D. STATUTORY FRAMEWORK
10 Section 17 of the TMA provides that a "trade mark is a sign used, or intended to be used, to distinguish goods … dealt with or provided in the course of trade by a person from goods … so dealt with or provided by any other person" (original emphasis).
11 The statutory framework for registration of trade marks was recently summarised by the Full Court in Modena Trading Pty Ltd v Cantarella Bros Pty Ltd (2013) 215 FCR 16 at [52]-[56]. For present purposes, it is sufficient to refer to the following:
52. Under s 27 of the Act, a person may apply for the registration of a trade mark in respect of goods if the person claims to be the owner of the trade mark and the person is using, or intends to use, the trade mark in relation to the goods. Under s 31, the Registrar of Trade Marks (the Registrar) must examine and report on whether the application has been made in accordance with the Act and whether there are grounds for rejecting it. Under s 33, the Registrar must, after the examination, accept the application, unless satisfied that the application has not been made in accordance with the Act or that there are grounds for rejecting the application.
53. Under s 41(2), an application for the registration of a trade mark must be rejected if the trade mark is not capable of distinguishing the applicant's goods in respect of which the trade mark is sought to be registered (designated goods) from the goods of other persons. Under s 41(3), in deciding that question, the Registrar must first take into account the extent to which the trade mark is inherently adapted to distinguish the designated goods from the goods of other persons. …
…
56. Sections 41(3) to (6) is, in effect, a code directed to how s 41(2) is applied: Blount Inc v Registrar of Trade Marks (1998) 83 FCR 50 at 56-7, affirmed in Time Warner Entertainment Company LP v Stepsam Investments Pty Ltd (2003) 134 FCR 51 at [26].
(This decision was the subject of a grant of special leave to the High Court. The appeal has been heard. The decision is reserved.)
12 When the application was filed (25 July 2011), s 41 entitled "Trade mark not distinguishing applicant's goods or services", relevantly provided:
…
(2) An application for the registration of a trade mark must be rejected if the trade mark is not capable of distinguishing the applicant's goods … in respect of which the trade mark is sought to be registered (designated goods …) from the goods … of other persons.
Note: For goods of a person and services of a person see section 6.
(3) In deciding the question whether or not a trade mark is capable of distinguishing the designated goods … from the goods … of other persons, the Registrar must first take into account the extent to which the trade mark is inherently adapted to distinguish the designated goods … from the goods … of other persons.
(4) Then, if the Registrar is still unable to decide the question, the following provisions apply.
(5) If the Registrar finds that the trade mark is to some extent inherently adapted to distinguish the designated goods … from the goods … of other persons but is unable to decide, on that basis alone, that the trade mark is capable of so distinguishing the designated goods … :
(a) the Registrar is to consider whether, because of the combined effect of the following:
(i) the extent to which the trade mark is inherently adapted to distinguish the designated goods … ;
(ii) the use, or intended use, of the trade mark by the applicant;
(iii) any other circumstances;
the trade mark does or will distinguish the designated goods … as being those of the applicant; and
(b) if the Registrar is then satisfied that the trade mark does or will so distinguish the designated goods …- the trade mark is taken to be capable of distinguishing the applicant's goods … from the goods … of other persons; and
(c) if the Registrar is not satisfied that the trade mark does or will so distinguish the designated goods … the trade mark is taken not to be capable of distinguishing the applicant's goods … from the goods … of other persons.
…
(6) If the Registrar finds that the trade mark is not to any extent inherently adapted to distinguish the designated goods … from the goods … of other persons, the following provisions apply:
(a) if the applicant establishes that, because of the extent to which the applicant has used the trade mark before the filing date in respect of the application, it does distinguish the designated goods … as being those of the applicant - the trade mark is taken to be capable of distinguishing the designated goods … from the goods … of other persons;
(b) in any other case - the trade mark is taken not to be capable of distinguishing the designated goods … from the goods … of other persons.
Note 1: Trade marks that are not inherently adapted to distinguish goods … are mostly trade marks that consist wholly of a sign that is ordinarily used to indicate:
(a) the kind, quality, quantity, intended purpose, value, geographical origin, or some other characteristic, of goods …; or
(b) the time of production of goods … .
…
(Original emphasis.)
13 The parties agree that s 41 of the TMA requires a two-stage analysis. First, the Court must consider the question of inherent adaption to distinguish under s 41(3). ZIMA is presumed to be sufficiently "inherently adapted to distinguish" under s 41(3) unless the Court is satisfied otherwise on the balance of probabilities: Chocolaterie Guylian NV v Registrar of Trade Marks (2009) 180 FCR 60 at [21]; Mantra IP Pty Ltd v Spagnuolo (2012) 205 FCR 241 at [32]-[34]. It is only if the Court is still unable to decide that question that the analysis proceeds to the second stage under ss 41 (4), (5) and (6): Blount Inc v Registrar of Trade Marks (1998) 83 FCR 50 at 56-7; Chocolaterie Guylian at [9]; Mantra IP at [23]; Modena Trading at [53]-[56].
14 The test for assessing whether a trade mark is "inherently adapted to distinguish" for the purposes of s 41(3) was articulated by Kitto J in Clark Equipment Co v Registrar of Trade Marks (1964) 111 CLR 511 at 514, where his Honour referred to the words of Lord Parker of Waddington in Registrar of Trade Marks v W. & G. Du Cros Ltd [1913] AC 624:
"The applicant's chance of success in this respect [i.e. in distinguishing his goods by means of the mark, apart from the effects of registration] must, I think, largely depend upon whether other traders are likely, in the ordinary course of their businesses and without any improper motive, to desire to use the same mark, or some mark nearly resembling it, upon or in connexion with their own goods. …"
15 Justice Kitto continued:
[T]he question whether a mark is adapted to distinguish [is to] be tested by reference to the likelihood that other persons, trading in goods of the relevant kind and being actuated only by proper motives - in the exercise, that is to say, of the common right of the public to make honest use of words forming part of the common heritage, for the sake of the signification which they ordinarily possess - will think of the word and want to use it in connexion with similar goods in any manner which would infringe a registered trade mark granted in respect of it.
16 Any acquired distinctiveness resulting from use of the trade mark is irrelevant to considering the "inherent fitness of the mark for the purpose of distinguishing the applicant's goods from those of other persons": Clark Equipment at 513. This idea was explained further by Gibbs J in Burger King Corp v Registrar of Trade Marks (1973) 128 CLR 417 at 424:
Inherent adaptability is something which depends on the nature of the trade mark itself … and therefore is not something that can be acquired; the inherent nature of the trade mark itself cannot be changed by use or otherwise.
(Emphasis added.)
See also Chancellor, Masters and Scholars of the University of Oxford (Trading as Oxford University Press) v Registrar of Trade Marks (1990) 24 FCR 1 at 7; Unilever Australia Ltd v Societe Des Produits Nestlé SA (2006) 154 FCR 165 at [35]; Kenman Kandy Australia Pty Ltd v Registrar of Trade Marks (2002) 122 FCR 494 at [84]; and Mantra IP at [42] and [52].
17 What then makes a mark "inherently adapted to distinguish"? Each case must be considered and determined on its own facts. Earlier authorities have explained the issue or identified the relevant considerations in a number of ways.
18 "An inherent capacity is an "essential permanent characteristic" and "intrinsic" to the trade mark": Unilever at [28]-[30] and [54]. The distinction between inherent adaptation to distinguish and an adaptation to distinguish acquired through use is important. The latter is irrelevant under s 41(3). Lindgren J in Kenman Kandy at [84] described it in these terms:
While inherent adaptation to distinguish requires attention to be focused on the mark itself, and is intended to stand in sharp contrast to a mark's capacity to distinguish arising from use, the notion of "the mark itself" does not exclude from consideration the nature of the range of goods within the class or classes in respect of which registration is sought, or the various ways in which the mark might, within the terms of the registration, be used in relation to those goods. Indeed, those matters must be taken into account. … Whether the [mark] is inherently adapted to distinguish can be tested by assessing how it would be perceived and understood by members of the public seeing [the good bearing the mark] for the first time, because this test excludes the possibility of a trade mark significance arising from use.
(Emphasis added.)
19 The applicable principles were summarised recently by Reeves J in Mantra IP at [52]:
… [R]egard must be had to the presumption of registrability in s 33 of the Act. The assessment under s 41(3) looks to the mark itself and its inherent nature; it does not take into account the effect of use; it considers how the mark would be understood by ordinary Australians seeing it for the first time. The question can be tested by asking whether other traders trading in services of the same or a similar kind and only actuated by proper motives are likely to want to use the mark in connection with the same or similar services. A proper motive is one founded on the "common right of the public to make honest use of words forming part of the common heritage". Signs that are descriptive in nature, or use a geographical name, form part of the "common heritage" and, therefore, cannot usually be inherently distinctive. This test is to be applied negatively, not positively and the assessment is to involve a "practical evaluative judgment ... in the real world".
(Emphasis added.)
20 The TMA precludes registration of a trade mark which would grant a person "a monopoly in what others may legitimately desire to use": Kenman Kandy per Stone J at [145] citing W & G Du Cros at 635. Accordingly, words (ordinary or technical) which are descriptive of the character or quality of the goods are not inherently adapted to distinguish: Kenman Kandy at [144] and the authorities cited. Why? Because "the words have significations or associations that invite confusion and because registration of a trade mark using such words would preclude the use by others whose goods have similar qualities": Kenman Kandy at [145].
21 That leads us to invented words. "It is the absence of association and signification that accounts for invented words often being found to be inherently adapted to distinguish a trader's product": Kenman Kandy at [148], as well as at [147]-[156] and the authorities cited.
22 As the learned authors of Shanahan's Australian Law of Trade Marks and Passing Off (5th ed, Thomson Reuters (Professional) Australia Limited, 2012), Mark Davison and Ian Horak stated at [20.545]:
Newly coined or invented words stand outside the common stock of language from which other traders must be entitled to choose their descriptions. Indeed, it could be said that all invented words are "capable of distinguishing" and "inherently adapted to distinguish" because they are not part of the English language and therefore other traders could not need, without improper motive, to use them. As Lord Herschell put it in Eastman Photographic Materials Co Ltd's Application [(1898) 15 RPC 476 (HL)] "an invented word is allowed to be registered as a trade mark, not as a reward of merit, but because its registration deprives no member of the community of the rights he possesses to use the existing vocabulary as he pleases".
The fact that a word does or does not appear in a dictionary [NationsBank Corp's Application (1998) 45 IPR 345; Re Application by AG-ID Pty Ltd (2005) 68 IPR 153] or was not known before the applicant adopted it [Advanced Hair Studio of America Pty Ltd v Registrar of Trade Marks (1988) 12 IPR 1; Zeneca Ltd v Sanonda (Aust) Pty Ltd (1998) 41 IPR 587; Babcock & Wilcox Co's Application (1998) 41 IPR 147] does not determine whether it is capable of distinguishing. …
(Original emphasis.)
There is of course a qualification. An invented word will not be acceptable unless it conveys no meaning, at least to "ordinary Australians": Kenman Kandy at [152] and the authorities cited.