N.V. Sumatra Tobacco Trading Company v British American Tobacco Australia Services Limited

Federal Court of Australia|2011-10-31|Before: Collier J

Solicitor for the Applicant: Bennett & Philp Lawyers

Counsel for the Respondent: Mrs K Downes SC and Mr B Le Plastrier

Solicitor for the Respondent: Corrs Chambers Westgarth Lawyers

AND: BRITISH AMERICAN TOBACCO AUSTRALIA SERVICES LIMITED ACN 004 069 649

JUDGE: COLLIER J DATE OF ORDER: 31 OCTOBER 2011 WHERE MADE: BRISBANE

The application be dismissed. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

IN THE FEDERAL COURT OF AUSTRALIA QUEENSLAND DISTRICT REGISTRY GENERAL DIVISION QUD 310 of 2011

AND: BRITISH AMERICAN TOBACCO AUSTRALIA SERVICES LIMITED ACN 004 069 649

JUDGE: COLLIER J DATE: 31 OCTOBER 2011 PLACE: BRISBANE

REASONS FOR JUDGMENT 1 The applicant in the interlocutory proceeding before me was the applicant in the substantive proceeding before a Judge of this Court. The substantive proceeding concerned an application in the original jurisdiction of the Court by way of an appeal from a decision of a delegate of the Registrar of Trade Marks under s 56 of the Trade Marks Act 1995 (Cth) ("the Act"). Pursuant to s 44 of the Act the delegate had refused to register two trade marks of the applicant, namely LUCKY DRAW (Application No 963426) and LUCKY DREAM (Application No 963428) in Class 34 of the Register of Trade Marks. The respondent had, before the delegate, opposed registration of the applicant's trade marks. 2 Before his Honour, the respondent had, by notice of cross-appeal, sought orders that the delegate's decision be varied such that the grounds of opposition advanced by the respondent under s 43 and s 60 be found to be established. 3 In a judgment delivered 9 September 2011 (NV Sumatra Tobacco Trading Company v British American Tobacco Services Limited [2011] FCA 1051) the primary judge varied the decision of the delegate to refuse to register the applicant's trade marks. His Honour ordered that the applicant's trade marks be registered, but only in respect of goods described as ashtrays (not made of precious metal), lighters, matches and smokers' articles. It is not in dispute that these goods represent a small subset of the goods in class 34 for which the applicant sought registration. His Honour otherwise dismissed the application. 4 In relation to the cross-appeal, his Honour found that the s 60 ground was made out in respect of each of the applicant's trade marks. 5 The applicant seeks leave to appeal the decision of his Honour pursuant to s 195(2) of the Act. Section 195(2) provides: Except with the leave of the Federal Court, an appeal does not lie to the Full Court of the Federal Court against a judgment or order of a single judge of the Federal Court in the exercise of its jurisdiction to hear and determine appeals from decisions or directions of the Registrar. 6 The respondent opposes the grant of leave.

Principles 7 There is no dispute between the parties as to principles applicable to an application for leave to appeal from a decision of a Judge of this Court. As the Full Court explained in Décor Corporation Pty Ltd v Dart Industries Inc (1991) 33 FCR 397 at 398-399, the first test is whether, in all the circumstances, the decision is attended with sufficient doubt to warrant its being reconsidered by the Full Court. The second test is whether substantial injustice would result if leave were refused, supposing the decision to be wrong. 8 These tests apply not only generally in respect of applications for leave to appeal, but also specifically in respect of applications for leave to appeal from decisions of this Court under the Act (Food Channel Network Pty Ltd v Television Food Network, GP [2009] FCA 1445, The Scotch Whiskey Association v De Witt (2008) 75 IPR 280, Hills Holdings Limited v Bitek Pty Ltd [2011] FCA 644). 9 Before considering the application of these principles in further detail it is appropriate to turn to the decision from which leave to appeal is sought.

The decision 10 The case before his Honour entailed extensive evidence from numerous witnesses over five days. His Honour's judgment is lengthy and detailed. 11 In summary, the applicant sought registration of the trade marks LUCKY DRAW (Application No 963426) and LUCKY DREAM (Application No 963428) in respect of goods in Class 34 of the Register described as "cigarettes, cigarette filters, kretek cigarette papers, white cigarettes, ashtrays (not made of precious metal), cigars, tobacco, lighters, matches, smokers' articles". LUCKY DREAM was accepted on 20 November 2003 and LUCKY DRAW on 1 December 2003. The respondent was the owner of registered trade marks LUCKIES (Trade Mark 81923) registered 31 July 1944 and LUCKY STRIKE (Trade Mark 151409) registered 5 November 1958, both of which were registered in respect of Class 34 goods described as "manufactured tobacco". The respondent opposed registration of the applicant's trade marks on the following grounds: at the priority date (25 July 2003) each of the applicant's trade marks were deceptively similar to the respondent's registered trade marks (s 44(1)); by the priority date each registered trade mark had acquired a reputation in Australia, and because of that reputation the use by the applicant of each of its trade marks would be likely to deceive or cause confusion (s 60); each of the applicant's trade marks contained a particular connotation such that use of each trade mark in relation to the field of goods for which registration was sought would be likely to deceive or cause confusion (s 43). 12 The delegate found that the s 44 ground of opposition established in relation to the respondent's trade mark LUCKIES, and refused to register either of the applicant's trade marks. 13 After considering the standard of proof in this Court, in an application under s 56 of the Act his Honour turned to ss 43, 44(1) and 60 of the Act which provide as follows: 43 Trade mark likely to deceive or cause confusion An application for the registration of a trade mark in respect of particular goods or services must be rejected if, because of some connotation that the trade mark or a sign contained in the trade mark has, the use of the trade mark in relation to those goods or services would be likely to deceive or cause confusion. 44 Identical etc. trade marks (1) Subject to subsections (3) and (4), an application for the registration of a trade mark ( applicant's trade mark ) in respect of goods ( applicant's goods ) must be rejected if: (a) the applicant's trade mark is substantially identical with, or deceptively similar to: (i) a trade mark registered by another person in respect of similar goods or closely related services; or (ii) a trade mark whose registration in respect of similar goods or closely related services is being sought by another person; and (b) the priority date for the registration of the applicant's trade mark in respect of the applicant's goods is not earlier than the priority date for the registration of the other trade mark in respect of the similar goods or closely related services. Note 1: For deceptively similar see section 10. Note 2: For similar goods see subsection 14(1). Note 3: For priority date see section 12. Note 4: The regulations may provide that an application must also be rejected if the trade mark is substantially identical with, or deceptively similar to, a protected international trade mark or a trade mark for which there is a request to extend international registration to Australia: see Part 17A. 60 Trade mark similar to trade mark that has acquired a reputation in Australia The registration of a trade mark in respect of particular goods or services may be opposed on the ground that: (a) another trade mark had, before the priority date for the registration of the first-mentioned trade mark in respect of those goods or services, 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. Note: For priority date see section 12. 14 In [44]-[65] his Honour discussed principles explained in a large number of cases, including Australian Woollen Mills Limited v F.S. Walton and Company Limited (1937) 58 CLR 641 at 658 and 659, Cooper Engineering Co Pty Ltd v Sigmund Pumps Ltd (1952) 86 CLR 536 at 538, Southern Cross Refrigerating Co v Toowoomba Foundry Pty Ltd (1954) 91 CLR 592 at 595, Registrar of Trade Marks v Woolworths Ltd (1999) 93 FCR 365 at [47] and [50], Berlei Hestia Industries Ltd v Bali Co Inc (1973) 129 CLR 353 at 362 and 363, de Cordova v Vick Chemical Co (1951) 68 RPC 103 at 106, Crazy Ron's Communications Pty Ltd v Mobileworld Communications Pty Ltd (2004) 61 IPR 212 at [72]-[90], and Companhia Souza Cruz Industria E Comercio v Rothmans of Pall Mall (Australia) Ltd (1998) 41 IPR 497 at 504. 15 His Honour summarised the decision of the delegate ([66]-[75]), and then turned to consider evidence upon which the parties relied. Key evidence in that proceeding (and, indeed, evidence to which my attention was directed at the hearing) was that of: Mr Gary Mack, whom his Honour described as the principal witness for the respondent as to the history of the marketing and sale of cigarette products under and by reference to the trade marks LUCKY STRIKE and LUCKIES; a number of tobacco retailers, namely Messrs George Georgas, Robert Macaro, Con Sarris and Maxwell Behrendt; and Professor John Hajek, a Language Scholar whose expert evidence was called by the respondent. 16 His Honour's discussion of the evidence before him, comprising almost 50 pages of the judgment, was extremely detailed, particularly in relation to Mr Mack's evidence, which was recounted by his Honour over the course of thirty pages of the judgment. 17 In relation to Mr Mack's evidence, his Honour did not accept that Mr Mack had developed a body of specialised knowledge emanating from his experience in the tobacco industry which would support opinion evidence from Mr Mack as to: the propensity of consumers and retailers to refer to cigarettes branded "LUCKY DREAM" or "LUCKY DRAW" as "LUCKIES", or to interpret a request for a packet of "LUCKIES" by a customer as meaning a request for "LUCKY DREAM" or "LUCKY DRAW" ([159], [162]); whether a customer would be unlikely to notice being given the wrong packet because of the fast pace of cigarette purchase transactions ([160], [162]); whether the existence of cigarettes in the Australian market with the brand name LUCKY DREAM or LUCKY DRAW would be likely to cause confusion and deception amongst both retailers and consumers ([161], [162]). 18 Otherwise his Honour accepted Mr Mack's evidence, including: that customers commonly abbreviated or used nicknames for a great many cigarette brands on the markets, including reference to Winfield cigarettes as "Winnie" or "Winnies", Peter Jackson cigarettes as "PJs", Stradbroke cigarettes as "Straddies", John Players cigarettes as "JPs" and Peter Stuyvesant cigarettes as "Stuyvos" ([144]); his direct evidence of his observations of ordinary people using ordinary language in the course of common place or ordinary transactions for the sale and purchase of a commonly consumed good based upon his observation of those things over 30 years ([163]); that, when visiting retail sites, he had heard consumers ask for a packet of cigarettes by reference to the full brand name and from time to time had heard a consumer use an abbreviation of a name in asking for particular cigarettes, and had seen retailers respond to the use of a customer's abbreviation ([167], [168]); that he had heard many retailers and customers refer to LUCKY STRIKE cigarettes as "LUCKIES" ([171], [172]), as well as sales representatives and area managers ([184]); that the target customers for LUCKY STRIKE were "urban sophisticates" ([183], [188], [190]); that the focus of Mr Mack's interaction was with retailers rather than consumers ([206]); that not all brands of cigarettes attracted abbreviations or nicknames ([206]); and that the decision to call LUCKY STRIKE by the nickname "LUCKIES" from time to time would have been a carefully managed process by the respondent ([206]). 19 Significantly, in relation to Mr Mack's evidence his Honour observed: 213. Even though Mr Mack accepts that his experience of the sale of tobacco products to consumers is "incidental" or "coincidental" to his experience in the sale, supply and distribution of cigarette products to retailers beginning with his experience in the industry as a cash van salesperson and progressing through the various appointments he held and described, Mr Mack continued to engage with retailers throughout the 30 years to 31 years of his experience. In that context he spoke with retailers and saw and heard retailers engage with consumers. 214. I accept his evidence that retailers came to engage with the brand Lucky Strike by calling the product Luckies and I accept that internally within LHP and BAT the product came to be described as Luckies. I also accept that Mr Mack heard and saw transactions over a long period, perhaps intermittently, but nevertheless over a long period, in which consumers also used the nickname Luckies as a description of Lucky Strike cigarettes. 215. I also accept that the origin of the nickname Luckies, on this evidence, came from the manufacturer and BAT and in that sense the manufacturer largely educated or seeded functional elements of the market (whether at the wholesale level by engaging with retailers or in brand management by retailers to consumers) with use of the name Luckies as a nickname or abbreviation for Lucky Strike cigarettes. Notwithstanding the origin of that behaviour, the conduct became one of the contextual circumstances of the tobacco market so far as the use of those names was concerned irrespective of any question of reputation in either name. The propensity to use Luckies as an abbreviation or nickname for Lucky Strike is simply one of the contextual circumstances of the tobacco market. 216. I also accept that facets of the "darkening market" and the legislative changes which introduced progressive prohibition upon various levels of promotion of cigarette products meant that the oral engagement between a customer and a retailer became the dominant mechanism for the purchase and sale of cigarettes, at least to the extent that Mr Mack understood and observed those transactions. I also accept that transactions occur in some sites, according to Mr Mack's evidence, that are busy and noisy. 217. An important aspect then of the context of the tobacco market is, in Mr Mack's experience, that retailers occasionally used the nickname Luckies in making reference to Lucky Strike cigarettes and participants within BAT in their engagement with external market participants (retailers) used the term Luckies from time to time in making reference to Lucky Strike cigarettes. That may have been either an entirely cultivated pattern of behaviour or behaviour influenced significantly by the experience of market participants in abbreviating some cigarette product names to a nickname. 218. To the extent that the evidence of Mr Mack across the field of his experience (which I accept) suggests that nicknames were adopted for at least some cigarette products (but plainly not all cigarette products), the propensity of retailers and consumers, at least to some degree, to adopt an abbreviation of Lucky Strike to Luckies, conditioned in all probability by a disposition in the manufacturer to characterise Lucky Strike cigarettes as Luckies (by endorsing Luckies on the cigarette packet on the back of that packet and on the flip-top section of the box until the legislative prohibitions came to pass), seems to me, as a practical matter, in transactions of this kind, very likely. 219. These features of the tobacco market and the behavioural characteristics I have found as facts based upon Mr Mack's evidence, were characterising features of the market in July 2003. 20 Further, his Honour accepted the evidence of the retailers Messrs Georgas, Macaro, Sarris and Behrendt. His Honour described the evidence of Mr Macaro as "a useful benchmark description of typical consumer transactions in the engagement between a retailer and a purchaser of cigarette products" (at [247]). His Honour said: 267. However, I do accept that at least in terms of their own experience as retailers they are entitled to not only give evidence of their direct observations of behaviour but that they are entitled to give evidence of whether they, as very experienced retailers, would be confused if asked to sell a packet of cigarettes in response to a request for a packet of Luckies in circumstances where a packet of cigarettes was available for sale under the name Lucky Draw or Lucky Dream. In doing so they are not offering expert opinions about how customers would behave but giving evidence borne out of their own experience, upon the relevant hypothesis. 21 His Honour had also noted evidence of Mr Macaro that: • "…customers came into his business and would ask for "a packet of Luckies please" or "a packet of Lucky Strike please". He says that more than half of the customers who purchased Lucky Strike cigarettes from his business referred to Lucky Strike cigarettes as Luckies and when asked for a packet of Lucky Strike cigarettes he would select the packet from either the display stand behind the counter or the Perspex on the counter (before the particular Victorian statutory restrictions took effect) and then hand the cigarettes to the customer." ([250]) • "…customers "often referred to Lucky Strike cigarettes as Luckies and that more than half of the customers who purchased Lucky Strike cigarettes asked for them by using the name Luckies". He says that when customers asked for Luckies he always knew that they were referring to Lucky Strike cigarettes because this was a common name for Lucky Strike cigarettes, he says, both in the tobacco industry and amongst customers." ([251]) • "…abbreviations or nicknames or slang words are used for some products instead of the full brand. He cites examples as Winnies for Winfield, PJs for Peter Jackson, Dunnies for Dunhill, B&H for Benson & Hedges and Stuyvos for Peter Stuyvesant. He puts Luckies in that camp, as a nickname, abbreviation or slang used by customers for Lucky Strike." ([252]) 22 In relation to the evidence of Professor Hajek, his Honour admitted the witness' affidavit material and expert observations, and noted Professor Hajek's observation that Australian English is well-known for its speaker's marked tendency to use nicknames often formed by abbreviating words, frequently by adding short suffixes to a word ([271]). Further, his Honour accepted that, as an expert in linguistics, Professor Hajek was in a position to express opinions about language structure and grammatical and syntactic analysis. However, his Honour then turned to the complex issue of the disposition of market participants engaged in consumer transactions in relation to particular goods in a particular environment within the context of particular behavioural experience all conditioned by a particular regulatory environment. His Honour was not persuaded that Professor Hajek's predictive opinion (about the propensity of consumers to abbreviate LUCKY DREAM and LUCKY DRAW in the way he suggested) was authoritative in terms of the field of his expertise ([284]). 23 Significantly, his Honour observed: 285. I regard the experience of the retailers and Mr Mack engaged, as they are, as ordinary persons using ordinary language in the context and settings of the commercial transactions in question, as much more compelling. Professor Hajek expresses his opinions in quite short form and although I do not criticise him for that, it seems to me that there is some force in the criticisms made by NVS in their objections to his evidence. 24 Following consideration of all evidence before him, his Honour made extensive findings. Summarised, these findings included the following: LUCKY DRAW or LUCKY DREAM were not words which bear any visual or phonetic resemblance to LUCKY STRIKE ([287]), and there was no real and tangible risk of confusion in the course of the oral transactions described in the evidence ([297], [304]). LUCKY STRIKE is a trade mark which is a feature of the market, albeit a segment of the market which might be described as urban sophisticates ([288]). Over a long period of time the word "LUCKIES" has been used as a nickname for LUCKY STRIKE or an abbreviation or shorthand way by consumer seeking a packet of LUCKY STRIKE cigarettes ([291]). The sale and purchase of cigarettes is dominated by an oral transaction in which the customer asks for a packet of cigarettes by reference to the name of that product ([292]-[293]). The name LUCKIES is demonstrated to have been used by customers in the abbreviated sense of referring to LUCKY STRIKE because of a combination of the education in the use of that name by the respondent and behavioural characteristics of customers in abbreviating LUCKY STRIKE to LUCKIES ([300]). While his Honour was not satisfied of the real or tangible risk of confusion between LUCKY DRAW or LUCKY DREAM, and LUCKY STRIKE, his Honour took a different view in relation to "LUCKIES". At [306] (a paragraph of his Honour's judgment which was the focus of the applicant's grounds for leave to appeal) and [307] his Honour said: 306 However, I am satisfied that there is a real likelihood of confusion between Luckies and Lucky Dream and Lucky Draw having regard to aural considerations. Contextually, in the market for cigarette products, Luckies is treated as an abbreviation of Lucky Strike whether by education by BAT or by reason of a disposition in that market of some consumers and retailers to abbreviate, or both. A retailer hearing a request for a packet of Luckies might well reach to the planogram or below the counter for a packet of Lucky Strike cigarettes or, on the hypothesis that a product is in the planogram or under the shelf called Lucky Draw or Lucky Dream, the retailer hearing the reference to Luckies might (in a real and tangible sense rather than a fanciful remote sense), respond to that request by reaching for the rival's product. Alternatively, from the consumer's side of the counter, a buyer might seek out the purchase of a packet of Lucky Dream or Lucky Draw cigarettes and use the term Luckies with the result that a retailer might supply that consumer with a packet of Lucky Strike cigarettes. I accept, in this context, that a packet of cigarettes bearing the trade mark Lucky Dream or Lucky Draw would reflect differentiating get-up and that the use of the term Luckies by a consumer seeking out a packet of Lucky Draw or Lucky Dream cigarettes is a less likely source of confusion than a retailer hearing a request for Luckies (as a reference to Lucky Strike) and mistakenly selecting the rival's product. 307 A number of the retail witnesses have given evidence of their experience over the period of their working life in the retail side of the tobacco industry including matters which relate to the period as at July 2003. However, in expressing their views specifically of mistakes or their experience of confusion from their own perspective (rather than the opinions they gave of the reactions of consumers in the hypothetical presence of trade marks Lucky Draw and Lucky Dream) they have placed their observations or views at the time and date of the swearing of their affidavits in 2009 rather than expressly turning their attention to events as at the priority date of July 2003. I infer however that their evidence remains good for the period at July 2003 as I have no reason to believe that circumstances or events, at least as they relate to the transactions, greatly altered between 2003 and 2009, so as to put that evidence to one side and entirely discard it. His Honour was satisfied that the s 44 ground was made out as LUCKY DREAM and LUCKY DRAW were deceptively similar to the respondent's registered trade mark "LUCKIES" subject to the question of similar goods. His Honour was also satisfied that the s 60 ground was made out on the footing that each of the applicant's trade marks was deceptively similar to the respondent's registered trade mark "LUCKIES" and because of the reputation subsisting in "LUCKIES". Neither LUCKY DRAW nor LUCKY DREAM was prohibited from registration in respect of "ashtrays (not made of precious metal), lighters, matches or smokers' articles" by reason of s 44 of the Act, and nor was the respondent's opposition made out under s 60. The evidence did not support the respondent's opposition under s 43 of the Act.

Grounds of leave to appeal 25 The grounds of application as found in the application for leave to appeal filed 23 September 2011 are as follows: 1. The Applicant submits that leave to appeal ought to be granted in the present case for the following principal reasons: a. The appeal involves important questions regarding the principles and considerations to be applied in the test of deceptive similarity in trade mark law. b. The refusal of leave to appeal carries significant implications for the Applicant. Whilst the Applicant could re-apply for registration of the two trade marks in suit, doing so will mean that it will lose the benefit of the priority dates which relate to the two present applications. c. The refusal of leave to appeal also carries an additional significant consequence. In light of the primary judge's decision, if the Applicant were to commence using either LUCKY DREAM or LUCKY DRAW as trade marks it would be exposed to the prospect of a trade mark infringement suit brought by the Respondent in reliance upon its registered trade mark LUCKIES. Whilst the Applicant considers any question of trade mark infringement, at this or any later time, is separate and distinct from the context in which the primary judge considered the issue of deceptive similarity (on the question of registrability), it may be that the Respondent will seek to rely on the primary judge's decision to estop any defence proposed by the Applicant to trade mark infringement. 2. The Applicant wishes to supplement these grounds in the course of oral submissions at the hearing of the leave application. 26 The grounds for leave to appeal set out in the interlocutory application appear to go exclusively to the question whether the applicant would suffer substantial injustice should his Honour's decision be wrong and leave be refused. Nothing in the grounds as filed advances the claim that the decision of his Honour is affected by sufficient doubt to warrant reconsideration, as required by the Full Court in Décor. 27 In this case no issue was taken by Ms Downes SC for the respondent in relation to this matter. This may well be because the solicitor for the applicant, in an affidavit filed 23 September 2011, deposed as to reasons why his Honour erred in the primary judgment. In my view it is better practice for the applicant, in the actual application for leave to appeal, to set out grounds for leave to appeal. In any event, in this case Ms Downes SC for the respondent conceded that the applicant would suffer substantial injustice as contemplated by the Full Court in Décor if the applicant were denied an opportunity to appeal supposing the decision of his Honour were wrong (transcript p 39 l 35). At the hearing, and in light of Mr Bennett's affidavit and submissions of both parties, the applicant's case proceeded on the following grounds: In applying the test for determining whether each of the applicant's trade marks were deceptively similar to the respondent's trade mark LUCKIES, his Honour incorporated into his analysis a reputational aspect - namely that LUCKIES is related to LUCKY STRIKE - despite his Honour's acknowledgment that reputation is not relevant in relation to the issue of deceptive similarity under s 44 of the Act. The basis for his Honour's finding at [306] appears to be an assumption that the opposed marks would be shortened to LUCKIES, however his Honour did not make any finding to this effect. 28 In support of these grounds, the applicant submitted, in summary, as follows: In focusing on the likelihood of confusion between the applicant's trade marks and LUCKIES having regards to aural considerations, the primary judge incorrectly took into account reputational aspects of LUCKIES and LUCKY STRIKE trade marks in the question of deceptive similarity. The question of deceptive similarity involves a two-stage test, namely: whether the marks look alike or sound alike; and if they do, whether the resemblance is likely to deceive. The trial Judge did not conduct the first stage of the test, and whether the comparison of the competing marks as a whole lead to an overall resemblance of similarity. Visually the competing marks are very different, and aurally they are not alike because each of the applicant's trade marks contains a second, distinct word. The primary judge reached the erroneous conclusion as to deceptive similarity based on the reputation of "LUCKIES" as an abbreviation for LUCKY STRIKE, and the propensity for confusion if the term "LUCKIES" was spoken in the context of a consumer purchasing cigarettes. This was an incorrect application of the two-stage test.

Did his Honour incorporate a reputational aspect into his analysis of whether deceptive similarity had been established? 29 Before his Honour the applicant claimed that the delegate had erred in applying s 44 of the Act by having regard to the trade reputation claimed by the respondent to subsist in its trade marks LUCKIES and LUCKY STRIKE rather than the marks as registered. Before me, the applicant submits that his Honour similarly erred in incorporating a reputational aspect into his analysis of whether the applicant's trade marks were deceptively similar to the respondent's trade marks under s 44. 30 Reputation is clearly an issue for consideration under s 60 of the Act, not s 44. 31 There is no doubt that, in the course of the judgment, his Honour had regard to the reputation claimed by the respondent as subsisting in its trade marks. However I am not satisfied that his Honour confused issues of reputation with principles relevant to s 44. The relevant passages in his Honour's judgment are [306]-[311] which followed his Honour's consideration of the likelihood of confusion between LUCKY STRIKE on the one hand, and LUCKY DREAM and LUCKY DRAW on the other. The relevant passages are as follows: 306. However, I am satisfied that there is a real likelihood of confusion between Luckies and Lucky Dream and Lucky Draw having regard to aural considerations. Contextually, in the market for cigarette products, Luckies is treated as an abbreviation of Lucky Strike whether by education by BAT or by reason of a disposition in that market of some consumers and retailers to abbreviate, or both. A retailer hearing a request for a packet of Luckies might well reach to the planogram or below the counter for a packet of Lucky Strike cigarettes or, on the hypothesis that a product is in the planogram or under the shelf called Lucky Draw or Lucky Dream, the retailer hearing the reference to Luckies might (in a real and tangible sense rather than a fanciful remote sense), respond to that request by reaching for the rival's product. Alternatively, from the consumer's side of the counter, a buyer might seek out the purchase of a packet of Lucky Dream or Lucky Draw cigarettes and use the term Luckies with the result that a retailer might supply that consumer with a packet of Lucky Strike cigarettes. I accept, in this context, that a packet of cigarettes bearing the trade mark Lucky Dream or Lucky Draw would reflect differentiating get-up and that the use of the term Luckies by a consumer seeking out a packet of Lucky Draw or Lucky Dream cigarettes is a less likely source of confusion than a retailer hearing a request for Luckies (as a reference to Lucky Strike) and mistakenly selecting the rival's product. 307. A number of the retail witnesses have given evidence of their experience over the period of their working life in the retail side of the tobacco industry including matters which relate to the period as at July 2003. However, in expressing their views specifically of mistakes or their experience of confusion from their own perspective (rather than the opinions they gave of the reactions of consumers in the hypothetical presence of trade marks Lucky Draw and Lucky Dream) they have placed their observations or views at the time and date of the swearing of their affidavits in 2009 rather than expressly turning their attention to events as at the priority date of July 2003. I infer however that their evidence remains good for the period at July 2003 as I have no reason to believe that circumstances or events, at least as they relate to the transactions, greatly altered between 2003 and 2009, so as to put that evidence to one side and entirely discard it. 308. I also accept that the evidence demonstrates that cigarettes are also bought by third parties for others. The third party purchasers may not be smokers and the "once removed" consideration suggests a greater likelihood of confusion emerging in respect of those transactions. 309. I accept that the promotional material described by Mr Mack (see [117]) was distributed into the market. I infer that if the manufacturer went to the trouble and expense of producing a range of promotional material of that kind, it must have been used and distributed in the way suggested in the evidence. 310. Notwithstanding the acceptance by Mr Mack and Ms Wallace of the limitations in the health and standing of the brand Lucky Strike, I accept that a reputation has been demonstrated by reference to sales of a significant absolute number of sticks over a long period of time in both names. I also accept that notwithstanding the importance of get-up, colouring and livery, the dominant feature in the mind of retailers and consumers governing the sale, selection and purchase of the product is the name and it seems to me that even though the livery has, in one sense, a persona, the product is known, that is to say the reputation, resides in the brand name, albeit in a stylised or crafted way. 311. I am satisfied that the s 44 ground is made out as Lucky Dream and Lucky Draw are deceptively similar to BAT's registered trade mark "LUCKIES" subject to the question of "similar goods". I am also satisfied that the s 60 ground is made out on the footing that each of NVS's trade marks are deceptively similar to BAT's "LUCKIES" mark and because of the reputation subsisting in "LUCKIES", each NVS trade mark would be likely to deceive or cause confusion. 32 While the applicant focuses on [306] of his Honour's judgment, that paragraph should not be read in isolation. 33 First, I consider from reviewing [306]-[311] that his Honour's reference to "reputation" at [310] and [311] was in relation to the s 60 ground advanced by the respondent. While there is no specific delineation between the analysis of s 44 and s 60, the separate discussions of principles applicable to s 44 and s 60 in [306]-[310] is evident, culminating in his Honour's conclusions in [311]. 34 Second, I accept the respondent's submission that, as a matter of fact, the word "Luckies" was found by his Honour to be treated as an abbreviation of "Lucky Strike" in the market for the buying and selling of cigarettes at the priority date. In making this finding, his Honour had particular reference to the evidence of Mr Mack at [167], [168], [171], [172], [214], [215], [217] and [218], and the evidence of Mr Macara at [250], [251] and [252]. In so doing, his Honour clearly considered "all the surrounding circumstances; and … 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 mark" (Cooper Engineering at 538). In particular at [215] his Honour said: 215. I also accept that the origin of the nickname Luckies, on this evidence, came from the manufacturer and BAT and in that sense the manufacturer largely educated or seeded functional elements of the market (whether at the wholesale level by engaging with retailers or in brand management by retailers to consumers) with use of the name Luckies as a nickname or abbreviation for Lucky Strike cigarettes. Notwithstanding the origin of that behaviour, the conduct became one of the contextual circumstances of the tobacco market so far as the use of those names was concerned irrespective of any question of reputation in either name. The propensity to use Luckies as an abbreviation or nickname for Lucky Strike is simply one of the contextual circumstances of the tobacco market. (Emphasis added.) 35 That it was clearly appropriate for his Honour to have unchallenged regard to evidence of Mr Mack, and tobacco retailer Mr Macaro in making findings as to propensity of tobacco purchasers to abbreviate "LUCKY STRIKE" to "LUCKIES", particularly where purchasers may be in a hurry to move on after their purchase (at [298]), is clear from observations of the High Court in Cooper Engineering at 539 where their Honours said: 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. As Lord Parker said in the passage cited, you must consider the nature and kind of customer who would be likely to buy the goods. A purchaser of spray nozzles and sprinklers would not be likely to be lacking in discernment. He would not be in a hurry to buy. He would not be likely to pay any attention to the presence of a common word like rain in the conbination. 36 His Honour at [306] found, inter alia, that, in the context of the tobacco market, a retailer might well experience confusion on being asked for a packet of "LUCKIES" by a consumer, and experience uncertainty as to whether the customer was requesting tobacco under the applicant's or respondent's trade mark. In my view this is not a reputational issue. It is an issue squarely within the confines of an analysis of deceptive similarity under s 44 of the Act. 37 I am not persuaded that his Honour's analysis in this respect is afflicted by sufficient doubt to warrant reconsideration.

Did his Honour find that the opposed marks would be shortened to "LUCKIES"? 38 The applicant submits that his Honour's finding at [306] is flawed because his Honour did not make any finding to the effect that the applicant's trade marks "LUCKY DREAM" or "LUCKY DRAW" would be abbreviated to "LUCKIES". 39 I do not accept this submission. At [159]-[160] his Honour observes: 159. Having regard to all of those matters and Mr Mack's experience, Mr Mack then goes on to express the opinion that if a brand of cigarettes called Lucky Dream or Lucky Draw were available in the Australian market, he considers that a significant proportion of consumers and retailers would be likely to refer to them as "Luckies"; a retailer confronted with a request for a packet of Luckies in circumstances where the consumer is seeking to purchase a packet of Lucky Draw or Lucky Dream cigarettes, is likely to interpret the request as a request for a packet of "Lucky Strike" cigarettes; and a retailer confronted with a request for a packet of Luckies by a customer seeking a packet of "Lucky Strike" cigarettes might interpret the request as a request for a packet of Lucky Dream or Lucky Draw cigarettes. 160. Moreover, Mr Mack expresses the opinion that since transactions for the purchase of cigarettes happen at a fast pace, the customer is unlikely to notice being given the wrong packet. Mr Mack also expresses the opinion that customers and retailers are likely to think that Lucky Dream or Lucky Draw cigarettes are simply a variant of "Lucky Strike" cigarettes and that other consumers and retailers are likely to think that Lucky Dream or Lucky Draw cigarettes are Lucky Strike cigarettes in different packaging. 40 Later in his judgment, after considering the oral and affidavit evidence of Mr Macaro and the affidavit evidence of the other tobacco retailers, his Honours says: 266. Mr Macaro, like the other tobacco retailers, swore an affidavit in which he expresses opinion evidence about the question of confusion in the mind of consumers. Evidence of this kind was also put on in that form by BAT from Mr George Georgas, Mr Sarris and Mr Behrendt. Although I propose to admit into evidence all of the affidavits of these witnesses, I do not accept that any of them has established a foundation for the giving of expert opinion evidence because they have not established a proper body of specialised knowledge for the purposes of s 79 of the Evidence Act. 267. However, I do accept that at least in terms of their own experience as retailers they are entitled to not only give evidence of their direct observations of behaviour but that they are entitled to give evidence of whether they, as very experienced retailers, would be confused if asked to sell a packet of cigarettes in response to a request for a packet of Luckies in circumstances where a packet of cigarettes was available for sale under the name Lucky Draw or Lucky Dream. In doing so they are not offering expert opinions about how customers would behave but giving evidence borne out of their own experience, upon the relevant hypothesis. 268. Mr Mack is entitled to give such evidence as well. 41 In [306], upon which the applicant focuses, his Honour specifically states: …A retailer hearing a request for a packet of Luckies might well reach to the planogram or below the counter for a packet of Lucky Strike cigarettes or, on the hypothesis that a product is in the planogram or under the shelf called Lucky Draw or Lucky Dream, the retailer hearing the reference to Luckies might (in a real and tangible sense rather than a fanciful remote sense), respond to that request by reaching for the rival's product. Alternatively, from the consumer's side of the counter, a buyer might seek out the purchase of a packet of Lucky Dream or Lucky Draw cigarettes and use the term Luckies with the result that a retailer might supply that consumer with a packet of Lucky Strike cigarettes. I accept, in this context, that a packet of cigarettes bearing the trade mark Lucky Dream or Lucky Draw would reflect differentiating get-up and that the use of the term Luckies by a consumer seeking out a packet of Lucky Draw or Lucky Dream cigarettes is a less likely source of confusion than a retailer hearing a request for Luckies (as a reference to Lucky Strike) and mistakenly selecting the rival's product… 42 In [306], his Honour has clearly made a specific finding as the likelihood that either LUCKY DREAM or LUCKY DRAW would be abbreviated to "LUCKIES" in the relevant market. Accordingly, this ground of the application is not substantiated.

Is there a "two-stage" test in respect of deceptive similarity as submitted by the applicant, which his Honour failed to apply? 43 At [59]-[61] of the primary judgment his Honour discussed the concept of "deceptive similarity" in the following terms: 59. Deceptive similarity by s 10 has at its centre the notion of resemblance. A trade mark is by that section taken to be deceptively similar to another mark if it so nearly resembles that mark that it is likely to deceive or cause confusion. The notion of resemblance involves an assessment by the Court of the visual and aural impressions made by the two marks but the likelihood of deception or confusion involves an assessment of what would be the probable visual and aural impressions on customers and potential customers which would arise if the marks were being used properly and within the scope of the registration: Shell Co. of Australia Ltd v Esso Standard Oil (Aust) Ltd [1963] HCA 66; (1963) 109 CLR 407 at 416 per Windeyer J; C A Henschke & Co v Rosemount Estates Pty Ltd [2000] FCA 1539; (2000) 52 IPR 42 per Ryan, Branson and Lehane JJ at [42]; Gardenia Overseas Pty Ltd v Garden Co. Ltd (No. 2) [1994] FCA 1280; (1994) 29 IPR 485 at 493; and Coca-Cola Co. v All-Fect Distributors Ltd [1999] FCA 1721; (1999) 96 FCR 107 at 122. In Gardenia, the differentiating circumstances in the aural reception of the words "garden" and "gardenia" involved the syllable structure of the words and the emphasis in pronunciation of the words. 60. Although a person might be caused to wonder about the source or origin of goods in the course of aural references to a word or mark in the course of a transaction, the question ultimately is whether there is a real and tangible risk of confusion occurring. In considering aural comparisons the Court has regard to the natural and ordinary pronunciation of the words in question although evidence is admissible to establish a pronunciation that departs from the orthodox pronunciation. Such evidence might be called from participants in the relevant trade, or consumers: Wingate Marketing Pty Ltd v Levi Strauss & Co. [1994] FCA 1001; (1994) 49 FCR 89 at 129 per Gummow J; and Pacific Publications Pty Ltd v IPC Media Pty Ltd [2003] FCA 104; (2003) 57 IPR 28 at 56 per Bennett J. 61. One further matter should be mentioned in relation to reputation in the registered trade marks against which the application for the opposed marks is considered. At [44], the Full Court in C A Henschke & Co. v Rosemount Estates Pty Ltd [2000] FCA 1539; (2000) 52 IPR 42 observed that what is required is, essentially, a comparison between the mark of the registered owner and that of the alleged infringer or, alternatively, the applicant for registration. A wider enquiry of the kind that might be undertaken in a passing off action is not appropriate. See also New South Wales Dairy Corp. v Murray Goldburn Co-operative Co. Ltd (1989) 14 IPR 26 at 67 per Gummow J emphasising that deceptiveness flows not only from the degree of similarity itself between the marks but also the effect of that similarity considered in relation to the circumstances of the goods, prospective purchasers and the market relevant to the monopoly attached to the registered trade mark. Thus, the Court is not looking to the totality of the conduct in the same way as in a passing off suit. Here, of course, the question of deceptiveness involves a consideration of the degree of similarity between the registered marks and the trade marks proposed for registration assuming the natural use of NVS's trade marks across the full field of goods for which registration is sought having regard to the effect of that similarity taking account, particularly, of all of the considerations mentioned in the passages quoted at [44], [45], [47], [48] and [52] of these reasons and [44]-[65] generally. 44 While submitting that this is the correct test in assessing deceptive similarity, the applicant then submitted that his Honour failed to properly consider the issue of deceptive similarity in respect of the respondent's trade mark "LUCKIES" in accordance with the two-stage test explained in Cooper Engineering at 538-539 and by Reeves J in Food Channel [2009] FCA 1445 at [72].

Cooper Engineering 45 In Cooper Engineering the respondent applied to register the trade mark "Rainmaster" in respect of "water spraying installations for horticultural or agricultural purposes and parts thereof". The appellant, who was the proprietor of a trade mark "Rain King" in respect of "spray nozzles, sprinklers and their parts", opposed the application. The appellant contended that the word "Rainmaster" was so similar to the words "Rain King" that it was "likely to deceive" within the meaning of the Act, and opposed registration in reliance on s 25 of the Trade Marks Act 1905 (Cth) (same description of goods and so nearly resembling the appellant's trade mark as to be likely to deceive) and s 114 of the Trade Marks Act 1905 (Cth) (a mark the use of which would be likely to deceive). 46 The Registrar of Trade Marks decided that there was no risk of confusion between the two trade marks and dismissed the opposition. 47 On direct appeal to the High Court from the decision of the Registrar the Court dismissed the appeal. 48 At 538 their Honours, in a joint judgment, observed as follows: The proper approach to the answer to this question is well settled. 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, "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.; Reckitt & Colman (Aust.) Ltd. v. Boden, 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. The onus of proving that there is no reasonable likelihood of deception lies upon the applicant for registration. If the question is left in dubio the application must be refused: Eno v. Dunn. (Footnotes omitted.)

Food Channel 49 In Food Channel Network Pty Ltd v Television Food Network GP [2009] FCA 1445, Reeves J held at [72]: Furthermore, in Cooper Engineering, the High Court held that this process involves a two stage test. The first stage is whether the marks really look alike, or sound alike. The second stage is, if they do, whether the resemblance is likely to deceive: see Cooper Engineering at 538 to 539 and Registrar of Trademarks at [84], per Branson J. 50 The reference to the findings of Branson J was a reference to her Honour's decision in Registrar of Trade Marks v Woolworths Ltd (1999) 93 FCR 365, where at [84] her Honour said: The High Court indicated in the Cooper Engineering case, at 539, that the question of whether one trade mark so resembled another trade mark as to be likely to deceive is, in substance, a two stage test. First, do the marks really look alike or sound alike? Secondly, if they do, is the resemblance likely to deceive? The court rejected a contention that it would be sufficient that the two marks conveyed the same idea (see also, Southern Cross Refrigerating Co. v Toowoomba Foundry Pty Ltd (1954) 91 CLR 592 at 607).

Finding 51 Ms Downes SC for the respondent submits that, in fact, there is no "two-stage test" as propounded by the applicant. In my view that submission is correct. Indeed there is no suggestion at all in Cooper Engineering that a two-stage process of reasoning - requiring satisfaction of the first stage before the Court can consider satisfaction of the second stage - is the correct approach to be adopted by the Court in determining whether one trade mark is deceptively similar to another. Rather, by reference to the judgment of Parker J (as he then was) in Pianotist Company Ltd's Application (1906) 23 RPC 774 the High Court explained that there must be consideration of all the surrounding circumstances and 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. 52 Examination of comments of Branson J in Woolworths to which reference is made in Food Channel [2009] FCA 1445 indicate that her Honour interpreted comments of the High Court in Coopers as being "in substance" a two-stage test. However French and Tamberlin JJ, who formed the majority in that case, did not make any such finding. Indeed French J in Woolworths explained the relevant test as follows: 49 The question of fact for the Court on an appeal from the Registrar in a case of alleged deceptive similarity between marks was posed by the High Court in Australian Woollen Mills Ltd v F.S. Walton & Co Ltd (supra) at 658: "...whether in fact there is such a reasonable probability of deception or confusion that the use of the new mark and title should be restrained." The reference to "restrained" reflects the fact that unlike this case the Australian Woollen Mills Ltd case was an appeal in an infringement action. The judgment of the likelihood of deception or confusion is a very practical one and what has long been accepted as the proper approach to making that judgment was set out in Australian Woollen Mills Ltd. It requires assessment of the effect of the challenged mark upon the minds of potential customers. Impression or recollection taken away from the point at which the challenged mark is observed will be the basis of any belief about a connection between the new and the old marks. The effect of spoken description must be considered. What confusion or deception may be expected is to be based upon the behaviour of ordinary people. As potential buyers of goods they are not to be credited with high perception or habitual caution. Exceptional carelessness or stupidity may be disregarded. The question ultimately is not susceptible of much discussion: "It depends on a combination of visual impression and judicial estimation of the effect likely to be produced in the course of the ordinary conduct of affairs." (659) 50 In Southern Cross Refrigerating Co v Toowoomba Foundry Pty Ltd (1954) 91 CLR 592 at 594-5, which concerned the 1905 Act, Kitto J set out a number of propositions which have frequently been quoted and applied to the 1955 Act. The essential elements of those propositions continue to apply to the issue of deceptive similarity under the 1995 Act. Applied also to service marks and absent the imposition of an onus upon the applicant they may be restated as follows: (i) To show that a trade mark is deceptively similar to another it is necessary to show a real tangible danger of deception or confusion occurring. A mere possibility is not sufficient. (ii) A trade mark is likely to cause confusion if the result of its use will be that a number of persons are caused to wonder whether it might not be the case that the two products or closely related products and services come from the same source. It is enough if the ordinary person entertains a reasonable doubt. It may be interpolated that this is another way of expressing the proposition that the trade mark is likely to cause confusion if there is a real likelihood that some people will wonder or be left in doubt about whether the two sets of products or the products and services in question come from the same source. (iii) In considering whether there is a likelihood of deception or confusion all surrounding circumstances have to be taken into consideration. These include the circumstances in which the marks will be used, the circumstances in which the goods or services will be bought and sold and the character of the probable acquirers of the goods and services. (iv) The rights of the parties are to be determined as at the date of the application. (v) The question of deceptive similarity must be considered in respect of all goods or services coming within the specification in the application and in respect of which registration is desired, not only in respect of those goods or services on which it is proposed to immediately use the mark. The question is not limited to whether a particular use will give rise to deception or confusion. It must be based upon what the applicant can do if registration is obtained. In respect of the last proposition, Mason J observed in Berlei Hestia at 362: "...the question whether there is a likelihood of confusion is to be answered, not by reference to the manner in which the respondent has used its mark in the past, but by reference to the use to which it can properly put the mark. The issue is whether that use would give rise to a real danger of confusion." 53 More recently the Full Court considered the issue of deceptive similarity under s 44 in Food Channel Network Pty Ltd v Television Food Network GP [2010] FCAFC 58. At [89]-[90] their Honours quoted extensively from Cooper Engineering, and continued at [91] to consider principles relevant to the issue of deceptive similarity by reference to the decision of the Full Court in Crazy Ron's Communications Pty Ltd v Mobileworld Communications Pty Ltd [2004] FCAFC 196. Specifically, their Honours adopted the principles explained in Crazy Ron's, which were as follows: [73] First, as the primary judge pointed out, the question of deceptive similarity of marks, unlike substantial identity, is not to be judged by a side-by-side comparison... [75] Second, the question of deceptive similarity involves factual issues in respect of which similarities of sound may be important... [76 Third, it is necessary to show a tangible danger of deception or confusion, although it is enough if an ordinary person entertains a reasonable doubt... [77] Fourth ...the court must make allowance for the imperfect recollection a person may have of the registered trade mark in determining whether another mark so nearly resembles the registered mark that it is likely to deceive or cause confusion... [79] Fifth, the authorities also recognise that the concept of imperfect recollection may be applied to trade marks other than those consisting simply of an invented word (as in Aristoc v Rysta and Berlei v Bali). If a registered trade mark includes words which can be regarded as an essential feature of the mark, another mark that incorporates those words may well infringe the registered trade mark. The other mark may also infringe if there is a tangible danger of deception or confusion by reason of consumers retaining an imperfect recollection of the words constituting an essential feature of the registered mark. 54 This list appears to be cumulative, rather than indicate a staged process. At no point does the Full Court in Food Channel [2010] FCAFC 58 find that a determination of deceptive similarity involves a two-stage process, as submitted by the applicant in this case. 55 I do not accept that there is such a two-stage process, or that his Honour was incorrect in failing to apply it.

Conclusion 56 In my view the submissions of the applicant do not raise sufficient doubt with respect to the decision of his Honour to warrant its being reconsidered by the Full Court. 57 I will ask the parties for submissions in relation to costs. 58 The application is dismissed. I certify that the preceding fifty-eight (58) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Collier.

Trade Marks Act 1995(Cth)ss 43, 44, 56, 60, 195(2)

Trade Marks Act 1905(Cth)ss 25, 114

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