The High Court of Australia has granted special leave to coffee giant Cantarella Bros Pty Ltd to appeal the Full Court of the Federal Court’s cancellation and removal of its trade marks ‘ORO’ and ‘CINQUE STELLE’ from the Trade Mark Register on the grounds that the foreign word trade marks were not inherently adapted to distinguish, as per Cantarella Bros Pty Limited v Modena Trading Pty Limited [2014] HCATrans 53..

Fact Shot

In  September  2010,  Modena  Trading  Pty Ltd  (Modena)  commenced  importing Italian coffee from Caffè Molinari SpA (Molinari) branded in Australia as ‘Caffe Molinari Oro’ and ‘Molinari Cinque Stelle’. Cantarella  commenced  proceedings  in  the Federal  Court  of  Australia  against  Modena for infringement of its trade marks ‘ORO’ and ‘CINQUE STELLE’ in relation to coffee  and  related  products  (class  30). Modena, in turn challenged the validity of Cantarella’s trade mark registrations on the  grounds  that  the  trade  marks  were not inherently adapted to distinguish the goods or services of Cantarella from the goods or services of other traders due to the descriptive nature of the words comprising the trade marks.

The Federal Court of Australia observed in the initial proceedings that the English translation of the words ‘ORO’ and ‘CINQUE STELLE’ (namely, ‘GOLD’ and ‘FIVE STARS’) would not have been  considered  distinctive  due  to  the descriptive nature of the words, however the appropriate test in this case was consideration of whether the foreign words were distinctive and whether, or not, the English translation of the words would be understood in Australia. The Federal Court upheld the trade mark registrations on the grounds that the words ‘ORO’ and ‘CINQUE STELLE’ were not so widely understood in Australia to mean ‘GOLD’ and ‘FIVE STARS’ (respectively) in a manner that would render the trade marks unable to distinguish Cantarella’s products from those of other traders. The Federal Court of Australia also held that Modena’s use of such words on imported coffee packaging infringed Cantarella’s registered trade marks and granted an injunction, restraining Modena from any further use of the words in Australia in relation to coffee products.

Modena appealed the decision to the Full Federal Court.

As reported in our December 2013 e-Bulletin, the Full Court of the Federal  Court of Australia (Full Court) overturned the original decision on appeal, finding that the Federal Court of Australia erred in determining that ‘ORO’ and ‘CINQUE STELLE’ were valid trade marks under the Trade Marks Act 1995 (Cth) (TMA) and ordered that the trade marks be removed from the Trade Mark Register.

Cantarella sought leave to appeal the decision in the High Court of Australia.

The High Court granted special leave for Cantarella to appeal, finding that the Full Court’s decision gave rise to important questions of law.

Grinds of Appeal

In its application for special leave, Cantarella submitted that the Full Court had erred in two material respects. First, that the Full Court applied the incorrect test for determining whether a foreign word had inherent distinctiveness (including, by reference to the ordinary significance of the foreign word in Australia). Second, that there was a lack of evidence to support the decision that the words ‘ORO’ and ‘CINQUE STELLE’ were commonly used by other traders in Australia in relation to coffee prior to Cantarella’s trade mark registration.

In relation to its first ground of appeal, Cantarella argued that the Full Court had misapplied the test in Clark Equipment Co v Registrar for Trade Marks (1964) 111 CLR 511 (Clark Equipment) in relation to whether the trade marks were inherently adapted to distinguish. Cantarella submitted that the test was not what other traders thought about the ordinary meaning of the words, but was a two-pronged test which required consideration of whether the words had an ordinary meaning in Australia and, if so, whether that ordinary meaning is one that traders are likely to use. Cantarella submitted that if no ordinary meaning is found – which they say would be the case here – then there is no need to look beyond and consider the second limb (namely, whether other traders are likely to use the words) as the words would have already achieved inherent distinctiveness.

In relation to its second ground of appeal, Cantarella submitted that the Full Court had no evidence before it on how other traders had used the words ‘ORO’ and ‘CINQUE STELLE’ prior to Cantarella obtaining trade mark registration in Australia, other than some references on a handful of invoices. Further, Cantarella submitted that it was inappropriate for the Federal Court to consider evidence of use by other traders after registration.

In their reply, Modena submitted that the Clark Equipment test was a fluid test and, as a consequence of that fluidity, its application may vary from case to case. Modena argued that, contrary to what was stated in Cantarella’s submissions,the Full Court’s judgment was not limited in its analysis to how other traders used the words, but their inquiry extended beyond the class of traders to consumers of the relevant goods or services. Further, Modena submitted that such lines of inquiry are not mutually exclusive. On that basis, Modena concluded that evidence in the case demonstrated that a high percentage of buyers of coffee at restaurants and cafes in Australia would understand the trade marks to mean ‘GOLD’ and ‘FIVE STARS’ and recognise them as descriptive terms. In addition, Modena submitted that it had and could demonstrate with ‘absolute certainty’ that other traders had used such words prior Cantarella’s trade mark registration in Australia and should be able to continue to use such terms innocently, without improper motive, after Cantarella’s trade mark registration.

What we’re left with: the dregs

For now, it is simply watch this space until the High Court sets the matter down for hearing, filtrates the Full Court’s decision and determines whether the Full Court applied the correct test in determining whether the trade marks ‘ORO’ and ‘CINQUE STELLE’ were inherently adapted to distinguish Cantarella’s goods from those of other  traders.

The High Court decision will be important to give guidance to trade mark owners in Australia as to when foreign word trade marks may be protected and the factors to be taken into account when adopting a foreign word trade mark.

Claire Arthur