The recent high court case of Modena Trading Pty Ltd v Cantarella Bros Pty Ltd considered
Trade marks help consumers find the products they know and like. In Re Powell's Trade-Mark, Bowen J explained the function of a trade mark in the following way1:
“The function of a trade-mark is to give an indication to the purchaser or possible purchaser as to the manufacture or quality of the goods - to give an indication to his eye of the trade source from which the goods come, or the trade hands through which they pass on their way to the market.”
This principal function of a trade mark is recognized in Section 17 of the Trade Marks Act 1995 (“Act”), which defines a trade mark as follows:
“A trade mark is a sign used, or intended to be used, to distinguish goods or services dealt with or provided in the course of trade by a person from goods or services so dealt with or provided by any other person”.
Consistent with this definition, the Registrar of Trade Marks must consider the degree to which a sign is inherently adapted to distinguish the goods for which it is used, from the goods of other manufacturers, before registering it as a trade mark3.
A trade mark’s primary role must always be distinguish goods in the marketplace and identify their origin. However, it is now recognised by business and brand strategists that a successful trade mark can also have an important marketing function. Words carry their own intrinsic meaning and a trade mark can be an extremely effective compressed means of conveying information to the target market about the benefits offered by product. Consumers can take a long time to comprehend marketing communications, but desirable and relevant brand meaning can be conveyed through a suitable trade mark within a few seconds.
Exploiting this potential marketing advantage many businesses adopt trade marks that describe the attributes of the product to which they are applied (i.e. the “brand proposition, such as the advantage over competitor’s brands”)4. However, often in their eagerness to maximize the marketing function by unambiguously communicating the brand proposition to consumers, some businesses lose sight of the primary role of the trade mark. When the trade mark is made too descriptive it can no longer be used by the consumer as a means to distinguish goods in the marketplace and identify their origin, and, in terms of the Act, cannot be registered as a trade mark.
A trade mark inextricably connects a product with the consumer in these ways and so assessing whether a trade mark is able to fulfil its fundamental role necessarily requires an understanding how consumers recognise, interpret and assimilate the information conveyed by any trade mark.
The recent High Court Decision of Cantarella Bros Pty Limited v Modena Trading Pty Limited5confirmed the importance of considering a trade mark’s capacity to distinguish from the consumer’s point of view.
A key issue in the case was whether the Italian terms ORO and CINQUE STELLE were too descriptive to be registered as trade marks and, more specifically, whether the term “inherently adapted to distinguish" in section 41 of the Act requires a consideration of what the ordinary signification or meaning of words would be to the ordinary Australian consumer.
This case, involved use of the sub brands ORO and CINQUE STELLE for specific blends of coffee under the house mark Vittoria. ORO and CINQUE STELLE are Italian words which meanGOLD and FIVE STARS in English respectively. Cantarella had sold its ORO and CINQUE STELLE branded coffee in Australia since 1996 and 2000 respectively and it owned registered trade marks for both names. The names were adopted because they conveyed relevant and desirable brand meaning to the target consumer consumers about superior product quality. For instance, CINQUE STELLE was promoted to the fine dining and first class traveller segments as a premium blend.
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In late 2009 Modena began distributing ORO and CINQUE STELLE products in Australia under the house mark CAFFE Molinari.
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Cantarella sued Modena for trade mark infringement. Modena denied infringement claiming it was not using ORO or CINQUE STELLE as trade marks and also cross-claimed that ORO and CINQUE STELLE should not have been registered as registrable trade marks, because they were not inherently distinctive. In support of its cross claim Modena argued that the names were descriptive words that were commonly used in the marketing of Italian-style coffee in Australia and in product marketing generally. It submitted evidence of third party use of ORO for coffee products in composite brand names (such as Lavazza Qualità Oro and Caffè Incas Orocoffee) and of FIVE STAR (such as Santos Five Star Espresso).
Federal Court Judgement of Emmett J
Ruling in favour of Cantarella, Emmett J found that ORO and CINQUE STELLE were inherently capable of distinguishing and so validly registered trade marks6. He applied a registrability test that required an assessment of whether the words would be understood as descriptive of the goods or their attributes by a significant number of the target market for coffee goods in Australia. He accepted that FIVE STARS and GOLD were descriptive English terms and so not capable of distinguishing in Australia. He also accepted that Italian speakers would have understood the words CINQUE STELLE and ORO as common Italian laudatory and therefore descriptive words. However, his factual finding was that ordinary English speakers made up the vast majority of the likely target audience in Australia for these goods and that the Italian words were not “commonly understood” or “generally understood” in Australia by “ordinary English speaking persons” as meaning FIVE STARS and GOLD respectively.
Appeal to Full Federal Court
Modena appealed to the Full Federal Court and was successful, with the Full Court ordering that Cantarella's trade mark registrations be cancelled. The factual finding of the Emmett J was not directly challenged; rather Modena argued that the wrong registrability test had been applied by the primary judge7.
The Full Court applied the registrability test of Kitto J in Clark Equipment Company v Registrar of Trade Marks8 and held that it was not necessary that consumers know what the words mean in English. Instead, they decided that the relevant issue was whether other traders might, without improper motive, want to use the words on their Italian-style coffee products.
The Kitto Test is 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 it9.
It was the relevance of the highlighted words that were argued before the Full Court10. Senior counsel for Modena argued that the test had been refined by Kitto J himself in the later case ofF.H. Faulding & Co Limited v Imperial Chemical Industries of Australia and New Zealand Limited11, which omitted the highlighted words, so that the issue of what the ordinary signification of the words may be to the public was not the focus of the enquiry; rather, it was whether other traders would want to use the same words.
While the Full Court was not persuaded as to the correctness of this argument it said that the reference to the “public” in the Kitto test did not necessarily mean the general population, or even the general adult population of Australia. The Full Court referred to other cases12 which did not require an enquiry at all into the knowledge and practices of consumers as the focus of the registrability enquiry but instead focussed on knowledge and practice within the relevant trade13. They said that it was "unnecessary ... that consumers know what the words mean in English" and at paragraph 80 of their judgment:
"It seems to us that “the public” in Kitto J’s parenthetical phrase in Clark Equipment is primarily referring to members of the public who are or may become traders, and who in the future may want to use the word or words in question, …..”.
The Full Court found that the following facts supported the conclusion that other traders would likely want to use the ORO and CINQUE STELLE marks for their own coffee-related goods.
- Oro and Cinque Stelle are Italian words meaning "gold" and "five stars", respectively, which signify the highest quality;
- Pure coffee in Australia is often associated with Italy, and so obvious to use Italian words to describe the quality of a coffee blend;
- There are many Italian speakers in Australia;
- Cantarella used ORO and CINQUE STELLE to describe according to their known ordinary significance its highest quality coffee blends; and
- Most importantly, other coffee traders have used the words ORO and CINQUE STELLE, albeit in combination marks.
Appeal to the High Court
Canteralla appealed the decision of the Full Federal Court to the High Court. Cantarella argued that the Full Court had incorrectly focused on how the Italian words had been used by other traders in composite marks. Cantarella relied on the highlighted words in the Kitto test to support their contention that the inherent adaptability of a trade mark consisting of a word (including a foreign word) is to be tested by checking the ordinary meaning (i.e. the "ordinary signification") of the word to anyone ordinarily purchasing, consuming or trading in the relevant goods, which Canteralla characterized as "the target audience"14. Canteralla referred to evaluating a mark in the real world15 and argued that any attempt to understand why it is that a trader would wish to describe goods using a particular trade mark necessarily requires a consideration of the mark's ordinary signification to the target market.
Modena argued that the reasoning of the Full Court's was correct and that the "inherent adaptability to distinguish" of a word is not to be tested by whether the word has "a meaning to ordinary people". It argued that the test is confined to whether other traders would be likely, in the ordinary course of their business and without any improper motive, to desire to use the word in connection with a particular product16.
The Majority Judgment
By majority decision the High Court allowed the appeal. The majority confirmed that the Kitto test in Clarke Equipment was the relevant registrability test but held that the question of whether a trade mark, consisting of a word or words (English or foreign) is "inherently adapted to distinguish", requires consideration of the "ordinary signification" of the words to any person in Australia concerned with the goods to which the proposed trade mark is to be applied.
They noted that coffee is a commodity and a familiar beverage consumed by many and agreed that the consideration of the "ordinary signification" of the words ORO and CINQUE STELLE in Australia undertaken by the primary judge (i.e. their ordinary signification to English speaking consumers, which comprised a significant proportion of the target market) accorded with settled principles. Emmett J had found that Modena’s evidence had not established that ORO andCINQUE STELLE conveyed a meaning sufficiently tangible to this group to amount to a direct reference to the character or quality of the goods and this was a factual finding not challenged by Modena.
To support their conclusions, the majority of the High Court referred to Mark Foy's Ltd. v Davies Coop & Co Ltd17, where the trade mark "TUB HAPPY" was found to be a registrable trade mark having no direct reference to the character or quality of cotton garments. In the cited case it was held that "TUB HAPPY" conveyed to the consumer only an overt and skilful allusive reference to goods, which was not "sufficiently tangible" to amount to a "direct reference" to the character or quality of cotton garments.
At paragraph 71 the majority of the High Court said:
“As shown by the authorities in this Court, the consideration of the "ordinary signification" of any word or words (English or foreign) which constitute a trade mark is crucial, whether (as here) a trade mark consisting of such a word or words is alleged not to be registrable because it is not an invented word and it has "direct" reference to the character and quality of goods, or because it is a laudatory epithetor a geographical name, or because it is a surname, or because it has lost its distinctiveness, or because it never had the requisite distinctiveness to start with. Once the "ordinary signification" of a word, English or foreign, is established an enquiry can then be made into whether other traders might legitimately need to use the word in respect of their goods. 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. Speaking generally, words which are prima facie entitled to a monopoly secured by registration are inherently adapted to distinguish”.
The majority found that the evidence led by Modena, purporting to show that rival traders used (or desired to use) the word ORO to directly describe their coffee products, showed no more than that it had been employed in a range of composite marks. It found that such evidence fell well short of proving that the word ORO, standing alone, is understood in Australia by persons concerned with coffee products to be directly descriptive of the character or quality of such goods.
How trade marks function is inextricably tied up with how the target market for the offering recognises, interprets and assimilates the information conveyed by the trade mark. The target market for consumer products (like coffee) in Australia is largely comprised of the English speaking Australian consumer and so, in respect of these goods, trade marks largely live and have their meaning in the minds of the Australian consumer.
In confirming the importance of considering the ordinary signification of words to persons concerned in the goods in this case18, when determining the distinctness and registrability of a trade mark under Section 41(3), the High Court has reaffirmed the historical rationale for a trade mark as something that assists consumers find the products they know and like.
At least for general consumer goods, the issue of what other traders may want to use (without improper motive) will necessarily be driven at first instance by what the ordinary signification or meaning those words have to the target audience for the goods, namely the consumer.
Traders often want to use descriptive words for the purpose of conveying relevant and desirable meaning about their products. If they want to do this and secure trade mark rights at the same time, they need to ensure that the words they use, as understood by the target audience for those goods, are not directly descriptive of the goods or broader brand proposition, but are at most convey only a skilful allusive reference to the target audience of the type that was accepted in the Tub Happy case and now by the majority of the High Court in this case.