Wellness Pty Limited v Pro Bio Living Waters Pty Limited - [2004] FCA 438 - FCA 2004 case summary — Zoe

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Wellness Pty Limited v Pro Bio Living Waters Pty Limited

[2004] FCA 438

Federal Court of Australia|2004-04-15|Before: Bennett J

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Source facts

Court

Federal Court of Australia

Decision date

2004-04-15

Before

Bennett J

Source

Original judgment source is linked above.

Judgment (34 paragraphs)

[1]

Summary of the action 1 On 3 December 2002, the applicant became the owner of the registered the trade mark "LIVING WATER", registration number 812514 ('the trade mark'). The applicant has used the trade mark in Australia since about August 2000 in respect of water produced by use of a water filter produced by the applicant, the Wellness water filter. The trade mark has been registered in classes including class 32: bottled water, spring and mineral water. 2 The factual basis of the applicant's allegations is that the first and second respondents have distributed, sold, offered for sale, advertised or promoted in Australia bottled water by reference to "PRO-BIO LIVING WATERS". 3 The applicant alleges infringement of the trade mark, contravention of sections 52, 53(c) and (d) of the Trade Practices Act 1974 (Cth) ('the TPA') and passing off by the first and second respondents of their water products and their business as those sold under licence from or otherwise associated with the applicant. The claim for contravention of s 53(c) and (d) of the TPA and the claim for damages were not pressed. 4 The applicant alleges that the third respondent is liable in his capacity as a director of the first and second respondents and as a joint tortfeasor and that he is liable under s 75B of the TPA. The applicant does not pursue the claim that the third respondent is a joint tortfeasor pursuant to a common design. 5 In their defence, the respondents raised a number of specific defences to the allegation of infringement of the trade mark. They allege that the trade mark should be expunged because it was not capable pursuant to s 41 of the Trade Marks Act 1995 (Cth) ('the Act') of distinguishing the applicant's goods and services in respect of which the trade mark was registered and that the trade mark would be likely to deceive or cause confusion by reason of the connotation and use of the words contained within the trade mark pursuant to s 43 of the Act. Particulars were sought of those defences but were not provided. There was no cross-claim filed and no orders sought by the respondents. There were no submissions addressed to the s 43 ground and I consider that it was not pressed. 6 In addition, it is alleged that the first respondent carried on business and distributed, sold and offered for sale bottled water under and by reference to its name and that the provisions of sections 122(1)(a)(i), 122(1)(b)(i) and 122(1)(f) of the Act applied. 7 The third respondent admits that he was and is a director of and that he has controlled and does control the first and second respondents. Otherwise, he denies liability 8 The respondents were represented by a solicitor at various interlocutory stages. When the matter was called on for hearing, there was no appearance by the respondents. A telephone call was made to the solicitor for the respondents. He informed the Court that the third respondent was to appear for himself and seek leave to appear for the first and second respondents. The solicitor sought an adjournment on the sole basis that the third respondent had 'overlooked' the date. This was despite the fact that the third respondent had been apprised of the hearing date on a number of occasions. The solicitor confirmed that the matter was to proceed on the evidence as filed. The application for adjournment was opposed by the applicant. I was informed that the third respondent was able to attend the next day. There was agreement that the matter would not take longer than the remaining two hearing days allocated. I granted the adjournment for one day. The applicant sought costs for the day on an indemnity basis. That order was not opposed. 9 When the hearing commenced, the third respondent appeared in person, initially by telephone, as he did not attend at Court on the second day and then, on the third day, in person. There was no objection by the applicant to leave being granted to the third respondent to appear for the first and second respondents. Leave was granted.

[8]

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.

[9]

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.

[12]

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).

[14]

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.

[16]

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.