Section 41(3) - Extent to which the trade marks are inherently adapted to distinguish
210 In Clark Equipment Co v Registrar of Trade Marks (1964) 111 CLR 511, Kitto J said at 513-514:
That ultimate question must not be misunderstood. It is not whether the mark will be adapted to distinguish the registered owner's goods if it be registered and other persons consequently find themselves precluded from using it. The question is whether the mark, considered quite apart from the effects of registration, is such that by its use the applicant is likely to attain his object of thereby distinguishing his goods from the goods of others. In Registrar of Trade Marks v. W. & G. Du Cros Ltd. [1913] A.C. 624, at pp. 634, 635 Lord Parker of Waddington, having remarked upon the difficulty of finding the right criterion by which to determine whether a proposed mark is or is not " adapted to distinguish " the applicant's goods, defined the crucial question practically as I have stated it, and added two sentences which have often been quoted but to which it is well to return for an understanding of the problem in a case such as the present. His Lordship said: "The applicant's chance of success in this respect [i.e. in distinguishing his goods by means of the mark, apart from the effects of registration] must, I think, largely depend upon whether other traders are likely, in the ordinary course of their businesses and without any improper motive, to desire to use the same mark, or some mark nearly resembling it, upon or in connexion with their own goods. It is apparent from the history of trade marks in this country that both the Legislature and the Courts have always shown a natural disinclination to allow any person to obtain by registration under the Trade Marks Acts a monopoly in what others may legitimately desire to use." The interests of strangers and of the public are thus bound up with the whole question, as Hamilton L.J. pointed out in the case of R. J. Lea, Ltd. [1913] 1 Ch. 446, at p. 463; but to say this is not to treat the question as depending upon some vague notion of public policy: it is to insist that the question whether a mark is adapted to distinguish be tested by reference to the likelihood that other persons, trading in goods of the relevant kind and being actuated only by proper motives - in the exercise, that is to say, of the common right of the public to make honest use of words forming part of the common heritage, for the sake of the signification which they ordinarily possess - will think of the word and want to use it in connexion with similar goods in any manner which would infringe a registered trade mark granted in respect of it.
211 In Cantarella Bros Pty Ltd v Modena Trading Pty Ltd (2014) 315 ALR 4, French CJ, Hayne, Crennan and Kiefel JJ explained Kitto J's judgment at [57]:
In Clark Equipment, Kitto J considered for the purposes of registration in Pt B the word "Michigan", which had acquired distinctiveness through 20 years of use in respect of the applicant's goods despite the fact that it was a geographical name of a State in America. After approving Lord Parker's test in Du Cros and Hamilton LJ's observation in RJ Lea, his Honour explained that directly descriptive words, like geographical names, are not prima facie suitable for the grant of a monopoly because use of them as trade marks will rarely eclipse their "primary" (that is, ordinary) signification. Such a word, his Honour said, "is plainly not inherently, that is in its own nature, adapted to distinguish the applicant's goods". Traders may legitimately want to use such words in connection with their goods because of the reference they are "inherently adapted to make" to those goods. Kitto J's elaboration of the principle, derived from Lord Parker's speech in Du Cros, applies with as much force to directly descriptive words as it does to words which are, according to their ordinary signification, geographical names.
212 Although Cantarella Bros was concerned with the question of whether foreign words were inherently adapted to distinguish, the judgment of the majority is also relevant to English words. Their Honours said at [59]:
The principles settled by this court (and the United Kingdom authorities found in this court to be persuasive) require that a foreign word be examined from the point of view of the possible impairment of the rights of honest traders and from the point of view of the public. It is the "ordinary signification" of the word, in Australia, to persons who will purchase, consume or trade in the goods which permits a conclusion to be drawn as to whether the word contains a "direct reference" to the relevant goods (prima facie not registrable) or makes a "covert and skilful allusion" to the relevant goods (prima facie registrable). When the "other traders" test from Du Cros is applied to a word (other than a geographical name or a surname), the test refers to the legitimate desire of other traders to use a word which is directly descriptive in respect of the same or similar goods. The test does not encompass the desire of other traders to use words which in relation to the goods are allusive or metaphorical. In relation to a word mark, English or foreign, "inherent adaption to distinguish" requires examination of the word itself, in the context of its proposed application to particular goods in Australia.
213 The majority continued:
[70] In accordance with the principles established in Mark Foy's and restated in Clark Equipment, Faulding and Burger King, determining whether a trade mark is "inherently adapted to distinguish", as required by s 41(3), requires consideration of the "ordinary signification" of the words proposed as trade marks to any person in Australia concerned with the goods to which the proposed trade mark is to be applied.
[71] As shown by the authorities in this court, the consideration of the "ordinary signification" of any word or words (English or foreign) which constitute a trade mark is crucial, whether (as here) a trade mark consisting of such a word or words is alleged not to be registrable because it is not an invented word and it has "direct" reference to the character and quality of goods, or because it is a laudatory epithet or a geographical name, or because it is a surname, or because it has lost its distinctiveness, or because it never had the requisite distinctiveness to start with. Once the "ordinary signification" of a word, English or foreign, is established an inquiry can then be made into whether other traders might legitimately need to use the word in respect of their goods. If a foreign word contains an allusive reference to the relevant goods it is prima facie qualified for the grant of a monopoly. However, if the foreign word is understood by the target audience as having a directly descriptive meaning in relation to the relevant goods, then prima facie the proprietor is not entitled to a monopoly of it. Speaking generally, words which are prima facie entitled to a monopoly secured by registration are inherently adapted to distinguish.
(Footnotes omitted.)
214 In Registrar of Trade Marks v W & G Du Cros Ltd [1913] AC 624 at 635, Lord Parker said that the registrability of a trade mark as being distinctive should:
…largely depend upon whether other traders are likely, in the ordinary course of their business and without any improper motive, to desire to use the same mark, or some mark merely resembling it, upon or in connection with their own goods.
215 In Cantarella Bros the majority said of this passage at [73]:
Lord Parker was not referring to the desire of traders to use words, English or foreign, which convey an allusive or metaphorical meaning in respect of certain goods.
216 In Mantra IP Pty Ltd v Spagnuolo (2012) 205 FCR 241, Reeves J at [52] referred to the authorities concerning s 41(3) and summarised the principles as follows:
In summary, the principles that can be extracted from these authorities, bearing on the assessment required by s 41(3) of the Act in the present case, are as follows. [The opponent] bears the onus of persuading the court on the balance of probabilities that the word mark "Q1" should not be registered. In discharging that onus, regard must be had to the presumption of registrability in s 33 of the Act. The assessment under s 41(3) looks to the mark itself and its inherent nature; it does not take into account the effect of use; it considers how the mark would be understood by ordinary Australians seeing it for the first time. The question can be tested by asking whether other traders trading in services of the same or a similar kind and only actuated by proper motives are likely to want to use the mark in connection with the same or similar services. A proper motive is one founded on the "common right of the public to make honest use of words forming part of the common heritage". Signs that are descriptive in nature, or use a geographical name, form part of the "common heritage" and, therefore, cannot usually be inherently distinctive. This test is to be applied negatively, not positively and the assessment is to involve a "practical evaluative judgment…in the real world".
217 I respectfully adopt the summary of principles given by Reeves J, subject to reading them in the context of the decision in Cantarella Bros.
218 The cross-claimants submit that the trade marks are not inherently adapted to distinguish the services of Accor or CHL from the services of other persons in circumstances where:
(a) HARBOUR LIGHTS simply adopts the names of the community titles schemes;
(b) CAIRNS HARBOUR LIGHTS simply adopts the names of the community titles schemes save for the word "Cairns", which is the name of the city in which the schemes are located and which forms part of the common heritage;
(c) at the time of applying for registration of the trade marks, CHL was not the sole owner of all apartments in the Harbour Lights schemes; and
(d) the schemes are governed by by-laws which prevent the body corporate from entering into an exclusive letting rights agreement in relation to all the residential apartments in the schemes (ss 16(2), 169(1) and 180(3) and (4) of the Body Corporate and Community Management Act 1977 (Qld) ("the BCCM Act")), meaning that individual lot owners have the right to use whomever they wish to let their apartments.
219 The cross-claimants submit that other traders, including other lot owners and their agents, will want to, and in fact need to, use the names "Harbour Lights" and "Harbour Lights Cairns" legitimately (that is, without any intention to trade on the reputation of Accor or CHL) for the sake of geographical reference. They submit that the trade marks are descriptive of a characteristic or quality of the services offered by Accor or CHL, namely that they are used in connection with a geographic location. They submit that the services are connected with the lots comprising the two community titles schemes. The lots are real property and are a geographic location, and the services comprise of provision of an entitlement to occupy a geographic location. They submit that the services are so closely related to the lots that the services are largely indistinguishable from the lots themselves.
220 The cross-claimants submit that other traders, whether lot owners or their agents, would seek to use the name of the community titles schemes for their ordinary geographic significance. They submit that other traders would of necessity refer to the lots comprised in the community titles schemes to describe the services offered by them, namely the entitlement to occupy the lots comprised in the scheme.
221 The cross-claimants submit that lot owners in a community titles scheme have a common heritage. They argue that it follows that the lot owners have a right in common with other owners to use the name of the scheme to signify the location of their apartments which they let, in the same way that traders in a town have a right to use the name of the town to signify the location of their services provided from within the town.
222 The cross-claimants also argue that permitting an on-site agent to register as a trade mark the name of a community titles scheme is contrary to the provisions of the BCCM Act, which are designed to give lot owners freedom of choice as to whomever they wish to act as their agent to let their apartments.
223 The cross-claimants rely on Note 1 to s 41(6), which stated that trade marks that are not inherently adapted to distinguish goods, are mostly those that consist wholly of a sign that is ordinarily used to indicate the kind, quality, quantity, intended purpose, value, geographical origin or some other characteristic of the goods or the time of production of goods. In Ocean Spray Cranberries Inc v Registrar of Trade Marks (2000) 47 IPR 579, Wilcox J at [30] noted that although the note "does not have legislative force… it fairly reflects the trend of relevant judicial authority".
224 The cross-respondents submit that the present case is indistinguishable from Mantra IP v Spagnuolo and Mantra Group v Tailly where the same issues were decided. They submit that "Harbour Lights" was coined by CHL, is not descriptive, is not a geographical name and is not part of the common heritage. They argue that registration of the trade marks does not prevent lot owners from using the words "Harbour Lights" to describe the place where their apartment is located, but merely prevents them from carrying on a business under that name.
225 The issue under s 41(3) is the extent to which the trade marks HARBOUR LIGHTS and CAIRNS HARBOUR LIGHTS are inherently adapted to distinguish the services of Accor from those of others. In Burger King Corporation v Registrar of Trade Marks (1973) 128 CLR 417, Gibbs J said at 424:
Inherent adaptability is something which depends on the nature of the trade mark itself…and therefore is not something that can be acquired; the inherent nature of the trade mark cannot be changed by use or otherwise.
226 In Kenman Kandy Australia Pty Ltd v Registrar of Trade Marks (2002) 122 FCR 494, Lindgren said at [84]:
While inherent adaptation to distinguish requires attention to be focused on the mark itself, and is intended to stand in sharp contrast to a mark's capacity to distinguish arising from use, the notion of "the mark itself" does not exclude from consideration the nature of the range of goods within the class or classes in respect of which registration is sought, or the various ways in which the mark might, within the terms of the registration, be used in relation to those goods. Indeed, those matters must be taken into account.
227 It is necessary to commence by considering the ordinary signification of the trade marks to persons who will trade in or use the service to which the trade mark is applied, namely lot owners, travel agents and potential guests.
228 I will start with HARBOUR LIGHTS. The cross-claimants point out that these are not invented words. HARBOUR LIGHTS is a well-known combination of ordinary English words. That combination is used in ordinary language to refer to the collection of lights around a harbour and the lights on boats or structures in a harbour.
229 When used in relation to services involving some form of accommodation, HARBOUR LIGHTS suggests that the accommodation has views of a harbour and is close to a harbour. However, to an ordinary person looking at the words for the first time, they do not directly describe a characteristic of the accommodation, in the way that something like "Harbour View" or "Harbour Side" might. The words HARBOUR LIGHTS allude to certain characteristics, but do not directly describe those characteristics. I consider that the words are in the nature of a "covert and skilful allusion" to the services, which make them prima facie registrable. In my opinion, the words HARBOUR LIGHTS are not descriptive of a characteristic of the services provided by Liv and Accor.
230 Liv and Ms Bradnam submit that HARBOUR LIGHTS is a geographical name, being the name of the community titles schemes and the building. In Mantra IP v Spagnuolo, Reeves J rejected such an argument, saying at [59]:
Thus, it is apparent from what the Full Court said (above) in MID Sydney that a sign concurrently applied as the name of a privately owned building and to distinguish certain services to be provided from, or in relation to, that building, does not lose its inherent adaptability to distinguish the services concerned. The Full Court appears to have reached that conclusion because the name of a privately owned building cannot be regarded as being the equivalent of a geographical place name such that it is to be considered as part of the "common heritage" over which the public, including a competitor trading in, or near, the building can claim to have a public right to make honest use of that sign in relation to its goods or services. In other words, its use as a trade mark will not, in any way, infringe upon the "common heritage" because its concurrent use as a building name does not bring it within that domain. This does not, of course, prevent a trader operating within the building concerned from using the name of the building to indicate the location of its place of business.
231 Nor does the name HARBOUR LIGHTS otherwise indicate a geographical origin. In the context of s 122(1)(b) of the TMA, Reeves J in Mantra Group v Tailly held at [87]-[88]:
[T]he word "geographical" in s 122(1)(b) was intended to protect the common right of the public to use words forming part of the common heritage, specifically, the name of a country, region, city or town. On the other hand, they suggest that word was not intended to extend to a large privately owned residential apartment building like the Circle on Cavill complex that could not be said to be a part of the common heritage, any more than it did to the large privately owned city office building in the MID Sydney case.
…
Taking into account all these matters, I consider the words "geographical origin … of … service" in s 122(1)(b) are to be construed to refer to the name of a country, region, city, town or similar geographical area from which a trader's goods or services have been derived, but not to refer to a privately owned building situated within such a city or town, such as the Circle on Cavill complex in this case.
232 I respectfully agree with the views of Reeves J. I do not accept that HARBOUR LIGHTS is descriptive of a geographical location connected with the services, even though they reflect the name of the building connected with the services. The fact that the services are connected with real property and that the services comprise of provision of an entitlement to occupy that real property does not affect the inherent adaptability of the relevant words to distinguish.
233 The cross-claimants point out that their argument that lot owners in a community titles scheme have a common heritage and common right to use the name of the scheme to signify the location of their apartments was not made in Mantra IP v Spanguolo or in Mantra Group v Tailly. That argument stems from the "common right of the public to make honest use of words forming part of the common heritage, for the sake of the signification which they ordinarily possess" identified by Kitto J in Clark Equipment Co. In Mark Foy's Ltd v Davies Co-op & Company Ltd (1956) 95 CLR 190 at 199, Williams J quoted from the speech of Lord Herschell in Eastman Photographic Materials Company Ltd v Comptroller-General of Patents, Designs, and Trade-Marks [1898] AC 571 at 580:
"The vocabulary of the English language is common property: it belongs alike to all; and no-one ought to be permitted to prevent the other members of the community from using for purposes of description a word which has reference to the character or quality of goods".
234 In Mantra IP v Spagnuolo, Reeves J at [55] identified the principle as being that a sign is not inherently adapted to distinguish where it includes words or names over which there is a common or public right of use in that they form part of the common heritage.
235 The "words forming part of the common heritage" described by Kitto J are those words available to all members of the community, rather than to a small section of the community. Such words include descriptive words and geographical locations.
236 The cross-claimants' argument that the words are not inherently adapted to distinguish is based on the words being part of the "common heritage", but that expression refers to the "common right of the public" to use particular words. The cross-claimants rely upon the personal interests of lot owners to establish that they have a specific entitlement to use HARBOUR LIGHTS in connection with the provision of accommodation letting services in respect of the property. The entitlement they seek to establish is peculiar to the lot owners, but does not extend to members of the public. That entitlement is not comparable to a right to use the name of the town to signify the location of services provided from within the town.
237 The registration of HARBOUR LIGHTS does not prevent the lot owners from using those words to describe the location of the apartments they wish to let or allowing their agents to do so. The lot owners are, however, prevented from using HARBOUR LIGHTS as a trade mark while the trade mark is registered. In particular, they cannot operate a business involving accommodation leasing, rental or letting under the name HARBOUR LIGHTS. None of that is inconsistent with the policy of the BCCM Act which gives lot owners the freedom to choose an agent.
238 At times, Liv and Ms Bradnam seemed to suggest that the use of HARBOUR LIGHTS had acquired a meaning that related to accommodation letting services by the time of the application for registration. The submission, if that is what it was, seemed to be that "Harbour Lights" had become so well known as the name of the building that the words could not be regarded as inherently adapted to distinguish Accor's and CHL's services. However, the question of inherent adaptability depends on the words themselves, and is not affected by use. The mark HARBOUR LIGHTS was first devised in relation to the proposed building by CHL in 2003. The inherent adaptability of those words to distinguish CHL's and Accor's services is not affected by events since then.
239 In my opinion, the words "Harbour Lights" are inherently adapted to distinguish the services of Accor and CHL. Those words are prima facie registrable as a trade mark.
240 The words CAIRNS HARBOUR LIGHTS are in a different category. In Clark Equipment Co, Kitto J referred to the difficulty in reaching a conclusion that the name of a place or area being adapted to distinguish one person's goods from the goods of another. In Kenman Kandy v Registrar of Trade Marks, Stone J said at [145]:
Signs that are descriptive of the character or quality of the relevant goods or which use a geographical name in connection with them cannot be inherently distinctive because the words have significations or associations that invite confusion and because registration of a trade mark using such words would preclude the use by others whose goods have similar qualities or which have a connection with the relevant areas.
241 In the present case, a person looking at the words CAIRNS HARBOUR LIGHTS for the first time in relation to accommodation leasing, rental or letting services would understand them to refer to a place - either the city of Cairns, or Cairns Harbour. Such a person would understand that the accommodation being offered is in Cairns, or, more specifically, in the area of Cairns Harbour. There is a direct and not merely allusive reference to a characteristic of the services, namely the location of the accommodation offered.
242 In this situation, it is necessary to consider whether other traders are likely, in the ordinary course of their business and without any improper motive, to use a mark resembling CAIRNS HARBOUR LIGHTS in connection with their own services. In my opinion, the answer is that they may well wish to do so. It is not hard to imagine that an accommodation provider may wish to describe their services by incorporating the words "Cairns Harbour".
243 The inclusion of the word "Lights" does mean that CAIRNS HARBOUR LIGHTS is to some extent inherently adapted to distinguish. However, I am unable to decide, on that basis alone, that the trade mark is capable of distinguishing the services.