Hansen's market strategy, and court's general view of and approach to the evidence
64 It is helpful, in addition to describing Hansen's market strategy, to outline my general view of and approach to the evidence.
65 Mr Rodney Sacks, the Chief Executive Officer of Hansen, gave uncontested evidence about Hansen's market strategy, the target market for the MONSTER ENERGY product and the way in which the product was to be brought to the attention of that market. I accept this aspect of his evidence.
66 The evidence set out below of Mr Sacks details the way in which the Hansen product was to be brought to the attention of young male adults in Australia.
67 As I have indicated, Hansen described its target market as males between the ages 18 to 30. Bickfords described its target market as males between the ages of 18 to 24. The parties accepted that it was convenient to refer to the target market as young adult males in Australia. Whilst the focus of the parties and of my review of the evidence has been upon this target market, the reputation that is sought to be established is a reputation to potential customers in Australia. This may include persons outside the target market. However, I have proceeded on the basis that unless Hansen establishes the required reputation amongst the target market, it cannot and does not demonstrate sufficient persons outside that target market (being other potential customers) have been sufficiently exposed to or are sufficiently aware of the mark MONSTER ENERGY or MONSTER.
68 Whilst the evidence given by Mr Sacks talks in terms of market strategy, it says nothing about, in my view, whether that strategy was in fact successful, or if successful, the extent of its success in Australia. I do not consider that I can infer (nor do I) that just because the marketing strategy was put in place globally, even if a strategy adopted by others (including Bickfords) as being a good and appropriate strategy, this in itself proves the implementation of that strategy and more importantly in this case, the extent of its success in Australia. This is particularly so considering that the strategy is of relatively recent origin insofar as its connection to Australia is concerned, when viewed in light of the relevant date (April/May 2006), its 'word of mouth' and indirect nature, and where there are no actual sales or direct advertising in Australia of the Hansen product.
69 One must recall that the strategy being adopted is to sponsor athletes and events, so as to create the required image of MONSTER ENERGY, and render it attractive to the target demographic. In this way, the target demographic over some period become familiar with the product before it is in fact launched. The strategy itself recognises that public recognition is a staged process and may take some time to be implemented successfully.
70 Nonetheless, the evidence of Mr Sacks can be used to evaluate the other evidence presented in this proceeding as to the actual exposure of the products in Australia. For instance, through this evidence of Mr Sacks, the Court has an appreciation of the reach of the sponsorship of athletes and events, and the impact that sponsorship may have upon the target audience.
71 Mr Sacks made the following observations:
… Hansen allocates the majority of its marketing, advertising and promotional budget on athlete endorsements and sponsoring events. In particular, Hansen's marketing focus includes focus on international events, including but not limited to events which are webcast on the internet. …
There are a number of reasons why we spend the majority of our advertising, marketing and promotions budget on the sponsoring of athletes and events. The first is (and these reasons are not in any particular order of importance) because [we intend that] the advertising, marketing and promotions that we carry out in relation to MONSTER ENERGY are all about image. The image of MONSTER ENERGY needs to be attractive to the product's target demographic, namely males aged between 18 and 30 years. [We intend that] (t)he image of the MONSTER ENERGY beverages is therefore edgy and aggressive. The athletes and events MONSTER ENERGY sponsors tend to be edgy and aggressive, or extreme. By having this image, the product is attractive to our target demographic.
Secondly, our approach to marketing proceeds on the following basis. This 18 to 30 year old demographic is not typically the targeted market of mainstream print media. Rather it is the in-direct and non-traditional forms of advertising, such as sponsorships and product placement, which are instrumental in reaching this demographic. This demographic, which consists primarily of the so called "Y generation", is more likely to dismiss and not give credibility to an advertisement that has obviously been paid for and which they see, for example, on mainstream television. This is because the Y generation tends to be sceptical of mainstream advertising and media. It is a far more credible and effective advertisement if this demographic sees, for example, someone competing in a sports event that is meaningful to that demographic wearing a MONSTER ENERGY helmet and/or sports gear. The demographic thinks the brand is acceptable and legitimate because an athlete, that is, a credible peer who they look up to is endorsing the product by wearing the helmet and/or sports gear. They may have never seen the product or tasted it, but immediately relate to the product as legitimate. This contributes to making the brand "cool". For this reason, the sponsorship of athletes is more important than the sponsorship of events. We obviously sponsor events as well. But with the latter, the target demographic is more likely to associate the title sponsors of the event with large corporations and may be more sceptical about the product. The sponsorship of credible athletes who compete in events is the most effective marketing tool. This is what appeals to the "Y generation". Also for this reason, we have approved, in countries such as Australia, the distribution of specific MONSTER ENERGY apparel and merchandise (which I explain in further detail later in this affidavit). …
Thirdly, by sponsoring athletes and events, MONSTER ENERGY receives an enormous amount of unsolicited press coverage. The vast majority of references to MONSTER ENERGY one reads in magazines or newspapers, reads or views on the internet, or views on television, are unsolicited. Again, because we are appealing to the X [sic] generation, an unsolicited article or web cast is much more meaningful and credible than a solicited article or web cast.
The fourth reason is that by sponsoring athletes and events, widespread and global exposure is created. The athletes' exploits are followed avidly by those attending the events, and by many more viewers that watch the television and webcast broadcast of these events and follow the sports. The athletes create enormous public exposure and awareness of the MONSTER ENERGY product. This way, our target demographic in a country becomes familiar with MONSTER ENERGY before it is launched in the country. Further, the focus on international events, and events which are popular internationally, helps to attract distributors in other countries and so helps to lay a foundation in other countries before MONSTER ENERGY is launched in those countries".
[Emphasis added].
72 There is nothing unusual in this strategy of sponsorship and promotion. It involves the brand becoming part of the popular culture. The consumers are themselves lured into spreading the message. Each recipient of the brand message becomes a messenger spreading the word to yet more messengers who tell a few more and so on. The aim is to find the trendsetters and encourage them to talk about their product to their own friends and admirers. Nor is this 'word of mouth' or 'viral' marketing really new - what is perhaps new is the recent advancement in the variety and sophistication of techniques used in its implementation; these include the building of web communications so customers can chat about their product experiences online, and using prominent men and women to display or talk up a brand in public places. Such celebrities are now shown worldwide through the use of modern communication networks.
73 For many years marketers have used involvement with sports as a way to promote goods and services. Events and tie-ins to sports have proven an effective way to reach potential customers. Spectators are attracted to extreme sports, such as skateboarding, snowboarding and BMX biking, which are often dangerous and creative. Such sports have become more popular and are shown through all forms of communication world wide. Extreme sports are about a particular lifestyle, which some younger people respond to and enjoy. Here, Hansen's intention is to make the brand have an authentic connection with and become part of the extreme sports community and then to have it become better known from there to the target audience. From a marketing perspective, the key is the promotional opportunities associated with sporting events and celebrities.
74 However, accepting all this as the approach taken, and accepting that we are in the age of global communications and the extensive use of the internet, the first principal question is whether the evidence establishes that the necessary proportion of potential customers in Australia have became aware of Hansen's product so that Hansen has a sufficient reputation in the mark MONSTER ENERGY or MONSTER. In my view it does not.
75 It is not (without more) sufficient to point to extreme sports enthusiasts or participants exposed to Hansen's product, or merely to show isolated or fleeting references to MONSTER, MONSTER ENERGY or to some other indicium that may be associated with the product without showing, or it being appropriate to infer, the impact such references may have on those exposed to such indicia.
76 The awareness of the target audience must be one which in a practical and business sense is such that it can be said that the Hansen product is known to the people who are the potential customers, mainly but not exclusively, young male adults. The awareness must be of a sufficient level to demonstrate sufficient knowledge in Australia of the mark MONSTER and MONSTER ENERGY as associated with the Hansen product.
77 This can only be done through appropriate evidence. The Court must be satisfied, on the balance of probabilities, as to the existing reputation. As Gummow J reminded us, caution must be taken in treating findings found at an interlocutory level as if they would be findings which would suffice to establish reputation at trial (see ConAgra 33 FCR at 354).
78 The evidence necessary or sufficient to establish reputation to found a case for passing off and contravention of the TPA will depend upon various factors (see eg Natural Waters of Viti Limited v Dayals (Fiji) Artesian Waters Limited (2007) 71 IPR 571 at [58]-[59]). Reputation may be inferred from a high volume of sales and extensive advertising, without any other direct evidence (see in a different context, Kenny J in McCormick & Company Inc v McCormick (2000) 51 IPR 102 at [86]-[88]. In this proceeding, there are no sales or direct advertising or promotion of Hansen's product in Australia. Rather, the evidence relied upon is that of exposure to persons in Australia through the marketing strategy adopted by Hansen to reach its target demographic primarily in other countries.
79 No expert evidence concerning the reputation of Hansen's product in Australia, nor any survey evidence as to the reputation in and public recognition of the Hansen product in Australia, was sought to be led by any party, although such evidence would be potentially admissible: see Natural Waters (2007) 71 IPR at [30].
80 As I have said, reliance has been placed by Hansen upon a strategy 'to lay a foundation' in Australia (for instance) before the Hansen product is launched. Whilst the young male adult is accepted as the target market or the main potential customer, the initial focus of the strategy is upon those who are involved in or watch extreme sports, which sports have an international focus and appeal. No direct evidence has been led as to the number of persons who fall within the potential extreme sports target customers, nor as to the number of persons who fall within the potential young male adult target customers, although there is some indication on the evidence tendered by Bickfords that there were some 1.01 million males in Australia aged between 18 and 24 over the relevant period. The Court has been asked not only to accept that the strategy of targeting extreme sports has been successful but, more importantly, has extended to the potential young male adult customers that are the potential target market through the technique of 'word of mouth' marketing described previously. I am not persuaded on the evidence that over the relevant period the foundation laid has reached the level of establishing the required reputation in the Hansen mark in Australia.
81 In this proceeding, I have taken into account not only the number of references to the get-up of Hansen's product, but also the context in which they appear, so as to evaluate properly the evidence presented and the effect it may have on the potential customers targeted, namely young male adults. Where, as in this proceeding, the get-up is striking and distinct, a reputation may be more readily and quickly obtained, but the Court cannot assume this has occurred in a market where the product has not been sold or directly advertised. It may be that in these circumstances potential customers will not necessarily associate any get-up, packaging, or design with the Hansen product. It will all depend upon the extent of the customers' own interests (say in a particular extreme sport) and his or her own previous exposure to the product.
82 The Court has also been provided with evidence of multiple exposures, which must be considered as a whole. However, one is confronted with the question of whether the same people see each and every example of the exposures, and observe similar parts or aspects of the get-up, and whether the exposures have in fact yet reached the target demographic, as distinct from just the extreme sports enthusiasts. It is accepted by Hansen that the strategy that has been adopted is to pave the way for the expansion into new territory (such as Australia), and is to give 'credibility' in the eyes of its target demographic. However, this Court needs to determine whether the strategy has at the relevant date been developed to such a stage as to give the exposure that is required by law. After all, the law promotes innovation and local competition, and the Court must be mindful not to make orders to protect persons who do not establish on the evidence that their brand is sufficiently well known in Australia.
83 To give an example of the development of the marketing strategy that is anticipated, one need only look to the strategy in respect of the website. The concept is to develop an interactive and compelling website that represents the product and builds the product image for a relatively new product. The aim of the website is to develop an emotional response between the consumer and the product. This will take time, and the development of the emotional connection will not (by definition) occur with a substantial number of people or, necessarily, any one person immediately. In my view, the website concept, accepting it to involve a good marketing strategy, has not been demonstrated to reach the stage of development to indicate sufficient exposure to the Hansen product to potential customers in Australia.
84 There is some direct evidence of customers in the relevant demographic being actually misled as to the source of a product; the Court should give great weight to such evidence when considering whether a representation or conduct is potentially misleading or actually misleading. However, the principal issue in this case is that of reputation; the Court must make its own assessment and evaluation of the evidence in considering whether there is a sufficient reputation established. In weighing up the direct evidence of the customers presented in this proceeding, the Court needs to consider the circumstances of each witness, and to determine to what extent that witness is part of the target demographic, which is not just the extreme sports follower, but the young male adult. It may well be that extreme sports followers, having seen the material relied upon by Hansen, were aware of the Hansen energy drink and mark, but, even then, this does not necessarily mean that the potential young male adult customer, a wider group of consumers than the extreme sports follower, would have the same awareness or knowledge as the extreme sports followers.
85 Further, the Court should be careful in drawing upon the advertising strategy of other companies and their experiences, as each strategy will be adopted to the specific product and will depend upon the extent to which the product advertised is already known, along with other considerations. To say, as does Hansen, that one or two minutes of exposure of the Carlton Draught brand of beer during 120 minutes of a football match would be regarded as very helpful advertising by Foster's (which I accept) does not assist in answering the question for determination in this proceeding. Everything will depend upon the recognition already in the brand name, and there is a difference between building that recognition from scratch, and reinforcing recognition of an already well-known brand. Similarly, the position in the United States, where there have been substantial direct sales and substantial advertising of the MONSTER ENERGY drink, is quite different from the position in Australia, where such sales and advertising do not exist. Further, any reliance upon Billabong's marketing strategy and its success, whilst demonstrating that the marketing strategy may be a good one, does not demonstrate (in itself) that the Hansen marketing strategy as adopted in Australia has achieved the same results as the Billabong strategy. As I have said, the success or otherwise of the strategy in each case will depend upon many influencing factors, including the extent to which a product is already or becomes well known.
86 Take for instance the exposure in the form of the words MONSTER and MONSTER ENERGY and the 'M' claw device appearing on athletes' clothing or headgear and on various signage (including giant cans, barriers, banners and tents) at a particular event, with the exposure in Australiabeing through television, assuming by way of example only that it was occurring every minute or two throughout the 90 minute programme, with the one minute reach of viewers being 26,000 and 30 minute reach being 6,000.
87 Undoubtedly, I could conclude that a certain number of persons would immediately know of and recognise the get up and product of the Hansen product by reference to the words MONSTER or MONSTER ENERGY. This may be because they had seen it elsewhere, possibly in other countries or in magazines, and knew of its existence. Others may have been exposed by the broadcast of the sports event for the first time, and have no real appreciation of the significance of, or attach any importance to, the get-up or product. These people may, however, gain a greater appreciation and knowledge if they had further exposure. I do not know and cannot infer how many of the target demographic watchedthe program, or who becamesufficiently familiar with the product. It could be that within the numbers viewing some werefemale, younger than 18, or over 30. If I assumed that mainly extreme sports enthusiasts watched the programme, I could not extrapolate how many young adult males may have come to know or recognise the product, yet alone how many of the wider number of potential customers.
88 Further, in this proceeding, exposure comes in varying forms and not always by reference to the combination of all three elements - the words MONSTER, MONSTER ENERGY and the 'M' claw device - or even by reference to the fact that such relate to an energy drink. This makes it all the more difficult to assess the impact upon those viewers who are watching the events on television and who are not at the event itself. The AMA motocross programs relied upon by Hansen (depicting motocross events in the United States), had only a few seconds of legible exposure of the words MONSTER ENERGY on banners. The words MONSTER ENERGY were otherwise not visible or only fleetingly so. The television programs must be viewed with this in mind when considering the question of reputation.
89 I deal with one other matter before considering some of the specific instances of exposure relied upon by Hansen.
90 Hansen relied upon the evidence of third parties wanting to become involved in the distribution of the Hansen product in Australia, along with Bickfords' own conduct and research, in support of its case to establish reputation in Australia.
91 There is no doubt that there was an interest in developing the new energy drink product in Australia by other companies; they approached Hansen to this end. However, the interest of other parties in Hansen's product shows that they were aware of the product, and probably considered it would market well in Australia, but does not in itself, or in combination with the other evidence presented on behalf of Hansen, show a sufficient reputation in the young male adult market or in other potential customers in Australia. In my view, such evidence of the interest of third parties does not show the extent to which the Hansen mark MONSTER ENERGY had a reputation in Australia.
92 Bickfords' own conduct does not advance the matter any further. There is no doubt that Bickfords' campaign was similar, very similar in fact, to that of Hansen. The strategy as described by Mr Sacks of Hansen could equally describe the strategy of Bickfords. However, this does not mean that the strategy of either Hansen or Bickfords had been implemented to the stage necessary to have the sufficient market exposure.
93 Hansen also specifically relies upon favourable survey evidence of Bickfords in support of Hansen's own case to help demonstrate the success of the Hansen strategy and particularly exposure through the web. There are a number of problems with this approach: the survey relied upon was conducted between 25 July to 8 August 2006 (after the relevant date of April/May 2006), there were only 264 respondents to the survey, and the question 'where have you heard/seen MONSTER ENERGY drink advertising' was responded to after Bickfords had entered into the market with its own energy drink product. Whilst I do not consider that the Bickfords exposure was at all substantial, there is the real possibility that those surveyed may have been influenced by the two 'competing' products and mistakenly answered the survey as to where they had seen a brand of the product enquired about. For these reasons, I regard this material to have little or no weight in assisting Hansen to prove its reputation.
94 In relation to the specific evidence of exposure which I summarise later, I make the following conclusions.
95 Many extracts showing exposure only show Hansen's 'M' claw device and do not show visibly the words MONSTER or MONSTER ENERGY. Hansen's claim is not that the claw device or any similar device was distinctive in Australia of Hansen or its products. Hansen's claim is based on the names MONSTER and MONSTER ENERGY. The present proceedings must therefore turn on evidence demonstrating a reputation amongst Australian customers by reference to the names MONSTER or MONSTER ENERGY. The fact that Bickfords opposes Hansen's application for registration as a trade mark of the 'M' claw on the ground that the claw brought to mind the marks MONSTER or MONSTER ENERGY does not, in my view, assist Hansen in overcoming the way it has pleaded its case, nor does it demonstrate as a matter of evidence, that Hansen has in fact generated a sufficient reputation in Australia. At best, the ground of opposition reflects an argument being put forward by Bickfords, after receiving legal advice, that Australians are familiar with the 'M' claw and its use in association with the marks MONSTER and MONSTER ENERGY. Whether this is so or not will depend upon the evidence.
96 Nevertheless, the evidence in this proceeding demonstrating use of the claw device without MONSTER or MONSTER ENERGY does not in my view take the case of Hansen any further. The exposures of the 'M' claw on its own suffer from the same deficiency as do some of the exposures of the words MONSTER or MONSTER ENERGY; the references are fleeting, sometimes isolated, and not necessarily referable to the product itself.
97 As to the television and DVD evidence, my evaluation is that the potential customer (other than perhaps some of the extreme sports enthusiasts) would have only observed occasional fleeting and background references to Hansen's brand, which made up a relatively small part of each program, and were shown amongst many other words, names and brands. For example, I am not persuaded that whoever in Australia may have been watching the program 'AMA Motocross Mt Morris 2005' on FoxSports 1 at 1pm on Wednesday 7 September 2005 necessarily paid much attention to the scattered portions cumulatively making up the 3 minutes and 15 seconds of Hansen's footage which occurred within that 90 minute program. Further, during that 90 minute program, other brands competed with Hansen's MONSTER ENERGY for the attention and memory of any such Australian viewers, including brands which may have been more readily recognised and remembered by Australian viewers than Hansen's brand.
98 By way of example of the fleeting, occasional and incidental references in magazines to the mark MONSTER ENERGY, I refer to two specific magazine exposures. One is an article in the magazine 'Australasian Dirt Bike' (November 2005 Edition) (which copy article is Schedule A to this judgment) about Ricky Carmichael, a motocross rider, which visually depicts a motocross rider (presumably Ricky Carmichael), and giant MONSTER ENERGY cans with the 'M' claw. This is an example of a specific reference to the MONSTER ENERGY drink, and is the most pronounced and explicit of the magazine exposures. However, this is an isolated example.
99 The other, more typical, magazine exposure in 'Australasian Dirt Bike' (August 2005 Edition) is as shown in the copy advertisement which is Schedule B to this judgment; it displays a motocross rider (presumably Sean Hamblin) with the MONSTER ENERGY mark shown with the claw, but in an advertisement for riding accessories, and involving many other visual references. The object of the advertisement is not to sell or necessarily display MONSTER ENERGY, but to advertise riding accessories. Even assuming the same people subscribe to or purchase the magazine every month over a period of, say, three years, the awareness of those people of this type of exposure will be insufficient for a reputation in Australia to arise in relation to MONSTER ENERGY. The advertisement is directed to something other than the energy drink, the MONSTER ENERGY mark and claw (whilst in this case clearly depicted) are amongst other displayed brands, and the advertisement itself is just one page amongst many in the magazine devoted to an 'extreme sport'. Whilst the same readers of the magazine will presumably follow their chosen extreme sport through websites, DVDs and television, the references to MONSTER ENERGY in these media are in the main of the same quality as in this advertisement. In some instances on the television programs, there is only a reference to the 'M' claw and, in the case of moving pictures, the depiction of the mark MONSTER ENERGY or MONSTER is even more fleeting and could go unnoticed. Whilst the extreme sport takes place before the live audience, it is primarily televised or shown through a DVD to the Australian viewer.
100 I accept the submission of Bickfords that the proper analysis of any material is to consider the position of actual viewers or readers, who are likely to have been primarily focused on the extreme sports in question, without any real perception of the advertising for all the various brands in the background to the action. This is not to say that some or all of the exposure of the mark MONSTER ENERGY is not perceived by some or all of the viewing public, but I must be persuaded that the relevant Australian young male market did the perceiving, or at least came to know later of the brand through word of mouth, and that the extent of the reputation amongst potential customers in Australia is at such a level to justify the Court's intervention.
101 With regard to both the television and magazine evidence, I draw a distinction between the exposure of images of Hansen's brand in the United States, where many may have purchased and consumed Hansen's product, and of television viewers and magazine readers in Australia who have not had any other exposure to Hansen's product. In my view, because of the quality of the exposure in Australia, viewers and readers would not have a level of awareness or appreciation to give rise to the reputation arising as contended for by Hansen. In the United States the position in all probability would be quite different.
102 In the end, I accept Bickfords' submission that any exposure of Hansen's brand in Australia is a by-product of its targeting of the United States and other markets where its product is actually sold, and only the beginning of its strategy to lay a foundation in Australia. Such incidental exposure of Hansen's brand does not provide a proper basis for the reputation Hansen now claims in Australia, at least on the evidence presented to this Court.