use as a trade mark

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].  ?

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Playgro v Playgo

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PLAYGRO v PLAYGO

Well, you’ll never guess what? It turns out that:

playgo

is deceptively similar to:

playgro

No April Fool’s. Now, maybe some of you (like me) are thinking, “Wait a minute, there must be ‘gazillions’ of trade marks for toys with PLAY in them. That’s true, but the second syllables of the verbal elements are just too close, both visually and aurally. As Moshinsky J explained:

In my view, the fact that there are other trade marks for goods in class 28 containing ‘PLAY’ as part of the word, does not assist in resolving the matter. Accepting that it is a crowded market for toys, games and playthings where the word ‘PLAY’ is used as an element of the trade mark, and therefore more attention than usual may be paid to the second syllable, there is nevertheless a closer degree of similarity between the trade marks in issue here and the marks referred to in paragraph [94] above. In the present case, the second syllable of each mark (‘GRO’ and ‘GO’ respectively) is visually and phonetically very similar, while in the other cases (for example, PLAYSKOOL and PLAYBOY) the second syllable is quite different.

The different shaped backgrounds and colours and arrangement of the verbal element(s) were not signficant matters.

A couple of other points.

Playgo is based in Hong Kong. It sold and supplied its products to Myer, Woolworths and Big W there (presumably FOB or some similar arrangement). It argued therefore that it did not use its trade mark in the course of trade in Australia as property in the goods passed on delivery in Hong Kong.

Moshinsky J rejected this argument. When Playgo sold its product to Myer and the others, it knew they were intending to import them into Australia for sale at retail. Moshinsky J considered this was just a straightforward application of Gallo and Estex. Until the goods passed into the hands of the ultimate consumers, they were still in the course of trade and the PLAYGO trade mark operated to denote Playgo as the trade source.

Perhaps surprisingly given this conclusion, however, his Honour considered that Playgo was not liable as a joint tortfeasor with Myer, Woolworths or Big W for the infringements committed by their use. Selling the goods to them, with knowledge of what they intended to do with them (i.e., import them into Australia for retail sale) did not have sufficient commonality of purpose to amount to a common design, to “acting in concert together”; it was merely facilitation:

Nevertheless, in my view, the facts do not establish that Playgo Enterprises and Myer engaged in a ‘common design’ to offer for sale and sell toys bearing the Playgo Device Mark. The relationship between Playgo Enterprises and Myer was merely that of vendor and purchaser. The Supply Agreement appears to be a standard agreement for the sale and purchase of goods; there are no special features which involve Playgo Enterprises in the process of offering for sale and sale of the goods to customers. The facts do not indicate that Playgo Enterprises played any role in the offering for sale or sale of the goods to customers. It is true that Playgo Enterprises sold goods bearing the Playgo Device Mark to Myer, and knew that they were to be offered for sale and sold to customers in Australia. Nevertheless, in my view, that is insufficient to amount to a ‘common design’ because Playgo Enterprises did not engage in any acts in furtherance of the alleged common design. At most, Playgo Enterprises facilitated the infringement by selling the goods to Myer; but mere facilitation is not enough to establish joint tortfeasorship.

Although it is not referred to in the judgment, presumably the other limb of joint tortfeasorship – directing, procuring or inducing the infringement – would also fail in the absence of some positive act (other than selling to the importer for importation in Australia and sale)?[1] If so, that illustrates that the common law principles are much less help to the right holder than the statutory prohibitions in copyright law and patent law against authorising infringement[2] and, even more so, s 117 of the Patents Act 1990.

Playgro Pty Ltd v Playgo Art & Craft Manufactory Limited [2016] FCA 280

  1. See e.g. Ramset Fasteners (Aust) Pty Ltd v Advanced Building Systems Pty Ltd [1999] FCA 898; 44 IPR 481 at [41], [52].  ?
  2. In Cooper v Universal Music, for example, the provision of links on a website which browsers could use to download infringing content did constitute infringement where the website was designed to enable anyone, including the primary infringers, to place the links on the website.  ?

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Coke v Pepsi – “second” look

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Last week, Besanko J dismissed Coca-Cola Co’s claims that PepsiCo’s “Carolina” bottle shape infringed Coke’s trade marks, and was passing off and misleading or deceptive conduct.

Contour v Carolina

Some background

Coca-Cola Co relied on four trade marks: TM Nos 63697, 767355, 1160893 and 1160894 registered in class 32 for non-alcoholic beverages. The first two might be thought of as 2D representations of the shape of Coca-Cola Co’s “Contour” bottle, which has been in use in Australia since 1938.

1287.2

The second two were essentially the silhouette of the bottle; one image in white, the other in black.

1287.3

PepsiCo had introduced its Carolina bottle shape into Australia in August 2007 on a very small scale. It seems not to have been on the market at all between May 2008 and February 2009, when it was reintroduced on a larger, but still small scale. The Carolina bottle shape had apparently not been the subject of any advertising or promotion. At the time when PepsiCo introduced the Carolina bottle, there were 4, perhaps 6, other bottles used for soft drinks in the market with “waists of varying degrees” so the Contour bottle was not unique in that respect.

The trade mark infringement claims

Besanko J found that PepsiCo was using the Carolina bottle shape as a trade mark, but did not infringe because it was not deceptively similar to Coca-Cola Co’s trade marks.

In deciding that PepsiCo was using the overall shape of the Carolina bottle as a trade mark, Besanko J noted that the relevant goods were the beveage, a formless substance, and the bottle was just a container. So, the cases like Philips v Remington where the shape was the shape of the goods themselves did not apply. At [213], his Honour found that the shape was distinctive and intended to be so.

Besanko J was not prepared to find, however, that PepsiCo used the silhouette of the Carolina bottle as a trade mark. A number of factors played into this conclusion. His Honour accepted that the outline or shape of the bottle may be one of the first things seen by a consumer from a distance. However, that was not enough in itself. Among the factors that led to the finding, his Honour noted at [215]:

…. All bottles have an outline or silhouette and the fact that a bottle has a waist is not so extraordinary as to lead to the conclusion that that feature alone is being used as a trade mark.

and at [216]:

…. the outline or silhouette of the Carolina Bottle is likely to become less important in the consumer’s mind as he or she approaches the refrigerator or cooler and focuses on word marks, logos, and brands. As I have said, the fact that an aspect of a product may be seen at one point does not lead to the conclusion that consumers would see it as a badge of origin.

deceptive similarity

Besanko J agreed with the Full Court’s analysis of the shape depicted in TM Nos 63697 and 767355:

  • the sides of the bottle are curved rather than flat;
  • there is fluting on the top and lower portions of the bottle and no fluting in a central section;
  • the top and lower portions of the bottle have the same number of flutes; and
  • the bottle has a flat base and banded neck.

In contrast, PepsiCo’s Carolina bottle did not have flutes or the clear band; it had a horizontal “wave” feature and its waist was both more gradual and extended higher up the bottle. These differences at [235] were “significant”.

At [240], his Honour rejected Coca-Cola Co’s argument that the overall impression consumers would take away from the Carolina bottle was of “a bottle having a low waisted contoured shape”. Instead:

I do not accept that that is the view which would be held by the ordinary consumer. In my opinion, the waist, the horizontal wave feature, and, to a lesser extent, the frustoconical neck are the significant features of the Carolina Bottle.

Besanko J was not prepared to find that outline or silhouette of the bottle was the essential feature of thes trade marks. Rather, the vertical flutes and the clear belt band were as prominent. At [238]:

…. It cannot be said, for example, that a bottle with a waist is so extraordinary, or a bottle with vertical flutes and a clear belt band so common, that the outline or silhouette should be considered the essential feature.

However, Besanko J also found that the Carolina bottle was not deceptively similar to the silhouette marks represented in TM Nos 1160893 and 1160894. His Honour found that the Carolina bottle was distinctive in itself and, therefore, not deceptively similar. So, at [247], his Honour said:

Even if the outline or silhouette is the only feature of the marks, or is the essential idea of the marks, the comparison is with the sign the alleged infringer has used as a trade mark. In this case, I have found that is the whole shape of the Carolina Bottle. The following are the distinctive features of the Carolina Bottle which I think are distinctive but are not part of the registered marks:

(1) the Carolina Bottle has a gently curving waist at a higher point than that in the marks and does not have an abrupt pinch near the base;

(2) the Carolina Bottle has a cylindrical shoulder, not a curved shoulder;

(3) the Carolina Bottle has a frustoconical neck, not a curved neck;

(4) the Carolina Bottle has a twist top enclosure, not a cap lid seal; and

(5) the Carolina Bottle has a distinctive horizontal embossed wave pattern across the bottom half of the bottle.

Then, at [248], his Honour pointed out that the first 4 factors related to the silhouette and “it seems to me … the outline or silhouette of the Carolina Bottle would not be deceptively similar to either [trade mark].”

I am not at all sure, with respect, that the question is whether the accused sign is distinctive in its own right. Perhaps this means that, in a market where there are other low waisted bottles, the differences were sufficiently important that consumers would not be caused to wonder whether there was a connection with the trade mark owner.

Passing off / misleading or deceptive conduct

On this part of the case, Besanko J thought it was difficult to see why the ordinary consumer would not make his or her purchase on the basis of the [famous] brand names, device marks or logos. However, “not without some hesitation”, his Honour was prepared to find at [270] that a sufficient number of consumers who select a bottle from the store’s refrigerated drinks cabinet themselves “may well make their selection based on overall bottle shape” as a result of their minimal involvement in the purchase.

There was no likelihood of deception or confusion, however, as the shape of the bottles was too different. At [271]:

The difficulty for [Coca-Cola Co] is that, even accepting that and accepting that both bottles will contain dark brown cola and be sold within a similar, if not the same, context, I do not think that such a consumer would be misled or deceived, or would be likely to be misled or deceived, in the case of overall bottle shape because I think he or she would detect quite clearly the difference between the Contour Bottle and the Carolina Bottle. The most noticeable difference between the two bottles is that the Contour Bottle has the very distinctive fluting and the Carolina Bottle has the distinctive horizontal waves. Other noticeable features are the different shaped neck and shoulders and the fact that the waist on the Contour Bottle is lower and more pinched. In other words, if overall bottle shape is the cue, I do not think that there is any real likelihood of deception.

The role of intention

On all 3 aspects of the case, Coca-Cola Co contended that PepsiCo had intentionally designed the Carolina bottle to take advantage of the reputation in the Contour bottle. While Besanko J noted there were features of the relevant PepsiCo executive’s evidence “which caused me to scrutinise it carefully”, his Honour was not prepared to find an intention to deceive or cause confusion.

In any event, Besanko J did not think the resemblance of the Carolina bottle to the Contour shape was sufficiently close for PepsiCo’s intentions to lead to findings of infringement, passing off or misleading or deceptive conduct.

Coca Cola Company v PepsiCo Inc (No 2) [2014] FCA 1287

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Trade mark excellence

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“Dental Excellence” vs “south perth dental excellence”

A rare case of IP in a court other than the federal courts. Guess who didn’t win?

Dr Agapitos has operated a dental surgery under the name Dental Excellence from Mt Hawthorn in Perth since 2002. In (or from) 2010, he secured registration, TM No. 1388792, for Dental Excellence in respect of “dentistry” in class 44. The provisions of s 41(5) were applied.

Dr Habibi had 3 dental practices in various parts of Perth. Then in 2007, she bought from Dr McNeil his dental practice in South Perth, McNeil’s Dental Care, which promoted its services with the slogan (or tag or strap line) ‘Excellence in Dental Care’. In 2010, when Dr Habibi was updating the signage at the South Perth practice, she changed the name to South Perth Dental Excellence. It was accepted on both sides that Dr Habibi did not know of Dr Agapitos’ practice when she settled on her name. (According to Google Maps, they are about 12.5km apart or somewhere between 13 and 20 minutes drive.)

Dr Agapitos took umbrage and sued for infringement of his trade mark. Dr Habibi counter-claimed for revocation on the basis that “Dental Excellence” wasn’t capable of distinguishing “dentristy”.

Le Miere J applied the standard test from Clark Equipment Co v Registrar of Trade Marks:

The applicant’s chance of success in this respect (i.e. in distinguishing his goods by means of the mark, apart from the effects of registration) must, I think, largely depend upon whether other traders are likely, in the ordinary course of their businesses and without any improper motive, to desire to use the same mark, or some mark nearly resembling it, upon or in connexion with their own goods.

to find that Dental Excellence lacked any capacity to distinguish. So at [39] his Honour said:

other service providers are likely, without any improper motive, to desire to use the words ‘dental excellence’ in connection with their own services. An honest dentist may want to use the word ‘excellence’ on or in connection with ‘dental’ to indicate, or at least claim, that they provide dental services of a superior quality. ‘Dental Excellence’ may not be words which are commonly used by somebody outside the calling of dentistry but that is not the point. The point is that a dentist may well want to use the words ‘dental excellence’ to identify the services they provide and the quality of those services. The name ‘dental excellence’ at the date of filing had a sensible meaning that was descriptive of the plaintiff’s designated services. The name was apt to describe the provision of dental services of superior quality.

What is more, there was evidence that other dentists did in fact use the phrase in relation to their businesses.

Dr Agapitos could not save his registration on the basis of acquired distinctiveness under s 41(6). He put on the usual types of evidence of advertising and promotion. There was also evidence from 3 customers and a dental nurse who had gone to Dr Habibi’s practice by mistake. There was also some evidence of “licensing” of practices in other states, albeit the licences were created some two years after the trade mark was applied for. Jacobs J’s warning from British Sugar about use not equalling reputation was applied: in this case, the evidence of use, by what appears to have been a suburban dental practice, was too slight to overcome the evidence of other users.

Le Miere J finished off by (perhaps surprisingly[1]) finding that Dr Habibi did not use “dental excellence” as a trade mark and so s 120 was not infringed. In any event, she had adopted her sign in good faith and so qualified for the defence under s 122(1)(b).

The CJEU on the revocation of a trade mark on the basis that it no longer distinguishes the relevant goods or services (genericide) – Kornspitz. Of course, they do things differently in America: Living Proof is apparently distinctive, but Perfect Hair Day is not.[2]

Agapitos v Habibi [2014] WASC 47 (Le Miere J)

  1. Compare cheezy twists in Aldi v Frito-Lay.  ?
  2. Well, we do have Sheer Relief and, of course, Tub Happy.  ?

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Bugatchi gets Bugatti-ed

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While I thought that Bugatti was a car brand, it turns out it is (also) since 1989 a registered trade mark in Australia for,amongst other things, men’s clothing. Originating in Canada, there is also a line of men’s clothing under the label BUGATCHI UOMO. Products bearing this brand have been coming into Australia since 1991. Shine Forever, however, has been importing the line since 2010. Tracey J has ruled that Shine Forever has been infringing the BUGATTI trade mark.

Unsurprisingly, Tracey J rejected Shine Forever’s argument that it was not using BUGATCHI UOMO as a trade mark. According to Shine Forever, the Estex case meant that the Canadian supplier, as the manufacturer of the products, was using the BUGATCHI UOMO trade mark in Australia and not Shine Forever. Nice try, but no cigar.

Shine Forever also tried to rely on the s 122(1)(f) and (fa) defences. There is no infringement if:

(f) the court is of the opinion that the person would obtain registration of the trade mark in his or her name if the person were to apply for it; or

(fa) both:

(i) the person uses a trade mark that is substantially identical with, or deceptively similar to, the first-mentioned trade mark; and

(ii) the court is of the opinion that the person would obtain registration of the substantially identical or deceptively similar trade mark in his or her name if the person were to apply for it; or

For most of the preparatory steps and the trial, Shine Forever maintained it was the person entitled to rely on the defence. However, in the course of submissions the director (self-)representing Shine Forever sought to argue that the Canadian supplier was the person entitled to the defence. Tracey J would not let Shine Forever change its case at that stage. The interesting thing here is that Tracey J said:

54 Like s 123, s 122 operates as a qualification or exception to s 120(1). It provides a defence to “a person” who may otherwise contravene s 120(1) by infringing a registered trade mark. The “person” which is alleged, in the present proceeding, to have contravened s 120(1) is Shine Forever. It is, therefore, the “person” referred to in the prefatory words of s 122(1). The various references, in paragraphs (f) and (fa), to “the person” plainly refer to the person against whom infringement of s 120(1) is alleged and who seeks to invoke one or more of the defences available under s 122(1). In this case that person is Shine Forever, not BUA.

55 As Shine Forever did not seek to contend that it had defences under paragraphs (f) and (fa), these provisions do not assist it.

This probably means that, because Shine Forever was arguing the Canadian supplier was using the trade mark, it couldn’t then argue it was the person referred to in s 122.

Wonder why it couldn’t do that in the alternative?

Now, usually where a local importer or retailer is selling goods bearing a foreign manufacturer’s trade mark, the foreign manufacturer is the owner of the trade mark. Does Tracey J’s approach therefore also mean that, on the strict terms of the provision, the importer or retailer who gets sued for infringement could never rely on the defence when the person who would be entitled to get registered is the foreign supplier?

Bugatti GmbH v Shine Forever [2013] FCA 1116

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Affinage and A.S.P. 2

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For completeness, I should note that IHC UK has appealed Logan J’s decision earlier this month finding that it infringed IHC Australia’s registered trade mark for AFFINAGE. Summary here.

Interestingly, Logan J has granted a stay of his order to remove all references to A.S.P. from IHC UK’s Web site at www.affinage.com.

You will recall that IHC UK owns AFFINAGE outside Australia and had adopted A.S.P. at least partly to deal with the fact that it could no longer use “its” trade mark in Australia.

Logan J appears to have considered a stay pending the outcome of the appeal was in order as IHC UK:

  1. Had removed all references to Australia (including the drop down country box) from its web site at www.affinage.com;
  2. IHC UK was having some sort of global re-launch of A.S. P. in the UK soon, involving 150 or so distributors from around the world;
  3. His Honour accepted that the decision that the modified Web site infringed had been a “difficult one”; and
  4. IHC Australia had not sought damages and it was difficult to identify what damages might flow from the stay.

His Honour did not think that he needed to order a stay of 7 days of his orders relating to the removal of references to Australia from www.affinage.com. That stay had been sought out of an abundance of caution and IHC UK was generally trying to comply with the orders so it appeared a breach, if any, would have been inadvertent.

International Hair Cosmetics Group Pty Ltd v International Hair Cosmetics Limited (No 2) [2011] FCA 540

For the orders under appeal, see International Hair Cosmetics Group Pty Ltd v International Hair Cosmetics Limited [2011] FCA 339

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Using a sign on the internet

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Logan J has granted injunctions against International Hair Care UK’s  use of AFFINAGE (and other trade marks) on its global website for (in effect) infringing International Hair Care Australia’s trade marks registered in Australia. The facts throw up the interesting question of what happens when 2 different people own the same trade mark in different countries and try to use it on the internet.

Facts

IHC UK is the owner of the registered trade mark AFFINAGE for hair care products in the UK and 20 other countries throughout the world, but not Australia.

In 1992, Mr Barry, the principal of IHC UK, set up IHC Australia with Mr Jolly. At that time, Mr Barry owned a majority of the shares.

IHC Australia applied for and registered AFFINAGE under the Australian trade marks act for hair care products.

In 2002, Mr Barry sold his then remaining shareholding in IHC Australia to Mr Jolly (and his wife) for $480,000. IHC Australia kept its registered trade marks and, under the terms of the sale, the parties divided up the global rights between themselves. IHC Australia got the rights to AFFINAGE in China, South-East Asia, Australia, New Zealand and the South-West and Western Pacific to the International Date Line; IHC UK had the rights to the rest of the world.

Sometime after this, Mr Barry or IHC UK incorporated a new Australian company, Affinage Salon Professional Pty Ltd, to sell hair care products under the brands A.S.P. and KITOKO.

In August 2010, the parties started legal action in Australia against each other. That litigation was compromised by a deed of settlement the terms of which, amongst other things, included Affinage Salon Professional agreeing to change its name so that it did not include AFFINAGE and IHC UK and its subsidiary undertaking:

not to use AFFINAGE … as a sign in connection with the importation, marketing, sale or manufacture in Australia of hair care products including hair colours and dyes.

In January this year, IHC Australia’s solicitor did a Google search and went to the link for IHC UK’s website at www.affinage.com. At that link, he was presented with a banner AFFINAGE and beneath it in smaller script SALON PROFESSIONAL. There was a “country box” with a drop down list of countries. When he selected “Australia”, he was taken to a page headed “ASP”. Under the “Profile tab” for Australia, there were the following passages:

In 1996 [IHC UK] conceived, created and lunched the premium hair care brand AFFINAGE. Originated as a line of hair colour, the AFFINAGE brand grew rapidly to include [reference to other types of product]… Now we are introducing our exciting new hair care brand, ASP, to the Australian and Asian markets. Having already signed distribution agreements with a number of companies we look forward to fantastic success in 2011.

….

Today our products are sold in over 50 countries – across Europe, Africa, the United States, South America and the Asia Pacific. Our brands are marketed globally by [IHC UK] and through it’s associated companies in the USA and Australia. Global distribution is achieved through a worldwide network of wholesalers and specialist distributors

A map of the world showed markers ASP Australia, ASP USA and identified the UK as Worldwide HQ. If the UK or the USA were chosen, the same information was displayed, but the landing pages were headed AFFINAGE and AFFINAGE, not ASP, was used to mark the countries.

IHC Australia re-commenced proceedings for breach of the undertakings.

Following service of the court documents (no other notice of complaint having been given), IHC UK amended its website.

The landing or home page now looked like:

IHC UK's modified home page

and Australia no longer appeared in the drop down box for countries under AFFINAGE, only under A.S.P.

Findings

Logan J found that the website in both its unmodified and modified form breached the undertaking in the deed of settlement and granted injunctions, amongst other things, requiring the A.S.P. component of IHC UK’s website to be removed from www.affinage.com. In contrast, the Facebook and Twitter links on the home page did not breach the undertakings.

On its true construction, the undertaking required IHC UK not to use AFFINAGE in Australia as a trade mark (at [61]). This required that IHC UK not use AFFINAGE as a trade mark in a way which targeted Australia.

IHC UK’s use targeted Australia

His Honour recognised that IHC UK was perfectly entitled to use its trade mark in, for example, the UK where it was the registered owner. The problem was to reconcile that entitlement and the global nature of the internet with IHC Australia’s territorial rights in Australia.

At [59]:

… the reconciliation to which I have just referred is achieved, in terms of the undertaking given in this case, by an approach that finds a use of the nominated words in connection with “marketing” in Australia if the words as so used are downloaded in Australia and there is evidence that the use was specifically intended to be made in, or directed or targeted at Australia.

Unlike the Ward & Brodie case, that targeting was effected by the country selection box: that was its whole purpose. In the case of the unmodified website (at [60]):

that global web site is, inter alia, directed to or targeted at Australia. That is the whole purpose of the “Australia” option in the drop down box selection offered on the global landing page.

This was also true of the modified website. At [62]:

…. That Australian targeted use on the global landing page controls all that follows when one selects, as did Mr Bennett, the “Australia” option in the drop down box.

It was use as a trade mark

While IHC UK could legitimately say it introduced the brand AFFINAGE into Australia as a matter of historical fact. Its usage of the term went much beyond that.

On the first or unmodified form of the website, the purpose of the profile page or tab in the Australia” section was to persuade people to buy IHC UK’s, “and materially” its Australian distributor’s, products by reference to the AFFINAGE trade mark. At [67], his Honour explained:

When one reads the language of the “Profile” page in context, the repetition of AFFINAGE and the repeated use of “our brands” in conjunction with “worldwide” and “are marketed globally by IHC UK and through its associated companies in the USA and Australia”, the reference to Affinage is not just to a matter of foreign history but part of a current promotion that our goods worldwide, including those offered in Australia, include goods with the AFFINAGE brand. ….

No doubt, part of that context included the fact that one landed on a home page emblazoned with the AFFINAGE banner. But, his Honour, as in the Mantra case, was troubled by the repetitive use of the trade mark and, particularly, the representation that “Our goods “are marketed globally … in the USA and Australia”. His Honour also made the point that nothing on the profile page made it clear that IHC UK no longer held the rights to AFFINAGE in Australia.

The modified version of the website, featuring both the AFFINAGE and A.S.P. trade marks, was much closer to the line. Despite the separation between the 2 marks and the removal of Australia from the drop down box for AFFINAGE, however, Logan J considered it was still using AFFINAGE to target Australia in a trade mark sense. At [70]:

The “setting” for the viewer of this global landing page has undoubtedly changed and changed in a way that seeks to create a discrete Australian “target”. What remains though is a determined endeavour to place AFFINAGE in the mind of the viewer who has an interest in reading further in relation to Australia. The Australian “target” remains on the global landing page as a fixed feature. A connection between the AFFINAGE brand product and the ASP brand, each formulated by IHC UK is promoted and promoted to an Australian viewer. What the global landing page does not say is that IHC UK has no connection with the AFFINAGE brand in Australia. Instead, the overall “setting” is that there is an Affinage world brand in which the Australian province is known as “A.S.P.”. This, in my opinion, remains a use of that sign in Australia in connection with marketing contrary to the terms of the undertaking.

Accordingly, IHC UK was ordered to remove :

  1. Australia from the drop down country box;
  2. the A.S.P. pages from its website
  3. any references to Australia from its website; and
  4. any links between any new A.S.P. website and the AFFINAGE website.

FCR O35 r11(2)

For those interested in procedural matters, Logan J refused to follow the Ucorp ruling and concluded that FCR O35 r11(2) conferred a power only; there was a discretion whether or not to award an injunction once it was shown the terms of the undertaking had been breached.

International Hair Cosmetics Group Pty Ltd v International Hair Cosmetics Limited [2011] FCA 339

Using a sign on the internet Read More »

A case of (un) parallel imports

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

BTB holds a licence to make and sell “Greg Norman” branded clothing in India from Greg Norman Collection Inc (GNC). GNC is the “head licensor” of the “Greg Norman” trade marks registered in, amongst other places, India and Australia.

By clause 2.4 of the licence agreement, BTB agreed not to sell the branded clothing it made outside India without GNC’s consent:

LICENSEE acknowledges that this License is limited to the TERRITORY defined herein, and agrees not to sell LICENSED PRODUCTS to anyone other than its regular retail customers in the TERRITORY in the normal course of trading, and further agrees that it will not sell LICENSED PRODUCTS destined directly or indirectly for sale outside the TERRITORY without the prior written approval of GNC.

Sunsport operates mainly in Pakistan, but also has a representative in Singapore, Mr Wadhwani. Mr Wadhwani also operates a business, PT International which, amongst other things, supplies product to the second respondent in Australia.

Sunsport told Mr Wadhwani that it could source genuine Greg Norman branded merchandise from BTB. Mr Wadhwani told the principal of the second respondent, Mr Dwyer, this. Mr Dwyer checked out GNC’s website and established that BTB was an authorised licensee of GNC and placed an order with Mr Wadhwani from BTB’s catalogue.

Sunsport placed an order with BTB for a shipment of clothing, apparently to be delivered to Pakistan via Singapore. When the shipment reached Singapore, however, PT International on sold the goods to Mr Dwyer’s company, which imported them into Australia.

Nicholas J has found that in doing so Mr Dwyer’s company infringed the “Greg Norman” trade marks.

One particularly interesting issue is why Mr Dwyer’s company was unable to rely on s 123 of the Trade Marks Act 1995: while BTB was in fact a licensee of the relevant trade marks, Nicholas J still found that the trade marks had not been applied to the particular goods with the trade mark owner’s consent. The main reason for this conclusion was that BTB’s licence was limited to India. Although BTB made and marked the goods in India where it did have a licence, it had no licence to sell “Greg Norman” merchandise outside India. At [78] his Honour said:

Where a registered owner consents to another person applying the registered mark to goods on condition that the goods must not to be supplied outside a designated territory, the registered owner would not usually be regarded as having consented to the application of the mark to goods which the other person knows at the time he or she applies the mark are to be supplied by him or her outside the territory.

However, there may be more to it than that. It would appear that BTB made a special batch of the merchandise to fill the order from Sunsport. Also, the evidence showed that BTB did not include the sale in its royalty reports to GNC. While strictly obiter, his Honour went on to note at [89]:

I would not be prepared to infer that products manufactured by BTB in respect of which GNC had received royalty payments were products to which the second applicant’s marks had been applied without the second applicant’s consent in the absence of convincing evidence to that effect. Of course, as I have previously found, royalties were not paid on the products shipped to Sunsports. ….

and went on to reject an argument that the goods imported were of an inferior quality.

If nothing else, this decision shows just how high the hurdle may be for someone who want to engage in parallel importing. On the other hand, if the receipt of royalties has the significance identified at [89], trade mark owners will need to scrutinise statements from their licensees very carefully to ensure that they are not “implicitly” licensing a parallel importer. The implicit licence, or licence by acquiescence, however,  might seem very hard in cases where royalty reports don’t come in for several months (or longer) unless, perhaps, there be a pattern of acquiescing.

A second interesting point lies in his Honour’s comments on the Champagne Hiedsieck case. In that case, Clauson J had held that there is no use of a trade mark as a trade mark by someone when the goods in question are goods to which the trade mark owner had actually applied the mark. That ruling has been upheld and applied many times.

I had thought the High Court’s references to Champagne Hiedsieck in its Gallo ruling showed its continuing relevance.

Nicholas J points out, however, that the High Court stated that s 123 embodies the principle in Champagne Hiedsieck. As a consequence, applying conventional principles of statutory interpretation, his Honour concluded that the enactment of s 123 has operated as a kind of statutory repeal or displacement of Champagne Hiedsieck. His Honour explained:

[98] The question whether a person who sells goods to which a trade mark has been applied with the consent of the owner of the mark uses the mark as a trade mark was recently left open by the High Court: E & J Gallo Winery v Lion Nathan Australia Pty Ltd [2010] HCA 15; (2010) 265 ALR 645 at [53].

[99] The respondents’ argument before me was that, independently of the question of trade mark use by them (which was, as I have said, conceded by them to have occurred), the applicants were also required to establish that the respondents had engaged in “infringing use” and, for that purpose, had to establish that the marks on the relevant goods had not been applied by or with the licence of their owner. I do not think this is correct. There is no justification for implying any such additional requirement. If the circumstances referred to in s 123 are shown to exist then the respondents will not have infringed the registered trade marks, not because of any additional requirement of the kind now postulated but by operation of s 123 itself. The High Court observed in E & J Gallo Winery at [34] that s 123 reflects the principle established by Champagne Heidsieck.
[100] As a matter of statutory construction, s 123 of the Act, in form and substance, creates an exception to infringement which, in accordance with the relevant principles of statutory construction, leads to the conclusion that it is the person who invokes the section who carries the onus of proof: Avel Pty Ltd v Multicoin Amusements Pty Ltd [1990] HCA 58; (1990) 171 CLR 88 at 119; Vines v Djordjevitch [1955] HCA 19; (1955) 91 CLR 512 at 519.

(Nicholas J did go on to note how lightly the burden on a respondent might shift.)

Arguably, the point was not strictly before his Honour as Mr Dwyer’s company conceded it was using the Greg Norman trade marks “as trade marks”. If right, however, there would appear to have been a significant narrowing of defendants’ “wriggle room”.

Sporte Leisure Pty Ltd v Paul’s International Pty Ltd (No 3) [2010] FCA 1162

A case of (un) parallel imports Read More »

Appeal sinks luscious LIPS

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One month after the appeal was heard, the Full Court has rejected Nature’s Blend’s appeal that Nestlé used Luscious Lips as a trade mark.

Nature’s Blend argued first that the trial judge had wrongly focused on the character of Nestlé’s use instead of the proper meaning of the Nature’s Blend mark. As the mark was registered for all confectionery, not just “lips”, it was said to be inherently distinctive. The Full Court, however, rejected this requirement and re-affirmed that the test was to examine whether or not the way Nestlé used the mark (the “impugned use”) would be understood by ordinary consumers as functioning as a badge of origin.

Nestlé’s Luscious Lips are part of its ‘Retro Party Mix’ pack. The expression ‘luscious Lips’ appeared only on the back of the packaging in the expression:

That’s right! All your old favourites are back, so put on those flares & get ready to party! Up to 7 lolly varieties including … cool COLA Bottles, those radical Racing Cars, yummy Honey flavoured Bears, totally freeeekie Teeth, luscious Lips, partying Pineapples and outrageous Raspberries.

You can see the front of the packaging at the product’s very own facebook page.

Nature’s Blend contended that the trial judge had improperly diluted the significance of the ‘luscious Lips’ expression on the Nestlé packaging by reference to the presence of other, more prominent brands.

This issue can be tricky because the Courts have long held that one does not take into account extraneous matters such as disclaimers or the presence of other trade marks when considering the question of deceptive similarity. On the question of use as a trade mark, it is permissible.

While the Full Court acknowledged that the fact that other trade marks were used more prominently on the packaging did not preclude ‘luscious Lips’ from being used as a trade mark, the characterisation of the impugned use depended on the particular usage in question in its own particular setting. In this case, the presence of ALLEN’s and Retro Party Mix did in fact undercut the likelihood that consumers would read ‘luscious Lips’ as a trade mark.

The Full Court also agreed that Nestlé had used the trade mark in good faith as a description.

Nature’s Blend Pty Ltd v Nestlé Australia Ltd [2010] FCAFC 117 (Stone, Gordon and Mckerracher JJ)

Comment on decision at first instance.

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Kit Kat shape trade mark

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Nestlé has successfully appealed Aldi’s opposition to registration of a 4 bar Kit Kat as a trade mark:

Societe Des Produits Nestle S.A. v Aldi Stores (A Limited Partnership) [2010] FCA 218

The trade mark is TM No. 822780 for this:

The endorsement reads:

The trade mark consists of the shape of the goods, being four bars attached to one another by a thin base as depicted in the representations attached to the application form.* * Accepted under the provisions of subsection 41(6).*

Now, the appeal was resolved by consent. There is an interesting practice point there Nicholas J, an experienced IP practitioner before going to the Bench, explains the rationale for allowing appeals on this basis.

The larger questions are of course how did Nestlé get it accepted and what can they do with it?

The endorsement indicates that the sign was accepted on the basis of acquired distinctiveness under s 41(6). It would appear from the Opposition decision, there was (as you would expect) enormous sales and advertising and a survey indicating 77% of the public would identify the shape as Kit Kat.

Consistently with the approach taken by the Full Court in BP Green (cf [118] and [121-122]), the Hearing Officer upheld the opposition on the ground that the shape was not used as a trade mark. Decision here (pdf –  I couldn’t find it on Austlii).

Of course, we don’t know what evidence, if any, Nestlé filed in support of its appeal, which might have persuaded Aldi to withdraw.

Next, what happens if Aldi or Coles or Woolworths start selling a chocolate with 4 bars like the shape above wrapped in their own packaging? At the Opposition hearing, Nestlé argued that post sale use, such as unwrapping the chocolate after sale, could constitute use as a trade mark citing Kabushiki Kaisha Sony Computer Entertainment v Nuplayer Ltd [2005] EWCH 1522 (Ch D) in support. Given his conclusions on other points, it was sufficient for the Hearing Officer to assume this was the case. How it sits with Re Yanx’ TM might be another matter.

What happens to those people who are selling 1 finger or 2 bar variations on a theme? Shades of Adidas’ 3 stripe wars.

Kit Kat shape trade mark Read More »

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