A majority of the Full Federal Court has overturned a finding that Aldi’s use of “Cheezy Twists” infringed Frito-Lay’s TWISTIES trade mark.
Frito-Lay is the registered owner of the TWISTIES trade mark which has been used in Australia for many years. Aldi operates a chain of low-priced grocery stores, specialising in generic or own-brand products and introduced an extruded cereal based cheese flavoured snack, sold in packaging bearing the words “Chazoos” and “Cheezy Twists”.
At first instance, Gyles J found that the words “Cheezy Twists”, as they appeared on the packaging, were used by Aldi as a trade mark and further, that there was a sufficient resemblance to TWISTIES to make the use by Aldi of the words “Cheezy Twists” likely to deceive or cause confusion.
His Honour found that while the method of manufacture of both products did not literally involve “twisting”, the Aldi product was aptly described as a “twist” and was so described in the trade. Acknowledging that it was possible for there to be two trade marks used on packaging (in this case the words “Chazoos” and “Cheezy Twists”), Gyles J also noted an “admission” by Aldi’s chief buyer that the expression “Cheezy Twists” had been adopted by Aldi to distinguish its goods from those of other traders.
His Honour concluded that Aldi had intended to reproduce, as far as possible, the precise product sold under the TWISTIES mark and had chosen the word “Cheezy” in conjunction with the word “Twists” in order to take advantage of the aural resemblance to TWISTIES. In the circumstances, there was a sufficient resemblance to make the mark “Cheezy Twists” likely to deceive or cause confusion.
The primary judge based his decision, in part, on the principle discussed by Dixon and McTiernan JJ in Australian Woollen Mills Limited v F S Walton & Co. Limited (1937) 58 CLR 641 at 657, that:
“… if a mark or get-up for goods is adopted for the purpose of appropriating part of the trade or reputation of a rival, it should be presumed to be fitted for the purpose and therefore likely to deceive or confuse …”.
Aldi appealed this decision and the majority of the Full Federal Court (Hill and Lindgren JJ) found:
1. that the words “Cheezy Twists” had been used by Aldi as an unregistered trade mark on the packaging of its cheese flavoured snack food product, in addition to its registered trade mark “Chazoos”, and not merely as a description of its product; and
2. that, nevertheless, “Cheezy Twists” was not deceptively similar to the registered trade mark TWISTIES.
In the view of the majority, while the evidence showed that Aldi wished to produce a cheese snack product of similar quality, appearance and flavour to the TWISTIES product, and to adopt a youthful “funky” name for the product, it did not lead to the conclusion that Aldi set out to appropriate the trade or reputation of the product of a trade rival in the sense referred to in Australian Woollen Mills. In that case, it was not suggested that a finding as to the alleged infringer’s subjective purpose took away the need for a finding on the objective question of likelihood of confusion.
In his dissenting judgment, Conti J agreed with both Hill and Lindgren JJ in finding that “Cheezy Twists” had been used as a trade mark and not merely as a descriptor, but disagreed with the majority on the question of whether there was deceptive similarity between “Cheezy Twists” and TWISTIES. His Honour agreed with the primary judge that Aldi had intentionally sailed as close to the wind of the market leader as it could, conscious of the commercial advantage to be gained, but in doing so had crossed over the “forbidden line” of trade mark infringement. In Conti J’s view, the primary judge had correctly applied the principle in Australian Woollen Mills in finding that there had been trade mark infringement.
It is important to note that this case was argued solely on the basis of trade mark infringement. Hence the Court did not need to consider any similarity in colour, font or get-up of the respective packaging. Also, appellate courts are generally reluctant to set aside an evaluation of the facts by a trial judge based on impressions or perceptions formed during the presentation of the evidence. The majority in the present case considered that Gyles J had improperly drawn adverse inferences based on an incorrect application of the so-called “principle” in the Australian Woollen Mills case and therefore were not restrained in setting aside his finding of deceptive similarity. Finally, this case is a valuable reminder that descriptive words can, depending upon the context, also function as trade marks.
Spruson & Ferguson
HIGH COURT FINDS TERMS OF CONFIDENTIALITY DEEDS CONCERNING THE SUBJECT OF PATENT APPLICATIONS A RESTRAINT OF TRADE
The High Court of Australia has recently considered the validity of confidentiality agreements continuing in perpetuity in Maggbury’s Case1. The majority of the High Court held that Deeds of Confidentiality which included terms precluding the receiver of confidential information from using that information even after the information entered the public domain constituted a restraint of trade and that such terms were unenforceable.
The inventor, Mr Allen, a Director of Maggbury Pty Limited (“Maggbury”) approached Hafele Australia Pty Limited (“Hafele”) to develop and market world-wide his invention, parallel-opening fold-away ironing board (“Information”).
After filing provisional patent applications in Australia for the Invention, Maggbury (the owner of the Invention) and Hafele executed Deeds of Confidentiality. A related PCT Application was also filed. Mr Allen then disclosed to Hafele the confidential information relating to the Invention (“Invention”). The relevant terms of the Deeds of Confidentiality included:
5.6 “Hafele [Australia] shall not at any time hereafter use the Information for any purpose whatsoever except with the Inventor’s informed prior written consent.
11. It is a condition of this agreement that Hafele [Australia] will forever observe the obligations of confidence set out in this Agreement, unless released from such obligations in writing by the Inventor”.
The international publication date in respect of the PCT Application was 6 February 1997. The publication date in Australia was 12 days later. Maggbury had also displayed the ironing boards the subject of the Invention at a trade show in Sydney in July 1996. Visitors to the show were able to inspect the assembly of the Maggbury ironing boards as well as a display of the Inventor’s designs of that product.
Negotiations between Maggbury and Hafele subsequently broke down and soon thereafter Hafele began to develop and market its own wall-mounted fold-away ironing boards similar to the Maggbury ironing board.
On 21 September 1998 Maggbury instituted proceedings in the Supreme Court of Queensland against Hafele and its parent company. As the Maggbury patents had not proceeded to grant, Maggbury relied on the terms of the two Deeds of Confidentiality.
The Supreme Court of Queensland, at first instance, ordered a permanent injunction against Hafele and its parent company from manufacturing or distributing wall-mounted ironing-boards designed using wholly or in part information derived directly or indirectly from the Information. The Queensland Court of Appeal reversed the judgement and the matter was appealed to the High Court.
The High Court considered whether the Deeds of Confidentiality could operate to prevent Hafele’s use of the Information in perpetuity notwithstanding the fact that the Information had been disclosed to the public.
The majority of the High Court (Gleeson CJ, Gummow, Hayne JJ) held that to give effect to the terms of the Deeds of Confidentiality would constitute a restraint of trade. The majority found that public disclosure occurred at least in February 1997 (when the international patent was published) and that no injunction should be granted under the general law because the information had been made public. The majority refused to give effect to the Deeds of Confidentiality for information which no longer retained the quality of confidence as there no longer existed any subject matter upon which the agreements could operate once that information had entered the public domain.
This case illustrates the importance of carefully considering and drafting confidentiality agreements to ensure that not only the confidential information is properly protected, but that such agreements are ultimately enforceable.
The content of this article does not constitute legal advice and should not be relied on in that way. Specific advice should be sought about your specific circumstances.