In the recent decision of PDP Capital Pty Ltd v Grasshopper Ventures Pty Ltd [2021] FCAFC 128 (29 July 2021), the Full Federal Court confirmed that a trade mark owner who merely authorises use of its trade mark cannot be subject to liability for direct trade mark infringement pursuant to s120(1) of the Trade Marks Act.
In the first instance decision, found here, PDP failed in its claims against Grasshopper for trade mark infringement, misleading and deceptive conduct under the Australian Consumer Law and for passing off. Both parties failed in their attempt to cancel the other parties' trade marks but succeeded in having them restricted.
Background
PDP has manufactured and sold a range of chilled dairy desserts and snacks in Australia under the Wicked Sister brand since 2008.
PDP owns registrations for WICKED SISTER in plain word and
stylised forms which cover various goods in classes 29 and 30
(collectively "the Wicked Sister Marks"). The earlier
stylised mark 
dates from 2008 and
is owned by PDP Fine Foods Pty Ltd. The later stylised mark 
and plain word mark WICKED SISTER both date
from 2016 and are owned by PDP Capital Pty Ltd, a related IP
holding company. PDP Capital's marks achieved registration by
consent from PDP Fine Foods.
Grasshopper is an IP holding company which has authorised the use by various entities selling dipping sauces since 2002 under the WICKED brand.
Grasshopper owns a registration dating from 2005 for the trade mark:
("Wicked Tail Mark") in class 30 for dipping sauces and related products. The WICKED Tail Mark was modified in 2014 to:
("New Wicked Mark") for which Grasshopper applied for registration in 2015 with the original branding phased out by early 2016. Grasshopper extended its product range to include waffle dippers in 2018.
Both the Wicked Sister and Wicked products are sold through Coles supermarkets.
PDP sells flavoured rice puddings, custard, tiramisu and panna cotta under the Wicked Sister Marks, made from fresh ingredients and found in the refrigerated section of the dairy aisle of supermarkets.
On the other hand, Grasshopper's "Wicked" dipping sauces and waffle dippers are shelf stable products which do not require refrigeration, although the dipping sauces are sometimes placed with frozen berries in the refrigerated section of the fresh food section of the supermarket.
Appeal
The Full Court considered grounds of appeal relating to infringement, the parties' respective removal claims and the ACL and passing off.
Infringement
Whether the Party Authorising use of the Trade Mark is liable for Infringement
Grasshopper authorised use of the Wicked Trade Marks to other companies but was not found to be liable for direct infringement under s120(1). The Full Court confirmed the primary judge's finding.
The Court noted that under the wording of s120(1) it is the act of "the person" that attracts a finding of infringement. The language does not suggest use by one person will constitute an infringement by another person. Not every reference to the use of a trade mark in the Trade Marks Act is intended to import the definition of "authorised use" by an "authorised user" under s7(3).
An alleged infringer, who has not engaged in a primary act of infringement within s120, may nonetheless be found to infringe as a joint tortfeasor (referring to Hashtag Burgers Pty Ltd v In-N-Out Burgers, Inc [2020] FCAFC 235). However, PDP did not allege joint tortfeasorship in this case.
Deceptive Similarity
PDP contended that the primary judge made a number of errors in her reasoning in finding that the New Wicked Mark and Wicked Sister Marks were not deceptively similar.
Most were dismissed; however, their Honours acknowledged that the essential comparison in an infringement suit remains one between the marks involved and that it was not appropriate for the primary judge to descend into fine detail about the actual uses of the Wicked Sister Marks. Despite this, the Court noted that trade circumstances is a relevant consideration and were not prepared to overturn the primary judge's findings in relation to deceptive similarity or infringement.
PDP's removal claim
At trial, in response to PDP's challenge to the registration of Grasshopper's "Wicked Tail Mark" for non-use, the primary judge found use only in respect of "dips, including chocolate dips", but exercised discretion to maintain the registration for all listed goods with the exception of "savoury dips".
PDP contended that the primary judge erred in finding that there had been use of the Wicked Tail Mark in relation to "dips, including chocolate dips" and in the exercise of discretion.
Grasshopper transitioned from use of the Wicked Tail Mark to the New Wicked Mark between 2014 and 2016. Apart from finding use of the Wicked Tail Mark in respect of "dips, including chocolate dips", her Honour also found that Grasshopper had established an intention to use the Wicked Tail Mark in the future in relation to chocolate rocky road, fruit flavoured toppings and sauces as well as the balance of categories of goods.
On appeal, Grasshopper acknowledged that the primary judge erred in referring to a future intention to use the "Wicked Tail Mark", and that this should have been a reference to the "New Wicked Mark". However, the Court found that the primary judge did intend to refer to the Wicked Tail Mark in her assessment of the facts and stated, "within the welter of overlapping issues advanced by the parties, her Honour made an error". The Court re-exercised the discretion and ordered that all goods except for "dips, including chocolate dips but excluding savoury dips" be removed from the registration for the Wicked Tail Mark.
Grasshopper's removal claims
Grasshopper applied for removal of the Wicked Sister Marks under the s92(4)(a) ground of lack of intention to use and no use as at the filing date. The primary judge found that Grasshopper had established grounds for removal of the marks for bakery products, confectionery, ice cream confections, dipping sauces and various yoghurt products, but exercised discretion not to remove the marks for the remaining goods. However, the registration for "dessert sauces" should be replaced with "custard".
PDP contended that the primary judge erred in finding that PDP Capital had no intention as at the filing date to use the Wicked Sister marks on the remaining goods, placing insufficient weight on PDP's 2018 Strategic Plan.
The Court agreed with the primary judge's finding that the 2018 Strategic Plan spoke only in general terms about future plans that amounted to no more than raising a speculative possibility of an intention to expand into different product areas.
PDP argued that use on "tiramisu", which was sufficient to maintain a claim for "cakes", should also have been sufficient to establish use in relation to "bakery products". The Court noted that this proposition was not put to the trial judge and reminded that an appeal is not a forum for a party to retry a case. This aside, the Court said that it does not follow from a finding that "tiramisu" falls within the category of a "cake" that it also falls within the category of a "bakery product". Similarly, PDP failed to establish that use in relation to "profiteroles" was use for "bakery products" given, in particular, that PDP itself referred to these products as "chilled desserts".
PDP also contended that "dessert sauces" were not relevantly different to "dipping sauces". Again, while this contention was not asserted at trial, their Honours said that use of a trade mark on "custard", which was found to be sufficient to establish use for a claim of "dessert sauces" is not sufficient to establish a claim for use on "dipping sauces".
Accordingly, PDP's appeal in relation to Grasshopper's removal claims were dismissed.
ACL and passing off
The primary judge rejected PDP's claims that Grasshopper's conduct in selling its dipping sauces and waffle dippers under the New Wicked Mark was misleading and deceptive in contravention of ss18 and 29 of the Australian Consumer Law, or amounted to passing off. This was due to her findings that the Wicked Marks and Wicked Sister Marks were not sufficiently similar and that PDP did not have an established reputation in the Wicked Sister Marks as at 2014 when use of the New Wicked Mark commenced.
PDP were critical of the primary judge's treatment of their evidence going to reputation and for taking into account the reputation of Grasshopper to find that there was no real likelihood of confusion or deception. The Full Court was not satisfied that PDP had established any errors made by the primary judge in her assessment of the issues and the appeals were dismissed.
Takeaway
The case reaffirms that there is no statutory liability for infringement by authorisation, with the result that an IP holding company that merely authorises use of a mark cannot be subject to liability for direct infringement. However, it may be liable as a joint tortfeasor.
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.
