The applicant's case in contract
30 Turning to the applicant's case in contract, it alleges that, by the use of the respondent's mark, the respondent is in breach of cl 5.5 of the licence agreement. It is not, of course, said that the respondent has used either the registered mark or the device mark as such, but it is alleged that the respondent's mark is "similar to or capable of being confused with" one or other, or both, of those marks. Before reaching the point at which the respondent's mark and the mark or marks protected by the licence agreement must be visually compared, there are several general issues as to the applicant's entitlement to relief under cl 5.5 which arise on the submissions made by the parties. For the sake of simplicity, in this part of my reasons, where I intend to refer to either the device mark or the registered mark without discrimination, I shall use the term "the applicant's mark".
31 The first issue is whether the device mark (as distinct from the registered mark) was assigned to the applicant at all. The respondent says not. It points out, correctly, that the intellectual property offer of 20 August 2008 related only to the registered mark, and that there is not, otherwise, any evidence of an assignment of the device mark as distinct from the registered mark. That is correct so far as it goes. In my view, however, the applicant's entitlement to relief under cl 5.5 of the licence agreement does not depend on the fact of an assignment of the device mark. In terms, the licence agreement relates to the device mark as much as it does to the registered mark, and the respondent has promised not to use either. If this promise is enforceable in equity, at least as between the applicant and the respondent, there is no need to look further for evidence of an assignment. The substance of the respondent's promise is that it would, in favour of the applicant, forswear any further use of the device mark. Subject to the respondent's other contentions to which I shall come, I consider that the applicant has a clear title to enforce that promise.
32 The second issue relates to the relevance of the provisions of the Trade Marks Act to the construction of cl 5.5. Here a number of questions arise. The respondent submitted that the words "similar to or capable of being confused with" in cl 5.5(b) of the licence agreement should be so construed as to go no further than the expression "deceptively similar" in the Trade Marks Act. That is to say, the prohibition in cl 5.5(b) should extend only to the use of a mark which so nearly resembles the applicant's mark as to be likely to deceive or to cause confusion. It was submitted that the licence agreement was concerned with trade marks, in the lexicon of which the terminology used in cl 5.5(b) had an accepted, long-established, understanding. It was said that the parties could not have intended to set up a prohibition which ran parallel with, but which was not quite the same as, that contained in the Trade Marks Act itself.
33 It is significant that the prohibition in cl 5.5(b) includes the use of registered trade marks. Thus it is clear that the parties intended to add a contractual restraint to that which existed under the Trade Marks Act. Quite apart from the content of the restraint, the terms of the clause departed from those of the Act in two respects at least. First, the effect of the clause was, in part, to impose upon the respondent an obligation to police compliance on the part of its subsidiaries. Secondly, the prohibition was concerned with the use of a mark (and of similar etc marks) not only as a trade mark, but also as a business name, domain name "or otherwise". That is to say, it would be a breach of cl 5.5 if the applicant's mark, or a mark similar to or capable of being confused with any such mark, were used in one of these ways even if there was not the physical or other relation to the relevant goods and services required by subss (4) and (5) of s 7 of the Trade Marks Act. There are, therefore, indications that, in adopting cl 5.5 in its existing terms, the parties did not have in mind confining themselves to the regime of protections provided by the Trade Marks Act.
34 Turning then to the content of the restraint set up by cl 5.5(b), it is clear that, in terms at least, this provision uses a different test from that which applies under s 10 of the Trade Marks Act. There are two aspects of that difference which presently require consideration. The first relates to the circumstance that the provision contains what appears to be an alternative: "… similar to or capable of being confused with". On the applicant's case, these are true alternatives to which effect must be given: the first question is whether the respondent's mark is similar to the applicant's mark, and if so, no question of the potential for confusion need be considered. By contrast, s 10 of the Act sets up a single test which links resemblance with the (consequential) likelihood of confusion.
35 I am not attracted by the construction for which the applicant contends. Devoid of context, the word "similar" can be most unhelpful in conveying a meaning. It is the context which provides the connotation. For example, a consumer who is unable to buy his or her customary brand of a particular product might ask the retailer: "Have you anything similar?" Normally, such an inquiry would connote a similarity with respect to the purpose for which the requested product was to be used. The present context is that of a trade mark, that is to say, of a mark of distinction of the services of the respondent in the course of trade. In that context, there is a sense in which the composite expression "similar to or capable of being confused with" conveys a more satisfactory understanding of the intention of the draftsman than either "similar to" or "capable of being confused with" standing alone. In my view, the kind of similarity with which the provision is concerned is that which is capable of causing confusion. The confusion, quite evidently, is between the mark presumptively being used by the respondent and the relevant mark protected by cl 5.5(b). I propose to decide this point by reference to such an understanding of this provision.
36 The second aspect is that involved in the respondent's submission that cl 5.5(b) should be construed such that, in point of content, the restraint therein precisely mirrors that in s 10 of the Trade Marks Act. The respect in which the test stated by the contractual provision conspicuously differs from that under s 10 is that it is concerned with similarity which is capable of causing confusion, whereas the section is concerned with resemblance which is likely to deceive or to cause confusion. Here I think that the applicant has the better of the argument. It is as clear as may be that the parties to the licence agreement were conscious of the circumstance that many of the marks referred therein were registered under the Trade Marks Act; and it may be inferred that they had an active appreciation of the requirements of s 10. I have no reason to doubt that their choice of different language by which to express the prohibition in cl 5.5(b) was a conscious one. I consider that for the court to conflate, as it were, the terms of that prohibition into those of s 10 of the Trade Marks Act would be to neutralise that choice, and would go against the parties' intentions.
37 It must be recognised that the prohibition arising under cl 5.5(b) of the licence agreement is not a matter of legislation. It is the result of a commercial bargain concluded between substantial organisations. Those prohibitions formed part of the consideration passing from the Primary group to Zuellig within the larger transaction by which the applicant was sold to the latter. If I were to construe the clause as though it went no further than replicating the corresponding provisions of the Trade Marks Act - and on the assumption, which I must make for present purposes, that the clause is somewhat more favourable to the applicant than the Act - I would be diminishing the value of that consideration. Given that the applicant's mark was, before the making of the licence agreement, the property of a company within the Primary group, and given the allocation of that mark, and of the Symbion name and goodwill generally, to the applicant, I should not regard it as in the least surprising that the applicant should request, and that the respondent should accede to, the imposition of a prohibition in terms more extensive than those correspondingly to be found in the Trade Marks Act.
38 The next question which arises with respect to the potential relevance of trade mark law to the operation of cl 5.5(b) is one which relates to the approach to the visual comparison which is proper to be taken in making the judgment required by this provision. Under the Trade Marks Act, when considering whether a mark so nearly resembles a trade mark that it is likely to deceive or to cause confusion, one does not place the two marks side by side and undertake a precise comparison of their individual features. Rather, one approaches the problem from the perspective of those who see the allegedly infringing mark for the first time, and have an imperfect recollection of the protected mark from previous exposure: Australian Woollen Mills Ltd v F S Walton & Co Ltd (1937) 58 CLR 641, 658; The Shell Company of Australia Ltd v Esso Standard Oil (Australia) Ltd (1961) 109 CLR 407, 414-415; NSW Dairy Corporation v Murray-Goulburn Co-operative Co Ltd (1989) 86 ALR 549, 589. In the context of cl 5.5(b), the question is whether the respondent's mark would, by reason of similarity, be capable of being confused with the applicant's mark in the eyes of the person who has some previous acquaintance with the latter. I consider that the approach which the authorities have taken under the Trade Marks Act is a useful one to take under cl 5.5, so long as one remembers that the test as such is not the same.
39 There is one further observation I would make before leaving the general area of the extent to which the construction and enforcement of cl 5.5(b) may properly be informed by trade mark law. As mentioned above, under the Trade Marks Act, where the goods or services in question are offered in a specialised market, the owner of a mark cannot succeed on the question of deceptive or confusing resemblance without specialised evidence. In the present case, it was not submitted on behalf of the respondent that the same principle applied to the determination of the question of similarity which is capable of causing confusion under cl 5.5(b). Indeed, it was implicit in its submission that that determination was proper to be done by the court, unassisted by any such evidence.
40 The third issue was one of construction with respect to cl 5.5, and relates not to the Trade Marks Act but to the relationship between the parties who negotiated the licence agreement, and the setting in which that took place. It was submitted on behalf of the respondent that to construe cl 5.5 as potentially the source of a prohibition against the use of the respondent's mark would be unreasonable, and could not have been what the parties intended. The force of the point was based upon the circumstance that, as at August 2008 when the substance of the provisions of the licence agreement was settled, the respondent's mark had been devised, and was in use, albeit to a limited extent, by Idameneo 123, then a company within the Primary group, as was the applicant itself. It was submitted on behalf of the respondent that the reasonable bystander would have regarded it as unlikely that the respondent, when agreeing to the terms of cl 5.5, had in mind setting up a prohibition upon a then existing use of the respondent's mark. It was submitted that for the applicant to have insisted on such a prohibition would rightly have been regarded, both by the respondent and by the bystander, as quite unreasonable, and that the general words of the prohibition should not be understood in such a sense.
41 The respondent's argument appears to involve the proposition that cl 5.5 of the licence agreement should be read subject to an implied qualification that, whatever may be the actual position with respect to similarity or the prospect of confusion, the respondent's mark itself would never be caught thereby. The agreement is, of course, an apparently complete, professionally drafted, written agreement, and the implication of terms could be done only in accordance with the conditions referred to in BP Refinery (Westernport) Pty Limited v Shire of Hastings (1977) 180 CLR 266, 283. In my view, the implied term proposed by the respondent would satisfy neither the second nor the third of those conditions: the implication is not necessary to give business efficacy to the licence agreement, and the implication is not so obvious that it "goes without saying".
42 A substantial difficulty facing the respondent with respect to the third condition is that there is no evidence that the applicant, or that Zuellig, knew of the existence of the respondent's mark in the period August-October 2008. Indeed, so far as revealed in the evidence, it was not until February 2010 that the applicant first learnt of the existence of that mark. It is true that the applicant did not call anyone who was involved in the negotiation of the share sale agreement and the other agreements in the second half of 2008, but neither was any evidence led on behalf of the respondent from which it might be inferred that any executive, director or officer of the applicant knew of the respondent's mark at that time. The respondent has invited me to assume that no evidence which might have been given by those who were involved in the negotiation of the relevant agreement in 2008 would have assisted the applicant on this question, and I would not be unsympathetic to that invitation if the evidence which had been called reached the point of requiring the applicant to provide a response. However, given the timing of the introduction of the respondent's mark to which I have referred to in paras 5-6 above, I am not disposed, in the absence of any evidence on the point, to consider it intuitively unlikely that the applicant would be unaware of the respondent's mark at the relevant time. As against this, if the existence of the respondent's mark was as selfevident to the respondent as the respondent claims it should have been to the applicant, it might be expected that the respondent's own negotiators would have raised the matter in the context of negotiating cl 5.5 of the licence agreement. I do not think that the respondent has made good its case for an implied qualification to be read into the express terms of that clause.
43 The fourth issue also arose under a submission made by the respondent. It was said that the court should not be persuaded that the respondent's mark fell within the words of cl 5.5 because both that mark and the applicant's mark existed within a broad universe of marks and logos in the allied health sector, many of which had similarities as between themselves, and had features in common with each of the marks which are contentious in this proceeding. The respondent tendered examples of such marks and logos, and, during crossexamination, had the General Manager of Retail Services of the applicant, Andrew John Vidler, recognise where various similarities lay, with a view to providing a foundation for the submission, which was made on its behalf, that the respects in which the respondent's mark and the applicant's mark were similar were features commonly observed across the sector.
44 I find this submission unattractive, for two reasons. First, I have difficulty appreciating how the comparison between two marks which is required by the terms of cl 5.5 can be affected, one way or the other, by the presence or absence of other similar marks in the same industrial sector. In an extreme case, there may be another mark the use of which would be a self-evident breach of cl 5.5, but the existence thereof could not bear upon the comparison required by the clause. (And I mention in this respect that one of the marks to which Mr Vidler was referred drew a response from him to the effect that the applicant was opposing an application to register the mark under the Trade Marks Act.) Secondly, the matter cannot be approached as though the applicant and the respondent were two completely independent trading entities within the allied health sector. The fact is that they were previously part of the same corporate group, and they went their separate ways by reference to the terms of a commercial bargain made between their now respective parent companies, part of which was the acceptance by the respondent of a specific restraint upon its use of marks which were similar to, or capable of being confused with, the applicant's marks. Alone of all companies in the allied health sector, the respondent's branding activities are subject to that restraint. It is a restraint which the respondent voluntarily undertook, as part of the consideration which passed under a commercial bargain which I must assume that its parent, Primary, regarded as satisfactory. The application of cl 5.5 cannot, in my view, be influenced by the practices of other companies.
45 The fifth issue concerns the circumstances in which the respondent's mark and the applicant's mark are used. The respondent pointed to the fact that the respondent's mark is used in connection with the delivery of diagnostic imaging services, the customers for which - as a practical reality if not strictly as a matter of contract - are medical and dental practitioners. By contrast, the applicant's mark is used in connection with the wholesale distribution of pharmaceutical products (some small number of which are "over the counter" products branded with the applicant's mark and which, therefore, may find their way ultimately into the hands of consumers). According to the respondent, these are quite distinct settings in which the respective marks are used, and there could be little or no possibility of the similarity between the marks, assuming there to be one, causing confusion.
46 In terms at least, cl 5.5 is concerned with a mark, as such, being confused with the applicant's mark, as such. It is not the putative use of a mark that is to be compared with the corresponding use of the applicant's mark for the potential of those uses to cause confusion. However, it is the use of a mark which is the subject of the prohibition in the clause, and I accept that the setting in which a mark is used may either strengthen or weaken a case by the applicant that the mark is similar to the applicant's mark in a way that may confuse. Thus I am prepared, favourably for the respondent, to give cl 5.5 a construction that would allow the particular circumstances of the allegedly contravening use to inform the judgment whether the mark so used is similar to or capable of being confused with the applicant's mark.
47 But I do not accept the respondent's factual submission that the circumstances in which the respondent's mark is used are so distinct from the business activities of the applicant as to leave no realistic scope for confusion by reason of similarity. Both marks are used in the allied health sector: indeed, before 2008, the applicant's mark was used by the respondent and its subsidiaries (then not part of the Primary group) in both the pharmaceutical and the imaging parts of that sector. I think I am entitled to regard it as notorious that there is a degree of contact, at both the professional and the consumer levels, as between these parts, such as would make it quite unsurprising if the same people - to some extent at least - had occasion to encounter both the respondent's mark and the applicant's mark from time to time. And there is some evidence that the respondent's mark is used in settings, such as the premises of hospitals, where those who have regular business dealings with the applicant - pharmacists and the staff of hospital pharmacy departments, for example - might be expected to be found. If there is such similarity between the marks as would be capable of causing confusion - a question to which I turn next - I would not accept that the respective areas of operation are so distinct as to exclude the reasonable prospect of that confusion arising in fact.
48 That leaves the question whether the respondent's use of the respondent's mark is in breach of cl 5.5 of the licence agreement as I have construed it. Here I must resist the temptation to lay out a catalogue of similarities and differences as between the marks being compared, but must confine myself to those features of both which would bear upon the prospect that an observer, previously acquainted with the applicant's mark, would be confused upon encountering the respondent's mark. For these purposes I take the respondent's mark as represented in para 7 above, and the applicant's mark in the colour of the device mark.
49 In my view, features which these marks have in common and which would carry the potential for confusion are the following. First, the marks both embody an internal space defined by a continuous, non-rectangular, ample surrounding portion, as in, for example, an automotive tyre or a donut. Secondly, a distinctive (and, in my view, memorable) feature of the surrounding portion on both is that it folds backwards and inwards on itself alternately, giving something of the impression of motility, if not fluidity. Thirdly, the internal space in both marks has the appearance of a Reuleaux triangle, or at least of a generally triangular space with curved sides and rounded corners. And fourthly, the respondent's mark is generally (although not in all respects) of a similar colour to that of the applicant's mark.
50 By contrast, the differences between the marks are such as would best be noted by the observer who had the two marks side-by-side, and was astute to discern matters of detail. At that level, these differences cannot be denied. First, the external shape of the respondent's mark is circular, whereas that of the applicant's mark is triangular. Secondly, the respondent's mark is ornamented with straight, curved and looped lines whereas the applicant's mark has no such ornamentation. Thirdly, to the extent that it represents a triangle, the internal space in the respondent's mark sits on the base thereof, whereas that in the applicant's mark sits on the apex. And fourthly, blue shading is an observable feature of some sections of the respondent's mark, whereas there is no such shading in the applicant's mark.
51 Taking these similarities and differences into account, the question is whether, as a matter of overall impression, the net result is that the respondent's mark is similar to the applicant's mark to an extent capable of causing confusion. In my opinion it is. As I have stressed above, the question is not whether the resemblance is such as would be likely to cause confusion. It will be sufficient if it is such as would be capable of causing confusion. That is a lower bar than is put in place by s 10 of the Trade Marks Act. On the facts of the present case, I am satisfied that the applicant has crossed it.
52 There will be judgment for the applicant under cl 5.5 of the licence agreement. I shall hear the parties on the terms of the orders necessary to give effect to this conclusion; and as to costs.
I certify that the preceding fifty-two (52) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Jessup.