Health World Limited v Shin-Sun Australia Pty Ltd

THE NATURE OF THE APPLICATION IN THIS COURT 3 The appeal is heard in the original jurisdiction of the Court and is by way of a hearing de novo on the material before this Court - Blount Inc v Registrar of Trade Marks (1998) 40 IPR 498 at 506; Clinique Laboratories Inc v Luxury Skin Care Brands Pty Ltd (2004) AIPC 91 - 957 at [2]; Torpedoes Sportswear Pty Ltd v Thorpedo Enterprises Pty Limited (2003) 132 FCR 326 at [15]. The onus of establishing a ground of opposition lies with the applicant on at least the balance of probabilities: Lomas v Winton Shire Council [2002] FCAFC 413 at [36]. 4 In my view the reasoning of Emmet J in F Hoffman-La Roche AG v New England Biolabs Inc (2000) 99 FCR 56 at [64] - [67] in respect of appeals from the decision of the delegate of the Commissioner of Patents to allow a patent to proceed to registration against opposition to the grant of the patent is applicable to the present proceedings brought under the Act. In Lomas a Full Court of this Court (Cooper, Kiefel and Emmett JJ) said (at [17] - [19]): '17 No submissions were addressed to the Court concerning the standard to be applied by a single judge in considering an appeal under s 56 of the Act. The presence of s 195(2) suggests that a parallel should be drawn with the scheme of appeals in opposition proceedings under the Patents Act 1990 (Cth). On that basis, on appeal under s 56, the Court should consider whether the trade mark should clearly not be registered. Only if so satisfied should the Court decide to uphold an opposition. 18 The fact that leave to appeal from the decision of a single judge is required indicates the quasi summary nature of an opposition proceeding. An unsuccessful opponent would always have the opportunity to bring an expungement proceeding if the opposition proceeding fails. In an expungement proceeding, the validity of a trade mark can be fully explored. That is a reason for concluding that there should not be a full exploration of the prospective validity of a trade mark on an appeal in an opposition proceeding. 19 Thus, it would be inappropriate for there to be a full exploration of the validity of the trade mark in two separate proceedings in the Court, first in an appeal in an opposition proceeding and then, subsequently, if the opposition proceeding failed, in an expungement proceeding. Those considerations emphasise the need for the Full Court, before refusing leave to appeal pursuant to s 195(2) of the Act, to be satisfied that a decision by a single judge upholding an opposition is undoubtedly correct.' 5 Bennett J in Torpedos Sportswear also applied as the relevant test in considering an appeal under s 56 of the Act whether the trade mark should clearly not be registered: see at [16] - [22]. However, the question was treated as an open question by Gyles J in Clìnique Laboratories at [12] - [13]. 6 I agree with Bennett J's analysis and reasoning in determining the applicable test. Having said that I am satisfied for the reasons which appear below that the applicant does not make out its grounds of objection on the balance of probabilities. Accordingly, it has not been necessary to apply the higher standard that a ground of objection is clearly or undoubtedly correct. 7 Other than in respect of the application of the 'should clearly not be registered test', the parties are agreed on the applicable principles to be applied on this application. 8 The grounds of opposition are to be judged as at the Priority Date as defined by the Act: Southern Cross Refrigerating Co v Toowoomba Foundry Pty Ltd (1954) 91 CLR 592 at 595; Lomas at [36]. That date is the filing date of the application for trade mark 874775 being 7 May 2001. 9 It is common ground between the parties that the respondent has not commenced to commercially exploit the trade mark 'HEALTHPLUS'. 10 Although the applicant in its Notice of Appeal raised a number of grounds of appeal, it abandoned all grounds other than those relating to s 60 and s 42(b) of the Act.

DECEPTIVE SIMILARITY UNDER SECTION 60 OF THE ACT 11 Section 60 of the Act provides: '60 The registration of a trade mark in respect of particular goods or services may be opposed on the ground that: (a) it is substantially identical with, or deceptively similar to, a trade mark that, before the priority date for the registration of the first-mentioned trade mark in respect of those goods or services, had acquired a reputation in Australia; and (b) because of the reputation of that other trade mark, the use of the first-mentioned trade mark would be likely to deceive or cause confusion.' 12 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: s 10 of the Act. 13 Paragraph (a) of s 60 lays down four pre-requisites which must be established. They are: (i) the application mark must be substantially identical with or deceptively similar to a trade mark which existed before the priority date ('the existing trade mark') in respect of the goods or services in respect of which the application mark seeks registration. (ii) the existing trade mark had acquired a reputation in respect of the goods or services for which the applied for trade mark is sought to be registered; (iii) the reputation of the existing trade mark has been acquired before the priority date; and (iv) the reputation of the existing trade mark was acquired in Australia. 14 Unless each of the preconditions is satisfied no question arises for consideration under para (b) of s 60 of the Act: Registrar of Trade Marks v Woolworths Limited (1999) 93 FCR 365 at [82] - [83]. 15 In Cooper Engineering Co Pty Ltd v Sigmund Pumps Ltd (1952) 86 CLR 536 the High Court stated that the proper approach to the question, whether one word trade mark so resembles another word trade mark as to be likely to deceive, was well settled. Their Honours (Dixon, Williams and Kitto JJ) said at 538: '…It was summed up by Lord Parker (then Parker J.) in In the Matter of an Application by the Pianotist Company Ltd. for the Registration of a Trade Mark (1), "You must take the two words. You must judge of them, both by their look and by their sound. You must consider the goods to which they are to be applied. You must consider the nature and kind of customer who would be likely to buy those goods. In fact, you must consider all the surrounding circumstances; and you must further consider what is likely to happen if each of those trade marks is used in a normal way as a trade mark for the goods of the respective owners of the marks. If, considering all those circumstances, you come to the conclusion that there will be a confusion - that is to say, not necessarily that one man will be injured and the other will gain illicit benefit, but that there will be a confusion in the mind of the public which will lead to confusion in the goods - then you may refuse the registration, or rather you must refuse the registration in that case." To the same effect see Australian Woollen Mills Ltd. v. F.S. Walton & Co. Ltd (2); Reckitt & Colman (Aust.) Ltd. v Boden (3), in this Court. It is sufficient if persons who only know one of the marks and have perhaps an imperfect recollection of it are likely to be deceived: Aristoc Ltd. v. Rysta Ltd.' (original emphasis) 16 Their Honours continued (at 539): '… The fact that two marks convey the same idea is not sufficient in itself to create a deceptive resemblance between them, although this fact could be taken into account in deciding whether two marks which really looked alike or sounded alike were likely to deceive.' 17 To the same effect, Windeyer J said in Shell Co of Australia Ltd v Esso Standard Oil (Australia) Ltd (1963) 109 CLR 407 at 415: ' … The marks are not now to be looked at side by side. The issue is not abstract similarity, but deceptive similarity. Therefore the comparison is the familiar one of trade mark law. It is between, on the one hand, the impression based on recollection of the plaintiff's mark that persons of ordinary intelligence and memory would have; and, on the other hand, the impressions that such persons would get from the defendant's television exhibitions. To quote Lord Radcliffe again: "The likelihood of confusion or deception in such cases is not disproved by placing the two marks side by side and demonstrating how small is the chance of error in any customer who places his order for goods with both the marks clearly before him … It is more useful to observe that in most persons the eye is not an accurate recorder of visual detail, and that marks are remembers rather by general impressions or by some significant detail than by any photographic recollection of the whole": de Cordova v. Vick Chemical Co (1). And in Australian Woollen Mills Ltd v. F.S. Walton & Co. Ltd (2) Dixon and McTiernan JJ. Said: "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" (3).' (original emphasis) See also: Southern Cross at 594 - 595. 18 The test as formulated in Cooper Engineering, Shell and Southern Cross has been applied as the applicable test in respect of whether the mark sought to be registered is deceptively similar with the cited mark for the purposes of the Act: see Sports Café Ltd v The Registrar of Trade Marks (1998) 42 IPR 552 (FC) at 556 - 557; Aldi Stores Ltd Partnership v Frito-Lay Trading Co GMBH (2001) 54 IPR 344 (FC) at [84] - [88], [148] - [149]; Woolworths at [50], [83] - [85]; Torpedoes Sportswear at [78]. 19 The applicant's opposition to registration of the respondent's word trade mark 'HEALTHPLUS' is based on its unregistered mark 'INNER HEALTH PLUS'. Evidence in support of the applicant's opposition was given in affidavit and oral evidence by Mr Graeme Joiner, the National Sales and Marketing Manager of the applicant. Evidence in opposition to the application was given by Ms Theresa Yun Sun Shin by affidavit and orally. Ms Shin is the respondent's business general manager. 20 Mr Joiner deposes, and it is not disputed, that the applicant commenced to market a probiotic product comprising acidophilus in March 1991. The product was intended to be ingested by consumers to restore and maintain a good bacterial balance within the stomach and intestine of the consumer. The product was sold in powder form in a labelled bottle. The label included the registered trade mark No. 563793 which was for a device in the following form: 21 Directly above the device appeared the words 'ETHICAL NUTRIENTS'. Immediately below the device appeared the following: 'TO HELP FRIENDLY BACTERIA WHICH MAY HAVE BEEN DISTURBED BY ANTIBIOTIC AND OR CONTRACEPTIVE PILL USE' 22 In 1996 the applicant registered trade mark No. 721456 being the words 'INNER HEALTH' in respect of 'Pharmaceutical preparations included in this class, including such preparations for promoting the growth and adherence of beneficial intestinal bacteria in humans being goods in class 5'. 23 Between 1991 when it was first marketed and 1999/2000 the product, sold as Ethical Nutrients Inner Health Powder, achieved substantial sales at times exceeding $1m per annum. However by 1999 sales were declining and Mr Joiner was determined to develop 'a new product which would build on the success of Inner Health' ('the INNER HEALTH PLUS product'). 24 Mr Joiner gave the following evidence which I accept: 'Thank you. Now, in 1998 when you joined Health World Limited, you took - did a review of the product ranges then offered by Health World Limited, didn't you?--- Yes. And, as a result of that review, your evidence is that you were concerned to stop the decline in sales of Inner Health, and that you came to a decision to - for the company to develop an improved version of Inner Health; that's correct? --- Yes. … Now, when you moved to a decision to make an improved version of Inner Health, one of the improvements was to present the product in capsule form. That's your evidence, isn't it? --- Yes. And am I correct then that you kept the powder form as the Inner Health product? --- Yes So Inner Health doesn't come in a capsule form? --- No. And the capsule product then is Inner Health Plus? --- Yes. And it doesn't come in a powder form? --- No. So essentially what you're putting onto the market then is if you want the powder you take Inner Health and if you want a capsule form you take Inner Health Plus? --- That wasn't the only change. That is an encapsulation of a change though, isn't it? --- Encapsulating was one of the changes we made when we created Inner Health Plus. Why didn't you put Inner Health Plus in a powder form? --- We maintained the Inner Health name for those people who were already using that product. We had quite a substantial business with just the Inner Health powder. And you were seeking to - if this is correct - both migrate people to Inner Health Plus and increase the market? --- Those that wanted to have a more convenient form or an upgraded product could come over to Inner Health Plus, and then with the Inner Health Plus in a capsule in a stronger form, it was to grow the overall total sales of that business for us and the market. … And you said that the capsule was - paraphrasing, Mr Joiner - a more convenient form of product? --- Yes. Because people can take it anywhere? --- The Inner Health powder needs to be taken out of the fridge, a dry spoon put into it, it needs to be mixed into something, it's a liquid, unless you put it in juice. If you just put it straight in water it didn't taste the best. The capsule is a single process. In our industry a capsule is far more convenient than a powdered product. And that was one of the messages that your sales force took to its pharmacies and health food stores, wasn't it? --- That we could now encapsulate the product? Yes? --- Yes. And another message they took was that the increase in the amount of live acidophilus bacteria in each dose. Is that correct? --- Yes. And that was a dose being equivalent from your teaspoon to a capsule. Is that in rough terms correct? --- Yes. And there was another strain of beneficial bacteria that had been introduced into the Inner Health Plus product? --- That's right. So that it was in at least three respects an improved version of Inner Health? --- Of course. Inner Health was a well-established business. It had very good brand acceptance. And the Inner Health - so that's the reason why you kept the Inner Health colour of the name, didn't you? --- The blue and orange? Yes? --- Yes. And indeed, you kept the blue for the name Inner Health and did a contrast for the orange for the Plus? --- To make the Plus stand out. As a qualifier to say it's improved? --- To say Inner Health Plus is - it is Inner Health Plus.' 25 The form of labelling which included the applicant's trade mark device was altered sometime between October 1991 (see Ex GRJ4 to Mr Joiner's affidavit) and May 2001. The form of the label in May 2001, I find, was that depicted in Ex 3 in these proceedings. The label was in three panels. The central panel was as follows: The panels to the left and right included product information. 26 The form of the label in respect of the new product as at May 2001, I find, was in the form of Ex GRJ27 to Mr Joiner's affidavit which is: 27 The label was substantially similar to the 'INNER HEALTH' label in Ex 3 save that the word 'PLUS' replaced the word 'POWDER' and was printed in orange rather than blue print and the words 'High Potency Probiotic Capsules' appeared under the white circular area which included the words 'INNER HEALTH' and 'POWDER' and 'INNER HEALTH' and 'PLUS' respectively. Both the 'INNER HEALTH' and 'INNER HEALTH PLUS' products continue to be sold by the applicant as alternative choices to consumers to satisfy the same health purpose. They are sold from the same outlets. 28 The evidence is, and I accept that, the applicant's 'INNER HEALTH PLUS' product is sold in health food stores and pharmacies and is displayed in refrigerated cabinets. In this respect it is displayed with other health supplements involving live cultures which require refrigeration. The 'INNER HEALTH' product does not require refrigeration at the point of sale. 29 There is no evidence that the applicant has used the 'INNER HEALTH' mark or the 'INNER PLUS HEALTH' mark with any other pharmaceutical preparations included in Class 5 other than probiotic products for promoting the growth and adherence of beneficial intestinal bacteria in humans. The whole of the evidence of advertising of the 'INNER HEALTH' and 'INNER HEALTH PLUS' products between March 1991 and May 2001 demonstrates that the product was a health supplement for use to promote better internal health through improving the bacterial environment of the human intestine. In that context the use and intended use of the product characterised and limited the mark 'INNER HEALTH' as one related to the internal health of the person consuming the product by way of restoring or maintaining a good bacterial balance in the stomach and intestine. 30 The applicant submitted that the respondent had applied for the 'HEALTHPLUS' trade mark almost 12 months after the 'INNER HEALTH PLUS' product had been on the market and after advertising campaigns in June and July 2000. It contended that there was a real possibility that the respondent had adopted its mark to take advantage of the applicant's goodwill and that it should be presumed therefore that it was likely to deceive or confuse consumers because, as a trader in the market, it had been adopted by the respondent to achieve that end: Australian Woollen Mills Ltd v F S Walton & Co Ltd (1937) 58 CLR 641 at 657. 31 Evidence as to the circumstances in which the applied for mark was chosen was given by Ms Shin on behalf of the respondent. I accept her evidence. Counsel for the applicant conceded that he was unable to point to anything in the materials or her cross examination which would cast doubt on her evidence. The contention that the respondent had adopted the applicant's common law trade mark to take advantage of the applicant's goodwill in its 'INNER HEALTH PLUS' product is rejected. 32 The applicant further submitted that the failure of the respondent to commercially use the applied for trade mark after foreshadowed legal action by the applicant was evidence of a consciousness on the part of the respondent that the applied for mark was deceptively similar to the applicant's common law trade mark. I reject this submission. The relevant correspondence is in evidence. The inference is that in accordance with legal advice the respondent chose not to apply its trade mark commercially until the issues in dispute were determined in the foreshadowed proceedings. 33 Finally, it was submitted that the lodgement of notice of opposition by the respondent to the registration of the trade mark 'INNER HEALTH PLUS' under the Act on the ground that that trade mark was deceptively similar to the prior registered mark 'HEALTH PLUS' was an admission, binding on the respondent, that the converse was true. Whether or not the filing of the notice of opposition which contains, among other contentions, an allegation of deceptive similarity for the purposes of the Act, constitutes an admission made by the solicitor acting within authority for the purposes of this suit, a question I do not decide, the question of deceptive similarity remains a live issue in these proceedings. As with s 52 of the Trade Practices Act 1974 (Cth) whether a matter or thing is misleading or deceptive in terms of a statute involves a legal conclusion. That issue always remains for the Court itself to decide: Rhone-Poulenc Agrochimie SA v UIM Chemical Services Pty Ltd (1986) 12 FCR 477 (FC) at 487 - 488; 504. The Court is to determine the matter in accordance with the well settled principles outlined in the authorities referred to earlier in these reasons. If the Notice of Objection lodged by the respondent to the applicant's application to register the trade mark 'INNER HEALTH PLUS' has any weight at all, it is not decisive of the matters in issue. In the circumstances in which the Notice of Objection was lodged by the respondent's solicitor and having regard to the legal issues which arise on the consideration of that objection, I obtain no assistance from the Notice of Objection and give it no weight in my consideration of the issues in dispute in these proceedings. 34 The mark 'INNER HEALTH PLUS' as it appeared on and in context in the labels in May 2001 conveyed two discrete ideas. This was because of the location of the word 'PLUS' and the use of a contrasting colour to starkly distinguish the word PLUS from the words 'INNER HEALTH'. The word 'PLUS' also appeared in the context of the words below - 'High Potency Probiotic Capsules' which conveyed the message of enhanced or more efficacious operation of the product to bring about 'INNER HEALTH'. 35 Although in an aural sense there may be no dissemble break between the words 'INNER HEALTH' and 'PLUS', the use of the composite phrase 'INNER HEALTH', with the stress when spoken being normally on the first word of the phrase, to convey a complete idea of internal health or well being, maintains the severance of ideas which is clear in the visual presentation of the words on the label. The 'PLUS' in the aural sense, as with the visual sense, presents as a descriptor or qualifier of the words 'INNER HEALTH'. 36 I am satisfied from the evidence of Mr Joiner, and I find, that the use of the word 'PLUS' in conjunction with the words 'INNER HEALTH' was intended to and would in the mind of a consumer for goods of that type qualify the words 'INNER HEALTH' so as to create the impression, and would be remembered and recalled, that the product was a potent and effective acidophilus based supplement to promote internal health of the stomach and the intestine. This decision was made in order to attach to the existing reputation of the mark 'INNER HEALTH' a descriptive phrase denoting an improvement or advance in the product. The descriptive word used was 'PLUS'. 37 The respondent's mark is 'HEALTHPLUS'. Aurally it is totally dissimiliar to the applicant's mark in that it is a contrived single word composed of two separate words. The sense of the statement conveyed by the single word is that the two words from which it is composed are complementary. The word as a matter of impression conveys to the ordinary person a sense of additional or improved health and well being. Visually the two marks are stylistically different and convey different visual images by virtue of the strong contrast between the words 'PLUS' and 'INNER HEALTH' in the applicant's mark and the complementary parts of the single word in the respondent's mark. 38 Because the message conveyed by the respondent's mark is clearly different to that conveyed by the applicant's mark, the use of the respondent's mark in respect of like products to those of the applicant to which the mark 'INNER HEALTH PLUS' is applied would not in my view be likely to cause confusion or deceive as to the source of the product. The general impression and effect of the word mark 'HEALTHPLUS'across the range of pharmaceuticals in Class 5 does not alter depending upon the nature of the product within the class. The use of the term 'PLUS' as part of a single word does not, and would not, convey to any ordinary customer or potential customer of the product the idea of potency or enhanced effectiveness of the product generally or in comparison with other like products which is the clear message conveyed by the applicant's mark in respect of the 'INNER HEALTH PLUS' product. 39 I am satisfied that the aural and visual effects of the two marks when compared by reference to the effect and impression each would produce on, and what would be retained by customers and potential customers of the products to which they are or would be applied, would be significantly different. I am further satisfied that the nature of the applicant's products marketed through health stores and pharmacies, being promoted by general advertising and by campaigns to the medical and pharmaceutical professions, are such that customers and potential customers are likely to buy the product for its claimed benefits to internal health and for that reason are more likely than not to associate the applicant's distinctive mark with its product rather than to mistakenly associate the respondent's mark with the applicant's product. Indeed, the nature of the applicant's product is more likely to induce customers or potential customers, by the association of its use with a verbal description of it, to ask for the goods by the trade name of 'INNER HEALTH' or 'INNER HEALTH PLUS'. 40 I am not satisfied that there is a real risk that there will be a confusion in the mind of the public as to the two marks which will lead to confusion in the goods, including any acidophilus products within Class 5, to which the respondent may apply the trade mark 'HEALTHPLUS'. I am satisfied that there is no sufficient similarity between the two marks aurally, visually or in the separate idea each mark conveys to confuse or deceive potential customers as to whether the two products come from the one source or as to the identity of the products; the different ideas which are naturally suggested by the marks when seen in the circumstances in which the marks will be used and those in which the goods would or may be sold serve to reduce any risk of confusion or deception. I find that there is no deceptive similarity (as explained in the authorities referred to) of the application mark 'HEALTHPLUS' to the common law trade mark applied to the applicant's 'INNER HEALTH PLUS' product. 41 The applicant fails to make out the first element required by par (a) of s 60 of the Act. That the common law trade mark attached to the 'INNER HEALTH PLUS' product had acquired a reputation before 7 May 2001, as I find that it did, does not overcome the fact that the respondent's mark was not substantially identical or deceptively similar to the applicant's mark at the priority date. The applicant fails to make out its ground of opposition under s 60 of the Act.

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