First published in LexisNexis IP Bulletin, June 2008
Hansen Beverage Company has failed at first instance in the Federal Court to establish its claims of misleading and deceptive conduct and passing off against Bickfords with regard to its branding of a range of energy drinks for sale in Australia as MONSTER and/or MONSTER ENERGY.1 Bickfords failed in their cross-claim that they had, by their activities in the Australian market to date in their products, established the requisite reputation. As a result, it is likely that we will have a surfeit of differently packaged Monster drinks on the market, from two different sources.
Middleton J admitted this may involve:
... a risk of confusion or possibility of blunders by some members of the public in their choice of the energy drinks that are or may be made available by either Hansen or Bickfords' but that 'such risk or possibility the law accepts.
Hansen's product, launched in 2002 in 16 oz (473 ml) cans, sells well in the US and about 27 other countries, particularly to 18 to 30 year old males, but it has only been obtained in Australia via eBay.
Bickfords certainly became aware of this by 2005, and when they searched the Australian trade mark register and found that the names MONSTER and MONSTER ENERGY were not the subject of any actual or pending registrations, they lodged an application themselves for MONSTER in class 32 on 5thSeptember 2005, and even contacted Hansen in the US to discuss a possible licence agreement. No agreement eventuated. They were also successful in obtaining the domain name monsterenergy.com.au (Hansen owns monsterenergy.com and advertises it on all its cans).
Bickfords developed and started distributing their new Monster Energy drinks in April 2006. There was no dispute that the packaging of the two product lines were so similar that they could relevantly mislead or deceive for the purposes of the Trade Practices Act 1974 and passing off. Not only was the look and feel of the packaging similar, but the brand name was also identical.
In 2001, Red Bull successfully sued its former sub-distributor Sydneywide2 for copying the getup of its well-known energy drink
when there was no similarity between the product names, Red Bull and LiveWire. The important distinction between that case and this one is that Red Bull had already been promoted, distributed and sold in Australia for some years, and Red Bull therefore definitely had the requisite reputation in Australia to make its case.
Requisite reputation not made out
At issue in the Monster case was whether the plaintiff had established the requisite reputation in the products in Australia to produce a likelihood of deception among consumers, or damage to its reputation. This was the same issue that had been dealt with by the Full Court in ConAgra Inc v McCain Foods (Aust) Pty Ltd (1992) 33 FCR 3023, which concerned the use of the brand 'Healthy Choice'. It is necessary to first establish this, the Court said, even when there may be evidence of fraud available to the plaintiff. Incidentally, this case follows long-established precedent that to merely imitate the name of another trader and the getup of their product does not establish a case of fraud.
Hansen's evidence: Hansen argued that their reputation in Australia arose from their global marketing activities, primarily sponsorship of extreme sports events and athlete endorsements
It was significant that there are no sales, direct advertising or promotion of Hansen's product in Australia and, although it would have been admissible, neither side sought to lead expert or survey evidence about Hansen's product reputation in Australia.
Hansen argued that their reputation in Australia arose from their global marketing activities, primarily the sponsorship of extreme sports events and athlete endorsements.
The Court required Hansen to establish that, as at the date that Bickfords started to sell their product, a significant or substantial proportion of people who would be potential customers within Australia would be likely to be misled.
Hansen relied on their strategy to 'lay a foundation'4 to raise awareness of their product in Australia well prior to any proposed launch, by sponsoring high-profile international extreme sports events and the athletes that compete in them, relying on reportage in extreme sports publications and exposure on the internet. This use of unconventional marketing was said to be appropriate to the target demographic.
The Court noted that extreme sports followers were a smaller group of consumers than the target demographic of young adult males.
Television ratings evidence tendered by Hansen was rejected as hearsay, because viewers who were representing that they were watching television at the relevant time (by pressing the button on their television meter) were not present in Court to give this evidence. A submission by Hansen that the ratings statistics should be alternatively admitted as business records of the television ratings company OzTAM was also rejected because they were the productive output of OzTAM rather than its internal business records.
An expert's opinion on the ratings evidence did not come within the exception to the opinion rule set out in s79 of the Evidence Act 1995 (Cth) and the Court also declined to exercise any discretion to admit the opinion once it had rejected the ratings evidence on which that opinion was based.
It is important to note that the Court's comment before giving judgment on the above evidentiary issues was:5
I should say that even if this affidavit evidence were accepted, it would not alter the view I have reached in this proceeding, or my evaluation of the quality of the television exposure, assuming the number of viewers contended by Hansen in fact saw the relevant programs. This is because even if this number of viewers saw the programs, the extent of the exposure, in my evaluation, would not give rise to the awareness of the marks as contended by Hansen by reason of the quality of the exposure as explained in these reasons.
The Court considered carefully the specific instances of exposure relied on by Hansen, but concluded that because the product is not available here, the quality of exposure of the brand in Australia was such that it would not have given rise to a level of awareness sufficient for Hansen to succeed in its claims. The exposure of Hansen's brand was described by the Court as 'incidental', and his Honour went on to say that this 'does not provide a proper basis for the reputation Hansen now claims in Australia, at least on the evidence presented to this Court'.6
Bickfords' cross-claim, some evidence of direct sales and promotional activity presented
In relation to Bickfords' cross-claim, there was some evidence of direct sales and promotional activity presented, but this was largely confined to Adelaide where Bickfords is located. Apparently a planned national launch 'never really eventuated'.7
There was no other direct evidence of reputation tendered on behalf of Bickfords. Some generalised evidence was given by its new product development brand manager, but it was not considered to amount to the type of direct evidence required. The fact that there was some evidence of actual confusion between the Hansen product and the Bickfords product did not assist Bickfords' cross-claim either,
owing to the conclusions based on Bickfords' 'own evidence placed at its highest'.8
No doubt Bickfords' Australian trade mark application will also be hotly contested by Hansen
Hansen's appeal to the Full Federal Court, filed on 21 April 2008, has been listed for the hearing to commence on 4 August 2008. No doubt Bickfords' Australian trade mark application will also be hotly contested by Hansen. IP Australia records show the opposition to the trade mark was referred to the Court on 19 May, and references the above proceedings.
In many previous trade mark opposition cases, it has been hard for opponents to base their opposition merely on advertising circulating from abroad or other overseas use.9
In bringing its appeal, the Court's words will be ringing in Hansen's ears:
After all, the law promotes innovation and local competition, and the Court must be mindful not to make orders to protect persons who do not establish on the evidence that their brand is sufficiently well known in Australia.10
The Court in this case in fact went somewhat further in rewarding copying and seizing of an opportunity by the Australian firm, something which is hard to characterise as 'innovation', but for which there is nevertheless ample precedent.
The High Court first recognised the rights of local traders in these circumstances in the 1947 case Seven Up Co v OT Ltd (1947) 75 CLR 203, where Williams J stated, (at page 211):
... in the absence of fraud, it is not unlawful for a trader to become the proprietor under the Trade Marks Act of a mark which has been used, however extensively, by another trade as a mark for similar goods in a foreign country, provided the foreign mark has not been used at all in Australia at the date of the application for registration.
Lessons: the importance of exporters protecting their position by registering their trade marks in all potential export jurisdictions
This case highlights the importance of potential exporters protecting their position by registering their trade marks in all potential export jurisdictions. The lesson is as much for Australian exporters as for foreign companies – if the shoe had been on the other foot, imagine how dismissive the response of the US courts would have been.
Footnotes
1 Hansen Beverage Co v Bickfords (Aust) Pty Ltd [2008] FCA 406; BC200802057 (the Monster case).
2 Red Bull Australia Pty Limited v Sydneywide Distributors Pty Limited [2001] FCA 1228; BC200105204.
3 In which ConAgra, which had likewise never sold its product here, also failed both at first instance and on appeal to establish a sufficient reputation in Australia to succeed in stopping McCain from producing its copycat product.
4 Above n 1 at [80] and [102].
5Above n 1 at [111].
6 Above n 1 at [102].
7 Above n 1 at [250].
8 Above n 1 at [260].
9 For example, Le Cordon Bleu BV v Cordon Bleu International Ltd [2000] FCA 1587; BC200006829 and Sassaby Inc v Janet Cosmetics Pty Ltd (2001) 54 IPR 425; compare Anheuser-Busch Inc v Castlebrae (1001) 32 FCR 64 (the 'Spuds Mackenzie' case).
10 Above at [82].
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