ARTICLE
20 March 2024

Trade Marks: The shape of things to come?

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Spruson & Ferguson

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Established in 1887, Spruson & Ferguson is a leading intellectual property (IP) service provider in the Asia-Pacific region, with offices in Australia, China, Indonesia, Malaysia, Philippines, Singapore, and Thailand. They offer high-quality services to clients and are part of the IPH Limited group, which includes various professional service firms operating under different brands in multiple jurisdictions. Spruson & Ferguson is an incorporated entity owned by IPH Limited, with a strong presence in the industry.
Recent case clarifies law with respect to what constitutes use "as a trade mark". This has increased the relevance & power of shape TMs.
Australia Intellectual Property
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Shape Trade Marks and RB (Hygiene Home) Australia Pty Ltd v Henkel Australia Pty Ltd [2024] FCAFC 10

A recent decision from the Full Court of the Federal Court of Australia has clarified the law with respect to what constitutes use "as a trade mark" and in doing so, appears to have greatly increased the relevance and power of shape trade marks.

Background

The appellants were RB (Hygiene Home) Australia Pty Ltd and Reckitt Benckiser Finish BV (RB). RB was the owner of an Australian trade mark registration (Registration) comprising an image of its Finish Powerball product as follows:

Picture1.jpg

The respondent, Henkel Australia Pty Ltd (Henkel), marketed and sold a product called SOMAT Excellence 4in1 dishwasher gel caps (Somat Product). The Somat Product had packaging which displayed a stylised image of one of its gel caps (Somat Device), as follows:

image-2-2.jpg

image-2-5.jpg



RB commenced proceedings against Henkel in the Federal Court, alleging that Henkel was using the Somat Device as a trade mark, and that it was deceptively similar to the Registration (along with another trade mark registration owned by RB). Henkel, in turn, filed a cross-claim against RB, alleging that RB had not used the Registration "as a trade mark", and as such, it was liable to be cancelled for non-use.

RB argued that it had used the Registration when advertising and selling its Finish Powerball product (Powerball Products), including on two variations of its packaging shown below:

image-2.jpg

Purple Quantum Packaging

image-2-1.jpg

Quantum Tablets Packaging

The Purple Quantum Packaging notably included a stylised depiction of a Finish Powerball product in the middle of the packaging, consisting of a base tablet, a red ball floating above the tablet and a "star burst" behind the red ball (Quantum Device), along with smaller images of the actual Powerball Products (shown just above the purple triangle) (Powerball Images). The Quantum Tablets Packaging included a clear window, which allowed a consumer to see the actual Powerball Products inside the packaging.

Relevantly, the primary Judge found that:

  • The Quantum Device was not substantially identical to the Registration, such that any use of the Quantum Device did not constitute use of the Registration.
  • The Powerball Images displayed on the Purple Quantum Packaging, and the actual Powerball Products as displayed on the Quantum Tablets Packaging were both substantially identical to the Registration. However, Her Honour found that neither had been used "as a trade mark".
  • Due to the above, the Registration had not been used by RB as a trade mark, and as such, was to be removed from the Register for non-use.
  • The Somat Device on the Somat Product was not being used as a trade mark, and even if it was being used as a trade mark, it was not deceptively similar to the Registration.

Accordingly, RB's infringement claim was unsuccessful, and the Registration was ordered to be cancelled for non-use.

The Appeal

RB appealed the decision to the Full Court of the Federal Court. The Full Court partially allowed the appeal, with its findings as follows:

1. Was the Quantum Device sufficiently similar to the Registration?

The Full Court agreed with the Primary Judge that due to the various differences between the Quantum Device and the Registration, including the floating ball and the "starburst" effect, the two marks were not substantially identical, such that use of one did not constitute use of the other.

2. Did the Powerball Products which were visible in the Quantum Tablets Packaging, constitute use "as a trade mark"?

RB contended that the primary Judge incorrectly found that the Powerball Products which were visible on the Quantum Tablets Packaging due to the clear window, did not constitute use as a trade mark.

In making her decision, the primary Judge analysed both parties' expert evidence relating to the way in which consumers search for the products in question, and noted that the number of visual cues used is "often as low as one or two". She found that the "most diagnostic cue" to the consumer to find a product would be the very prominent POWERBALL logo and branding on the packaging. She then found that it was common for traders to display depictions of their products on packaging, and that Finish had at least six different product depictions over its range. As a result, she found that the purpose of the product depictions was to allow a trader to see what the product looked like, and to differentiate the product from other products of the same brand. As a result, the product depictions did not function as a trade mark.

The Full Court disagreed and noted the expert evidence that the display of the Powerball Products served two functions – one was simply to show the product which was being sold however one was to "reinforce" to the consumer that the product comes from the supplier of Finish Tablets. While the Full Court accepted the expert evidence that the FINISH POWERBALL branding was the main diagnostic cue for the consumer to find a Finish product, it found that a trade mark does not need to be the primary diagnostic cue to be used a trade mark.

Accordingly, the Full Court found that the display of the Powerball Products on the Quantum Tablets Packaging did constitute use "as a trade mark", and as they were substantially identical to the Registration, found that the use constituted use of the Registration.

3. Did the Quantum Products, which were visible on the Purple Quantum Packaging, constitute use "as a trade mark"?

For the same reasons as outlined above, the Full Court overturned the primary Judge's finding that the depictions of the Quantum Products did not constitute use as a trade mark.

4. Did the Somat Device on Henkel's Product constitute use "as a trade mark"?

Once again, the Full Court overturned the primary Judge's finding that the Somat Device on Henkel's product did not constitute use as a trade mark.

The primary Judge's conclusion was again based largely on the fact that consumers would only look to one or two visual cues when considering a product, and that the prominent SOMAT was the "most" diagnostic cue, with the next being the colour schemes of products. In addition, the primary Judge had regard to the fact that there were several different SOMAT product depictions. Based on these factors, the primary Judge concluded that the product depictions, such as the Somat Device, did not function as a brand, and would not be perceived by a consumer to designate the origin of the products.

In reversing this finding, the Full Court found the product depictions allow consumers to differentiate between different variations of one brand, and that this was akin to being a "sub-brand". The Court noted that numerous sub-brands such as Big Mac to McDonalds, were capable of being trade marks, even if they were used alongside the umbrella brands. The Court then found that even if the Somat Device was a "poor cue" to allow a consumer to identity the brand in the face of the prominent SOMAT branding, the question is not whether it is an effective cue, but whether it is a cue at all.

Accordingly, having regard to its central location and the highly stylised nature of the Somat Device, the Court found that it was being used "in part to signify that a product with something like this shape originates from the supplier of the product and partially to provide a description of the product in the packaging". Accordingly, the Somat Device was being used as a trade mark on the packaging of the Somat Product.

5. Was the Somat Device deceptively similar to the Registration?

The Full Court upheld the primary Judge's finding that impressions created by two devices were "substantially different", and as such, they were not deceptively similar.

Outcome of the Appeal

The decision means that while RB was partially successful in the appeal, and in relation to the decision to cancel the Registration, its infringement claim against Henkel ultimately failed as the Somat Device was found to not be deceptively similar to the Registration.

Conclusion

The Full Court's finding has clarified, and seemingly expanded, the test of what constitutes use "as a trade mark". Practically, the decision represents a significant departure from the primary Judge's findings and findings made in other cases. In addition, the decision appears to have breathed new life into shape trade marks.

Specifically, the Court has confirmed that to function as a trade mark, a sign doesn't need to be the primary diagnostic cue which informs a consumer as to the trade source of a product – or indeed, even a prominent and notable one. Rather, the question is simply whether the sign indicates a connection between the goods and the user of the sign, regardless of whether numerous other signs on the product do it "better". This would appear to open the door for findings that a significant number of trade marks can be present on a product/its packaging or its advertising, regardless of how prominent the main signs/trade marks are and how effective they are at informing the user as to the trade source of the products. For instance, it's not uncommon for product packaging to include numerous elements such as a brand name, a product name, a logo, a colour scheme, a stylisation of the product, a window showing the product, a slogan, and so on. Previously the Courts have seemed reluctant to determine that all of these elements function as trade marks, however in light of this finding, if evidence can be adduced that any/all of these elements are used by consumers to even a very small extent to determine the source of a product, they will constitute use "as a trade mark".

This is likely to have positive and negative effects for brand owners. The positive is that brand owners now appear to have a better opportunity to seek trade mark protection for each element of their product and packaging, with issues concerning non-use of any trade marks being less of a concern. In addition, it's more likely that if other traders emulate any elements of the packaging, their use may constitute infringement of any registration. This would, in turn, also appear to be the most substantial negative for brand owners, as they will now need to very carefully consider every element of their advertising and packaging, to determine whether they are likely to function as a trade mark – and if they do, undertake full clearance searches for them or risk infringement.

In addition, the relevance of shape trade marks appears to have received a significant boost in light of the decision. The Court's judgment would appear to suggest that if a brand owner makes a decision to display its non-functional product shape to a consumer, it's possible, or even likely, that the shape would be used "as a trade mark", which would make seeking and retaining a registration for the shape easier. Then, if third parties seek to copy the shape of the product and display it to consumers, there would appear to be a clear risk of infringement. Indeed, this could be the case long after any design protection for the product has ceased.

Until the Courts provide more guidance as to what constitutes use of a trade mark, brand owners should carefully consider all signs, shapes, colours or anything else they use on and in relation to their packaging and products, to ensure that they have sufficient trade mark protection for any important elements and/or that they are not potentially infringing a third party trade mark registration by using a feature.

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.

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