Worldwide: Review of the Important Trade Mark Issues Arising out of 2009: Shape Trade Marks, Bad Faith as Ground for Opposition and Deceptive Similarity.
Update Trade Marks 2009

Best Trade Mark Cases of 2009 By Chris Bevitt and Michael Deacon February 2009

In this article, we review some of the important trade mark issues arising out of the following significant trade mark cases of 2009:

• Chocolaterie Guylian N.V. v Registrar of Trade Marks - considering a shape trade mark's capacity to distinguish, trade mark use and survey evidence
• Sebel Furniture Limited v Acoustic & Felts Pty Limited - considering the use of shapes as trade marks and deceptive similarity
• Hard Coffee Pty Limited v Hard Coffee Main Beach Pty Limited - considering bad faith as a ground for trade mark opposition
• E & J Gallo Winery v Lion Nathan Australia Pty Limited - considering trade mark use, deceptive similarity and the effective date of removal of trade marks for non-use
• Bavaria NV v Bayerischer Brauerbund eV - considering a trade mark's capacity to distinguish, confusion and the use of geographical indications

Chocolaterie Guylian N.V. v Registrar of Trade Marks [2009] FCA 891 - shape trade marks: use and capacity to distinguish

The Registrar of Trade Marks refused trade mark registration of the seahorse shape of chocolates sold by Guylian on the basis that it was incapable of distinguishing Guylian's chocolates. Guylian appealed to the Federal Court.

The facts

Guylian applied for trade mark registration of the seahorse shape in Australia on 16 October 2002, claiming priority from an earlier international registration filed on 16 April 2002.

Guylian has sold chocolates in the seahorse shape in Australia since 1980. It has also included images of the seahorse chocolate on its chocolate boxes and in other promotional materials in conjunction with stylised "Guylian" and "G" trade marks. Guylian sells the seahorse chocolates as part of a marine-shaped chocolate range, including seashell and prawn shaped chocolates. Evidence presented to the court confirmed that other traders were selling seashell-shaped chocolates since at least the mid-1990s. The results of a public survey commissioned by Guylian indicate that 40.6% of those surveyed associate Guylian with the seahorse shape, 13.3% with another brand or manufacturer, and 46.1% did not associate the shape with any manufacturer or brand.

Section 41(2) of the Trade Marks Act 1995 states that the Registrar must reject an application for registration of a trade mark if the mark is not capable of distinguishing the applicant's goods from those of others. If the Registrar considers that the mark is to some extent adapted to distinguish the applicant's goods, section 41(5) provides that the Registrar must consider the combined effect of (1) the extent to which the mark is inherently adapted to distinguish; (2) the use, or intended use, of the mark by the applicant and (3) any other circumstances, to determine if the trade mark does or will distinguish the applicant's goods.

The decision

The Federal Court upheld the Registrar's decision. Although the seahorse shape was to some extent inherently adapted to distinguish Guylian's goods, the evidence did not establish that Guylian had used the shape as a trade mark or that the shape does or will distinguish Guylian's chocolates from those of others for the purpose of section 41(5). In particular, the court noted the following:

whether a trade mark is adapted to distinguish is determined by reference to the likelihood that other traders actuated by proper motives will want to use the same or a deceptively similar mark for the relevant goods as at the priority date of the trade mark application;

• given there was already a tendency for traders to sell seashell/marine shaped chocolates before the priority date, there is some degree of likelihood that those traders might legitimately wish to use a seahorse shape for their chocolates as at that date;
• competition resulting from other traders selling similar shaped chocolates should not necessarily be considered improper, particularly if such traders do not assert a connection with Guylian or if they sell the chocolates in a way that clearly identifies the manufacturer;
• there was no evidence that Guylian sought to restrain other traders selling seahorse shape chocolates;
• the seahorse shape used by Guylian was not so unique or distinct that other traders selling chocolates in an ordinary seahorse shape would avoid potentially infringing the Guylian seahorse shape if it were registered as a trade mark;
• the survey only tested association between the seahorse shape and Guylian - it did not prove that consumers relied on the seahorse shape alone to identify Guylian as the source of the chocolates;
• evidence of use of the shape did not establish that Guylian had used the shape as a trade mark or in such a way that educated consumers to recognise the shape as a badge of origin of the chocolates; and
• the "Guylian" and "G" trade marks used in conjunction with the seahorse shape on chocolate boxes and in promotional materials diluted the trade mark significance of the seahorse shape - it was the "Guylian" and "G" trade marks that identified Guylian as the source of the chocolates, not the seahorse shape.

The Guylian decision shows that generally, a shape will have more capacity to distinguish goods or services if it is invented or unique. The likelihood of traders wishing to legitimately use the same or a similar shape will increase if the shape includes ordinary features or significations. Also, if the shape trade mark is embodied in a product itself, the shape should be used in such a way that consumers are educated or guided into recognising that the shape of the product indicates the source of the product. This may be more difficult to achieve if the shape is used in conjunction with other trade marks. Evidence that consumers merely associate a shape with a manufacturer may not be enough to show that the manufacturer has used the shape as a trade mark.

Sebel Furniture Limited v Acoustic & Felts Pty Limited [2009] FCA 6 - shape trade marks: use and deceptive similarity

Sebel sought an interlocutory injunction preventing Acoustic from selling its Titan moulded plastic chair in Australia. Sebel alleged that Acoustic infringed Sebel's registered trade mark for the shape of its Postura chair by using as a trade mark a shape deceptively similar to the Sebel trade mark on or in relation to the Titan chair.

The facts

Both parties were seeking to sell their respective chairs to the education sector. Each submitted a tender for the same substantial NSW government supply contract. Sebel had been awarded the previous supply contracts from 1999-2009. For over 60 years, Sebel has manufactured and supplied plastic moulded chairs in Australia. In contrast, Acoustic did not have a significant presence in the Australian market and commenced importing a small number of the Titan chairs into Australia in 2008. The court noted that the chairs were not sold through usual retail channels. Likely purchasers of the chairs were government/education officials with access to technical information about the chairs and knowledge of Sebel and its Postura chair. As a result, the likely purchasers would be able to distinguish the Postura chair from similar products such as the Titan chair.

The decision

The Court identified the following issues for consideration: (1) whether Acoustic was using the shape of the Titan chair as a trade mark as required by section 120(1) of the Trade Marks Act 1995 and, if so, (2) whether the shape of the Titan Chair was deceptively similar to the Sebel trade mark.

On the first issue, the court re-affirmed the following principles from Kononinklijke Philips Electronic NV v Remington Products Australia Pty Ltd [2000] FCA 876:

• use of a trade mark usually involves the trade mark having an identity separate from the goods themselves and does not include simply using the goods themselves;
• a shape dictated by the nature or functional requirements of the goods cannot operate as a trade mark as in such a case the shape will usually be something other traders will legitimately wish to use; and
• to function as a trade mark, the shape must be something extra or added to the inherent form of the particular goods.

The Court decided that Acoustic had not used the shape of the Titan chair as a trade mark because the shape of the chair did not contain features additional to the functional elements of the chair and did not have a separate identity to the chair itself.

On the issue of deceptive similarity, the Court considered that there were obvious differences between the chairs, including the Titan chair having more rounded edges and each chair having apertures of different size, shape and location. In addition, there was unlikely to be any confusion caused by the sale of Titan chairs given the purchasers of both chairs were likely to be well-informed about both chairs and the differences between them.

Given the above, the Court decided that Sebel did not establish a prima facie case of trade mark infringement and refused to grant the injunction sought on that basis. However, aside from the trade marks issues addressed in the case, an injunction was granted to prevent Acoustic from making representations that the Titan chair complied with UK standards superseding Australian standards, which Sebel claimed breached section 52 of the Trade Practices Act 1974.

Generally, a trade mark (shape or otherwise) must be distinctive to serve as an indicator of origin. The Sebel case confirms that for a shape to function as a trade mark it must be something extra to the inherent form of the product itself. This is more likely to be the case where the shape of the product is unique or concocted and is not dictated by the functionality of the product.

Hard Coffee Pty Limited v Hard Coffee Main Beach Pty Limited [2009] ATMO 26 - opposition on the ground of bad faith

Under section 62A of the Trade Marks Act 1995, a trade mark application can be opposed on the grounds that the application was made in "bad faith". "Bad faith" is not defined in the Act. The Hard Coffee decision is the first Australian Trade Marks Office decision to substantively deal with "bad faith" as a ground for trade mark opposition.

The facts

The Opponent owned and operated a number of coffee shop businesses under the name Hard Coffee from 1996, one of which it sold in 2004. The director of the purchaser company and signatory to the business sale agreement was also the director and secretary of the Applicant. In the agreement, the purchaser acknowledged that it did not obtain any interest in the Hard Coffee business name and that the Opponent retained all title relating to "Hard Coffee". The Applicant subsequently filed trade mark applications for HARDCOFFEE and HARDCOFFEE MAIN BEACH in September 2007. The Opponent opposed the applications on the grounds that they were made in bad faith.

The decision

In reaching his decision, the delegate for the Trade Marks Office highlighted the following principles about "bad faith":

• the person alleging bad faith must establish it on the balance of probabilities;
• to establish bad faith there must be an element of intentional dishonesty or a deliberate attempt to mislead the Registrar;
• if the Applicant claims the application was made in ignorance or naivety, bad faith will still be established if a reasonable person standing in the Applicant's position should be aware that they ought not apply for trade mark registration; and
• the Opponent must establish that the conflicting trade marks are at least deceptively similar if it wishes to establish "bad faith" on the basis that the Applicant is seeking to appropriate the Opponent's mark.

The delegate found that the Applicant made the application with knowledge of the Opponent's interest in "Hard Coffee" and in the face of rights previously acknowledged by the director of the Applicant. In addition, the delegate confirmed that the Applicant's trade marks were substantially identical to "Hard Coffee". Accordingly, the Trade Marks Office found that the applications were made in "bad faith" and refused registration of the trade marks. Based on this decision, any person seeking to file an application for a trade mark with the knowledge that another person already has rights to an identical or similar trade mark (registered or unregistered) will be at risk of having its application opposed and refused on the basis of "bad faith".

E & J Gallo Winery v Lion Nathan Australia Pty Limited [2009] FCAFC 27 - use, deceptive similarity and removal for non-use

The facts

Gallo was the registered proprietor of the trade mark BAREFOOT in relation to wines, registered in 1999. Gallo acquired the mark in 2005 from an individual who had licensed the mark to a US company. Lion Nathan commenced selling beer in Australia under the trade mark BAREFOOT RADLER in 2008. Gallo claimed that Lion Nathan's use of the BAREFOOT RADLER trade mark infringed Gallo's BAREFOOT trade mark on the basis that the Lion Nathan mark was deceptively similar to the Gallo mark, was used in relation to goods of the same description as "wines", and such use was likely to deceive or cause confusion. In response, Lion Nathan applied to remove registration of the Gallo mark on the basis that Gallo did not use it in Australia during the period from 7 May 2004 to 8 May 2007 (the required 3 year period for a successful non-use application). The only sale of wines bearing the BAREFOOT mark in that period was by a 3rd party distributor who sold approximately 16 bottles of the wine imported from Germany. Gallo had no knowledge of those sales. These bottles were initially exported to Germany by the US company licensed to use the BAREFOOT mark by its previous owner.

The Court identified the following issues for consideration: (1) whether trade mark use requires some consent or knowledge of the trade mark owner or its authorised users; (2) when an order for removal of a trade mark for non-use takes effect - which may have serious implications in the case of infringement proceedings; and (3) for the purposes of infringement, whether the Lion Nathan mark was deceptively similar to the Gallo mark and used in relation to goods of the same description as "wines".

The decision

The Court noted the following on the issue of use:

• a trade mark is defined in the Trade Marks Act 1995 as a sign used, or intended to be used by a person in the course of trade (emphasis added);
• although there was use of the mark in Australia during the relevant period, the question for the purpose of section 92(b) of the Act was whether the registered proprietor or its authorised user had used the mark in Australia during the relevant period;
• for there to be use in Australia, the owner/authorised user must have engaged in conduct of some type which they might reasonably contemplate would result in its goods bearing the mark being dealt with in the course of trade in Australia;
• no authority suggests that inadvertent or unintended use of a trade mark in Australia results in ownership of that mark for the purpose of registration in Australia;
• for consistency, the use with which the non-use provisions of the Act are concerned should be of the same character as that which warrants trade mark registration (i.e. not inadvertent or unintentional use).

Gallo had not used or had knowledge of the use of its mark in Australia or engaged in conduct that might reasonably result in the mark being used in Australia. There was no course of trade between Gallo and the 3rd party distributor that imported the wine bearing the mark from Germany. Accordingly, the Court found that Gallo had not used the BAREFOOT trade mark in Australia during the relevant period and ordered that the mark be removed.

The Court confirmed that its power to remove a trade mark registration was exercisable at the end of the proceedings. Logically, the order could only operate prospectively as it was an order actively directing the Registrar to remove the mark. Accordingly, the Court confirmed that the order for removal made by the trial judge had effect from 27 June 2008 and not the date on which the non-use period ended (8 May 2007).

Although the Court ordered removal of the mark, it could still be infringed at any time up to the date of removal. Accordingly, the Court considered whether Lion Nathan's use of the BAREFOOT RADLER mark before 27 June 2008 infringed Gallo's BAREFOOT mark. The Court decided that BAREFOOT RADLER was deceptively similar to BAREFOOT and likely to deceive or confuse on the basis that:

• the word BAREFOOT remains prominent in the Lion Nathan mark despite the addition of the word RADLER; and
• there is an obvious link between the word BAREFOOT and an imperfect recollection of Gallo's mark likely to cause deception or confusion.

The Court also held that BAREFOOT RADLER applied in relation to beer was used in relation to goods of the same description as "wines". Whether or not goods are of the same description involves a number of considerations including the nature and characteristics of the goods, their origin, their purpose, whether they are usually produced by one and the same manufacturer, and whether they are sold through the same trade channels and to the same class of consumers. According to the Court, "beer" and "wine" were generally distributed together by the same distributors and producers of alcoholic beverages no longer confine their business to the production of beer or wine to the exclusion of the other. In addition, the evidence showed that Lion Nathan intended for its product to be an appealing alternative to wine and actively targeted wine drinkers with the intention of converting them to beer. The court decided that BAREFOOT RADLER was used in relation to goods of the same description as "wines" and therefore held that Lion Nathan had infringed Gallo's BAREFOOT trade mark.

The decision serves as an important warning that a person can still infringe a trade mark removed for non-use if the infringing activity occurred after the relevant non-use period but before the date of the removal order.

An appeal on the issue of trade mark use was heard in the High Court in December 2009. The highly anticipated High Court decision is expected to be released in the coming months.

Bavaria NV v Bayerischer Brauerbund eV [2009] FCA 428 - distinctiveness, confusion and geographical indicators

The facts Bavaria NV appealed the successful opposition by Bayerischer to its "BAVARIA" trade mark, which was used by Bavaria NV in relation to beers it manufactured in The Netherlands using Bavarian techniques. Bayerischer opposed registration of the mark on the grounds that it was incapable of distinguishing Bavaria NV's goods from those of others; use of the trade mark would be likely to deceive or cause confusion because it conveyed a false connotation that the beers were brewed in Bavaria and had the characteristics of beers brewed using the Bavarian method; and "Bavaria" was a geographical indication which section 61 of the Trade Marks Act 1995 prohibited from use on products manufactured outside of Bavaria. In addition, Bayerischer argued that section 55 of the Act conferred a general discretion on the court to refuse registration of the mark even if no ground of opposition was established.

The decision

In considering the mark's capacity to distinguish, the Court made it clear that the trade mark had to be considered in its entirety. The mark was not simply the word "Bavaria", but incorporated a range of features including other words such as "Holland" (which appeared repeatedly in the mark) and devices including shields, borders and sprigs of barley. The Court also acknowledged that a number of breweries used the word Bavaria and commonly relied on other differentiating features in their beer labels to distinguish their products. Accordingly, the Court held that significant weight should given to the elements of the mark in addition to the word "Bavaria" and, when viewed as a whole, the mark was inherently adapted to distinguish Bavaria NV's goods.

In the absence of evidence of actual confusion, the Court disagreed that the mark conveyed connotations likely to mislead Australian consumers. The evidence suggested that Australian consumers were generally unaware of the "Bavarian method" of brewing beer or the associated characteristics of that type of beer, meaning they would not purchase the beer on the basis of that particular brewing method. In addition, the repeated use of "Holland" in the trade mark, which the Court held would not go unnoticed by the reasonable consumer, dispelled any possible confusion about the origin of the beer.

The Court confirmed that "Bavarian" could not be used for goods manufactured in The Netherlands if it was a "geographical indication" for the purposes of the Act. Section 6 of the Act defines "geographical indication" in relation to goods originating in a particular country as a sign recognised in that country as indicating that the goods originated in that country and have a quality or characteristic attributable to their geographical origin. According to the Court, recognition of a sign for the purpose of section 6 had to be formal, such as by court order or legislation. BAYERISCHES BIER, (which translates as "Bavarian Beer") and another trade mark incorporating the words GENUINE BAVARIAN BEER were the only relevant geographical indications formally recognised in Germany. In a strict application of section 61 of the Act, the Court confirmed that registration of Bavaria NV's mark should only be refused if it contained the actual signs recognised in Germany as geographical indications, not an essential part of those signs or something similar. Because "Bavaria" was not the same as the geographical indications BAYERISCHES BIER or GENUINE BAVARIAN BEER, the court held that the Bavaria NV did not contain a geographical indication and should not be refused registration on that basis.

Finally, the Court rejected any assertion that section 55 of the Act gave it a general discretion to refuse registration if none of the formal grounds of opposition were established. Section 55 gives the Court discretion to impose certain conditions or limitations in relation to the use or registration of the mark. However, it is clear from the decision that an opponent must establish one of the grounds of opposition expressly listed in the Act to successfully oppose the registration of a trade mark. Accordingly, as Bayerischer did not establish a ground of opposition under the Act, the Court allowed the application for Bavaria NV's trade mark to proceed to registration.

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.