Composite trade marks are trade marks which include word marks, together with one or more designs and/or logos. The limits to the protection afforded composite trade marks consisting of a product’s entire packaging were demonstrated in Mars Australia Pty Ltd v Sweet Rewards Pty Ltd [2009] FCA 606. Mars failed to convince the Federal Court that the labels used by a competitor, Sweet Rewards, on its ‘Malt Balls’ product constituted passing off, misleading and deceptive conduct or trade mark infringement in relation to Mars’ ‘Maltesers’ product.

The decision of the Federal Court in relation to the passing off and misleading and deceptive conduct claims is uncontroversial. In essence, these claims will not be established where a clear, alternative branding is used that eliminates the potential for confusion that may otherwise arise.

However, this case serves as a timely reminder that, while complex, composite marks can be a useful tool in preventing clear ‘knock-off’ style infringement but they may have limited use in the absence of clear copying.

The background

Maltesers have been marketed in Australia since approximately 1953. Both parties accepted that Maltesers is a ‘famous’ product on account of Mars’ extensive advertising, reputation and use.

Since 2005, Sweet Rewards had imported and distributed ‘Malt Balls’ to discount department and other stores. The Malt Balls are sold in jars with either a red or orange label depending on the store in which they were sold.1

No passing off or misleading and deceptive conduct

Mars alleged Sweet Rewards had engaged in passing off and misleading and deceptive conduct on the basis that both the red and orange Malt Balls label represented that:

  • there was a connection between Maltesers and Malt Balls
  • Malt Balls contained the same ingredients or tasted the same as Maltesers, and
  • that a Malt Ball was a Malteser.

Not surprisingly, Justice Perram dismissed each of these claims, on the basis that it was unlikely (or in the case of the orange label, highly unlikely) that an ordinary consumer of chocolate confectionary could possibly mistake the Malt Balls for Maltesers, or be misled or confused in relation to a connection between the two.

Critically, in the absence of the use of the word ‘Maltesers’, in Justice Perram’s view, consumers would not be confused despite the similarities between the two products. To know that one is eating a ‘Malt Ball’ is to know that one is not eating a Malteser.’

No trade mark infringement

Mars alleged that the label used by Sweet Rewards infringed a number of its registered trade marks. The relevant composite trade marks were effectively the Maltesers packaging. To succeed, given the products in question were the same, Mars needed to establish that:

  • Sweet Rewards was using the Malt Balls label as a trade mark, and
  • The Malt Balls label was deceptively similar to the trade marks owned by Mars.

Interestingly, it appears that Mars had attempted to rely on the use of the colour red by Sweet Rewards as a basis for infringement. In advancing this argument, Mars appears to be asserting exclusivity in the use of the colour red in relation to confectionery. However, it is not clear that Mars has such exclusive rights and it would be difficult for Mars to establish that it does, since the colour red in relation to Maltesers is almost always used in conjunction with the word ‘Maltesers’.

Was the use of the Malt Balls label use as a trade mark?

In short, no. Justice Perram held that Sweet Rewards intended to, and did in fact, use the ‘Delfi’ name and skier logo as trade marks: that is, as signs distinguishing Sweet Rewards’ products from those of others.

In contrast, the words ‘Malt Balls’ were simply descriptive of the product and therefore were not being used by Sweet Rewards as a trade mark. Similarly, his Honour did not consider that the balance of the Malt Balls label was being used as a trade mark by Sweet Rewards and the evidence did not establish that the balance was intended to be so used.

Although there may be cases where two (or more) trade marks are used simultaneously, Justice Perram did not consider that this was such a case. In his view, the clear use of the ‘Delfi’ brand as a trade mark reduced the possibility that the rest of the label, or the label as a whole, was also being used as a trade mark. Accordingly, Mars fell at the first hurdle in establishing trade mark infringement.

This case demonstrates that registrations for composite marks will be ineffective where it is clear that an alternative brand is being used as a trade mark. As a result, composite marks necessarily provide trade mark owners with a ‘thin’ layer of trade mark protection.

Was the Malt Balls label deceptively similar to the Maltesers trade marks?

Although not strictly necessary given his conclusion that Sweet Rewards had not used the label as a trade mark, in the event that this conclusion was wrong, Justice Perram nevertheless considered whether the Malt Balls label was deceptively similar to the Maltesers trade marks.

The applicable principles

In considering this issue, Justice Perram provided a useful summary of the principles relevant to assessing deceptive similarity. These principles are as follows:

  1. Deceptive similarity is assessed by comparing the impression of the registered mark and the allegedly infringing mark, based on the recollection that persons of ordinary intelligence would have.
  2. Aural similarity may be important.
  3. The risk of deception must be tangible, it is enough if an ordinary person entertains a reasonable doubt.
  4. Allowances must be made for imperfect recollections in considering whether a mark so nearly resembles another mark that it is likely to cause confusion or deception.
  5. The reputation of a trade mark is generally not relevant (in contrast to passing off and section 52 actions). However if a trade mark is particularly well known, this will be relevant in assessing a consumer’s imperfect recollection of the trade mark, since consumers will generally be taken to be familiar with the trade mark and its use.

Application of the principles

Applying these principles, Justice Perram concluded, correctly in our view, that the Malt Balls label was not deceptively similar to the Maltesers trade marks, on the basis that:

  • the Maltesers trade marks were famous and consumers generally must be taken to be familiar with them
  • in light of this high level of familiarity, the chances of a consumer forgetting or imperfectly recollecting the Maltesers mark were ‘vanishingly small’
  • the aural similarity between ‘Malt Balls’ and ‘Maltesers’ was negligible at best, and

the use of the colour red was unlikely to cause confusion and, in any event, any such risk was ameliorated by the effect of the differences between the words ‘Malt Balls’ and ‘Maltesers’ and the use of the Delfi marks.

As a result, even if the use by Sweet Rewards of the Malt Balls label was use as a trade mark, consumers could not possibly be confused by the Malt Balls label.

Take away note

Composite trade marks, despite their limitations, may still have a place in your stable of registered marks. What a brand owner chooses to register should be determined based on the key brand identifiers for the relevant product. However, you should always bear in mind that it will be the factual comparison between what is used as a trade mark on the allegedly infringing product and the mark that is protected that will determine whether any infringement has occurred.