A case about works of artistic craftsmanship

Spoiler alert: it wasn’t!

State of Escape (SOE) sells the Escape bag:

2 images of a soft carry-all tote bag in blue perforated neoprene with sailing rope handles; one image with the sides expanded; the other closed.

SOE claimed Ms Schwartz and her company, Chuchka, were infringing copyright in the Escape bag as a work of artistic craftsmanship by importing and selling the Chuchka bags. SOE also alleged that the sale of the Chuchka bags was misleading or deceptive conduct and passing off.

Despite Ms Schwartz’ denials, Davies J found that the Chuchka bag was copied from the Escape bag and, if copyright subsisted in the Escape bag, numerous versions of the Chuckha bag would be infringements. SOE did not have a registered design and SOE was selling at least 50 or 60 Escape bags a day. So, subsistence of copyright came down to whether or not the Escape bag was a work of artistic craftsmanship.[1]

The Escape Bag

The Escape bag is a soft, oversized tote bag. It is made from perforated neoprene fabric with handles made from sailing rope which wrap around the body and base of the bag. It also has an internal, detachable pouch made from perforated neoprene and press studs at either end for expansion.

The bags are made by hand. They feature hand punched holes where the rope goes in, a heat seal tape finish along the top line of the bag and other contact points.

The Escape bag was designed over several months of trial and error in 2013 by Ms MacGowan who, with Ms Maidment, is a co-founder and director of SOE.

Ms MacGowan gave evidence that she designed the bag to be both beautiful and practical. She chose perforated neoprene as it was aesthetically pleasing and light:

The bag did not have any lining. I did not want it to have any embellishments. I did not want anything disguising something that was not beautiful. I wanted the whole thing to be beautifully created. I hand cut all the patterns. I wanted the inside to be as beautiful as the outside. I wanted to challenge ingrained ideas that a bag had to be a certain way. My focus was, ‘This is what it is’. I did not want the bag to be like something else. Everything in the design had to be there for a reason. For instance, there was a risk that binding could ruin the curve of the bag. I ended up putting binding on the top edge because I was concerned it would fray. There were a lot of things that I felt strongly about.

Ms MacGowan said she did not want to use leather or webbing for the handles as she considered they did not fit with the design aesthetic. She spent many months with her sewing machine working out how to fix the rope to the bag so it retained its round profile and was not merely glued. Ms MacGowan explained:

It really complemented the neoprene beautifully. And also it was very important that I had to find rope that matched back with the fabric beautifully because it was really about creating an impression of the whole than the individual parts. So that was also very, very important.

Ms MacGowan’s evidence explained design issues she had to confront and resolve including:

  • how to sew the rope on to the bag rather than glue it;
  • how to stop the fabric from ripping at pressure points where the rope joined the bag;
  • stopping the raw cut neoprene edges at the top of the bag from fraying;
  • reinforcing the pressure points under the press studs and rope entry points;
  • using a glue lined heat shrink black tubing to fix the rope to the bottom of the bag;
  • attaching the rope to the four bottom corners which would otherwise be exposed to the risk of damage;
  • providing a pocket for valuables;
  • finishing the inside seams to look like the rest of the bag.

Burge v Swarbrick

At [77], Davies J and counsel for the parties managed to divine nine guiding principles from the High Court’s decision in Burge v Swarbrick to determine whether the Escape bag qualifed as a work of artistic craftsmanship:

(a) the phrase “a work of artistic craftsmanship” is a composite phrase to be construed as a whole: Burge at 357 56, 360 [66]. It is not permissible to inquire separately into whether a work is: (a) artistic; and (b) the manifestation of craftsmanship;

(b) in order to qualify as a work of artistic craftsmanship under the Copyright Act, the work must have a “real or substantial artistic element”: Burge at 356 52;

(c) “artistic craftsmanship” does not mean “artistic handicraft”: Burge at 358 59;

(d) a prototype may be a work of artistic craftsmanship “even though it was to serve the purpose of reproduction and then be discarded”: Burge at 359 60;

(e) the requirements for “craftsmanship” and “artistic” are not incompatible with machine production: Burge at 358–9 5960;

(f) whilst there is a distinction between fine arts and useful or applied arts, when dealing with artistic craftsmanship there is no antithesis between utility and beauty or between function and art: Burge at 359 61;

(g) a work of craftsmanship, even though it cannot be confined to handicraft, “at least presupposes special training, skill and knowledge for its production… ‘Craftsmanship’… implies a manifestation of pride and sound workmanship – a rejection of the shoddy, the meretricious, the facile”: Burge at 359 61, citing George Hensher Ltd v Restawile Upholstery (Lancs) Ltd [1976] AC 64 (Hensher) at 91 per Lord Simon;

(h) although the matter is to be determined objectively, evidence from the creator of the work of his or her aspirations or intentions when designing and constructing the work is admissible, but it is neither determinative nor necessary: Burge at 360 [63]–65. In determining whether the creator intended to, and did, create a work possessing the requisite aesthetic quality and requisite degree of craftsmanship, the Court should weigh the creator’s evidence together with any expert evidence: Burge at 360 64 and 65; and

(i) in considering whether a work is one of “artistic craftsmanship”, the beauty or aesthetic appeal of the work is not determinative. The Court must also weigh in the balance the extent to which functional considerations have dictated the artistic expression in the form of the work: Burge at 364 8384.

Having set out the High Court’s statement of principle at 83, Davies J emphasised at [79] the High Court’s factual conclusion at [73] in application of that principle:

Taken as a whole and considered objectively, the evidence, at best, shows that matters of visual and aesthetic appeal were but one of a range of considerations in the design of the Plug. Matters of visual and aesthetic appeal necessarily were subordinated to achievement of the purely functional aspects required for a successfully marketed “sports boat” and thus for the commercial objective in view.

The Escape bag was not a work of artistic craftsmanship

Ms MacGowan’s evidence at [84] was that “the overall appearance of the bag as an object was fundamentally the most important thing.” She explained that “simplicity, beauty and originality” were her guiding principles:

“something free of embellishments, that was so pure in its form, structure and makeup that it embodied beauty in simplicity.”

SOE’s expert, a Ms Beale, agreed; considering the Escape bag “unique”. In cross-examination, however, she accepted that the uniqueness arose from the “decision decision” to use perforated neoprene and sailing rope “rather than in any contribution to the creation of those underlying materials.”

Ms Schwarz’ expert, Mr Smith, considered the use of perforated neoprene and sailing rope to be “strong design features”, but neither of them in itself was “new”. Mr Smith considered that combining 2 or more features that had been in common use over many years “[was] an evolution in styling rather than a completely new design”.

While Davies J reported that the experts agreed the Escape bag was a quality product, at [105] her Honour reported the experts agreeing that:

the Escape Bag is constructed using a standard construction method of “stitched together and then turned out” and other elements conform to what is generally expected of this style of bag – significant skill, training or knowledge was not required beyond what was expected in the design or manufacturing process”.

Davies J accepted that Ms MacGowan aspired to produce something of beauty, but that was not determinative as, following Burge, whether something was a work of artistic craftsmanship had to be determined objectively. At [109], her Honour declared that assessment required looking at the bag as a whole and “not by disintegrating the design choices made by Ms MacGowan within the functional limitations of the bag she created.” (emphasis supplied) While Ms MacGowan set out to design a stylish bag, at [110] her Honour found that “the function and utility of the bag as a carry all bag governed the overall design of the bag.”

Davies J considered on the evidence that significant design features resulted from and served functional considerations.

In the result, Davies J considered that, in designing the Escape bag, Ms MacGowan was not an “artist-craftsperson”: she had no special training, skill and knowledge relating to the design of handbags. The central aesthetic choices were the decisions to use perforated neoprene and sailing rope. Those two choices alone were not sufficient to constitute the resulting bag as a work of artistic craftsmanship.

At [121] – [122], her Honour explained:

[121] I also accept the submission for the respondents that Ms MacGowan did not approach the design and manufacture of the Escape Bag as an artist-craftsperson. She had no special training, skill and knowledge relating to the design and manufacture of handbags and many of the issues she encountered were purely functional in nature – for example, preventing the raw edges of neoprene from fraying, reinforcing the point where the rope handle enters the bag, and how to sew the sailing rope onto the bag while retaining the roundness of the rope.

[122] Further, I do not regard the selection and use of perforated neoprene as the fabric for the Escape Bag or its use in combination with sailing rope as involving an act of artistic craftsmanship. Both materials were readily available commercial materials capable of being used to manufacture a carry all bag without some particular training, skill or knowledge. At its highest, the use of those materials to make an everyday bag was an evolution in styling. Whilst Ms Beale was of the view the combination of those materials made the Escape Bag “unique” she accepted in cross-examination that the uniqueness to which she referred related to “design decision” to use those materials, rather than in any contribution to the creation of those materials.

At one level, the decision can be seen as raising a high bar for designs applying the “form follows function” theory of design rather the embellishment of embellishment’s sake. That seems to follow, however, from Burge. The suggestion that “revolution” rather than “evolution” is required might also be thought concerning.

While Davies J emphasised at [121] the functional nature of issues to be resolved, one might question the ways they could be resolved and the aesthetic choices that might be involved.

There may also be troubling aspects of the level of skill required to be demonstrated. The experts agreed that the level of skill exhibited by Ms MacGowan was not “beyond what was expected in the design or manufacturing process”. Are then works of artistic craftsmanship limited only to those exhibiting rare levels of skill? It is important to remember that the point of protecting works of artistic craftsmanship is to encourage real artistic effort by silversmiths, potters, woodworkers, hand-embroiderers and many others whose work does not qualify as a sculpture, engraving, drawing, painting or any of the other categories named in paragraphs (a) and (b) of the definition of artistic work.[2]

In that respect, it does not appear that Ms MacGowan could be characterised as an “artist-craftsperson”. Davies J appears to have considered that the innovation lay in the choice of materials – perforated neoprene and sailing rope – in an otherwise fairly standard bag design. In that case, the result should be uncontroversial especially as the objective was always large scale production.

Nonetheless, the decision highlights yet again the problematic decision to include what was intended to be an expansive, and expanding, category of subject matter as an exception to a defence.

On the “passing off” related allegations, Davies J (mercifully) found SOE did not a reputation in the features of the bag alone reputation. Her Honour also considered, where the competing bags sold for around, respectively, $300 and $100, the branding of the products brought into play the well-known principle from Parkdale v Puxu:

Speaking generally, the sale by one manufacturer of goods which closely resemble those of another manufacturer is not a breach of s 52 if the goods are properly labelled. There are hundreds of ordinary articles of consumption which, although made by different manufacturers and of different quality, closely resemble one another… the normal and reasonable way to distinguish one product from another is by marks, brands or labels. If an article is properly labelled so as to show the name of the manufacturer or the source of the article its close resemblance to another article will not mislead an ordinary reasonable member of the public.

State of Escape Accessories Pty Limited v Schwartz [2020] FCA 1606


  1. See Copyright Act 1968 s 77 and see paragraph (c) in the definition of artistic work in s 10(1). Copyright was claimed in the first, finished bag Ms MacGowan made or, alternatively, the first 8 bags supplied to the first customer. At [47], the first finished bag differed from the 8 bags supplied to the customer in that it did not include heat shrinkable tubing, the internal pouch was differently designed and there was no branding.  ?
  2. See paragraph 260 of the Gregory Committee report quoted by the High Court in Burge at para. 49  ?

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. ?

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


  1. 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.  ?

Another get-up case gets up

The get-up for Homart’s CHÉRI ovine bio-placenta product has been held to misrepresent an association with Careline’s CHANTELLE product.

Chantelle

 

Chéri

 

 

 

 

 

 

 

Now, you might be thinking that CHÉRI marks out Homart’s product from CHANTELLE rather plainly. But the dreaded Red Bull and Peter Bodum cases reared their heads again.

Sales of Careline’s CHANTELLE product had exploded after it adopted its current get-up: from between $25,000 to $60,000 per year to over $2 million in between June 2014 and early 2016 when Homart introduced its competing product.

Homart’s get-up was nothing like the other products in its CHÉRI range. Its get-up was much closer than any other competing product to Careline’s. The boxes of the products were often displayed in stores stacked, with the lid of the top box open so that customers could see the contents.

 

 

 

 

 

 

Accordingly, the branding on Homart’s product was often not visible, at least initially. CHÉRI itself was not thought to be a particularly distinctive mark, especially as both CHANTELLE and CHÉRI began with the same “shhh” pronunciation. Burley J could not accept the explanation for the adoption of the get-up advanced by Homart’s designer.

After a very careful consideration of the evidence, his Honour summarised:

194 The unique combination of features making up the get-up of the CHANTELLE bio-placenta product are eye-catching. They extend to the packaging in open or closed configuration and provide strong visual cues by which a consumer would note and remember the product. From this combination, quite separately to the name, the consumer is informed of the origin, quality and type of goods being purchased. Homart has taken all of those cues.

195 The suggestion conveyed by the get-up is not, in my view, dispelled sufficiently by the use of the CHÉRI Australia brand name. The name CHÉRI Australia is a relatively weak mark for distinguishing otherwise identical products because:

(a) such reputation as Homart has in the mark CHÉRI is weak and has been significantly dissipated by reason of Homart’s choice to use it in packaging distinctly different to the products in the balance of the CHÉRI range (see section 9 above);

(b) the phonetic and visual similarities between the first letters of both the CHÉRI and CHANTELLE marks diminish the effect of the use of different words (see [85] above). In this context both Chantelle and Chéri are French sounding names. Both commence with “Ch…”. To persons not familiar with French, they are likely to be weak means of distinguishing otherwise identical products (unlike “Andronicus” and “Moccona” in Stuart Alexander). They are likely to be perceived as words that convey little or no meaning (I make this observation without particular regard to the level of English literacy of the target market and assuming it to be roughly on par within native English speakers); and

(c) the addition of the reference to “Australia” has a similar local geographical connotation to “Sydney” as used in the CHANTELLE bio-placenta product.

….

 

198 Further, the trade circumstances to which I have referred in section 5 above demonstrate that often the display of the bio-placenta products in stores may not clearly show the trade mark, for instance, when the products are stacked one on top of the other. In those circumstances consumers are likely to use the visual cues provided by the get-up of the packaging to indicate the product which they seek rather than the names.

199 In my view, it is likely that a not insubstantial number of persons within the relevant class, who are aware of the CHANTELLE bio-placenta product, would be diverted from a search for that product by the get-up of the Homart product. They may note that something seems different about the brand name, but be convinced by the other similarities in the get-up that her or his recollection as to the brand name was mistaken. A consumer familiar with the CHANTELLE bio-placenta product may well recall its get-up, but have no or an imperfect recollection of its name and acquire the CHÉRI bio-placenta product believing it to be the CHANTELLE bio-placenta product. This would be especially likely in circumstances where the store does not stock both brands. The rapier of suggestion caused by the similarity in get-up will in those circumstances result in a sale for Homart.

200 Further, the findings that I have expressed in section 8 above (Development of the CHÉRI bio-placenta product) as to Homart’s intention, lead to the application of Australian Woollen Mills. That authority was applied by the Full Court in RedBull at [117] (Weinberg and Dowsett JJ, Branson J agreeing) who said:

Without wishing to labour the point unduly, we again point out that where a trader, having knowledge of a particular market, borrows aspects of a competitor’s get-up, it is a reasonable inference that he or she believes that there will be a market benefit in so doing. Often, the obvious benefit will be the attraction of custom which would otherwise have gone to the competitor. It is an available inference from those propositions that the trader, with knowledge of the market, considered that such borrowing was “fitted for the purpose and therefore likely to deceive or confuse…”. Of course, the trader may explain his or her conduct in such a way as to undermine the availability of that inference. Obviously, this reasoning will only apply where there are similarities in get-up which suggest borrowing.

201 In the present case, I am satisfied that this was the intention of Homart. As noted in Red Bull at first instance (Conti J) at [64], the difference between the brand names is not necessarily decisive of an absence of the requisite intention. Nor, as I have noted above by reference to the Full Court decision in Peter Bodum, is the presence of a brand name determinative of an absence of misleading conduct. In the present case, in any action under s 18 of the ACL, one must look at the totality of conduct of the alleged deceiver.

202 I have found that Homart intentionally adopted a get-up for its product for the purpose of appropriating part of the trade or reputation of Careline. The choice of the CHÉRI Australia brand name was not, in the particular circumstances of this case, sufficient.

In the context of the findings at [198] above, his Honour had earlier noted at [29] – [30] that the cause of action could be made out even if the customer’s mistaken impression was dispelled by the time they had reached, or at, the sales counter. Burley J did discount Careline’s argument that the largely Chinese speaking customer base would not appreciate the different wording in Roman characters.

Does this mean Parkdale v Puxu is dead?

Homart Pharmaceuticals Pty Ltd v Careline Australia Pty Ltd [2017] FCA 403

Winnebago the damages or a reasonable royalty Down Under

You will remember that Winnebago (USA) successfully sued the Knotts for passing off in Australia but (in large part because of Winnebago (USA)’s delay in asserting its rights) the Knotts had developed their own reputation in Australia and so could continue using WINNEBAGO here provided it was used with an appropriate disclaimer (here and here). The damages were to be assessed.

Now we know what the damages will be:

Knott Investments, the company that built and supplied the “Australian” Winnebagoes will have to pay a royalty calculated at 1% of its sales on all sales made from 6 years before the proceedings were started until the disclaimer was put in place.

The dealers who sold the vehicles will also have to pay a royalty of 1% on their sales in addition, but only from the date proceedings were actually commenced.

Winnebago (USA) claimed damages on the basis of a reasonable royalty. The respondents resisted. It was clear that Winnebago (USA) would never have granted them a licence and, equally, they would never have taken a licence from Winnebago (USA). In those circumstances, the respondents said, the court could not impose a royalty on the basis of an assumed agreement that would never have happened:

the applicant suffered no damage by way of a lost royalty (in effect, no lost “sale”) because the applicant would not have licensed the respondents to use the Winnebago marks in the first place.

Yates J rejected that defence and held that compensation was required to be paid on what has been called “the user principle”:

Under this principle, a plaintiff is entitled to recover, by way of damages, a reasonable sum from a defendant who has wrongfully used the plaintiff’s property. The plaintiff may not have suffered actual loss from the use, and the wrongdoer may not have derived actual benefit. Nevertheless, under the principle, the defendant is obliged to pay a reasonable sum for the wrongful use. The reasonable sum is sometimes described as a reasonable rent, hiring fee, endorsement fee, licence fee or royalty (amongst other expressions), depending on the property involved and the nature of the wrongful use.

Black CJ and Jacobson J in a copyright case in the Full Court had appeared to reject the application of that principle.[1] Yates J, however, considered the principle could and should be adopted in the context of passing off (and trade mark infringement) on the basis of a long line of English and Australian cases applying the principle in the context of trespass to real property, conversion, detinue and intellectual property infringements.[2] Otherwise, the respondents would escape liability for damages as a result of the very thing that made their conduct unlawful: the lack of consent by Winnebago (USA).

The respondents also argued that no damages should be payable because, as the Full Court found, they had a concurrent reputation in WINNEBAGO in Australia. Yates J rejected this too. His Honour considered that the existence of concurrent reputations – one which did not require a disclaimer and one which did – meant there was value in being able to use the reputation without any disclaimer. Yates J arrived at the royalty of 1% on the basis that Winnebago (USA) had granted a licence to an Australian licensee at that rate and, while various other considerations were entered into, that was an appropriate round number.

Three points in relation to the dealers.

Yates J rejected their first argument: that they should not be liable for anything as the supplier, Knott Investments would already have paid a royalty. However, the dealers’ sales of vehicles in passing off were separate wrongs to those of the manufacturer and so required separate compensation.

Secondly, while Winnebago (USA) did not submit evidence about what damages the dealers’ actions caused, it claimed a royalty of 4 or 5%. Yates J considered, in the absence of evidence, that a royalty of 1% would be consistent with that imposed on the supplier.

Thirdly, the dealers (and for that matter, the Knotts) would be liable for damages for passing off only where they acted with fraud: that is, with knowledge of Winnebago (USA)’s reputation in Australia and its desire to assert those rights here. In the absence of evidence avout what the dealers knew, Yates J considered that they could only be held to have acted with fraud once proceedings were initiated:

The difficulty for the applicant is that the evidence does not address the question of what the dealers knew or thought. Even if they might have been aware of the applicant’s activities in the United States or in other overseas markets, it does not follow that they also understood that the applicant had a reputation of any significance in Australia, let alone one that was capable of legal protection, or, more importantly, that, prior to the commencement of this proceeding, the applicant was claiming that it had rights in Australia in respect of the Winnebago marks and that the commercial activities of the first respondent and its dealers constituted an infringement of those rights. However, from the time of commencement of this proceeding, when the applicant’s claims were exposed, the position of the second to twelfth respondents was different. From that time, they were on notice of the applicant’s claimed rights. Their persistence in using the Winnebago marks after this notice constitutes fraud in the relevant sense.

The need to show “fraud” is another difference between the tort of passing off and the action for misleading or deceptive conduct under the Australian Consumer Law.

Winnebago Industries Inc v Knott Investments Pty Ltd (No 4) [2015] FCA 1327


  1. Aristocrat Technologies Australia Pty Ltd v DAP Services (Kempsey) Pty Ltd (2007) 157 FCR 564; [2007] FCAFC 40 (Aristocrat) at [27]-[28].  ?
  2. One of those cases was Bunnings Group Ltd v CHEP Australia Ltd (2011) 82 NSWLR 420; [2011] NSWCA 342, in which the leading judgment was given by Allsop P, now the present Chief Judge.  ?

Nappyland, Nappy Land and napplyland.com.au

Flick J has provided a timely reminder that a registered trade mark does not always trump common law rights in passing off or under the Australian Consumer Law, in finding that Nappy Land and nappyland.com.au passed off Nappyland’s rights in NSW.

Mr Ngo and Mr Ho (through his company Powerware) started off in business together in 1997 as Nappy Land in New South Wales. Mr Ho also incorporated National Australian Nappies in 1997.  Mr Ngo and Mr Ho fell out in 1999 and Mr Ngo seems to have bought out Mr Ho’s share in Nappy Land when Mr Ngo and his wife became the owners of the business name in NSW. They appear to have carried on the business in NSW through his company CI JI Family. At some point, CI JI Family started using the following (unregistered) trade mark:

get_tmi_image-1.pl

By late 2000, Mr Ho through National Australian Nappies had registered Nappy Land as a business name in Victoria and appears to have been trading throughout Australia except NSW. From February 2002, National Australian Nappies secured registration of TM 902900

get_tmi_image.pl

It seems like Mr Ngo and Mr Ho had very different views about who bought what when their partnership came to an end. Be that as it may, there doesn’t appear to have been any real dispute that Mr Ngo and CI JI Family were operating throughout the period in NSW as effectively Nappyland or that National Australian Nappies was operating outside NSW as Nappy Land.

At some point, it appears in or about 2013, however, National Australian Nappies, started attempting to enter the market in NSW. CI JI Family and Mr Ngo sued seeking interlocutory relief, but secured a speedy trial instead.

National Australian Nappies and Mr Ho sought to rely on their registered trade mark to fend off the action on the basis that s 20 of the Trade Marks Act confers on the owner the exclusive right to use the trade mark as a trade mark in Australia for the relevant goods/services. (Section 122(1)(e) also provides a defence to trade mark infringement.) However, s 238 s 230 (of course; thanks: Tim Golder) provides:

Passing off actions

             (1)  Except as provided in subsection (2), this Act does not affect the law relating to passing off.

             (2)  In an action for passing off arising out of the use by the defendant of a registered trade mark:

                     (a)  of which he or she is the registered owner or an authorised user; and

                     (b)  that is substantially identical with, or deceptively similar to, the trade mark of the plaintiff;

damages may not be awarded against the defendant if the defendant satisfies the court:

                     (c)  that, at the time when the defendant began to use the trade mark, he or she was unaware, and had no reasonable means of finding out, that the trade mark of the plaintiff was in use; and

                     (d)  that, when the defendant became aware of the existence and nature of the plaintiff’s trade mark, he or she immediately ceased to use the trade mark in relation to the goods or services in relation to which it was used by the plaintiff.

The fact of the trade mark registration therefore provided no protection against either the passing off or ACL claim. Despite aspects of the evidence being less than satisfactory, Flick J held there was sufficient evidence that the public in NSW was being misled or deceived and so s 18 of the Australian Consumer Law was contravened and there was a passing off.

His Honour went on to award damages of $25,000 as an exercise in “judicial estimation” rather than impermissible “imagination” with further orders to be decided at a later hearing. Presumably, unless bought out, CI JI Family will seek injunctions to stop further use in NSW of Nappy Land unless some form of disclaimer can be arrived out which prevents the misrepresentation. We shall have to wait and see.

CI JI Family Pty Limited v National Australian Nappies (NAN) Pty Limited [2014] FCA 79

Winnebago 2: the disclaimer

Back in June, the Full Court, upheld the trial Judge’s conclusion that Knott was engaging in misleading or deceptive conduct, and passing off, by using the Winnebago “logos” to promote RVs of its (Knott’s) manufacture that had nothing to do with Winnebago USA. Because the breach was in the nature of “passing off” rather than trade mark infringement and because Winnebago USA had sat on its hands for 25 years allowing Knott to build up some goodwill of its own, however, the Full Court was prepared to grant an injunction only to restrain use of WINNEBAGO and the Winnebago logos by Knott which did not adequately disclaim association with the USA.
The Full Court has now handed down its decision about the form of that disclaimer:

without:

(f) where the name, mark or logo is used on one or more vehicles or in a document (including any print advertisement or webpage), stating in any relevant document (including any print advertisement or web page) or on any vehicle, clearly and prominently, and reasonably proximate to any name, mark or logo:

(i) (where the name, or mark or logo is used on or in relation to a single vehicle) “This vehicle was not manufactured by, or by anyone having any association with, Winnebago of the United States”; or …

In addition, radio and television commercials must have a prominent voiceover of no less than 10 seconds’ duration stating:

These vehicles were not manufactured by, or by anyone having any association with, Winnebago of the United States.

Also, Knott will be required to obtain a signed acknowledgement from each purchaser, hirer etc. that he or she has been informed the vehicles was “not manufactured by, or by anyone having any association with, Winnebago of the United States.”

Given the 25 year delay, the Full Court was not prepared to countenance allowing Winnebago USA to take an account of Knott’s profits.

The Full Court did, however, remit the matter back to the trial judge on the question of damages (limited to the six years before the proceeding was brought), but with an important rider.

Winnebago USA wants to argue that its damages should be a reasonable royalty on the use of its rights. The Full Court noted that other Full Court authority [1] appeared to stand in the way of that approach, but there might be scope for that to be revisited in light of the New South Wales Court of Appeal’s consideration of remedies for the unauthorised use of property in the context of conversion.[2]

The rider: before Winnebago USA gets to try this argument, it has to satisfy the trial Judge that there is “some prospect of a substantial (that is, real) award.”

Knott Investments Pty Ltd v Winnebago Industries, Inc (No 2) [2013] FCAFC 117


  1. Aristocrat Technologies Australia Pty Ltd v DAP Services (Kempsey) Pty Ltd (in liq) [2007] FCAFC 40; 157 FCR 564 at 569 [27]-[28].  ?
  2. Bunnings Group Ltd v CHEP Australia Ltd [2011] NSWCA 342; 82 NSWLR 420 at 464–470 [166]-[186].  ?

The power of a registered trade mark

If you have tried to buy, sell or rent property in Australia in the last 10 years (at the least!), like some nearly 7 million other Australians you have no doubt come across realestate.com.au, the web-portal run by REA Group. Real One also competes in that space.[1]

Bromberg J has held that Real One’s logos:

Real One 2nd logo
Real One 2nd logo

Real One 1st logo
Real One 1st logo

did not “pass off”[2] REA Group’s logos:

559.1

Nor did they infringe REA Group’s registered trade mark: [3]

TM No 1478263
TM No 1478263

However, the use of Real One’s URL in ads like this:

Real One Ad
Real One Ad

did infringe the registered trade mark! [4]

Bromberg J held that the uses both in the first line and the second line of the advertisment infringed. In contrast to his Honour’s rejection of the claim for misleading or deceptive conduct, Bromberg J explained at [241]:

In my view, the display of the term “realestate1.com.au” in the heading of a sponsored link would have been regarded by many consumers to be the trading and domain name of the business whose link it was. One of the central distinguishing features of REA’s realestate.com.au trade marks is the idea that the term “realestate.com.au” is both a brand name and a domain name at the same time. When Real Estate 1 used “realestate1.com.au” as a trading name, it took up that precise idea. In that context consumers are likely to pay substantive attention to “.com.au” because it serves the function of identifying the brand whose domain name is also being used as a brand. The whole of the domain name is likely to be read or at least scanned. In a circumstance such as that, there was in my view, a real danger of confusion on the part of a consumer familiar with REA’s realestate.com.au trade marks. That principally arises because in a scanning process of the kind which can occur on a search results page, the “1”, which is not very distinct in the context of a domain name in ordinary type face, is likely to be missed by some consumers.

First, his Honour distinguished Perram J’s proposition in the Solahart case that usually one can ignore the inclusion in a sign of elements like “www” and “.com.au” as merely “accoutrements” of the domain name system and so not matters that the public would pay attention to. Unlike the situation before Bromberg J, however, that observation was not made in a context where the .com.au element formed part of the registered trade mark.[5]

Second, I can certainly see that the bold “headline” (the first line) in Real One’s advertisment is plainly being used as a trade mark. But the use in the second line???

Yes, I know that cases have held that domain names / URLs are the Internet’s equivalent of a sign or billboard. That can certainly be true and, in the first line of the advertisement, the URL is plainly being used in that way, but surely with respect in the second line the URL is no more than an address.

Third, one might express some alarm that anyone can stop someone else using the term “real estate” (in connection with real estate services). There are, after all only 387 other registered trade marks in class 36 alone which include the words “real estate”. On the Internet, there is also at the least realestateview.com.au. Bromberg J’s first answer in [241] above is that it was not just the use of “real estate” that gave rise to liability: it was the use of that term and “.com.au” in combination and the comparative insignificance of the “1” in Real One’s URL.

Bromberg J did, however, recognise the problem and said at [247]:

As my conclusions demonstrate, registration of REA’s realestate.com.au marks has effectively given REA a monopoly over two highly descriptive terms when used in combination. Those terms are likely to be the most common terms on a search results page where a search has been conducted for a residential real estate portal. The protection conferred by REA’s trade marks over the use of “realestate” and “.com.au” in combination, provides REA with a monopoly over the term “realestate” in circumstances where its rivals seeking also to use “realestate” or a close variant thereof as a second-level domain, do not forego the advantages of using “.com.au” in their domain names. The natural advantage of a domain name which incorporates “realestate” to the commercial success of property portals will be apparent from observations I have already made. There is also a natural advantage in the use of the suffix “.com.au”. It is troubling that terms that are highly descriptive of a particular area of commerce and which provide significant commercial advantage should not be readily available for use by all who seek to participate in that commerce. However, in the absence of a successful challenge to the registration of REA’s realestate.com.au trade marks, whilst that may be troubling, REA is nevertheless entitled to the protection of the monopoly which has been conferred upon it.

The question has to be asked, however, on what basis could REA group’s logo be revoked or refused registration? Given the device elements (and the large number of other, competing devices), it would surely be held to be capable of distinguishing. The “good” old days (i.e., before the 1995 Act) were at least better in this respect: the Registrar could impose disclaimers to ensure these sorts of monopolies should not arise.

Two short points in conclusion:

His Honour did also find that Real One’s “real commercial” logo infringed REA group’s registration for its “real commercial” logo.

It would seem that Real One is still able to operate from its “.net.au” URL.

REA Group Ltd v Real Estate 1 Ltd [2013] FCA 559


  1. Bromberg J found at [258] that the principal of Real One adopted the name to pressure REA group into buying him out at some point, but also went on reluctantly to find no accessorial liability (akin to authorising).  ?
  2. For simplicity, I will treat that term as covering the actions for misleading or deceptive conduct (now under s 18 of the ACL formerly known as s 52 of the Trade Practice Act 1974) which, of course, was really the focus of that part of the case.  ?
  3. The number doesn’t seem to be identified, but TM Nos 811931 and 1075935 are for the mark in black and white and TM No. 1478263 is for the colour version reproduced in his Honour’s reasons.  ?
  4. Also contrast this result with the Thredbo Resort’s failure to stop ThredboNet using Thredbo in domain names to market rental accommodation at Thredbo village: Kosciuszko Thredbo Pty Limited v ThredboNet Marketing Pty Limited [2013] FCA 563 – Thredbo Resort having only pending opposed applications.  ?
  5. Decision under the UDRP have reached similar positions.  ?

Winnebago loses half an appeal

The Full Court has partially allowed an appeal from Foster J’s decision to order Knott Investments to stop using the Winnebago trade marks for “campers” or RVs not made by Winnebago. As a result, Knott can continue to use “Winnebago” if it can make it clear it is not associated with the Winnebago company.

Some facts

From about 1959, Winnebago had been making and selling its RVs under that brand name in the USA and eventually other countries including the UK and Canada, but not Australia.

Winnebago logo
Winnebago logo

In the early 1960s, Binns became aware of the Winnebago name and logo while travelling around the USA. In 1978, Binns and his wife started manufacturing and selling their own RVs in Australia under the name “Winnebago” and using the Winnebago logo. In 1982, they incorporated Knott which then took over running their business.

The Winnebago company discovered what Knott was up to by 1985. However, the Winnebago company did nothing about this until 1992 when the parties entered into a “settlement” agreement. Following this, Knott kept making and selling its own Winnebago brand RVs and registered the Winnebago logo as trade marks. Winnebago itself did nothing further until 2010, when it wished to enter the market in Australia and started proceedings alleging misleading or deceptive conduct, passing off and seeking revocation of Knott’s trade mark registration for Winnebago and the logo.

When do you test whether conduct is misleading or deceptive

The Full Court allowed Knott’s appeal insofar as it related to when Knott’s conduct had to be tested as misleading or deceptive. Foster J held this was in 1982 when Knott was recorded in the Register of Business Names as having commenced running the business, there being no formal documentation of a transfer of the business. The Full Court, however, considered that Knott was plainly the successor in title to the Binns’ business and so the relevant time was 1978, when the Binns started up.

This is important because the Full Court unanimously considered the relevant time to assess whether conduct is misleading or deceptive under s 52 of the TPA (as it was) and s 18 of the ACL (as it now is) is the date when the “infringer’s” conduct started, not some later date.

As it turned out, however, this did not help Knott much as the Full Court considered the evidence clearly established Winnebago had a “spillover” reputation in Australia in 1978 even though it had not traded in Australia at that point.[1] Therefore, Knott (and the Binns’) conduct was likely to mislead or deceive.

Estoppel, laches, acquiescance or delay

The issue that loomed large in the Full Court’s eyes was Winnebago’s delay in bringing proceedings to enforce its rights – 25 years after it first learned of Knott’s activities and 18 years after the “settlement” agreement. Over that period of time, Knott had built up its own substantial reputation in “Winnebago” in vehicles of its own manufacture.[2]

First, the Full Court agreed with Foster J that the “settelment” agreement did not authorise or concede any rights to use “Winnebago” to Knott. Clause 6 provided:

This Agreement does not address, impact upon, or relate in any way, manner or form to the use or ownership of the [Winnebago marks] in Australia or to any rights relating to the [Winnebago marks] based on reputation or use under any statute or at common law in Australia. By entering into this Agreement, Winnebago does not expressly or impliedly acknowledge that Australian Company has any rights of any nature whatsoever to the [Winnebago marks] in Australia. To the extent not expressed in this Agreement, this Agreement shall be without prejudice to the rights of Winnebago and Winnebago expressly reserves all of its legal rights.

Knott argued, however, that the 18 year delay in bringing proceedings meant it was unjust to permit Winnebago to bring proceedings now. Allsop J despatched this argument for six:

First, there was no clear representation, arising either out of the Settlement Agreement or from the conduct. The terms of the agreement, in their context, contained a degree of commercial ambiguity. The terms, however, of cl 6 could leave no doubt in Mr Binns’ mind that any practical confidence in him that Winnebago was not going to sue him was not based on any right conceded by Winnebago. He proceeded at his own risk. The finding by the primary judge at [155] of the reasons (not specifically challenged) that Mr Binns knew there was a risk of having to rebrand his product if Winnebago entered the market is also fatal to the submission. (emphasis supplied)

Allsop CJ and Jagot J rejected Knott’s arguments based on laches, acquiescance and delay both for similar reasons and because Knott had expressly disclaimed them at trial.

Notwithstanding this, the Full Court considered that Foster J’s order that Knott be restrained from using the Winnebago trade marks was unjust. Even though Knott (or, really, Binns) had adopted the Winnebago trade marks to take advantage of the Winnebago company’s reputation and there was evidence that some members of the public had been misled, nonetheless, Knott had over decades built up its own substantial, independent reputation. Instead, therefore, the injunction should only prohibit use which did not appropriately disclaim any trade association with the Winnebago company. At [67], Allsop CJ explained:

This limitation of relief can be seen to reflect not only the balancing of the respective interests of Knott and Winnebago in the reputation developed by Knott’s expenditure, in the context of Winnebago’s extraordinary (and informed) delay, but also the erosion of the reputation of Winnebago ….

and

The evidence reveals sufficient to conclude that at least some of Knott’s reputation in the use of the name and marks was the development of its goodwill and reputation; that not all of the development of its business involved the taking advantage of Winnebago’s reputation in Australia. In normal circumstances, this would not matter; it would be something that the party passing off would have to accept as a consequence of its wrongdoing. Here, however, Winnebago has contributed to this by standing by, informed of the position, for 25 years while Knott expended money and built a business, part at least of which was its own reputation. (emphasis supplied)

The disclaimer or dissassociation had to be clear on the vehicles Knott made in future as well as in its advertising and promotional material.

The third member of the Court, Cowdroy J, did not explicitly reject the laches or acquiescance defence, but agreed in the approach of Allsop CJ saying at [106]:

the Court considers that the granting of relief to completely restrain the appellants from the use of the Winnebago marks to be unreasonable in light of the substantial delay by Winnebago.

Finally, the Full Court upheld Foster J’s order to cancel Knott’s registration of the Winnebago trade marks. Knott had registered these in direct contravention of the terms of the “settlement” agreement.

Some thoughts

In 1992, a representative of the Winnebago company had written to its then Australian lawyers explaining:

… While we are obviously interested in persuading or compelling Mr Binns to cease using the subject marks in Australia, I really do not think that we can justify any additional expense. We are not selling our products there nor do we have any plans to do so. There has in the past been some indication that Mr Binns was experiencing some financial duress and perhaps with any luck he will go broke. In any event, at least for the time being, I think we will just continue to monitor this situation … [3]

No doubt, the sentiments will resonate with everyone advising a foreign brand owner in Australia. The Full Court’s approach may provide a warning. The terms of the “settlement” agreement were sufficiently limited to preserve the Winnebago company’s right to enter the market and object to misrepresentation of association, but failure to enforce its rights promptly has left it encumbered with a competing, independent user of its brand. On the other hand, Knott did not bring matters to a head in negotiating the “settlement” agreement and finds itself constrained. As Allsop CJ said, it ran the risk. How the disclaimer should be effected is unclear, but there are indications in Allsop CJ’s reasons that Knott has been able effectively to dissociate its business from the Winnebago company, while still using the Winnebago trade marks, since 2003.

Knott Investments Pty Ltd v Winnebago Industries, Inc [2013] FCAFC 59


  1. Nothing controversial in the principle: see ConAgra v McCain [1992] FCA 159; 33 FCR 302, although successful cases are still relatively rare.  ?
  2. For example, Foster J referred to Knott spending over $6million in advertising expenditure between 1992 and 2010.  ?
  3. See [114] of Foster J’s reasons at first instance.  ?

Another get up not made out

Mitre 10 has been refused an interlocutory injunction to stop “Masters” using a blue, white and grey get-up for a hardware store. Macaulay J was not persuaded there was a serious question to be tried and, even if there were, the damage to “Masters” resulting from an injunction far outweighed the damage to Mitre 10’s goodwill if no injunction were granted.

His Honour itemised a number of reasons why the claim did not rise to a prima facie case. The main reason was that Mitre 10 was trying to argue that the colour scheme adopted by “Masters” would misrepresent an association with Mitre 10. The problem with that was that both rivals’ get-up included plastering their respective brand names and logos on their get-up. That created a real difficulty when, apparently, other hardware stores unrelated to Mitre 10 used a similar get-up. At least at the interlocutory stage, Mitre 10’s evidence apparently showed that less than half its stores had adopted the get-up in which reputation was now claimed.

You can get a bit of an idea of the competing get-ups from Mitre 10’s homepage and Masters’ homepage (or even better (or worse) try here).

Mitre 10 Australia Pty Ltd v Masters Home Improvement Australia Pty Ltd [2011] VSC 343

You won’t have heard of Masters yet: it isn’t scheduled to start trading until September or October. Apparently, it is a joint venture between Woolworths and Lowe’s from the USA and, of course, Woolworths’ main competitor just happens to own Bunnings.

Back in the “good old” days, we used to bring actions for passing off in the State Supreme Courts. Then, we worked out that by bringing a counterpart claim for misleading or deceptive conduct, we could go play in the Federal Court. Recently, the Federal Court has not been so kind to straight get-up claims (Bodum and Maltesers and Nutrientwater). This resort to the old State court has not led to any different outcome at this stage.

Of course, there have been cases where the interlocutory injunction was lost but the plaintiff ultimately succeeded at final trial.