Australia: Trade Mark Infringement - Key Cases from 2011

Last Updated: 15 March 2012
Article by Chris Bevitt

INTRODUCTION

This article briefly discusses each of the key trade mark infringement cases from 2011, beginning with the Full Federal Court decisions. Major issues considered include use of a name as a defence to trade mark infringement, when is a domain name used as a trade mark and what constitutes goods of the same description.

OPTICAL 88 LTD V OPTICAL 88 PTY LTD [2010] FCA 1380 [2011] FCAFC 130

Facts – the Applicant

The applicant, Optical 88 Ltd (88HK), is a Hong Kong company which operates or licenses many optical stores, primarily in Hong Kong. 88HK began business in the late 1980s, expanding rapidly. 88HK was the owner of the following 2 registered Australian trade marks:

TM No. Form of trade mark Goods/Services Priority date
520707 optical products (only) October 1989
1083966

(966 Mark)
optical products and associated retail/wholesale services November 2005

88HK held other similar registered Australian trade marks with later priority dates.

88HK had no stores in Australia and could show only very limited use of its trade marks in Australia. That use was limited to 3 of its Hong Kong stores (in a total of 8 transactions) sending bonus cash coupons and receipts incorporating its 707 Mark to customers in Australia in connection with the sale of third party branded optical products. With each sale, an optical cleaning cloth bearing OPTICAL 88 and its logo was included but in a different arrangement from that covered by its registered trade marks.

The evidence showed that when 88HK applied for the 966 Mark in 2005, it had only a "general intention" to use the 966 Mark "at some future but unascertained time". There were no specific plans in place to use the trade mark in Australia.

Importantly, there was no evidence that 88HK ever supplied optical products branded with its trade marks. All the optical products it supplied were third party branded products.

The facts – the respondents

The second respondent (Mr Law) established an optical dispensing business in Campsie in 1984. In February 1992 (after 88HK's 707 Mark was registered but well before the 966 Mark was registered), Mr Law expanded and rebadged the business, registering OPTICAL 88 as a business name. In 1993, Mr Law incorporated and operated the business under the name Optical 88 Pty Ltd (88Oz) using the name OPTICAL 88 by itself and also in combination with VISION CENTRE and VIP CARD on store signage and stationery. 88Oz operated 3 optometry practices.

The evidence established that Mr & Mrs Law were originally from Hong Kong and that Mr Law had travelled to Hong Kong on various occasions from 1984 to 1992 to attend optical conventions, reading local business and professional publications. Importantly, Mr Law asserted that he was unaware of 88HK and chose OPTICAL 88 for business and cultural reasons.

88HK's claims

88HK commenced proceeding against 88Oz and its directors alleging trade mark infringement, breach of the Trade Practices Act 1974, passing off and copyright infringement (by 88Oz's logo). In this article, only the trade mark infringement claims will be considered.

88Oz's defences and cross claims

In their defence, the respondents claimed that the OPTICAL 88 name had been used in good faith as use of their own name(section 122(1)(a)(i) of the Trade Marks Act 1995), that they had prior continuous use of the Optical 88 name except in relation to the 707 Mark (section 124) and that the respondent could obtain registration of the relevant mark (section 122(1)(fa)).

The respondents applied under section 92 to have the 707 Mark and 966 Mark removed for non-use.

The decision at first instance – Yates J

His Honour held as follows:

  • 88Oz's use of OPTICAL 88 was deceptively similar to, and therefore infringed, 88HK's relevant trade marks but defences were available to defeat 88HK's claim;
  • In assessing deceptive similarity in composite word and logo marks, the word elements should not too readily be assumed to be essential or distinguishing features but in this case they were (and therefore infringement was established);
  • 88Oz's defence of use of its own name in good faith applied to defeat the trade mark infringement claim even though there were other elements in most uses by 88Oz;
  • 88Oz's use of the name was honest (despite Mr Law's frequent visits to Hong Kong for business purposes) because OPTICAL is a precise, descriptive word to describe the type of business and 88 is considered to be lucky by Asian cultures, also representing spectacles – the name was not so unusual as to support a conclusion that it could only have come from Mr Law's knowledge of 88HK's business;
  • For the purposes of section 124(1), 88Oz had continuously used its trade marks from a date before registration of all 88HK's trade marks other than the 707 Mark;
  • The defence under section 122(1)(fa) (would have obtained trade mark registration if applied for) failed because section 60 (prior reputation leading to deception or confusion) would have entitled 88HK to oppose any application by 88Oz – 88HK produced survey evidence from a survey it conducted in 6 Sydney shopping centres (including the 3 where the 88Oz stores were located) showing that 50% of the survey participants associated the name with the Hong Kong company (with 40% associating it with Sydney/88Oz);
  • Despite certain statements and admissions in Mr & Mrs Law's affidavits, all use of the relevant trade marks was use by 88Oz and not by Mr & Mrs Law, the directors of 88Oz – therefore they were not personally liable for infringement;
  • The onus was on 88HK to rebut allegations of non-use and that it had no intention to use its marks;
  • The very limited amount of use of OPTICAL 88 by 88HK was sufficient use but it was not use of the 707 Mark in relation to the classes in which the trade marks were registered – the 707 Mark was registered only for goods and 88HK's limited use was for services;
  • 88HK had only a vague and general intention to use the 966 Mark in the future, which was insufficient to constitute an intention to use to support its registration;
  • The 707 Mark and the 966 Mark must be removed from the register for non use – it was not reasonable to exercise discretion under section 101 to allow those marks to remain.

The decision on appeal – Cowdroy, Middleton and Jagot JJ

Their Honours upheld Justice Yates' decision on all counts. In relation to the defence under section 122(1)(a)(i) (use of own name), they reaffirmed that the incorporation of other elements into the name does not remove the availability of the defence. The defence is available when the use of the name is the reason for the finding of infringement.

SYMBION PHARMACY SERVICES P/L V IDAMENEO (NO 789) LTD [2011] FCA 389/2011 FCAFC 164

The facts

Symbion Pharmacy Services Pty Limited (Symbion) was previously a subsidiary of Idameneo (No 789) Ltd (then called Mayne Ltd (Idameneo). Symbion was involved in the pharmacy and pharmaceutical distribution business. Idameneo and other subsidiaries apart from Symbion were involved in the provision of medical services and diagnostic imaging and pathology services.

In 2008, Idameneo was acquired by the Primary Health group. Four months later, the Primary Health group sold Symbion to Zuellig Australia Pharmacy Services Pty Ltd. Under the sale agreement, Idameneo assigned to Symbion or confirmed that Symbion otherwise retained, certain trade marks which included the word SYMBION and a triangle shaped device (Triangle Device) set out below:

In 2008, Idameneo was acquired by the Primary Health group. Four months later, the Primary Health group sold Symbion to Zuellig Australia Pharmacy Services Pty Ltd. Under the sale agreement, Idameneo assigned to Symbion or confirmed that Symbion otherwise retained, certain trade marks which included the word SYMBION and a triangle shaped device (Triangle Device) set out below:

As part of the sale of Symbion, Idameneo contractually committed to Symbion not to use any trade marks which were the same as, similar to or capable of being confused with the Symbion-owned marks (with an exception for a short term transitional use licence not presently relevant).

In 2006 and 2007, before acquiring Idameneo and divesting Symbion, the Primary Health group made limited use of the device mark below (Circular Device) in connection with the provision of diagnostic imaging services.

After the sale of Symbion, Idameneo commenced to use the Circular Device in conjunction with the name "Healthscan Specialist Imaging" for diagnostic imaging and radiology services.

Symbion's claims

Symbion claimed that Idameneo's use of the Circular Device infringed Symbion's Triangle Device and also breached Idameneo's contractual obligation not to use similar trade marks. This article does not discuss the detailed contractual arguments or findings other than to note that Symbion succeeded in the claim for breach of contract at first instance but failed on appeal – see below.

Idameneo asserted that there was no possibility of confusion because the Circular Device was used in relation to diagnostic/radiology services while the Triangle Device was used in relation to wholesale distribution of pharmaceutical products.

The decision at first instance – Jessup J

His Honour held as follows:

  • Radiology services, as supplied by Idameneo using the Circular Device, are within the class of services in respect of which the Symbion Triangle Device is registered;
  • The particular services supplied under each mark were specialised services offered to a specialised market, not to the general public – as such, evidence from persons in the trade as to the likelihood of deception or confusion is required in accordance with the judgment of Lord Diplock in General Electric Co Limited (USA) v General Electric Co Limited [1972] WLR 729;
  • Symbion offered no specialist evidence with respect to radiology services as to whether the Circular Device would deceive or cause confusion in relation to Symbion's Triangle Device;
  • Idameneo submitted evidence from its managing director, who previously practised full-time as a general practitioner for over 35 years; Symbion did not challenge this evidence;
  • Idameneo's evidence was that diagnostic imaging services were used by general practitioners, specialists and hospital doctors who, when referring patients for diagnostic services, must be aware of and use the name or identity of the diagnostic image provider, thus the use of a logo (even if similar) would not cause deception or confusion;
  • As Symbion did not provide its own evidence on the issue and did not challenge Idameneo's evidence, Idameneo's evidence of no confusion must be accepted and Symbion's infringement case was dismissed.

The decision on appeal – Rares, Gilmour and Dodds-Streeton JJ

The appeal related only to the finding at first instance that Idameneo had breached the sale agreement with Symbion. Their Honours overturned the decision of Jessup J and held that there was no breach of the agreement. The Court affirmed that in a specialist market, evidence of deception or confusion from those involved in the relevant trade is required and the judge is not permitted to rely on his or her own impressions or general knowledge.

HILLS HOLDINGS LTD V BITEK PTY LTD [2011] FCA 94

The facts

Hills Holdings Ltd (Hills) held a registered series mark (No. 901020) for DGTEC, DGTEK and DGTECH for "digital and electronic products" in class 9 registered from 23 January 2002. Hills and its predecessors had used DGTEC on TV set-top boxes since 2001 and on other electronic products such as LCD televisions, video and DVD recorders, iPod docking stations since November 2005. These electronic products were sold through various national retailers.

In July 2003, Bitek Pty Ltd (Bitek) applied to register Digitek in class 9 for "TV installation accessories including external TV antennas, none of the foregoing being set-top boxes". Bitek had used the Digitek mark since January 2004 on a range of TV installation accessories including antennas, brackets, cabling and switch selectors and on TV-related products such as set-top boxes and remote controls. Bitek generally sold its installation products through specialist suppliers to the trade.

Hills' opposition to Bitek's application for Digitek was unsuccessful. Hills then appealed to the Federal Court against the opposition decision. In separate proceedings (heard with the opposition appeal), Hills claimed that Bitek's use of the Digitek mark infringed Hills' DGTEC series mark and breached the Trade Practices Act 1974. Bitek cross-claimed seeking removal of Hills' series mark on the grounds of non-use. This article focuses on the infringement proceedings.

Decision by Lander J on infringement

Lander J held as follows:

  • The Digitek mark was deceptively similar to Hills DGTEC series mark – both marks were visually and phonetically similar and had a similar meaning;
  • Bitek's use of its Digitek mark on set-top boxes and remote controls did infringe Hills' DGTEC series mark;
  • Bitek's use of its mark on TV installation accessories (aerials, brackets etc) did not infringe Hills' mark because they were not goods of the same description;
  • The TV installation accessories were not goods of the same description because they were "fundamentally different" from televisions, were sold through different channels and were not substitutable for televisions even though they were interdependent with both being required for television viewing. Installation accessories are sold through trade channels to installers while set-top boxes, TVs etc are sold through retailers to consumers;
  • Bitek's defence under section 122(1)(fa) – entitlement to registration of the mark – succeeded except in relation to set-top boxes and remote controls;
  • Bitek partially succeeded in its removal for non-use application with Hills' trade mark being limited to the goods to which it was actually applied; use of one of the marks in a series was evidence of use of all other marks in the series;
  • Even if Bitek's removal application had succeeded entirely, Bitek would still have been liable for the prior trade mark infringement (E&J Gallo Winery v Lion Nathan (Australia) Pty Ltd [2009] FCAFC 27 applied).

SOLAHART INDUSTRIES PTY LTD V SOLAR SHOP PTY LTD [2011] FCA 700

The facts

Solahart Industries Pty Ltd (Solahart) has manufactured, sold and installed solar powered hot water heaters since 1953. It holds various registered trade marks for SOLAHART in class 11.

In May 2009, Solar Hut Pty Ltd (owned by Solar Shop Pty Ltd) began selling low cost photovoltaic (solar power) systems through its website solarhut.com.au. Solahart objected to Solar Hut's use of the Solar Hut name. In response to Solahart's objections, in October 2009, Solar Hut launched its SUNSAVERS brand sold via its sunsavers.com.au website and ceased direct promotion via the solarhut.com.au site. However, Solar Hut maintained the solarhut.com.au website for an additional year, which directed searchers to the sunsavers.com.au website. All references to SOLAR HUT were removed from solarhut.com.au.

Claims

Solahart alleged that Solar Hut infringed 3 of Solahart's SOLAHART trade marks by using SOLAR HUT as its primary brand and website and then continuing to operate solarhut.com.au after establishing sunsavers.com.au. Solahart alleged infringement of sections 120(1) and 120(2) of the Trade Marks Act 1995. Solahart also alleged passing off and breach of the Trade Practices Act 1974 but this article does not cover those aspects of the case.

Decision by Perram J

His Honour held as follows:

  • Solahart's claim for infringement under section 120(1) failed because the goods sold by Solar Hut were not the same as the goods covered by Solahart's trade marks – Solahart's registrations did not cover solar cells used to produce energy;
  • Solahart's primary infringement claim under section 120(2) succeeded because the goods sold by Solar Hut were goods of the same description as those covered by Solahart's trade marks for the reasons set out below. His Honour acknowledged that this is an inherently contestable issue as demonstrated by Perram J in a quotation which may attract frequent reference in the future: "one may no more readily answer whether a monkey is an animal of the same description as a baboon than one may say that trade mark attorneys are lawyers of the same description as intellectual property barristers");
  • There were differences between the products with Solahart involved in solar hot water products installed by a plumber while Solar Hut's products were used to generate solar energy and installed by an electrician;
  • There were also similarities between the products in that both involve use of the sun, both concern reducing electricity usage and both involve roof mounting;
  • There was some evidence of substitutability with demand for photovoltaic products having diminished demand for solar hot water heating products;
  • Solar Hut is not substantially identical with SOLAHART because SOLA refers to the sun and lacks distinctiveness while HUT does not look like HART in length or structure;
  • Solar Hut is deceptively similar to SOLAHART for the reasons set out below;
  • SOLA and SOLAR have the same meaning and are visually and phonetically very similar;
  • HART and HUT are not visually similar but are very similar aurally;
  • Use of the Solar Hut name and website before the Sunsavers mark was adopted was use as a trade mark and infringed Solahart's trade marks with the domain name being "largely analogous to a shop front" (and therefore being trade mark use);
  • Continued operation of the solarhut.com.au website after the launch of sunsavers.com.au was also use as a trade mark and therefore infringed Solahart's trade marks – the purpose of maintaining the website was to exploit residual reputation in the Solar Hut name and increase sales of photovoltaic systems;
  • Mere registration of a domain name does not constitute trade mark infringement;
  • If a cybersquatter does not seek to attract consumers to the website, there is unlikely to be trade mark infringement;
  • If a person uses a domain name to attract visitors to another site related to goods and services covered by the trade mark, trade mark infringement may be established.

CONCLUDING REMARKS

While there were only a few Full Federal Court trade mark infringement decisions in 2011 and no High Court judgments, the year saw the Court providing important clarifications on the following key issues:

  • Only a low level of use is needed to resist an application for removal of a mark for non-use, even in the case of a foreign company with no Australian establishment – but the use must be in respect of the goods or services for which the mark is registered;
  • An intention to use a mark must be more than a vague, unspecified future plan;
  • A high level of personal involvement is necessary for directors of a company to be personally liable for trade mark infringement;
  • The infringement defence under section 122(1)(a)(i) relating to use of own name is quite broad, extending to uses of marks incorporating the alleged infringer's name;
  • Where the conflicting trade marks are used in a specialised industry with the goods and services not being offered to the general public, the applicant must submit evidence of the likelihood of confusion or deception from a qualified person engaged in the relevant field or their infringement case will fail – the judge has no discretion to decide based on his or her impressions or knowledge;
  • In considering whether goods are goods of the same description, the issue of substitutability is becoming increasingly important. Interdependent goods are not goods of the same description. It is still necessary to consider the market for the goods and the trade channels through which they are marketed but these considerations will not be determinative;
  • Consistently with earlier decisions, even if a trade mark is removed for non-use, the holder still has an action for infringement occurring during the period before it was removed;
  • Use of a domain name which promotes or has another connection with goods and services which are similar to that of the trade mark owner is likely to be trade mark infringement even if the name or a deceptively similar name is not actually used on the website.

By taking note of these key lessons, trade mark owners can increase their chances of successfully enforcing their rights while others can take steps to reduce the risk of infringing registered trade marks.

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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Authors
Chris Bevitt
 
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