NEC Corporation v Punch Video

nec trade marks 6 NEC has registered a number of trade marks with priority dates earlier than the priority date for the registration of the Trade Mark. Specifically identified in NEC's further amended statement of issues on this appeal are the following: Application/ Mark Class

Registration No. 177937 NEC (stylised) 9 326407 NEC (stylised) 37 326408 NEC (stylised) 42 454938 NEC (stylised) 16 460413 NEC (stylised) 42 648027 NEC IMAGE RISCSTATION 9 648028 NEC EXPRESS RISCSERVER 9 674029 NEC (stylised) 9, 37, 42 674031 NEC (stylised) 16 724362 NEC EXPRESS 9 735957 NEC EXPRESSBUILDER 9 750871 NEC ULTRACARE 37 485985 NEXTAR 9

grounds of objection 7 NEC's principal ground of opposition to the registration of the Trade Mark is that it is deceptively similar to one or more of its registered trade marks in respect of similar goods that have earlier priority dates (s 44 of the Trade Marks Act 1995 (Cth) ('the Act')). 8 Additionally NEC places reliance on s 43 of the Act which provides, in effect, that an application for the registration of a trade mark must be rejected if, because of some connotation that the trade mark has, the use of the trade mark would be likely to deceive or cause confusion. Further NEC contends that use by Punch Video of the Trade Mark would constitute misleading or deceptive conduct within the meaning of s 52 of the Trade Practices Act 1974 (Cth) and thus be contrary to law (s 42(b) of the Act). Finally NEC contends that the Trade Mark is not capable of distinguishing the goods of Punch Video from the goods of other traders, including NEC (s 41(2) of the Act).

reasons of the delegate 9 The Delegate found that some of the goods and services of Trade Mark Nos 177937, 326407 and 674029 are similar or closely related to the goods in respect of which the Trade Mark is sought to be registered. However, the Delegate did not think it likely that consumers would infer a connection between NEC and a trade mark in which the element 'nec' formed part of a single word. She expressed the view that: 'If I were to accept this argument then I would also need to accept that ordinary English words, such as "nectarine", "necessary" or "necromancy" for instance, when used as trade marks for the goods, Automobile audio‑visual entertainment equipment, would be taken as indicating a connection with [NEC]. The opponent has in fact, no registrations where the element NEC forms only part of a word.' 10 I interpolate that evidence before the Court establishes that a subsidiary of NEC Australia Pty Limited, itself a subsidiary of NEC, is the registered owner in Australia of Trade Mark No 499006 NECARE for services in class 37 (service and maintenance of PABX and other communication systems). This trade mark was registered on 7 November 1988. 11 The Delegate took the view that whether NEC's trade marks are perceived as the word 'NEC' or the letters 'N‑E‑C', the impression created by the trade marks is different from the word 'necvox'. She stated: 'Although [NEC's] trade marks are wholly contained in the subject trade mark this is insufficient to satisfy a claim that [Punch Video's] trade mark is deceptively similar to [NEC's] trade marks. To reach such a conclusion I would have to ignore the significance of the suffix that clearly differentiates the trade marks.' 12 The Delegate concluded that NEC had not established the ground of opposition under s 44 of the Act. For similar reasons the Delegate also rejected the other grounds of opposition to the registration of the Trade Mark relied upon by NEC.

consideration 13 Section 44(1) of the Act relevantly provides: '(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.' 14 Section 10 of the Act defines 'deceptively similar' as follows: 'For the purposes of this Act, a trade mark is taken to be deceptively similar to another trade mark if it so nearly resembles that other trade mark that it is likely to deceive or cause confusion.' 15 In Registrar of Trade Marks v Woolworths at 382 French J, with whom Tamberlin J agreed, formulated the following propositions: '(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 Industries Ltd v The Bali Co Inc (1973) 129 CLR 353 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."' 16 Registration of the Trade Mark is sought in stylised lettering as follows: 17 NEC has registered trade marks consisting of the letters 'NEC' in stylised lettering ('the NEC mark') in the following forms: (see, for example, Trade Mark Nos 177937 and 326407) (see, for example, Trade Mark No 674029) The second form of the NEC mark (ie Trade Mark No 674029) has been NEC's primary mark since 1998. Although frequently reproduced in blue lettering, Trade Mark No 674029 has no restriction as to colour. 18 NEC and its subsidiaries and related companies operate a global manufacturing and distribution business in the computer, telecommunications, information technology and electronics industries. NEC was originally called Nippon Electronic Company Limited ('Nippon'). Nippon commenced business in Japan in 1899 with the production, sale and maintenance of telephone and switching systems. During the twentieth century Nippon expanded worldwide changing its name to NEC Corporation in 1983. As at September 2003 NEC had a total of 196 subsidiaries, 106 of which operate outside of Japan. As at March 2003 the NEC Group employed more than 145,000 people and in the fiscal year ending 31 March 2003 reported gross sales of over US$39 billion. 19 The NEC mark has been in use as a trade mark since 1961. It is not in dispute that NEC and the NEC Group have extensively advertised and promoted their goods and services under the NEC mark throughout the world including in Australia. Nor is it in dispute that the NEC mark has consequently become an extremely well‑known trade mark or brand. I am satisfied that as at 19 November 1999, the priority date for the registration of the Trade Mark, NEC enjoyed a substantial reputation in the NEC marks in Australia and elsewhere. 20 Punch Video was originally fully owned by Chang Lung Wen ('Mr Chang'). Mr Chang now owns 50% of the share capital of Punch Video and Chan Ghim Hong ('Mr Chan') owns the other 50%. Mr Chang and his family own Punch Video Inc., a company incorporated under the laws of Taiwan. Punch Video Inc. has manufactured automobile hi‑fi equipment for more than 20 years and automobile audio‑visual equipment since 1996. The Trade Mark was used by Punch Video Inc., apparently as an unregistered trade mark, before 1998. Since that time Punch Video has applied in approximately 16 jurisdictions to register the Trade Mark. The Trade Mark has been registered in some jurisdictions but in other jurisdictions opposition proceedings instituted by NEC remain to be resolved. 21 NEC contends that the Trade Mark is deceptively similar to each of the NEC marks identified in [17] above. This contention is based principally on the claim that the most important elements of the NEC marks and the Trade Mark are the letters or word element. On this basis NEC argued that the Trade Mark would, or might well, be seen by consumers as being constituted by the NEC mark followed by the non‑distinctive element 'vox' conveying the meaning of voice or sound. 22 Both parties called expert evidence on the question of whether the sale of automobile audio‑visual entertainment equipment in Australia under the Trade Mark would be likely to signify to consumers that the equipment was made by NEC or by a company with an affiliation with NEC. NEC called a Senior Lecturer in Marketing, Dr Margaret Anne Craig‑Lees ('Dr Craig‑Lees') and Punch Video called a Marketing Psychologist, Ms Lavinia Jeanne Strachan ('Ms Strachan'). 23 Dr Craig‑Lees expressed the opinion that NEC is a highly visible global brand that is strongly associated with communications (audio/visual) technology, household electrical goods, computers and software. She expressed the further opinion that consumers who are familiar with NEC as a trade mark or 'identifier' would 'in all probability' associate a product in the categories of communications (audio/visual) technology, electrical goods, computers and software products bearing the Trade Mark with NEC. Dr Craig‑Lees considered that the incorporation of the word 'vox' into the Trade Mark would strengthen this association because 'vox' is often used as part of a trade mark or brand in relation to sound equipment/products, music groups, discussion groups and news groups. She instanced, amongst others, '94.5 VOX fm' (a radio station), 'Vox.com' (an online art newsgroup) and 'Vox amplification' (a manufacturer of speakers). 24 By contrast Ms Strachan, while acknowledging that there would be very few consumers in Australia who would not recognise the NEC mark, did not believe that there would be a likelihood that consumers seeing the Trade Mark used in respect of automobile audio‑visual equipment in Australia would assume an association with NEC. She placed weight on the fact that the NEC mark is seen as a combination of three letters, and not as a word, and that the Trade Mark is likely to be pronounced as a single word. She additionally placed weight on the differentiation between the two marks made by the use of lower case for the Trade Mark and upper case for the NEC marks. She stressed, however, that consumers would not consciously note this difference. Ms Strachan thought that consumer familiarity with the word 'vox' in the context of audio or voice recording, and with a brand of audio equipment called Voxon, would make it less, rather than more, likely that they would associate the Trade Mark with NEC. 25 No additional evidence was placed before the Court concerning the brand 'Voxon' to which Ms Strachan referred. Unlike the brand 'Woolworths', 'Voxon' does not have notorious familiarity to Australian consumers of which judicial notice may be taken (see Registrar of Trade Marks v Woolworths at 386 per French J). I am for this reason unable to attribute weight to Ms Strachan's view that Australian consumers of automobile audio‑visual equipment would be familiar with the brand 'Voxon'. I accept, however, that Australian consumers are likely to be aware that the word 'vox' is not uncommonly used in respect of audio equipment or voice broadcasting generally. 26 The experts were in agreement that brands and marks are primarily recognised visually rather than aurally. For this reason I attribute little weight to the different ways in which 'NEC' and 'necvox' are ordinarily pronounced. For the same reason I consider that any of the NEC trade marks that utilise the letter 'X' rather than 'C', of which Trade Mark No 485985 NEXTAR is an example, may be disregarded for present purposes. 27 Ms Strachan gave evidence, which I accept, that the NEC mark provides a very good example of the way in which a symbol can be recognised by consumers as a brand that has a set of values. Neither Ms Strachan nor Dr Craig‑Lees placed much weight on the font of the NEC mark as an element of its visual presentation although, as mentioned above, Ms Strachan thought that the lower case form of the Trade Mark would assist in differentiating it from the NEC mark. 28 The use of the lower case lettering in the Trade Mark certainly gives it the appearance of a word. This is what the Delegate appeared to have in mind when she concluded, in effect, that consumers were no more likely to infer a connection between the Trade Mark and NEC than they were to infer a connection between ordinary English words such as 'nectarine', 'necessary' and 'necromancy' on the one hand and NEC on the other (see [9] above). With respect, it seems to me that in reaching this conclusion the Delegate overlooked that in the case of each of the three words that she instanced there is no reason to see the letters 'nec' as standing apart from the rest of the word. The Shorter Oxford English Dictionary on Historical Principles shows that 'nectarine' derives from 'nectar', 'necessary' derives from the Latin 'necessarius' and 'necromancy' derives from the Greek prefix 'necro'. By contrast, as Ms Strachan and Dr Craig‑Lees agreed, the Trade Mark would be seen by consumers as the distinctive word 'vox' preceded by the letters 'nec'. It could thus be argued that an appropriate comparator for the exercise undertaken by the Delegate might be a word such as, for example, 'Sonyvox', rather than words of the kind identified by the Delegate. 29 Nonetheless, were it not for the evidence discussed below I would be most reluctant to depart from the conclusion of the Delegate that the Trade Mark is not deceptively similar to the NEC mark. However, in my view, the below evidence tips the scale in favour of a conclusion that the decision of the Delegate should be set aside. 30 Mr Chan gave affidavit evidence that: 'The Trade Mark was derived from letters in a description of the goods "New Entertainment for Cars" together with the commonly used word "VOX" which refers to "voice".' 31 NEC challenges the truthfulness of Mr Chan's evidence in this regard. Mr Chan agreed that the phrase 'New Entertainment for Cars' did not appear on any of the documents produced in this proceeding. He was not re‑examined to displace the inference that the phrase does not appear in any promotional material concerning Punch Video products. The evidence also establishes that the Trade Mark was used before Punch Video Inc. launched its in-car display screens in 1996 and thus at a time when Punch Video Inc. was only manufacturing audio equipment for cars. Mr Chan was not involved in the management of Punch Video Inc. when the Trade Mark was first used or at any time. Nonetheless, he chose to give evidence concerning the provenance of the Trade Mark. His attempts to do so by reference to new forms of in-car entertainment were unpersuasive and raised questions as to his credibility. No evidence was adduced from Mr Chang. 32 Mr Chan initially gave evidence that, although Punch Video had registered the word 'necvox' as a trade mark in other jurisdictions without limitation as to style, it had never been used other than with lower case lettering. However, when shown a photograph showing the signage reproduced below, Mr Chan acknowledged the use of upper case lettering:

The photograph showing the above signage formed part of an exhibit to an affidavit sworn by Mr Chan. It therefore seems fair to assume that Mr Chan was familiar with it.

33 In my view it is significant that the lettering shown in the photograph, which was apparently taken at a motor show in Jakarta in 2000, is not simply upper case lettering; the letters 'NEC' are shown in what appears to be the stylised lettering of Trade Mark No 674029 (see [17] above). 34 I am satisfied on the balance of probabilities that the 'nec' component of the Trade Mark did not derive from the phrase 'New Entertainment for Cars'. No other explanation has been offered for the choice of the letters 'nec' as the prefix to 'vox' in the Trade Mark. I consider it more likely than not that the phrase 'New Entertainment for Cars' has been invented by someone associated with Punch Video or Punch Video Inc. to add verisimilitude to the claim that the Trade Mark owes nothing to the NEC trade marks. 35 I am also satisfied that Punch Video has used 'necvox' in upper case lettering as a trade mark in at least one other jurisdiction and that Mr Chan was not frank in his evidence on this issue. I conclude, on the balance of probabilities, that the trade mark 'necvox' was initially adopted by Punch Video Inc., and continues to be used by Punch Video, because it can be understood to suggest that the goods in respect of which it is used are the goods of NEC. 36 In Australian Woollen Mills Limited v F S Walton and Company Limited (1937) 58 CLR 641 ('Australian Woollen Mills') at 657 Dixon and McTiernan JJ stated: 'The rule that if a mark or get‑up for goods is adopted for the purpose of appropriating part of the trade or reputation of a rival, it should be presumed to be fitted for the purpose and therefore likely to deceive or confuse, no doubt, is as just in principle as it is wholesome in tendency. In a question how possible or prospective buyers will be impressed by a given picture, word or appearance, the instinct and judgment of traders is not to be lightly rejected, and when a dishonest trader fashions an implement or weapon for the purpose of misleading potential customers he at least provides a reliable and expert opinion on the question whether what he has done is in fact likely to deceive. Moreover, he can blame no one but himself, even if the conclusion be mistaken that his trade mark or the get‑up of his goods will confuse and mislead the public.' 37 In Windsor Smith Pty Ltd v Dr Martens Australia Pty Ltd (2001) 49 IPR 286 ('Windsor Smith') at 293 the Full Court considered that the inference to be drawn from a finding that a trader has deliberately adopted the get‑up of a rival's product for the purpose of implying a connection with the rival was 'simply one piece of evidence to be assessed with such other evidence as may be adduced on the issue'. It is not necessary for me to decide whether there is any inconsistency between the approach of the Full Court in Windsor Smith, which involves claims under the Trade Practices Act 1974 (Cth) and for passing‑off, and that of the High Court in Australian Woollen Mills. In this case, unlike the situation that prevailed in Windsor Smith, there was no persuasive evidence concerning the practical operation of the market place which suggested that the intention of causing confusion had failed. The inability of NEC to call evidence of actual confusion of consumers by reason of the use of the Trade Mark carries little weight. Only limited advertising using the Trade Mark appears to have been undertaken. 38 Having regard to the rule enunciated in Australian Woollen Mills, as well as to my own judgment of the visual impression created by the Trade Mark, I prefer the evidence of Dr Craig‑Lees to that of Ms Strachan on the question of whether the sale of automobile audio‑visual entertainment equipment in Australia under the Trade Mark would be likely to signify to consumers that the equipment was made by NEC or by a company with an affiliation with NEC. I conclude that as at the relevant date (ie 9 November 1999) there was a real tangible danger that the use of the Trade Mark in respect of automobile audio-visual entertainment equipment in Australia would cause a number of persons to wonder if the equipment was made by NEC or by a company with an affiliation with NEC. In making this judgment I have placed weight on the matters referred to in [41] and [42] below. 39 I conclude that the Trade Mark is deceptively similar to a trade mark registered by NEC, namely any one of the Trade Mark Nos 177937, 326407 and 674029. Each of these trade marks has a priority date for registration earlier than the priority date for the registration of the Trade Mark. In the circumstances it is unnecessary for me to give consideration to the other registered trade marks upon which NEC relied. 40 It is therefore necessary to determine whether Trade Mark Nos 177937, 326407 and 674029 are registered in respect of similar goods or closely related services to automobile audio‑visual entertainment equipment. It is convenient to start by considering whether the above trade marks are registered in respect of similar goods to automobile audio‑visual entertainment equipment. This involves consideration of the nature of the goods, the uses to which they are put and whether they are commonly sold together to the same class or classes of customers. (Southern Cross Refrigerating Company v Toowoomba Foundry Proprietary Limited (1954) 91 CLR 592 at 606‑607). 41 Each of the Trade Mark Nos 177937 and 674029 is registered in respect of goods in Class 9 including radio and television equipment. Trade Mark No 674029 is additionally registered in respect of video and studio equipment, mobile and portable radio equipment, cordless telephone sets, computers including mini computers, monitors, colour LCDs, VCRs, compact disc players and video games units. I am satisfied that Trade Mark Nos 177937 and 674029 are registered in respect of goods that are put to a similar use (ie audio‑visual entertainment) to the goods in respect of which the Trade Mark is sought to be registered. 42 Unchallenged evidence was received that certain retail stores, such as JB Hi Fi and Strathfield Car Radios, stock audio-visual entertainment equipment for both home and car use. Unchallenged evidence was also received that a number of well‑known manufacturers such as, for example, Sony, JVC and Kenwood, produce audio-visual entertainment equipment for home use and for use in automobiles. I am satisfied that the two classes of goods are, and were in 1999, commonly sold together to the same class of customers. 43 I am satisfied that Trade Mark Nos 177937 and 674029 are registered in respect of similar goods to the goods in respect of which Punch Video has applied to register the Trade Mark, namely automobile audio‑visual entertainment equipment. 44 Trade Mark No 326407 is registered in respect of services in Class 37, namely installation, maintenance and repair of communications and electronic equipment. 45 In contending that the Trade Mark is deceptively similar to Trade Mark No 326407 NEC placed reliance on Caterpillar Loader Hire (Holdings) Pty Ltd v Caterpillar Tractor Co (1983) 77 FLR 139. In that case the respondent had sought an injunction restraining the appellant from using the name 'Caterpillar' in its business name. Lockhart J at 151 observed: 'Speaking generally, the closer the relationship between particular goods and services the greater is the potential for confusion between trade marks for those goods and services. The possibility of confusion is heightened when the trade marks for goods and services are household names such as the word "Caterpillar" is in this case.' The other members of the Full Court took the same view (see Franki J at 141 and Neaves J at 163). 46 The services in respect of which Trade Mark No 326407 is registered would include the installation, maintenance and repair of the goods in respect of which the Trade Mark is sought to be registered. I conclude that Trade Mark No 326407 is registered in respect of services closely related to the goods in respect of which the Trade Mark is sought to be registered. 47 For the above reasons I conclude that s 44(1) of the Act requires that the application to register the Trade Mark be rejected. 48 The above conclusion renders it unnecessary for me to determine whether the other grounds of objection to the registration of the Trade Mark have also been established.

conclusion 49 The appeal from the decision of the Delegate will be allowed and the decision of the Delegate reversed. It will be ordered that the application to register the Trade Mark be refused. Punch Video will be ordered to pay NEC's costs of this appeal and of the opposition proceedings before the Delegate. I certify that the preceding forty‑nine (49) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Branson.

Counsel for the Applicant: S Goddard and C Cochrane

Solicitor for the Applicant: Spruson and Ferguson

Date of Hearing: 16, 17 and 22 June 2005