The High Court of Australia has handed down an important decision concerning the test for when a trade mark is registrable.  The impact of the decision will be particularly significant for businesses who deal in imported products that are labelled with words in languages other than English, and may open the door to the registration of many marks that would previously have been considered unregistrable.

The key issue in Cantarella Bros Pty Ltd v Moden Trading Pty Ltd was whether the Italian words ORO and CINQUE STELLE were properly registered for coffee.    Cantarella is the registered owner of both marks, and sued Modena for infringement.  In defence, Modena argued that Cantarella’s registrations should be cancelled on the ground that neither mark meets the requirements for registrability under the Trade Marks Act.  According to Modena, both marks were descriptive terms which traders who deal in coffee would legitimately wish to use.  The word ORO translates from Italian as “gold” and CINQUE STELLE means “five stars”.

Previous cases have established that, as a matter of public policy, the trade mark registration system should not confer monopoly rights over words that other traders might legitimately wish to use.  For example, WHOPPER was held to be unregistrable for hamburgers (it describes a large hamburger), and BARRIER was held to be unregistrable for skin creams (it describes a cream that acts as a barrier to protect the skin).

On the other hand, in another famous trade mark case TUB HAPPY was considered registrable for cotton clothing, despite conveying some meaning (i.e. the clothes are readily washable) because the term is allusive and not directly descriptive of the relevant goods.

Ordinarily, terms such as “gold” and “five stars” would be considered to have a very low level of inherent capacity to distinguish, because they are commonly used in a variety of contexts to indicate that products or services are “premium” or “luxury” in nature.

At trial, it was held that only a very small minority of Australians would recognise the allusions made by CINQUE STELLE and ORO, and so the trial judge held that the marks were registrable.  On appeal, the Full Federal Court disagreed with trial judge.  The Full Court cautioned against an “Anglocentric perspective”, and held that the Italian meaning of the words was entirely descriptive in relation to coffee, and that it did not matter whether Australian consumers understood the meaning of the words or not.

The High Court (by 4-1 majority) held that the test for whether a word is “inherently adapted to distinguish” involves an assessment of the “ordinary signification” of the word.   The Court stated:  “If a foreign word contains an allusive reference to the relevant goods it is prima facie qualified for the grant of a monopoly. However, if the foreign word is understood by the target audience as having a directly descriptive meaning in relation to the relevant goods, then prima facie the proprietor is not entitled to a monopoly of it”.

There was evidence to show that the term ORO (and D’ORO) had in fact been widely used by various traders in relation to coffee.  However, the Court considered that the evidence was not sufficient to show that traders used (or desired to use) ORO or CINQUE STELLE to directly describe their coffee products.   According to the Court, the evidence did not show that either term was understood in Australia by persons concerned with coffee products to be directly descriptive of the character or quality of coffee.

Ordinarily, widespread use of a term by a variety of traders would suggest that the term lacks inherent capacity to distinguish, because widespread use indicates that traders legitimately desire to use the term..  The Full Court placed considerable weight on the fact that other traders had used the term ORO in relation to coffee.  However the High Court was unconvinced, deciding that whilst other traders had used the term, they did so as part of composite trade marks comprising other Italian words, and not descriptively.   Prior registrations containing ORO were also not evidence that the term was directly descriptive of coffee.

The Court stated that the trial judge “was right to reject Modena’s submission, based on the evidence, that honest traders might legitimately wish to use the words to directly describe, or indicate, the character or quality of their goods”.

In his dissenting decision,  Gaegler J stated that “Gold” and “Five Star” are ordinary English words which signify quality and which any person might legitimately wish to use.  His Honour concluded that the same reasoning applied to their Italian equivalents when used for goods “of a kind commonly associated with Italy, often enough imported from Italy and often enough sold to Italian speakers”.

Taken at face value, the High Court’s decision has lowered the bar for when a mark will be considered “inherently adapted to distinguish”.  It is surprising that a laudatory term that is widely used by various traders would be considered inherently distinctive.    The Court’s focus was very much on whether the marks in question were directly descriptive.  The Court stated that they key to resolving the appeal was the distinction between a word which is a “covert and skilful allusion” to the goods (prima facie registrable) and a word having a “direct reference” to goods (prima facie not registrable).  The Court was of the view that ORO and CINQUE STELLE were merely allusory and not directly descriptive, because the evidence did not show that the terms conveyed “a meaning or idea sufficiently tangible to anyone in Australia concerned with coffee goods as to be words having a direct reference to the character or quality of the goods”.

However it might be doubted whether a word that is widely used by a variety of traders in relation to particular products could ever be capable of indicating a unique trade origin for those products, regardless of whether the word is directly descriptive or not.    This is particularly so in the case of imported products.    If a word is commonly used in another country in relation to coffee (for example), it is likely that traders importing coffee from that country will wish to use that word on packaging, even if the meaning of the word is not understood in Australia.  By focusing on whether the words ORO and CINQUE STELLE are descriptive, the Court perhaps gave insufficient weight to the fundamental question of whether the words are capable of functioning as trade marks at all.

To some extent the Court’s decision may have been influenced by how the case was run and the evidence presented at trial.  If Modena had demonstrated that not only is the term ORO widely used by a variety of traders in relation to coffee, but that traders choose to use the term because of its descriptive or laudatory significance, the outcome of the case may well have been different.

In light of the Court’s decision, there would now appear to be greater scope to register marks that are not understood in Australia to be directly descriptive of the goods or services for which they are used, and in particular foreign language marks.