Wellness Pty Limited v Pro Bio Living Waters Pty Limited

The issues 10 It was not in dispute that the respondents' LIVING WATERS range of bottled water products are 'goods ... in respect of which the trade mark is registered' in terms of s 120(1) of the Act. As to the alleged infringement of the trade mark, there were a number of issues: · Whether PRO-BIO LIVING WATERS is a single trade mark or two trade marks. · If LIVING WATERS is itself a trade mark: i. whether the first and/or second respondents used it as a trade mark ii. whether LIVING WATERS is substantially identical or deceptively similar to the trade mark LIVING WATER and thereby infringes. · If a single trade mark, whether PRO-BIO LIVING WATERS is substantially identical or deceptively similar to the trade mark LIVING WATER and thereby infringes. · If there was infringement, whether it was by the first respondent and/or the second respondent. · If there was infringement, whether the third respondent was liable as a joint tortfeasor. · Whether any of the provisions of s 122 relied upon provide a defence to the first respondent.

The evidence 11 Evidence was filed by the applicant and none of the deponents were required for cross-examination. The evidence was unchallenged. There was no evidence filed on behalf of the respondents.

The applicant 12 The applicant has used the trade mark in various advertising and promotional material for the purpose of promoting the water produced by means of the Wellness water filter, which it has sold in Australia since August 2000. The applicant has spent money on advertising and promotion and artwork, has used the trade mark in advertising and promotional material and has generated revenue from the sales of the Wellness water filter. These sales, throughout Australia, are primarily directed to customers who contact the applicant but the applicant also sells the Wellness water filter through retail stores. It should be noted that the applicant does not sell bottled water.

The first respondent 13 The first respondent was registered as a company on 11 February 2002. The only director is the third respondent, who owns 50% of the shares. 14 As to the use of 'living waters' by the first respondent, the evidence established: (a) At its premises at 2074-2080 Hume Highway, Campbellfield, Victoria ('the Hume Highway premises'), the first respondent, as at 6 December 2002, displayed signs as follows in the form of Annexure A to these reasons ('the logo'). (b) The first respondent produced an invoice, using the logo, for 5 litres of "Spring Water" and 5 litres of "Water for Life". (c) The containers to which the invoice referred were labelled using the logo. One was additionally labelled "Spring Water" and the other "Water for Life": (i) The label for the "Spring Water" container also contained two references to "PRO BIO", one reference to "Pro Bio", two references to "Pro Bio Living Waters" and one reference to "Pro-Bio Living Waters Pty Ltd". For example, on the label for "Spring Water", there appeared "PRO-BIO FROM THE GREEK "FOR LIFE"" and "PRO-BIO ORGANIC SPRING WATER". (ii) The label for the "Water for Life" container contained one reference to "Pro-Bio Living Waters Pty Ltd" and one reference each to "PRO-BIO "WATER FOR LIFE"" and "PRO-BIO ORGANIC SPRING WATER". (d) The first respondent used its name, for example on stationery, in the form of Annexure B to these reasons ('the second logo'). (e) A price list, using the second logo, referred to prices for "Murrindindi Organic Spring Water", "Water for Life" and "Bacteriostatic Water Treatment (Colloidal Silver)". 15 Accordingly, it is not in dispute that the first respondent used the name LIVING WATERS in the promotion and sale of a range of bottled water, in particular: (a) on signage (b) on stationery (c) on labels for its water products (d) on bottles of water (e) as part of its corporate name.

The second respondent 16 The second respondent was registered on 14 July 2003. Its principal place of business is 110 Gaffney St, Coburg, Victoria ('the Coburg premises'). The third respondent is the sole director and also the secretary of the company and owns 100% of the shares. 17 As to the use of LIVING WATERS by the second respondent, on 23 July 2003 Mr Ramsden, an investigator retained by the applicant, obtained from the Coburg premises pamphlets and a price list which, on their face, were those of the second respondent. The pamphlets and the price list contain references to "PRO-BIO Tech Waters Pty Ltd" and describe "Springwater" from Murrindindi, "Alkaline Water" and "Acid Water". One pamphlet has a reference to "Pro-Bio's acid water". The price list, which is headed "PRO-BIO LIVING WATERS PRODUCT PRICES", listed "Acid Water", "Alkaline Water", "Health Water", "Colloidal Silver" and "Murrindindi Organic Spring Water". 18 Visible on a wall at the Coburg premises was a sign containing the words "PRO-BIO UNIQUE".

The third respondent 19 On or about 11 February 2003, Mr Conlon, a director of the applicant wrote to the first respondent, marked to the attention of the third respondent, a letter of demand, alleging infringement of the trade mark. The third respondent rang Mr Conlon approximately a week later and said: 'hello its Rodney Robinson from Pro Bio Living Waters I have your fax. You guys don't know what you are doing. We are in Victoria. It has nothing to do with you and will continue to do as we like.' Mr Conlon replied: 'look please check the trade mark law. You are infringing on our trade mark.' 20 After that conversation the logo was still in use at the Hume Highway premises and was observed by Mr Conlon at the Coburg premises, to which the first respondent had moved. It was also used on containers obtained by Mr Ramsden from the Coburg premises. 21 On 23 July 2003, Mr Ramsden obtained from the Coburg premises a business card of the third respondent. That card bore the name of the first respondent in the form of the second logo and also referred to "PRO-BIO NATURES MINERAL AND ORGANIC PRODUCTS" in the form of Annexure C to these reasons ('the third logo').

Whether PRO-BIO LIVING WATERS is a single mark or two marks 22 Counsel for the applicant submits that the name PRO-BIO LIVING WATERS, as used by the respondents, contains two separate trade marks: PRO-BIO and LIVING WATERS. She points to the logo and submits that PRO-BIO has been deliberately created as an embellished mark on the bottles and signs, while LIVING WATERS is not so embellished. Counsel also emphasises the differences in font, style and size of the two components. She submits that PRO-BIO and LIVING WATERS perform quite distinct and separate functions, one (PRO-BIO) to identify the source of the product range. The other (LIVING WATERS) as a secondary mark in respect of the products that form part of the LIVING WATERS range of bottled water products. 23 The third respondent submitted that the addition of PRO-BIO changed the structure of the name so that LIVING WATER was not being used 'in its own right'. 24 The comparison to be made for the purposes of infringement is between the whole mark as used and the registered mark. If PRO-BIO LIVING WATERS is a single mark, the comparison is between the trade mark, LIVING WATER, and PRO-BIO LIVING WATERS. If made up of two marks, the comparison is between LIVING WATER and LIVING WATERS. 25 There is no evidence from consumers as to their impressions; it is a matter for the Court to view the matter objectively or, as put by Lockhart J in Pepsico Australia Pty Ltd v Kettle Chip Company Pty Ltd (1996) 33 IPR 161 ('Pepsico') at 163, with resort to common sense. 26 In Anheuser-Busch Inc v Budejovický Budvar, Národní Podnik56 IPR 182 ('Anheuser-Busch') at [155], Allsop J considered whether the impugned mark was the whole of "Budejovický Budvar" or its component words. His Honour observed that the mark there was composed of two foreign words, placed in close proximity to each other, written in similar script and that they received prominence on the label of equal proportion on the neck and slightly different prominence elsewhere. He concluded that the sign used to distinguish or intended to be used to distinguish the goods in the course of trade from other goods was the phrase consisting of the two words and that it would be so understood by relevant readers as a composite single mark. 27 In the present case, in addition to the matters raised by counsel and referred to above, there is use of PRO-BIO with LIVING WATERS (as in the logo), without LIVING WATERS (as on the container labels) and with other phrases (as in the third logo). These different uses indicate a separate purpose for the words PRO-BIO. 28 In my view, as used and as it would be understood by consumers, PRO-BIO is used to denote the company that is the origin of the range of waters collectively marketed and distinguished in the course of trade under the name LIVING WATERS. LIVING WATERS is thereby used as a separate trade mark.

Whether the use of LIVING WATERS is use as a trade mark 29 The next question is whether LIVING WATERS is descriptive, having direct reference to the character and quality of the water or whether the words appear as a trade mark for distinguishing the product of the respondents from other water products in the course of trade. A mark may have a descriptive element but still serve as a badge of trade origin (Johnson & Johnson Australia Pty Ltd v Sterling Pharmaceuticals Pty Ltd (1991) 30 FCR 326 ('Johnson & Johnson') per Lockhart J at 335 and per Gummow J at 347) and there may still be trade mark use although another trade mark or indication of origin is used in the same packaging or advertisement (Johnson & Johnson per Gummow J at 349; Pepsico per Sackville J at 179, 182 and 185). The use of descriptive words may, however, make it more difficult to establish that the words do so distinguish the product. 30 The words "living waters" represent a coined phrase which cannot be said to have no direct reference to the character or quality of the goods, the water (see Mark Foy's Limited v Davies Coop and Company Limited (1956) 95 CLR 190 ('Mark Foy's') and the use of the expression "tub happy"). In Mark Foy's, that did not preclude the majority of the High Court (Dixon CJ and Williams J) from concluding that there was use as a trade mark. In my view, the words "living waters" do convey a meaning but, to adapt the words of Dixon CJ at 194-195: 'in ordinary English speech the words do not possess a connotation sufficiently definite to amount to a direct reference to the character or quality of the goods … Many uses of words are purely emotive. A word or words are often employed for no purpose but to evoke in the reader or hearer some feeling, some mood, some mental attitude … They may have an emotive tendency, but they do not appear to me to convey any meaning or idea sufficiently tangible to amount to a direct reference to the character or quality of the goods' or, paraphrasing what was put by Williams J at 201, to say that water is living is in the ordinary use of English meaningless. The words contain at most a 'covert and skilful allusion' to the quality of the water. The words convey only a 'vague association of ideas'. They do not have an inherent capacity to describe the water (cf Johnson v Johnson and the word "caplet"). 31 In support of a submission that registration of LIVING WATER as a trade mark should not have occurred, the third respondent referred me to the use of the words "living water" in the Bible and also to references to "living water" as the "essence of life". He also asserted that the respondents do not sell "living water" as a product and that a trade mark should refer to a product. 32 The key question remains whether, objectively, the words are used to distinguish the bottled water as that of the respondents. Counsel for the applicant submits that, in the context of its use, LIVING WATERS primarily performs the function of a trade mark in that it acts as an identifier for a range of products that are categorised as being natural and healthy and does not act as a descriptor, as the description of each product is clearly identified on each label. The submission by the respondents that "living water" is not sold as a product is consistent with the words being used to identify the product range and not to describe the products themselves. 33 In my view, LIVING WATERS is used to distinguish the bottled water products of the respondents from the bottled water products of other traders, so that it is a 'badge of origin' of those goods (Aldi Stores Ltd Partnership v Frito-Lay Trading Co GmbH (2002) 54 IPR 344 at [26]). The contents of the containers, the products, are described as, for example "spring water" or "water of life". 34 It follows that, in my opinion, LIVING WATERS as used is not a descriptor but a trade mark.

SUBSTANTIALLY IDENTICAL 35 When LIVING WATER and LIVING WATERS are compared side by side it is clear that there is a total impression of resemblance, notwithstanding the presence of the "s" in the latter, making "waters" plural. That is of minor significance and does not derogate from the fact that the essential features of the mark are present (The Shell Company of Australia Limited v Esso Standard Oil (Australia) Limited (1963-1964) 109 CLR 407 at 414). There is substantial identity. 36 Accordingly, there is no need to consider whether the marks are deceptively similar.

INFRINGEMENT 37 As the trade mark LIVING WATERS is substantially identical to the registered trade mark LIVING WATER in respect of bottled water, spring and mineral water, there is infringement of the applicant's mark within s 120 of the Act. The evidence establishes that the first and second respondent have each used the mark and have infringed the applicant's trade mark.

Liability of the third respondent for infringement 38 The third respondent admits that he controls the first and second respondents. He is the sole director of each company and owns 50% of the shares in the first respondent and 100% of the shares in the second respondent. This alone is not sufficient render him personally liable for the infringement by the corporate respondents (Leonardis v Theta Developments Pty Ltd (2000) 78 SASR 376 ('Leonardis') at [103]-[105], upheld on appeal on this aspect Theta Developments v Leonardis [2002] FCAFC 170 at [108]). However, in the case of the first respondent, there was no suggestion that the other 50% shareholder was in any way concerned with the day-to-day running of the company, nor was there any suggestion of any other person being in any way involved with the affairs of the first or second respondents (cf Leonardis). 39 The first and second respondents continued to use LIVING WATERS after the third respondent became aware of the existence of the applicant's registered trade mark and the applicant's allegation of infringement. Indeed, in the conversation with Mr Conlon referred to at [19] above, the third respondent positively asserted that he would continue to act as he pleased, despite the applicant's allegation. This reflected a 'wilful and knowing pursuit of a course of conduct that was likely to constitute infringement or reflected an indifference to the risk of it' (Mentmore Manufacturing Co Ltd v National Merchandising Manufacturing Co Inc (1978) 89 DLR (3d) 195 ('Mentmore') at [28]; King v Milpurrurru (1996) 34 IPR 11). The evidence also leads to the conclusion that the third respondent ordered, directed or procured the first and second respondent to carry out their activities (Performing Rights Society Ltd v Ciryl Theatrical Syndicate Ltd [1924] 1 KB 1 ('Performing Rights') per Atkin J at 14-15). Whether the Mentmore test or the Performing Rights test is applied and whether there is any difference between them (Allen Manufacturing Co Pty Ltd v McCallum & Co Pty Ltd (2002) 53 IPR 400 at 409-410), the third respondent is liable for the infringing acts of the first and second respondents. The evidence leads to the conclusion that the second respondent is a 'one-man company', further supporting the conclusion that the third respondent is liable for the tortious conduct of that corporate respondent (Microsoft Corporation v Auschina Polaris Pty Ltd (1996) 36 IPR 225 at 240).

SECTION 122 DEFENCES 40 Defences arising under sections 122(1)(a)(i), 122(1)(b)(i) and 122(1)(f) of the Act were pleaded in the defence as follows: 'They admit that the first respondent has carried on business and traded, and distributed, sold and offered for sale bottled water, under and by reference to its name, and say that the first respondent is and was authorised and permitted to do so by reason of, inter alia, the provisions of paragraphs 122 (1) a) (i), 122 (1) b) (i) and 122 (1) f) of the TMA. Save as aforesaid they deny each and every allegation in paragraph 10.' Particulars were sought but were not provided.

Section 122(1)(a)(i) 41 This section provides: '(1) In spite of section 120, a person does not infringe a registered trade mark when: (a) the person uses in good faith: (i) the person's name or the name of the person's place of business' 42 This defence cannot assist the second respondent, Pro-Bio Tech Waters Pty Ltd as its name does not include LIVING WATERS. 43 The registered name of the first respondent is Pro Bio Living Waters Pty Ltd. The first respondent can use that name, with or without the "Pty Ltd" (Parker-Knoll Ltd v Knoll International Ltd [1962] RPC 265 at 275). The requirement for the use to be in good faith imports an absence of intention to make use of the goodwill which has been acquired by another trader. The resemblance between the registered trade mark, of which the first respondent was aware and the name of the first respondent does not prevent the use being bona fide provided that there was an honest belief that no confusion would arise and if there were no intention of wrongfully diverting business (Davison, M., Johnstone, K. and Kennedy, P., Shanahan's Australian Law of Trade Marks and Passing Off, 3rd edition, Lawbook Co, Sydney, 2003 ('Shanahan') at [18.195]). Evidence of such an honest belief is necessary to establish 'bona fide use' (Anheuser-Busch at [216]). There is no evidence led by the first or third respondents to establish use in good faith, their belief or their intention. There is no evidence as to the reason for the choice of the first respondent's name or the reason for the subsequent incorporation, after the receipt by the first respondent of the applicant's letter of demand, of the second respondent with a name that does not include the words "living waters". There has been no submission made by the respondents addressed to this defence other than the mere assertion that there is an entitlement to use the name. 44 There is no basis upon which to conclude that the first respondent has used its name in good faith for the purposes of s 122(1)(a)(i) of the Act.

Section 122(1)(b)(i) 45 This section provides: '(1) In spite of section 120, a person does not infringe a registered trade mark when: ……… (b) the person uses a sign in good faith to indicate: (i) the kind, quality, quantity, intended purpose, value, geographical origin, or some other characteristic, of goods or services' 46 Again, there was no evidence adduced by the respondents. Again, there is a requirement to establish that the use be in good faith. The respondents made no submissions on this defence. 47 I have concluded that the use of LIVING WATERS by the respondents is use as a trade mark and it follows from that conclusion that the words are not used as descriptive of the goods and that their use is not reasonably necessary for the adequate description of the goods. The respondents have not pointed to a use of LIVING WATERS as 'some objective description of [bottled water] or of a feature of the [bottled water], by reference to commonly used and understood qualities' (Britt Allcroft (Thomas) LLC v Miller (t/as The Thomas Shop) (2001) 49 IPR 7 at [67]). As Williams J observed in Mark Foy's this finding goes some way towards a finding against the respondents. 48 I have concluded that the expression "living waters" is not used as a descriptor and it, therefore, follows that the expression does not indicate a characteristic of the bottled waters as set out in s 122(1)(b)(i) or that the use of the expression was used in good faith for that purpose. The prominence given to the words and the fact that other descriptions such as "spring water" are used for the particular style of water are also indications that the sign has not been used in good faith for the required purpose and that they are used to indicate a brand (see Shanahan at [18.220]-[18.230] and the cases cited therein). This defence has not been established.

Section 122(1)(f) 49 This section provides: '(1) In spite of section 120, a person does not infringe a registered trade mark when: ……… (f) the court is of the opinion that the person would obtain registration of the trade mark in his or her name if the person were to apply for it' 50 Again, while this was raised in the defence, no evidence or submissions by the respondents addressed it. 51 I have found that LIVING WATERS is substantially identical with the applicant's registered trade mark. Accordingly, s 44(1) of the Act applies. Section 44 relevantly provides: '(1) Subject to subsections (3) and (4), an application for the registration of a trade mark (applicant's trade mark) in respect of goods (applicant's goods) must be rejected if: (a) the applicant's trade mark is substantially identical with, or deceptively similar to: (i) a trade mark registered by another person in respect of similar goods or closely related services; or (ii) a trade mark whose registration in respect of similar goods or closely related services is being sought by another person; and (b) the priority date for the registration of the applicant's trade mark in respect of the applicant's goods is not earlier than the priority date for the registration of the other trade mark in respect of the similar goods or closely related services. … … … (3) If the Registrar in either case is satisfied: (a) that there has been honest concurrent use of the 2 trade marks; or (b) that, because of other circumstances, it is proper to do so; the Registrar may accept the application for the registration of the applicant's trade mark subject to any conditions or limitations that the Registrar thinks fit to impose. If the applicant's trade mark has been used only in a particular area, the limitations may include that the use of the trade mark is to be restricted to that particular area. … …… (4) If the Registrar in either case is satisfied that the applicant, or the applicant and the predecessor in title of the applicant, have continuously used the applicant's trade mark for a period: (a) beginning before the priority date for the registration of the other trade mark in respect of: (i) the similar goods or closely related services; or (ii) the similar services or closely related goods; and (b) ending on the priority date for the registration of the applicant's trade mark; the Registrar may not reject the application because of the existence of the other trade mark.' 52 There is no evidence that satisfies me that s 44(3) or s 44(4) applies. I am not of the opinion that the respondents would obtain registration of LIVING WATERS were they to apply for it. This defence has not been established.

TRADE PRACTICES CLAIMS and passing off 53 The evidence to support claims for contravention of the TPA must be described as slight. The applicant submitted that its use of the trade mark since 2001 has created goodwill and reputation. There is evidence of advertising and promotional material and money spent on advertising in which the expression "living water" is used in conjunction with "Wellness". There is also evidence of sales of the Wellness water filters. There is no direct evidence of goodwill or reputation. The evidence was that the applicant primarily sells its water filters directly to customers who contact the applicant. The submission (unsupported by evidence) was that a person who had seen the applicant's advertisements referring to the water produced by its filters and who had also seen the respondents' use of PRO-BIO LIVING WATERS would be misled into a belief that the respondents or their products were associated with the applicant. That was put on a hypothetical, rather than evidentiary, basis. 54 The applicant submitted that the relevant class of persons by reference to whom the conduct of the first and second respondents is to be judged are persons who buy and drink bottled water of a specialty type, being water for which certain health benefits are claimed. There was no evidence as to why the class should be so narrowed, compared to buyers of bottled water generally. It is also relevant that the applicant does not sell bottled water but a water filter, while the first and second respondents sell water that is in containers. .

trade practices claim 55 The test for the purposes of s 52 of the TPA is 'whether the misconception complained of would be suffered by that hypothetical individual who would have been a member of that ordinary or reasonable class of purchasers of the respondent': Campomar Sociedad, Limitada v Nike International Ltd (2000) 202 CLR 45('Nike) at [106]. There is no evidence that a purchaser of a water filter would have any regard to ready bottled water or vice versa. There is no evidence of a reputation on the part of the applicant or its product. The evidence may lead to a conclusion as to the sale of the water filters but there is no reason for concluding that any hypothetical purchaser would pay any regard to the description of the product of the filter as "living water" or be misled or be likely to be misled by a ready-bottled product bearing the words "living waters".

passing off 56 Counsel conceded that it was necessary to determine what, if any, reputation the applicant possessed in LIVING WATER at the date on which the respondents' conduct commenced (Cadbury-Schweppes Pty Ltd v Pub Squash Co Pty Ltd [1980] 2 NSWLR 851 at 861). As that date is unknown, the applicant refers to the date of registration of the first respondent, 11 February 2002 and the date of registration of the second respondent, 14 July 2003. 57 I am not prepared to draw the inference from the evidence as to advertising expenditure and sales volume that the applicant possessed the requisite reputation or that a purchaser would be misled. In the absence of evidence of goodwill built up by the applicant, there can be no injury to that goodwill and no passing off (Nike at [108]). 58 The applicant has not established a contravention of s 52 of the TPA or passing off.

conclusion 59 The applicant has established infringement of its trade mark by the first and second respondents. The third respondent ordered and directed the first and second respondents to sell and offer for sale products which infringed the applicant's trade mark. The applicant has not established a contravention of s 52 of the TPA or passing off.

orders 60 I direct the applicant to file and serve Draft Short Minutes of Order to give effect to these reasons, including appropriate orders as to the costs by Wednesday, 21 April 2004. I stand the matter over to Thursday, 22 April 2004 at 9.30 am. I certify that the preceding sixty (60) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Bennett.

Counsel for the Applicant: C Champion

Solicitor for the Applicant: Hazan Hollander

Solicitor Advocate for the First Respondent: M Buxton (1 March 2004)

Advocate for the First Respondent: R Robinson (director of the First Respondent) (2 March to 3 March 2004)

Solicitor for the First Respondent: Buxton & Associates

Solicitor Advocate for the Second Respondent: M Buxton (1 March 2004)

Advocate for the Second Respondent: R Robinson (director of the Second Respondent) (2 March to 3 March 2004)

Solicitor for the Second Respondent: Buxton & Associates

Solicitor Advocate for the Third Respondent: M Buxton (1 March 2004)

Third Respondent appeared in person from 2 March to 3 March 2004

Solicitor for the Third Respondent: Buxton & Associates

Dates of Hearing: 1, 2 and 3 March 2004

Date of Judgment: 15 April 2004