158 The applicant says that 'Bud' is the essential, indeed the only, feature of its mark 'Bud'. It says that the addition of '-ějovický' and '-var', being collocations of letters with no English meaning will not dispel the likelihood of deception or confusion caused by the use of 'Bud'. But that submission tends to break up the words used by the first respondent into syllables, giving, or assuming, an operative deceptive or confusing effect of the first syllable, not being dispelled by the later syllables. The submissions significantly rely on cases where the claimant's mark has had added to it a prefix or a suffix. Kerly's Law of Trade Marks and Trade Names (13th Ed) at [16-39] refers to the 'sounder approach' of treating the defendant's mark as a combination having 'one individual thing which is a monopoly of the plaintiff': The Sanitas Company Ltd v Condy (1887) 4 RPC 530 and cf Ravenshead Brick Co Ltd v Ruabon Brick & Terra Cotta Co Ltd (1937) 54 RPC 341. The authors of Kerly put it that it is necessary to consider how important that thing is to the whole; or, as Shanahan says (op.cit p 172), whether it retains its identity in the later mark as a distinguishing or essential feature. The applicant also stresses that it is the first syllable which is identical to the mark and that there is a tendency in English, recognised in the cases, to slur the termination of words: Kerly op.cit [16-69]. Comparison with 'Budweiser' is said by the applicant to be somewhat different. There are said to be visual and aural similarities between 'Budweiser', a longer word than 'Bud', with a foreign language ending and both 'Budějovický' and 'Budvar'. To this is added the 'shared core' of 'Bud'.
159 I see no deceptive similarity between 'Budějovický Budvar' and 'Budweiser' or 'Bud', on a visual comparison. Though three of the words are foreign, and though these three share a first syllable, I do not think anyone would be confused about the trade source of the products. Anyone with any, even the most rudimentary, background of European language would appreciate that different languages were being used with 'Budějovický Budvar' and 'Budweiser'. In the absence of any such appreciation, they just look like different foreign words. I do not think that anyone would be likely to view them as, or question whether or not they were, marks of related 'Bud products' or question whether or not they came from the same trade source. They look like different foreign words with a common first syllable. There is that resemblance, but I do not think that the essential or distinguishing feature of the words is 'Bud' as it strikes the eye or fixes in the recollection. Thus, I do not think that there is any likelihood from a visual impression of an evoked association of the phrase 'Budějovický Budvar' with the word 'Budweiser' or the word 'Bud' causing confusion of the kind to which I have referred. However, there is a question of abbreviation to which I will come in a moment.
160 As to aural comparison, the effect of the spoken mark 'Budějovický Budvar' must be considered. A number of things should be noted. First, many Australians are likely, I think, to pronounce the 'Bud' in 'Budějovický Budvar' and 'Budweiser' as rhyming with 'mud', not 'good'; even though Mr Noonan's evidence tends to indicate that at least some will say it rhyming with 'good'. Secondly, whilst the presence of the Slavonic diacritical elements in the impugned mark distinguishes the visual appearance of the mark, as used, from the appearance of the registered marks, it makes pronunciation of the phrase in full difficult, or at least an unfamiliar challenge, for the English speaker, or speaker of English in Australia. In that context, and for that reason, I think that the mark is, from its nature, likely to be the subject of some abbreviation. The ordinary buyer, rather than struggle with the unfamiliar five syllable word, 'Budějovický', not knowing of the correct way to deal with the diacritical elements above the letters, ignorance of the effect of which will cause uncertainty and might cause embarrassment, is likely to take something easier to say from the mark. What that something is, is a matter of some importance. The first respondent says that if abbreviation occurs it is likely to be to 'Budvar'; the applicant says that it is likely to be abbreviated further to 'Bud'. Further, to the extent that abbreviation does not take place, I do not think there is any likelihood from the pronunciation of 'Budějovický Budvar' of an evoked association with 'Budweiser' or 'Bud' causing confusion of the kind to which I have referred.
161 As to abbreviation, I think a mechanical syllable by syllable reduction of the phrase 'Budějovický Budvar' to 'Bud', through the intermediate abbreviation to 'Budvar', because Australians often abbreviate, and the proposition that 'Budějovický Budvar', like 'Budweiser Budvar' elsewhere, will be abbreviated to 'Bud', place too little weight upon a number of factors. First, the evidence is that people called it 'Budvar' while it was on sale in Australia. I deal with this evidence below. Secondly, 'Budvar' is a convenient abbreviation of 'Budějovický Budvar', in that 'Budvar' is eminently pronounceable to the English speaker. Thirdly, the abbreviation to 'Budvar' allows the abbreviator to retain the European meaning or content to his or her request. Fourthly, and related to the previous point, as I understood what Ms Strachan was seeking to say in cross-examination on this question, one reason not to abbreviate to 'Bud' is the pre-existence in the market of a well known brand or word 'Bud', in the context of beer. The abbreviator is likely to choose 'Budvar', rather than 'Bud', as long as he or she is not confused as to trade source by the visual impression of the impugned mark, which, as I have said, I do not think will occur. This last point is not illegitimately to intrude get-up or reputation into the process of comparison of the relevant marks. It is necessary at this stage of the analysis to consider whether the consumer will abbreviate, and if so, to what. In that analysis the acceptance of the fact that consumers are familiar with 'Bud', and will, in the context of beer, associate it with the 'Budweiser' product through the 'Bud' mark, is a fact relevant to the abbreviation process. If the visual impression of the impugned mark is one which causes the viewer to think that the trade source is a 'Bud' or 'Budweiser' trade source, then it is likely that the abbreviation will go straight to 'Bud'. If the visual impression of the impugned mark is one which causes the viewer to question whether the trade source is a 'Bud' or 'Budweiser' trade source, then it is quite possible that the abbreviation will be made to 'Bud'. But, if, as I think is the case, the viewer will not be caused to question from the mark 'Budějovický Budvar' whether the trade source is a 'Bud' or 'Budweiser' trade source, then I think it is likely that the abbreviator, recognising the separate identity of the 'Budějovický Budvar' mark, will choose an abbreviation conformable with the mark and its European idea and consistent with a separation from his or her recognition of the pre-existing mark 'Bud'.
162 The first respondent also submitted that the proposition that people in Australia will abbreviate 'Budějovický Budvar' to 'Bud' was mere conjecture and not inference: Seltsam Pty Ltd v McGuinness (2000) 49 NSWLR 262, 275-77; Luxton v Vines (1952) 85 CLR 352, 358; Transport Industries Insurance Co Ltd v Longmuir [1997] 1 VR 125, 141; Australian Competition & Consumer Commission v Amcor Printing Papers Group Ltd (2000) 169 ALR 344, 361. There is some force in this criticism. However, Dr Beaton did give evidence that he thought the abbreviation would be made to 'Budvar' or to 'Bud'.But, this could be described as no more than his professional conjecture. No evidence of people actually confronted with the label, whether direct, or by survey, or in what Ms Strachan and Dr Beaton would call a 'focus group' was given. It was a subject available for evidence: George Ballantine & Son Ltd v Ballantyne Stewart & Co Ltd [1959] RPC 273; United Kingdom Tobacco Co Ltd's Application (1912) 29 RPC 489. Though, on balance, I do not take too much from its absence.
163 As I said, there was evidence of how the first respondent's product, being sold as 'Budweiser Budvar' and 'Budějovický Budvar', was referred to in Australia. Mr Noonan was a director of the third respondent from 1996 to July 1999. He had business experience in the food and liquor industries at retail and distribution level in Australia. In about 1996, he, with another man, developed a business (later carried on by the third respondent) importing what were perceived as beers at the very top end of the beer market, as specialty beers. As part of this business, the third respondent imported 'Budějovický Budvar'. He gave evidence that from his reading, experience and knowledge of the liquor industry, he knew the beer produced by the first respondent as 'Budvar'. He also said that from his experience and knowledge of the beer industry, the word 'Budvar' was commonly used in Australia to describe the first respondent's beer in Australia and that people in the liquor trade referred to the first respondent's beer as 'Budvar'. That, he said, was the most common usage in the trade. That evidence might well be affected by the liquor trade and customers being influenced by the presence in Australia of beer bearing the 'Budweiser Budvar' label for a time. However, it is evidence as to the type of abbreviation which might well take place from the mark 'Budějovický Budvar'. Other witnesses bore out the proposition that the first respondent's product was generally referred to as 'Budvar'. In conversations with the enquiry agents employed by the applicant, a number of sellers used the word 'Budvar' to describe the first respondent's beer.
164 Dr Beaton thought that the visual focus would be on the syllable 'Bud' and that this is what the consumer would take away. He thought that consumers would identify and refer to the first respondent's product as 'Bud' or 'Budvar', preferring not to use the word 'Budějovický'. On that basis he was of the view that there was a very real likelihood that Australian consumers, particularly first time buyers or drinkers, would be confused between the applicant's 'Budweiser' product and the first respondent's 'Budějovický Budvar' product and will be misled or deceived as to the origins or source of the first respondent's product. This view of the visual impression was important to his views about expression and abbreviation. I disagree with his views as to visual impression.
165 Reference was made by the applicant to George Ballantine & Son Ltd v Ballantyne Stewart & Co Ltd [1959] RPC 47 and on appeal at 273. In that case the defendant sold Scotch whisky under labels which carried the words 'Ballantyne Stewart's', 'Ballantyne Stewart & Co Ltd', 'Blenders and Bottlers Ballantyne Stewart & Co Ltd' and 'Ballantyne Stewart's Old Argyll'. The plaintiff's marks consisted of the word 'Ballantines'. At first instance, Lloyd-Jacob J said at 48-9:
It is plain that such display must inevitably result in bottles so labelled being identified in the market by reference to these prominent features, and, having regard to the common practice of abbreviation obtaining in trade channels, the existence of which in the retail distribution of whisky in bottle was spoken to in evidence, it must be taken as reasonably probable that the form of reference will be to 'Ballantyne's'. Such reference is phonetically identical with the sound of two of the Plaintiffs' aforesaid marks registered in respect of the same goods and would prima facie establish that the Defendant Company, in putting bottles so labelled upon the market, were infringing the exclusive right conferred by registration to the use of the Trade Mark in relation to the goods in respect of which it is registered.
166 Reference was also made by the applicant to Baume & Co Ltd v A H Moore Ltd [1958] RPC 226, 234; Carnival Cruise Lines, supra at 383-84; Seven-Up Co, supra at 266-69; RKH Pty Ltd v Christian Dior (1985) 6 IPR 78, 81; Polo Textile Industries Pty Ltd v Domestic Textile Corporation Pty Ltd (1993) 26 IPR 246; United Kingdom Tobacco Co's Application (1912) 29 RPC 489; Sturtevant Engineering Co Ltd v Sturtevant Mill Co of USA Ltd (1936) 53 RPC 430, 440; Associated Rediffusion Ltd v Scottish Television Ltd [1957] RPC 409, 414; and Crystalate Gramaphone Record Manufacturing Co v British Crystalite Co Ltd (1934) 51 RPC 315, 320. However, as submitted by the first respondent, these cases deal with different, though related, questions: that infringement will occur where the infringer has taken the trade mark or a word that is an essential feature of the mark; and that once infringement occurs, it is not avoided by the adding of other words.
167 More difficult is the position where the word or, as here, syllable, is merged into the totality of the mark, so as no longer to have a distinct and separate appearance visually, or a distinct and separate sound when the whole mark is spoken or where the likely abbreviation is made. Yet, what if a not insignificant number of people will still abbreviate it to the registered mark or something close to it? In the light of the view I have taken that I do not think abbreviation to 'Bud' will occur, it is unnecessary to deal with the distinction identified by Mr Yates between, on the one hand, abbreviation from the mark because of the cognition of the shortened form as an essential integer of the mark, from which it can be reasoned that the infringer has taken the essential element of the mark; and, on the other hand, the abbreviator, who through some linguistic habit, uses first syllables, but who does not see in the impugned mark the syllable functioning as a mark.
168 In most cases, where oral abbreviation occurs, that will be because the syllable or word to which abbreviation is made is seen as an essential, or sufficiently important, integer of the impugned mark. As set out in [159] above, my view that 'Bud' does not play that role visually in 'Budějovický Budvar', as used, is important to my conclusion regarding abbreviation.
169 My view is the same in respect of the aural comparison with the registered mark 'Budweiser'. Whilst the syllables after 'Bud' in both 'Budweiser' and 'Budvar' are European, they are likely to be expressed differently: 'Budweiser' with the 'ei' pronounced as in 'eye', or as in 'bee'; and 'Budvar' with 'var'. I think that those different sounds are sufficiently different to form the basis of a distinction between 'Budweiser' and 'Budějovický Budvar' shortened to 'Budvar', which will mean that confusion is unlikely. This is so whether the 'Bud' is pronounced to rhyme with 'mud' or 'good'.
170 The applicant submitted that the first respondent, and in particular Mr Bocek, intended and expected consumers to utilise the short form 'Bud' in reference to its beer. This, it was said, was a form of expert evidence: Who better, the applicant asked, to assess the likely effect of its marketing on the public, but a beer maker and seller of long experience who has sold its and his products all over the world, including to English speaking countries?
171 There is significant force in the proposition that an experienced and knowledgeable businessman such as Mr Bocek is an expert in his field. In Australian Woollen Mills, supra at 657 Dixon J and McTiernan J said:
The rule that if a mark or get-up for goods is adopted for the purpose of appropriating part of the trade or reputation of a rival, it should be presumed to be fitted for the purpose and therefore likely to deceive or confuse, no doubt, is as just in principle as it is wholesome in tendency. In a question how possible or prospective buyers will be impressed by a given picture, word or appearance, the instinct and judgment of traders is not to be lightly rejected, and when a dishonest trader fashions an implement or weapon for the purpose of misleading potential customers he at least provides a reliable and expert opinion on the question whether what he has done is in fact likely to deceive. Moreover, he can blame no one but himself, even if the conclusion be mistaken that his trade mark or the get-up of his goods will confuse and mislead the public.
172 Mr Catterns did not put the matter on the basis of a legal presumption, that is the effect of a rule of law. In that he was correct; for the issue of deception or confusion is ultimately a matter of fact for the Court, as was said by Dixon J and McTiernan J shortly afterwards in the same paragraph, at p 658; and see also Aldi Stores Ltd Partnership v Frito-Lay Trading Company GmbH [2001] FCA 1874at [91]. Rather, he said that I should find this intention on behalf of Mr Bocek; and this, coming from a man of such experience and knowledge, would assist me in concluding that consumers will shorten to 'Bud', thereby causing confusion in the market.
173 I should add, at this point, that these matters were also relied on by the applicant in the refuting of the claim of good faith by the first respondent under para 122(1)(a)(i) of the TM Act, to which I will come in due course.
174 The applicant's submission as to what the first respondent intended was founded significantly on what, it was said, I should take from the evidence of Mr Bocek. This involved an attack on the credit of Mr Bocek. It will be necessary to deal with this at a little more length later in dealing with good faith. However, I think it appropriate to make some general comments about his evidence based on my examination of his affidavit, the surrounding documents and my observation of him under cross-examination. Whilst his affidavit was at times couched in a way which required qualification, I do not think that Mr Bocek, at any time, sought to give me evidence in cross-examination which was other than truthful. He struck me, if I may say so, as a determined and resolute man, intent upon dealing with a thoughtful and skilful cross-examiner and cross-examination, to the best of his ability. He appeared, at times, not prepared to give anything away, but that, I think, was a product of a careful and measured response to questions crafted with precision, and delivered in a foreign language. I should add that whilst his spoken English was passable and no doubt such as to give him a facility in everyday commercial and social exchanges, and while he could plainly read and write English, his command of the language was not up to a cross-examination of this kind, and he had the assistance of an interpreter. Though, it should be noted, at times he did answer directly in English. (Where the transcript records 'Witness' rather than 'Interpreter', Mr Bocek himself answered.) I do not think the difficulty that Mr Catterns sometimes had of extracting an answer to his liking, which sometimes later came, was ever a deliberate and conscious attempt by Mr Bocek to deflect the truth. I will say something more on this topic later, but by way of commencing to deal with this attack on him, I would say that I conclude that Mr Bocek was a truthful witness.
175 The first matter pointed to by the applicant is affidavit evidence in English sworn by Mr Bocek in proceedings in Estonia and Lithuania. These proceedings were not explained in full before me. No evidence was given as to the issues raised in each, beyond that given by Ms Lejtnarová. She was an in-house lawyer at the first respondent. In Estonia in 1995 and 1996, proceedings were commenced by Anheuser-Busch in the Estonian Ministry of Economy in the 'Industrial Property Board of Appeals'. An appeal appears to have been bought by Anheuser-Busch from that body in the 'Administration Court'. What I take to be Ms Lejtnarová's summary of these proceedings (see Exhibit HL 5) was as follows:
Anheuser-Busch, Inc. files the Appeals with the Board of Appeals as the registration of the trade marks has not violated the Trade Marks Law and thereby the cancellation of the registrations is false.
Anheuser-Busch, Inc. files the appeals No. 131, 132, 133 with the Board of Appeals. In the appeals it is requested to cancel the registration of trademarks Budweiser Budvar, Budeweiser Budvar combined and Budweiser in the name of Budějovický Budvar.
176 I take the last phrase in the quotation 'in the name of Budějovický Budvar' to refer to the first respondent and not to indicate that that phrase was one of the marks of which cancellation was sought. (By saying that I am not concluding that there was any such registration.)
177 In Lithuania proceedings were commenced in 1996, 1997 and 1998 by Anheuser-Busch in the Patent Office, Board of Appeal. There are also proceedings in the Vilnius District Court seeking declarations of the invalidity of the marks 'Budweiser Budvar' and 'Budweiser Budbräu'. The Patent Office proceedings were described in Ms Lejtnarová's affidavit (see Exhibit HL 5) as follows:
Objection to the registration of trade mark Bud.
Objection to the registration of trade marks Budweiser Budvar Nr. 7904, Budweiser Budvar label Nr. 24237 and Budweiser Budbräu Nr. 24236.
Objection to the registration of trade mark Budweiser Nr. 26407.
178 It would appear that it was in this context that Mr Bocek said the following, amongst other things, in the affidavits in both proceedings:
My Company became a typical and traditional representative of the Czech beer brewing as well as of the Czech Republic, since this country occupies on the world scale first place in beer consumption per head with 155.3 litres/head/year and beats all competition.
This position made the Czech beer brewing famous all over the world, Pilsner Urquell and Budweiser Budvar or Budvar being the foremost well-known marks.
At a later date to the trademarks Budweiser Budvar and Budvar the trademark BUD was added, the origination of which was due to the fact that BUD is on one hand an inseparable part of all trademarks of my company, on the other hand another incentive for the origination of this trademark came from the consumers of the Budweis beer, who have been using it as an abbreviation.
…
The beer brewed in the city of Ceské Budějovice /Budweis being its currently used German and English translation since olden days until the present time has been designated since the very beginning as Budweis beer. Gradually my company, National Corporation has been creating a trademark series a characteristic feature of which is the geographical denomination 'Budějovický' /Budweiser/, derived from the name of the seat of my company, which is at the same time the place where the Budweis beer is brewed.
All these trademarks begin by the syllable BUD… This holds good also for the name of the National Corporation, a name which coincides with the principle trademark BUDWEISER BUDVAR. In view of the fact that the Budweis beer possesses special characteristic quality features attained only in my company as well as the fact that beer brewing has been connected throughout full 700 years with the geographical locality of Ceské Budějovice /Budweis/, the denomination Budějovický /Budweiser/ derived thereof has been complying and the time complies with the requirements laid down both by the Czech legislation and by the Lisbon Agreement for the Protection of Appellations of Origin and their International Registration on an appellation of origin. Also [unreadable] denominations were granted protection as appellations of origin.
…
179 This evidence was, as the subject matter of the proceedings shows, directed primarily to the trade marks which comprise or include 'Budweiser' and 'Budvar'. No doubt shortening to 'Bud' occurs in countries of various linguistic bases where these words are used as the marks. The applicant's beer is so abbreviated. I have already concluded that, in my view, such a shortening would occur here if people thought the first respondent's product, on looking at the mark as used, was 'Budweiser'. I know nothing about how the product or name has been promoted in these countries, about the reputation of the product in these countries and about the language habits of speakers in these countries. I do not think that this evidence and this episode in cross-examination comprise a sound premise upon which to conclude that Mr Bocek and the first respondent were intending and expecting Australians to abbreviate 'Budějovický Budvar' in the way it appears on the white labels and neck seal, to 'Bud'. Much the same can be said for the cross-examination of Mr Bocek on an affidavit filed in English proceedings by an officer of the first respondent. In England the first respondent sells beer under 'Budweiser Budvar' brand and has a sizeable reputation there under that brand. I know nothing as to how it has been promoted there. In these circumstances, what Mr Bocek thought about abbreviation to 'Bud' there really does not assist me.
180 The submission was put that because an abbreviation of 'Budweiser Budvar' to 'Bud' was recognised in some countries (without, I would add, my being apprised of reputation, promotion, history and context of those words in those countries) it followed, 'a fortiori' that there will be an abbreviation of 'Budějovický', because it was foreign. A number of things can be said about this proposition. First, one is not within the universe of logic, but impression, perception, habit and behaviour (the latter two in respect of abbreviation). Secondly, one is not looking at 'Budějovický' in isolation, nor at 'Budvar' in isolation. If one were, it may be that the conclusion would be open that English speaking Australians would shorten either or both (viewed singularly) to 'Bud'. Rather, one is dealing here with the mark 'Budějovický Budvar' as used on this label. That is the relevant field of enquiry. I will not repeat my views about this expressed elsewhere, see [159] to [162] above.
181 Thus, subject to what follows, I would conclude that the use of 'Budějovický Budvar' on the front white label, rear white label and seal on the neck label is not an infringement of the marks 'Bud', 'Budweiser' and 'Budweiser King of Beers' under s 120 of the TM Act. The qualification to that statement arises by reason of what appears on the strip on the front label below the white section. Until May 1998 there was an orange strip as set out in [122] above, with the phrase 'Budweiser Budvar' above 'National Enterprise'. After May 1998 there was (and the intention is that there will be in the future) a red strip as set out in [124] above, with the phrase 'Budweiser Budvar' on the same line as 'National Corporation'.
182 It is necessary to assess whether what appears in the orange and red strips has any effect upon what would otherwise be my conclusion about the use of the phrase 'Budějovický Budvar' on the front white label. This involves the question as to whether the proximity of the word 'Budweiser' otherwise affects my views as to the unlikelihood of confusion from the use of 'Budějovický Budvar' and as to the likely abbreviation therefrom, and the consequences of that. It is convenient, before coming to that matter, to deal with what I will call the 'Budweiser Budvar' use on the orange and red strips as a separate and distinct infringement complaint of the applicant.