Convergence and brand extension
193 Pioneer KK relies not only on actual use but also on "brand extension" and "convergence" of digital technologies.
194 Pioneer Computers relies on the distinction between computers such as the built-to-order personal computers and notebooks that it sells and the audio-visual products sold by Pioneer KK and Pioneer Australia under the slogan. Pioneer Computers says that computers remain distinctively identifiable as computers and are not confused with devices that may be connected to them or with other electronic products such as sound systems, car navigation systems and televisions. The attributes relevant to audio-visual entertainment products such as quality of sound and clarity of picture are, it says, different from the attributes sought in a computer of processing power and functionality.
195 Pioneer KK does not rely upon a use or intended use of the Pioneer KK marks in connection with computers, or on use with computer peripherals that are integral to a computer being used as a computer (in the sense of a personal computer or notebook). Pioneer KK says that the distinction between audio-visual products and computer products has disappeared or diminished to such an extent that the consumer does not distinguish between them. Computer products and consumer electronic products have, Pioneer KK says, converged during the relevant period and today.
196 "Convergence" combines the benefits of one particular product and the technology associated with that product with another product in order to expand the applications of the original product and produce a superior consumer offering. Computer manufacturers have, since the early 1980s, incorporated audio and visual functions into computers. This has been in parallel with the transition in the perception and use of computers from business tools to more consumer oriented devices, as a result of the incorporation of entertainment features and enhancement of the functions of computers. One example is the ability to download images from digital cameras and music. Pioneer KK says that, at least by the end of the relevant period, computers have been regarded by consumers as tools for home entertainment, information gathering and communication.
197 Pioneer KK does not dispute that computers are a recognisable class of products but relies on the fact that different types of equipment can contain the same information. Pioneer KK's witnesses describe this as a "blurring" of categorisation.
198 Pioneer KK relies on articles that have appeared from 1994 to 2007 in various publications, including newspapers and computer journals such as Computer Reseller News. These are not relied upon for the truth of their content but it is not in dispute that such comments were made in Australia. For example, in an article published in The Sydney Morning Herald in January 2000, comments are made as to the likely connections between television on the one hand and the Internet and video games on the other and the use of televisions as 'a central one-stop shop for information and interaction'. The distinction is drawn between the content of television as a medium and the use to which television sets will be put. The prediction is made that (in 2000) the trend is towards the use of a single television screen for watching television and also using the Internet and accessing data services. This was termed "convergence".
199 Convergence was also discussed in an article in The Australian on 21 October 2003 on "home entertainment". Convergence technology can be described, as it was in The Courier Mail on 28 April 2007, as a situation where one unit has several purposes. This can be achieved by putting personal computer (PC) components into a television, or by using laptop personal computers in the customisation of entertainment and information hardware. Mr Blanket, a lecturer in advertising and marketing at the Macquarie Graduate School of Management, describes convergence as a 'product/technical concept that overtime "blends" or combines the benefits of one particular product (and the technology associated with that product) with another product in order to expand the applications of the original product and produce a superior consumer offering'.
200 Digital technology enables the transfer of data, images and sound across different types of equipment. Home entertainment systems reproduce sounds and images but this does not represent the extent of their use. As Mr Bartlett explains, 10 to 20 years ago computers were sold and used as business devices whereas audio-visual products were considered to be for entertainment. This has changed. Today, computers are more oriented to entertainment. Media centres function as computers but are built to look like audio-visual equipment for use in the home and can be used for storage of data including sounds and images. Data that can be stored in a computer can also be stored on a CD or DVD.
201 Mr Ham has worked in the electronics industry for approximately 26 years with Pioneer Australia. He says that when he commenced that employment in 1976 there was, in his opinion, a fairly clear distinction between consumer electronic products which were designed for use by consumers in the car or home and computers which were then generally restricted to use in industry. He points to examples that demonstrate the "convergence" between telephony, computing and media technologies. Examples include the personal digital assistant (PDA) or electronic organisers, which include devices such as the Palm Pilot and the Blackberry and function as hand-held computers. Such products have, since about 1997, included calculators, clocks, games and data storage functions in the form of address books, calendars and to-do-lists. During the mid 1990s PDAs could not connect to the Internet but it was possible to synchronise them with computers so that, for example, documents created on a computer could be manipulated on the PDA. In the past five to seven years, including the relevant period, PDAs available in Australia have developed to include audio-visual capabilities and wireless technology (to enable use as mobile telephones and for Internet access).
202 Mr Ham describes that consumer uptake of a device increases as the technology matures and the price drops. He describes that consumers must accept new products and emphasises that connectivity is important; the ability for the new device to communicate with existing products. He says that there has been an evolution of the use of computer technology in audio-visual systems. Audio-visual systems use computer technology; computer game machines are, in effect, computers; home media centres may be connected for information to the computer and provide an output for an audio system and amplifier. Mr Ham expresses the view that, from his experience, consumers do not draw the distinction between what might be classically described as a computer and devices that utilise computer technology.
203 Mr Ham uses the term "multimedia products" to describe commercial video products such as non-domestic DVD players and recorders and non-domestic plasma display screens and computer related products such as optical laser discs, optical drives (that is CD-ROM drives, CD-writers, DVD-ROM drives and DVD writers) and computer data storage jukeboxes. Mr Ham says that during his time with Pioneer Australia, at least until his retirement, the range of Pioneer multimedia products expanded in accordance with advances in technologies. There were and are a range of consumer electronic digital products, many of which could be used in conjunction with computers during the relevant period, enabling digital information to be created, stored, manipulated and transferred from one digital product to another and to and from a computer. Mr Bartlett describes "media centres" as computers designed for home entertainment purposes which generally include audio-visual components including a radio, CD/DVD player and recorder, digital set-top box and gaming system. Mr Ham, for example, presently owns a "media centre" which includes a computer with Internet access which is integrated with consumer electronic products such as a hi-fi system, a high-definition television and a DVD player/writer. This media centre can be used in conjunction with still and video digital cameras and broadband and wireless modems.
204 During the relevant period, computers could be and were used for the playing, recording and manipulation of video footage and the playing, recording and manipulation of music, for example to create different play lists. The development of broadband Internet access also enabled computers to play, edit and record television and radio broadcasts via the Internet and otherwise.
205 Since the early 1980s, computer manufacturers have incorporated audio and visual functions into computers. This changed the way in which computers were regarded from business tools to a more "consumer oriented" product incorporating entertainment features. This includes functions that enable, for example, the ability to download images from digital cameras to computers and downloadable music. On the other hand, other electronic products have been enabled to carry out functions previously carried out on computers. One example that Mr Blanket gives is the Apple iPod, which is 'essentially a personal audio entertainment product used in conjunction with a computer and dedicated "iTunes" software' but can also function as an external data storage device. Mr Blanket states that while products such as the iPod and the iPhone are consumer electronic products, they can be used with, or are dependent upon use with, a computer in order to function. This represents what Mr Blanket describes as 'the convergence of computers with consumer electronic products'.
206 Mr Bartlett describes the change in the use of products since the early to mid 1990s in the wholesale and retail markets in Australia for computers and consumer electronic goods, including audio-visual products for home entertainment. For example, many plasma display screens for domestic use can function as televisions and can also be connected to computers in order to function as monitors. Computers can, and could during the relevant period with the addition of a relevant tuner card, receive television broadcasts and video via the Internet.
207 To the extent that such an opinion can be given, Mr Blanket's opinion is that, from the perspective of the consumer, there has been 'a significant and increasing "blurring" since at least the mid to late 1990s between what would previously have been and has been perceived by an average consumer as a traditional computer and as a more mainstream consumer product'. He gives the opinion that what used to be regarded as a business tool has become a consumer service relevant to a range of domestic applications in areas such as home entertainment, information gathering and communications and even household appliances. He points to the marketing in Australia since January 2003 of an LG "Internet refrigerator" which can be used to watch TV, access the web, listen to music and make phone calls. He points generally to the fact that consumer electronic products are effectively integrated with computers and computer technology.
208 Convergence has also affected the retailing of products and, since the late 1990s, computers and other electronic products have become available to consumers under one roof in, for example, department stores. Mr Ham describes the change in retailing that he observed after the 1990s and in particular during the relevant period. He says that during the relevant period major retailers of consumer electronic products such as Harvey Norman stocked digital cameras and camcorders, iPods, plasma display screens, digital set-top boxes as well as computers. However, the computers were generally sold in a separate section of the store from the other products.
209 Since the late 1990s, Pioneer KK has offered car electronic products that have PC compatible features which allow data to be transferred from a computer to certain of those products. In June 2007, after the relevant period, Pioneer Australia launched car navigation products in Australia, which have been distributed to retailers under and by reference to the second Pioneer KK mark. That navigation system includes audio information, visual and communication features including an LCD touch screen and a voice recognition feature, as well as Bluetooth and Apple iPod connectivity via an external adaptor. It enables the playback of MP3 files as well as DVD, DVD-R and DVD-RW playback. These products were marketed by a media launch as well as articles, advertisements and brochures and on the Pioneer Australia website.
210 "Brand extension" is the practice by which an existing brand name that has been established and used in relation to one category of product is adapted for use in relation to a new category of product. As described by Mr Blanket, brand extension is 'used to heighten and strengthen the value of an existing brand and to build upon the value of a brand'. The goal of brand extension is to trade off a core brand and its positioning and extend the association to other products. It may apply in relation to the use by the brand owner of an existing brand for a new product or by way of licence to another manufacturer for a new product. It may operate to apply from products to services. It may assist entry into a new physical market or into a new target market. The use of brand extension is and has been for at least 20 years a well established technique in the electronics market in Australia.
211 Pioneer KK says that manufacturers of consumer electronic products for home and personal entertainment have, since at least the late 1990s, successfully moved into computers and computer related products. Similarly, it says that a number of computer manufacturers have developed products that retail into the home and personal entertainment market. It submits that consumers are familiar with this brand extension.
212 Pioneer KK has had less direct activity in this regard but Pioneer KK points to names such as Sony, Toshiba, Samsung and Apple. Sony has been associated with consumer electronic products for personal and home entertainment and, since about 2000, has become well-known in Australia for brands of laptop computers. Further, Sony has become well-known in the entertainment industry since the late 1990s, with use in the music and film industries, and is also known for the Sony PlayStation and related services.
213 Mr Blanket expressed the opinion that the general blurring or brand extension means that a person who saw a particular trade mark such as SONY would assume that a SONY branded computer or computer related product came from the same organisation as a SONY branded home entertainment product. At the least, the public would be aware that such a range of products may be those of a single manufacturer.
214 Mr Blanket describes a 'halo affect', where the consumer sees the manufacturers as providing a total experience for a consumer who wants entertainment, communication and information. In his view, Pioneer KK's strong reputation in relation to electronic products for the home, car and business including computer related products and services, together with the concept of brand extension and the convergence of computers and consumer electronic products, would affect the response of an Australian consumer to the use of the "Pioneer" brand or word mark in relation to the removal goods and the removal services. He believes that such a consumer would associate those goods and services with Pioneer KK and Pioneer Australia. This is despite the fact that Pioneer Australia and Pioneer KK have not, unlike manufacturers such as Sony and Samsung, advertised on their website as manufacturers or distributors of computers.
215 In Mr Blanket's opinion, consumers rely on "brand credibility" in making product choices; in particular, in an unfamiliar technical area. In his opinion this approach also applied prior to and during the relevant period.
216 Pioneer KK's core proposition is that the market for computer products and audio-visual equipment can no longer be considered entirely distinct or separate. Pioneer KK also emphasises that the Pioneer KK marks have been advertised and promoted in Australia in connection with a broad range of audio-visual and electronic goods for home, office and car use and in the provision of after sales service in respect of those goods.
217 Mr Blanket expresses the view that consumers want entertainment, communication and information. He says that it is not a question of the use of digital technology alone but one of functionality. For example, a digitised washing machine would not be considered entertainment; consumers distinguish the difference between computers and machines that have computer technology in them. In his view, consumers would recognise a computer as distinct and would use different devices for different ends. He points out that consumers are used to seeing multiple brands in a single location. For example, on its website, Pioneer Computers sells not only its own computer products but also those of other makers, such as Mitsubishi, and he says that the consumer would readily distinguish between the products.
218 Pioneer Computers submits that convergence and brand extension are not relevant to Pioneer KK's business. It submits that Pioneer KK's optical drive business is compatible with its focus on audio and audio-visual products, as the primary usage of these drives has always been the storage and playing of audio and video images and data. The fact that other manufacturers market computers, computer peripherals and entertainment systems should not, it says, substitute for the proper enquiry as to what is Pioneer KK's business and the goods on which it used the marks in the relevant period or subsequently. Pioneer Computers says that Pioneer KK's business and sound, visual and audio products do not demonstrate any "convergence" of technologies. The fact that other manufacturers manufacture MP3 players, electronic game consoles, kitchen electric goods and computers is not relevant, says Pioneer Computers, to the limited range manufactured by Pioneer KK.
219 However, a consumer who has been exposed to brand extension in the field of computers and multimedia products would not necessarily appreciate that Pioneer KK has not taken a course similar to that of other manufacturers.
220 Pioneer Computers says that computers remain distinctively identifiable as computers and are not confused with devices that may be connected to them or other electronic products such as sound systems, car navigation systems and televisions. The attributes relevant to audio-visual entertainment products such as quality of sound and clarity of picture are different from the attributes sought in a computer, of processing power and functionality. However, Pioneer Computers has promoted and distributed LCD monitors which could be used as computer monitors and televisions and it announced in October 2006 that it was selling a device featuring a camera, camcorder and an MP3 player which may be connected to a personal computer. This was marketed under its DREAMVISION brand.
221 I am satisfied that both during and by the end of the relevant period and today, the average consumer would be familiar with the convergence of technologies and the uses to which the technologies have been put and the fact that this has enabled various manufacturers to expand their products to cover what may previously have been the separate product lines of computer goods and audio-visual products. Accordingly, such a consumer would be led to believe that a computer, audio-visual or multimedia product sold under the name "Pioneer" or under the mark PIONEER would be associated with Pioneer KK.
222 Pioneer KK's submission, supported by Mr Blanket's opinion, is that Pioneer KK's strong reputation in relation to products for the home, car and business (including computer related products and services related to such products), coupled with the concepts of brand extension and convergence, would be highly likely to cause consumers to believe that there was an association between Pioneer KK and removal goods and removal services sold under the name "Pioneer". While I have accepted this proposition in respect of the removal goods, I do not accept it in respect of the removal services.
223 Pioneer KK's evidence focussed on its multimedia products and the services offered in relation to those products which, in my view, were not removal services. Pioneer KK did not suggest that Pioneer Australia provided any services otherwise than those incidental to the sale of its multimedia and other electronic products. Pioneer KK did not suggest that there has been a convergence of its after-sales services with services coming within the removal services, or a convergence of audio-visual and computer products with services coming within the removal services. Pioneer KK has not established use of the Pioneer KK marks on the removal services and I do not consider that the concepts of convergence and brand extension support the exercise of the discretion in favour of maintaining the removal services within the second Pioneer KK registration.