Unilever Aust Ltd v Karounos

[2001] FCA 1132

Federal Court of Australia|2001-08-17|Before: Hill J

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Source facts

Court

Federal Court of Australia

Decision date

2001-08-17

Before

Hill J

Source

Original judgment source is linked above.

Judgment (55 paragraphs)

[1]

1 The applicant, Unilever Australia Limited ("Unilever") manufactures in Australia, advertises and sells here various food products. On the packaging (and in advertising material) the word "real" appears. The products are Continental chicken stock, Continental beef stock and Rosella soup. The packaging is described later in more detail. 2 On 15 May 1997 and 29 August 1997 respectively, with registration effective from 4 January 1995, the Registrar of Trade Marks registered two trade marks in the name RFC Nominees Pty Limited. The company subsequently changed its name to Revelinu Pty Limited (it may be noted that this is Unilever, spelled backwards) and is now in liquidation. For convenience I propose to refer to it as RFC Nominees. The first, which is numbered 649764 is the word and device mark "Real Fish'n Chips". The second, which is numbered 649760 is the word mark "REAL". The marks were registered in respect of various goods and services in classes 16, 29, 30, 35 and 42, as described in Schedule 1 of the Trade Marks Regulations 1995 (Cth). The goods and services in respect of which the marks are registered are as follows: Class Goods or services in respect of which the word mark is registered 3 16 4 Paper, cardboard and goods made from these materials in this class. [The word and device mark also includes "printed matter" in this class.] 5 29 6 Take-away foods and beverages in this class including meats, fish, poultry and seafood and game whether processed or not; dairy products; salads. 7 30 8 Take-away foods and beverages in this class including baked products, confectionary, ices, bread and pastries. 9 35 10 Licensing services; licensing and franchising services. 11 42 12 The provision of food and beverages including but not being limited to restaurant, café, canteen, snack bar, fast foods, take-away and catering services.

[2]

[3]

4 In 1998, RFC Nominees claimed that Unilever's use of the word "real" on its products infringed the registered marks. Unilever then applied to the Court on 22 July 1998 for relief seeking cancellation of the registration of the marks and, following an amendment to its pleadings, their removal for non-use. However, Unilever's claim for cancellation of the word and device mark was not pressed at the hearing. Alternatively, Unilever sought a declaration that its use of the word "real" did not infringe the registered marks and amendment of the registration of each mark to limit the class of goods in respect of which the registration was to apply to "take-away fish and chips" and the class of services to "the provision of take-away fish and chips". 5 As originally commenced, RFC Nominees was the only respondent to the proceedings. Later, Mr Karounos and Sabre were joined. On 11 December 2000, leave was given to Unilever to discontinue its claim for relief as against RFC Nominees, then in voluntary administration. Sabre elected not to participate in the proceedings, although it sought and obtained leave to make such written submissions as it should be advised to make after the evidence had been heard. In fact no submissions were made by Sabre. 6 RFC Nominees, Mr Karounos and Sabre cross-claimed against Unilever claiming, inter alia, damages for infringement. By consent it was agreed that any issue of damages should be deferred until the questions of validity and infringement were decided. A consequence of RFC Nominees being placed into voluntary administration was that its cross-claim was stayed, pending the administrator making a decision whether to proceed with the cross-claim. Before that decision was made RFC Nominees went into liquidation and the previous administrator became the liquidator. With apparent disregard of courtesy to the Court, the liquidator did not notify that fact either to the Court or to Unilever for some considerable time. 7 Ultimately, as a result of a motion by Unilever, I ordered RFC Nominees to provide security for Unilever's costs of the cross-claim, such security to be provided on or before 9 August 2001, otherwise its cross-claim would be dismissed. Subject to the provision of that security I set down the cross-claims for hearing on 4 September 2001. 8 Much earlier, I had ordered the proceedings, so far as they were brought by Unilever (by then only against Mr Karounos and Sabre), to be heard despite the fact that there was a possibility that RFC Nominees might proceed with its cross-claim. At least so far as Mr Karounos was concerned, and apart from the question of damages, the main proceedings and the cross-claim raised essentially the same issues. The hearing took place in February and March 2001. At the hearing Mr Karounos, who appeared in person (he was represented by a solicitor in connection with one of the many applications for adjournment that were made by him and by counsel in respect of final submissions made on 19 April 2001) led evidence and made oral and written submissions. Among other things he submitted, before going into evidence, that he had no case to answer. At the time of giving judgment on an adjournment application made by Mr Karounos on 21 February 2001 (which adjournment was granted), I rejected the no case to answer submission. I indicated in that judgment that I would provide full reasons later for my rejection of the submission. However, I did provide some reasons for doing so at the time. On reflection they were probably adequate. They should, however, be read with the present reasons so far as they concern the question whether the word mark was registrable. Absent evidence adduced by Mr Karounos there was, before Mr Karounos went into evidence, no evidence of use of either mark. 9 Once it became clear that RFC Nominees was not able to provide security and in consequence its cross-claim would be dismissed, my Associate notified Mr Karounos that the separate cross-claim of RFC Nominees would not proceed in September 2001 and requested him to advise whether he wished to vacate those dates, so far as they related also to his cross-claim, on the basis that he had already adduced evidence and made submissions in the main proceedings brought by Unilever. The notification stated that unless Mr Karounos replied within the time fixed in it, it would be assumed that he did wish to vacate the additional hearing dates and that the Court would proceed on the basis of the evidence and submissions already made to give judgment on both the Unilever application and his cross-claim. Mr Karounos did not reply. A follow up fax advised him that as no reply had been received, the hearing dates would be vacated and judgment delivered on both Unilever's application and his cross-claim without further hearing. Again there was no reply.

[10]

(5) If the Registrar finds that the trade mark is to some extent inherently adapted to distinguish the designated goods or services from the goods or services of other persons but is unable to decide, on that basis alone, that the trade mark is capable of so distinguishing the designated goods or services: (a) the Registrar is to consider whether, because of the combined effect of the following: (i) the extent to which the trade mark is inherently adapted to distinguish the designated goods or services; (ii) the use, or intended use, of the trade mark by the applicant; (iii) any other circumstances; the trade mark does or will distinguish the designated goods or services as being those of the applicant; and (b) if the Registrar is then satisfied that the trade mark does or will so distinguish the designated goods or services-the trade mark is taken to be capable of distinguishing the applicant's goods or services from the goods or services of other persons; and (c) if the Registrar is not satisfied that the trade mark does or will so distinguish the designated goods or services-the trade mark is taken not to be capable of distinguishing the applicant's goods or services from the goods or services of other persons. Note 1: For goods of a person and services of a person see section 6. Note 2: Use of a trade mark by a predecessor in title of an applicant and anauthorised use of a trade mark by another person are each taken to be use of the trade mark by the applicant (see subsections (1) and 7(3) and section 8). (6) If the Registrar finds that the trade mark is not inherently adapted to distinguish the designated goods or services from the goods or services of other persons, the following provisions apply: (a) if the applicant establishes that, because of the extent to which the applicant has used the trade mark before the filing date in respect of the application, it does distinguish the designated goods or services as being those of the applicant-the trade mark is taken to be capable of distinguishing the designated goods or services from the goods or services of other persons; (b) in any other case-the trade mark is taken not to be capable of distinguishing the designated goods or services from the goods or services of other persons. Note 1: Trade marks that are not inherently adapted to distinguish goods or services are mostly trade marks that consist wholly of a sign that is ordinarily used to indicate: (a) the kind, quality, quantity, intended purpose, value, geographical origin, or some other characteristic, of goods or services; or (b) the time of production of goods or of the rendering of services. Note 2: Use of a trade mark by a predecessor in title of an applicant and anuthorised use of a trade mark by another person are each taken to be use of the trade mark by the applicant (see subsections (1) and 7(3) and section 8)."

[22]

Although his database included the Adelaide Advertiser it had failed to locate use of the word "real" in the context of "Real Fish'n Chips" or, indeed, any use of either mark by RFC Nominees or the respondents. 16 Unilever also relied on an affidavit of Mr Parry-Okeden, managing director of a media monitoring company Adtrak Pty Ltd, who had made searches of television commercials broadcast between June 1994 and December 1995 in which the word "real" had been included. According to his searches it would seem that a number of companies used the word "real" to indicate the genuineness of their product or its ingredients. For example McDonalds French Fries ("real potato"), Uncle Tobys Roll Ups ("real fruit"), Farm House milk ("real cows milk") and KFC breakfast ("real bacon, real sausages"). 17 This evidence was said to show that the word "real" where used in print and television advertisements had been merely descriptive, denoting that the particular product advertised or the ingredients used in it were natural, fresh or homemade. In particular none of the searches threw up any use by the respondents (or RFC Nominees) or anyone authorised by them of the word "real". Yet, given that it was suggested that Mr Karounos or RFC Nominees had used the word and device mark in Adelaide in conjunction with the sale of fish and chips it might have been expected that either print or television advertising would have disclosed it. 18 Affidavit evidence was read by Mr Karounos from a number of experts in marketing and market research. The experts included Mr Hancock, a director of Communication and Marketing Research Associates Pty Ltd, market research consultants, Ms Strachan (whose affidavit was filed on behalf of Unilever), a market researcher and a director of Inview Pty Limited, and a Professor Quester who is an Associate Professor of Marketing at the University of Adelaide. Some of the evidence was read subject to an objection from Unilever as to its relevance. In particular, evidence which is summarised later concerning the use of brands and sub-brands in marketing suffers the problem that the question whether an expert in marketing considers use of a word as a brand or sub-brand is not necessarily the same question as whether use of the word is use as a trade mark in relation to goods for the purposes of the Act. Ultimately, the statutory question falls to be determined by reference to the way the particular word is used in relation to particular goods. That question will usually, if not inevitably, be determined by inspecting the packaging or advertising on or in which the word claimed to be used as a mark is in fact used. 19 Mr Hancock had, at Mr Karounos' request, carried out market research for the "Real Fish'n Chips" business in 1994 and later, in 1999, for the RFC Trust (both RFC Nominees and Mr Karounos were, at different times, registered owners of the marks in their capacity as trustee of this trust) in relation to what was referred to as "Real Food Branding & Packaging Issues". The research examined consumer perceptions and connotations associated with the word "real" when used in relation to food, assessed packaging and labelling issues involving the use of the word "real" and reported on consumer responses to both a stylized logo representation of the word "real" and the word "real" itself to determine the extent to which consumers perceived each to be used as a brand. Those who participated in the research were asked what they thought was intended to be connoted by use of the name "Real Fish and Chips". Responses included the views that "genuine fish" was used as opposed to "imitation fish", that "real fish" was cooked rather than "plastic food", that the food was "real food and not junk food", that the food was "good for us", that it was "made from natural product", that it was "not processed", that it was "healthier" or "fresh", or that it was "traditional", "authentic", "quality" or similar to "home made". 20 Mr Hancock stated further that when consumers were presented with both a stylised logo representation of the word "real" and the word "real" simpliciter, the stylized real device (logo) caused respondents to very quickly and clearly identify that representation as a brand name. On the other hand reaction to the word alone included the suggestion that the product was "without a brand name" and that it "looks like they are talking about the product … the contents of the packet". 21 Ms Strachan commented upon the research carried out by Mr Hancock. She considered the use of focus groups by Mr Hancock to be flawed methodology. She criticised it also on the basis that it had been carried out with the underlying assumption that the word "real" was a brand. She considered that all of the attributes defined as associated with the word "real" by the research were suggestive of characteristics or descriptors of the product, rather than of a brand name. She was of the view that generally speaking consumers believed that the word "real" was not a genuine brand name and that that was the conclusion which properly was to be drawn from the report of Mr Hancock. 22 In reply Mr Hancock disputed the conclusions which Ms Strachan sought to draw from his research. He said that his report concluded that the word "real" was "more quickly and clearly recognised as a brand when written in stytlised form". However, he said that when the word "real" was presented in "regular writing", it was "still recognised as a brand, but less immediately". He said further that the results of his research indicated that "consumers accept the word 'real' as a brand when it is presented prominently and appropriately". 23 Professor Quester had written two reports dealing first with brands (including whether Unilever's use of the word "real" amounted to use as a brand) and then with the question whether various uses of the word "real" by companies other than Unilever amounted to use as a brand. Her definition of a brand was a: "name, term, design, symbol or any other feature that identify a seller's goods or services as distinct from those of other sellers."

[30]

· A "Real Fish 'N' Chips Intellectual Property Licence and Management Agreement" between Mr Karounos and Trevor Archibald Maxwell granting Mr Maxwell a licence of intellectual property that includes the marks and involving the franchising of the "Real Fish'n Chips" business. The agreement is signed but dated only 1997. Under the agreement, Mr Maxwell is permitted to use the marks for the purposes of the licence and is required to use his best reasonable endeavours to, inter alia, promote and enhance the intellectual property dealt with by the agreement. The agreement requires a sublicence of the intellectual property to be granted to Jilahk Pty Ltd by 30 June 1997 and contemplates the grant of franchises. · An unsigned "Management Agreement" between Mr Karounos, Mr Maxwell and Jilahk Pty Ltd. This agreement contemplates a sublicence of certain intellectual property, which includes the marks, by Mr Maxwell to Jilahk Pty Ltd. The management agreement is a requirement for the grant of the sublicence and includes at the top of it a handwritten date of 28 May 1997. The agreement was admitted as evidence that negotiations occurred between Mr Maxwell and Mr Karounos. · A "Real Fish 'N' Chips Sublicence Agreement" between Mr Maxwell and Bacalon Pty Ltd (undated but apparently entered at some time after 5 May 1997). Under this agreement, a sublicence of intellectual property, which includes the marks, is granted to Bacalon Pty Ltd by Mr Maxwell. This agreement is in relation to the franchising of the "Real Fish'n Chips" business. · An "Agency Agreement" between Mr Karounos and Mr Maxwell which appears to have been executed at some time during 1997. This agreement appoints Mr Maxwell as Mr Karounos' agent for the negotiation of licences and assignments of intellectual property, which includes the marks, worldwide (excluding Australia and New Zealand). 32 Mr Karounos also tendered copies of a business card belonging to him that contained both the word mark and the word and device mark printed upon it and of letterhead containing the word and device mark printed upon it. There was no evidence of the time of production of these items.

[31]

Was Unilever a "person aggrieved" for the purposes of s 88 of the Act. 33 Unilever submitted that it was a "person aggrieved" for the purposes of s 88(1)(a) of the Act because it manufactured Rosella and Continental products in packaging which included the word "real"; because RFC Nominees and Mr Karounos had alleged that its use was an infringement of the marks and because in the cross-claims each of RFC Nominees, Mr Karounos and Sabre had alleged that the use of the word "real" infringed the marks. 34 The principles upon which the Court has determined whether a person is a "person aggrieved" within the meaning of the Act were stated by McLelland J in Ritz Hotel Ltd v Charles of the Ritz Ltd (1988) 15 NSWLR 158 at 193-196 ("Ritz Hotel") and have been approved by Full Courts of this Court in Kraft Foods Inc v Gaines Pet Foods Corporation (1996) 65 FCR 104 at 113 and Campomar Sociedad, Limitada v Nike International Ltd (1998) 85 FCR 331 at 363. Relevantly, they may be expressed as follows: (a) The expression "person aggrieved" has no special or technical meaning and is to be liberally construed. (b) The expression includes any person having a real interest in having the Register rectified, or the trade mark removed in respect of any goods, as the case may be, and thus would include any person who would be, or in respect of whom there is a reasonable possibility of his being, appreciably disadvantaged in a legal or practical sense by the mark remaining on the Register. (c) The question whether an applicant for relief is a "person aggrieved" cannot be divorced from the nature and extent of the relief claimed. A person must be aggrieved in relation to the category of goods and services in respect of which they are seeking to have the trade mark cancelled. (d) The material time at which a person must be aggrieved is the date of application. That is, the date of the commencement of the proceedings in which the claim for that relief is made. 35 Since the material time to consider the matter is when the application is filed, the cross-claims, by their nature later in time, will have no relevance. Nor would mere use by Unilever of the word "real" in relation to the products necessarily require the conclusion that Unilever is a person aggrieved as the registration may be in respect of classes of goods different from the classes into which the Unilever products fall. But it is not necessary to consider in detail into what categories the Unilever products fall, because the allegations made by Mr Karounos in his letter of 20 May 1998 and in the letters from his patent attorneys (Collison & Co) dated 16 June 1998 and 17 July 1998 suffice to establish Unilever as a person aggrieved in relation to each of the classes in respect of which the marks are registered. The allegations in these letters are in nature general and allege infringement in relation to all the classes in respect of which the marks are registered. They threaten further action if Unilver does not cease the alleged infringing action. There is, in these circumstances, a sufficient disadvantage to Unilver in a practical sense to require the conclusion that it is a person aggrieved. As was said in Continental Liqueurs Pty Ltd v GF Heublein and Bro Inc (1960) 103 CLR 422 at 427-8: "It is enough to say that the respondent has shown an intention of preventing the applicant from using the word, if by any means it can do so, and on some future occasion it may well rely for this purpose on the trade mark now in question."

[32]

Whether the word "real" is capable of distinguishing goods or services. 36 It was submitted by Unilever that the word mark "REAL" was not capable of being or becoming a trade mark because it was not, to any extent, inherently distinctive within the meaning of s 41 of the Act. Particularly it was submitted that: (a) The word "real" is an ordinary English word and is used as such. It is not distinctive of the goods of a particular trader. (b) Both as an adjective and as an adverb the word has a range of meanings and shades of meaning, all of which are descriptive. (c) "Real" is a word that manufacturers and suppliers of food and food services naturally wish to use in respect of their products and services and they should be free to do so. 37 It was submitted that because the word "real" is not to any extent inherently distinctive the only way in which registration of the word as a mark could be supported would be if there was evidence that prior to the date of filing of the application for registration it was used by RFC Nominees or Mr Karounos. However, putting to one side the word and device mark used in relation to fish and chips, there was no evidence at all of any use of the word "real" by RFC Nominees or Mr Karounos, or indeed anyone authorised by them. 38 For Mr Karounos it was submitted that it did not follow merely because a word had a descriptive flavour that it could not be distinctive of the goods of a trader. So, it was submitted, the word "real" was at least sufficiently inherently capable of distinguishing goods and services as to be capable of registration. Alternatively it was submitted that there was evidence of sufficient use or intention to use the word "real" both prior to and after the date of filing of the application for registration to render the word mark distinctive for the purposes of the Act. 39 Section 17 of the Act provides that: "A trade mark is a sign used, or intended to be used, to distinguish goods or services dealt with or provided in the course of trade by a person from goods or services so dealt with or provided by any other person." 40 As the definition in the Act indicates, the crucial element by which a word or symbol constitutes itself a trade mark is its capacity to distinguish the goods or services to which it relates from other goods and services. As Kitto J said in Clark Equipment Co v Registrar of Trade Marks (1964) 111 CLR 511 ("Clark Equipment") at 512: "[A] trade mark is not distinctive of the goods of a person unless it is adapted to distinguish goods with which that person is or may be connected in the course of trade from goods in respect of which no such connection exists." 41 The test by which courts have determined whether a word or symbol is adapted to distinguish the goods or services to which it relates from other goods or services is well established and finds its classical expression in the speech of Lord Parker of Waddington in Registrar of Trade Marks v W & G Du Cros Ltd [1913] AC 624 at 634-635 where his Lordship stated that the answer to the question of whether a word or symbol was a trade mark depended largely: "upon whether other traders are likely, in the ordinary course of their business and without any improper motive, to desire to use the same mark, or some mark nearly resembling it, upon or in connection with their own goods." 42 This statement was approved by Kitto J in Clark Equipment at 513-4 and has been applied in this Court repeatably; see, for example, Big Country Developments Pty Ltd v TGI Friday's Inc (2000) 48 IPR 513 at 521. 43 In determining the capacity of a word or symbol to distinguish the goods to which it relates a distinction is drawn between words which are descriptive of the goods to which they relate and those which are not. As Kitto J said in Clark Equipment at 515: "[T]he more apt a word is to describe the goods, the less inherently apt it is to distinguish them as the goods of a particular manufacturer."

[37]

45 See also, for example, Pepsico Ausralia Pty Ltd v Kettle Chip Co Pty Ltd (1996) 135 ALR 192 (the "Kettle Chip case") per Lockhart J at 193-4 and the Caplets case at 347-8 per Gummow J. 46 That there is no firm divide between words which are descriptive and those which are capable of distinguishing goods and services from others is recognised by the Act insofar as section 41 conceives of three methods by which a word or symbol may be capable of distinguishing the applicant's goods or services from goods or services of other persons. The necessary quality of distinctiveness may be achieved by the inherent adaptation of the word or symbol to distinguish the goods or services from goods or services of others; or, by a combination of the inherent adaptation of the word or symbol to distinguish the goods and services, the use or intended use of the word or symbol by the applicant and any other circumstances; or, by use of the word or symbol prior to the filing of the application for registration. These three inquiries form the basis for the determination of the capacity of a word or symbol to be registered as a trade mark. 47 Mr Karonous relied on the decision of the High Court in Mark Foy's Ltd v Davies Coop & Co Ltd (1956) 95 CLR 190 (the "Tub Happy case") for the proposition that it is erroneous to assume that words such as "real" possess a meaning and then to proceed to inquire what the meaning is. Words, it is submitted, are not always used to convey a meaning but may be purely emotive. So much of Mr Karonous's submissions may be accepted. However, in my opinion, they do not avail the respondents where the mark concerned is as ordinary a part of the English language as the word "real". The Tub Happy caseconcerned the issue of whether the coined phrase "Tub Happy" used in connection with clothes was validly registered as a trade mark. In that case, Williams J said (at 201) that "any reference that the words 'Tub Happy' have to the character or quality of articles of clothing is very remote". 48 In contrast, the word "real" has and is only capable of having a very direct reference to the character and quality of the goods in connection with which it is used. In my opinion, the word "real" in its ordinary usage and as used in the evidence in this case, is, in the words of Lockhart J, "so totally descriptive of the goods concerned as to be unregistrable"; the Caplets case at 336. In fact, the evidence of the respondent, including documentation of RFG, supports a conclusion that the word "real" is clearly intended to be used to convey an idea to consumers about the quality and nature of the goods to which it is attached. For example, the RFG Strategic Plan for years 1999-2002 and Business Plan for fiscal year 1999/00 annexed to Mr McEntegart's affidavit contains the following statements: "Those brands, organisations and individuals that succeed over the next ten years will do so because they tap into a community need for authenticity, lack of pretence and integrity.

[44]

"it is necessary to consider the words used, as they present themselves to buyers or potential buyers [of the product] who are to form a view about what they are meant to connote: Tub Happy case, at 200, per Williams J and 207, per Kitto J, both citing Re Keystone Knitting Mills Ltd's Trade Mark (1928) 45 RPC 421 at 426, per Lord Hanworth MR." 52 In my opinion, the evidence shows that almost without exception consumers understand the word "real" to refer to the character or quality of goods, or their ingredients, as being genuine, natural, organic, healthy or the like. There was no evidence to support the proposition that the word "real", on its own, is or can be regarded as a word which provides a "badge of origin". The qualities which it implies are all qualities a manufacturer or seller of goods or services may honestly wish to attribute to their goods and services by use of the word "real" without any intention to associate its goods with those of the respondents. In fact, there was a considerable body of evidence, some of which is referred to earlier, showing such persons using the word in a descriptive sense in respect of foodstuffs. 53 It is appropriate here to say something about the concepts of brand and sub-brand referred to in the evidence of marketing experts. There will usually, perhaps always, be a coincidence between the concept of a brand and the concept of a trade mark, if only because each will provide a badge of origin which will distinguish the particular goods (or services). The concept of a sub-brand may be in a different category. Experience shows that a sub-brand may sometimes be a trade mark as, for example, where there are two registered marks, one often related directly to the name of the trader and the other specific to a particular product. The name Toyota could be registered as a trade mark in respect of cars. The name "Celica" might likewise be registered as a trade mark in respect of cars. But the mark Celica might be regarded as a sub-brand by a marketing expert. However, not all words which might be recognised by that expert as a sub-brand may distinguish or be capable of distinguishing the goods or services of one trader from those of another. Often the badge of origin will not be the sub-brand on its own, but the combination of both what the experts see as the brand and what the experts see as the sub-brand. As Lockhart J said in the Caplets case at 337-8: "Merely to associate a word with the product of a particular producer does not mean that the association is necessarily one of origin." For a sub-brand to be a trade mark on its own it must, like would usually be the case for a brand, itself be capable of distinguishing the goods and services of the trader from those of other traders. Hence, emphasis on whether a word is a brand or sub-brand may distract from the real issue of whether either or both is a trade mark. 54 In my view the word "real" alone and without anything more is not inherently adapted to distinguish the goods or services of the respondents, assuming that there were any. Given this finding it is unnecessary to consider evidence going to use after the date of filing of the application for registration. That evidence, if there were any, would not avail the respondents. Even if I had found that the mark was at least to some extent, although not to a sufficient extent to render it capable of distinguishing goods or services on that basis alone, adapted to distinguish goods or services, there is no evidence of use of the word mark in such a way as would render it capable of distinguishing goods or services or of any other circumstance that could do so. As has already been noted, there was some evidence of use of the words "Real Fish'n Chips" which words, at least together with the logo, would be capable of being a mark, but that capacity arises not from the use of the word "real" but from its use in combination with the other words and logo. 55 However, in deference to the case Mr Karounos sought to advance I will consider the question whether such evidence as there was sufficed to satisfy s 41(6)(a) of the Act. That section requires the respondents to establish that the extent to which the trade mark was used before the application for registration of the word "real" was filed was such as to render the word "real" capable of distinguishing the goods or services the subject of the registration. The use to be established must be use prior to the filing of the application for registration. It need not be use by the current registered owner; it could be use by a predecessor in title of an applicant for registration: s 41(1). There must not only be use of the word prior to the filing of the application for registration; the use must be use as a trade mark, in the sense that it conveys information about the commercial origin of goods or services: Koninklijke Philips Electronics NV v Remington Products Australia Pty Ltd (2000) 48 IPR 257 at 265-6. In a case such as the present, where the word is a descriptive word, it will not be possible to establish use as a trade mark unless that use attaches to the word a secondary or distinctive meaning: cf the Caplets case at 339 per Lockhart J. 56 Mr Karounos led no evidence of any relevant use of the word "real" prior to the filing of the application. The only evidence relating to prior use was that which related to the word and device mark "Real Fish'n Chips", which, I have already noted, does not assist the case for the word mark "REAL". 57 In my view the attempted registration seeks to appropriate a word in common usage: cf Eastman Photographic Materials Co Ltd v Comptroller-General of Patents, Designs, and Trade-Marks ("Solio" case) [1898] AC 571 at 580. The registration should be cancelled in accordance with s 88(1)(a) of the Act.

[45]

Whether the marks should be removed from the Register for non-use. 58 It is a ground for removal of a valid trade mark from the Register, upon application being made to the Court by a person aggrieved, that in a continuous period of three years ending one month before the day on which a non-use application is filed the registered owner did not use the mark in Australia: ss 92(3), 92(4)(b)(i), but see s 93(2). As a result of s 100(1)(c) of the Act, once an allegation of non-use is made, as here by Unilever, the onus is on the registered owner of the mark to show use of the mark. However, the Court is empowered not to order removal where it is reasonable that the mark should not be removed from the Register: s 101(3). It was not suggested that the Court should exercise its discretion under this section. 59 To rebut the allegation of non-use it must be established that the mark, or the mark with additions or alterations not substantially affecting its identity, was "used in good faith by its registered owner in relation to those goods or services during [the relevant three year] period": s 100(3)(a). The relevant use in relation to goods must be use as a trade mark, ie a badge of origin "upon, or in physical or other relation to, the goods": s 7(4). Authorised use, that is to say use under the control of the owner of the mark, will be taken to be use by the registered owner: ss 7(3) and 8. However, it suffices to rebut an allegation of non-use to establish that because of circumstances that were an obstacle to the use of the mark during the period the mark was not used: s 100(3)(c). 60 It was submitted that the relevant period of non-use was that running from 9 (properly 10) January 1997 to 9 January 2000: cf 93(2), 92(4)(b). Where the proceedings are brought in the Court the non-use period will be determined not by reference to the time of filing of the original application, if the non-use application is not then made, but from the time of amendment to the pleadings when for the first time the non-use application is made. Unilever amended its pleading to include a non-use application on 10 February 2000. 61 There is little doubt that the threats made to Unilever by Mr Karounos suffice to ensure that Unilever has standing to bring the proceedings as a person aggrieved: cf Woolly Bull Enterprises Pty Ltd v Reynolds [2001] FCA 261 ("Woolly Bull Enterprises") at [11]. 62 As already noted the only evidence of use in the period is the evidence of Mr Karounos as to the date the last Real Fish'n Chips shop operated, the evidence in the affidavit of Mr McEntegart and the licence agreements (which would appear to relate to the "Real Fish'n Chips" business) that were tendered. The evidence of Mr McEntegart concerned, it will be recalled, evidence of the activities undertaken by RFG in preparation for the launch of a "Real" product line and of the grant of a sole and exclusive licence to commercialise the "Real" trade marks in Australia by Real Corporation to RFG in September 1999. There is annexed to the affidavit an extract from a trade publication "RETAIL World" which refers to RFG plans to introduce a range of food and beverage products under the "Real" brand. However, the Marketing report of D&J Marketing referred to previously notes that "'Real" products are unestablished within the market place". Although it seems to have been contemplated that the products would be on shelves of supermarketsby July 2000 there is no evidence which suggests that this in fact happened. Evidence of intended use is not evidence of use where the intention is not implemented. Nor is a proposal to grant licenses. Further, so far as the licence agreement between Real Corporation and RFG was concerned there is no evidence that links Real Corporation with the registered owner of the marks so as to constitute that use, such as it was, use by a person authorised by the registered owner. In any case, mere entry into a licence agreement is not evidence of use whether under the authority of the registered owner or at all. 63 So far as the evidence suggests, the only use of any mark in the period that could be said to be shown, authorised or otherwise, was of the word and device mark "Real Fish'n Chips". If there were some other use in Adelaide it might be expected to have been revealed from advertisements in the Adelaide Advertiser. Nothing appeared there. Business cards, letterhead, or intended launches will not without more avail Mr Karounos. 64 It would not be necessary for the respondents to show regular and continuous use in the three year period: cf Estex Clothing Manufacturers Pty Ltd v Ellis and Goldstein Ltd (1967) 116 CLR 254 at 258 per Windeyer J. A single use in good faith would suffice to prevent a person succeeding on an application for removal based on s 95(4)(b): Woolly Bull Enterprises at [14], and [16]. 65 Reliance was placed by Mr Karounos on the case of Buying Systems (Australia) Pty Ltd v Studio Srl (1995) 30 IPR 517 ("Buying Systems") in support of a submission that evidence of actual trade was not required to establish actual use of a mark as a trade mark. While it is true that it is not necessary to show actual dealing in goods bearing a trade mark to establish use of the mark there must still be shown use of the mark as a mark and in relation to the relevant goods or services. Buying Systems was a case where the activities, which included advertising a proposed fashion magazine, arranging advertisements to be placed in the new magazine and undertaking promotional activities, were sufficient to constitute use of the word "studio" as a mark. There the evidence went beyond preliminary arrangements to use the mark and showed an objectively ascertainable commitment to offering to supply the magazine: cf Drummond J in Woolly Bull Enterprises at [28]. Here there was no evidence that any plan to introduce "Real" branded products ever was proceeded with. The evidence amounted to no more than steps that were preparatory to the introduction of products. Nothing appears to have proceeded beyond the planning stage. There was never use of the word mark in relation to goods or services within any class in which the word mark was registered. Mere business cards or letterhead (the evidence did not permit any conclusion as to when either was printed) will not suffice to prove on their own any use of a mark in relation to goods or services. There was never here any commitment on the part of the registered owner or for that matter any authorised user to supply goods or services under the "Real" mark. At best the evidence showed an intention to confer rights to use the word mark (as well as the word and device mark), apparently for a "Real Fish'n Chips" franchise. 66 It follows that if the word mark was capable of registration I would order that it be removed from the Register on the ground that the respondents had not demonstrated use of the mark during the relevant period. It was submitted, however, that the institution of the present proceedings by Unilever prevented use of the mark, in that it deterred others from entering licence agreements to commercialise the mark or from taking action under such licence agreements. So, it was said that the failure of the licensees to use the marks was a circumstance beyond the control of the registered owner sufficient to satisfy s 100(3)(c) of the Act. 67 In Woolly Bull Enterprises Drummond J considered what was sufficient to constitute an obstacle to use for the purposes of s 100(3)(c). After extensive consideration, Drummond J concluded at [55] that: "In my opinion, circumstances within s 100(3)(c) will only exist when events arise that are capable of disrupting trade in the area of commercial activity in which goods bearing the registered owner's mark are traded. For the statutory excuse to be made out, those circumstances must cause (in a practical business sense) non-use of the particular mark by the owner, whether or not they have an impact on any persons other than the owner of that mark who are also involved in that same area of commercial activity. There must be a causal link shown between the relevant circumstances and the mark's non-use."

[47]

Did Unilever infringe the marks. 71 Again it is unnecessary to deal with this issue other than perhaps in relation to the word and device mark. I will state shortly my conclusions. 72 Particularly where what is claimed to be a trade mark is an ordinary English word and descriptive of certain qualities, it is obvious that the word can be used without necessarily constituting an infringement. In determining whether there is an infringement, context is all important: Shell Company per Kitto J at 422. In the Caplets case Gummow J said at 374-8: "… The relevant context, where the mark is a word mark, includes a consideration of the way in which the word has been displayed in relation to the goods and advertisements of which complaint is made … Where the trade mark allegedly used by the defendant comprises ordinary English words … then … that circumstance may be taken into account by the court in the process of reasoning by which it accepts or rejects a submission that the use in question is not a trade mark use but a description of the goods in question … [W]here the issue is one of infringing use by use of a word mark … the fundamental question remains … whether those to whom the user is directed are being invited to purchase the goods (or services) of the defendants which are to be distinguished from the goods of other traders 'partly because' (emphasis supplied) they are described by the words in question." 73 See also the Kettle Chip case at 163 per Lockhart J where his Honour refers to the need to read an expression "as a whole, and in the context of the packaging as a whole" and per Sackville J at 182 where his Honour states that the "purpose and effect of the words are to be determined by having regard to the context in which they are used". 74 It is also relevant to note that the more apt to describe a word is the more difficult it will be to find its use to be an infringing use. As Lockhart J commented in the Kettle Chip case at 162: "It is easier to find infringement of a registered mark where it consists of a coined phrase (see Mark Foy's Ltd v Davies Coop & Co Ltd (1956) 95 CLR 190 (the Tub Happy case)) than in a case where the registered mark is a generally descriptive word which has acquired a secondary meaning, so becoming distinctive of the plaintiff's goods as a badge of origin. The reason is that there is always inherent in a word that is originally descriptive the risk that even when it is used by others in trade it will be used in its original descriptive sense. And of course, where a word that is initially descriptive subsequently acquires a secondary meaning, it remains that use of the word in a descriptive sense cannot be restrained by the proprietor of the trade mark." 75 The Rosella soup packet contains the word "real" and the word "soup" on either side of the Rosella brand. Both the word "real" and the word "soup" are in the same font and size. In contrast, the word Rosella is substantially larger, includes the Rosella logo and is of overall much greater prominence. A statement that the soup is "ready to serve" is included on both the front and side of the packet. On one side flap are also included, inter alia, the words "wholesome chicken soup blended with real cream" (emphasis added). 76 The Continental stock packets indicate that the stock is in liquid form. The 250 ml beef stock packet contains the words "Real Beef" on its front in upper case letters of the same size. The word stock appears in smaller lettering. The Continental logo takes prominence, featured alone at the top of the front of the packet. On the front of the packet the words "made with natural ingredients" are included. On the side of the pack it is stated that "Continental Real Beef Stock is made with natural ingredients to give you the flavour and aroma of homemade stock" (emphasis added). The other side of the pack states that "250 ml of Continental Real Beef Stock is equivalent to one cup of homemade stock" (emphasis added). The 500 ml packet of Continental chicken stock contains similar wording on the packet. However, in its case unlike for the beef stock, the words "Real", "Chicken" and "Stock" each appear on their own lines with the word "real" in smaller lettering than the word "chicken". 77 Given the general layout of the packet and the use of terms such as "natural ingredients", "home made", "real cream" and "wholesome", the context in which the word "real" is used on the Unilever products suggests that the term is being used descriptively and not in any sense as indicative of the origin of Unilever's goods or as a sub-brand, as that term is understood by the marketing experts who gave evidence. In my opinion, a person looking at the packaging would consider the word in each case to be used descriptively given its placing, size and general prominence. The information conveyed to consumers by phrases on each packet reinforce the descriptive nature of the use of the word "real" emphasising that the contents of each packet are natural, similar to homemade and the like. 78 The fact that the layout of the word "real" is not consistent between the Rosella and Continental products and even within the Continental products further suggests that it is not intended to in any way be used as an identifier or distinguisher of any goods. Clearly the words "Rosella" and "Continental" are emphasised much more than the word "real" and are the identifying elements. Even were the word being used as a sub-brand, and I do not consider that it is, such use would not necessarily constitute a trade mark use. 79 It follows that as I have found Unilever to not have used the word "real" as a trade mark on its products, Unilever could not have infringed the word and device mark and I would grant a declaration accordingly. It follows also that had "REAL" been a valid mark the subject of use during the relevant period, I would not have found Unilever to have infringed that mark and would have granted a declaration accordingly.

Unilever Aust Ltd v Karounos

At a glance

Court

Decision date

Before

Source

Judgment (55 paragraphs)

Parties

Legislation Cited (2)

Cases Cited (15)

Cited By (8)