Shape not misleading
Last week, we looked at Mortimer J’s reasons for dismissing Shape Shopfitters’ allegations of trade mark infringement against Shape Australia. Presumably, given the colour and stylistic constraints of the registered trade mark, Shape Shopfitters’ main attack was based on the prohibition against misleading or deceptive conduct under the Australian Consumer Law. It too was unsuccessful.
Shape Shopfitters’ contention was that, by changing its name from ISIS to Shape Australia, Shape Australia was misrepresenting to the public that the two businesses were affiliated in some way with Shape Shopfitters being the specialist shopfitting arm of the Shape Australia. The descriptive nature of the common term, Shape Shopfitters’ fairly confined reputation and the fact that most of its dealings were with well-established contacts combined to mean that there was no such misrepresentation.
In about October 2016 when Shape Australia changed its name, Shape Shopfitters had annual turnover of between $10 million to $13 million a year. Almost all of its business was in fitting out, or the maintenance of, retail food outlets; especially quick service restaurants. Two thirds of its jobs were for contracts under $5,000; over 90% was for jobs under $200,000. Most of its business was in Victoria. 88% of its business outside Victoria was for the same seven clients: Grill’d, Nando’s, Sumo Salad, San Churro, Mad Mex, Schnitz or Coco Cubano. All of whom were well-established customers. Most of its work came from invitations to participate in closed tenders requested by established clients or directly negotiated contracts, once again with established customers.
In contrast, Shape Australia had annual revenues of around $400 million and the average size of its contracts was $1.55 million. Its role was usually as head contractor and construction manager, contracting out the work to specialist sub-contractors. It did do, however, some shopfitting work.
Mortimer J rejected Shape Australia’s argument that the relevant public was restricted just to the purchasers of construction services. Section 18 is not limited just to consumers; it provides protection to all people dealing with the respondent. In this case, including suppliers such as architects and subbies.
Mortimer J also rejected Shape Australia’s argument that none of its customers would mistakenly think that there was a connection with Shape Shopfitters. That was irrelevant. The question was whether people aware of Shape Shopfitters’ reputation would be misled or deceived.
However, there was no real, practical risk that the public would be misled or deceived. The businesses were simply too different and those dealing with Shape Shopfitters were well aware of its identity: At [216] – [217]:
I am not satisfied that participants in the industry would be led into such an error [i.e. thinking that Shape Shopfitters was an arm of Shape Australia]. The parties’ business activities are too different, they operate in different areas, with the applicant being far more specialised and more geographically contained. The link the applicant posits is possible and not fanciful in a theoretical sense, but it is without any foundation in the reality of the way the parties’ business activities are conducted, and in the way the “participants in the commercial construction industry” encounter the two businesses. That is especially so when one considers evidence such as that from Mr Billings that the applicant secures a lot of its business through word-of-mouth referrals.
The most that can be said is that there is a likelihood that participants in the industry, on isolated occasions, may be led to confuse the two entities because they both have the word “Shape” in their name, and occasionally communications may be directed to one when meant for the other. That is what the evidence discloses has in fact occurred, from time to time, in relatively few instances.
While there was some evidence of confusion, confusion itself is not enough and they were isolated instances only. Quickly dispelled.
You might recall that her Honour excluded evidence of print outs of websites of various businesses as hearsay and prejudicial. Evidence of the registration of such businesses as companies or business names was admitted, however, because the evidence was official ASIC records. There were 12 such businesses.[1] While Mortimer J accepted that this evidence did not take the matter very far, nonetheless it showed that the public could well come across other “Shape” entities in circumstances which undermined the potential for Shape Shopfitters to be seen as an “arm” of Shape Australia:
I accept that evidence of the bare existence of these entities cannot take the matter very far. However, the number of such entities using the word “shape” in their corporate names, and (I am prepared to infer) trading activities, is not without significance. Even without more information about those entities, the relative prevalence of the word “shape” in corporate and trading names, frequently in conjunction with construction-related words such as “joinery” and “projects” suggests that “participants in the industry” (including potential clients, purchasers and subcontractors) might well come across other entities using the word “shape” in the provision, sale and promotion of their particular services. That possibility cannot be discounted, and it tends against the linear proposition on which the applicant’s case relies: namely, the likelihood that the applicant (and it would appear, only the applicant) will be perceived to be part of the respondent’s larger group, and perhaps as its specialist shopfitting arm. That linear proposition must depend, it seems to me, on the applicant occupying something of a unique place in the market so that such a representation by the respondent’s use of the word “SHAPE” could only be made in respect of the applicant, and not other entities. This evidence tends against such a conclusion.
There was also some evidence from a search engine optimisation expert. It showed that neither business had very active websites. Those people who searched for Shape Shopfitters, however, typically did so by reference to the term “shopfitters”. This reinforced her Honour’s impression that it was its shopfitting specialty that identified Shape Shopfitters. On the other hand, Shape Australia did not typically generate hits in searches on terms related to “shopfitting”. If it did come up, it was invariably placed below the result for Shape Shopfitters:
Because of this, people searching for the Shape Shopfitters Website through searches for these terms are very unlikely to be misdirected to the SHAPE Australia website.
The passing off allegations failed similarly for want of the necessary misreprensation.
Shape Shopfitters Pty Ltd v Shape Australia Pty Ltd (No 3) [2017] FCA 865
- Shape Building Pty Ltd; Shape Design; Shape Property Developments; Shape Consulting; Shape Constructions Pty Ltd; Shape Project Management Pty Ltd; Shape Builders Pty Ltd; Shape Joinery & Design Pty Ltd; Shape Fitouts Pty Ltd; Shape Projects Pty Ltd; Shape Construction; the 12th, Shape Developments Pty Ltd changed its name in the course of the litigation although the reasons for that were not known. ?
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