is registration precluded by section 60 of the act?
79 Almost as an afterthought, McCormick & Co submits that s 60 of the Act presents an insurmountable obstacle to Mary McCormick's application. The Act deals with applications for registration in Part 4 and opposition to registration in Part 5. Division 2 of Part 5 is headed "Grounds for opposing registration". Section 57 provides:
The registration of a trade mark may be opposed on any of the grounds on which an application for the registration for a trade mark may be rejected under Division 2 of Part 4, except the ground that the trade mark cannot be represented graphically.
By virtue of s 57, McCormick & Co opposes registration of Mary McCormick's marks on the grounds provided by s 44 (in Part 4). Section 60, which forms part of the second Division of Part 5, further provides:
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.
McCormick & Co submits that the evidence establishes the circumstances set out in pars 60(a) and (b). The registration of a trade mark may be opposed on any of the grounds specified in Division 2 of Part 5 and on no other grounds: see s 52(4).
80 Mary McCormick's marks are substantially identical with, or deceptively similar to, the McCormick & Co marks. That was not in issue on the appeal. But does the evidence establish that before 9 March 1992 the McCormick & Co marks had acquired a reputation in Australia on account of which the use of Mary McCormick's marks would be likely to deceive or cause confusion? Counsel for Mary McCormick submits that McCormick & Co fails at this fundamental point.
81 What is intended by the word "reputation" in s 60? The word is defined in The Macquarie Dictionary as follows:
reputation … 1. the estimation in which a person or thing is held, esp. by the community or the public generally; repute … 2. favourable repute; good name … 3. A favourable and publicly recognised name or standing for merit, achievement, etc. … 4. The estimation or name of being, having done, etc, something specified.
Cf. The Oxford English Dictionary. In s 60, the word is, I think, apt to refer to "the recognition of the McCormick & Co marks by the public generally".
82 Does the evidence establish that in Australia before 9 March 1992 the McCormick & Co marks were recognised by the public generally and, because of that, the use by Mary McCormick of her marks would be likely to cause the public confusion, as for example, by the public's mistakenly attributing a business connection between the two or attributing her product to the company?
83 I accept, as counsel for Mary McCormick said, that this is not an issue that attracts s 144 of the Evidence Act 1995 (Cth). Whether the McCormick marks have a reputation in Australia is not a matter "that is not reasonably open to question". In ConAgra Inc v McCain Foods (Aust) Pty Ltd (1992) 33 FCR 302 at 343, Lockhart J said :
[R]eputation within the jurisdiction may be proved by a variety of means including advertisements on television or radio, or in magazines and newspapers within the forum. It may be established by showing constant travel of people between other countries and the forum, and that people within the forum (whether residents there or persons simply visiting there from other countries) are exposed to the goods of the overseas owner … .
In this case McCormick & Co relied on the following evidence to establish the reputation of its marks: (1) an order, made in 1984 under s 26(3) of the Trade Marks Act 1955 ("the 1955 Act"), that certain McCormick marks were distinctive; (2) extensive sales under the marks; (3) considerable expenditure on advertising; and (4) the use of promotional material.
84 As I have said, McCormick & Co directly or through its subsidiary, McCormick Australia, had sold products in Australia since 1962, i.e., for thirty years before March 1992. There was evidence that in 1991 (and thereafter until 1995) the value of McCormick & Co's retail gross sales across Australia was very large. (The precise details were the subject of a confidentiality order.) Further, the sales were substantial in every state, save perhaps for Tasmania. There was evidence that in 1998 the company marketed its products to about 1400 supermarkets throughout Australia. The evidence supports the inference that the company was marketing its products to a large number of supermarkets in 1992, including major supermarket chains. Use of the McCormick & Co marks has been extensive. Very many of the McCormick & Co's products bore one or other of the McCormick & Co marks. The products ranged from herbs and spices to condiments, sauces and food flavourings. Notwithstanding the large value of the company's retail gross sales, the company's products were commonly relatively inexpensive. There was also evidence that in 1991 (and thereafter until 1998) the company spent a very large amount (about 1.5% in 1991 and about 3% of its gross retail sales in 1995) on advertising and promotion. There was extensive use made of the mccormick marks in that advertising and promotional material. Officers of McCormick & Co, including Mr R W Skelton (the company's chief legal officer and an honest and credible witness) believed that the mccormick marks were well known. In May 1984, the Registrar made an order deeming a mccormick mark to be a distinctive mark pursuant to s 26(3) of the 1955 Act. Whilst I do not think that the order can be direct evidence of anything other than what it says, the order, when taken with other matters, may support an inference about the reputation of the mark. I infer from these facts, when taken together, that consumers would recognise with relative ease the McCormick & Co marks as indicative of the food products made and supplied by the company.
85 It may be correct to say, as counsel for Mary McCormick did, that the volume of the company's sales does not directly establish that a significant number of people held the McCormick & Co marks, as distinct from the company's products, in favourable regard. It does not follow, however, that the volume of sales and promotional expenditures are irrelevant. As Hearing Officer Thompson observed in Hugo Boss AG v Jackson International Trading Co Kurt D Bruhl GmbH & Co KG (1999) 47 IPR 423 ("Hugo Boss") at 436:
[I]t is true that the assessment of the reputation of a trade mark goes far beyond mere examination of sales or turnover of goods sold under that trade mark and contemplation of the advertising and promotional figures.
As regards a trade mark, its reputation derives both from the quantum of sales under that mark and also the esteem, or image, projected by that trade mark. The quantum of sales, advertising and promotion contributes to the 'recognition' component of the trade mark's reputation. The credit, image and values projected by a trade mark attaches to the 'esteem' component of the reputation as do the public events and other trader's marks with which [the] owner of the trade marks in question chooses to associate the trade marks via sponsorships, cross-promotions, 'contra deals' and so forth.
It follows that a trade mark used in relation to goods with comparatively low sales may have a high and strong reputation by virtue of the high credit or esteem in which it is held or, conversely, that a trade mark which has very high sales may have a strong reputation notwithstanding the lack of esteem that attaches to it. The particular popular images, or sets of values, that attach to the trade mark are also, therefore, important parts of the reputation of the trade mark and may be as strong an associative force in the minds of the public as the association of the trade marks with the goods or services themselves.
86 In practice, it is commonplace to infer reputation from a high volume of sales, together with substantial advertising expenditures and other promotions, without any direct evidence of consumer appreciation of the mark, as opposed to the product: see, e.g., Isuzu-General Motors Australia Ltd v Jackeroo World Pty Ltd (1999) 47 IPR 198; Marks & Spencer plc v Effem Foods Pty Ltd (2000) AIPC ¶91-560; Photo Disc Inc v Gibson (1998) 42 IPR 473; and RS Components Ltd v Holophane Corp (1999) 46 IPR 451. This Court has followed this approach as well, acknowledging that public awareness of and regard for a mark tends to correlate with appreciation of the products with which that mark is associated, as evidenced by sales volume, amongst other things. Thus, in Toddler Kindy Gymbaroo Pty Ltd v Gymboree Pty Ltd [2000] FCA 618 ("Gymboree"), Moore J accepted at [94] that the applicant had established a reputation for the purposes of s 60 solely on the basis of use and promotion of the relevant mark. Another example of this approach is Nettlefold Advertising Pty Ltd v Nettlefold Signs Pty Ltd (1997) 38 IPR 495 ("Nettlefold"), in which Heerey J relied upon the public visibility of the applicant's marks over approximately two decades as well as a $100,000 promotional campaign in finding that a reputation for the purposes of s 28 of the 1955 Act existed.
87 It is true, as Mary McCormick's counsel points out, that the evidence does not establish what proportion of sales was made under or by reference to any particular mark. It is also true, as he points out, that, apart from the evidence as to sales and advertising expenditure, there is little or no evidence about the effect of advertising upon consumers. There were no consumer surveys in evidence, nor was there evidence about the marketing of McCormick & Co's products. There was also no evidence to connect whatever international reputation McCormick & Co might have with the reputation of the McCormick & Co marks in Australia.
88 I accept that those were important omissions and, in another case, might have proved fatal. Still, none of the factors pointed to by counsel for Mary McCormick are essential requirements for a finding of reputation under s 60. The sales and advertising of the order of magnitude involved in this case are, in my view, a sufficient basis for establishing reputation along the lines of the approach indicated in Gymboree and Nettlefold and other relevant authorities. Contrast Lee v Korean Air Lines Co Ltd (2000) AIPC ¶91-557, Winglide Pty Ltd v Corporate Express Inc (1999) 46 IPR 627, Aktion Zahnfreundlich v Suntory Ltd (1998) 42 IPR 593, Somers v Greenbelt Pacific Pty Ltd (1998) 42 IPR 587 and Clissold v Amalgamated Television Services Pty Ltd (2000) AIPC ¶91-566. Without speculating on what the threshold level of sales or promotional expenditures might be (if, indeed, one exists), McCormick & Co have clearly passed it. Bearing in mind all the circumstances to which I have referred, I am satisfied that McCormick & Co have established that the McCormick & Co marks had acquired a reputation in Australia before March 1992.
89 I am also satisfied that because of the reputation of the McCormick & Co marks, the use of Mary McCormick's marks would be likely to cause confusion. Briefly, not only are Mary McCormick's marks deceptively similar to those of McCormick & Co, the name "McCormick" is a prominent element of the marks in question. As I have said, Mary McCormick seeks the registration of her marks for a product (instant batter) that is sold in the same channels of trade, to the same kind of customers, as the products sold by McCormick & Co under its marks. Mary McCormick's instant batter is sold in supermarkets. So too are McCormick & Co's spices, herbs and like products. Mary McCormick's instant batter is ordinarily located in close proximity to the herbs, spices and like products of McCormick & Co. The dollar value of Mary McCormick's 150g instant batter packet is low and broadly commensurate with many of McCormick & Co's supermarket products.
90 The ultimate question is whether s 60 is subject to s 44(3) of the Act. The delegate decided that it was upon the basis that ss 44(3) and 60 were the equivalent of ss 34(1) and 28 of the 1955 Act respectively. Sections 28 and 34 of the 1955 Act, which were separate and distinct provisions, were both contained in Part IV, entitled "registrable trade marks".
Section 28 read:
A mark -
(a) the use of which would be likely to deceive or cause confusion;
(b) the use of which would be contrary to law;
(c) which comprises or contains scandalous matter; or
(d) which would otherwise be not entitled to protection in a court of justice;
shall not be registered as a trade mark.
Subsection 34(1) provided:
In case of honest concurrent use or of other special circumstances which, in the opinion of the Registrar, make it proper so to do, the Registrar may permit the registration of trade marks which are substantially identical or deceptively similar, or, but for the honest concurrent use or other special circumstances would be deceptively similar, for the same goods or services or other goods or services, by more than 1 proprietor subject to such conditions and limitations (if any) as the Registrar imposes.
Opposition to registration formed the subject of Part VI of the 1955 Act; Part VI proposed no grounds of opposition additional to those in Part IV.
91 Section 28 was held to be subject to s 34 of the 1955 Act, which was the honest concurrent use provision, in New South Wales Dairy Corporation v Murray Goulburn Co-Operative Company Ltd (1990) 171 CLR 363 ("NSW Dairy") at 384 per Mason CJ, 390 per Brennan J, 405-406 per Dawson and Toohey JJ with whom Gaudron J agreed at 414. At 405-406, Dawson and Toohey JJ wrote:
At common law the right to a trade mark was an adjunct of the goodwill in a business and incapable of an existence separate from it. If, however, the goodwill of a business was divided, the need to recognize more than one user of a trade mark arose, despite the possibility of confusion. For each proprietor to have been able to seek an injunction against the other would have been to undermine ownership. In addition, the increase in the ease of communications during the nineteenth century meant that goods displaying deceptively similar marks, which previously had been restricted to a particular locality, might be offered to a wider set of purchasers, thus producing a greater likelihood of confusion through simultaneous use. The doctrine of honest concurrent user, now embodied in the legislation, developed at common law as a response to this. It prevented one owner of a trade mark from bringing an action of infringement against the proprietor of a substantially identical or deceptively similar mark, but permitted either owner to obtain an injunction to restrain the use of the mark by a usurper … .
The doctrine of honest concurrent user meant that a degree of confusion had to be tolerated within the system. The mere fact that the use of a mark would be likely to deceive or cause confusion was not necessarily sufficient to support an injunction restraining that use. That, Lord Diplock explained [in General Electric Co v General Electric Co Ltd [1972] 1 WLR 729 at 745, 748; [1972] 2 All ER 507 at 521, 524], was how s 11 [of the Trade Marks Act 1938 (UK)] and its predecessors came to be interpreted in such a way that something more than mere deception or confusion was required to disentitle a trade mark to protection in a court of justice.
The doctrine of honest concurrent user is also an explanation of the form of s 114 of the Trade Marks Act 1905 (Cth) and if, as we think is the case, s 28 was not intended to effect any relevant change in meaning, it is an explanation of the use of the word 'otherwise' in s 28(d). It is a reference back to s 28(a). Section 28(a) must be read together with s 28(d) so that the reference in s 28(a) to a 'use … which would be likely to deceive or cause confusion' is a reference to a use which would not only be likely to deceive or cause confusion but would be not entitled to protection in a court of justice. The word 'otherwise' in s 28(d) is thus given some work to do. …
This view of s 28 is, we think, supported by the scheme of the Act. Not only is it consonant with s 34 which permits the registration of trade marks which are substantially identical or deceptively similar in the case of honest concurrent user, but any other construction would allow a person who 'assiduously infringed' a trade mark to exploit the infringement by producing a situation in which the use of the registered mark would be likely to deceive or cause confusion … .
92 As Mason CJ recognised, to read s 28(a) as though it were governed by s 28(d) was a difficult exercise, noting at 384:
It may be sufficient to say that in the context of the entire statutory scheme a trade mark is only liable to be expunged under s 28(a) if the use of it becomes likely to deceive or cause confusion and that likelihood is due to the fault or blameworthy conduct of the registered proprietor. However, for the purpose of this appeal, I am content to accept that the fault or blameworthy conduct must be such as to disentitle the mark to protection in a court of justice.
See also Nettlefold at 504-506. Brennan J did not rest his view on s 28(d), noting that "the Act does not make the avoidance of deception or confusion absolute, even in the case of an application for original registration: see, e.g., s 34".
93 As counsel for McCormick & Co observes, the structure of the Act and the provisions with which this appeal is concerned differ markedly from the 1955 Act. Parts 4 and 5 of the Act relate to separate stages in the registration process. The reasoning that led Mason CJ, Dawson, Toohey and Gaudron JJ to hold that s 28 was subject to s 34 of the 1955 Act does not apply under the new Act. Within Division 2 of Part 4, s 44(1) provides for a ground for rejecting an application before acceptance by the Registrar. Subsection 44(1) expressly states that it is subject to s 44(3), the honest concurrent user provision. The whole of s 44 is expressed as an interlocking series of subsections. Section 60, which is part of a Division specifically setting out the grounds for opposing registration, is directed to the position after acceptance. Section 60 is not expressed to be subject to s 44(3), any analogous limitation, or even the Act generally: contrast s 89(1). On its face, it is a stand-alone provision. Furthermore, s 60 is apparently intended to afford a ground of opposition that is additional to the grounds set out in Part 4. Section 57 expressly states that the grounds of opposition may be "any of the grounds on which an application for the registration of a trade mark may be rejected under Division 2 of Part 4" (which includes s 44). Sections 58 to 62 add further grounds for opposition. On its face, there is no honest concurrent user exception to s 60.
94 Further, there are pertinent differences between s 44(1) and s 60. Subsection 44(1) requires a comparison of the applicant's mark with the mark of another person and the goods to which they both apply. If the Registrar concludes the marks are deceptively similar and the goods to which they apply are goods of the same description (and par 44(1)(b) is satisfied), then the registration application must be rejected; that is, of course, unless, in an exercise of discretion under s 44(3), the Registrar determines to permit the registration. Section 60 also requires a comparison, this time between the accepted mark and a mark that, before the relevant date, had acquired a reputation in Australia. If the marks are deceptively similar, then the question is whether the use of the mark, which has been accepted, would be likely to deceive or cause confusion, because of that reputation. Under s 60, the new inquiry centres on the reputation of the earlier mark. That reputation is critical to the opposition under s 60: contrast s 28 of the 1955 Act and see Carnival Cruise Lines Inc v Sitmar Cruises Ltd (1994) 120 ALR 495 at 504 per Gummow J.
95 These differences may reflect the different stages of the registration process at which the questions of deceptive similarity and confusion arise. In this connection the observations of Branson J in Woolworths at 389-390 are apposite. Her Honour said:
The broad provision contained in s 28(a) of the 1955 Act is now reflected in two separate sections of the Act: ss 43 and 60. Section 43, which is a ground for the rejection of an application for registration of a trade mark, looks to the inherent qualities of the trade mark of which registration is sought for the purpose of identifying whether the use of the trade mark would be likely to deceive or cause confusion. Section 60, which is a ground of opposition to registration, is concerned with whether the use of the trade mark of which registration is sought would be likely to deceive or cause confusion by reason of the reputation in Australia of another trade mark.
The fact that s 43 is found in Pt 4, Div 2 of the Act, whilst s 60 is found in Pt 5, Div 2, reflects, in my view, an appreciation of the practical reality that before the acceptance for registration and advertising of an application for registration of a trade mark, the information available to the Registrar touching on issues of likely deception and confusion will be limited. The Registrar will be in a position to assess the extent to which the trade mark for which registration is sought resembles a registered trade mark. He or she will also be in a position to appreciate the proper uses which may be made of the registered trade mark on the one hand, and of the trade mark for which registration is sought, should it be registered, on the other. However, the Registrar cannot reasonably be expected to be cognisant of the reputation of registered and unregistered trade marks generally or, indeed, of the extent, for example, to which all Australians, whose circumstances and geographic locations are diverse, may be assumed to be familiar with particular words. As French J has pointed out, the acceptance stage is not the time for detailed adversarial examination of an application.
The position will change following the filing of a notice of opposition to registration. An opponent is entitled to rely on evidence in support of the opposition and the applicant for registration may rely on evidence in answer to the opposition. By this means, material which could not ordinarily be expected to be available to the Registrar for the purpose of determining whether an application for registration of a trade mark should be accepted, may become available to him or her for the purpose of determining whether the trade mark should be registered.
The provisions of Part 8, especially s 88(2) and s 89, concerning amendment and cancellation of registration perhaps confirm her Honour's analysis, by showing the new legislative response to the situation considered in NSW Dairy. See also Janice Luck, "Distinctiveness, Deceptive and Confusing Marks under the Trade Marks Act 1995" (1996) 7 Australian Intellectual Property Journal 97 at 100-101.
96 Whilst I accept, as counsel for Mary McCormick contends, that the doctrine of honest concurrent user is derived from the common law and pre-dates trade mark legislation, I am of the view that s 44(3) of the Act does not provide an exception to s 60. Accordingly, I would order that the appeal pursuant to s 56 of the Act be allowed and the cross appeal be dismissed. I would set aside the delegate's decision and in lieu refuse registration. I would hear the parties on the question of costs once they have had an opportunity to consider these reasons.
I certify that the preceding ninety-six (96) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Kenny.