Australia: Intellectual property: an inter-Stella battle

Last Updated: 21 July 2014
Article by Jane Owen

DECIDING UPON A new brand is exciting. Once you've chosen the name, you can't wait to pull the trigger and explode into the public consciousness. There are two ways you can go from there – launch straight away or conduct some due diligence to make sure no one else has registered your name or already uses the same (or similar) name.

It seems obvious that the second option is the most sensible, but so often this step is deferred to a 'less crazy time'. However, if you don't clear your brand before you launch, you can run into trouble... Take Wong Kwaid Hua as an example.

Sometime in 2006, Mr Wong's company decided to start developing cosmetics and skincare products under the name "St Ella New York" (in a stylised font). It wasn't until 2010, four years later, that Mr Wong applied for registration of that name as a trademark in Australia with the intention of licensing the mark to his company. The name St Ella comes from the name of one of the company's directors – Stella Chin. The application covered a range of things, most relevantly perfumery, cosmetics, leather goods, and beauty care.

In around 2001 Stella McCartney launched her own fashion house. As part of that venture, from 2003 to 2010 Stella McCartney launched in Australia a perfume line branded "STELLA", a skincare line (branded "CARE"), a lingerie line and a children's clothing line. Stella McCartney branded fashion and handbags have been sold in Australia since 2003 and 2004 respectively. Stella McCartney also conducted other business in Australia, such as collaborations with Target. Combine that with the reputation that Ms McCartney enjoys from a swag of fashion and beauty industry awards, and one might reasonably be expected to be aware of the reputation of Stella McCartney. When launching its various product lines, Stella McCartney Limited filed trade mark applications for the associated brands. When Mr Wong's St Ella New York trade mark application was advertised, Stella McCartney Limited opposed it.

Stella McCartney's opposition was successful because the St Ella New York mark was found to be deceptively similar to Stella McCartney's STELLA registered trademark. The St Ella New York trademark could, therefore, not proceed to registration. The continued use of that mark could also be problematic.

During a hearing at the Trade Marks Office, the hearings officer pointed out that because Stella McCartney Limited had registered a plain word mark (rather than a logo or stylised mark), its rights in that word extended to all the ways that it might be depicted, which included lowercase, which increased the similarity between Stella and St Ella.

Is registration better than reputation? Stella McCartney Limited also sought to oppose Mr Wong's application because, by reason of the reputation in the STELLA name, the use of Mr Wong's mark would be likely to deceive or cause confusion. This argument was based on evidence of sales of the goods and services described above by Stella McCartney Limited. However, the particular evidence provided in the case was not considered to be enough to prove a reputation warranting refusal of registration of Mr Wong's mark. Similarly, any additional recognition of Stella McCartney Limited's STELLA mark arising from an association with Stella McCartney was not considered enough to prevent registration. This ground of opposition did not succeed.

New York, New York? The hearings officer also hinted that the use of "New York" in the trade mark could lead to the mark being misleading if, in fact, Mr Wong's company's goods were not from New York (although in this case, connection with New York was proved).

If a trademark contains a connotation that would likely render it misleading, deceptive or confusing, that can prevent you from obtaining registration of that mark, which leaves you vulnerable to having to rely on your reputation to stop people using similar brands. While there can be some cache associated with some locations which might make them desirable to include in your trade mark, this could backfire if it is found that there is no connection between your product offering and that location.

So, what do you need to do before bursting onto the Australian stage with your new brand? The outcome of this inter-Stella battle suggests:

  • always check to see if someone else has already registered a similar trademark for the same goods or services as yours (and the earlier you check, the less money you will have wasted on development and marketing);
  • register a word mark if you can, not just a stylised version of the words;
  • avoid using any place names in your mark that don't have a genuine connection to your goods or services (and seriously consider whether you need them at all!);
  • relying on reputation without a registered mark to stop others from using a similar trade mark to yours is a risky strategy. While it may be a useful 'plan B', it is not as sound a strategy as registering a trademark;
  • once you have a registration, keep a watch on new marks coming through so that you can oppose any of them if necessary.

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.

K&L Gates has been awarded a 2012 EOWA Employer of Choice for Women citation acknowledging our commitment to workplace diversity.

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