quite different. BCP’s market was member of the general public looking for premium quality products. Host’s customers, however, were cafes, restaurants, pubs, clubs, community groups and the like who were cost conscious but attended to their purchases with considerable care. So, for example, at [370]:

the typical reasonable consumer is most likely to perceive the October 2015 catalogue use to represent that the manufacturer or producer of the glassware is an entity known as “Banquet by Bohemia” or “Bohemia”, there is no more than a remote prospect that reasonable customers are likely to consider that the goods offered in the catalogue are offered with the sponsorship or approval of BCP or are offered by Host with the approval of BCP or that the Banquet products emanate from BCP. First, I do not consider that the typical Host customer who encounters this publication would be likely to be aware of BCP. Secondly, I consider that any Host customers who are aware of BCP would understand it to be a retailer of a range of glassware products sold under a range of different brands. Thirdly, to the extent that such customers perceive that BCP has a trade connection with products that it sells, those customers are likely to do so by reference to the common use of the 701 mark or the modified 701 mark. Without the presence of that mark, in my view they are unlikely to consider that the word “Bohemia” as it appears in the impugned uses connotes a connection or association with BCP. Needless to say, no such mark appears in the October 2015 catalogue. Fourthly, such customers would also be influenced by the geographical nature of the term and the material differences between the Host and BCP products such as price, quantity and quality. ….

Bohemia Crystal Pty Ltd v Host Corporation Pty Ltd [2018] FCA 235


  1. It also used BANQUET CRYSTAL BY BOHEMIA, CZECH CRYSTAL BY BOHEMIA and expressions like BANQUET FLUTE.  ?
  2. Given the filing dates of BCP’s trade marks, the original form of s 41 applied.  ?
  3. See also [153] – [155].  ?
  4. At [161], Burley J pointed out that PERSIA in the Persian Fetta case and Peking and Ceylon still retained their signification as place names.  ?
  5. If you are going to use a descriptive expression, you have to accept a certain degree of confusion is inevitable.  ?

Enforcing foreign judgments – consultations

The Commonwealth government is participating in negotiations for a new Convention on the recognition and enforcement of foreign judgments. Now it is seeking public input on a range of outstanding issues.

One of the general issues on which input is sought is the extent to which and the nature of problems experienced in trying to enforce a judgment in a foreign country.

Intellectual property issues are high on the list of matters being debated. Chapter 5 of the consultation paper is directed to intellectual property rights’ issues.

The issues include whether or not intellectual property rights should even be included in the judgments covered by the Convention. So draft article 2(m) proposes to exclude judgments about intellectual property rights from the Convention altogether; alternatively, articles 5 and 6 proceed on the basis that intellectual property rights are included. Which approach should it be?

If included, the basic idea is that a judgment on subsistence, ownership or infringement of an intellectual property right made by a Court in the country which granted the right could be enforceable under the proposed Convention to the extent that the judgment dealt with the subsistence, ownership and infringement of the right in that country.

It is proposed to treat judgments about the subsistence, ownership and infringement of registered rights granted by the country where the judgment is made as falling exclusively under the Convention. Judgments about unregistered rights, such as copyright and unregistered designs, would not be exclusive.

According to the consultation paper, one consequence of this arrangement would be that judgments involving “multi-state IP infringements” of registered rights will be enforceable under the Convention only to the extent that the judgment relates to infringements in the country/jurisdiction issuing the judgment.

No doubt for sound philosophical rationalising, trade secrets do not count as intellectual property rights under the draft Convention. Practically speaking from a business’ perspective, however, one might wonder why confidential information should be treated differently to unregistered “rights”.

Another area of issues raised in the consultation paper is the extent to which awards of damages, especially additional or exemplary or otherwise punitive damages, should be capable of enforcement under the Convention.

As the next (and possibly final) meeting of the commission preparing the draft for a Treaty conference is on 24 – 29 May 2018, the deadline for submissions is COB 27 April 2018.

Hague Conference Judgments Project: Recognition and enforcement of foreign judgments

Not a Comedy of Error

Robertson J has overturned the Registrar’s decision to cancel a number of trade mark registrations for VOKES[1] as errors wrongly made in the Register and ruled they were properly registered in Laminar’s name.

Until 2001, Vokes was the registered owner of the trade marks.

On 15 August 2001, it applied to the Registrar under s 216 to have the name of the registered owner changed to AES Environmental Pty Ltd.

On 12 October 2005, Laminar submitted to the Registrar an assignment of the trade marks from AES to it and Laminar became the registered owner.

In December 2014, Vokes applied to the Registrar under s 81 to have the registration in the name of Laminar cancelled and the registrations restored into Vokes’ name.

The application under s 216 in 2001 had not been made because Vokes changed its name to AES. Rather, it seems Vokes had assigned the trade marks to BTR in 1998 and BTR wanted to assign them in 2001 to AES. There were no assignment documents, or at least none were submitted to the Registrar. So, it seems Vokes / BTR / AES were trying to use s 216 as a kind of short cut. AES subsequently assigned the trade marks to Laminar.

The Registrar pointed out that there was authority that s 216 could not be used to register transfers by assignment , it was only for situations where there had been a change in the name of the entity on the Register.[2] Accordingly, the Registrar held that the registration of the trade marks in the name of AES had been wrongly made and so ordered that change of name of the registered owner to be rectified.

Laminar appealed.

Robertson J clearly thought it a bit rich for Vokes to be coming back to correct the Register some 13 years after its own ruse.

HIs Honour held that the power to correct “errors or omissions” under s 81 was not triggered by the events in 2001. On the basis of the information then before the Registrar, there had been no error.

At [60], his Honour said:

There was no finding by the delegate that in August 2001, and by reference to what the Registrar then knew, there had been an error made by the Registrar. The error was on the part of the person submitting the form in circumstances where there had not, in truth, been a change of name and address: as found by the delegate, Vokes had not changed its name. This was not brought to the Registrar’s attention, so far as the delegate found, before December 2014 when Vokes made its application under s 81.

And then, by way of further explanation, at [65]:

Contrary to the conclusion of the delegate in the present case at [23], in my opinion there was no jurisdictional error on the part of the Registrar in 2001. It is true that there was not a change in the name of the registered owner of the registered trade marks but the Registrar did not know that nor should she have known it: the submission was not pressed before me that it was plain on the face of the form that there was no change of name in the registered owner. If there were no jurisdictional error then it follows that the decisions to record changes of the owner’s name on the Register were not decisions which “had no legal foundation and are no decisions at all” as found by the delegate as a consequence of his conclusion that the decisions were tainted by jurisdictional error.

Therefore, the power under s 81 was not enlivened.

In any event, Robertson J ruled that, if he were wrong in that conclusion, the intervening events (i.e., the assignment from AES to Laminar) meant that the Registrar’s power under s 81 was no longer available. A “person aggrieved” had other remedies they could pursue.

The decision in Mediaquest, which had been relied on by the Registrar, was distinguished. That case involved an application to record an assignment where the objection to the registration of the assignment was made within one month of the assignment being recorded.

Laminar Air Flow Pty Ltd v Registrar of Trade Marks [2017] FCA 1447


  1. There were also registrations for UNIVEE and VOKES VEE-GLASS.  ?
  2. Citing the continuing effects of Crazy Ron’s at [123].  ?

My Angel is a …*

Rares J has ordered that Centrefold Entertainment’s trade mark registration for CENTREFOLD, No 1695466, be expunged from the Register on the grounds that it is not capable of distinguishing “Entertainment’s” services.

Both Entertainment and Metro are in the business of providing “promo models” and adult entertainment services.[1] Metro promoted its services under the sign “Centrefold Strippers”. Having secured its registration for CENTREFOLD, Entertainment sued Metro for infringement. Things did not turn out how it hoped!

Entertainment argued that CENTREFOLD was a “covert and skilful allusion to its services, not descriptive of them.” It argued that the ordinary meaning of the word was of a person or the particular pages in particular types of magazine.

Rares J rejected this argument on the grounds that the word registered was a “noun” and not an adjective. However, Entertainment used the word in an adjectival sense as part of the composite mark “Centrefold Entertainment”. Hmmm.

Perhaps more compellingly, his Honour pointed out at [93] that there were at least three businesses in the adult entertainment field using names which included CENTREFOLD: Centrefold Lounge, Centrefold Strippers (i.e., Metro) and Centrefold Entertainment itself.

Also, the evidence showed that models who had achieved the status of being Centrefolds, promoted themselves as such and could often command a premium for their services.

In these circumstances, the word was not metaphorical or allusive. At [101], his Honour explained:

“Centrefold” is an ordinary English word that is apt to describe the kinds, qualities and characteristics of performers, models and others, as persons who appear, or have appeared or are prepared to appear, nude or scantily clad before strangers and in pages of magazines. Any supplier of adult entertainment services of the kind comprised in the designated services, without improper motive, might desire to use the word “centrefold” to describe that supplier’s services. That is because of the ordinary signification of the word: Cantarella 254 CLR at 358 [58].[2]

Next, his Honour held that Entertainment’s use of “Centrefold” was not sufficiently substantial to warrant registration under (the “new” version of) s 41(4).

Bear in mind that the trade mark was registered from 22 May 2015.

It appears to have been common ground that Entertainment had not used “Centrefold” alone before it applied to register its trade mark.

Secondly, until about March 2014 (i.e. just over a year before the filing date of the trade mark), the principal of Entertainment had been running two businesses, “XXX Princess” and “Centrefold Entertainment”. XXX Princess was the business promoting the adult entertainment services – by reference to XXX Princess. As part of a deliberate strategy, Centrefold Entertainment’s website and Facebook page did not explicitly promote adult entertainment services. It was only from March 2014 that Entertainment’s website explicitly promoted adult entertainment services by reference to its composite mark (see below). In that period (March 2014 to May 2015), the evidence showed Entertainment had only 2,000 customers. Rares J ruled at [107]:

It is unlikely that the limited use of “centrefold” in Entertainment’s dealings with perhaps, at maximum, the 2,000 individuals who made the bookings (but none of whom, on the evidence, ever received a tax invoice), would have brought its name to their attention, or that of others who may have telephoned the business, as a brand or trade mark rather than, if at all, as a mere reference to a business name. This limited usage would not have brought into the public consciousness the use of “centrefold” as a brand or trade mark in association with the designated services of Entertainment.

The evidence also showed that neither Entertainment nor Metro spent much (if anything) by way of Google AdWords on “centrefold”, focusing their expenditure instead on “strippers” and “waitresses”. There was also evidence a mere 0.39% of hits on Metro’s “Centrefold Strippers” website came via “centrefold”.[3]

Now that all seems uncontroversial. There are some potentially problematic issues.

First, here is one of Entertainment’s Facebook posts from 6 May 2013:

It appears that that was essentially the form of Entertainment’s page from at least early 2012.

One might think that was use of the composite mark as a trade mark for adult entertainment services, albeit not use of the trade mark as registered alone. It seems that the phone number appearing in the ads was a common phone number for XXX Princess and Entertainment and, as already noted, Entertainment’s case seems to have been that the performers were actually arranged by “XXX Princess”. That said, I am rather mystified what Entertainment’s page was doing.

Secondly, there was some evidence of a period late in 2012 where the principal of Entertainment answered the telephone to those calling in to book a performer “Centrefold Entertainment”. It appeared likely that, if the caller was surprised they had not reached XXX Princess, that some business patter was deployed to dispel any confusion. His Honour unsurprisingly, with respect, characterised that use in effect as de minimis.

Thirdly, Entertainment’s evidence was that from September 2012, invoices to all customers were sent out under the composite mark. There was a glitch in the system, however, so it appears no-one received them. Somehow, the performers and Entertainment got paid.

There was also evidence from at least one of the performers that she sent (at least) one invoice for her services into Entertainment by reference to the composite mark. Rares J, however, discounted this as evidence of use on the basis that which entity they were billing was hardly of any moment to the performers and they were rather confused about which company or website they were providing their services through.

The passing off and ACL claims by each party against the other failed on a straightforward application of the Hornsby Building Information Centre case.

By reference to the use of the word “may” in s 126, Rares J considered that the power to grant an injunction was discretionary. If his Honour had not found the trade mark invalid, Rares J would have refused an injunction on the basis of “lack of clean hands”. In promoting its services on the web, Entertainment used photographs of scantily clad young ladies. 90% of the photographs, however, were not of any of its models. They were photographs found on the Internet, including from sources such as “Sports Illustrated”. The Court would not condone such deceptive practices through the coercive power of an injunction.

Metro Business Centre Pty Ltd v Centrefold Entertainment Pty Ltd [2017] FCA 1249

  • with apologies to Seth Justman and the J Geils Band.

  1. Apparently, a “promo model” is someone who provides his or her services to promote a business by, for example, handing out advertising or business cards in a public venue, or acting as an adornment at an event, such as appearing in a manufacturer’s clothing or livery at a trade or motor show. They do not appear naked, or partially naked and get paid $20 – $30 per hour. An adult entertainer (or, often, a “stripper”) would perform naked or partially naked and could earn 10 to 20 times that for a 20 – 30 minute show.  ?
  2. Entertainment’s case was no doubt “assisted” by its principal’s evidence to the effect that he had never heard the term being used to describe “centrefolds”!  ?
  3. The Google Analytics report showed almost 830,000 hits on the website for the relevant period.  ?

IP Amendment (Productivity Commission Part 1 …) Bill – exposure draft

IP Australia has released an exposure draft bill and regulations to implement some of the Productivity Commission’s recommendations from its Intellectual Property Arrangements report. Intended to be the Intellectual Property Laws Amendment (Productivity Commission Response Part 1 and Other Measures) Bill 2017.[1]

According to the news release, the amendments will:

  • commence the abolition of the innovation patent system (PC recommendation 8.1)
  • expand the scope of essentially derived variety declarations in the Plant Breeder’s Rights (PBR) Act (PC recommendation 13.1)
  • reduce the grace period for filing non-use applications under the Trade Marks Act (PC recommendation 12.1(a))
  • clarify the circumstances in which the parallel importation of trade marked goods does not infringe a registered trade mark (PC recommendation 12.1(c))
  • repeal section 76A of the Patents Act, which requires patentees to provide certain data relating to pharmaceutical patents with an extended term (PC recommendation 10.1)
  • allow PBR exclusive licensees to take infringement actions
  • allow for the award of additional damages, under the PBR Act
  • include measures intended to streamline a number of processes for the IP rights that IP Australia administers,

and everyone’s favourite “a number of technical amendments”.

On the parallel imports front, the bill would introduce a new s 122A to replace s 123(1) with the object of overruling the Federal Court’s case law severely restricting the legality of “parallel imports” since the 1995 Act came into force. It’s a “doozy”.

For example, it attempts to reverse the onus of proof that the courts have imposed on parallel importers by providing that

at the time of use, it was reasonable for the [parallel importer] to assume the trade mark had been applied to, or in relation to, the goods by, or with the consent of, a person who was, at the time of the application or consent (as the case may be):

(i) the registered owner of the trade mark; or

(ii) an authorised user of the trade mark; or

(iii) a person authorised to use the trade mark by a person mentioned in subparagraph (i) or (ii), or with significant influence over the use of the trade mark by such a person; or

(iv) an associated entity (within the meaning of the Corporations Act 2001) of a person mentioned in subparagraph (i), (ii) or (iii).

 

I suppose “reasonable to assume” does at least require some objective support for the “assumption”.

The second part – (iii) and (iv) above – is trying to deal with the situation where the registered owner assigns the trade mark to someone in Australia, but with the capability of calling for a re-assignment.[2]

This will require considerable flexibility by the Courts in interpreting “significant influence”.

If you have made such and assignment, or your client has, you had better start re-assessing your commercial strategy, however. The transitional arrangements say the amendment will apply to any infringement actions brought after the section commences. Moreover, this will be the case even if the “infringing act” took place before the commencement date.

Comments should be submitted by 4 December 2017.

Exposure draft bill

Exposure draft EM

Exposure draft regulations

Exposure draft explanatory statement


  1. Seems like the “short title” of bills are reverting to the old form “long” titles!  ?
  2. For example, Transport Tyre Sales Pty Ltd v Montana Tyres Rims & Tubes Pty Ltd [1999] FCA 329.  ?

AIPPI Sydney

Over the weekend, I shall be attending the annual Congress of AIPPI in Sydney.

Lots of interesting sessions and practitioners from all round the world

If you are attending or in the vicinity, say “hello”.

ALDI lookalike survives moroccanoil, but is not natural

Morroccanoil Israel Ltd (MIL) has successfully obtained injunctions against some of Aldi’s lookalike products, but only on the basis that the marketing misrepresented they were “natural” products and further that their argan oil content conferred certain “performance” characteristics. MIL’s claims that the products infringed its trade marks and “passed off” failed. MIL did successfully appeal the Registrar’s refusal to register “Moroccanoil” as a trade mark and fended off Aldi’s attempt to have MIL’s trade marks removed on the grounds that they were not capable of distinguishing.

Katzmann J’s decision runs to 741 paragraphs, so there is a lot more ore to be mined than I shall cover in this blog post.

MIL has two registered trade marks in Australia1 in respect of, amongst other things, hair care products:

TM 1221017
TM 1375954

 

 

 

 

 

Although its get up varied over time, you can get a good idea of how it sold its products in Australia from the following:

Aldi (Like Brands, only cheaper) introduced its own range of Moroccan Argan Oil products such as:2

 

The Trade Mark Infringement Claim

MIL put its case on trade mark infringement on Aldi’s use of Moroccan Argan Oil, not the get up of any product packaging.

Despite Aldi’s reliance on the presence of the PROTANE (or PROTANE Naturals) or VISAGE house brands, Katzmann J had little difficulty despatching the claim that Aldi did not use Moroccan Argan Oil as a trade mark over the fence for six. The term was not purely descriptive; argan oil was only one ingredient of many and only the 11th or 12th ingredient in terms of volume. Viewed objectively, it clearly presented as a badge of origin, especially when depicted with oil drops instead of “o”.

However, Katzmann J held that Moroccan Argan Oil was not deceptively to either trade mark. A central consideration was that each of MIL’s trade marks was a composite mark. “Moroccanoil” was a prominent feature, but the prominent “M” was an equally prominent feature.3

Further, by the time Aldi came to adopt “its” trade mark, there other players in the market using the expression “Moroccan Argan Oil”.

Treating “Moroccanoil” as the relevant essential feature of MIL’s trade marks, Katzmann J accepted that the interposition of “Argan” between “moroccan” and “oil” may well not interrupt the recall of the brand moroccanoil but nonetheless went on to hold at [220]:

…. In my view, there is no real, tangible danger that an ordinary or reasonable consumer with an imperfect recollection of one or other or both those marks or, as was argued, the name “Moroccanoil”, would wonder whether a mark called “Moroccan Argan Oil” is or is associated with either of the composite marks that are the First and Second Trade Marks.  Ignoring similarities in the get-up of the respective products, including the colour-scheme and packaging, I am not satisfied that the hypothetical consumer would mistake the Aldi “Moroccan Argan Oil” mark for the First or Second Trade Marks or wonder whether the Aldi product is made by the owner of the First and Second Trade Marks.  Considering each of the First and Second Trade Marks as a whole, I find that the Aldi mark is not deceptively similar to either of the MIL marks.

Four other points

First, MIL placed heavy reliance on what it said was evidence of 58 consumers being confused that Aldi’s product was MIL’s. These included reports of people who said, or were reported to have said, that they had bought MIL’s products in Aldo’s stores although, of course, MIL’s products were not available in Aldo’s stores.

Only one of those consumers gave direct evidence and Katzmann J considered there were sufficient deficiencies in her evidence to regard her as an unreliable witness.

For example, the witness had a clear recollection of seeing different Aldi products displayed together although it appears to have been accepted they were only displayed in different parts of the store, she referenced MIL’s get up rather than its trade mark, she admitted to being distracted by a distressed child and it emerged that she had not disclosed her previous experience working in advertising as the basis for concluding Aldi’s product was some kind of brand extension.

All the other evidence was the more typical hearsay evidence of employees of MIL and its distributor and stockists about what customers told them. Katzmann J accorded this evidence no weight. Her Honour’s reasons warrant very careful consideration, especially as this type of evidence (if not its scale) is very typical.

206 That is because the evidence largely consists of reports given to others in a way that makes it impossible to decide what was responsible for the confusion. Certainly, there is nothing to suggest that any deceptive similarity arising from the get-up of the products or aspects of it were disregarded. The evidence provides either no or no sufficient foundation for the conclusion that any purchase of an Aldi product was made because of the deceptive similarity of the respective marks.

The indirect nature of the evidence was critical as it meant there was no context to assess the conduct:

207 …. Matters such as the following are often left unclear, or are completely unexplained: whether the person was aware of MIL’s products when they encountered the Aldi products, and if so to what extent; which Aldi product(s) were in issue; in what circumstances the alleged confusion occurred, including what level of attention the person gave to the Aldi products at the time; whether there were other factors at play that might have led to the person acting in the way that they did; and any other relevant circumstances. It would be essential to understand these matters in order to accord any weight to the evidence.

208 In view of the way in which the evidence was adduced (predominantly through witnesses to whom the reports were either directly or indirectly made by anonymous consumers), and in the absence of contemporaneous records, it was not possible for these matters to be explored in cross-examination.

209 Furthermore, even at face value a number of the reports do not bespeak of confusion, let alone deception. In one case, reported by Ms Williamson, the consumer said that she had bought products at Aldi that “look like” MIL’s products. While this is illustrative of similarity, it does not denote deceptive similarity. Some of the evidence consists of second-hand hearsay, such as the complaints received by Thierry Fayard. As a matter of common experience this evidence is unreliable ….

Secondly, MIL sought to rely on Aldi’s alleged intention to trade on MIL’s reputation in its trade marks. There does not seem to have been any real dispute on the evidence that Aldi had set out to “benchmark” its products at least partly on MIL, but also partly on another competing product by Organix:

214 Ms Spinks’4 evidence is insufficient to demonstrate that by the choice of the name “Moroccan Argan Oil” Aldi set out to mislead consumers into thinking that the Aldi brand was moroccanoil. No precise evidence was led as to how Aldi settled on the name “Moroccan Argan Oil” and no questions on this subject were asked in cross-examination. If its object were as alleged, then one would think it would call its products “Moroccan Oil”. The name Aldi chose was different. The name Aldi chose —“Moroccan Argan Oil” — was the name then used by Organix, whose products Aldi had used as the “benchmark” for its shampoo and conditioner. Further, the ultimate product was not taken to market before Aldi had received advice as to compliance with Australian laws. Ms Spinks said that an organisation known as “Silliker” (Silliker Australia Pty Ltd) was retained to undertake “due diligence checks” to ensure that proposed product packaging and labelling complied with relevant “regulations” and the Australian Consumer Law. She was not challenged about this evidence in cross-examination.

A third aspect is that MIL also sought to lead evidence of 13 other major brands which Aldi was said to have knocked off “lookalikes”. MIL wanted to use this evidence as tendency evidence under s 97 of the Evidence Act to show that Aldi deliberately copied product get ups to take advantage of their reputation.

Katzmann J accepted that could potentially be relevant evidence. MIL’s application failed, however, because its notice was not sufficiently specific to comply with the stringent requirements for the admissibility of such evidence and it was given too late. Moreover, the evidence would not carry matters further than the direct evidence of Ms Spinks. At [129]:

… tendency evidence is generally used to prove, “by a process of deduction, that a person acted in a particular way, or had a particular state of mind, on a relevant occasion, when there is no, or inadequate, direct evidence of that conduct or that state of mind on that occasion”: …. Here, however, there was direct evidence from Ms Spinks of the development process in relation to the goods in question. The evidence MIL wished to adduce as “tendency evidence” consisted merely of samples and images of other, unrelated products. It did not include any evidence as to how or why the get-up for the particular products was selected. It takes the evidence given by Ms Spinks no further. Consequently I am not persuaded that the evidence in question has significant probative value.

Even if the tendency evidence had been admitted, it would not have helped on the trade mark case as it was evidence of a tendency to adopt features of get up, not the trade mark itself.

Finally on this part of the case, Katzmann J held that Aldi’s hair brushes and dryers etc. were goods of the same description as the hair care products in class 3 covered by MIL’s registrations. As with Aldi’s own hair care products, however, there was no likelihood of deception or confusion so s 120(2) did not come into play.

The ACL claims

MIL brought three claims under the Australian Consumer Law alleging that Aldi had engaged in misleading or deceptive conduct by:

  1. misrepresenting that its products were MIL’s products or in some way sponsored or associated with MIL (i.e., a passing off type claim);
  2. misrepresenting that its products were made from, or substantially from, natural ingredients; and
  3. misrepresenting that the argan oil in the products gave the products performance benefits which they did not in fact have.

As noted above, MIL succeeded only on the latter two claims.

In relation to the passing off claim, Katzmann J accepted that Aldi had modelled the get up of some of its products on MIL’s get up5 and sought to appropriate some of the reputation of MIL’s products to its own benefit. At [380]:

Aldi unquestionably modelled its Oil Product on the MIL Oil Treatment. Ms Spinks referred to it as “the benchmark” product. Aldi copied several of its “diagnostic cues”, including the use of a bottle very similar in style, size, shape, and colour, the same pump mechanism for the extraction of the oil from the bottle, the use of a cardboard box, and the prominent use of a similar colour for both the bottle’s label and the box. Ms Spinks accepted in cross-examination that Aldi’s object was to achieve an exact colour match with the bottles and conceded that consumers would associate the colour of the bottle and the type of packaging with the MIL product. ….

and

384 The evident purpose of copying important features of the MIL Oil Treatment was to remind consumers of that product. It would be naïve to believe that in doing so Aldi was not seeking to capitalise on MIL’s reputation and attract to itself some of its custom. I find that in adopting the particular get-up for the Aldi Oil Treatment bottle and box, Aldi copied from the get-up of the MIL Oil Treatment and box and that it did so in order to appropriate part of MIL’s trade or reputation or the trade of MIL’s authorised distributors and resellers.

That was not sufficient in itself for a finding of misleading or deceptive conduct. The question was whether or not Aldi had sufficiently distinguished its products from MIL’s.

Katzmann J considered that, if regard were paid only to the similarities between the respective get ups, there would have been a likelihood of deception. However, it was necessary to have regard to the respective get ups as a whole. When considered as a whole, there were important differences which served sufficiently to distinguish Aldi’s products:

  • first, ALDI’s products were prominently branded with its well-established house brands PROTANE or VIGOUR;
  • secondly, MIL’s products featured the very prominent large “M”, which was not replicated in ALDI’s get up;
  • thirdly, in MIL’s products “moroccanoil” appeared vertically, while Aldi used “moroccan argan oil” horizontally only;
  • fourthly, there were significant differences in the packaging, especially the shampoo and conditioner which were closer to the Organix product than to MIL’s;
  • fifthly, the closest products – the competing oil treatment products – were sold by MIL in a glass bottle, but Aldi had used a plastic bottle only;

Her Honour considered that none of these differences were concealed and were at least as conspicuous as the similarities. Further, viewed as a whole, the Aldi range was cheaper and the use of the house mark clearly marked the products out as a different brand. Further, the two businesses marketed their products through completely different trade channels and at very different price ranges.

MIL’s heavy reliance on the similarity of the turquoise colours used did not avail:

413 Colour-blind, inattentive consumers, and consumers with an imperfect recollection of the MIL products might confuse the colours. I accept Professor Quester’s evidence that consumers are unlikely to detect subtle differences in colour between two sets of products as they would not ordinarily engage in a side-by-side comparison. Indeed, I am prepared to accept that a not insignificant number of consumers might think the colours are the same. On the other hand, as Ms Spinks’ evidence shows, at the time Aldi entered the market with “Moroccan Argan Oil”, at least one other company, Organix, was selling hair care products in turquoise containers and also under the name “Moroccan Argan Oil”. Other products, like Pure Oil of Marrakesh, were sold in cartons, bottles and other containers featuring various shades of blue.

414 Knowledge of third-party usage of a particular get-up or name can affect the chances that a consumer might be misled or deceived.

As in Cadbury v Darrell Lea, MIL did not have a monopoly in the colour.

MIL also failed in its attempt to rely on the printing of “Moroccan Oil” on (at least) some Aldi receipts. At [428], they were issued after purchase, which was too late.

As one would expect, the failure of this part of MIL’s ACL claim was also fatal to its passing off claim.

Natural products

I don’t propose to go into the detail of why the use of the brand name Protane Naturals was misleading or deceptive other than to record that Katzmann J did find the brand name deceptive since the relevant products were not substantially “natural” products. There is some quite involved evidence about what a “natural” product is or may be if you are going to get into that sort of thing.

Performance representations

Some of Aldi’s products claimed on their packaging to “helps strengthen hair” and “helps protect hair from styling, heat and UV damage” and similar claims.

Katzmann J rejected Aldi’s argument that this was a reference to the capabilities of the product as a whole rather than as a result of the use of moroccan argan oil. Apart from the presentation on the packaging and the prominence given to that oil, Aldi’s own internal documents claimed it was the argan oil that conferred these attributes.

MIL’s scientific evidence established, however, that there was too little argan oil (which is apparently very expensive) in Aldi’s products to have the desired effects. Needless to say, the expert evidence dealing with this part of the case is also rather involved.

Wrap up

Overall and barring the outcome of any appeal, this seems like a rather Pyrrhic victory for MIL. I don’t have any idea how much damages will flow for the breaches of the ACL. Nonetheless, here is plenty of scope for Aldi to continue using its lookalike get up; the prevention of which was surely the point of the exercise. What is more, the result was achieved only after a very lengthy trial including, amongst other things, eight experts: 2 lexicographers, four marketing experts and two chemists!

Moroccanoil Israel Ltd v Aldi Foods Pty Ltd [2017] FCA 823

  1. Following her Honour’s decision (and barring any appeal), it will have three including TM No. 1463962 “moroccanoil” in respect of Hair care products, including oil, mask, moisture cream, curly hair moisture cream, curly hair mask, curly and damaged hair mask, argan and saffron shampoo, hair loss shampoo, dandruff shampoo, dry hair shampoo, gel, mousse, conditioner and hair spray in class 3. ?
  2. In addition to hair “lotions” such as shampoo, Aldi also marketed hair brushes and powered hair dryers and the like. ?
  3. Those of you who read 140 year old case law might also be thinking about the striking colour scheme. Katzmann J, citing the 5th edition of Shanahan and the Office Manual, held that MIL’s trade marks were not limited to the specific colours as there was no endorsement under s 70 and so the marks were taken to be registered for all colours. One could be forgiven for thinking this approach renders the Register seriously misleading at times. ?
  4. The Aldi employee charged with introducing the range. ?
  5. The Aldi shampoo and conditioner products were “benchmarked” on Organix’ get up, not MIL’s. ?

Government consultation papers on patent and trade marks

Government consultation papers on patent and trade marks

Government consultation papers on patent and trade marks

The Australian government has issued 5 consultation papers on how to implement some of the recommendations it has accepted from the Productivity Commission’s Final Report into Intellectual Property Arrangements:

Submissions are required by 17 November 2017 (with a view to introducing a bill as soon as possible).

I can’t say that introducing yet another inventive step test (there are 4 if you count common general knowledge alone – depending on which regime applies to the patent in question) makes much sense.

Most of the Productivity Commission’s reasoning was based on the common general knowledge alone test used in Alphapharm.1 It did find, however, that there had not been much change in the Commissioner’s rate of granting patents relative to the EPO since the Raising the Bar act was passed. However, so far as I could see, it doesn’t tell us how many applications the Commissioner had examined under the Raising the Bar regime and you would have to guess a large number were still under the 2001 regime.2

Essentially, the Raising the Bar regime allows any piece of prior art to be combined with common general knowledge to test obviousness. It also allows prior art information to be combined in the same way as one might expect an English court or an EPO board would.3 The Raising the Bar regime should in fact operate just like the UK/EPC regime and one would have thought we should give it a good chance to work!

  1. See e.g. the reliance on Angiotech Pharmaceuticals v Conor Medsystems Inc. [2007 EWCA 5 at [43]. ??
  2. The Merial case is the only judicial consideration I am aware of applying the regime introduced in 2001 but, if you know of others, let me know. ??
  3. See e.g. KCI Licensing v Smith & Nephew [2010 EWCA Civ 1260 at 6. ??

 

A real estate franchise agreement

2The Court of Appeal has ruled that Century 21 Australia’s arrangements permitting Victorian Realty Group to trade as “Century 21 Complete Properties” was a franchise agreement for the purposes of the Estate Agents Act 1980 (Vic.).

Section 43(5) of the Victorian Estate Agents Act has its own definition of a “franchising agreement”:

franchising agreement means an agreement whereby an estate agent is authorized to carry on business under any name in consideration of any other person entitled to carry on business under that name receiving any consideration whether by way of a share in the profits of the estate agent’s business or otherwise (emphasis supplied)

One of the reasons this is significant is that each party to the franchising agreement is jointly and severally liable for any defalcations, or negligence, by the estate agent : s 43.

Victorian Realty Group (VRG), while trading as “Century 21 Complete Properties” in Craigieburn, had committed a number of defalcations which resulted in 13 of its clients losing money. Those clients were compensated out of the Victorian Property Fund. The Secretary brought proceedings against Century 21 Australia, the franchisor1 under s 43 to recover those payouts.

Under the terms of the franchise agreement, and the incorporated Policy and Procedures Manual, Century 21 Australia granted VRG the right and obligation to trade exclusively under the name Century 21 Complete Properties. There were other rights and obligations to use “Century 21” in the various ‘trademarked’ forms, and to use various systems and participate in the Century 21 marketing plan. In other words, you and I would consider it a pretty typical example of a franchise arrangement.

The trial judge, however, found that the arrangement was not a “franchise agreement” as defined in s 43 because of the words in the definition “under that name”. VRG was authorised only to carry on business under the name “Century 21 Complete Properties”, not just “Century 21”; and “Century 21 Australia”, the franchisor, did not carry on business under that name.

The Court of Appeal unanimously allowed the Secretary’s appeal. As a matter of practicality and commercial reality both VRG and Century 21 Australia were carrying on business under “Century 21”, not just their respective formal names:

50 In its written case, the respondent seemed to accept that the Franchise Agreement was an agreement that would ordinarily be described as, and understood to be, a franchise agreement. The respondent’s written case described the Franchise Agreement as ‘the unambiguous franchise agreement in this case’. That description was, with respect, apposite. While that description does not relieve the Court of its obligation to properly construe and apply the definition of ‘franchising agreement’, it brings into focus the question of what legislative purpose might possibly exist in differentiating between franchise agreements that have different provisions as to trade names and the terms upon which their use is or is not permitted. That said, it is of course the text of the statutory definition that is paramount in the resolution of this proceeding.

51 ‘Century 21’ is a name. Equally, one might describe the relevant circumstances in this case as involving the use of a name being ‘the Century 21 name’. When one examines the Franchise Agreement (including the P&P Manual) it seems to us that that agreement authorised VRG to carry on business under the name ‘Century 21’ or the Century 21 name. Like any franchise agreement, it did so on particular terms. We have already set out the relevant terms in the present case. The existence of those terms does not gainsay the fact that the Franchise Agreement was one which authorised VRG to carry on business under the Century 21 name.

52 Similarly, in our view, the International Agreement entitled the respondent to carry on business under the name ‘Century 21’ or the Century 21 name within the meaning of the statutory definition. In our view, this conclusion accords with the text of the definition construed, as it must be, in its context and by reference to the legislative purpose of the provisions of the Act.

The focus on commercial reality is no doubt to be welcomed. The decision, however, has little direct relevance to the broader definition of “franchise agreement” for the purposes of the Franchising Code of Conduct as that is not tied just to a name. Instead, clause 5 of schedule 1 to the Competition and Consumer (Industry Codes – Franchising) Regulation 2014 applies to agreements which satisfy 3 requirements including (by way of contrast to the Estate Agents Act) the rather more broadly expressed operation of a business substantially or materially associated with a trade mark, advertising or commercial symbol. More fully, a franchise agreement is an agreement:

(b) in which a person (the franchisor ) grants to another person (the franchisee ) the right to carry on the business of offering, supplying or distributing goods or services in Australia under a system or marketing plan substantially determined, controlled or suggested by the franchisor or an associate of the franchisor; and

(c) under which the operation of the business will be substantially or materially associated with a trade mark, advertising or a commercial symbol:

(i) owned, used or licensed by the franchisor or an associate of the franchisor; or

(ii) specified by the franchisor or an associate of the franchisor; and

(d) under which, before starting or continuing the business, the franchisee must pay or agree to pay to the franchisor or an associate of the franchisor an amount including, for example

Secretary to the Department of Justice and Regulation v Century 21 Australia Pty Ltd [2017] VSCA 205

  1. Century 21 Australia had been appointed the master franchisee for Australia by Century 21 International with powers to appoint and manage “Century 21” franchisees here. ??
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