In a 4:1 judgement handed down this morning in Cantarella Bros Pty Limited v Modena Trading Pty Limited [2014] HCA 48, the High Court of Australia has confirmed that the trade marks ORO and CINQUE STELLE (respectively, 'gold' and 'five stars' in Italian) are inherently adapted to distinguish coffee goods in Australia.  

Background

  Earlier this year, trade mark owner Cantarella took its battle with Modena over its registered trade marks CINQUE STELLE and ORO (in relation to coffee) to the High Court. CINQUE STELLE means 'five stars' in Italian, and ORO means 'gold'. Cantarella had sued for trade mark infringement. Modena had denied liability, saying that its use of CINQUE STELLE and ORO was in good faith to indicate the characteristics of the coffee products, and cross-claimed to cancel the marks. Cantarella won at first instance, but on appeal the Full Federal Court reversed the decision and ordered Cantarella's trade marks to be cancelled. Cantarella then sought leave to appeal the decision before the High Court, asking the court to consider the inherent distinctiveness of trade marks consisting of foreign words with laudatory qualities.  

Question on appeal

The question before the court was how the test for inherent distinctiveness fromClark Equipment is to be applied. Clark Equipment is authority that distinctiveness is to be assessed:

…by reference to the likelihood that other persons, trading in goods of the relevant kind and being actuated only by proper motives – in the exercise, that is to say, of the common right of the public to make honest use of words forming part of the common heritage, for the sake of the signification which they ordinarily possess – will think of the word and want to use it in connexion with similar goods in any manner which would infringe a registered trade mark granted in respect of it.

Cantarella's position

Cantarella's position rested on two arguments:

  1. The Full Court had incorrectly assessed the inherent adaptability of the ORO and CINQUE STELLE trade marks by focusing on their Italian origin. The Full Court should have instead assessed the inherent adaptability of the marks by reference to how Australian consumers would understand the words; and
  2. Trade marks consisting of foreign words should be assessed in the same manner as trade marks consisting of English words, namely:
  • What does the foreign word mean as understood by the average consumer? and
  • What is the likelihood that other traders would desire to use the foreign word in connection with their own similar goods/services because of its ordinary signification?

Modena's position

Modena submitted that the Full Court's assessment of inherent adaptability was correct, saying that the test for adaptation to distinguish is to be assessed only by reference to the likelihood that other traders would want to use the word in connection with a particular offering of goods or services; any consideration of the ordinary meaning or signification of the word to the average consumer was irrelevant. According to Modena, Australia's large ethnic populations (including a high percentage of Italo-Australians) meant that a large portion of Australian consumers would understand the meaning of the Italian words and therefore other traders would want to use the words ORO and CINQUE STELLE in relation to coffee products.  

The majority decision (French CJ and Hayne, Crennan and Kiefel JJ)

The High Court confirmed that:

Consideration of the 'ordinary signification' of any word or words (English or foreign) which constitute at trade mark is crucial…Once the 'ordinary signification' of a word, English or foreign, is established an enquiry can then be made into whether other traders might legitimately need to use the word in respect of their goods.

Accordingly, the test for inherent distinctiveness, including in relation to foreign words, is the two-step test argued by Cantarella:

  1. What does the word ordinarily mean to the relevant consumer, and in particular, is the ordinary signification of the word a direct reference to the character or quality of the goods/services?
  2. If the word is understood by the relevant consumer to be directly descriptive of a characteristic or quality of the goods/services provided under the mark, what is the likelihood that other traders might legitimately need to use the word in respect of their own goods/services?

The High Court found that, as in the TUB HAPPY case  (where the words TUB HAPPY were held not to be directly descriptive of, but were instead a 'skilful allusion' to the relevant goods, which were clothing), ORO and CINQUE STELLE were not directly descriptive of coffee.   Modena's evidence of use of similar signs by other coffee traders in the Australian marketplace (such as 'd'oro', LAVAZZA QUALITA ORO and other composite marks or use of the words 'five star(s)' on coffee packaging and in relation to a wide range of services) did not demonstrate that the word ORO on its own would be understood by Australian consumers to be directly descriptive of a quality or characteristic of coffee goods.  Without evidence that consumers understood the words ORO and CINQUE STELLE to be directly descriptive, Modena's evidence of use of similar signs by other traders was unhelpful and the primary judge was right to refuse Modena's submissions in relation to distinctiveness of the marks.   The High Court held that Cantarella's trade marks ORO and CINQUE STELLE were inherently adapted to distinguish the goods covered by Cantarella's trade mark registrations.  

Justice Gageler's dissent

  Justice Gageler, in dissent, agreed with the Full Federal Court's assessment of the test for distinctiveness and indicated that he would have dismissed Cantarella's appeal.   His Honour agreed with the majority that the test for distinctiveness applies equally to trade marks consisting of a foreign word or words. However, he considered that the focus of the test for distinctiveness is:

…on the extent to which the monopoly granted on registration of a trade mark would foreclose options otherwise available to rival traders acting in the ordinary course of their businesses without any desire to benefit from the applicant's reputation

  as opposed to being limited to the 2-step test argued by Cantarella. In Gageler J's opinion, a lack of direct descriptiveness does not automatically establish that a word has capacity to distinguish; other considerations must be taken into account.   In light of these comments, His Honour considered that the Full Court had adopted the correct approach in assessing the distinctiveness of the ORO and CINQUE STELLE marks. As at 2011, numerous traders in the Australian marketplace used the words ORO and D'ORO, as well as 5 STELLE and FIVE STAR, in relation to coffee-related goods and services. Taken together with the English meaning of ORO (gold) and CINQUE STELLE (five stars), the words indicated quality and were therefore words required for legitimate use by other traders and could not possess inherent distinctiveness.  

Conclusion

This is very good result for trade mark owners whose marks consist of a 'skilful allusion' to a quality or characteristic of goods/services covered by an application rather than a directly descriptive mark.