A Monster Waste Of Energy?

The Federal Court Delivers A Firm Reminder About Trade Mark Registration

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The Federal Court's judgment in Hansen Beverage Company v Bickfords (Australia) Pty Limited ([2008] FCA 406, 31 March 2008) emphasises that it is vital to register a trade mark in Australia in order to protect rights in a name, regardless of the trade mark's widespread use overseas.

The judgment confirms that it does not automatically transpire, nor can it be assumed, that mass sales, advertising and general success of a product outside Australia will protect the name of the product when it reaches Australian shores.

Background

The Managing Director of Australian beverage production company Bickfords went on a business trip to the United States in 2005. In 2005 the energy drink market in Australia was starting to grow. There was a limited range of energy drinks on the market, but these were nothing like Hansen's Monster-super-sized-can that Americans seemed to love.

Bickfords' Managing Director saw the potential for a supersized can to succeed in the burgeoning Australian energy drink market, and, since there was nothing like it on our Australian shelves, he contacted Hansen in the U.S to discuss striking a licensing deal for the name Monster Energy, which was already extremely successful in the US. Hansen was not interested and did not licence the name to Bickfords.

In 2006, Bickfords started to make its own version of the drink, based completely and unashamedly on Hansen's monstrously successful product.

The products compare as follows (Hansen/Bickford):

Name= Monster Energy/ name = Monster Energy.

The phrases used by Bickfords were also pretty much identical to a product called Lost that Hansen had put on the market as follows (Hansen/Bickford):

At the time Bickfords started selling its version of the energy drink in Australia, Hansen had established its Monster Energy drink as the second biggest selling energy drink in the world (behind Red Bull).

Bickfords then marketed and sold its version in Australia, knowing that the Hansen Monster Energy product had never been formally launched in Australia, nor was it protected by a registered trade mark in Australia.

The Proceedings

Hansen initiated proceedings for misleading and deceptive conduct under section 52 of the Trade Practices Act Cth 1974 and the tort of passing off.

The parties agreed that the similarities between the products could mislead and deceive for the purposes of the tort of passing off and the Trade Practices Act.

The Court found that the key issue in the proceedings was whether Hansen had shown a sufficient reputation in Australia in the mark Monster Energy or its contraction Monster (at the relevant date and for energy drinks) such that the adoption of the mark by Bickfords for its energy drinks conveys a misrepresentation that Bickfords' product was in fact a Hansen product or associated with Hansen.

Bickfords cross-claimed that Hansen's product would be confused with its product because of Bickford's use and reputation in Australia. Bickfords had to establish that, at the relevant time, it had a reputation substantial enough in Australia in order for its cross-claim to succeed.

Reputation

The Court heard Hansen's evidence that through its heavy 'lay a foundation' marketing stratagem it had, subtly and through supporting and sponsoring extreme sporting events outside Australia infiltrated its target demographic (18 to 30 year old males) without directly marketing or selling its product in Australia. Hansen backed up this argument by informing the Court that, because it also sponsored individual athletes (including Australians) and distributed merchandise and had coverage in Australia through magazines and television programs produced elsewhere, and had a website that was used by Aussies, it had established its reputation in Australia.

Hansen's Claim Dismissed

Middleton J held that a reputation could not be assumed in a market where the product has not been sold or directly advertised. The Court found that the reputation requirement could not be established despite noting that extreme sports people could well have been aware of the product from exposure via extreme sporting events, but the broader population was not exposed to the product in such a way or in any way at all.

Hansen's claim was dismissed.

Bickfords' Cross-Claim Dismissed

Middleton J held that, regardless of Bickfords starting its retail sales and promotion of its version of the Hansen product in Australia, Bickford's promotion of the product had been all but limited to South Australia.

Middleton J found that because the promotion of Bickford's version was mostly limited to one State in Australia, the marketing and promotion of the product was not of a scope or quality that could have resulted in the requisite reputation in Australia to succeed in a section 52 Trade Practices Act claim or the common law passing off claim.

In Conclusion

Overall, the Court found that Bickfords had exploited its similar product to that of Hansen in Australia in circumstances where Hansen had not directly promoted its own product, or acquired any developed reputation.

The Court held that both parties had only really just begun to develop their reputations in Australia and, on that basis, neither had reached a stage of development that enabled the Court to make any of the orders sought.

The message from the Court here is clear - if you or your client want to protect the rights in a name or mark for future use, register that name or mark as a trade mark. There should be no misconception that a significant reputation in that name or mark outside Australia will translate into a protectable reputation in Australia in the absence of direct marketing, advertising and sales.

I acknowledge and thank Mandy Chapman, solicitor, for her assistance with this article.

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.