O’Callaghan J has awarded “The Practice” $200,000 in damages against The Practice Business Advisers & Tax Practitioners for trade mark infringement.
The Practice has been the owner since 2016 of Registered trade mark No 1757523:
for tax, accounting and business management services in class 35 and financial advisory and tax services in class 36. It had been using this trade mark since 2014, having adopted it in place of two rather more stylised logos in use from 1999.
The Respondent was incorporated in January 2017 and began providing business advisory and accountancy services under this logo:
In addition to the logo and in perhaps something of a differentiation from The Agency case, the evidence showed the Respondent’s website also featured:
(i) “At the Practice, our purpose is to Open New Possibilities and Add Value to Your Business”;
(ii) “The Practice can help you with: >> Taxation Advice >> Tax Planning >> Tax Effective Structures”;
(iii) “The Practice has the best business advisory accountants to guide you through this process.”;
(iv) “Contact The Practice”;
(v) “The Practice offers a full suite of financial and administration solutions for business such as small business bookkeeping in Melbourne and preparing sample small business financial statements”;
(vi) “Whether you need big or small business succession planning, The Practice is here to help.”;
(vii) “The Practice: Experts in Tax Compliance for Small Business”; and
(c) The following statements on the Respondent’s social media accounts:
(i) “The Practice can provide the tax solutions you need.”;
(ii) “The Practice’s Main Purpose is to open new possibility and add value to your business”;
(iii) “Here at The Practice, we tailor our services to meet the unique needs of your business”; and
(iv) “Let The Practice provide tax and business solutions for you!”
(d) On invoices sent to clients the words “THE PRACTICE” are shown in different coloured font to the rest of the invoice, with “THE” in light blue and “PRACTICE” in dark blue.
(e) Mr Hassan’s email signature has the words “The Practice” in bold font above the italicised words Business Advisers and Tax Practitioners.
(the emphasis was added by O’Callaghan J).
Perhaps the most interesting aspect of the case is that the Respondent sought to rely on the use of own name in good faith (s 122(1)(a)) and honest concurrent user (s 44(3) via s 122(1)(f) and (fa) as defences to infringement.
In rejecting both defences, O’Callaghan J considered at [61] and [88] that a person would not be acting in good faith (or honestly) if they did not take the steps that an honest and reasonable person would take to ascertain the ability to use the trade mark; they had in effect taken a risk.
The basis of these defences were searches that Mr Hassan, the sole director of the Respondent, claimed to have made. These claims were rejected. They came under sustained attack as “recent invention”. But O’Callaghan J also pointed out, Mr Hassan claimed to have searched terms like “The Practice Business Advisers and Tax Practitioners”; no where did he claim simply to have searched “The Practice”. Moreover, while Mr Hassan did claim to have undertaken a trade mark search, that was only back in 2001 when he was adopting a different version of the name.
O’Callaghan J did not accept the argument that the Respondent was only a one man company, not a large multinational (at 71] to [72]):
I cannot accept that submission. In my view, a person in the respondent’s position acting honestly and reasonably would have conducted far more extensive and thorough searches than Mr Hassan says he did to ensure that his chosen name did not conflict with a registered trade mark. In those circumstances it is unnecessary to consider the veracity of Mr Hassan’s evidence about his searches in 2013, 2014 and 2017.
The onus was on the respondent to prove that it had used reasonable diligence to ascertain that a chosen name did not conflict with a registered trade mark and in my view, the respondent has not discharged that onus for the reasons I have given.
The $200,000 damages were comprised of $100,000 compensatory damages and $100,000 additional damages. The judgment doesn’t disclose the scale of the Respondent’s business or its impact on the applicant’s business – other than it was a one man company.
The Practice Pty Ltd v The Practice Business Advisers & Tax Practitioners Pty Ltd [2024] FCA 1299
A trade mark registration may be attacked, or its registration opposed, on the grounds that the application was made in “bad faith“.
Basing themselves on UK decisions on the corresponding provision, Australian courts have sought to test this by whether people adopting proper standards would regard the decision to (apply to) register the trade mark as “falling short of acceptable commercial behaviour”. See e.g. Fry Consulting at [165] and DC Comics at [62].
Generally speaking, influenced by the examples in the EM, this has meant allegations of bad faith have tended to have success where the applicant can be said to have been aware of some other person’s trade mark and has sought to take advantage of that unfairly or opportunistically.
The IPKat, however, reports that the UK Supreme Court has accepted bad faith may be found where the applicant did not have an intention to use the trade mark in relation to all the goods, or services, specified in the application.
This decision was reached in circumstances where Sky’s trade mark was registered in respect of:
(a) good which it never had any intention of using – such as “bleaching preparations” and “whips”;
(b) categories of goods and services such as “computer software” which were so broad that Sky could not have intended to use its trade mark across the full range; and
(c) in some cases all goods or services in particular classes.
Now, it is certainly arguable that Lord Kitchin’s reasoning is not directly transferable to Australia as it was made under the strictures of EU law and his Lordship considered that the position under the 1938 Act had been superseded and replaced by the requirements of the 1994 Act implementing the requirements of the EU Trade Marks Directive.
That said, as Lord Kitchin pointed out, the EU regime has been developed to implement obligations under the Paris Convention and the TRIPS Agreement – both of which our 1995 Act sought to implement.
Moreover, Lord Kitchin recognised that challenges based on non-use did not preclude a challenge on the grounds of bad faith. At [193] – [194], his Lordship explained:
Indeed, in Ragopika at [73] – [74], Kennett J considered that “bad faith” requires to be tested by whether or not the conduct involves and attempt to use the trade mark system contrary to the purposes of the system:
What these examples have in common is an attempt to use the statutory regime for registration and protection of trade marks for a purpose that is foreign to the purposes of that regime, and undermines or hampers the proper use of that regime by businesses consistently with those purposes. Trade mark legislation balances various interests, as discussed by reference to the 1955 Act in Campomar Sociedad, Limitada v Nike International Limited [2000] HCA 12; 202 CLR 45 at [40]–[49], but its objectives can be said to boil down to “consumer protection and protecting the interest of traders in both the goodwill associated with their trade mark and the value of the registered trade mark as property in its own right” (Davidson and Horak, Shanahan’s Australian Law of Trade Marks and Passing Off (7th ed, Thomson Reuters 2022) at [1.05]). A leading English case described registration of a trade mark as “designed to enable bona fide proprietors to protect their proprietary rights without having to prove unfair trading” (Harrison v Teton Valley Trading Co Ltd [2004] 1 WLR 2577 at [24], quoted in Fry Consulting at [147]).
The concept of “falling short of acceptable commercial behaviour”, as an aspect of or pointer to “bad faith”, needs to be understood in this context and anchored in the Act. The behaviour needs, in my view, to be more than simply ruthless or morally questionable. If not actually fraudulent or dishonest, it needs to have some quality that makes it repugnant to the purposes for which the statutory regime exists. ….
His Honour’s reasoning is reflected in Lord Kitchin’s analysis. So, at [152] – [153], Lord Kitchin explained:
Wheelahan J has ruled that Vittoria’s[1] instant coffee jar did not infringe the registered trade mark for the shape of the Moccona instant coffee jar, TM 1599824. In some consolation for KDE, however, Wheelahan J also rejected Vittoria’s attempts to have the Moccona shape trade mark cancelled.
Moccona “shape” TM
As well as (non-)infringmenet, his Honour’s 603 paragraphs cover a kitchen sink of issues including s 41, s 59, bad faith, fraud, false suggestion or misrepresentation, non-use, authorised use and, just in case the infringement case did not succeed, misleading or deceptive conduct / passing off.
One interesting aspect of this case is that both sides relied on evidence from marketing experts and industrial designers although the industrial designers proved more useful (for the Judge) than the marketers.
To give some context to the infringement findings, it is as well to start with the attack on validity.
For the purposess of this post, I will touch on the s41 attack only.
Not inherently adapted to distinguish
Wheelahan J held that the Moccona jar had no inherent capacity to distinguish at all. However, TM 1599824 was filed on 7 January 2014 and KDE had used it so extensively that it has acquired secondary meaning so that it did in fact distinguish coffee as coming from KDE.
Although the shape was the shape of a container and, unlike Kenman Kandy, not the shape of the goods – coffee, a container for “otherwise formless goods” which was purely functional could not be adapted distinguish; there must be something “extra” about the shape. (At [258] – [259]).
The Moccona coffee jar was not purely functional: it was not a plain box, sachet, tube, tin or carton. It had relatively squat proportions, a double-tiered lid and a particularly shaped shoulder.
However, the expert evidence considered the shape was essentially a traditional jar shape. There was evidence of similarly shaped jars for other prodcts, the shape was similar to food preserving jars and at least two producers, Andronicus and Park Avenue, had used similarly shaped jars in the 1980s and 1990s.
In light of this evidence, Wheelahan J considered that the non-functional features of the Moccona jar played an aesthetic role but did not play the role of a badge of origin. At [267]:
even those features of the KDE shape mark that do play an aesthetic role still do not serve any inherently distinctive role. Rather, features such as the double-tiered lid and the shoulder of the jar serve to evoke a particular tradition, forming part of the common heritage. In other words: the KDE shape mark is both primarily functional and, to the extent that it is not functional, it draws on features of the common heritage that are not apt to distinguish the goods of any one trader.
Secondary meaning
His Honour found, however, that KDE had used the shape of the Moccona jar sufficiently that it had become distinctive in fact of KDE thereby defeating the operation of s 41(3).
A number of factors led to this conclusion.
First, there were numerous coffee jars and containers in evidence but within the diversity of shapes and sizes, the Moccona jar was distinct ([293]).
Secondly, in 1981, the then rival Andronicus brand had run an advertisement featuring an unlabelled Moccona-shaped jar to identify the expensive import which Andronicus sought to be compared to and compete with ([294] – [296]).
Thirdly, while Andronicus and Park Avenue had used jars similar to the Moccona jar in the 1980s and 1990s, there was no evidence of anyone supplying instant coffee in such a shaped jar since then – except of course “Moccona” ([297]).
Fourthly, there had been some (Cantarella described it as “limited”) television or streamed video advertising in which the jars had been depicted without any labelling.[2] The “Moccona” trade mark did appear at various points in the advertisements, sometimes in close proximity to the jars, but not actually on the jars themselves. For example, Wheelahan J explained of one advertisment in the course of rejecting the non-use attack (at [352]):
Unlabelled Moccona coffee jars
The “Dec Jar 2022” video, which related to the “Be Inspired” range of limited-edition Moccona glass jars, is striking. This video — which, I have already noted, has been viewed more than one million times — shows six unlabelled Moccona jars together and individually. The video never shows the jars with a Moccona label. While the Moccona logo does appear at certain points, this video illustrates clearly how the applicants have deployed the shape of the jar as a trade mark. It was accepted that the actual jars depicted, when sold in supermarkets, did bear Moccona labels. The fact that the applicants chose to advertise the jars without the Moccona labels, however, indicates that the jar was being used as a device that, in and of itself, marked out the coffee within the jars as Moccona coffee. The Moccona logo appearing in the advertisement was relatively small, and was not dominant when compared with the jars. Viewed objectively, this video is an instance of the KDE shape mark being used as a device indicating the origin of the coffee contained within the jars, and thus as a trade mark.
Returning to the question of acquired distinctiveness, his Honour concluded at [306]:
…. But from when the Andronicus advertisement was broadcast in 1981, the applicants developed a significant association between their coffee products and the jar shape in which those products were sold. In the two decades immediately preceding the priority date, there were no competitors using jars that were apt to detract from the effectiveness of this use as a badge of origin. That provides the context in which the advertisements described above must be understood. Especially by means of those advertisements, which I find to have been extensive given the amount of revenue spent on advertising that was the subject of confidential evidence, the applicants clearly deployed the KDE shape mark as a badge of origin in the last decade before the priority date. In all of the circumstances, I consider that this amounted to such significant use of the KDE shape mark as a badge of origin before the priority date as to satisfy the test of use under s 41(3)(b).
The confidentiality of the advertising expenditure figures makes it a bit difficult to assess the extent of use. Also, by my count, there were 14 TVCs / YouTube videos of which 4 or possibly 5 were before the priority date. Four of those 5 were shown in free-to-air and pay TV (presumably reaching national audiences); the fifth in 2014 was shown to have had 19,000 views. Some of the later videos were shown to have hundreds of thousands of views and even millions.[3]
Authorised use
Cantarella argued that KDE could not rely on the advertising in Australia as that advertising was produced and run by JDE Australia. JDE Australia was not a subsidiary of KDE (nor KDE, a Netherlands company) of JDE Australia. Both, however, were subsidiaries of the same ultimate parent company.
Wheelahan J found that JDE Australia’s use was nonetheless use under KDE’s control and so qualified as authorised use.
First, the evidence showed that the coffee sold in Australia had been manufactured in a factory in the Netherlands by JDE Netherlands. JDE Netherlands sold the coffee in the jars to JDE Australia. JDE Netherlands was a wholly-owned subsidiary of KDE and both shared the same address. In these circumstances, Wheelahan J at [322] was willing to infer JDE Netherlands made and sold the coffee under KDE’s control.
Cantarella argued there was no evidence that the glass jars themselves had been manufactured under KDE’s control. Wheelahan J considered this was not necessary. At [323]:
…. The question posed by s 8(3) is whether “the owner of a trade mark exercises quality control over goods or services” in relation to which a trade mark is used. Having regard to the registration of the KDE shape mark in this case, s 8(3) will be satisfied if KDE exercised quality control over the coffee or instant coffee in relation to which the shape mark was used. It is not to the point whether KDE oversaw the manufacture of the glass jars in which the coffee was sold.
I am not sure I would be willing to advise a client not to control the manner of use of the trade mark as well as the quality of the goods or services being provided. Although one might expect in this situation it was fairly safe to assume KDE was not letting JDE Netherlands send out coffee in cracked or otherwise deficient jars.
In any event, Wheelahan J also found a second basis for finding quality control. Cantarella pointed to the fact that, unlike Trident Seafoods, KDE and JDE Australia did not have common directors.
Wheelahan J accepted at [331] that common directors was one of three key considerations in the Trident Seafoods court finding a “unity of purpose” between the user and the trade mark owner. It was a significant, but not determinative, factor. His Honour considered that the principle emerging from Trident Seafoods was that “unity of purpose” would be indicative of actual control by the trade mark owner over use of the mark. Whether sufficient “unity of purpose” could be inferred will vary from the circumstances of individual cases.
In addition to the two companies both being members of the same corporate group, JDE Australia was a wholly-owned subsidiary of DE Investments. During the relevant non-use period, DE Investments and JDE Australia did share some directors.
Moreover, DE Investments and KDE had entered into a licence agreement as a result of which JDE Australia was required to comply with KDE’s “brand guidelines” and, further, to obtain KDE’s approval before introducing “any new key communication asset in Australia”. At [335], Wheelahan J found KDE did in fact exercise actual control over the advertising used by JDE Australia.
As a result, Wheelahan J found that KDE, DE Investments and JDE Australia shared a common purpose of deploying KDE’s intellectual property for the purposes of the global group.
Unless you’re acting for someone being sued by such a global tentacle, we can all with respect breathe a sigh of relief.
Infringement – or not
While Wheelahan J rejected Cantarella’s wide-ranging attacks on the validit of KDE’s registered trade mark, his Honour found Cantarella’s Vittoria jar did not infringe.
First, his Honour held that the Vittoria jar was not actually used as a trade mark.
The jar itself was relatively plain, in contrast to the Moccona jar, and for that reason less likely to draw attention. Moreover, there was no evidence of Cantarella advertising its products in unbranded jars.
And, while the use of the Vittoria logo was necessarily smaller than the jar itself, his Honour considered the Vittoria logo served the trade mark function, in some cases “swamping” any possibility that the jar would be seen as a trade mark.
An advertisement for Vittoria coffee
As his Honour explained at [463] of this advertisement:
…. the overall impression I gain from this advertisement is of a Vittoria-branded product that is packaged in a particular jar. Without more, featuring a product in its packaging as part of an advertisement does not constitute trade mark use. Nothing about the advertisement is apt to suggest to a viewer that Vittoria coffee can be distinguished from the coffee of other traders by the relatively plain shape of the jar alone. ….
Similarly, at [475] the overall appearance of the aisle fins featuring the Vittoria product including the fact that the whole product was displayed, the plainness of the jar and the prominence of other branding elements led his Honour to distinguish RB Hygeine on its facts.
Aisle fin for Vittoria coffee
Secondly, while Wheelahan J accepted KDE’s argument that purchasers of instant coffee do not spend a long time deciding which products to buy, his Honour considered at [496] (and [502]) that there was no “real, tangible risk that a notional buyer, with a recollection only of the KDE shape mark’s rough proportions and general shape, would be perplexed, mixed up, caused to wonder, or left in doubt, about whether instant coffee sold in the Cantarella jar shape has the same commercial source as coffee sold in the KDE shape mark.”
Moccona coffee jarVittoria coffee jar
Wheelahan J considered that a notional consumer would recall three core features of the Moccona jar: its overall proportions being a fairly squat body sitting beneath a slowing sloping should and lid; the body being roughly two thirds of the overall height. Secondly, the shape of the shoulder and the neck. Thirdly, the height of the lid.
In contrast, Cantarella’s jar had a much taller body compared to its width; the shoulder was quite rounded and involved very little height and the lid appeared as a single, flat disk wider than the neck. At [502]:
The buyer would view the Cantarella jar shape as noticeably taller in its proportions, with a compressed neck section, and a plain, low lid. Even with the imperfect recollection outlined above, there is no real risk that a buyer could confuse the Cantarella jar shape, in view of its distinct visual impression, with the KDE shape mark.
A short comment on the evidence of the marketing experts
At [187], Wheelahan J recorded that he did not find the evidence of the marketing experts of much assistance. This was essentially because the experts addressed (and had been asked by the parties to address) marketing concepts rather than the legal concepts related to trade mark use.
In the case of Prof. O’Sullivan (called by JDE), this was because his evidence was directed to “diagnostic cues”; features used by consumers to identify something or distinguish it from something else. Wheelahan J considered this did not address whether the features the Professor identified functioned as a “badge of origin”. As his Honour explained by way of an example at [190]:
For example, if only one producer of instant coffee were to market a 750-gram jar, consumers could successfully rely on the size of the jar as a “diagnostic cue” for identifying that producer’s coffee. But, without more, nothing about this example suggests that the size of the jar is being used as a badge of origin. In this way, the concepts deployed by Professor O’Sullivan were too broad to answer the narrower question the Court must confront.
On the other hand, Vittoria’s Mr Blanket addressed questions about “the core elements of a brand” rather than whether some feature was being used as a trade mark. Wheelahan J explained at [191]:
…. He seemed to suggest that a feature will not amount to a core element of a brand, or perhaps even a brand element at all, if the feature does not appear consistently in relation to the entire range of products within the brand, or if it is not necessary for consumers to use for the purposes of identifying products within that brand. During cross-examination, examples were given of the Coca-Cola bottle and the triangular prism involved in the Toblerone packaging. Mr Blanket appeared to suggest that the bottle and packaging would not amount to core brand elements because some Coca-Cola and Toblerone products are sold without them. ….
Wheelahan J also considered that “certain aspects” of the experts’ evidence were not persuasive, even in their own terms.
Thirdly, Wheelahan J considered the marketing experts’ evidence did “not provide great assistance” as it was directed the to “jury issues” which were ultimately matters for the Court to decide.
Given the expense of deploying marketing evidence, very careful thought indeed needs to be given to its desirability and how it can be made useful
The advertisements and stills extracted from them are discussed at [45] – [88]. Unlike the YouTube video in Motherland, KDE’s evidence included evidence of broadcast on Australian TV or “views” by Australian consumers. ?
