trade mark use

Motherland, Mothersky and Mother

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

Some background

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

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

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

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

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

MOTHERLAND

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

MOTHERSKY

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Other circumstances

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

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

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

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

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


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

Motherland, Mothersky and Mother Read More »

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. ?

ALDI lookalike survives moroccanoil, but is not natural Read More »

Keywords Are Not Trade Mark Use

Katzmann J “gets” the Internet and helps to bring Australian trade mark law well and truly into the 21st century: buying keywords for search engine advertising is not trade mark use. some instances of the use of the trade mark in the sponsored links, however, did infringe.

Malouf is business which helps people who get a bad credit report repair or correct that report.

Veda is a credit reporting agency. Amongst other things, it has registered VEDA in class 36 as a trade mark for:

Financial services; provision of credit risk, financial and asset information and reports; credit scoring and risk assessment services; information provision, advice, research, appraisal, analysis, credit enquiry and consultation ….[1]

Malouf bought advertisements for its business on Google search results pages using the Google AdWords program. Through that program, the advertiser selects terms – keywords – for which, when someone does a “Google” search including one of those keywords, they will pay to have their advertisement appear as an advertisement – a sponsored result – in the search results pages.[2] The keywords Malouf chose included VEDA and 85 other terms using it such as “contact veda”, “veda credit score” etc. Mr Malouf explained his strategy:

So, with Veda approximately anywhere from 20 to 40 per cent — which is published on their website — of people may have an adverse credit history with a credit reporting body. A lot of them don’t know that they’ve got bad credit. So, potentially, one in five customers that are trying to contact Veda may be our target market. … [W]e want to have our ad showing up — anyone trying to contact Veda — because, potentially, one in five of those customers may be wanting to fix their credit file.

Over time, the advertisements Malouf paid to place took 3 forms. Until October 2014, they were along the lines of these sponsored links:

Malouf Sponsored Link type 1
Malouf Sponsored Link type 1

After September/October 2014, the sponsored links did not feature “Veda” in the text.

This gave rise to two main issues: (1) did the use of “keywords” infringe and (2) did the uses in the actual advertisements (sponsored links) infringe?

Keywords

Katzmann J held that Malouf’s “purchase” of keywords using VEDA did not infringe Veda’s trade marks.[3] It was not use as a trade mark. Her Honour gave 3 reasons:

First, all Malouf did was select the keywords and provide them to Google. In doing that, objectively, it was not using the words to distinguish its services from those of other providers. “Rather, it has used them to identify internet users who may have an interest in using [Malouf’s] services.”

Second, anyone could acquire the keywords, not just Malouf. This was not determinative, but it was a consideration. What it meant was that anyone, including any of Malouf’s competitors could also “buy” the same keyword(s). Thus, the keywords were not performing the function of a trade mark: distinguishing (identifying) the trade source to the exclusion of all others.

Thirdly, and perhaps most significantly, the keywords were invisible to consumers. Katzmann J explained:

… the proposition that using words which are invisible and inaudible, indeed imperceptible, to consumers is using them as a trade mark makes no sense. How could the keywords be understood to be used to distinguish the services of one trader from those of another when the keywords are indiscernible? How could it appear to consumers that, by Malouf’s designation of the Veda keywords to Google, the words are used to denote a connection in the course of trade between Malouf’s services and the services provided by another trader, or to distinguish its services from the services of others, when the consumers have not seen or otherwise perceived the keywords?

Also, when the consumer did not search on the term VEDA alone, how would he or she know which term(s) generated the search results?

At this point, Veda relied on Accor. Katzmann J, however, pointed out, first, that Accor involved metatags, not keywords. More significantly, her Honour noted Accor was inconsistent with Kenny J’s ruling in Complete Technology where Kenny J had said:

I do not accept that the use of any of CTI’s Registered Trade Marks in Green Energy’s metatags would constitute a trade mark infringement for the purposes of s 120(1). Metatags are invisible to the ordinary internet user, although their use will direct the user to (amongst other websites) Green Energy’s website. Once at the Green Energy website, then, in the ordinary course, the internet user will be made aware that the website is concerned with Green Energy’s services. It cannot, therefore, be said that the use in a metatag of CTI’s Registered Trade Marks is a use that indicates the origin of Green Energy’s services.Thus, metatag use is not use as a trade mark …. (emphasis supplied by Katzmann J)

Katzmann J agreed with Kenny J’s analysis.

Katzmann J then rejected Veda’s reliance on 2 New Zealand cases and the CJEU’s decision in Google France. They were decisions in a different context and, in any event, the English courts since Google France had held that keywords did not infringe.

Sponsored links

Whether the sponsored links which used Veda in their text infringed turned on the nature of the actual use.

Malouf had used expressions like[4] “Clean Your Veda File”, “Fix My Veda History”, “Get Your Veda Report File”, “Veda Credit File Repairs”, but also “The Veda Report Centre” and “The Veda-Report Centre”.

Katzmann J held that the uses like “Clean Your Veda File” were descriptive and used in a descriptive rather thant trade mark sense:

In all but the advertisements featuring “The Veda Report Centre”, I am not satisfied that Malouf has used the Veda Trade Marks as trade marks. Rather, it seems to me that they have been used to describe the object to which its services are directed — fixing, cleaning or repairing Veda credit files or reports — not as a badge of the origin of its business and therefore not as a trade mark. …. the Veda Trade Marks have not been used by Malouf to distinguish its services from those provided by others but to describe the kind or character of the services it provides. ….

The Veda Report Centre, however, was a different case. That was used as a badge of origin to market the Malouf business under the Veda name.

The second conclusion seems to me, with respect, uncontroversial. I also personally agree with the first conclusion that the descriptive uses were not infringements too. In the “old days”, that would have been beyond controversy as the case law clearly established that use of the trade mark Yeastvite in an expression such as “Substitute for Yeastvite” was not use as a trade mark – use of a registered trade mark to refer to the products which the trade mark owner marked with the trade mark was not trade mark use. What the North Americans call “nominative fair use”.

The wrinkle here is that, with the introduction of s 123 into the Act, the High Court has left open the question whether that “old” law is still “good” law.[5] Following that, a number of Full Courts – in which the question did not arise because the goods in question were in fact pirate or counterfeit goods, not genuine goods – have proceeded on the basis that the “old” rule no longer applies.[6]

Even if the Full Court (assuming there is an appeal) continues down that, with respect, heretical path, all may not be lost as Malouf did invoke s 122 in its defence. In reaching her Honour’s, with respect eminently sensible conclusion, Katzmann J did note that it was unclear from the case law how s120 related to s 122. In any event, her Honour found that Malouf could rely on the s 122 defence except in relation to the usage “The Veda Report Centre”. Katzmann J rejected Veda’s arguemnt that the sheer number of keywords showed a systematic and targetted attempt to undermine the registered trade mark. Almost all of those uses were not infringements.

As with the trade mark infringement case, the allegations of misleading or deceptive conduct all failed except in respect of the “Veda Report Centre” usage in the sponsored links.

Lid dip: James McDougall

Veda Advantage Limited v Malouf Group Enterprises Pty Limited
[2016] FCA 255


  1. Veda also has registrations for VEDA ADVANTAGE, VEDACHECK and VEDASCORE.  ?
  2. Hal Varian explained how AdWords advertising works in 2009 and with more polish in 2014.  ?
  3. The claim was brought under s 120(1), the allegation under s 120(2) was abandoned during the trial.  ?
  4. The full list is at [161] of her Honour’s judgment.  ?
  5. See E. & J. Gallo Winery v Lion Nathan Australia Pty Limited (2010) 241 CLR 144; [2010] HCA 15 at [33] – [34].  ?
  6. The cases are discussed by Allsop CJ in Scandinavian Tobacco at [65] – [71].  ?

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