Best Trade Mark Cases 2016
Introduction
Welcome to Shelston IP's 2016 round up of key trade mark cases in Australia and New Zealand.
Non-use cases made a frequent appearance in 2016, including interesting decisions on the level of control required over a licensee to rely on the licensee's use of the trade mark, and whether a foreign entity can be liable for trade mark infringement in Australia where the sale of the goods and delivery was completed overseas. The key parallel importing case for 2016 may alarm some overseas manufacturers, particularly those who supply in bulk and wish to prevent repackaging into smaller quantities.
Australia Snapshots
Lodestar Anstalt v Campari America LLC [2016] FCAFC 92 (28 June 2016)
Removal Non-Use Authorised Use Control
Generally, a registered trade mark must be regularly used by or under the authorisation of the trade mark owner to avoid the risk of being removed for non-use. This Full Federal Court decision provides guidance on what constitutes "authorised use" of a trade mark, confirming that the trade mark owner must exercise actual control over use of the trade mark for use to be authorised. The decision has significant implications for trade mark owners seeking to prove that a third party, such as a licensee or distributor, has made "authorised use" of the trade mark for the purposes of refuting an application to remove the trade mark registration for non-use.
See page 4
Scandinavian Tobacco Group Eersel BV v Trojan Trading Company Pty Ltd (2016) 119 IPR 247; [2016] FCAFC 91 (24 June 2016)
Infringement Parallel Imports Re-Packaging Consent
This Full Federal Court decision has further highlighted the difficulties faced by trade mark owners seeking to curb parallel importation, confirming that trade mark owners may be unable to prevent foreign exporters re-packaging genuine products overseas, re-applying the trade mark and then selling the products in Australia in certain circumstances.
See page 6
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Playgro Pty Ltd v Playgo Art & Craft Manufactory Limited (2016) 335 ALR 144; (2016) 117 IPR 489; [2016] FCA 280 (22 March 2016)
Infringement Deceptive Similarity Use Foreign Joint Tortfeasor Common Design
This Federal Court decision confirms that foreign companies can still be liable for trade mark infringement in Australia, even if they are not directly engaged in promoting, delivering, offering for sale or selling products or services in Australia.
See page 8
Dick Smith Investments Pty Ltd v Ramsey [2016] FCA 939 (12 August 2016)
Removal Non-Use Use
In this case, the Federal Court confirmed that a relatively small amount of promotional use of a trade mark, even before the relevant product has been sold or offered for sale, can be enough to defend an application to remove a trade mark registration for non-use.
See page 11
New Zealand Snapshots
Tasman Insulation New Zealand Limited v Knauf Insulation Limited [2015] 3 NZLR 145; (2015) 116 IPR 352; [2015] NZCA 602 (16 December 2015)
Infringement Use as a Trade Mark Revocation Generic
The New Zealand Court of Appeal has resolved a dispute between Tasman Insulation and Knauf concerning the use of "batts" for insulating materials following appeals by both parties from the earlier decision of the High Court. The Court confirmed that BATTS (registered as a trade mark by Tasman Insulation) had not become generic in respect of insulating materials and therefore remained an enforceable registered trade mark, but also held that Knauf's use of "batts" did not infringe the registered mark. The judgment provides a good indication of the circumstances in which a registered trade mark may become generic and some guidance on what steps may be taken by a trade mark owner to avoid that occurring.
See page 13
Crocodile International Pte Limited v Lacoste [2016] NZCA 111 (11 April 2016)
Revocation Non-Use
In what some may see as a curious or at least lenient decision, the New Zealand Court of Appeal has refused to revoke a trade mark registration for non-use despite the trade mark owner only having used a mark that is conceptually similar to the registered trade mark. This decision appears to have set the bar very low when it comes to relying on use of a similar trade mark to defend an application to revoke another trade mark for non-use. This position may change, with an appeal to the New Zealand Supreme Court pending.
See page 15
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Lodestar Anstalt v Campari America LLC [2016] FCAFC 92
The Parties
Campari America LLC (Campari America) was the registered trade mark owner. Lodestar Anstalt (Lodestar) applied to remove the trade marks from the register on the basis of non-use. The judgment of the Full Federal Court (Allsop CJ, Greenwood, Besanko, Nicholas and Katzmann JJ) relates to an appeal by Lodestar from the first instance Federal Court decision of Perram J, who allowed Campari America's appeal against the original decision by the Registrar of Trade Marks to remove the trade marks from the register.
The Trade Marks
The Australian trade marks in issue were WILD GEESE WINES (No. 1066646) and WILD GEESE (No. 1066650), both registered in class 33 for "wine" (the Wild Geese Marks).
Background and Issues
The background to this case is somewhat convoluted, so only key aspects are summarised here.
Wild Geese Wines Pty Ltd (WGW) transferred to Campari America's predecessor ownership of the Wild Geese Marks. In exchange, Campari America's predecessor granted WGW a perpetual licence to use the Wild Geese Marks for wine exclusively in Australia. For simplicity, we refer to Campari America's predecessor and Campari America as "Campari".
The licence included standard trade mark licence terms. It also included the following specific requirements relating to quality control:
the wine to which WGW applied the Wild Geese Marks must meet the quality standards required for the Australian Wine and Brandy Corporation (AWBC) to approve the wine for export; and
WGW must provide samples of the wine on request from Campari to AWBC, Campari or the Australian Wine Research Institute to confirm compliance with the required quality standards.
Campari was also entitled to terminate the licence if WGW breached the licence in a material way.
Under section 92 of the Trade Marks Act 1995, a trade mark registration may be removed if the trade mark owner has not used the trade mark in Australia in relation to the goods for which it is registered for a continuous period of 3 years. An application cannot be brought until the trade mark has been registered for 5 years (section 93(2)). Section 7 of the Act provides that an "authorised use" of a trade mark by a person is taken to be use of the trade mark by the trade mark owner.
Importantly, section 8 of the Act confirms that a person is an "authorised user" if it uses the mark in relation to the relevant goods or services "under the control of the owner of the trade mark" and use of the mark is an "authorised use" only to the extent that the user uses the mark under the control of the trade mark owner. Trade mark owners have traditionally relied on trade mark licences similar to the one in this case to establish the element of control required by the Act.
As part of a long-running worldwide battle for control of the Wild Geese name, Lodestar, which manufactured whisky under the brand "Wild Geese", applied to remove the Wild Geese Marks from the register under section 92 on the basis that the marks had not been used by Campari.
Campari had not used the Wild Geese Marks in Australia during the relevant 3 year period. It was also apparent that Campari never requested samples of the wine produced by WGW and did not take any steps to monitor the manufacture or sale of wines by WGW in Australia, even though it was entitled to do so by the terms of the licence.
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During the relevant 3 year period, WGW sold in Australia wines with labels featuring WILD GEESE WINES, such as the following:
Campari argued that use of the Wild Geese Marks by WGW on the wines in accordance with the licence was "authorised use" and therefore constituted use by Campari for the purpose of refuting Lodestar's non-use application.
Previous Decision
At first instance, Perram J held that WGW had made "authorised use" of the Wild Geese Marks, despite evidence suggesting that Campari had exercised no actual control over the use of the marks by WGW. In reaching his decision, Justice Perram indicated that he was bound to follow the Full Court decision of Yau's Entertainment Pty Ltd v Asia Television Ltd [2002] FACFC 78, which he felt required only the possibility of contractual control by the trade mark owner over use of the mark by the user to establish "authorised use", even though he disagreed with that principle.
The Decision
The Full Federal Court disagreed with Justice Perram's interpretation of Yau and overturned the decision, holding that the Trade Marks Act 1995 required more than just a theoretical possibility of contractual control over use of a trade mark to establish "authorised use".
In considering the meaning of "under the control" of the trade mark owner for the purposes of section 8, the Court referred to the judgment of Aickin J in Pioneer Kabushiki Kaisha v Registrar of Trade Marks [1977] HCA 56 in support of the proposition that the trade mark owner must exercise a sufficient degree of control over the quality of the goods manufactured under licence in order for the trade mark to serve its purpose of indicating a connection in the course of trade
between those goods and the trade mark owner as contemplated by Pioneer. The degree of control required for that purpose will depend on the circumstances of the case.
In this case, the Court found that neither Campari nor the licence terms had any impact or control over WGW's manufacturing processes or the quality of the wine it produced, noting that: (a) the AWBC standard was so low (with virtually all wines approved at first instance) that its use in the licence as a benchmark for quality control was merely illusory; (b) Campari never requested samples of the wine, nor were any samples supplied to Campari for quality control purposes, during the relevant 3 year period; and (c) Campari never monitored WGW's operations or use of the Wild Geese Marks.
The Court held that Campari had not made use of the Wild Geese Marks during the relevant 3 year period and could not rely on use of the marks by WGW for the purposes of section 92 because Campari had exercised no actual control over WGW or its use of the Wild Geese Marks.
The Significance
The decision confirms that a trade mark owner must exercise actual control over use of the trade mark by its "authorised user" to establish use of the mark for the purposes of section 92. A mere possibility of control will be insufficient, even if that possibility is provided by contractual terms agreed between the trade mark owner and authorised user. Note that this decision applies primarily to third party licensees. Under section 8(4) of the Trade Marks Act 1995, if the owner of a trade mark exercises financial control over the user's relevant trading activities, the user is taken to do so under the control of the owner.
Trade mark owners should ensure not only that their trade mark licences (and other commercial agreements involving use of their marks) permit them to exercise control over the use of their trade marks, but should also take actual steps to exercise that control to avoid the risk of their trade mark registrations becoming vulnerable to removal for non-use.
Read full Lodestar Anstalt v Campari judgment
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Scandinavian Tobacco Group Eersel BV v Trojan Trading Company Pty Ltd (2016) 119 IPR 247; [2016] FCAFC 91
The Parties
Scandinavian Tobacco Group Eersel BV (STG) is the registered owner of various Australian trade marks. Trojan Trading Company Pty Ltd (Trojan) is the alleged infringer of the trade marks. The judgment of the Full Federal Court (Besanko, Nicholas and Yates JJ) relates to an appeal by STG and its Australian distributor, Scandinavian Tobacco Group Australia Pty Ltd, from the first instance Federal Court decision of Allsop CJ, who dismissed STG's claims against Trojan for trade mark infringement, passing off and contraventions of the Australian Consumer Law.
The Trade Marks
The Australian trade marks in issue were:
CAFE CREME (No. 761892) registered in class 34 for "Cigars, cigarettes, tobacco, tobacco products, smokers' articles, lighters, matches";
HENRI WINTERMANS (No. 179680) registered in class 34 for "Manufactured tobacco, cigars, cigarillos and other manufactured tobacco products";
HENRI WINTERMANS (No. 1529889) registered in class 34 for "Cigarettes, tobacco, tobacco products, smokers' requisites, lighters and matches"; and
LA PAZ (No. 643779) registered in class 34 for "Cigars and cigarillos",
(all together referred to as the STG Marks).
Background and Issues
STG manufactures cigars in Belgium, Holland and Indonesia, during which time the STG Marks are applied to the packaging of the cigars by or under the control of STG.
Trojan imported into Australia genuine STG cigars which had been manufactured and packaged by STG overseas. Trojan then unwrapped and re-packaged the cigars for compliance with the Tobacco Plain Packaging Act 2011 (better known as Australia's "plain packaging laws"), which involved Trojan replacing the original packaging with new packaging and then applying to the new packaging the STG Marks that were on the original packaging.
STG claimed that the importation and sale of the re-packaged cigars by Trojan infringed the STG Trade Marks pursuant to section 120(1) of the Trade Marks Act 1995. Section 120(1) states that "a person infringes a registered trade mark if the person uses as a trade mark a sign that is substantially identical with, or deceptively similar to, the trade mark in relation to goods or services in respect of which the trade mark is registered".
Under section 121, a person may also infringe a trade mark by doing certain prescribed acts in connection with the trade mark or the packaging of the goods, as long as those acts have been prohibited by the trade mark owner by notice applied to the goods. Applying the trade mark to goods after the state, condition, getup or packaging in which they were originally offered to the public has been altered is one of the acts which may be prohibited by notice from the trade mark owner. Importantly, STG did not apply any such notice to the original packaging of its cigars.
Trojan relied on section 123 to defend the infringement claim, which states that "in spite of section 120, a person who uses a registered trade mark in relation to goods that are similar to [or the same as] goods in respect of which the trade mark is registered does not infringe the trade mark if the trade mark has been applied to, or in relation to, the goods by, or with the consent of, the registered owner of the trade mark".
STG also claimed that Trojan's conduct constituted passing off and contraventions of sections 18 and 29 of the Australian Consumer Law. Those claims were dismissed and are not discussed here.
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Previous Decision
At first instance, Allsop CJ found that the application of the STG Marks by Trojan to the re-packaged cigars was an infringing use of the marks under section 120(1). However, Allsop CJ also found that Trojan had a defence to infringement under section 123.
STG argued that the phrase "has been applied to... with the consent of the registered owner" in section 123 refers to the alleged infringer's application of the trade mark, not to any earlier application of the mark by or under the control of the trade mark owner (in which case, Trojan's re-application of the trade mark would not have been protected by section 123). Conversely, Trojan argued that section 123 is directed to any application of the trade mark by or with the consent of the owner, which means the defence applies if the trade mark has at any time been applied to the goods by or under the control of the owner.
Chief Justice Allsop agreed with Trojan, noting that section 123 only requires that the trade mark has been applied to the goods with the consent of the trade mark owner at some time in the past. Section 123 does not require the goods to continue to bear the mark as applied by the owner. In other words, section 123 will provide a defence in connection with the later use of a trade mark on or in relation to goods, such as re-packaging the goods with the same trade mark, as long as the trade mark was initially used on or in relation to those goods by or with the consent of the trade mark owner. This interpretation was considered to be consistent with the primary purpose of section 123 to protect non-infringing uses of trade marks to indicate a connection between the goods and the trade mark owner, for example in the context of advertising and sale by retailers.
The Decision
The Full Federal Court upheld Chief Justice Allsop's decision stating:
"The language of s123(1) refers to a mark that has been applied to or in relation to goods by or with the consent of the registered owner. The operation of the section is not expressly or impliedly confined to a situation in which the goods still bear the mark
as applied by the owner. The temporal requirement of the section will be satisfied if at some time in the past, which may be after the time of manufacture, the mark has been applied to or in relation to goods by or with the consent of the owner. If those goods are later sold by a person in circumstances which involve him or her using a mark that was previously applied by or in relation to the goods by the owner then s123(1) will be engaged."
As a result, the Court held that Trojan's repackaging of the cigars with the original STG Marks fell within the scope of section 123 and that Trojan therefore had a valid defence to STG's trade mark infringement claim.
The Significance
This decision may cause serious concern for trade mark owners wishing to control the quality and nature of their product packaging, particularly where the quality of the product packaging is an important aspect of the owner's branding and goodwill. Applying an appropriate notice to product packaging as contemplated by section 121 is critical to provide grounds to stop importers altering product packaging in certain cases. Trade mark owners could also have other options available in addition to an action for trade mark infringement. Actions for passing off or breach of the Australian Consumer Law could be available, for example if the trade mark owner is able to establish that the re-packaging misleads or deceives Australian consumers or there is a misrepresentation that the re-packaging was carried out with the trade mark owner's consent. The specific circumstances will generally dictate whether these other options are available to trade mark owners.
Read full Scandinavian Tobacco
v Trojan judgment
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Playgro Pty Ltd v Playgo Art & Craft Manufactory Limited (2016) 335 ALR 144; (2016) 117 IPR 489; [2016] FCA 280
The Parties
Playgro Pty Ltd (Playgro) is the registered owner of various Australian trade marks. Playgo Art & Craft Manufactory Limited (Playgo Art) and Playgo Toys Enterprises Limited (Playgo Enterprises) are the alleged infringers of the trade marks. Both Playgo Art and Playgo Enterprises are jointly referred to as "Playgo" where relevant. This Federal Court judgment (Moshinsky J) relates to Playgro's claims that Playgo infringed Playgro's trade marks by applying a substantially identical or deceptively similar trade mark to products manufactured by Playgo and/or that Playgo Enterprises is liable as a joint tortfeasor for any infringement by retailers arising from the promotion and sale of those products in Australia.
Both Playgo Art and Playgo Enterprises are based in Hong Kong.
The Trade Marks
Playgro is the owner of Australian trade mark registration numbers 740357 and 1330413 for PLAYGRO and numbers 954929, 970023, 1149144 and 1330416 for the following logo:
(all together referred to as the Playgro Marks).
Amongst other things, the relevant Playgro Marks are registered in class 28 for "games and playthings" and "toys".
Playgo is a toy manufacturer and wholesaler based in Hong Kong which applies the following logo to its toys:
(the Playgo logo).
Background and Issues
Playgo supplied toys bearing the Playgo logo to Myer and a subsidiary of Woolworths in China, with the toys subsequently being exported and sold by Myer and Woolworths in Australia. Ownership of the toys passed from Playgo to Myer and Woolworths in China and Playgo had no control over the toys once they were delivered to Myer and Woolworths under the applicable commercial supply terms. Considering the above, all of Playgo's conduct occurred outside of Australia and Playgo had no involvement in the export or sale of the toys from China to Australia. However, Playgo knew that all the toys were to be shipped to and sold in Australia.
Playgro claimed that Playgo infringed its Playgro Marks by using as a trade mark the Playgo logo in respect of toys and playthings contrary to section 120(1) of the Trade Marks Act 1995.
Playgro also claimed that Playgo Enterprises should be liable as a joint tortfeasor for any trade mark infringement by Myer and Woolworths resulting from their promotion and sale of the toys in Australia, even if the court held that Playgo Enterprises had not used the Playgo logo in Australia for the purposes of section 120(1).
Playgo claimed that it never used the Playgo logo as a trade mark in Australia and therefore could not be liable for infringement under section 120(1). It argued that a finding to the contrary would mean that any foreign manufacturer could be liable for infringement in Australia even if it was unaware of the infringing conduct.
The primary issues for the Court were whether:
1.the Playgo logo was substantially identical with, or deceptively similar to, the Playgro Marks;
2.Playgo had "used" the Playgo logo for the purposes of section 120(1); and
3.Playgo Enterprises was liable as a joint tortfeasor for any infringing conduct of Myer or Woolworths.
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The Decision
Substantial identity and deceptive similarity
Not surprisingly, Moshinsky J held that the Playgo logo was deceptively similar to the Playgro Marks.
Justice Moshinsky accepted that there are a number of registered trade marks with the prefix "play". However, Moshinsky J considered that the Playgo logo and Playgro Marks were distinguishable from the other "play" marks and were deceptively similar given the strong visual and phonetic similarities between the "go" and "gro" aspects of the marks, which caused the marks to look and sound similar when considered as a whole. Taking into account the imperfect recollection of consumers, Moshinsky J considered that there was a real and tangible danger of purchasers being caused to wonder if two products sold by reference to the Playgo logo and Playgro Marks came from the same source.
"Use" of the Playgo logo
Justice Moshinsky applied the same reasoning as the High Court in Estex Clothing Manufacturers Pty Ltd v Ellis & Goldstein Ltd [1967] HCA 51 and E&J Gallo Winery v Lion Nathan Australia Pty Ltd (2010) 241 CLR 144 in deciding that Playgo had used the Playgo logo in Australia for the purposes of infringement, even though those cases were concerned with "use" of a trade mark for the purpose of non-use proceedings (and accordingly, unlike in this case, a finding of use in Australia was highly beneficial to the foreign owner in defending their trade marks). In Estex, the High Court confirmed that overseas manufacturers continue to use their trade marks in Australia after title to the goods passes to Australian retailers as long as the goods remain in the course of trade. In addition, the High Court in Gallo held that the foreign manufacturer's knowledge of product sales or use of the mark in Australia (or lack of knowledge, in fact) was not relevant to or necessary for establishing use of the mark in Australia by a foreign entity. According to Moshinsky J, the consideration of "use" in Estex and Gallo should not be limited to non-use cases and applied equally to the context of an infringement case.
Noting that Playgo was aware that the toys were intended to be sold by Myer and Woolworths in Australia, Moshinsky J held that Playgo continued to use the Playgo logo and the logo continued to operate as a trade mark indicating that Playgo was the source of the toys while the toys remained in the course of trade, even if this was after the initial application of the logo to the toys and transfer of title to the products in China. In this case, and noting that the toys were being supplied by Playgo to Myer and Woolworths for the purpose of sale in Australia, the toys remained in the course of trade while they were promoted in Australia by Myer and Woolworths and until such time as they were ultimately purchased by customers in Australia.
Much of Justice Moshinsky's decision on "use" appeared to be based on the fact that Playgo was aware from the outset that the toys were intended to be sold in Australia. It is unclear if Moshinsky J would have arrived at the same conclusion if Playgo was held to have no knowledge of the intended sale of the products in Australia. In fact, Moshinksy J specifically pointed out that this question did not need to be considered. However, applying the reasoning in Gallo, it may be the case that foreign manufacturers and distributors will still be liable for infringement in similar circumstances even without knowledge of intended or actual sales or use of the mark in Australia. While Moshinsky J specifically left this question open (because it was not relevant on the facts of the case), this would be a surprising result and is unlikely to correctly represent the law on trade mark infringement in Australia.
No joint tortfeasors
Despite finding that Playgo Enterprises was directly liable for infringing the Playgro Marks, Moshinsky J held that Playgo Enterprises would not have been considered a joint tortfeasor for any trade mark infringement by Myer and Woolworths resulting from their promotion and sale of the toys in Australia.
A person must share a common design to participate in or induce another person to commit the infringing act to be liable as a joint tortfeasor. In this case, Moshinsky J held that Playgo Enterprises did not share a common design with Myer or Woolworths to sell the toys in a manner which infringed the Playgro Marks, they simply shared a commercial relationship as vendor and purchaser.
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Playgo Enterprises and Myer/Woolworths were not acting in concert for the common purpose of committing or furthering an infringing act. At best, Playgo Enterprises merely facilitated the infringing conduct by Myer and Woolworths by initially selling them the toys bearing the Playgo logo.
The Significance
The finding that Playgo was directly liable for trade mark infringement in this case has significant implications for overseas manufacturers and suppliers supplying overseas where they know that the goods will ultimately be promoted and sold in Australia. It does however provide Australian trade mark owners with some comfort that foreign distributors may not be able to avoid liability for trade mark infringement in Australia by simply restricting their commercial terms, activities and operations to other jurisdictions. Of course, it may not be easy for the Australian trade mark owner to prove that the foreign supplier knew of the intended destination.
Read full Playgro v Playgo judgment
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Dick Smith Investments Pty Ltd v Ramsey [2016] FCA 939
The Parties
Dick Smith Investments Pty Ltd (Dick Smith) was the applicant for and is the former registered owner of the subject trade mark, which is now owned by Ozemate Pty Ltd (Ozemate). Roger John Ramsey (Ramsey) applied to remove the trade mark from the register on the basis of non-use. This judgment of the Federal Court (Katzmann J) relates to an appeal by Dick Smith and Ozemate from the original decision by the Registrar of Trade Marks to remove the trade mark from the register.
The Trade Mark
The Australian trade mark in issue was OZEMITE (No. 811789), registered in class 29 for "Spreads and snack foods in this class" and in class 30 for "Yeast; yeast extracts; spreads and snack foods in this class".
Background and Issues
For around 20 years, Dick Smith and predecessors in title have promoted and sold various Australian-made food products intended to compete with similar foreign owned products. On 28 October 1999, Dick Smith applied to register the trade mark OZEMITE with the intention of using the brand for a spread similar to the popular Vegemite product. OZEMITE was subsequently registered on 23 October 2003, but Dick Smith's OZEMITE product was not made available for purchase until 2012.
After Dick Smith registered OZEMITE, Ramsey began selling a similar yeast-based spread under the brand "AussieMite" and applied to register AUSSIE MITE on 7 May 2001 for "spreads" and "spreads and snack foods containing yeast and yeast extracts". AUSSIE MITE was subsequently registered as a trade mark on 8 November 2006, despite opposition by Dick Smith.
Under section 92 of the Trade Marks Act 1995, a trade mark registration may be removed if the trade mark owner has not used the trade mark in
Australia, or used the trade mark in good faith, in relation to the goods for which it is registered for a continuous period of 3 years.
In 2011, Ramsey applied to remove the registration of Dick Smith's OZEMITE trade mark on the basis that the mark had not been used by Dick Smith in relation to "spreads and snack foods", "yeast" and "yeast extracts" during the 3 years preceding Ramsey's removal application.
Dick Smith conceded that it had not sold or offered for sale any OZEMITE products during the relevant 3 year period, as the product was still in development and was not brought to market until 2012. However, Dick Smith relied on the following two promotional uses of the mark as evidence of use:
1.an appearance on the "Chaser" television program on ABC in August 2010, during which Dick Smith (the well-known man of that name behind Dick Smith) wore a t-shirt featuring the OZEMITE mark; and
2.a radio interview on 28 March 2011 during which Dick Smith indicated his intention to launch OZEMITE as part of expanding his Australian owned and made product range.
At first instance, the Registrar of Trade Marks upheld Ramsey's application and directed removal of the OZEMITE trade mark registration. Dick Smith appealed to the Federal Court.
The Decision
The Federal Court (Katzmann J) upheld the appeal, deciding that Dick Smith had made sufficient use of OZEMITE in good faith during the relevant 3 year period.
Referring to Gallo and Estex, Katzmann J confirmed that the required use of the trade mark for the purposes of section 92 need not be limited to goods actually sold or to physical use in respect of a tangible object. Rather, the use must show a genuine intention to use the mark for commercial
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purposes in respect of the goods in the course of trade. This may include use in the context of merchandising, advertising or other promotional activities prior to the sale of the goods. In support of her view, Justice Katzmann also referred specifically to the definition of "trade mark" in section 17 of the Trade Marks Act 1995, which states that "a trade mark is a sign used, or intended to be used, to distinguish goods".
Considering both instances of promotional use relied on by Dick Smith, Katzmann J held that the television and radio appearances featuring the OZEMITE mark constituted an "expression of a genuine interest to use the mark for commercial purposes", noting that "they reveal uses of the mark in association with the goods in the course of their production and preparation for the market and in this way were uses of the mark in connection with goods in the course of trade. Their objective purpose was to revive, if not maintain, interest in the OZEMITE product amongst potential purchasers so that there would be a viable market for the product once it was released".
Interestingly, Katzmann J also indicated that she would have exercised her discretion to allow the mark to remain on the register even if Dick Smith was unable to show sufficient use. Justice Katzmann's belief that Ramsey was seeking to trade off Dick Smith's reputation in OZEMITE, by adopting a phonetically identical mark (AUSSIE MITE) which he must have realised was likely to cause consumer confusion or deception, was one of the various factors leading Katzmann J to that conclusion. Allowing both marks to co-exist on the register and both products to compete for attention in the market was considered the best means of alleviating the risk of AUSSIE MITE being mistaken as a Dick Smith product.
Justice Katzmann allowed the appeal and Dick Smith's OZEMITE registration remains on the register.
The Significance
This decision reinforces the position established by the High Court in Gallo that very little evidence of use is required to defend an application to remove a trade mark for non-use.
Read full Dick Smith v Ramsey judgment
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Tasman Insulation New Zealand Limited v Knauf Insulation Limited [2015] 3 NZLR 145; (2015) 116 IPR 352; [2015] NZCA 602
The Parties
Tasman Insulation New Zealand Limited (Tasman Insulation) is the registered trade mark owner. Knauf Insulation Limited (Knauf) is the alleged infringer of the trade mark. In response to the infringement claim, Knauf sought to revoke registration of the trade mark on the basis that it had become generic and was not being used by Tasman Insulation as a trade mark. This New Zealand Court of Appeal judgment (Randerson, French and Cooper JJ) relates to appeals by both parties from various aspects of the earlier High Court judgment of Brown J in this case.
Note that unlike in Australia, New Zealand's High Court is not the court of final recourse. The New Zealand Supreme Court performs that function.
The Trade Mark
The New Zealand trade mark in issue was BATTS (No. 105507), registered in class 17 for "insulating materials".
Background and Issues
Tasman Insulation has been the owner of the New Zealand trade mark registration for BATTS in respect of insulating materials since 1973. Knauf was importing into New Zealand insulation products under the primary brand "Earthwool", but was also using "batts" on its product packaging, labels, instructions and in the HTML code for an image on its website relating to the products.
Tasman Insulation claimed that Knauf's use of "batts" for its insulation products and in the HTML code infringed Tasman Insulation's BATTS trade mark. In response, Knauf applied to revoke Tasman Insulation's BATTS trade mark registration on the basis that "batts" had become generic in New Zealand and Tasman Insulation was not using "batts" as a trade mark. Knauf also sought to defend the trade mark infringement claim by
asserting that it had not used "batts" as a trade mark but had used the name honestly and merely to describe the nature or quality of its products.
Both parties also made claims under the Fair Trading Act 1986 (NZ), including in relation to misleading and deceptive conduct, but those claims are not discussed here.
Previous Decision
Revocation generecism and non-use
Section 66(1)(c) of the Trade Marks Act 2002 (NZ) provides that a trade mark may be revoked for becoming generic only if it has become a common name in general public use for the relevant goods or services as a result of the trade mark owner's acts or inactivity. Justice Brown confirmed that the applicant carries a heavy burden of proof in order to establish not only that the mark has become a common name but has done so as a result of its owner's acts or inactivity.
For the purposes of section 66(1)(c), "acts" include positive acts to protect the trade mark or encourage its use by others as a trade mark while "inactivity" includes a failure to take measures to protect the mark. Importantly, Brown J noted that inactivity must be considered by reference to unauthorised trade mark use by others. For example, a failure to act in response to descriptive use of a mark by a third party that would not infringe the trade mark would not amount to inactivity because the trade mark owner would not be legally entitled to take action against such use.
The evidence showed that third parties had been using "batts" descriptively. However, the evidence also showed that Tasman Insulation had taken a number of positive steps in connection with protecting BATTS, managing its use as a trade mark by others and/or indicating that it was being used as a trade mark, including: (i) using with BATTS; (ii) using BATTS as an adjective in advertising materials to indicate the origin of its
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insulating materials (being use as a trade mark); (iii) issuing branding style guides to control use of the mark, including by requiring the mark to be used as an adjective only and encouraging its use with an already generic name such as "product" or "insulation"; (iv) notifying customers in writing of its trade mark rights in connection with BATTS; and (v) taking action for infringement in some cases.
Considering that Tasman Insulation was not obliged to take action against descriptive use of "batts" by others and that Tasman Insulation had been taking positive steps to protect its BATTS trade mark registration, Brown J held that Knauf had failed to prove that "batts" had become a common name as a result of Tasman Insulation's acts or inactivity. In any case, Brown J was not convinced that "batts" had become generic based on the evidence before him.
Justice Brown also held that the evidence showed Tasman Insulation had used "batts" as a trade mark.
As a result, Knauf failed in its bid to revoke Tasman Insulation's BATTS trade mark registration.
Infringement
Justice Brown held that the use of "batts" by Knauf on its product packaging, labels and instructions was not use as a trade mark and therefore did not infringe Tasman Insulation's BATTS trade mark. Noting that Knauf had been using "batts" in lower case without any other distinctive features and taking into account all the circumstances surrounding its use, including the additional "Earthwool" branding, the nature of the market and customers of insulation products, Brown J considered that the relevant public would view Knauf's use of "batts" as describing its products rather than as a trade mark indicating the source or origin of the products.
However, Brown J held that Knauf's use of "batts" in the HTML code was use as a trade mark which infringed Tasman Insulation's BATTS trade mark. In that instance, "batts" would be visible to relevant internet users in a manner which did not simply describe the products but rather acted to identify the source of the products on the website. Knauf's defence that it was merely using "batts" honestly to describe its products failed, with Brown J deciding that "batts" had been used with the intention of diverting consumers to Knauf's website.
The Decision
The Court of Appeal upheld all aspects of the High Court's decision except for the finding that Knauf's use of "batts" in the HTML code infringed Tasman Insulation's BATTS trade mark. Instead, the Court of Appeal took the view that use of "batts" in the HTML code did not amount to use as a trade mark and therefore could not be infringing use, primarily on the basis that HTML code would appear random to consumers and would not convey the meaning necessary for "batts" to operate as a trade mark or be recognised in that manner by consumers.
As a result, both the revocation actions by Knauf and the infringement actions by Tasman Insulation were ultimately dismissed.
The Significance
This case reinforces well-understood principles that a trade mark owner with a trade mark which is at risk of becoming generic must actively manage its own use of the trade mark and use by distributors and customers, and also actively defend the trade mark against infringement. Somewhat ironically, such infringement action by Tasman Insulation in this case was to no avail due to the Court's finding that Knauf's use was not use as a trade mark.
Read full Tasman Insulation v Knauf judgment
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Crocodile International Pte Limited v Lacoste [2016] NZCA 111
The Parties
Lacoste is the registered trade mark owner. Crocodile International Pte Limited (Crocodile International) applied to revoke the trade mark registration on the basis of non-use. This New Zealand Court of Appeal judgment (Wild, French and Ks JJ) relates to an appeal by Crocodile International from the earlier High Court judgment of Collins J, who allowed Lacoste's appeal against the original decision by the Assistant Commissioner of Trade Marks to revoke the trade mark registration.
The Trade Mark
The trade mark in issue was New Zealand trade mark number 70068 for the following logo:
was registered". This has generally allowed trade mark owners to make minor variations to their use of their trade marks over time in commercial operations without fear of their corresponding trade mark registrations being revoked for non-use.
Crocodile International applied to revoke the Registered Trade Mark on the grounds of non-use.
Lacoste admitted that it had never used the Registered Mark, but argued that its use of the following marks amounted to use of the Registered Mark "in a form differing in elements that do not alter the distinctive character of the trade mark in the form in which it was registered" pursuant to section 7, thereby entitling it to maintain the registration of the Registered Mark:
(the Registered Mark).
Background and Issues
Under section 66(1)(a) of the Trade Marks Act 2002 (NZ), a registered trade mark may be revoked if it has not been genuinely used as a trade mark in the course of trade for its relevant goods or services for a continuous period of 3 years. (Note that the timing for when a non-use application can be brought differs between Australia and New Zealand. In New Zealand, an application can be brought any time after 3 years has elapsed from the date the trade mark was actually entered onto the Register (not the date the application was lodged). In Australia, the period is 5 years after the date the application was lodged.)
Section 7 of the Trade Marks Act 2002 confirms that use of a trade mark includes use "in a form differing in elements that do not alter the distinctive character of the trade mark in the form in which it
(the Lacoste Marks).
Previous Decisions
The Assistant Commissioner, who only considered the first of the above Lacoste Marks, held that its use did not constitute use of the Registered Mark as contemplated by section 7.
However, the High Court, considering the two device Lacoste Marks, overturned the initial decision and held that use of the device Lacoste Marks constituted use of the Registered Mark within the meaning of section 7.
The Decision
Crocodile International appealed the High Court decision, claiming that Collins J had taken the wrong approach in assessing the marks. In particular, Crocodile International claimed that Collins J failed to identify essential elements of the Registered Mark when comparing it to the
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Lacoste Marks and applied principles of comparison which are relevant only to cases of passing off, infringement or deception.
The Court of Appeal dismissed Crocodile International's appeal, holding that use of the Lacoste Marks was sufficient use of the Registered Mark within the meaning of section 7. The Court confirmed that the correct two-stage enquiry had been applied by Collins J, being to:
1.assess the points of difference between the marks as used and the mark as registered; and
2.ascertain if the differences alter the distinctive character of the mark as registered.
The Court acknowledged that there were differences between the Registered Mark and Lacoste Marks, including: (i) the crocodile is facing in opposite directions; (ii) the Registered Mark and Lacoste Marks use different fonts; (iii) the placement of the words "crocodile" and "Lacoste" are different relative to the crocodile image; and (iv) the two device Lacoste Marks do not contain the word "crocodile" one has the word "Lacoste" while the other has no word at all.
However, the Court held that "in terms of the overall impression these differences are insignificant and do not alter the distinctive character" of the Registered Mark "which is dominated by the image of the crocodile. The crocodile is the central idea and message."
According to the Court, the images of the crocodiles used in the Registered Mark and Lacoste Marks are similar and share the same key features including that the crocodile used in all marks has its mouth ajar, body arched, is drawn side-on, has jaws open slightly and has its scales, eyes, claws and teeth visible. The use of the stylised word "crocodile" in the Registered Mark only served to reinforce the dominant element of the Registered Mark and added little or nothing to the distinctiveness of the Registered Mark.
On the above basis, the Court held that Lacoste had used the Registered Mark within the meaning of section 7 by virtue of its use of the Lacoste Marks. Crocodile International's appeal was dismissed and registration of the Registered Mark was maintained.
The Supreme Court of New Zealand has granted Crocodile International leave to appeal the decision of the Court of Appeal. The question to be resolved on appeal is: "Did the Court of Appeal err in upholding the High Court decision to set aside the order made by the Assistant Commissioner of Trade Marks revoking trade mark 70068?"
The Significance
By focussing on the "central idea and message" of the marks, the Court of Appeal appears to have broadly applied section 7 to maintain registration of a trade mark on the basis of the use of conceptually similar marks. This decision may pave the way for New Zealand trade mark owners to rely on the use of conceptually similar trade marks to defend non-use actions and may make it more difficult to remove trade marks for non-use. Accepting use of conceptually similar trade marks for the purposes of defending a non-use action would result in a significant departure from the stricter approach previously taken in New Zealand and currently taken in other countries including Australia.
It will be interesting to see if the Supreme Court overturns this ruling on appeal. The final decision on this case will no doubt be anticipated with much interest.
Read full Crocodile International
v Lacoste judgment
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Concluding Remarks
That wraps up our review for another year. 2016 was a relatively quiet year for trade mark cases with no Australian High Court decisions and only a limited number of full Federal Court decisions. However, the cases have clarified some important matters relevant to all trade mark users which will require action, especially in relation to packaging. It will be interesting to see whether the New Zealand Court of Appeal's rather generous approach to use of similar marks to defend non-use proceedings is followed by the New Zealand Supreme Court and later cases.
Michael Deacon
Senior Associate Shelston IP Lawyers T +61 2 9777 2450 E MichaelDeacon@ShelstonIP.com
Chris Bevitt
Principal Shelston IP Lawyers T +61 2 9777 2450 E ChrisBevitt@ShelstonIP.com
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