Hills Holdings Limited v Bitek Pty Ltd

JUDGE: MANSFIELD J DATE: 7 JUNE 2011 PLACE: ADELAIDE

REASONS FOR JUDGMENT 1 This is an application for leave to appeal from the orders of Lander J made on 10 March 2011 following reasons for judgment given on 15 February 2011: Hills Industries Limited v Bitek Pty Ltd [2011] FCA 94. The application is made pursuant to s 195(2) of the Trade Marks Act 1995 (Cth) (the TM Act), as the proposed appeal concerns a decision from a judge of the Court hearing and determining an appeal from a decision of the Registrar of Trade Marks under s 35 of the TM Act. 2 The decision at first instance concerned three separate actions which were heard together. They were: (a) a proceeding in which Hills Holdings Limited (Hills) appealed from a decision of the Registrar of Trade Marks to dismiss Hills' opposition to the application of Bitek Pty Ltd (Bitek) to register Australian Trade Mark Application No 960495 DIGITEK (the opposition proceeding); (b) an application by Hills alleging that Bitek's use of the trade mark DIGITEK in respect of certain goods infringed Hills Australian Registered Trade Mark No 901020 for the series of word marks: "DGTEC; DGTEK; DGTECH" in respect of "digital and electronic products including televisions, video players, DVD players, CD players, decoders and cameras" (the infringement proceeding); and (c) an application by Bitek to remove Hills Australian Registered Trade Mark No 901020 on the grounds of non-use (the removal proceeding). 3 By the orders made following the judgment referred to, the appeal from the decision of the Registrar of Trade Marks in the opposition proceeding was unsuccessful. The decision of the Registrar of Trade Marks to register the Bitek mark was upheld. The Bitek mark was subsequently registered on 19 April 2011. 4 The decision in respect of the infringement proceeding was also adverse to Hills. Hills separately sought, and has been granted with the consent or acquiescence of Bitek, leave to appeal from that part of the decision and those orders relating to the infringement proceeding. That appeal will be listed for hearing in the August sittings of the Full Court of this Court. 5 The removal proceeding was also successfully prosecuted by Bitek, so that it has now been ordered that the Hills' registered marks be removed from the Register. There is no appeal by Hills from that decision. 6 Consequently, the present application concerns only Lander J's decision in the opposition proceeding. 7 In Woolworths Ltd v BP plc (2006) 150 FCR 134, the topic of leave to appeal under s 195(2) was considered by the Full Court. Sundberg and Bennett JJ at [54]-[55] said: The discretion to grant leave to appeal must not be constrained by elevating particular approaches to its exercise in particular classes of case to rules of general application (in Kenman Kandy at [25] per French J). However, it would be rare to grant leave to appeal in absence of a clear prima facie case of error on the part of the primary judge. Prima facie case of error is a prerequisite even if an important question of law and substantive injustice were relevant factors. We are of the view that the fact that this is the first time that this particular class of marks has been considered is not sufficient (Kirin-Amgen). In Lomas v Winton Shire Council [2003] AIPC 91-839 the Full Court emphasised at [16] the discretionary nature of the jurisdiction to grant leave to appeal under s 195(2) of the Act and distinguished between an appeal from a single judge where an opponent has been successful and where an applicant has been successful. Woolworths, the unsuccessful opponent, may bring expungement proceedings if the opposition proceeding fails. If the applicant is unsuccessful, "before refusing leave, the Court should be satisfied that it is clear beyond doubt that there has been no error and that any trade mark, if granted, should be expunged". Where an opponent has had the benefit of two hearings and has been unsuccessful in both, it would only be in an exceptional case that the Court would grant leave to mount a further consideration of the factual issues (Kirin-Amgen). It is pertinent that in the present case, Woolworths was successful before the Registrar and unsuccessful before the primary judge. The relevant question in this application is whether there has been a clear prima facie case of error on the part of the primary judge. 8 The correct approach to the present application is, in my view, accurately described by Jessup J in Scotch Whiskey Association v DeWitt [2008] FCA 73. I respectfully adopt and follow what his Honour said in that case at [12]-[19]. Reeves J in Food Channel Network Pty Ltd v Television Food Network, G.P (2008) 84 1PR 112 at [5]-[16] took the same view. Both Hills and Bitek agreed with that approach. 9 In exercising the discretion granted by s 195(2) of the TM Act, it is plain enough from DÉcor Corporation Pty Ltd v Dart Industries Inc (1991) 33 FCR 397 that the Court should refer to two principal considerations (see per Sheppard, Burchett and Heerey JJ at 398-399): (a) whether there is sufficient doubt to warrant reconsideration of the matter by a Full Court; and (b) whether the denial of an opportunity to appeal would involve a substantial injustice supposing the decision of the primary judge to have been wrong. 10 This is not necessarily an exhaustive list of factors. As the discretion under s 195(2) is unlimited in terms, there may be other matters which are relevant in particular circumstances. There is no particular onus of proof on the part of the applicant for leave to appeal when determining how the discretion is to be exercised. It is also appropriate to have regard to the two considerations specifically mentioned above, namely the sufficiency of the doubt and the extent of potential injustice together, rather than addressing the enquiries as separate and isolated components before exercising the discretion: see per Jessup J in Scotch Whiskey Association v DeWitt [2008] FCA 73 at [16]-[17] and Food Channel Network Pty Ltd v Television Food Network, G.P (2008) 84 IPR 112 per Reeves J at [7]. 11 In this matter, on the opposition proceeding, the grant of leave to appeal would follow both a full hearing of the opposition before a delegate of the Registrar of Trade Marks, and an appeal by way of a rehearing de novo before a single judge of the Court. It would also involve granting special leave to appeal in circumstances where, pursuant to s 88 of the TM Act, Hills has an alternative procedure to apply to have the trade mark of Bitek removed from the Register or to have it cancelled. It is for reasons such as those that the Court has generally been cautious about granting leave to appeal under s 195(2) of the TM Act. The refusal of leave to appeal, in such circumstances, will not commonly involve a substantial injustice supposing the decision of the primary judge to have been wrong. Such a conclusion is generally reinforced because of the fact of there having been in effect two first instance hearings rendering the prospects of the primary judge being wrong potentially more difficult to demonstrate. 12 Nevertheless, despite those circumstances, the discretion is an unfettered one. I accept that, as in the present circumstances, the Court would be more reluctant to grant leave to appeal in the case of a twice unsuccessful opponent to the registration of a trade mark than in circumstances where an applicant for registration had one prior success and a failure (as discussed in Scotch Whiskey Association v DeWitt at [13]-[20]). I note that, in a decision under an equivalent provision under the Patents Act 1990 (Cth), the Full Court in Genetics Institute Inc v Kirin-Amgen Inc (1999) 92 FCR 106 said at [16] that it would only be "in exceptional cases" that it would be right to grant leave to appeal to an opponent who had been twice unsuccessful. As the Court there observed, the opportunity to apply to institute revocation proceedings under s 138 of the Patents Act 1990 (Cth), equivalent to the opportunity to institute cancellation proceedings under s 88 of the TM Act, so that a grant of leave to appeal could not be finally determinative of the opponent's rights, would mean that it is unlikely that substantial injustice would be caused by the refusal of leave. 13 In my judgment, this is one of those circumstances in which that leave to appeal should be given. I do so because I consider there is a reasonable argument that the issues which will be ventilated on the infringement decision appeal overlap with those which are sought to be ventilated on the proposed appeal in the opposition proceedings. In my view, it would be undesirable for either Hills or Bitek to be confronted with a conclusion of the Full Court in the infringement proceedings which in some material way might be inconsistent with a conclusion of the primary judge in the opposition proceedings, or which might not be made in the same way in any subsequent proceedings under s 88 of the TM Act in any cancellation proceedings. There is a real public interest in judicial consistency in fact finding on identical or very similar issues between the same parties. The potential identity of, or similarity in, factual issues was recognised by the agreement of the parties that the three proceedings referred to above should all be heard at the same time at first instance, and that to the extent relevant, the evidence in one should be taken as evidence in the others. 14 However, that consideration of itself would not, in my view, be sufficient to grant leave to appeal in this matter unless there is also some arguable foundation for the proposed appeal succeeding. 15 The draft or proposed notice of appeal is not confined to the proposed appeal from the decision in the opposition proceeding. It also involves and intermingles the issues in the infringement proceeding. The draft or proposed notice of appeal, however, specifically identifies (as does the written submission of Hills) those matters where it is said that errors of law have been made and where certain questions of law arise on the proposed notice of appeal. 16 The written submissions on behalf of Hills, and responded to on behalf of Bitek extract from the proposed notice of appeal certain of the grounds said to be relevant to the proposed appeal in the opposition proceeding. Helpfully, they are addressed discretely in both submissions. 17 The first heading (in Hills' draft notice of appeal) is "Similar goods and goods of the same description". 18 Lander J remarked in the primary judgment at [29] and [30] that the Hills registered mark was in respect of goods in Class 9, described as "digital and electronic products including televisions, video players, DVD players, CD players, decoders and cameras". Bitek's amended statement of goods also was in respect of goods in Class 9, ultimately described as follows: "TV installation accessories, including external TV antennas, none of the foregoing being set-top boxes". A fundamental issue was whether those two descriptions are capable of overlapping. 19 Section 44(1) of the TM Act relevantly provides that an application for the registration of a trade mark in respect of goods must be rejected if the applicant's trade mark is deceptively similar to a trade mark registered by another person in respect of similar goods. The term "similar goods" is defined in s 14 to mean goods which are the same as the other goods or goods which are of the same description as that of the other goods. 20 The primary judge approached that question by separately considering whether the two marks themselves are deceptively similar, and concluded that they were. His Honour then considered whether the goods in respect of which the two marks existed were similar goods, relevantly whether they are goods "of the same description" as each other. He concluded at [137] When analysed the goods are quite different even though in the case of antennas they assist a television to operate. The Bitek goods are restricted to TV installation accessories including external TV antennas. They are not similar goods to televisions and certainly not similar goods to any of the other goods in the Hills goods. Nor are they goods of the same description. A television installation accessory is not an article of the same description as a television because it is quite different. 21 He reached that conclusion even though the respective goods were interdependent upon each other for their functionality. His Honour noted at [141] that he would have reached that conclusion whatever the onus upon Hills in relation to the matter, bearing in mind the apparently conflicting views expressed as to onus in Lomas v Winton Shire Council [2003] AIPC 91-839 and in Clinique Laboratories Inc v Luxury Skin Care Brands Pty Ltd (2003) 61 IPR 130. 22 Hills contends that that approach involved error in two respects. The first is that the primary judge failed to follow the correct approach for determining the question of whether the respective goods were "similar" or "of the same description" for the purposes of ss 14(1)(b), 44(1)(a)(i) and 120(2)(a) of the TM Act [the latter relating to the infringement proceeding] as directed in E & J Gallo v Lion Nathan (2009) 175 FCR 386 at [71] where, it is argued, a more practical rather than a precise analytical test should be applied. The argument is based upon the passage at [41] which says: That object seems plainly to be the avoidance of confusion and deception in the market place, which would be likely to arise should a market become available for use by two or more different companies, which are unrelated, upon goods of the same description. From that point of view, the expression "goods of the same description" is generally to be understood in such a sense that, if two different items are held not to fall within the expression, their sale under the same mark by different companies is not likely to lead to confusion or deception. 23 Secondly, it is argued that the primary judge erred by separately and distinctly considering first the question of deceptive similarity of the respective marks and independently the question of the similarity of the goods. It is urged that the correct approach is to make one overall practical judgment recognising that whether the resemblance between the different trade marks renders them deceptively similar, depends upon the nature and degree of that resemblance and the similarity between the goods in question, and that the determination whether the goods are similar is logically antecedent to the determination whether the trademarks used in respect of those goods are deceptively similar. That is based upon some observations of French J (with whom Tamberlin J agreed) in the Registrar of Trade Marks v Woolworths (1999) 93 FCR 365 at [39]-[40]. 24 In my view, there is some scope for those contentions to be sustained. I do not presume to form a view as to their probability of success. However, the passage referred to does leave for argument the question whether the sequence of consideration adopted by the primary judge is a correct one, and that in substance there is a practical judgment to be made depending upon the nature and degree of the resemblance of the goods and their functional inter-relationship and the way in which they are presented through the respective marks. It is arguable from E & J Gallo v Lion Nathan (2009) 175 FCR 386 at [70], but that is a matter to be decided upon the whole of the evidence. 25 I accept that much the same argument will be developed on the opposition proceeding appeal in any event. I think that there is a real and not a fanciful prospect of the argument that there is such an interconnection or perceived identification between television sets on the one hand and television antennas on the other hand that deceptively similar marks might be expected to confuse consumers, at whatever level of trade they are operating, as to the commercial source of those respective products. I do not need to develop those observations any further. I also do not need for present purposes to refer to television accessories other than television antennas. 26 The second relevant heading in Hills' draft notice of appeal refers to "Reputation". 27 The primary judge said at [188]-[197] that Hills DGTEC mark had not by July 2003 acquired a reputation in Australia, relating in particular to the sales and promotion of DGTEC set-top boxes. Hills relied on its sales of such products under that mark and its advertising expenditure. Bitek argued at the trial that the DGTEC mark had not been much used in respect of products other than set-top boxes to July 2003, and that its sales of that product (on the evidence, the judgment records, some 33,377 units had been sold for about $20.3 million through some 375 retailers including 15 national chains from about September 2001) were not sufficient to support a finding that DGTEC itself as a mark had acquired a reputation within Australia. At [195], the primary judge said such evidence "by itself does not prove any reputation at all". That was sufficient for the Hills' objection under s 60 of the TM Act to fail, as the absence of such a reputation must have meant that the use of Bitek's mark could not be likely to deceive or cause confusion. 28 By reference to the way in which Kenny J in McCormick & Co v McCormick (2000) 51 IPR 102 at [86] made use of evidence of sales and promotions, without direct consumer evidence, to infer reputation in the mark then under consideration, Hills argues that the approach of the primary judge was wrong. Reference is made to six other cases in the written submission of Hills, subsequent to that case, in which, it is agreed, reputation in a mark has been inferred from such evidence. 29 It is a subtle question whether, as Bitek contends in its written submissions, any reputation in the DGTEC mark by July 2003 was confined to set-top boxes and so could not extend to goods in respect of which Bitek sought registration of its mark. It is not necessarily apparent that the primary judge approached the question in that way, at least at the point of considering the existence of any reputation at all in the DGTEC mark itself. His Honour, arguably, did not address the first of Bitek's contentions set out above. He accepted the second of its contentions that the evidence did not show that the Hills mark had any reputation at all. At [196], he concluded that the evidence did not support "a finding of a reputation in the mark". 30 In my view, Hills' contention about error in that respect is also arguable for the reasons given by Hills in its written submissions. The more subtle question raised in Bitek's first contention and the focus of its written submissions in opposition to the application for leave to appeal is not one on which it is appropriate to express any firm view, without the benefit of reference to all the evidence and without the benefit of full argument. It is sufficient to say that I do not regard Bitek's contention as so clearly right that leave to appeal should be refused on that basis. 31 For the combination of reasons referred to above, I propose to grant Hills leave to appeal from the orders of Lander J in the opposition proceeding. 32 I agree with Bitek's contention that the draft or proposed notice of appeal in this matter should be confined to the grounds of appeal applicable to this matter rather than being intermingled with those in the appeal (by leave) from the orders made in the infringement proceeding. I will direct that be done. 33 As was common ground, I will direct that the appeal to be instituted pursuant to the leave now granted should be heard and determined at the same time as the appeal from the orders made in the infringement proceeding. I certify that the preceding thirty-three (33) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Mansfield.