Colorado Group Limited v Strandbags Group Pty Limited [2006] FCA 880 | Case summary

THE COURT DECLARES THAT:

By using the mark "Colorado" in relation to backpacks the respondent has infringed the first applicant's registered trade mark number 866291 (the "registered trade mark").

REASONS FOR JUDGMENT 1 Earlier this year I handed down judgment which dealt with several aspects of this case. Importantly, I held that the first applicant, Colorado Group Limited, was entitled to maintain registration of the "Colorado" trade mark only in respect of backpacks and that the respondent, Strandbags Group Pty Limited, had infringed the mark by using it on backpacks. Colorado Group was entitled to maintain its registration for backpacks because Strandbags Group had not established that it (Colorado Group) was not the first user of the mark for that article. I rejected an argument put by Colorado Group that by reason of its use of the mark on backpacks it was also the proprietor of the mark in respect of bags, wallets, purses and belts. That argument was rejected because I did not accept that these goods were the same kind of articles as a backpack. 2 Those findings did not dispose of the trade mark case. There are still two issues that must be resolved. The first is whether Colorado Group is entitled to claim proprietorship of the Colorado mark in respect of wallets and purses, not on the basis of having first used the mark on backpacks but by reason of its later use of the word in relation to wallets and purses. The second issue is whether Colorado Group can rely on s 120(2) of the Trade Marks Act 1995 (Cth) to support a finding that Strandbags Group infringed the registered trade mark by using it on handbags, wallets and purses or in relation to the bringing together of such goods for the benefit of customers. 3 As regards the first issue, there is a contest about who first used the word "Colorado" as a trade mark in relation to wallets and purses. Each side claims to be the first user of the mark in respect of these articles. Strandbags Group also has an alternative argument. It says that even if it (or its predecessor, Edgarlodge Pty Ltd) was not the first user of the mark on those articles it is, nonetheless, the first user of the mark in respect of handbags and handbags are goods of the "same kind" as wallets and purses. Both sides accept that for the first issue no distinction is to be drawn between wallets and purses. 4 To resolve the dispute it is necessary for me to refer to findings already made as well as to look further into the evidence. I have already found that Colorado Group (through its subsidiaries, Williams the Shoemen Pty Limited and Mathers Shoes Pty Ltd) first used the Colorado mark, probably from as early as 1982, but then only on backpacks. The backpacks were sold in Williams the Shoemen and Mathers Shoes footwear stores throughout Australia. It was not clear whether the mark was used alone as Colorado Group contended or was used only in combination with the "simple mountain motif", which was the case put by Strandbags Group. Because of the inconclusiveness of the evidence (we are after all talking about the 1980s) I was not prepared to make the finding Strandbags Group sought, the onus being on it to make out its cross-claim for removal. 5 In February 1991, the operation of the footwear businesses was transferred to Colorado Group. In July 1992, Colorado Group began developing a range of products to be sold through a retail chain of Colorado stores. The idea was to capitalise on the success of the Colorado shoe range. Mr Beagley, the General Manager for buying and marketing, was instrumental in establishing the chain. He said that it was intended that a full range of "Colorado" branded products be sold in each store; the range consisting of clothing, footwear, accessories and leather goods such as belts, bags and wallets. 6 Three stores were opened in July 1993, one in Victoria and two in New South Wales. Others soon followed. From the first opening, each store was stocked with a full range of products. In one way or another each product bore some form of a Colorado trade mark. It is not clear, however, whether the word "Colorado" was used alone or in combination with the "simple mountain motif". I found that the predominant use of the word was in association with the mountain motif. Mr Beagley said this was the case as regards wallets. 7 Colorado Group suggests that the use of the word "Colorado" in combination with the "simple mountain motif" was use of the word as a trade mark. I cannot accept this argument, although I toyed with it in my earlier reasons. The early cases that bear on the point were decided under the Trade Marks Registration Act 1875 (UK), 38 & 39 Vict, c 91. I referred to some of them in my previous reasons. Section 10 of the 1875 Act provided that "any special and distinctive word or words or combination of figures or letters used as a trade-mark before the passing of this Act may be registered as such under this Act". Thus, to obtain registration of a word mark, it was necessary to show not only that the word was "special and distinctive" but also that it had been "used as a trade-mark". This requirement was met if the word was used alone as a word. If it was used in combination with other words or with a device that was not sufficient: In re J B Palmer's Trade-Mark (1883) 24 Ch D 504; Re Spencer's Trade Mark (1886) 54 LT NS 659; In re Grossmith's Trade Mark (1889) 6 PR 180; Perry Davis & Son v Harbord (1890) 15 App Cas 316; Powell v The Birmingham Vinegar Brewery Company, Limited [1894] AC 8. In Re Chorlton and Dugdale's Trade Mark (1885) 53 LT NS 337, 338 Pearson J explained that for words to be registered as a mark they must "have been used solely and not in combination with any device. I think that 'used as a mark' means 'used by themselves as a trade mark' not 'used as part of a trade [mark]'". The same position holds under the present Australian Trade Marks Act, albeit the language is now different. 8 There is an exception to the general rule. In BP plc v Woolworths (2004) 62 IPR 545 I held that in very limited situations it was possible to dissect a total image to obtain proprietorship (and trade mark registration) of only one component of the total image. The test I adopted was whether the component created "a separate and distinct commercial impression" from the other components, so that it might be said of the distinct component that it performs a trade mark function. Another way of putting it is to determine whether the individual component for which registration is sought comprises a separate and distinct trade mark. In other words, although two or more elements (words, devices or both) may be used in combination and constitute a combination mark for which registration may be obtained that does not deny absolutely the possibility that one or more of those elements is an individual mark for which registration can also be obtained. Admittedly the cases where this will occur are rare. It is more likely to occur in the case of a word and device mark, because often the word is the dominant portion of a combination mark: In re Tekelec-Airtronic, 188 USPQ 694 (1975); Continental Specialities Corp v Continental Connector Corp, 192 USPQ 449 (1976); In re Dempster Bros, Inc,132 USPQ 300 (1961). 9 How are these principles to be applied to Colorado Group's combination mark - "Colorado" with the "simple mountain motif"? There is no evidence of the impact made by the individual components of the combination mark and, while helpful, that kind of evidence would not, of course, be determinative. All I have to go on is my own impression. And, in my judgment, this is not a combination mark which is comprised of several distinct trade marks. 10 If Colorado Group cannot rely on the combination mark, it is necessary to decide when it first used the Colorado mark alone in respect of wallets or purses or, for that matter, any goods of a similar kind. As stated, there is no evidence of use of the word alone for wallets or purses before at least 1997. But there is evidence that in some instances the word "Colorado" was used alone in relation to other goods. Mr Beagley said the word was used alone in 1993 in respect of "bags", which appears to be a reference to handbags, shoulder bags and other fashion bags. He explained, for example, that the kind of material used for some bags made the application of the motif design impossible. This evidence was not challenged. The question to be resolved, then, is whether this use was the first use of the mark in relation to such goods. 11 Edgarlodge began applying the word "Colorado" to goods as part of a combination mark consisting of the word "Colorado" together with the Indian head device. The combination mark was designed in April 1991 at the request of Edgarlodge's director, Mr Evans, and was registered shortly thereafter as a combination mark in respect of handbags, travelgoods and belts. The combination mark was first applied to a range of handbags that were sold at Edgarlodge's 11 Queensland stores beginning 1991. 12 In August 1992, Edgarlodge opened its first "Colorado" theme store which had the word "Colorado" on the shopfront. Previously the Edgarlodge stores had operated under the name "The Travel Bug" or "Bagstop". It has been suggested that the use of the word on the shopfront amounted to trade mark use in relation to goods. I do not accept that this use of the word, even if it were a fancy word, is use as a trade mark. In one way or other, the use of a word or device as a mark must involve its use in connection with particular goods. Unless there be some connection between the two the mark would not identify the source of the goods. A storefront name does not serve that purpose particularly where a variety of goods and "brands" are sold in the store. The average consumer would not think that a shop name is a badge of origin: rather he or she is likely to think that it is the name, or the business name, of the proprietor of the establishment. 13 It was also said that the use around this time of the word "Colorado" on invoices and the like was use as a trade mark. That may be true. Unfortunately, no example of any invoice or "the like" current at the time was produced - no doubt because there are none available. I am not prepared in these circumstances to speculate whether "Colorado" may have been used as a trade mark in this way in relation to any goods let alone the goods in question. 14 There is more evidence. I mentioned that one of the first items sold in the "Colorado" theme store from about 1991 was a range of handbags. The handbags, which bore Edgarlodge's combination mark, were supplied by a Hong Kong manufacturer. The manufacturer applied the combination mark to the goods before they were shipped to Australia. A sample from the first range is in evidence. The combination mark appears embossed on the front of the handbag. Inside the handbag, however, there is a brushed metal plate which bears the word "Colorado" alone. This use of the Colorado mark was not disputed. In addition, a small number of handbags were manufactured for Edgarlodge in 1992 and had on the front an embossed logo comprising the word "Colorado" on a diamond shaped label. I have not seen the handbag, only a drawing of the label. My impression is that the diamond shaped label is not part of the mark: it is merely the means by which the word "Colorado" is appended to the handbag. 15 The handbags sold well and the range of "Colorado" goods quickly expanded to include others, among them being wallets and purses. The combination mark was applied to the new range, either by it being embossed on the article itself or by it appearing on an attached metal plate. A coin purse sold at the time which was in evidence showed the combination mark embossed on the front. 16 There is no evidence that the word "Colorado" alone was directly applied to the wallets or purses. Mr Evans said that, to the best of his knowledge, the combination mark (word and Indian head) was used. Ms Blackman, who was employed by Edgarlodge between 1986 and 1998 as warehouse and store manager, said that "for the first few seasons" wallets featured the combination mark. A summary stock take from January 1993 referred to "Colorado leather wallets" in stock at the Liverpool store. I do not take this to be a statement of the type of mark that appeared on the wallets. 17 The word "Colorado" did appear on its own on cardboard credit card inserts (pieces of cardboard the size of a credit card) that were placed inside wallets. The contentious issue is when did these cards first appear? Strandbags Group says that they were in use as early as 1992. On one reading of his affidavit this is what Mr Evans said. But he clarified his position in cross-examination when he conceded that the credit card inserts were introduced "post-1995". In contrast, Ms Blackman said: "For wallets, I recall that the word 'Colorado' alone was stamped directly onto the leather. The word 'Colorado' was also printed on a business card insert which was then placed inside the wallets." It was her evidence that "[w]e always had that insert, from the very beginning." I think the likely position is that the cardboard insert with the word "Colorado" was first used after 1995, as Mr Evans stated. 18 The word "Colorado" appeared on a swing tag which was attached to handbags and purses and, until 1995, wallets. A sample swing tag was produced. On one side of the swing tag appears the combination mark. On the other side there is the statement: "Be a COLORADO collector". According to Mr Evans and his wife, Ms Malouf-Evans, these tags were in common use from 1991, having been attached to most Colorado branded goods, including handbags and wallets. Mr Evans said that a sample of this swing tag was submitted to the Trade Marks Office together with the application for the registration of the combination trade mark. 19 There can be no doubt that a swing tag bearing a trade mark is use of the mark in relation to the article to which the tag is attached. This is recognised by the Trade Marks Act itself which, by s 9(1)(a), provides "a trade mark is taken to be applied to any goods … if it is … affixed or annexed to [the goods]". The only question is whether the use of the word "Colorado" in the phrase "Be a COLORADO collector" is use of the word as a trade mark in circumstances where the word also appears on the opposite side of the tag as part of a combination mark. 20 The answer must be considered from the perspective of the public, or that section of the public that would purchase these kinds of goods. Would a person in this class understand that the word "Colorado" is being used as a trade mark; that is, as a statement concerning the origin of the goods? I am in no doubt that the answer to this question is in the affirmative. In my opinion a consumer looking at the swing tag would form the view that the goods are being distinguished by two marks, the combination mark and the word "Colorado". This conclusion is in accordance with Richards v Butcher [1891] 2 Ch 522. 21 The position reached to this point then is as follows. Edgarlodge was the first to use the word "Colorado" in relation to handbags. Edgarlodge's use of the word "Colorado" in respect of purses and wallets also predates Colorado Group's use of the word in respect of these goods. 22 I turn now to s 120(2). That section provides that a person will infringe a registered trade mark if he or she uses as a trade mark a sign that is substantially identical with, or deceptively similar to, the registered trade mark in relation to: (a) goods of the same description as that of the registered goods; (b) services that are closely related to the registered goods; (c) services of the same description as that of services in respect of which the trade mark is registered; or (d) goods that are closely related to registered services. There is a qualification. A person is not taken to have infringed the trade mark if the person establishes that the relevant use is not likely to deceive or cause confusion. 23 Having previously found that the Colorado mark used by Strandbags Group was substantially identical with or deceptively similar to Colorado Group's registered mark. It remains to be considered whether handbags, wallets and purses are goods "of the same description" as backpacks. The applicants also submitted (to be fair, less strenuously) that these were goods "closely related" to the service of bringing together backpacks for the benefit of customers and that the service of bringing together handbags, wallets and purses for the benefit of customers is a service "closely related" to backpacks or is a service "of the same description" as the service of bringing together backpacks for the benefit of customers. I will consider these issues in turn. 24 I can dispose of the "same description" inquiry fairly swiftly. Whether goods are "of the same description" is a question of fact. According to the authorities, the three principal factors to be considered are: (1) the nature of the goods, including their origin and characteristics; (2) the uses made of the goods, including their intended purposes; and (3) the trade channels through which the goods are bought and sold. It is not essential that all criteria be met. See Re Jellinek's Application for a Trade Mark (1946) 63 RPC 59; John Crowther & Sons (Milnsbridge) Ltd's Application for a Trade Mark (1948) 65 RPC 369; Reckitt & Colman (Australia) Limited v Boden (1945) 70 CLR 84; McCormick & Co Inc v McCormick (2000) 51 IPR 102. The expression "same description" is not to be construed restrictively and regard is to be paid to the business or commercial context in which the goods in question are bought and sold: Rowntree plc v Rollbits Pty Ltd (1988) 10 IPR 539, 546; Australian Wine Importers' Trade Mark (1889) 6 RPC 311, 318. Goods are not of the same description simply because they can be used for the same purpose, for example for personal adornment: Ritz Hotel Ltd v Charles of the Ritz Ltd (1988) 15 NSWLR 158, 220; Camiceria Pancaldi and B Srl v Le Cravatte Di Pancaldi Srl (1994) 30 IPR 547. 25 I do not think it can be said that handbags, purses and wallets are of the same description as backpacks. Backpacks, especially those in respect of which Colorado Group or its predecessor applied the mark (being school backpacks), are not put to the same use as handbags, wallets or purses. The nature of the products is, to my mind, quite different. Backpacks are highly functional and directed toward comfort, weight-bearing, support and durability while wallets and purses have a predominant fashion purpose. While perhaps not decisive, a person wishing to buy a backpack would not find a handbag, wallet or purse to be an acceptable substitute or alternative: see San Remo Macaroni Company Pty Ltd v San Remo Gourmet Coffee Pty Ltd (2000) 50 IPR 321, 330; Canon Kabushiki Kaisha v Brook (1996) 69 FCR 401, 410-411. In any event, a consumer is not likely to think that these goods originate from the same source. That is, I do not accept that either the trade or the public would regard the goods as similar. 26 I do not treat as relevant, as Colorado Group asserted it was, that both it and Strandbags Group sell these goods from the same stores and to the same sorts of customers. The fact that goods may be found in the same shop or in the same department within a department store is more a symptom of modern marketing methods which "tend to unify widely different types of products in the same retail outlets or distribution networks", than any great similarity in the goods: Continental Connector Corp v Continental Specialities Corp, 492 F.Supp 1088, 1096-1097(1979). In my view, correspondence in the channels of trade is no longer a very helpful line of inquiry in relation to many goods, although there may be exceptions. 27 The final question is whether the service of bringing together handbags, wallets and purses for sale is a service "closely related" to backpacks or whether it is "of the same description" as the service of bringing together backpacks for sale. I think these claims are hopeless. I do not understand how it can be said that the service of bringing handbags, wallets and purses together is "closely related" to backpacks. There is no relationship between the two. In my opinion, speaking generally it is only when retailing services consist of supplying the very goods in respect of which it is said the services are related that the services and goods will be closely related: see Warnaco US Inc v Estee Lauder Cosmetics Ltd (2001) 50 IPR 143, K Mart Corporation v Artline Furnishers Supermarkets Pty Ltd (1991) 23 IPR 149. Put another way, I cannot imagine that the public would expect the same business to supply handbags, wallets and purses as well as backpacks: Winglide Pty Ltd v Corporate Express Inc (1999) 46 IPR 627, 630. For much the same reasons, I reject the submissions that the service of bringing together handbags, wallets and purses for the benefit of customers is a service "of the same description" as the service of bringing together backpacks for sale and that handbags, wallets and purses are goods "closely related" to that service. 28 In view of these findings, it is not necessary to deal with the qualification in s 120(2) which, had it been necessary, I would have given Strandbags Group leave to pursue. I do observe, however, that it would not have been easy for Strandbags Group to establish lack of deception or confusion. 29 It is also not necessary to deal with s 122(1)(f), which provides that, in spite of s 120, a person does not infringe a trade mark where the person uses the mark in good faith and "the court is of the opinion that the person would obtain registration of the trade mark in his or her name if the person were to apply for it." For the sake of completeness and in the event this case goes further, I propose to state my views. (Again, had it been necessary I would have permitted Strandbags Group to amend its pleading to canvass this issue.) 30 On the facts as I have found them, Edgarlodge was, and its successor Strandbags Group is, unambiguously the proprietor of the Colorado mark in respect of handbags because of first use. There was a contest about its first use in relation to wallets and purses. Even if that contest had been resolved differently it would not have affected the outcome. In my earlier judgment I explained that a person is entitled to registration of a mark not only in respect of goods to which the mark has been applied but also to goods or classes of goods that are "of the same kind": Jackson & Co v Napper (1886) 35 Ch D 160. This is because it is assumed that a consumer is likely to believe that the other goods originate from the same source as the goods in respect of which the mark has been used. 31 In my view purses and wallets are goods of the same kind as handbags. Both are intended as fashion items and are used to carry small, everyday items such as money, credit cards, keys and like objects. True, handbags are usually larger than both wallets and purses but I do not think this affects the kind of goods they are. At any rate, it is often very difficult to tell the difference between what is a purse and what is a handbag these days, with many handbags being quite small in size. A consumer would expect a handbag and a purse or wallet bearing the same mark to come from the same source. Some are even matching in design. Indeed, many leading fashion houses sell lines of handbags, purses and wallets. 32 Were it necessary this analysis would produce the following consequence. That is, Strandbags Group would not infringe Colorado Group's mark when it applied the mark to wallets or purses, as well as handbags. 33 In the result, there will be declarations of trade mark infringement in relation to backpacks (with an injunction restraining further infringements) and that the first applicant is entitled at its election to damages or an account of profits. In addition there will be orders requiring the respondent to state in an affidavit the number of backpacks sold and the proceeds of sale. The Registrar will be directed to amend the registration of the trade mark so as to delete references to bags, belts, wallets and purses. Certain other orders will be made as has been discussed with the parties. 34 The only outstanding issue is costs. It is not easy to know what to do with the costs because each party has had a significant measure of success. Indeed each party concedes that there should be some apportionment of costs, but they differ markedly on what is the appropriate apportionment. I think that the costs should lie where they fall save in relation to the accounting of profits or assessment of damages. The latter costs should be paid by the respondent unless Colorado Group recovers less than any amount offered by way of compromise. I certify that the preceding thirty-four (34) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Finkelstein.

Colorado Group Limited v Strandbags Group Pty Limited

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