In the recent decision of Ceramiche Caesar S.p.A. v Caesarstone Ltd  FCAFC 124 (28 July 2020), the Full Court of the Federal Court considered the effect of an amendment during prosecution, expressly excluding goods in a trade mark application when assessing "honest concurrent use", and also the level of control required to support a trade mark owner's reliance on "authorised use".
There were three proceedings before the Full Court:
- Ceramiche Caesar's appeal from the primary judge's orders allowing Caesarstone's trade mark application for the word CAESARSTONE to proceed to registration for certain amended class 19 floor and wall goods (first proceeding);
- Ceramiche Caesar's appeal from the primary judge's orders allowing Caesarstone's trade mark application for a stylised CAESARSTONE mark (as depicted below) to proceed to registration for certain amended class 19 floor and wall goods and related services in class 35 and 37 (second proceeding); and
- Ceramiche Caesar's appeal from the primary judge's orders allowing Caesarstone's trade mark registration for the word CAESARSTONE to remain registered for certain amended floor and wall related services in classes 35 and 37 (third proceeding)
Ceramiche Caesar was successful in each of its three appeal proceedings before the Full Court.
The issues in the first proceeding and second proceeding overlapped, and the parties agreed that the third proceeding should follow the result of the first and second proceeding. As such, the summary below focuses on the first proceeding.
Summary of the Facts
Ceramiche Caesar is an Italian manufacturer of tiles for flooring and wall cladding which have been promoted, and sold in Australia since 1988 under the stylised CAESAR trade mark shown below:
Ceramiche Caesar registered the stylised CAESAR trade mark in Australia in class 19 for "Ceramic tiles for indoor and outdoor use" with effect from 23 November 2004.
Caesarstone is an Israeli manufacturer of large quartz slabs, being a raw building material distributed in Australia since 2003. Consumers do not buy the slabs. Rather, consumers buy the finished product that a stonemason manufactures from the raw slab.
Ceramiche Caesar did not dispute Caesarstone's right to use and register the CAESARSTONE trade mark for benchtops, countertops, vanities and surrounds. The dispute arose from Caesarstone's attempt to extend its registered trade mark rights into Ceramiche Caesar's area of registered trade mark protection, i.e. tiles for floors and walls.
Both the Registrar's Delegate and the primary judge concluded that the CAESARtrade mark operated as a barrier to registration to Caesarstone's trade mark applications under s 44(1) and (2) of the Trade Marks Act, 1995 (Cth) (Act) concerning the similarity of the trade marks. However, the primary judge made a further finding that Caesarstone had engaged in honest concurrent use of the CAESARSTONE word mark for some of the designated class 19 goods (floor panels and wall panels/cladding). This led his Honour to conclude that the trade mark application for the CAESARSTONE word mark should (subject to a limitation requiring the floor or wall goods to be "formed of composite stone slabs") be registered for class 19 floor and wall goods on the ground of "honest concurrent use".
Was the CAESARSTONE word mark used for the designated class 19 goods?
On appeal, the Full Court was asked to consider whether the CAESARSTONE word mark was used for the designated class 19 goods.
When the Caesarstone word mark was filed on 2 June 2005, the first good listed in the specification was "Tiles" as Caesarstone wanted to expand its registered rights into tiles. In an Examiner's report issued by the Trade Marks Office on 4 August 2005, the Examiner concluded that allowing an extension into floor and wall tiles would present a very high likelihood of deception or confusion with the prior registered CAESAR stylised mark. Caesarstone overcame the Examiner's objection by (a) deleting the word "Tiles" and (b) adding the disclaimer "none of the foregoing in the nature of tiles" into the class 19 goods specification (Tile Disclaimer).
Ceramiche Caesar successfully opposed each of the Caesarstone applications before the Trade Marks Office.
The primary judge, on appeal from the Trade Marks Office, found that there was concurrent use of the CAESARSTONE word mark by Caesarstone in respect of floor panels and wall cladding. His Honour concluded that these goods fell within the meaning of "tiles" as the Tile Disclaimer did not "subtract all content from the words which precede it".
Contrary to this position, the Full Court held that as a matter of plain English, the words "none of the foregoing being in the nature of tiles" operate to limit the class 19 goods to include only panels for floors, floor coverings and wall claddings which are not in the nature of tiles.
The Full Court also held that a finding of honest concurrent use must be a finding of use in respect of goods that are in fact specified in the trade mark application. Accordingly, honest concurrent use could not operate to permit registration in circumstances where the goods which were the subject of the honest concurrent use finding (in this case, goods in the nature of tiles) were expressly carved out of the description of goods in the application for registration.
Was any prior concurrent use "authorised use" under Caesarstone's "control"?
Given the Full Court's findings above, the issue of authorisation did not strictly arise but was nevertheless dealt with by the Full Court.
Caesarstone did not itself engage in any prior use in Australia of the CAESARSTONE word mark for fabricated floor or wall goods. Rather, Caesarstone sold its slabs to two Australian distributors, Carsilstone Pty Ltd (Carsilstone) and Tessera Stones and Tiles Pty Ltd (Tessera). Carsilstone and Tessera distributed the slabs to stonemasons.
The primary judge held that Carsilstone and Tessera's prior use of the CAESARSTONEword mark was taken to be Caesarstone's own trade mark under ss 7 and 8 of the Act, on the basis that such use was "authorised use" that occurred under Caesarstone's "control".
The primary judge concluded that there were two bases for finding that Caesarstone exercised "control".
- Caesarstone exercised quality control within the meaning of s 8(3) of the Act; and
- Caesarstone exercised control "on a wider basis than ... exercising quality control".
Ceramiche Caesar submitted that both conclusions involved an error.
The primary judge held that Caesarstone exercised quality control on the basis that Caesarstone:
- gave instructions regarding slab transport and storage to the Australian distributors;
- provided technical and marketing support services to the Australian distributors; and
- sought to exercise quality control by ensuring that the Australian distributors provided fabrication and installation manuals to the stonemasons, and contributing to the content of these manuals.
The Full Court found that the above matters, taken together, were insufficient to demonstrate an exercise by Caesarstone of quality control in respect of the designated goods. The Full Court also noted that Caesarstone did not have any contractual relationship with the stonemasons (who crafted the final product), and there was no evidence that Caesarstone ever inspected the stonemasons' work or conducted any quality control regarding the final product.
Control on a wider basis
The primary judge held that the Australian distributors used Caesarstone's trade marks under the control of Caesarstone on a "wide basis" because of:
- the visible presence of the Caesarstone mark on each raw slab;
- the circumstances concerning quality control; and
- evidence given by Mr Dixon, the General Manager, Marketing and Strategic Development of Caesarstone's subsidiary in Australia.
The Full Court observed that the slabs to which the mark was applied were not the designated goods. As such, the application of the mark to a slab was not indicative of control over the designated goods. Further, Tessera and/or Carsilstone were applying the CAESARSTONE mark to the inferior tiles of a Turkish competitor, apparently without Caesarstone's knowledge for a period of six years, from which an inference could be drawn that control, as a matter of substance, was not exercised by Caesarstone.
The Court also found that the evidence from Mr Dixon did not establish control on a wide basis from its additional activities including in respect of its website. In particular, the Court noted that making a website available, or displaying images on the website, was insufficient for the Full Court to find that Caesarstone exercised any control as a matter of substance over the designated goods which may have been depicted on that website.
Express exclusion of goods or services are commonly used to overcome objections during the examination of a trade mark application. However, in view of the Full Court's decision, such exclusions should be carefully considered (both in terms of their use and their scope), in the context of a trade mark applicant's actual or intended use of the trade mark.
Further, if manufacturers of raw materials wish to obtain trade mark protection for a finished product (i.e. products using or incorporating raw materials) which it does not make, the decision by the Full Court (whilst obiter) serves as a reminder that the manufacturer will need to exercise control as a matter of substance over the final product in order to rely on the use of a trade mark in respect of that final product. That reliance can prove to be crucial, as in the present case, where the manufacturer needs to rely on the use of the final product to support an application for registration, or otherwise support a defence to trade mark infringement or defend against a removal proceeding on the basis of non-use.
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.