Stone & Wood vs Elixir case highlights risk of relying on descriptive words as distinguishing elements of a trade mark.
The Full Court has affirmed that craft beer 'Thunder Road Pacific' makes no representation that it is associated with 'Stone & Wood Pacific Ale'. The decision's key message is a reminder to be wary of relying on descriptive words as a distinguishing element of a trade mark.
Stone & Wood and Elixir are both craft beer breweries. Since 2010, Stone & Wood have produced Stone & Wood Pacific Ale, which is currently its most popular beer. In 2015, Elixir introduced a new beer to its range, marketing it first as Thunder Road Pacific Ale and then, following objections by Stone & Wood, Thunder Road Pacific.
In the Federal Court before Moshinsky J, Stone & Wood argued that the Thunder Road Pacific product constituted passing off, misleading or deceptive conduct, false or misleading representations and trade mark infringement. Moshinsky J rejected each of the claims and found that Stone & Wood were guilty of making groundless threats of trade infringement.
On appeal to the Full Court, Stone & Wood's key submission was that Elixir’s use of the words “Pacific Ale” and “Pacific” represents to consumers that there is a connection or association between Thunder Road products and Stone & Wood or Stone & Wood Pacific Ale. In doing so, Stone & Wood submitted that the primary judge failed to recognise Elixir's particular form of passing off, which also constituted misleading or deceptive conduct and false or misleading representations in contravention with ss 18 and 29 of the Australian Consumer Law. To establish that Elixir was engaging in passing off Stone & Wood argued that:
(a) in 2015 Stone & Wood had a distinctive reputation in the words pacific ale and pacific;
(b) as such, the only connotation of pacific ale or pacific in the craft beer context was the Stone & Wood product; and
(c) Elixir's use of the words pacific ale or pacific made a representation of an association with Stone & Wood and gave consumers a subconscious cue to insidiously purchase Elixir's product instead of Stone & Wood's.
Stone & Wood was unsuccessful and the Full Federal Court upheld Moshinsky J's decision.
The Full Court of Allsop CJ and Nicholas and Katzmann JJ found that the words pacific ale or pacific alone do not distinguish Stone & Wood because:
(a) the word pacific is not the prominent branding reference for Stone & Wood labels, decals and get-up. Pacific or pacific ale serves a subsidiary branding use and does not distinguish the beer without the clear textual and visual connection to the dominating words Stone & Wood;
(b) the words have a descriptive or non-distinctive quality. They connote imprecise senses such as vague geographic and calming references, which do not distinguish Stone & Wood's product; and
(c) the use of only the words pacific or pacific ale by customers when purchasing beer in different environments was not always a reference to Stone & Wood.
Furthermore, the Full Court found that Elixir use very different colouring, get-up and packaging which demonstrates that Elixir was not trying to represent an association between its beer and the Stone & Wood product.
Stone & Wood also argued that the primary judge placed too much emphasis on its characterisation that craft beer customers are discerning due to their special interest in craft beer. The Full Court considered that consumers in the craft beer market are properly characterised as "interested and engaged" and "likely to pay attention to packaging and labelling" in order to choose a specific brewery's product. The Full Court furthermore held that less attentive purchasers and different purchasing environments had been sufficiently considered by the primary judge.
'Hopportunistic' legal claims
Not only was Stone & Wood's appeal dismissed with costs, but the Full Court upheld the first instance, finding that Stone & Wood made groundless threats of trade infringement.
After having commenced proceedings, Stone & Wood amended its pleadings to include a trademark infringement claim, which was raised unsuccessfully at first instance and not pursued on appeal. As Stone & Wood provided "no satisfactory explanation for the delay" in commencing the infringement claim, the Full Court agreed with the primary judge that Stone & Wood had not commenced the claim with due diligence. This contravened s 129 of the Trade Marks Act.
And so it would appear that 'schooner' or later claims must be substantiated to avoid any 'stein' on the record