Deceptively similar
69 The relevant principles were stated by the applicants to be found first in Southern Cross Refrigerating Co v Toowoomba Foundry Pty Ltd (1954) 91 CLR 592 at 595, where Kitto J said:
It is not necessary, in order to find that a trade mark offends against the section, to prove that there is an actual probability of deception leading to a passing-off. While a mere possibility of confusion is not enough - for there must be a real, tangible danger of its occurring … - it is sufficient if the result of the user of the mark will be that a number of persons will be caused to wonder whether it might not be the case that the two products come from the same source. It is enough if the ordinary person entertains a reasonable doubt.
70 In Vivo International Corp Pty Ltd v Tivo Inc (2012) 294 ALR 661 at [77] the Full Court said:
In this regard, as has been repeatedly said in the authorities the issue is not whether consumers might think that the trade marks are the same, but whether a number of persons will be caused to "wonder whether it might not be the case that the two products or closely related products and services come from the same source … [or to] wonder or be left in doubt about whether the two sets of products … come from the same source": see Registrar of Trade Marks v Woolworths Ltd (1999) 93 FCR 365 at [50].
71 In Australian Woollen Mills Ltd v FS Walton & Co Ltd (1937) 58 CLR 641 at 658, Dixon and McTiernan JJ said:
But, in the end, it becomes a question of fact for the court to decide whether in fact there is such a reasonable probability of deception or confusion that the use of the new mark and title should be restrained.
In deciding this question, the marks ought not, of course, to be compared side by side. An attempt should be made to estimate the effect or impression produced on the mind of potential customers by the mark or device for which the protection of an injunction is sought. The impression or recollection which is carried away and retained is necessarily the basis of any mistaken belief that the challenged mark or device is the same. … The usual manner in which ordinary people behave must be the test of what confusion or deception may be expected. Potential buyers of goods are not to be credited with any high perception or habitual caution. On the other hand, exceptional carelessness or stupidity may be disregarded. The course of business and the way in which the particular class of goods are sold gives, it may be said, the setting, and the habits and observation of men considered in the mass affords the standard. Evidence of actual cases of deception, if forthcoming, is of great weight.
72 The respondent relied on the statements in Anheuser-Busch Inc v Budejovicky Budvar (2002) 56 IPR 182 at [143]-[146], where Allsop J stated the test for deceptive similarity as follows:
The question of deceptive similarity must be judged by a comparison different from the side by side comparison undertaken to assess substantial identity; the question being the likelihood of deception or confusion from a recollection or impression of the registered mark. Thus, a side by side comparison is inadequate, and too narrow a test. The comparison is between, on the one hand, the impression based on recollection of the registered mark used in a normal or fair manner that persons of ordinary intelligence and memory would have, and, on the other hand, the impressions that such persons would get from the impugned mark as it appears in the use complained of: Shell Co of Australia v Esso Standard Oil (Aust) Ltd (1963) 109 CLR 407 at 414; Re Smith Hayden & Co Ltd's Application (1946) 63 RPC 97; Wingate Marketing Pty Ltd v Levi Strauss & Co (1994) 49 FCR 89 at 128; and cf Johnson & Johnson v Kalnin (1993) 114 ALR 215 at 220; 26 IPR 435 at 440.
The proper approach to the answering of this question is laid out in judgments of high authority. First, there is what was said by Parker J (as his Lordship then was) in Re Pianotist Co Ltd's Application (1906) 23 RPC 774 at 777 which was applied by Dixon, Williams and Kitto JJ in Cooper Engineering Co Pty Ltd v Sigmund Pumps Ltd (1952) 86 CLR 536 at 538 …
As set out in Cooper Engineering Co Pty Ltd v Sigmund Pumps Ltd (1952) 86 CLR 536 at 539, it is not sufficient that the two marks convey merely the same idea.
In Wingate Marketing Pty Ltd v Levi Strauss & Co (1994) 49 FCR 89 at 128-9 Gummow J said:
Where the comparison of the marks is necessary to determine whether that of the defendant is deceptively similar to the registered mark of the plaintiff, who sues for infringement, the primary comparison must be between the registered mark on the one hand and the mark as used by the defendant on the other. The comparison differs from that in a passing off action where the plaintiff points to the goodwill built up around the mark by reason of prior use and then points to the conduct of the defendant as leading to deception (or perhaps merely confusion) and consequent damage to that goodwill of the plaintiff.
…
The statement that in infringement proceedings the concern "for practical purposes" is only with the marks themselves requires some elaboration in the light of the other writings and authorities on the 1938 Act and the present Australian legislation, to which I have referred. In particular - (i) The comparison is between any normal use of the plaintiff's mark comprised within the registration and that which the defendant actually does in the advertisements or on the goods in respect of which there is the alleged infringement, but ignoring any matter added to the allegedly infringing trade mark; for this reason disclaimers are to be disregarded, price differential was considered irrelevant by Kearney J [in Polaroid Corporation v Sole N Pty Ltd [1981] 1 NSWLR 491] and Cross J [in British Petroleum Co Ltd v European Petroleum Distributors Ltd [1968] RPC 54], his Lordship also disregarded the differences in use by the parties of colour and display panels, and his Honour discounted the differences in the respective sections of the public to whom the goods were sold. (ii) However, evidence of trade usage, in the sense discussed above, is admissible but not so as to cut across the central importance of proposition (i). (iii) In particular, in making an aural comparison of the marks, whilst ordinarily one is concerned with what appears to be the natural and ordinary pronunciation, evidence in my view is admissible that those in the trade pronounce the defendant's mark in a manner which otherwise might be thought to vary from the normal fashion. (iv) Evidence of cases of deception or confusion may be taken into account (see, for example, British Petroleum Co Ltd v European Petroleum Distributors Ltd [1968] RPC 54 at 64). (v) Although, as Australian Woollen Mills (supra) itself decides, it is not decisive, evidence is admissible that the defendant's mark was adopted with a view to "sailing close to the wind", in the sense of the adverse finding made by the primary judge in this case.
73 Deceptive similarity is a question for the judge. In Murray Goulburn Co-operative Co Ltd v New South Wales Dairy Corporation (1990) 24 FCR 370 at 377 the Full Court said:
The roles of judge and witness were explained by Lord Evershed MR in Electrolux Ltd v Electrix Ltd (1953) 71 RPC 23 at 31. He said:
The question of infringement, the question whether one mark is likely to cause confusion with another, is a matter upon which the judge must make up his mind and which he, and he alone, must decide. He cannot, as it is said, abdicate the decision in that matter to witnesses before him.
74 The respondent also referred to Southern Cross Refrigerating Co v Toowoomba Foundry Pty Ltd (1954) 91 CLR 592 for the proposition that two essential principles in determining deceptive similarity were set out by Kitto J in that case at 595: (a) the registered trade mark owner must show that there is a real, tangible danger of confusion occurring, a mere possibility is not sufficient; and (b) a trade mark is likely to cause confusion if the result of its use will be that a number of persons will be caused to wonder whether it might not be the case that the two products come from the same source.
75 It is also necessary to set out s 10 of the Act as follows:
For the purposes of this Act, a trade mark is taken to be deceptively similar to another trade mark if it so nearly resembles that other trade mark that it is likely to deceive or cause confusion.
76 I do not find the concept of "initial interest confusion", "customer confusion that creates initial interest in a competitor's product", as exemplified in Playboy Enterprises Inc v Netscape Communication Corp 354 F 3d 1020 (9th Cir. 2004) at [2] as adding, for present purposes a useful additional tool of analysis. Further, I do not read Tivo Inc v Vivo International Corporation Pty Ltd [2012] FCA 252 at [105] (at first instance) as involving this concept.
77 Also I do not find the concept well-known in psychology called the "just noticeable difference" (JND), being the minimum amount by which a stimulus must be changed in order to produce a noticeable difference to an average person, to be of any assistance. Contrary to the submission of the respondent, and it was not put as replacing the legal test, I am not persuaded that the concept of JND is of help to the Court in determining whether there has been deceptive similarity, that is, in considering the imperfect recollection of a trade mark by a consumer. I am referring here to the evidence of Dr Glaser who gave his opinion that, when considering the Pacific Brands use of stripes, it was his opinion that use was sufficiently different from the adidas trade marks to exceed the JND threshold. In my opinion to approach the matter in that way, at least in the circumstances of the present case, is to add unnecessary refinement to the question of deceptive similarity.
78 Applying these principles, the applicants submitted there were at least eight important matters to take into account.
79 First, in applying the test of deceptive similarity, it was "important to consider what has been described as the "the idea of the mark", that is the idea which the mark will naturally suggest to the mind of one who sees it": Jafferjee v Scarlett (1937) 57 CLR 115 at 121-122 per Latham CJ (with whom McTiernan J agreed). The idea of the mark was sometimes expressed as whether the allegedly infringing mark takes a "significant and distinctive element" (Effem Foods Pty Ltd v Wandella Pet Foods Pty Ltd (2006) 69 IPR 243 at [36]), or "essential feature" of the earlier trade mark (Crazy Ron's Communications Pty Ltd v Mobileworld Communications Pty Ltd (2004) 209 ALR 1 at [93]; Optical 88 Ltd v Optical 88 Pty Ltd (No 2) (2010) 89 IPR 457 at [107]- [114]). If "the mark comes to be remembered by some feature in it which strikes the eye and fixes itself in the recollection" (Saville Perfumery Ld v June Perfect Ld (1941) 58 RPC 147 at 162), then confusion is likely to result if that feature is adopted in another trade mark.
80 Second, and related to the first point, the court will normally place significant weight on the first impression of a mark. This recognised that once a person has become familiar with two marks they were very unlikely to be confused, but at the point that a person is first exposed to the allegedly infringing mark confusion may well occur (Re Bali Brassiere Co Inc's Registered Trade Mark and Berlei Ltd's Application (1968) 118 CLR 128 at 136- 137 (first instance per Windeyer J)), and that initial confusion was sufficient to make out a case of deceptive similarity.
81 Third, as Dodds-Streeton J recently re-iterated in Tivo Inc v Vivo International Corp Pty Ltd [2012] FCA 252 at [105]:
It is well established that trade marks may be deceptively similar … even if confusion is unlikely to persist up to the point of, and contribute to, inducing sale.
82 Fourth, a finding of deceptive similarity cannot be avoided by showing that the public will not in fact be deceived as to the origin of the goods by the inclusion by the respondent of other material, such as its own trading names or brands, in conjunction with the impugned mark: see Caterpillar Loader Hire (Holdings) Pty Ltd v Caterpillar Tractor Co (1983) 48 ALR 511 at 513 -514 per Franki J and also Mark Foy's Ltd v Davies Coop and Co Ltd (1956) 95 CLR 190 at 204-205 per Williams J (Dixon CJ agreeing) at 195.
83 Fifth, whilst the question of deceptive similarity is ultimately one for the court, the evidence of expert witnesses may be of assistance in determining deceptive similarity. In particular, an appropriately qualified expert may give evidence about the possibility that consumers would be misled or confused.
84 In the present case, Dr Stavros gave evidence relating to the use of brands in general and in the sports footwear market in particular, so as better to inform the Court's comparison of the adidas trade marks and the respondent's trade marks.
85 Sixth, the intention or design of the respondent in deliberately seeking to imitate the adidas trade marks, or at the very least to "sail close to the wind" in that regard, was relevant to the assessment of deceptive similarity.
86 Seventh, the strength or "fame" of a trade mark must be taken into account in assessing the imperfect recollection of the registered trade mark which was relevant in the deceptive similarity test.
87 Eighth, the survey evidence in the present case provided clear evidence that a significant proportion of persons would be deceived or confused.
88 I was referred to the recent decision of the Supreme Court of Appeal of South Africa in Adidas AG & another v Pepkor Retail Limited (187/12) [2013] ZASCA 3 (28 February 2013). There it was held at [25] that it was immediately apparent, on first impression, that the four stripe marks on the respondent's soccer boot and the respondent's Boys' ATH Leisure Shoe, the respondent's "Hang Ten" sports shoe and the respondent's "Girls Must Have" shoe were not similar to the first appellant's trademarks and consequently that there was no likelihood of deception or confusion. That left the four stripe mark on the LDS Sportshoe and on the Men's ATH Leisure Shoe which were held at [27] to infringe. However, no doubt by reason of the largely factual basis of these claims, with respect, I did not find the reasoning or conclusions to be of assistance.
89 The respondent submitted that the shoes Exhibits C through N contained four stripes in various styles and groupings. In bringing this infringement proceeding adidas was seeking to extend its monopoly over its 3-Stripe Trade Marks with respect to shoes to the use of four stripes on shoes. The wide relief sought by adidas would effect a de facto registration of a trade mark that has never been used by adidas and was not inherently adapted to distinguish adidas' goods.
90 The shoes Exhibits C and E through N were imported by a division of Pacific Brands known as Global. Global had as its focus the commodity market, producing low specification shoes at very low prices. Such were the price point considerations and pressures resulting from low order volume that Global did not "design" shoes per se but rather selected shoes from Chinese suppliers. Small design variations on these selected shoes were sometimes possible. The shoe Exhibit D was designed and imported by a division of Pacific Brands known as Grosby. The shoe retailed at $19.95 which was at the very lowest end of Grosby's range of typical retail prices.
91 None of the shoes Exhibits C through N remained stocked by Pacific Brands and none had been sold for several years.
92 The respondent submitted that in considering the adidas trade marks as used in a normal or fair manner (ie how those marks are used), at a minimum the following were highly relevant:
a) from visual inspection, the 3-Stripe Trade Marks were simple - three stripes in a simple parallel configuration;
b) adidas had always used three stripes and had never used four stripes;
c) adidas builds an "aspirational product" made to high standards and to meet various performance specifications to which its 3-Stripe Trade Marks were applied. In Dr Stavros' terms, a consumer's first encounter was to see the marks on the shoe;
d) adidas had spent very large sums of money promoting its footwear bearing the 3-Stripe Trade Marks for more than 60 years including by sponsoring extremely high profile sporting events (including the Sydney 2000 Olympics), sportsmen and celebrities, ie this was normal use of these particular marks.
93 In cross-examination Dr Stavros confirmed his view that adidas had "embedded the three stripe brand into popular culture".
94 Similarly, the respondent submitted, in assessing the various impugned marks the subject of these proceedings as they appeared in the use complained of, at a minimum, the following were highly relevant:
a) all of the impugned shoes were shoes made of synthetic materials with no performance specification (they were commodity shoes of basic or poor quality) and this was the type and quality of shoe to which the various four stripes were applied; and
b) the shoes were not advertised and were sold in basic displays (hang sell, stacked boxes) where the stripes were often obscured.
95 During cross-examination Dr Glaser gave a succinct assessment of his opinion regarding the likelihood of confusion as follows:
where you have a company that has been working hard to establish three stripes as their mark for 60 years, the confusion, while possible, is unlikely.
96 To establish "deceptive similarity" it was not sufficient that the two marks conveyed merely the same idea: Anheuser-Busch Inc v Budejovicky Budvar (2002) 56 IPR 182 at [145]; Cooper Engineering Co Pty Ltd v Sigmund Pumps Ltd (1952) 86 CLR 536 at 539. 'Stripeness' as was coined by Senior Counsel for adidas had the character of an idea. It was far too liberal an approach to the notion of recollection (even an imperfect one) relevant to the assessment of deceptive similarity.
97 In this case, the comparison will be between the adidas trade marks and the various four stripe configurations as they appear on each of the impugned shoes.