prior user

In what is surely only the first step on the long road to the High Court, Yates J has ruled that Lavazza qualità Oro coffee does not infringe Cantarella’s ORO trade mark – because Cantarella’s trade mark was invalidly registered.

As you probably recall, Cantarella famously has registered trade marks for ORO (and also CINQUE STELLE) for, amongst other things, coffee and coffee beverages.[1]

Lavazza has been importing Lavazza qualità Oro coffee into Australia since at least 1979. In about 2017, however, it introduced new packaging in the following form:

Cantarella sued Lavazza for infringing its ORO registrations contrary to section 120(1) of the Trade Marks Act by the 2017 and later years’ forms of packaging.[2] Lavazza denied infringement and also cross-claimed for revocation on the grounds (a) that Cantarella’s trade marks were not capable of distinguishing and/or (b) Cantarella was not the owner of ORO as a trade mark for coffee in Australia.

Infringement

Citing Gallo, Self Care, Woolworths v BP, Anheuser-Busch and Johnson & Johnson, Yates J found that the 2017 (and later years) forms of packaging involved use of ORO as a trade mark and so infringed – subject to any defences.

The issue on infringement was whether ORO was being used as a trade mark – a badge of origin. That fell to be assessed objectively in the setting and context in which ORO appeared on the packaging. Would the relevant public think it was being presented as an identifier of the trade source of the product?

At [375], Yates J did not agree with Cantarella that ORO was the dominant feature of the packaging but it was one (original emphasis) of the dominant features.

At [376], his Honour accepted that LAVAZZA was being used as a trade mark but that didn’t preclude ORO as presented (my emphasis) from also (my emphasis) being used as a trade mark. Instead, his Honour found both LAVAZZA and ORO functioned independently as trade marks – badges of origin.

The flavour of his Honour’s reasoning can be seen in his Honour’s rejection at [377] of Lavazza’s argument that ORO was used only as part of a composite mark – QUALITÀ ORO:

I do not accept that, in this packaging, the word “oro” is used as part of a composite mark QUALITÀ ORO. Whilst, on the packaging, the word “oro” is used in proximity to the word “qualità”, I do not accept that there is any necessary connection between the two words for trade mark purposes. In my view, for trade mark purposes, the two words function independently of each other, particularly given the different sizes and stylistic representations of the two words, with the word “oro” functioning as a trade mark. The word “qualità” is not functioning as a trade mark. Even if traders or customers were to associate the two words because of their proximity to each other on the packaging, it does not follow that the word “oro” is not functioning, in its own right, as a trade mark. As explained above, the existence of a descriptive element or purpose does not necessarily preclude the sign being used as a trade mark: [343] – [346] above.

Similarly, Yates J held the fact that the evidence showed numerous other traders were also using ORO in relation to their products did not avoid infringement. At [379], his Honour explained:

I do not accept that mere common use of a particular word in a given trade means that the word is precluded from functioning as a trade mark in that trade. The circumstances and manner of use of the word in question are critical to determining whether trade mark use of the word is involved. In the present case, whilst background circumstances cannot be ignored, the focus must be on the way in which the word “oro” is used on the impugned packaging.

So, subject to the cross-claim, Lavazza would infringe.

The cross-claims

Lavazza cross-claimed under s 88(2)(a) for revocation on the grounds that the registration of the ORO trade marks could have been opposed (a) under s 41[3] as not capable of distinguishing and/or (b) s 58, Cantarella was not the owner.

Not capable of distinguishing

Under either form of s 41, the central question was whether or not ORO was capable of distinguishing or did in fact distinguish Cantarella’s coffee – when the trade mark in question was filed.

Citing Lord Parker’s speech in Registrar of Trade Marks v W & G Du Cros Ltd [1913] AC 624,[4] Lavazza argued that ORO did not serve as a badge of origin because:

“other persons had registered and/or used in Australia, and/or were continuing to use in Australia, and/or without any improper motive would desire to use in Australia the word ORO in respect of their coffee products”

or, alternatively, because, as a significant part of the Australian public would understand ORO was a laudatory reference to “gold”, it was descriptive.

Yates J rejected the first argument about common usage as inconsistent with the High Court’s majority ruling in the earlier ORO case – which his Honour refers to as the Modena proceeding.

In the the Modena proceeding, Yates J pointed out in a lengthy discussion concluding at [303], the majority held that inherent capacity to distinguish was not tested only by other traders’ desire to use, or use of, the sign. Rather, the ‘ordinary signification’ of the sign had to be ascertained and the legitimacy of other traders’ use tested by reference to that. French CJ, Hayne, Crennan and Kiefel JJ explained:

70 In accordance with the principles established in Mark Foy’s and restated in Clark Equipment, Faulding and Burger King, determining whether a trade mark is “inherently adapted to distinguish”, as required by s 41(3), requires consideration of the “ordinary signification” of the words proposed as trade marks to any person in Australia concerned with the goods to which the proposed trade mark is to be applied.

71 As shown by the authorities in this Court, the consideration of the “ordinary signification” of any word or words (English or foreign) which constitute a trade mark is crucial, whether (as here) a trade mark consisting of such a word or words is alleged not to be registrable because it is not an invented word and it has “direct” reference to the character and quality of goods, or because it is a laudatory epithet or a geographical name, or because it is a surname, or because it has lost its distinctiveness, or because it never had the requisite distinctiveness to start with. Once the “ordinary signification” of a word, English or foreign, is established an inquiry can then be made into whether other traders might legitimately need to use the word in respect of their goods. If a foreign word contains an allusive reference to the relevant goods it is prima facie qualified for the grant of a monopoly. However, if the foreign word is understood by the target audience as having a directly descriptive meaning in relation to the relevant goods, then prima facie the proprietor is not entitled to a monopoly of it. Speaking generally, words which are prima facie entitled to a monopoly secured by registration are inherently adapted to distinguish.

At [415], Yates J summarised the ruling in the the Modena proceeding:

…. As the majority explained, the desire of other traders to use the word in question is a function of the meaning that that word bears, according to its ordinary signification, in relation to the goods or services for which the mark is, or is sought to be, registered. ….

Accordingly, it was not for a judge sitting at first instance in the Federal Court to treat the majority in the the Modena proceeding as dealing only with a “narrow” question of distinctiveness of “descriptive” signs rather than a “broader” question of common usage. Moreover, it was not permissible for a judge sitting at first instance to disregard the majority view and adopt the dissenting view of Gageler J.[5]

Yates J then turned to consider the “ordinary signification” of ORO.

First, (albeit at [457]), Yates J rejected Cantarella’s argument that the High Court’s decision was conclusive on the question. Lavazza was not a party to that proceeding so there was no question of stare decisis.

Secondly, in this context, it was significant that the public was a broad consumer market and not a specialised trade or market. At [424], therefore, his Honour explained how the “ordinary signification” of a word fell to be determined:

Bringing these strands together, for presently relevant purposes a word will have an “ordinary signification” if it has been received into Australian English and has a commonly understood and commonly shared meaning by ordinary members throughout the Australian community at large.

(See also [463].)

This would not be satisfied if the word was shown to be used just in a particular locality or by a particular trader or even traders. Nor merely where a numerically large number of people knew the meaning. This latter point proved decisive.

Lavazza led extensive evidence of the use of “oro” by Lavazza and other traders before the relevant priority dates; the promotion of its own LAVAZZA QUALITÀ ORO in Australia in conjunction with “gold”; the permeation of the Italian language and coffee culture in the Australian coffee market; direct evidence from those in the trade (most of whom happened to be Italian speakers) that oro means gold and is used as a quality indication; and census data.

Yates J accepted that a numerically large section of the Australian public did appreciate that “ORO” meant gold in Italian but the evidence fell short of establishing ORO had been accepted into Australian English throughout the Australian community at large in contrast to, say, bravo, encore, en route and tour de force. At [460], his Honour summarised:

Whilst I accept that, speaking generally, a numerically large number of persons in Australia might understand, by their knowledge of Italian or another Romance language, that the word “oro” means “gold” in English, I am far from persuaded that the evidence before me shows that, even at the present time, “oro” has been received into Australian English such that the ordinary signification of “oro” is “gold”. I am satisfied, therefore, that the word “oro” does not have an ordinary signification. It follows that I am not satisfied that, as at 24 March 2000 or as at 30 September 2013, the Australian public, at large, would have understood that the word “oro”, when used in relation to the registered goods, meant “gold”, or was a laudatory reference to “gold”, and, therefore, “premium quality”.

Not the owner

In contrast, his Honour found the evidence established that Cantarella was not the owner of ORO as a trade mark for coffee at the priority dates for its registrations contrary to s 58.

At [490] – [491], Yates J rejected an argument that Cantarella could not own ORO as a trade mark because it was descriptive or in common use or lacked distinctiveness. That was the realm of s 41, not s 58.

As you know, the owner of a trade mark for Australian purposes is the first person to use the sign as a trade mark for the relevant goods or services or, if there has been no use, to apply to register it with the intention of using it as a trade mark – [494] – [498] and [571].

As the case was run, this required first establishing when Cantarella first used ORO as a trade mark for coffee and then examining when someone else’s use first started (and was not abandoned).

Cantarella was able to establish by accessing archived back-up tape that a product code COVIBON3 with the product description “VITT BK ORO BNS” was created in its systems on 2 August 1996. The data also showed that the first sale of COVIBON3 was made on 20 August 1996 “to the firm of solicitors formerly known as Mallesons Stephen Jaques” with sales ensuing to other customers in subsequent months.

Cantarella also led evidence from an employee who during the 1990s worked as a machine operator. His evidence included that Cantarella’s products were packaged using rewind tape – pre-printed film supplied on a roll. These rolls were inserted into an automated in-line packaging machine to create the bags. Part of this process involved inserting a printing plate into the packaging machine to stamp on the film product specific information. He recalled inserting ORO brand plates in “the mid–1990s could be 1993 or 1994”. However, Yates J was not prepared to accept this dating as it was inconsistent with Canteralla’s case based on the creation of the COVIBON3 code.

Turning to the other side of the equation, Lavazza relied on its own use in relation to its LAVAZZA QUALITÀ ORO product or, alternatively, use by a third party CAFFÈ MOLINARI ORO.

As mentioned at the outset, Lavazza’s product has been imported and sold in Australia since 1979. For many years (before the packaging that sparked this litigation), the packaging was in the following form or variations:

This, however, was not use of ORO simpliciter as a trade mark (e.g. at [548]).

Lavazza did establish that Caffè Molinari SpA has been supplying its CAFFÈ MOLINARI ORO product in Australia since September 1995:

The evidence of the lengths involved in establishing this use is quite involved and discussed in detail at [117] – [193]. This included evidence of witnesses from Molinari, the supplier, and CMS / Saeco, the first importer.

A particular twist here is that Modena’s importation and sale of CAFFÈ Molinari Oro coffee was found to be infringing conduct in the earlier Modena proceeding. However, the evidence of prior use in this case was from different witnesses, more extensive than and different to the evidence from Molinari that Modena advanced in the Modena proceeding.

At [574], Yates J found that the use of ORO on the CAFFÈ Molinari Oro packaging was use as a trade mark:

I reach this conclusion having regard to the size, colour, positioning, and prominence of the word “oro” on the packaging in relation to the other packaging elements. I observe that the word “oro” on that packaging is as conspicuous as the other trade mark used—CAFFÈ MOLINARI. I do not accept Cantarella’s contention that the word “oro” is used only as an element in the composite mark MISCELA DI CAFFÈ ORO, and not as a trade mark its own right.

However, the use of ORO BAR on the 3 kg packaging was not trade mark use of ORO alone – ORO BAR was not the same as, or substantially identical with ORO.

His Honour then went on to reject Cantarella’s contention that Molinari had abandoned its use of the trade mark.

At [581] – [582], Yates J recognised that ownership of a trade mark could be lost by abandonment – which required more than “mere” non-use or slightness of use. Despite the changes in Molinari’s packaging over the years, however, Yates J found Molinari had been using the ORO mark continuously as a matter of fact.

Finally, consistently with the decision in Anchorage Capital, Yates J ruled it was inappropriate to exercise his discretion under s 88(1) against non-cancellation of Cantarella’s mark.

In Anchorage Capital, the Full Court considered it was not in the public interest to allow someone, who was not the owner of the trade mark when they applied to register it, to jump the queue. Similarly, at [599], Yates J considered that ownership cannot (my emphasis) depend on the nature and scope of Cantarella’s reputation. Nor should other traders be vexed by use of the registrations “such as happened in the present case”.

Obiter dicta

As it was not necessary for his decision, Yates J commented only briefly on Lavazza’s defences to infringement based on prior use, good faith description as per s 122(1)(b), a right of use (s 122(1)(e)) or honest concurrent user through the operation of s 122(1)(f) or (fa).

Perhaps the most interesting comment is that Yates J, who was I think a member of the Working Party to Recommend Changes to the Australian Trade Marks Legislation[6], suggested at [647] – [649] that the orthodoxy prevailing since McCormick that honest concurrent use does not defeat an opposition on grounds of s 58 or s 60 should be reconsidered. Referring to Project Blue Sky on statutory construction, his Honor noted at [647]:

However, giving s 58 an operation that is independent of s 44(3) robs the latter provision of practical effect. If the registered owner of a trade mark is truly the owner of that mark, every application under s 44(3) can be met with a s 58 objection by the registered owner. There is, therefore, an apparent conflict between the operation of s 44(3) and the operation of s 58 of the Act.

Yates J also drew attention to other drafting difficulties with s 122(1)(f) and (fa). At [642] for example, his Honour explained:

To explain, the defence under s 122(1)(f) is directed to the case where the infringer has used the very mark that is registered (in this case, the ORO word mark), and the Court is satisfied that the infringer would obtain registration of that mark in that person’s name. On the other hand, the defence under s 122(1)(fa) is directed to the case where the infringer has not used the mark that is registered, but a mark that is substantially identical with or deceptively similar to the mark that is registered, and the Court is satisfied that the infringer would obtain registration of the substantially identical or deceptively similar mark in that person’s name. (my emphasis)

Yates J thought that this wording meant that only the defence under s 122(1)(f) would be available and it would be available only to “LL SpA” – the Italian parent of the Lavazza group. However, it was the local subsidiaries, Lavazza Australia and Lavazza OCS, which were being sued for infringement. The suggestion being that, despite s 7 and s 26, the defence was unavailable to the subsidiaries.

In any event, his Honour’s findings on Molinari’s ownership would preclude the Lavazza companies achieving registration.

I have no inside information about the commercial goals or intentions of any of the parties and, with respect, I would not want to be taken as suggesting Yates J has messed up in any way but one would think that, given Cantarella pursued the Modena proceedings all the way to the High Court, an appeal is likely to be forthcoming.

Cantarella Bros Pty Ltd v Lavazza Australia Pty Ltd (No 3) [2023] FCA 1258

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1. For ORO, Trade Mark No. 829098 registered since 24 March 2000 and also Trade Mark No. 1583290 registered since 30 September 2013 (which is also the same date the Full Federal Court delivered judgment upholding Modena’s appeal in the case the High Court subsequently overruled.  ?
2. In 2022, Lavazza also started importing into Australia capsules for Nespresso machines. The capsules were gold and had ORO emblazoned in black on them and these were added to the complaint.  ?
3. Given the different dates of the two registered trade marks, the two different version of s 41 were in play. For the “old” version, see [393].  ?
4. Quoted in Lavazza at [292].  ?
5. Should special leave to appeal this proceeding eventually be granted, someone will no doubt notice that only Gageler J, now Gageler CJ, remains of the Court that decided the the Modena proceeding.  ?
6. Despite its centrality to understanding what was intended to be achieved, I don’t think the Report itself is actually available online – which (if I am right) is something IP Australia should surely rectify.  ?