Cantarella Bros Pty Limited v Modena Trading Pty Limited [2014] HCA 48 

In the final chapter of the Italian coffee saga, the majority of the High Court has ruled that the Italian words ORO (meaning “gold”) and CINQUE STELLE (meaning “five stars”) are distinctive of, and therefore registrable for, coffee and related goods.

Background

Cantarella Bros Pty Limited (“Cantarella”) and Modena Trading Pty Limited (“Modena”) both sell coffee products in Australia. Cantarella is the owner of two Australian registered trade marks for ORO and CINQUE STELLE in class 30 for coffee and related goods.

In 2009, Modena began importing and distributing coffee in Australia using the names Caffè Molinari Cinque Stelle and Caffè Molinari Oro. In proceedings before the Federal Court, Cantarella claimed that Modena had infringed its registered trade marks. Modena denied trade mark use, and alternatively sought to cancel Cantarella’s registrations on the ground that the marks were not inherently adapted to distinguish.  The primary judge found infringement and rejected Modena’s cross-claim for cancellation of the registrations.

The issue of whether or not the Italian words ORO (meaning “gold”) and CINQUE STELLE (meaning “five stars”) were inherently adapted to distinguish coffee and related goods was taken to the Full Federal Court (the “FFC”) on appeal. The FFC overturned the primary judge’s decision and held that the words were not inherently adapted to distinguish coffee products and therefore Cantarella’s trade mark registrations should be cancelled. Cantarella appealed to the High Court.

High Court Decision

By a 4-1 majority, the High Court held that the Italian words ORO and CINQUE STELLE were distinctive of coffee and related goods, and therefore Cantarella’s trade mark registrations should be reinstated. This decision clarifies the test for assessing inherent distinctiveness of foreign language marks.

Under s 41(2) of the Trade Marks Act 1995 (pre-Raising the Bar Act), an application for the registration of a trade mark must be rejected if the trade mark is not capable of distinguishing the designated goods from the goods of other persons. In deciding if a mark is “capable of distinguishing”, the Registrar must first take into account the extent to which the trade mark is inherently adapted to distinguish the designated goods from the goods of other persons.

The leading test for determining if a trade mark is inherently adapted to distinguish was set out by Kitto J in Clark Equipment Company v Registrar of Trade Marks(1964) 111 CLR 511, as follows:

“[T]he question whether a mark is adapted to distinguish [is to] be tested 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.” 

Having reviewed a number of authorities and historical matters that informed and explained the test set out by Kitto J, the majority of the High Court accepted Cantarella’s submission that the appropriate test has two steps:

  1. Firstly considering the “ordinary signification” of the word to any person in Australia concerned with the relevant goods (the target audience).
  2. Then, enquiring whether or not other traders might legitimately need to use the word in respect of their goods.

The High Court noted that the consideration of the “ordinary signification” of the word is just as critical if the word is in a foreign language. Importantly, the High Court noted that the English translation of the foreign word is not critical, although it may be relevant. However, the meaning conveyed by a foreign word to the target audience is of utmost importance.

The majority indicated that if a foreign word is understood by the target audience as directly descriptive of the goods, the word is not likely to be registrable as other traders might legitimately need to use the word in respect of their own goods. However, if the ordinary signification (or ordinary meaning) of the foreign word contains merely an allusive or metaphorical reference to the goods, the word isprima facie registrable.

In the first instance, the primary judge considered the number of Italian speakers in Australia and the degree to which the words ORO and CINQUE STELLE are understood in Australia. The primary judge concluded that only a “very small minority” of Australians would understand the meaning of the words, and that the Italian language is not “so widely spread” that the words would be generally understood as meaning “gold” and “five stars”.

The High Court agreed with the primary judge’s approach and decided that ORO and CINQUE STELLE would not be understood by persons in Australia concerned with coffee products to be directly descriptive in relation to such goods. Accordingly, there was no legitimate need for other traders to use ORO and CINQUE STELLE in respect of their own coffee products. In this regard, the evidence provided by Modena that purported to show use of ORO and CINQUE STELLE by other traders was considered insufficient to show that the words were understood to be descriptive of coffee products.

The majority of the High Court therefore held that ORO and CINQUE STELLE were inherently adapted to distinguish coffee and related goods in class 30, and directed that Cantarella’s trade mark registrations should remain on the Register.

In his dissenting decision, Gaegler J stated that GOLD and FIVE STAR are ordinary English words that signify the quality of the respective goods. Therefore, the words are not inherently adapted to distinguish goods of one person from goods of another. In Justice Gaegler’s view, the FFC’s conclusion that the Italian equivalents of those words were not inherently adapted to distinguish coffee products which are commonly associated with Italy, often imported from Italy, and sold to Italian speakers, was sound.

The High Court’s criticism of the FFC decision

The FFC’s decision to overturn the primary judgement was considered by the majority of the High Court to be based on a “misunderstanding of the expression “ordinary signification” as it has been used in Australia (and the United Kingdom) since at least 1905 to test the registrability of a trade mark consisting of a word or words, English or foreign”.

When applying the classic test set out by Kitto J in Clark Equipment (supra), the FFC interpreted the reference to “common right of the public” as referring to members of the public who are or may become traders, rather than the general, English-speaking Australian public that would be familiar with coffee products. The FFC therefore looked at the likelihood of other traders in the relevant goods thinking of, and wanting to use, the words ORO and CINQUE STELLE in relation to their own goods.

In applying this interpretation of the test, the FFC found that ORO and CINQUE STELLE were considered by other traders to be entirely descriptive of the quality of premium coffee products and were therefore likely to be legitimately required by such traders. The FFC supported its findings by the fact that the Italian words meant “gold” and “five stars” which signify the highest quality, pure coffee in Australia is often associated with Italy and often originate from Italy, there are many Italian speakers in Australia, and that other traders have used the words ORO and CINQUE STELLE in relation to coffee products. In the FFC’s view, the application of the test “does not necessarily invite the question of whether such words, when they are foreign words, are commonly understood by the majority of English-speaking Australians”.

Whilst it was appropriate to consider the desire of other traders to use the foreign word in respect of their goods, the High Court noted that this desire must be based on the “ordinary signification” of the word, in Australia, to persons who will purchase, consume or trade in the goods. Importantly, the High Court stated that the “test does not encompass the desire of other traders to use words which in relation to the goods are allusive or metaphorical”.

Lessons

The English words GOLD and FIVE STARS are unlikely to be registrable as trade marks in Australia in relation to coffee products, without extensive evidence of use, as these words are descriptive of the quality of the goods being sold. However, according to this High Court decision, it does not necessarily follow that the corresponding foreign words are not registrable.

The High Court has confirmed the correct approach for determining whether or not a foreign word is inherently adapted to distinguish the designated goods. One must first consider the meaning of the foreign word to persons in Australia that will purchase, consume or trade in the goods. If the foreign word is understood by persons in Australia as descriptive, one must then ask whether or not, as a result of the descriptive connotation, other traders would legitimately be required to use the foreign word in relation to their goods. If the answer to the second question is “yes”, the foreign word is not prima facie registrable as a trade mark.

In light of the High Court’s decision, it may now be easier for trade mark applicants in Australia to register trade marks that contain a “covert and skilful allusion” to a characteristic or quality of the designated goods, provided the trade mark is not understood in Australia to be directly descriptive of the goods.

In relation to foreign language trade marks, this decision shows that the mere fact that the English translation of the word is descriptive in relation to the goods is insufficient to show that the mark lacks inherent distinctiveness. This is likely to provide greater scope for registering foreign word trade marks in Australia.