MOTHER

A cautionary trade mark tale

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In a rare case of a successful opposition under s 59, Energy Beverages has successfully opposed in the Court KMA’s attempt to register KANGAROO MOTHER.

Overview

As you might recall, Energy Beverages is the owner of registered trade marks in Australia for MOTHER in respect of amongst other things, non-acoholic beverages in class 5 and pharmaceutical and veterinary preparations, dietetic substances and food and beverages for babies in class 32.[1]

A New Zealand company, Erbaviva, applied to register KANGAROO MOTHER for a range of goods in classes 5, 29, 30, 31 and 32. Subsequently, the application was assigned to KMA. A Mr Zheng was the sole director and shareholder of both companies.

Energy Beverages’ opposition to the application on the basis of ss 42(b), 44 and 60 of the Trade Marks Act was unsuccessful. Energy Beverages “appealed” the Delegate’s decision to the Federal Court on the basis of s 59, s 44 and s 60.[2]

Secion 59

Section 59 provides:

The registration of a trade mark may be opposed on the ground that the applicant does not intend:

(a) to use, or authorise the use of, the trade mark in Australia; or

(b) to assign the trade mark to a body corporate for use by the body corporate in Australia;

in relation to the goods and/or services specified in the application.

which mirrors s 27.

Unlike s 92(4)(a), however, the person opposing registration under s 59 bears the onus of proving the lack of the requisite intention.

In very broad terms, this requires demonstration that the applicant does not have “a resolve or settled purpose at the time the application was filed to use the trade mark as a trade mark in relation to the relevant goods or services. A mere ”speculative possibility“ or ”a general intention to use the mark as some future but unascertained time” is not enough.

What happened

Before he incorporated Erbaviva and later KMA, Mr Zheng worked as the “Assistant to the Group Chairman” of NZ Skin Care Company. NZ Skin Care Company, as its name suggests, sold a range of skin care products and also home cleaning products.

The Group Chairman Mr Zheng assisted was a Mr Liu. Mr Liu was also the Chairman of a Chinese company, Shanghai Urganic. Mr Liu, however, was not a director of NZ Skin Care Company and Shanghai Urganic was not a shareholder in NZ Skin Care Company (although later it did become the ultimate shareholder of that company).

While he was still working for NZ Skin Care Company, Mr Zheng incorporated Erbaviva to sell “Erbaviva” brand skin care products and, after the trade mark application in issue had been filed, KMA. Neither company, however, has ever traded.

In the course of 2018, Erbaviva applied for and became registered as the owner of trade marks for a “Kangaroo Mother” logo and Kangaroo Mother in respect of a range of goods in classes 3, 5 and 21.[3]

In February 2019, Mr Zheng received an email from a Shanghai Urganic employee, Ms Lim,[4] informing him that Director Liu had “mentioned” we should apply for a food trade mark for “Kangaroo Mother”. Ms Lim supplied a catalogue for another company’s products to illustrate the goods under consideration. This exchange led to the application the subject of the appeal.

After some back and forth, Mr Zheng contacted Erbaviva’s then trade mark attorneys with instructions to file a trade mark application in Australia for a range of goods in classes 5, 29, 30, 31 and 32. (With the exception of “chocolate flavoured cola drinks”, Mr Zheng had simply cut and pasted the specification for another, unrelated company’s trade mark he had found on the IPONZ site.)

The attorney indicated he could file for this range of goods but proposed he amend it to ensure that Erbaviva had “the widest scope of protection in those classes.” So, after Mr Zheng approved that proposal, the application wound up in the form under opposition.[5]

What O’Callaghan J found

As the application was filed in Erbaviva’s name, the relevant intention was Erbaviva’s at the time the application was filed. That is, the question was whether or not Erbaviva had an intention to use the trade mark in any of the ways specified in s 59 when it filed the application.

O’Callaghan J held it did not.

First, the goods specified in the application as filed were much broader than those suggested by Ms Lim or proposed to the attorney by Mr Zheng.

Secondly, in cross-examination Mr Zheng’s evidence was that he did not regard Ms Lim’s report about what Director Liu “mentioned” as an instruction.

Thirdly, there were no documents produced through discovery or evidence of any plan or proposal beyond use for “gel candies, pressed candies, drops, powdered dairy products, solid beverages or capsules”.

Fourthly, Mr Zheng had simply cut and paste the specification he proposed to the attorney in a matter of minutes.

Fifthly, although the application had been made over four years ago, there was no evidence of any use or preparations to use.

Sixthly, there was no evidence to support the contention that Shanghai Urganic, NZ Skin Care Company and Erbaviva were part of a “conglomerate” (see “secondly” above).

Mr Zheng’s evidence unfortunately only went as far as claiming Erbaviva intended to use or authorise another company to use. So submissions that it intended to assign to KMA on its incorporation did not fly.

The evidence also included a non-disclosure agreement with an Australian manufacturer of various goods, but the counterparty was NZ Skin Care, not Erbaviva.

So O’Calaghan J found the s 59 ground proven and allowed the appeal to refuse registration. By way of obiter, O’Callaghan J would also have upheld the opposition grounds under s 44 and s 60.

Some observations

As noted above, successful oppositions under s 59 are not very common in view of the onus – unlike removal actions under s 92 in which s 100 places the onus on the trade mark owner to prove use.[6] And this case seems to have been particularly assisted by Mr Zheng’s problematic evidence and the amorphous nature of the relationship(s) with Director Liu.

That said, the first thing to note is that Energy Beverages did not pursue the ground before the Registrar but only on “appeal” where the Court procedures of discovery and cross-examination were deployed.

Next, it is significant that this was an opposition rather than an application under s 92. This is because O’Callaghan J followed Yates J’s decision in Apple (at [232]) and accepted that the whole application should be rejected if it failed in respect of any specified goods. At [28]:

There is but one application covering registration of the mark for all the services that have been specified. If the application fails in one respect, it fails as a whole….

In contrast, an application under s 92 may often result in removal of some, but not all, goods or services.

Thirdly, recognising this problem, KMA made an application on the penultimate day of the trial under s 197 to amend the specification of goods for a much more limited scope.

At [35], O’Callaghan J accepted that he should exercise this power in similar manner to that exercised by the Court when considering amendments to patents under s 105 of the Patents Act. That is, the power to amend was discretionary and required consideration of all the circumstances including when the owner became aware of the need to amend and any explanation for delay.

At [36] – [38], O’Callaghan J refused the request. KMA had been aware that Energy Beverages relied on the Apple approach from at least the opening. KMA failed to provide any explanation for its delay or the basis on which it proposed to exclude some goods but not others. Also, Erbaviva had deliberately sought the widest scope of protection possible, much broader than its own instructions.

In that connection, it is unusual to get the communications between the client and the attorney. While it is part of our jobs to ensure the client is getting appropriate protection, this case should serve as a warning against being too enthusiastic.

The question of discovery is also instructive. In October 2022, KMA had made discovery of 5 documents and a number of other documents over which privilege was claimed.

Two days before trial, however, KMA announced it proposed to rely on documents over which it had previously claimed privilege and, in the course of the trial just before Mr Zheng’s cross-examination, KMA sought to rely on a “further, extensive, tranche of documents which ought to have been produced in answer to the order for discovery”. At [62], O’Callaghan J invoked Aon Risk and refused that attempt on the grounds of prejudice and KMA’s failure to adequately explain the delay.

Energy Beverages LLC v Kangaroo Mother Australia Pty Ltd [2023] FCA 999 (O’Callaghan J)

  1. The class 32 goods were specified in TM No 1320799 for the “Mother” mark in gothic script.  ?
  2. Because the “appeal” is a hearing de novo, it is possible to raise grounds not raised before the Registrar.  ?
  3. After the trade marks were assigned to KMA, the logo mark has subsequently been removed for non-use under s 92 on application by Energy Beverages. KMA did not seek to defend the non-use application.  ?
  4. Although not an employee of NZ Skin Care Company, she did have the use of a NZ Skin Care Company email account.  ?
  5. Reasons for decision at [93] – [94].  ?
  6. S 92(4)(a) can be rebutted by showing use in good faith after the application was filed. And s 92(4)(b) proceedings can be brought only after the expiry of the period specified in s 93 (which is different depending on whether the application was filed before or after the Productivity Commission Implementation Act amendments).  ?

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Motherland, Mothersky and Mother

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The Full Court has allowed Energy Beverages’ (EB) appeal opposing Canteralla’s registration of MOTHER as a trade mark for coffee and related products. However, the Full Court rejected EB’s appeal against the removal of its MOTHERLAND trade mark for non-use. In the process, the Full Court provided helpful clarification of the role of Trade Marks Act s44(3)(b) “other circumstances”.

Some background

Cantarella applied to register MOTHERSKY in class 30 in respect of coffee, coffee beans and chocolate, coffee beverages and chocolate beverages and in class 41 in respect of coffee roasting and coffee grinding (TMA 1819816).

EB – the producer and distributor of the MOTHER energy drink – opposed, relying on its prior registered trade marks for MOTHERLAND (TM 1345404), MOTHER LOADED ICED COFFEE (TM 1408011) and MOTHER (TM 1230388) all registered, amongst other things, for non-alcoholic beverages.

Cantarella countered by seeking the removal of the MOTHERLAND and MOTHER LOADED ICED COFFEE marks for non-use under s 92 and deleting coffee beverages and chocolate beverages from its specification of goods.

The delegate ordered removal of MOTHERLAND (here) and MOTHER LOADED ICED COFFEE (here) from the Register for non-use. The delegate also dismissed EB’s opposition to the registration of MOTHERSKY. On appeal, the primary Judge upheld the delegates’ decisions.

EB sought leave to appeal the decisions in respect of MOTHERLAND and allowing the registration of MOTHERSKY. The Full Court refused leave to appeal the MOTHERLAND decision but allowed leave and upheld the appeal against registration of MOTHERSKY.[1]

MOTHERLAND

At [61], the Full Court quoted the well settled principles for trade mark use from Nature’s Blend:

(1) Use as a trade mark is use of the mark as a “badge of origin”, a sign used to distinguish goods dealt with in the course of trade by a person from goods so dealt with by someone else: Coca-Cola Co v All-Fect Distributors Ltd (1999) 96 FCR 107 at 19; E & J Gallo Winery v Lion Nathan Australia Pty Ltd (2010) 265 ALR 645 at [43] (Lion Nathan).

(2) A mark may contain descriptive elements but still be a “badge of origin”: Johnson & Johnson Aust Pty Ltd v Sterling Pharmaceuticals Pty Ltd (1991) 30 FCR 326 at 347–8; 101 ALR 700 at 723; 21 IPR 1 at 24 (Johnson & Johnson); Pepsico Australia Pty Ltd v Kettle Chip Co Pty Ltd (1996) 135 ALR 192; 33 IPR 161; Aldi Stores Ltd Partnership v Frito-Lay Trading GmbH (2001) 190 ALR 185; 54 IPR 344; [2001] FCA 1874 at [60] (Aldi Stores).

(3) The appropriate question to ask is whether the impugned words would appear to consumers as possessing the character of the brand: Shell Company of Australia Ltd v Esso Standard Oil (Australia) Ltd (1963) 109 CLR 407 at 422; [1963] ALR 634 at 636; 1B IPR 523 at 532 (Shell Co).

(4) The purpose and nature of the impugned use is the relevant inquiry in answering the question whether the use complained of is use “as a trade mark”: Johnson & Johnson at FCR 347; ALR 723; IPR 24 per Gummow J; Shell Co at CLR 422; ALR 636; IPR 532.

(5) Consideration of the totality of the packaging, including the way in which the words are displayed in relation to the goods and the existence of a label of a clear and dominant brand, are relevant in determining the purpose and nature (or “context”) of the impugned words: Johnson & Johnson at FCR 347; ALR 723; IPR 24; Anheuser-Busch Inc v Budejovicky Budvar (2002) 56 IPR 182; [2002] FCA 390 (Anheuser-Busch).

(6) In determining the nature and purpose of the impugned words, the court must ask what a person looking at the label would see and take from it: Anheuser-Busch at [186] and the authorities there cited.

The problem for EB was that its product is the energy drink MOTHER and its uses of MOTHERLAND focused on it being a fictional fantasyland tailored to “MOTHER-drinking” consumers.

An example of its use, taken from one of two commercials using MOTHERLAND, is:

Another example of use – the description in the “About Us” page of EB’s YouTube channel was “Welcome to MOTHERland”.

The Full Court considered that EB used only MOTHER as a trade mark in respect of energy drinks; MOTHERLAND was just used as the name of the fictional theme park and no more. Accepting that there could be more than one trade mark used in relation to a product, in context MOTHERLAND was not being used as a trade mark to indicate the trade source of the drink. At [67] – [68]:

The depiction of MOTHERLAND in the commercial with the prominent MOTHER in the well-known gothic script representation in contradistinction to LAND, appended in plain red font, emphasises the use of the distinctive gothic script MOTHER mark as the only mark possessing the character of a brand. MOTHERLAND was the name of the fictional theme park, and no more.

The presence of the dominant gothic script MOTHER mark each time MOTHERLAND appears in the commercial, including as the central part of the mark itself, is part of the context relevant to the assessment of the role of MOTHERLAND: Anheuser at [191]. The focus on the well-known gothic script MOTHER, including as part of MOTHERLAND, supports the conclusion that the gothic script MOTHER is the only mark being used to distinguish the MOTHER energy drinks in the commercial from the energy drinks of others.

There was a further problem with reliance on the commercials. The commercials had been run on television well before the non-use period. The commercials had also remained publicly available during the non-use period as they had been uploaded to EB’s YouTube and Facebook pages. There was no evidence, however, that anyone in Australia had accessed the commercials on either site. At [76], the Full Court explained:

Under existing authority, which has not been challenged in the present application, the mere uploading of trade mark content on a website outside Australia is not sufficient to constitute use of the trade mark in Australia …

citing Ward Group Pty Ltd v Brodie & Stone plc [2005] FCA 471; 143 FCR 479; Sports Warehouse Inc v Fry Consulting Pty Ltd [2010] FCA 664; 186 FCR 519; Christian v Societe Des Produits Nestle SA (No 2) [2015] FCAFC 153; 327 ALR 630.

Consequently, EB failed to demonstrate that the primary judge’s order to remove MOTHERLAND for non-use in respect of non-alcoholic beverages etc. was attended by sufficient doubt to warrant leave being granted to appeal.

MOTHERSKY

Despite the deletion of coffee beverages from Cantarella’s specification of goods, both parties conducted the proceedings on the basis that “coffee” included coffee beverages, not just the product of the coffee plant or coffee beans.

In contrast to the MOTHERLAND proceeding, the Full Court found that the primary judge made two material errors. First, his Honour had examined whether coffee beverages were similar goods to energy drinks and the powders and syrups for bottling energy drinks and concluded that the respective products had fundamentally different taste and flavour and were presented for sale and consumed in different circumstances.

This was in error. Section 44(1) calls for comparison of Cantarella’s “coffee” across the full scope of its normal and fair meaning to the full scope of EB’s specification. The correct comparison therefore was between “coffee” and “non-alcoholic beverages”.

Given the way the case had been conducted, the Full Court had little difficulty concluding that coffee beverages were “non-alcoholic beverages” within the scope of EB’s registration.

The fact that coffee as a beverage was classified in class 30 and not class 32 was a matter of administrative convenience and, at [132], irrelevant given Cantarella contended “coffee” covered “coffee beverages”.

Further, contrary to the primary judge’s approach, Cantarella’s claim for “coffee beverages” was not limited to “pure” coffee but extended across a range of beverages. Cantarella argued that coffee beverage did not include coffee flavoured milk. The Full Court accepted at [129] that there may be “a penumbra of uncertainty” about when a coffee flavoured beverage is not “coffee”. Treating “coffee” as meaning “coffee beverage”, however, at [128]:

there is nothing in the specification, so construed, which would limit the meaning of “coffee” to any particular coffee beverage or to any particular kind or type of coffee beverage. For example, there is nothing to limit “coffee” to black coffee as opposed to white coffee or coffee made with milk. There is nothing to limit “coffee” to coffee that does not include some additive such as, for example, a flavoured syrup. Further, there is nothing to limit “coffee” to a hot beverage or a freshly-brewed beverage as opposed to a cold or iced beverage. Further still, there is nothing to limit “coffee” to coffee produced by a particular process or prepared in a particular way, or to coffee packaged and promoted in a particular way. There are many permutations of what constitutes “coffee” as a beverage. Thus, coffee beverages cover a range of goods.

Further still, there was a sufficient body of evidence demonstrating that, at the priority date of the MOTHERSKY application, drinks such as pre-packaged iced coffee were regarded in the trade as non-alcoholic beverages and, further, of overlap between the trade channels through which coffee beverages and energy drinks were marketed and sold.

Secondly, the Full Court considered the primary judge materially erred when undertaking the deceptive similarity comparison.

The Full Court recognised that the comparison the test of deceptive similarity called for involved matters of judgment and degree about which opinions could reasonably differ. In the absence of legal error, mere difference of opinion was not enough. In undertaking the comparison, however, the primary judge’s assessment was heavily coloured by his Honour’s conclusion that “coffee beverages” and the goods covered by EB’s MOTHER registration were not the same or even of the same description.

Further, the primary judge erred by comparing only the specific way Cantarella actually used its trade mark with the specific way EB used its mark rather than comparing how notionally the competing marks could fairly be used across their full scope.

Undertaking the comparison themselves, the Full Court concluded that MOTHERSKY was deceptively similar to MOTHER.

First, at [167], while “mother” is a commonly used English word, it is not in any way descriptive of “non-alcoholic beverages” and was inherently distinctive of such goods. This was of considerable importance in the assessment. (emphasis supplied)

Secondly, at [168], “mother” was wholly incorporated in MOTHERSKY and did not lose its identify merely by the addition of “sky”.

Thirdly, at [169] to [170], “sky” did not have a well-understood meaning when added to “mother”. It might for example be understood according to its ordinary signification. Or it might be treated as some sort of playful variant or as creating a diminutive of “mother”. The Full Court considered that “mother” remained the dominanting element and, consequently, the likelihood of confusion arose.

As a result, s 44(1) operated to preclude registration of MOTHERSKY in the face of EB’s MOTHER registration for non-alcoholic beverages.

Other circumstances

It is well established that the registrability of a trade mark application falls to be determined at the date of the application.

Cantarella’s tactic of applying to clear the way for its MOTHERSKY application by removing EB’s blocking registrations for non-use is also long-standing although, of course, as at the date of the MOTHERSKY application, EB’s registrations were still in the way – removal for non-use being prospective, not retrospective.

At [176] – [178], however, the Full Court endorsed the Registrar’s practice (albeit by way of obiter dicta) of allowing an application to proceed to registration if the blocking citation was removed for non-use as “other circumstances” for the purposes of s44(3)(b). There would be “something perverse” in testing the registrability of the application against a mark which will be removed from the Register.

It is understood that an application for special leave to appeal to the High Court has been filed.

Energy Beverages LLC v Cantarella Bros Pty Ltd [2023] FCAFC 44 (Yates, Stewart and Rofe JJ)

  1. Leave to appeal being required under s 195(2) and so EB needed to persuade the Full Court that “(a) whether, in all the circumstances, the decision below is attended with sufficient doubt to warrant it being considered by a Full Court; and (b) whether substantial injustice would result if leave were refused, supposing the decision to be wrong.” citing Decor Corp Pty Ltd v Dart Industries Inc (1991) 33 FCR 397 at 398 – 399 and Primary Health Care Ltd v Commonwealth [2017] FCAFC 174; 260 FCR 359 at [206].  ?

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