| Focus: | SMA Solar Technology AG v Beyond Building Systems Pty Ltd (No 5) [2012] FCA 1483 |
| Services: | Intellectual Property & Technology, Commercial |
| Industry Focus: | Energy, Resources & Infrastructure |
The recent Federal Court decision in SMA Solar Technology AG v Beyond Building Systems Pty Ltd (No 5) [2012] FCA 1483 provides a timely reminder about the interaction between the Trade Marks Act 1995 (Cth) ("TMA"), the common law tort of passing off and the 'misleading and deceptive conduct' and the 'knowingly concerned' provisions of the Australian Consumer Law ("ACL").
Background
Through extensive sales and marketing of solar inverters and related devices and services in Australia, the applicants SMA Germany and SMA Australia (together "SMA") had acquired substantive goodwill in the name SUNNY BOY for solar inverters.
SMA Germany is the owner and SMA Australia the user of an Australian Trade Mark registration for SUNNY BOY in respect of:
"Energy supplying devices, essentially comprising transformers, inverters, battery storage and measuring and controlling devices therefore; computer software, namely evaluation software designed for inverter products in photovoltaic installations; all aforementioned goods included in this class".
The respondent, Beyond Building Systems ("BBS"), was a retailer and installer of third party solar energy systems, and their components including SMA's SUNNY BOY branded solar inverters.
In 2009, Mr Smith, a director of BBS sought (and later obtained) trade mark registration of a SUNNY ROO logo for solar panels, evacuated heat pipe solar collectors and the installation of solar energy systems. In 2010, Mr Smith assigned his interest in the SUNNY ROO logo trade mark to Ipevo (a company where he also held the position of director). Ipevo then licensed the registered SUNNY ROO logo mark to BBS.
In mid-2010, BBS decided to manufacture and market its own range of solar inverters, other solar products (such as photovoltaic panels) and installation services under SUNNY ROO logos and the plain words SUNNY ROO and SUNNY ROO PRODUCTS ("the SUNNY ROO trade marks").
SMA objected to BBS's use of the SUNNY ROO trade marks and argued that this use infringed its registered SUNNY BOY trade mark, amounted to passing off and contravened the misleading and deceptive provisions contained in ss 52 and 53 of the (now defunct) TPA and ss 18 and 29 of the ACL. SMA also argued that as Ipevo had licensed the registered SUNNY ROO logo mark to BBS, Ipevo was a contributory infringer, joint tortfeasor and was 'knowingly concerned' in misleading and deceiving Australian consumers.
Trade mark infringement
In finding that the SUNNY ROO trade marks were deceptively similar to SMA's SUNNY BOY registration, Justice Perram relevantly noted that s 10 of the TMA provides that "...a trade mark is taken to be deceptively similar to another trade mark if it so nearly resembles that other trade mark that it is likely to deceive or cause confusion."
As SMA's SUNNY BOY registration covered inverters, BBS's use of the SUNNY ROO trade marks for inverters was held to infringe SMA's SUNNY BOY registration. BBS had also provided installation services for inverters, which were held to be services 'closely related' to inverters and, therefore, infringed SMA's SUNNY BOY registration.
No defence was pursued on the basis that use of the SUNNY ROO trade marks was unlikely to deceive or cause confusion or pursuant to s 23 of the TMA which provides that a registered trade mark owner does not have the right to prevent the registered owner of another deceptively similar registered trade mark from using that trade mark except to the extent that the first-registered trade mark owner is authorised to do so under the registration of their trade mark.
Passing off & misleading & deceptive conduct
In order for SMA to succeed under the common law tort of passing off, SMA needed to prove that it had developed a reputation in the words SUNNY BOY as designating its solar inverters, that BBS had made a misrepresentation that its SUNNY ROO products had a connection with SMA, the reasonably foreseeable consequence of which was to injure SMA's reputation, and to establish in fact that SMA's reputation has been injured.
In order to succeed under the claims of misleading and deceptive conduct, SMA needed to demonstrate that there was a likelihood that the relevant class of persons would be misled into believing that BBS's SUNNY ROO products had a connection with SMA.
Due to significant sales and marketing on the part of SMA, the Court found that SMA had a reputation in the SUNNY BOY brand in relation to solar inverters, and that BBS' use of SUNNY ROO in relation to solar inverters "made confusion in the public mind inevitable".1
Evidence adduced from employees of SMA as to actual instances of confusion between SUNNY BOY and SUNNY ROO goods played a key role in enabling Justice Perram to find against BBS. This evidence demonstrated that Australian consumers had called SMA under the misapprehension that SMA was responsible for the manufacture of defective BBS SUNNY ROO products.
The licensor's liability
In determining whether Ipevo was liable as a joint tortfeasor in passing off and for trade mark infringement, the Court considered the scope of the trade mark licence between Ipevo and BBS.
Although the licence agreement did not expressly identify which trade marks had been licensed, the parties agreed that a licence to use the SUNNY ROO logo had been granted to BBS. While Ipevo argued that the licence extended only to the SUNNY ROO logo, the Court accepted SMA's contentions that the licence agreement granted BBS a non-exclusive licence to use intellectual property defined as including derivatives of the SUNNY ROO logo. As SUNNY ROO by itself was a derivative of the SUNNY ROO logo, the Court held that Ipevo had granted BBS a licence to use SUNNY ROO without the logo, and was liable as a joint tortfeasor in passing off and for trade mark infringement.
As to Ipevo's liability for being 'knowingly concerned' in BBS' breaches of the TPA and ACL, statutory provision2 is made for a person who, whilst not being a direct contravener, was nevertheless a person who was 'involved' including aiding, abetting, counselling or procuring, and also being in any way, whether directly or indirectly, knowingly concerned in, or party to, that contravention.
It was Ipevo's act of licensing the use of the SUNNY ROO name to BBS to use on its solar inverters with the knowledge that such use was likely to mislead consumers into believing there was a connection with SMA, that constituted Ipevo's knowing involvement in BBS' breaches.
The fact that Mr Smith was a director of both BBS and Ipevo and signed the licence agreement on behalf on both BBS and Ipevo did not assist Ipevo's defence. Prior to the date of licence agreement, BBS was installing SMA's SUNNY BOY inverters and accordingly "the senior management of BBS must have been aware of the deceptive similarity" between SUNNY ROO and SUNNY BOY.3 Ipevo's failure to call Mr Smith or any other person in a management position to refute awareness of deceptive similarity allowed the Court to attribute Mr Smith's knowledge as the director of BBS to Ipevo.
Take away
Having a trade mark registration does not of itself provide a defence to actions under the tort of passing off or contravention of the misleading and deceptive provisions of the ACL.
When seeking to protect trade marks, questions as to who is to own, who is to use and who is to be liable for the said use of the trade mark should be carefully considered and appropriate licensing arrangements established.
Instances of actual confusion remain critical to succeeding in restraining the misleading and deceptive conduct of third parties.
Footnotes:
1 SMA Solar Technology AG v Beyond Building
Systems Pty Ltd (No 5) [2012] FCA 1483 [30].
2 See section 82(1) of the now defunct TPA and section
236(1) of the ACL.
3 SMA Solar Technology AG v Beyond Building Systems Pty
Ltd (No 5) [2012] FCA 1483 [53].
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
