trade mark use

Dying in the FANATICS ditch

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The attempt by global online sports merchandise retailer, Fanatics LLC, to expand its operations directly into Australia has resulted in the cancellation of its FANATICS registrations in class 35[1] (but not class 42[2]) and findings that it had infringed FanFirm’s competing registrations in class 25[3]. FanFirm’s own registrations in classes 9, 16, 24, 32 and 38, however, were cancelled for non-use.

The case runs through the gamut of issues: ownership, first use, similarity of goods / services, cancellation under s 88, removal for non-use, honest concurrent user, infringement, defences under s 122(1) and ACL / passing off. Rofe J’s judgment runs to 497 paragraphs so I am not going to try to tackle everything. Rather, I want to pick out three or four issues which I found particularly interesting. In particular, when the US-based respondent sought to expand its business in Australia, it was forced (unsuccessfully) to try to read down the scope of FanFirm’s registered trade marks as mere adjuncts to its tour operator business.

Some background

You might recall watching a sporting event where there were some raucous crowd members wearing green and gold curly wigs. It turns out the original fanatic, a Mr Livingstone, attended the US Open in 1997 where his “enthusiastic support” earned him an invitation to attend a post match celebration with the winner, Pat Rafter.

Beginning with a Davis Cup match in October 1997, Mr Livingstone parlayed this beginning into a business promoting tours to sporting and, eventually, cultural events and selling merchandise. Those attending the tours often wore merchandise such as “FANATICS”- branded t-shirts and caps. In 2004, Mr Livingstone incorporated the applicant and it took over the business which has continued to grow and expand so that, by the time of the trial, there were some 160,000 members in its customer database.

Meanwhile, in 1995, the respondent started life in the United States as Football Fanatics Inc. It formally became Fanatics Inc only in 2010.

The respondent operates around the world selling licensed sports merchandise such as NBA, NFL, F1 and Premier League products and, since 2018, third party merchandise which it manufactures and brands with its FANATICS Marks.

Before 2010, the respondent’s business was operated through a series of audience-specific brands and websites such as www.footballfanatics.com (1997), www.fastballfanatics.com (2006), www.fastbreakfanatics.com (2007), www.faceofffanatics.com (2007), www.fightingfanatics.com (2008), www.surffanatics.com (2008), www.fanaticsoutlet.com (2008), www.kidfanatics.com (2009) and www.ladyfanatics.com (2009).

In 2009, it acquired the domain name <fanatics.com> which initially redirected to the Football Fanatics website. From 2011, however, it became the respondent’s primary website.

It appears the respondent had been making some sales to customers in Australia from its Football Fanatics website since 2000. The respondent also provided what were described in the judgment as modest sales figures from its www.fanatics.com website to Australians beginning in 2014 through till 2020.

In 2020, the respondent’s Australian operations expanded significantly. It began operating the Essendon Football Club’s online store as “A Fanatics Experience” and began selling its FANATICS branded merchandise nationally through Rebel Sports stores.

The trade marks

FanFirm relied on two trade marks of which, TM 1232983, was for FANATICS in classes 9, 16, 24, 25, 32, 38 and 39 which was registered with effect from its filing date on 2 April 2008. (The respondent had unsuccessfully opposed registration back in 2010.)

The respondent also had two registrations for FANATICS, another for FANATICS and Flag device and registrations for FOOTBALL FANATICS and SPORTS FANATICS. The earliest registrations, for FANATICS and FOOTBALL FANATICS, dated from 10 September 2008. That first FANATICS registration was achieved on the basis of continuous prior use under s 44(4).

The respondent’s Flag device:

Who used first (in Australia) and for what

Rofe J’s first crucial ruling was the determination of who was the first user of FANATICS as a trade mark in Australia – and for what.

Her Honour found that FanFirm had been using FANATICS in relation to goods – the merchandise – from its website at www.thefanatics.com from 2004.

Her Honour also found ([151] and [158]) that FanFirm’s use on its website was use in relation to the class 35 services of on-line retail services of sports related clothing and merchandise, order fulfilment services and product merchandising.

In reliance on the CHIFLEY Hotel case, the respondent contended (at [152]) that FanFirm’s sales from its website were neither use in respect of clothing nor retail sales as they were merely an adjunct to FanFirm’s core business of providing tour and event services.

Rofe J rejected this characterisation. At [153], her Honour pointed out that merchandise could be purchased from FanFirm’s website even if no tour or event booking was made. Thus, there was no necessary relationship between tours and events on one hand and, on the other, the merchandise. Her Honour also noted that Markovic J in the Katy Perry case had found that the sale of merchandise at and in conjunction with Katy Perry’s concerts was use in relation to the goods and retail services. Rofe J explained at [155]:

Markovic J’s findings on this issue were not challenged on appeal and I respectfully agree with her Honour. Using a trade mark on goods does not cease to be “use as a trade mark … in relation to goods” for the purposes of s 120(1) of the Act simply because the sale of the relevant goods is “closely tied” or an adjunct to some service offered by the applicant which is their primary or core business. In any event, I do not consider that the sale of merchandise on the applicant’s website to be merely an adjunct to its main business of providing tour and event services.

and at [158]:

…. The applicant’s website provided an online retail service from at least 2004 because customers could visit the website, select a product and then purchase that product. It therefore also provided order fulfillment services and product merchandising within the meaning of the respondent’s class 35 registration. ….

As FanFirm’s use was before the respondent’s earliest use in Australia in 2010 or 2011 (at [144] – [145]), her Honour’s conclusions ultimately led to orders for the cancellation of the respondent’s registered trade marks in class 35.

This conclusion did not extend to the respondent’s class 42 services – setting up, managing and operating an online store for a third party – as her Honour at [159] found such services were not the same kind of thing as online retail services or the class 25 goods.

The respondent’s use infringed FanFirm’s class 25 registration

Next, Rofe J found that the respondent’s sales of clothing merchandise from its fanatics.com website to Australians infringed FanFirm’s registration in class 25.

Some of the goods sold were the respondent’s own products branded with its Fanatics and/or Fanatics Flag mark. The respondent, however, contested that the sales of third party merchandise (i.e., not branded FANATICS) from its website and some products where FANATICS appeared only on the swing tag (or similar) involved use as a trade mark in relation to goods.

The third party merchandise

FanFirm argued that the sale of NBA, NFL and other third-party clothing manufactured by the likes of Adidas and Nike from the respondent’s website constituted not just use of FANATICS in relation to online retail services in class 35 but also use in relation to the goods themselves.

An example is this webpage:

The respondent argued (at [215]) that this was only use of FANATICS in relation to online retail services just as use of REBEL on REBEL SPORTS stores was use in relation to retail services and not the goods themselves.

Rofe J held, however, that this use constituted use in relation to the clothing goods themselves, not just in relation to retail services. In doing so, her Honour relied on the decisions in Sports Warehouse, [Solarhut][sol], [Flexopack][flex], Edgetec and Bob Jane. At least some of these cases involved the sale from the infringer’s website of goods which were not manufactured by (or for) the infringer. Accordingly, her Honour concluded at [220]:

The respondent invites consumers to visit its website at www.fanatics.com. At that website, goods are available for purchase under the name FANATICS as part of the domain name, displayed in page headings and in references to products. I consider that this constitutes use of the FANATICS Marks as trade marks in relation to the goods for which the applicant’s FanFirm Marks are registered, including clothing, sportswear and headgear.

The swing tag use

From 2020, the respondent was offering for sale from sites such as “www.aflstore.com.au” and “www.rebelsport.com.au” shirts and other apparel for 11 AFL teams and also some of its own branded clothing. At least some of the AFL clothing did not bear FANATICS on the labelling or otherwise. The “only” use of FANATICS was on the swing tag:

In addition to the swing tag, the FAQ also stated:

15.1 “When you make a purchase, you are purchasing from rebel. The order is simply being sent from a Fanatics warehouse.”

15.2 “Products shipped by Fanatics will only be available online and will be shipped direct from a Fanatics distribution centre to customers. Rebel does not hold these products in Australia.”

15.3 “Click and Collect is not available for products shipped by Fanatics as they are not stocked in our stores. They will be available for delivery only”

Further, there were other goods on which the respondent’s trade mark had been embroidered or printed on the label (albeit a small proportion of the total).

As with the third party merchandise from the respondent’s own website, the respondent argued this use on the swing tag was only use in relation to retail services, not the goods themselves. Rofe J also rejected this argument in the context of this case.

Given that s 7 defines use as use upon or in physical or other relation to the goods, the fact that the use was on the swing tag and not on the goods themselves was hardly determinative.

At [198], Rofe J considered:

It would be apparent to any reasonable Australian consumer that the Hawthorn Football Club (or any sporting club) does not manufacture clothing, and that the Hawthorn indicia are part of the design of the shirt material. The use of the FANATICS Marks in these instances are being used as “a badge of origin” to distinguish the respondent’s relevant good from goods manufactured by other sports clothing manufacturers such as Nike or Adidas: E & J Gallo Winery v Lion Nathan Australia Pty Ltd (2010) 241 CLR 144 at [41]–[42] (per French CJ, Gummow, Crennan and Bell JJ).

In any event, her Honour pointed at at [200]:

In this case, the FANATICS Marks on the FANATICS branded goods are being used as a badge of origin and thus the use constitutes trade mark use. The fact that other marks are present on the clothing, such as the logo of the relevant sporting team or league, does not matter. Dual branding is “nothing unusual” and does not have the effect that one of the marks is not being used as a trade mark: see Allergan Australia Pty Ltd v Self Care IP Holdings Pty Ltd (2021) 162 IPR 52 at [66] (per Jagot, Lee and Thawley JJ) and the cases there cited (these comments were not disturbed on appeal in Self Care). See also Anheuser at [189] and [191] (per Allsop J).

Thus, subject to the respondent’s numerous defences, FanFirm’s trade mark for clothing etc. in class 25 was infringed.

Some issues raised by the defences

The respondent raised a number of defences against a finding of infringement – in addition to its unsuccessful attempt to have FanFirm’s trade mark cancelled.

The respondent was exercising a right to use the trade mark given by registration

The respondent’s first line of defence was s 122(1)(e) – the exercise of a right to use a trade mark given to the user under the Act. That is, someone does not infringe another person’s registered trade mark if the “someone” has registered their own trade mark and is using it within the scope of that registration.

The issue here is that, as the respondent was not the owner of the trade mark for online retail services, its trade mark was not validly registered as a result of the operation of s 88(1)(a) and s 58.

On this issue, while her Honour considered it a “strange result” from a policy perspective, at [313] – [314] Rofe J followed Nicholas J’s ruling in Dunlop and held that cancellation was not retrospective but prospective only. That is, the respondent’s trade marks were not cancelled ab initio but only from the date of her Honour’s order.

While this protected the respondent from awards of damages (or an account) for its past conduct, (at [385]) this did not protect the respondent from an injunction against continued use of the infringing trade marks.

Honest concurrent user

As it had been using its trade marks in Australia since 2010 or 2011, the respondent also argued the Court should find the respondent was entitled to registration (s 122(1)(f) or (fa)) on the basis of honest concurrent user (ss 44(3)).

Ultimately, her Honour rejected this defence, finding that the respondent’s use did not qualify as honest concurrent user.

The problem for the respondent was at least three fold. First, the respondent adopted FANATICS as its corporate name and trade mark with knowledge of FanFirm and its trade mark. Indeed, it had sought to oppose registration of FanFirm’s mark. Rofe J accepted the respondent did not adopt the trade mark to take advantage of FanFirm’s reputation, however, it could not be described as “independent adoption”. Moreover, while two of the respondent’s senior executives involved in the decisions gave evidence, no-one from the respondent gave evidence of any honest belief that confusion would not result. At [331], her Honour concluded:

The adoption of the respondent’s new corporate name and mark occurred with knowledge of the applicant and its mark, and the goods for which registration of that mark was sought. Whilst I do not consider that the respondent adopted the FANATICS Marks in order to divert business or goodwill from the applicant, it cannot be described as “independent adoption”. Further, as I have said above, despite leading evidence from two senior employees of the respondent, the respondent led no evidence as to the existence of any honest belief that there would be no confusion as a result of the respondent adopting the same mark as the applicant’s existing marks. Thus, the two hallmarks of honesty are absent from the respondent’s adoption of the FANATICS Marks.

At [383] – [383], Rofe J relied on similar reasoning to reject the respondent’s contention that her Honour should exercise the discretion arising under s 89 not to remove the trade marks.

The injunction issue

In her Honour’s subsequent ruling on costs and non-pecuniary remedies, Rofe J stayed the operation of the order for cancellation of the registered trade marks pending the outcome of the appeal (for which Rofe J gave leave).

Rofe J also ordered an injunction restraining infringing use but refused to stay that order pending the determination of any appeal.

A number of factors led to her Honour refusing the stay.

These included, first, that her Honour was far from convinced that the respondent had the level of reputation in Australia it claimed given the apparently small scale of its sales here.

Secondly, the respondent’s claims of the disruption to its global business seemed overstated in light of the small scale of its Australian sales compared to the global business, its apparent disregard of the Australian market in deciding to adopt FANATICS and FanFirm’s evidence about the availability and utility of geo-blocking services so that the respondent’s sales to the rest of the world would be unaffected.

Further considerations included the dilution of FanFirm’s own goodwill and the difficulties in quantifying that.

Accordingly, Rofe J considered the balance of convenience lay in favour of not staying the injunction.

Bromwich J substantially upheld her Honour’s refusal to order a stay of the injunction but modified it slightly:

  1. to allow the respondent 28 days to implement geo-blocking of Australia; and
  2. to enable continued use in respect of “global customer care labels” in a particular form and to allow the respondent to deal with returns.

Bromwich J, like Rofe J, also referred to a number of other considerations.

Rofe J’s key finding was that FanFirm was the first user of FANATICS in Australia for goods such as clothing and online retail services for such products. Such use was not merely an adjunct to FanFirm’s tour organisation and supply business. As a result, the respondent’s trade marks for those goods and services will be cancelled and it has been enjoined against continued use in Australia. Just because you are clear to operate under your trade mark in one country does not mean you will be able to use it in another, different market.

FanFirm Pty Limited v Fanatics, LLC [2024] FCA 764 (Rofe J)

FanFirm Pty Limited v Fanatics, LLC (No 2) [2024] FCA 826 (Rofe J)

Fanatics, LLC v FanFirm Pty Limited [2024] FCA 920 (Bromwich J)

  1. Class 35: Business marketing consulting services; customer service in the field of retail store services and on-line retail store services; on-line retail store services featuring sports related and sports team branded clothing and merchandise; order fulfillment services; product merchandising; retail store services featuring sports related and sports team branded clothing and merchandise  ?
  2. Class 42: Development of new technology for others in the field of retail store services for the purpose of creating and maintaining the look and feel of web sites for others, not in the field of web site hosting; computer services, namely, creating and maintaining the look and feel of web sites for others, not in the field of web site hosting services; computer services, namely designing and implementing the look and feel of web sites for others, not in the field of web site hosting services; computer services, namely, managing the look and feel of web sites for others, not in the field of web site hosting  ?
  3. Class 25: Clothing, footwear and headgear, shirts, scarves, ties, socks, sportswear  ?

Dying in the FANATICS ditch Read More »

7NOW and the Shell Oil Drop Man

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7NOW and the Shell Oil Drop Man

In the 7Now case, the Full Court reminded us that the classic statement of when a sign is used as a trade mark for the purposes of Australian law is the Oil Drop Man case:[1]

With the aid of the definition of ‘trade mark’ in s. 6 of the [1955 Trade Marks] Act, the adverbial expression [‘as a trade mark’] may be expanded so that the question becomes whether, in the setting in which the particular pictures referred to were presented, they would have appeared to the television viewer as possessing the character of devices, or brands, which the appellant was using or proposing to use in relation to petrol for the purpose of indicating, or so as to indicate, a connexion in the course of trade between the petrol and the appellant. Did they appear to be thrown on to the screen as being marks for distinguishing Shell petrol from other petrol in the course of trade?

In that case, the High Court held that Shell was not using a caricature image of an animated oil drop man as a trade mark in its television advertisements and so did not infringe Esso’s registered trade marks depicting a “humanized oil-drop”. A surprising aspect of that decision is that, in doing so, the High Court overruled Windeyer J who had found it did infringe.

Unlike the High Court (who did watch the ads), we can’t see how Shell’s Oil Drop Man appeared. So it has always been something of a challenge to understand why.

Now Dr Vicki Huang, who professes law at Deakin University, has published an article revealing to the world some images from the original appeal books: “Uncovering secrets of Australia’s landmark High Court cases” (2024) 54 Australian Bar Review 209. (Unfortunately, its behind a paywall.) If you are a trade mark lawyer trying to grapple with what the late Prof. Lahore always regarded as the most elusive concept in Australian IP law, you should read it!

Back to the 7Now case

Seven had registered 7NOW as a trade mark, TM No 1540574, in respect of a range of goods and services in classes 9, 35, 38 and 41. 7-Eleven filed non-use applications against the trade mark on the s 92(4)(b) grounds.

By the time the proceeding reached the Full Court, four categories of goods and services in classes 9 and 35 were still in dispute (7-Eleven not pursuing the other services):

Category 1: computer software (in class 9);

Category 2: the promotion and sale of goods and services for others including through the distribution of online promotional material and promotional contests (in class 35);

Category 3: retail and wholesale services including retail trading via television programmes and by telephone and electronic means including the Internet (in class 35); and

Category 4: the bringing together, for the benefit of others, of a variety of goods enabling customers to conveniently view and purchase those goods including by mail order, telecommunications, website or television shopping channels (in class 35).

The trial Judge found that Seven had not discharged its onus under s 100 to show it had used its trade mark in respect of any of the categories and refused to exercise the discretion under s 101 not to order removal.

The Full Court allowed Seven’s appeal in relation to the promotion of goods and services for others only in Category 2 but otherwised dismissed it. As the Full Court emphasised in its quote from the Oil Drop Man case, the different outcomes arose from whether or not Seven’s use of its sign was sufficiently connected with the particular category.

How Seven used its 7NOW mark

It seems Seven’s evidence of use in the relevant period was limited to a one-page website:

As you can see, there is a 7NOW banner at the top of the page. Then (during the relevant period) there were 48 “tiles” which, if clicked, transferred the user to a different websites (some of which were associated with Seven such as 7plus and 7travel while others were not) and, finally, there was a panel with four columns of links at the bottom of the page.

Category 2 services

In effect the website operated as advertising the services being offered from the various websites linked through the 48 “tiles”. As the Full Court explained at [105], the

grid of those icons – [brought] to the consumer’s attention the services and goods offered on the linked websites and [made] it easier for the consumer to acquire those services and goods….

That was the performance of promotional services and those services were provided by reference to the 7NOW badge which clearly functioned as a trade mark. Accordingly, at [106]:

In our view, the connection shown on the website between the 7NOW mark, which has the character of a brand, and the actual performance of those promotional services is sufficient to mean that it has been used as a trade mark in relation to those services. ….

But, as the 7NOW website did not actually offer any goods or services for sale as opposed to the linked websites, the website was not “a means of delivering the service of selling goods. And so, Seven had not proved use of the mark in relation to sales services.

The other categories

To establish use in relation to computer software, Seven relied on the bottom two links under the 7Plus logo in the first column in the page “footer”:

“Get the iOS App

“Get the Android App”

If you clicked on one or other of those links, you were transferred to the page in the App store or the Android Play store where you could download the 7Plus app. 7NOW did not appear anywhere on those pages.

The Full Court agreed with the primary Judge’s conclusion that 7NOW had not been used to distinguish the (7PLUS) software from software being offered by third parties. A number of considerations from the overall context of the use played into this conclusion. These included:

  • 7NOW appeared only once on the website – at the top of the page and separated from the Store links by the 48 “tiles”;
  • the links to the stores were very much smaller and much less prominent that the tiles;
  • the links appeared under the, relatively speaking, prominent 7PLUS logo
  • there was no reference to the 7plus app at all;
  • getting to the software involved a 3-step process
    • the user had to navigate to the 7NOW page
    • the user then had to scroll down to links at the bottom of the page and perceived and read the words under the 7PLUS logo; and
    • then click on the link and be transferred to the page;
  • the 7NOW trade mark did not appear on the Store page

The same problem infected the claimed use for the other categories. Seven’s argument was that its 7NOW trade mark was being used for retail services because a user could buy goods of services from the websites linked by some of the tiles. So for example if one clicked on the tile for 7travel or House & Garden, this is what happened:

As with the computer software, however, the Full Court found the consumer would think the goods or services being offered from the linked website were being offered by reference to the trade mark(s) on that website. The connection between the 7NOW trade mark and the service of offering the goods or services in question for sale was not so much attenuated as severed.

If you do a Google search to buy some product, such as say a book, and the search results bring up, say, 10 or 20 links to sites from which you can buy the book, would you think Google was engaging in retailing the book?

Discretion

Finally, the Full Court rejected the appeal from the refusal to exercise the discretion against removal.

Seven placed heavy reliance on its family of 7-formative marks and its reputation in particularly the 7plus mark given there were some 12.5 million registered users of the 7plus app.

A number of factors played into the Full Court’s conclusion at [166] that the risk of confusion if another trader were to use 7NOW in relation to, say, retail services [via convenience stores] was so high that it would be reasonable to retain the registration for all categoires.  Seven Network (Operations) Limited v 7-Eleven Inc [2024] FCAFC 65 (Burley, Jackson & Downes JJ)

  1. Shell Company of Australia Ltd v Esso Standard Oil (Australia) Ltd [1963] HCA 66; (1963) 109 CLR 407 at 425 (Kitto J, Dixon CJ, Taylor and Owen JJ agreeing). The Full Federal Court supplied the emphasis.  ?

7NOW and the Shell Oil Drop Man Read More »

When is trade mark use on an overseas website an infringement in Australia

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Last week reviewed the notice and take down / moderation procedure the majority of the Full Federal Court adopted to limit the injunction against Redbubble’s trade mark infringement. In the course of allowing Redbubble’s appeal, the Full Federal Court also unanimously flagged significant questions about when the use of a trade mark on a website overseas may constitute trade mark infringement in Australia.

On these matters, Perram and Downes JJ delivered the main reasons and Nicholas, Burley and Rofe JJ agreed.

Some more facts

You will recall, Redbubble operates a website to which creators can upload their designs and customers can then buy merchandise to which the customers have chosen to have the designs applied. Once a customer has placed an order, Redbubble undertakes the fulfilment function including having the products manufactured and delivered to the customer branded with Redbubble’s trade marks.

Redbubble’s servers (at least in this case) are in the United States.

This part of the appeal concerned the second part of the trial – transactions 8 to 11. In the case of these “transactions”, Hells Angels’ trade marks officer in Australia merely viewed the trade mark infringing images on Redbubble’s website; he did not even make a trap purchase. There was no evidence that anyone else in Australia ever viewed the images or bought them.

Did this infringe?

The short answer is “yes”. But it is how the Full Federal Court got there that will require careful consideration in the future.

At first instance

The starting proposition is that for trade mark infringement in Australia there must be unauthorised use of the trade mark (or a substantially identical or deceptively similar sign) as a trade mark – i.e. as a badge of origin.[1]

Way back in 2005, Merkel J had concluded in Ward v Brodie the fact that a website was accessible from Australia was not sufficient to establish use; it was necessary to show that the website was directed at or targeted Australia.[2]

At first instance in this case, Greenwood J having found that the trap purchases (transactions ##1 to 7) infringed also found that transactions ##8 to 11 infringed even without a purchase. In doing so, his Honour applied the proposition that he had propounded in his 2019 ruling (which also involved trap purchases) at [469]:

The capacity to engage, in Australia, through the website, as Mr Hansen did, constitutes use in Australia by Redbubble. [3]

The appeal

Redbubble had not disputed that proposition at trial. It did seek to raise it as Ground 1 of its appeal. As it had not sought to argue the ground at first instance, however, this would have required leave and ultimately it did not press it.

So, it was unnecessary for the Full Federal Court to deal with the issue. At [48], however, their Honours placed a question over the correctness of Greenwood J’s proposition. Perram and Downes JJ said:

For the reasons which follow, to the extent that [469] of the 2019 judgment deals with the situation disclosed by Examples 8 to 11, we would reserve the correctness of that statement for a case where it is directly raised.

In the following paragraphs, their Honours identified at least three issues which would need to be addressed.

Why is a trap ‘viewing’ not an authorised use

The first issue was why a trap viewing was not a direct infringement.

Here, Perram and Downes JJ considered the trap purchases in Ward v Brodie had not been infringing because (now repealed) s 123(1) of the Trade Marks Act had provided it was not an infringement to use a trade mark in relation to goods to which the trade mark had been applied by or with the consent of the trade mark owner.

With the repeal of that provision, however, that proposition could no longer be applied. Further, at [50] their Honours questioned whether the replacement provision, s 122A,[4] “could be pressed into service” instead. Although their Honours expressed no concluded view at this stage.

However, Perram and Downes JJ at [51] questioned Merkel J’s conclusion in Ward v Brodie that a trap purchase was not authorised use under s 8(1). As a consequence, their Honours considered it would also be arguable that at least some of the trap viewer’s actions in viewing the images (i.e. requesting Redbubble to serve the images to the trap viewer) might also be authorised use and so fall within the defence provided by s 122(1)(e).

Noting once again that these matters had not been argued and so did not need to be decided, at [52] Perram and Downes JJ considered whether authorised use could in fact be made out could be “highly dependent on the particular facts”.

The reason for this warning lay in the different nature of some of the trap “views”. Mr Hansen, the Hells Angels’ trade mark officer had navigated to the Redbubble website and specifically requested the image displayed in transaction #8. The Redbubble website, however, included a carousel feature. So that, when image #8 was displayed the website automatically presented to him other images (##9 and 11) which Redbubble recommended to him.

The geographical reach of s 120(1)

The second issue the Full Federal Court raised was the geographical reach of infringement under the Australian Act. That is, there must be use as a trade mark in Australia. The Act does not reach acts outside Australia (if they do not involve trade mark use in Australia).

Is viewing an overseas website from Australia enough

Thirdly, Perram and Downes JJ at [57] considered it is open to question whether a website overseas which is merely viewed by people from Australia (other than a trap “viewer”) without purchase would constitute use as a trade mark in Australia. Their Honours noted that the previous decisions (apart from Greenwood J’s decision under appeal) including Christian v Nestlé involved an actual trade in Australia.

Noting that Moorgate Tobacco v Philip Morris established a threshold requirement for trade mark use that there “be an actual trade or offer to trade in the goods in Australia”, their Honours explained at [62]:

The question of whether mere overseas projection without a local trade in the goods can amount to trade mark use in Australia is, in our view, a question of considerable difficulty. It is made potentially more complex in this case because although the website is hosted from servers in the United States there is no doubt that Redbubble conducts business in Australia. The difficulty is that that business does not appear to have involved, in the case of Examples 8 to 11, any more than projection into the Australian market without any consequent trade in goods bearing the marks. An important question is whether the necessary geographical nexus for use of a trade mark in Australia can be established by the mere fact that the trader is engaged in trade in Australia albeit not in relation to the infringing trade mark. The answers to these questions are not self-evident. (emphasis supplied)

At [63], Perram and Downes JJ concluded:

On the current state of the authorities, we regard the matter as undetermined. At no point in either of the trial judge’s decisions does his Honour traverse these issues. We would therefore not read [469] of the 2019 judgment as resolving them.

Perhaps the issue that concerned their Honours is that, in the bricks and mortar world, Yanx established that consumers in Australia who bought “Yanx” cigarettes in the USA and imported them into Australia for their own personal use did not use the Yanx trade mark as a trade mark. The transaction was completed in the USA and the goods, when imported for the consumers’ own personal use, was no longer in the course of trade.

On the other side of the ledger, however, Deane J said in Moorgate at 433 –434:

The cases establish that it is not necessary that there be an actual dealing in goods bearing the trade mark before there can be a local use of the mark as a trade mark. It may suffice that imported goods which have not actually reached Australia have been offered for sale in Australia under the mark (Re The Registered Trade Mark “Yanx”; Ex parte Amalgamated Tobacco Corporation Ltd., at pp 204–205) or that the mark has been used in an advertisement of the goods in the course of trade (The Shell Co. of Australia v. Esso Standard Oil (Australia) Ltd., at p 422). In such cases however, it is possible to identify an actual trade or offer to trade in the goods bearing the mark or an existing intention to offer or supply goods bearing the mark in trade. In the present case, there was not, at any relevant time, any actual trade or offer to trade in goods bearing the mark in Australia or any existing intention to offer or supply such goods in trade. There was no local use of the mark as a trade mark at all; there were merely preliminary discussions and negotiations about whether the mark would be so used.

One might think that a website which was directed at, or targeting, Australians was making an offer to trade here or had an existing intention to offer and supply here, even if there is no actual sale. At least arguably, that does not seem very different, if at all, to advertisements in magazines circulating in Australia with the aim of soliciting custom. Moreover, (and this may require evidence in a particular case), if one clicks on the “Buy Now” or “Purchase” button on most websites, the whole transaction is automated and does not involve a volitional decision by the website operator whether or not to complete the transaction.

So why did Redbubble infringe

At the risk of simplifying the arguments very significantly, Redbubble’s argument was a kind of de minimis argument that the infringing images were not available to consumers in the ordinary course of trade.

This argument had two main strands to it. One strand was that the Hells Angels had been able to identify the accused images only through a prolonged period totalling some 4.5 hours over approximately 7 hours – typing in “Hells Angels” and filtering for “Newest”. Redbubble contended this was not the behaviour exhibited by ordinary consumers who, for example, spent on average spent less than four minutes on the site. The other strand was the claimed short period of time the images were available on the website.

Perram and Downes JJ did not think the primary judge had erred in rejecting Redbubble’s argument. Their Honours further pointed out that, if Redbubble had wanted to prove that an image was unlikely to be found, it should have provided evidence of what a search would have revealed at the relevant time. The carousel function also contradicted the argument.

Putting aside the factual problems, their Honours considered there was a more general objection to Redbubble’s argument. This was not a case of a consumer using a general search engine like Google or Bing and having to filter results. Rather, it was a case involving a search of a specific website with specific functionality designed to facilitate locating desired iterms. Having noted the search function and the catalogue Redbubble provided were central components of its business model, their Honours at [81] rejected the argument:

one must distinguish between, on the one hand, the difficulties a consumer may encounter in finding what they are searching for on a website explicitly designed for the purpose of helping them do so and, on the other, the idea that such difficulties entail that the website is not engaged in the ordinary course of its trade. We do not think that the fact that it might be difficult to locate goods bearing infringing trade marks in a poorly laid out store can mean that the goods are not being offered for sale in the ordinary course of the trader’s business. We do not think any different principle applies to a website of the present kind.

Some other matters

Patches and badges of affiliation

At [226], Perram and Downes JJ appeared to suggest that the use of the Hell’s Angels trade mark as “patches” on jackets and the like to indicate exclusive membership of the club would not be use as a trade mark. Pointing out that there may be trade mark use where the sign serves dual purposes, Nicholas, Burely and Rofe JJ at [255] expressly reserved that proposition for future consideration.

Nominal damages?

It is also worth noting that the Full Federal Court rejected Greenwood J’s award of $8,250 as nominal damages (if indeed it was nominal) on the basis that such an amount could never be considered “nominal”, whether it was calculated as $750 per infringement or as $8,250 on a global basis.

After reviewing the amounts that had been awarded in other cases as nominal damages, the Full Federal Court at [127] awarded the sum of $20 per infringement making, in total, $100.

Given the error in calculating the damages, the award of additional damages ($70,000) was also set aside since the amount awarded as damages was relevant to that assessment even if the amount awarded as additional damages did not need to be proportionate.

Most of the factors listed in s 126(2) did not support an award of additional damages and, while there was a ‘mild’ need for general deterrence, the trivial quantum of infringements led to no additional damages being awarded.

Redbubble Ltd v Hells Angels Motorcycle Corporation (Australia) Pty Limited [2024] FCAFC 15

  1. Most recently confirmed by the High Court in Self Care IP Holdings Pty Ltd v Allergan Australia Pty Ltd [2023] HCA 8; 171 IPR 120 at [22] to [25].  ?
  2. See also Christian v Société Des Produits Nestlé SA (No 2) [2015] FCAFC 153; 327 ALR 630 at [78]. An approach recognising that, as a website on a server overseas is accessible by anyone in Australia with an internet connection, the trade mark owner’s rights would be set at nought if infringement could be avoided simply by setting up a website on the internet while at the same time the owner’s rights (and the Court’s powers of enforcement) are territorially limited: Lifestyle Equities CV v Amazon UK Services Ltd [2024] UKSC 8 at [3].  ?
  3. The emphasis is the Full Federal Court’s at [47].  ?
  4. I am not aware of any decided cases on the interpretation of this provision. In the meantime, my attempt to understand it can be found in Warwick A Rothnie, ‘Unparalled importing and trademarks in Australia,’ (2020) 21(3) Business Law International 229 (behind a paywall I’m afraid).  ?

When is trade mark use on an overseas website an infringement in Australia Read More »

Motherland, Mothersky and Mother

Leave a Comment / Trade marks / / / , , , , , , , , , , ,

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

1 Comment / Trade marks / / / , , , , , , , , , , ,

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

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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].  ?

Keywords Are Not Trade Mark Use Read More »

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