After a long and hard fought battle, the recent Federal Court decision of MASTRONARDI PRODUCE LTD v REGISTRAR OF TRADE MARKS (2014) 108 IPR 7, finally awarded Mastronardi the right to register its ZIMA trade mark for tomatoes.

The entire case turned on the fact that it was found that ZIMA was not the name of a new variety of tomato.  Obviously, Mastronardi did what it needed to do.  It won the case.  But, hypothetically, did it have other avenues by which it could have achieved the same outcome?  What if it had conceded that ZIMA was the name for a new variety of tomato?  Could it still have won?

In this Alert, Partner Hayden Delaney and Associate Hayley Tarr, address the issue of the registrability of otherwise descriptive agribusiness trade marks in cases of monopoly over a plant variety.

Key Points

  • A monopoly is the legal right, or in some cases the circumstantial ability, to undertake a particular activity to the exclusion of all others;
  • A monopoly may be created by a plant breeder’s right, a patent, or a contractual arrangement (such as an exclusive licence);
  • The Trade Marks Act 1995 specifically allows for registration of otherwise descriptive terms in instances where the goods or services of the trade mark registration are the subject of a patented monopoly;
  • The author would argue that the legislative intent indicates that perhaps a broader interpretation should be given to the Act, such that the same applies where the goods or services of the trade mark registration are the subject of any other form of monopoly, including plant breeder’s rights or a contractual monopoly, because:
    • a trade mark will be considered inherently adapted to distinguish unless other persons, without improper motives, would need to use that trade mark in relation to the goods or services in the ordinary course of business; and
    • where there is a monopoly over a good or service, no other persons would need to use a trade mark in relation to that good or service as they are precluded from trading in it without a licence from the owner of the monopoly;
  • There is a risk associated with bundling trade mark rights together with monopoly rights as, when the monopoly is lost, so too the trade mark will be lost.

Agribusiness monopolies

There are over 50 different varieties of orange grape tomatoes alone.  Many of these are free for all traders to grow and sell.  But some are protected for exclusive use by a single trader, when that trader has called upon one or more means of obtaining a monopoly.  A new variety of tomato would normally be protected by a plant breeder’s right. However, there are other means of achieving a monopoly over a new variety of tomato, such as patent protection (if it involves an element of genetic modification) or other contractual monopolies (which can be obtained where the variety is a hybrid and therefore the variety cannot be reliably bred from seeds, such that the variety is protected “in fact” by an owner who knows what parents to cross to produce the hybrid variety, which owner can then exploit the variety himself or herself or grant to a licensee an exclusive licensee to exploit the variety).

Mastronardi did not have a plant breeder’s right for a variety of tomato, or any patent protection.  However, even the Registrar of Trade Marks conceded that Mastronardi had a monopoly, namely a contractual monopoly (which the Registrar coined a “factual monopoly”) because “Mastronardi is the controller of seeds that come to be grown by its licensee in Australia”. It is not discussed in the case and we cannot know for sure, but some online literature indicates that the tomatoes that Mastronardi sells under the ZIMA trade mark are hybrid tomatoes, which would explain how Mastronardi came to be the “controller of the seeds” in a position to licence the right to grow them to an exclusive licensee in Australia.

The statutory law

Under Section 25 of the Trade Marks Act 1995, where a trade mark relates to product or service formerly manufactured or provided under patent and the trade mark is the only commonly known way to describe or identify the product or service, exclusive rights to use that trade mark cease two years after the patent expired or ceased.

The case law

The test for assessing whether a trade mark is “inherently adapted to distinguish” for the purposes of s 41(3) was articulated by Kitto J in Clark Equipment Co 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.”

What it all means

Although section 25 of the Trade Marks Act 1995 refers only to patents, the law should follow the intention of the legislation. The explanatory memorandum only outlines what the section says, and provides little insight into the intention of the legislature when they enacted the section. One interpretation is that the section expressly refers to patents only, and so it was the intention of the legislature that it relate to patents only [the First Interpretation]. The alternative interpretation is that it demonstrates the legislature’s intention that, whereas a mark may otherwise be unregistrably descriptive, it will not be so if the owner of the mark has a monopoly, whether that be a patented monopoly, a plant breeder’s right monopoly[i] or a “factual monopoly” as in the case at hand [the Second Interpretation].  In such cases, the existence of a monopoly gives rise to the unusual state of affairs that a descriptive term for any goods or services can operate as both a description and a badge of origin simultaneously.  

It would appear that both parties to MASTRONARDI PRODUCE LTD v REGISTRAR OF TRADE MARKS proceeded on the basis that the First Interpretation is the correct interpretation. But, given that two interpretations exist, there would seem to be some merit in exploring the implications of the Second Interpretation.

If section 25 of the Trade Marks Act 1995 is interpreted in accordance with the Second Interpretation, then wherever a trader has a monopoly via a plant breeder’s right or a factual happenstance, that monopoly will be enough to render the descriptive term used for the goods or services in relation to which the trader has the monopoly registrable under the Act. No other traders would be inconvenienced, as there is no legitimate need for other traders to use the descriptive term in relation to the goods or services, as they cannot sell or provide those goods or services anyway!

Obviously, if a trader with a monopoly decides to rely on this section, and adopt a descriptive word as its trade mark, there is an inherent risk as most monopolies will terminate after a specified period of time (20 years for plant breeder’s rights and standard patents, 8 years for innovation patents) and after that time all traders are free to trade in the goods or services.  At that point in time, given the trade mark is the descriptor for the goods or services, the trade mark will lose its distinctiveness and become generic. In reflection of this, exclusive rights in the trade mark are statutorily lost (under s 25 of the Trade Marks Act 1995) after a period of two years in the case of formerly patented goods or services.  If the Second Interpretation were to prevail, it is likely that the courts would determine that the same time line would be imposed in the case of goods formerly protected by a plant breeder’s right or goods or services formerly protected by other forms of monopoly.  

Traders may be willing to run this risk in instances where the product has a short life span.  This may be the case with certain varieties of wheat, where new varieties are constantly being protected in a rapidly evolving market.  Having said this, even in such cases, there is still some vulnerability, as the monopoly may be cut short[ii] and then the trade mark (the right to which is inextricably linked with the monopoly) and all the goodwill that has been developed in the trade mark will be lost.

Nevertheless, it should be left up to traders as to whether they are willing to take this risk.  It is not the place of the Trade Marks Office to decide for them.  After all, if you are the only one allowed to sell a certain variety of tomato, then whatever you call that variety will operate simultaneously as a description and a badge of origin, and no one will be adversely affected as no other trader has the right to sell that tomato anyway.  Mastronardi should have been allowed to register ZIMA as a trade mark irrespective of whether it was a variety of tomato (over which they have a factual monopoly) or not.