Aldi Stores Ltd Partnership v Frito-Lay Trading Co Gmbh
[2001] FCA 1874
•21 DECEMBER 2001
FEDERAL COURT OF AUSTRALIA
Aldi Stores Ltd Partnership v Frito-Lay Trading
Company GmbH [2001] FCA 1874TRADE MARKS – infringement – registered mark “TWISTIES” in respect of snacks of extruded cheese-flavoured kind – alleged infringer uses “CHEEZY TWISTS” in respect of similar product – primary judge found infringement – whether use of “CHEEZY TWISTS” as a trade mark or as a descriptor – whether inquiry as to deceptive similarity limited by reference to the particular finding of trade mark use made – whether primary judge determined question of deceptive similarity as a matter of his own impression – application of presumption that person attempting to create deceptive similarity by choosing particular mark has succeeded, recognised by Dixon J and McTiernan J in Australian Woollen Mills Ltd v FS Walton & Co Ltd (1937) 58 CLR 641 – whether primary judge entitled to decide issue of deceptive similarity exclusively by applying that presumption – whether trial judge entitled to draw inference of attempt to create deceptive similarity – whether deceptive similarity existed – defence under s 122(1)(f) of Trade Marks Act 1995 (Cth) – whether alleged infringer would have obtained registration of “CHEEZY TWISTS” – whether the “capable of distinguishing” test laid down in s 41 of the Act would have been satisfied
WORDS AND PHRASES – “capable of distinguishing” – “inherently adapted to distinguish”
Trade Marks Act 1995 (Cth) ss 6 (“sign”), 41, 120
Top Heavy Pty Ltd v Killin (1996) 34 IPR 282 cited
James Watt Constructions Pty Ltd v Circle-E Pty Ltd [1970] 3 NSWR 481 referred to
Berzins Specialty Bakeries Pty Ltd v Monty’s Continental Bakery (Vic) Pty Ltd (1987) 15 FCR 402 referred to
JB Stone & Co Ltd v Steelace Manufacturing Co Ltd (1929) 46 RPC 406 (CA) referred to
Bass, Ratcliff & Gretton Ltd v Nicholson & Sons Ltd (1932) 49 RPC 88 (HL) referred to
Picot Ltd v Goya Ltd [1967] RPC 573 referred to
Kolotex GloAustralia Pty Ltd v Sara Lee Personal Products (Australia) Pty Ltd(t/a Hilton Hosiery) (1993) 26 IPR 1 referred to
The Shell Co of Australia Ltd v Esso Standard Oil (Australia) Ltd (1963) 109 CLR 407 referred to
Johnson & Johnson Australia Pty Ltd v Sterling Pharmaceuticals Pty Ltd (1991) 30 FCR 326 referred to
Unilever Aust Ltd v Karounos [2001] FCA 1132 referred to
British Sugar Plc v James Robertson & Sons Ltd [1996] RPC 281 distinguished
Wrigley’s (A’asia) Ltd v Lifesavers (A’asia) Ltd (1936) 37 SR (NSW) 9 referred to
Pepsico Australia Pty Ltd v Kettle Chip Co Pty Ltd (1996) 33 IPR 161 referred to
Sports Break Travel Pty Ltd v P & O Holidays Ltd (2000) 50 IPR 51 referred to
Australian Woollen Mills Ltd v FS Walton & Co Ltd (1937) 58 CLR 641 discussed
Wingate Marketing Pty Ltd v Levi Strauss & Co (1994) 49 FCR 89 referred to
Berlei Hestia Industrial Ltd v The Bali Co Inc (1973) 129 CLR 353 referred to
Marc A Hammond Pty Ltd v Papa Carmine Pty Ltd [1976] 2 NSWLR 124 referred to
Polaroid Corporation v Sole N Pty Ltd [1981] 1 NSWLR 491 referred to
Murray Goulburn Co-operative Co Ltd v New South Wales Dairy Corporation (1990) 24 FCR 370 (FC) referred to
S & I Publishing Pty Ltd v Australian Surf Life Saver Pty Ltd (1998) 88 FCR 354 referred to
Biogen Inc v Medeva Plc (1996) 36 IPR 438 referred to
Campomar Sociedad, Limitada v Nike International Ltd (2000) 202 CLR 45 referred to
Jones v Dunkel (1959) 101 CLR 298 referred to
R v Burdett (1820) 4B & Ald 95 (106 ER 873) referred to
Cooper Engineering Co Pty Ltd v Sigmund Pumps Ltd (1952) 86 CLR 536 referred to
Pianotist Company Ltd’s Application (1906) 23 RPC 774 referred to
Saville Perfumery Ltd v June Perfect Ltd (1941) 58 RPC 147 referred to
New South Wales Dairy Corporation v Murray Goulburn Co-operative Company Ltd (1989) 86 ALR 549 referred to
CA Henschke & Co v Rosemount Estates Pty Ltd (2000) AIPC ¶91-640 referred to
Mars GB Ltd v Cadbury Ltd [1987] RPC 387 referred to
Conde Nast Publications Pty Ltd v Taylor (1998) 41 IPR 505 referred to
Re London Lubricants(1920) Ltd’s Application (1925) 42 RPC 264 referred to
Unilever Australia Ltd v PB Foods Ltd (1999) 47 IPR 358 referred to
Blount Inc v Registrar of Trade Marks (1998) 83 FCR 50 referred to
Ocean Spray Cranberries Inc v Registrar of Trade Marks (2000) 47 IPR 579 referred to
Clark Equipment Co v Registrar of Trade Marks (1964) 111 CLR 511 referred to
Burger King Corporation v Registrar of Trade Marks (1973) 128 CLR 417 referred to
Big Country Developments Pty Ltd v TGI Friday’s Inc (2000) 48 IPR 513 referred to
Registrar of Trade Marks v W & G Du Cros Ltd [1913] AC 624 referred to
State Rail Authority of New South Wales v Earthline Constructions Pty Ltd (1999) 160 ALR 588 referred to
W D & H O Wills (Australia) Ltd v Phillip Morris Ltd (1997) ATPR 41-590 referred to
Mark Foys Pty Ltd v TVSN (Pacific) Ltd (2000) 104 FCR 61 referred to
Windsor Smith Pty Ltd v Dr Martens Australia Pty Ltd (2001) 49 IPR 286 referred toEsso Australia Resources Ltd v Commissioner of Taxation (1998) 84 FCR 541 referred to
Biogen Inc v Medeva plc [1997] RPC 1 referred toMembers of the Yorta Yorta Aboriginal Community v Victoria (2001) 180 ALR 655 referred to
Designers Guild Ltd v Russell Williams (Textiles) Ltd [2000] 1 WLR 2416 referred to
Norowzian v Arks Ltd (No 2) [2000] FSR 363 referred to
Pro Sieben Media AG v Carlton UK Television Ltd [1999] 1 WLR 605 referred toCross on Evidence (6th Austn ed, 2000) cited
Shanahan, Australian Law of Trade Marks and Passing Off (2nd ed, 1990) referred to
Blanco-White and Jacob, Kerly’s Law of Trade Marks and Trade Names (12th ed, 1986) referred toALDI STORES LIMITED PARTNERSHIP v FRITO-LAY TRADING COMPANY GmbH
N 1189 OF 2001
HILL, LINDGREN & CONTI JJ
21 DECEMBER 2001
SYDNEY
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
N 1189 OF 2001
ON APPEAL FROM A JUDGE OF THE FEDERAL COURT OF AUSTRALIA
BETWEEN:
ALDI STORES LIMITED PARTNERSHIP (PT 0022328)
APPELLANTAND:
FRITO-LAY TRADING COMPANY GmbH
RESPONDENTJUDGE:
HILL, LINDGREN & CONTI JJ
DATE OF ORDER:
21 DECEMBER 2001
WHERE MADE:
SYDNEY
THE COURT ORDERS THAT:
1. The appeal be allowed.
2.The orders made on 24 July 2001 in proceeding N 180 of 2001 be set aside and, in lieu of those orders, it be ordered that:
(a) the application be dismissed; and
(b)the applicant in that proceeding pay the costs of the respondent to that proceeding.
3.The respondent pay the appellant’s costs of the appeal.
Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
N 1189 OF 2001
ON APPEAL FROM A JUDGE OF THE FEDERAL COURT OF AUSTRALIA
BETWEEN:
ALDI STORES LIMITED PARTNERSHIP (PT 0022328)
APPLICANTAND:
FRITO-LAY TRADING COMPANY GmbH
RESPONDENT
JUDGE:
HILL, LINDGREN & CONTI JJ
DATE:
21 DECEMBER 2001
PLACE:
SYDNEY
REASONS FOR JUDGMENT
HILL J:
The appellant, Aldi Stores Limited Partnership (“Aldi”), appeals from the judgment of a judge of this Court which declared that it had infringed the respondent’s registered trade mark No. A166590 (“the trade mark”) and restrained it from distributing, supplying or offering to supply in Australia any cereal preparations which used a mark which his Honour found infringed the trade mark. His Honour also made consequential orders including orders involving recall and destruction of packaging held to embody an infringement of the trade mark.
The trade mark, which is registered in respect of goods in class 30, namely, “tasty preparations made from cereals, primarily for use as a snack and not being bread or cake”, is the word “Twisties”.
It is common ground that Frito-Lay Trading Company GmbH (“Frito-Lay”) is the registered owner of the trade mark and that the trade mark has over a long period of time in Australia been used as a trade mark in the marketing of snack food products.
Aldi has recently commenced operating in Australia a chain of grocery stores. It operates stores along similar lines in other countries. The goods it sells are displayed in cartons or boxes on pallets under generic names or its own brands at prices cheaper than the prices at which similar goods are sold in supermarkets or other outlets under other brands. One of the items it has developed for sale in Australia is an extruded, cereal-based snack with a cheese flavour. The product is manufactured for Aldi by a third party. It is sold in packaging on which the words “Cheezy Twists” appear. The manufacturing process does not, as such, involve twisting, but rather extrusion although, as his Honour held, the resultant product has a twisted appearance.
The product is sold in packaging the front and back of which are in the form shown in black and white in the annexure to this judgment, save that the packaging actually used is in colour.
The learned primary judge described the packaging in the following terms:
“The words ‘Cheezy Twists’ are prominently displayed on the front of the packet, at an angle and in an irregular font which is evocative of the shape of the product. The letters of the word ‘twists’ are larger than the letter of the word ‘cheezy’. The words are white against a red background. Above those words, and separated by an irregular silver band at an angle, is a blue logo including the word ‘Chazoos’, with a smiling face incorporated at the position of ‘oo’ against a gold background, with some white and yellow balls depicted on that background. Below the words ‘Cheezy Twists’ and separated by an irregular silver band at an angle, is the same gold background as above with similar white and yellow balls and the words ‘cheese flavoured snacks’ in white against a red background. The font of those words is regular and symmetrical and they are in a horizontal plane. There is a smaller version of this layout on the back, but there is no equivalent of the words ‘cheese flavoured snacks’. ‘Chazoos’ is stated on the back of the packaging to be a trade mark of ‘Aldi Stores’.”
The product is displayed in the store in such a way that the bottom part of the front of the pack cannot be seen as the potential purchasers walk down the aisle. Hence, potential purchasers see part of the front of a number of packs displayed in an opened carton including the words “Cheezy Twists” as described by the learned primary judge. The cartons have the words “Cheezy Twists” on the front and sides in a way which can be readily seen. The carton and manner of display are described by the learned primary judge as follows:
“The font of those words [Cheezy Twists] is regular and the words are on a horizontal plane. On the side, the logo including the word ‘Chazoos’ appears above the words ‘Cheezy Twists’. These goods are displayed in close proximity to other goods offered for sale by the respondent [Aldi] described as ‘Cheese Rings’ and ‘Cheese Balls’ as well as other products described as ‘Chicken Snacks’ and ‘Barbecue Snacks’. Each has a different coloured background for use on the display cartons. Red is used for ‘Cheezy Twists’, yellow for ‘Cheese Rings’, blue for ‘Cheese Balls’, green for ‘Chicken Snacks’ and a different colour red is used for ‘Barbecue Snacks’. The position, font and lettering of the description on the carton is similar in each case.”
The case for Frito-Lay was based solely on the provisions of the Trade Marks Act1995 (Cth) (“the Act”). Unusually for this class of case, Frito-Lay did not seek to rely at all on the provisions of Part V of the Trade Practices Act 1974 (Cth). Hence no question arises as to any similarity in colour, font or get-up.
The issues which thus arose for decision before his Honour (and on the appeal) were, and are, therefore, whether the words “Cheezy Twists” in the way they appeared on the packaging involved those words being used as a trade mark within the meaning of s 120(1) of the Act and, if so, whether that use infringed the trade mark. Frito-Lay did not complain about the use of the words on the carton. There were two subsidiary issues which arose by virtue of the defence filed by Aldi. The first was whether, in accordance with s 122(1)(b) of the Act, Aldi used the words “Cheezy Twists” in good faith to indicate some characteristic of the product contained in the packet. The second, in accordance with s 122(1)(f) of the Act, was whether the Court should be of the opinion that “the person [Aldi] would obtain registration of the trade mark in his or her name if the person were to apply for it”. The defence said to arise under s 122(1)(b) was abandoned in the appeal.
Section 120(1) of the Act provides as follows:
“A person infringes a registered trade mark if the person uses as a trade mark a sign that is substantially identical with, or deceptively similar to, the trade mark in relation to goods or services in respect of which the trade mark is registered.”
The phrase “use of a trade mark in relation to goods” is defined in s 7(4) of the Act to mean “use of the trade mark upon, or in physical or other relation to, the goods…”. A definition of “deceptively similar” is provided in s 10 of the Act. That section states that:
“… a trade mark is taken to be deceptively similar to another trade mark if it so nearly resembles the other trade mark that it is likely to deceive or cause confusion.”
A trade mark is defined in s 17 of the Act as:
“… a sign used … to distinguish goods … dealt with or provided in the course of trade by a person from goods … so dealt with or provided by any other person .”
“Sign” is defined in s 6 of the Act to include “word”.
The judgment appealed from
It was the submission of Aldi before the learned primary judge that, while the word “Chazoos” was a trade mark appearing on the packet, the words “Cheezy Twists” were not used as a trade mark, but rather merely as a description of the product contained in the packet. It was argued that although extruded, the word “twists” was a fair description of the shape of the product, and compared with the use by Aldi of descriptive words for other cheese flavoured products of different shapes sold by it, eg “rings” and “balls”. Further, it was submitted, the product had a cheese taste and was thus properly described as “cheezy”, the substitution of “z” for “s” not being of significance. The process of manufacture was properly described, it was said, as a twisting process.
For Frito-Lay, it was submitted that the word “twist” was not an apt description of the product, which was produced by extrusion, not twisting. It was said that the context in which the words appear on the packaging, and particularly the use on the front of the package of the words “cheese flavoured snacks” assisted the conclusion that the use of the words “Cheezy Twists” was use as a trade mark. “Cheezy” was, it was submitted, an invented word, not to be found in the dictionary. Significantly, it was said, Aldi had set out to reproduce, so far as was possible, the precise product marketed under the trade mark, one of the best known marks in the savoury snack food market. The packaging was devised with an eye to the Twisties packaging. One version of the packaging was, indeed, rejected because it was too close to Twisties packaging. In designing the product and its get-up, it was said Aldi had its eye set firmly upon the market leader, Twisties. So, it was argued, it should be found that Aldi adopted the name “Cheezy Twists” and the get-up of the Cheezy Twists packaging, in order to appropriate part of the trade reputation of Frito-Lay and that hence it should be presumed that the use of the name was likely to deceive or confuse consumers and thus to constitute an infringement of the trade mark. The fact that Aldi had used both “Chazoos” and “Cheezy Twists” on the packaging did not mean that it could not use both as trade marks, or that “Chazoos” was a mark and “Cheezy Twists” a description of the product.
The learned primary judge found for Frito-Lay on both questions. In his Honour’s view, the words “Cheezy Twists” as they appeared on the packaging were used by Aldi as a trade mark and further there was a sufficient resemblance to the trade mark to make the use by Aldi of the words “Cheezy Twists” likely to deceive or cause confusion to the public.
His Honour’s conclusion that Aldi had used the words “Cheezy Twists” as a trade mark was reached as follows:
1.While the method of manufacture of both products did not involve twisting, the Aldi product was aptly described as a twist and was so described in the trade.
2.However, it was possible for there to be two trade marks used on packaging. In the present case the word and logo “Chazoos” was clearly a trade mark. The words “Cheezy Twists” were used separately and distinctly from the “Chazoos” word and logo mark, although complementary to it. In that context both the “Chazoos” mark and the words “Cheezy Twists” were used as trade marks.
3.Mr Joyce, the buying director of Aldi, had made a direct admission (of a relevant fact), namely, that the use of the expression “Cheezy Twists” on the Aldi packaging was “employed by [Aldi] in seeking to distinguish its goods in the eyes of the consumer from the products of other traders”. This admission was said to be consistent with the evidence of a Ms O’Regan as to the process by which the name “Cheezy Twists” was chosen. His Honour’s use of the “admission” is the subject of challenge by Aldi.
His Honour concluded that there was an infringement of the trade mark having regard to the following matters:
1.That the mark “Twisties” had been widely used over a long period of time and was one of the best-known marks in the snack food market.
2.That while the extruded form of the product had a twisted appearance and was fairly described as “twists” and such products were widely referred to in the trade as “twists”, neither that word nor the mark “Twisties” had been applied to similar products with different shapes such as rings or balls. Frito-Lay did not have a monopoly with respect to the word “twists”, which was not its trade mark and was descriptive. Hence, Frito-Lay could not prevent Aldi using the words “cheese twists”.
3.The Twisties product was the market leader in the field. Aldi (and those to whom it delegated responsibility for devising the packaging) chose the word “Cheezy” in conjunction with the word “Twists” in order to take advantage of the aural resemblance with the trade mark “Twisties”. The instructions were to reproduce, so far as possible, the precise product marketed under the mark “Twisties”. In these circumstances, there was a sufficient resemblance to make the mark “Cheezy Twists” likely to deceive or cause confusion. It followed also that Aldi did not use the “Cheezy Twists” mark in good faith to indicate any characteristic of the goods so as to permit Aldi to rely upon the defence under s 122(1)(b) of the Act.
Having found that Aldi’s use of the words “Cheezy Twists” was use as a trade mark, that the use infringed the “Twisties” mark and that it was not used in good faith to indicate a characteristic of the product sold, his Honour found that whatever s 122(1)(f) of the Act might mean, the defence could have no application in the present circumstances. It is from this judgment that Aldi appealed.
The submissions on the appeal
The submissions of Aldi on the appeal can be summarised as follows:
1.It was not open to the learned primary judge to find that there had been use of the words “Cheezy Twists” as a trade mark.
2.The admission by Mr Joyce concerning what Aldi sought to achieve when using the expression “Cheezy Twists” on its packaging was not relevant to whether the words had been used as a trade mark.
3.His Honour erred in holding that Aldi had set out to produce a product exactly matching Frito-Lay’s product “Twisties”. In this respect, it was submitted a blind sampling test had been conducted with the aim of producing a product that matched the quality and characteristics of what was determined to be the best extruded cheese product already on the market. That this happened to be Twisties, the market leader, was co-incidental.
4.That his Honour erred in finding that the use of the words “Cheezy Twists” was deceptively similar to the “Twisties” mark by reason of an aural representation of the “Twisties” mark. Particularly it was not to his Honour to find that the use of the words “Cheezy Twists” was deceptively similar to the registered mark “Twisties” for the purposes of s 120(1) of the Act by reason of that aural resemblance.
5.His Honour should have held, having regard to the proper construction of s 122(1)(f) of the Act that Aldi would have obtained registration of the trade mark “Chazoos Cheezy Twists” and accordingly had a defence to any infringement of the trade mark “Twisties”.
There is overlap in some of these submissions. Ultimately, however, it can be seen that they relate to three matters. The first involves whether his Honour erred in holding that there was use by Aldi of the words “Cheezy Twists” as a trade mark. The second involves whether such use as there was infringed the “Twisties” mark. The final matter relates to the defence under s 122(1)(f) of the Act rejected by his Honour. These three matters will be considered seriatim.
Use of “Cheezy Twists” as a trade mark
It is familiar law that a mark or sign (in this case the words “Cheezy Twists”) will be used as a trade mark if the use is such as to distinguish the goods of the person who uses it from those of other traders, so that it is a “badge of origin” of the goods. It will be so used if it indicates a connection in the course of trade between the goods and the person who applies it to the goods: Shell Co of Australia Ltd v Esso Standard Oil (Australia) Ltd (1963) 109 CLR 407 per Kitto J at 422-425, Mark Foy’s Ltd v Davies Coop & Co Ltd (the Tub Happy case) (1956) 95 CLR 190 at 198-200 per Williams J, Johnson & Johnson Australia Pty Ltd v Sterling Pharmaceuticals Pty Ltd (1991) 30 FCR 326 at 335 per Lockhart J, 342 per Burchett J and 347-8 per Gummow J and Koninklijke Philips Electronics NV v Remington Products Australia Pty Ltd (2000) 48 IPR 257 at 265-6. In determining whether the mark is a badge of origin, as Kitto J said in Shell at 422 (and as the case itself illustrates) context will be all important. That context includes a consideration of the way in which the word is displayed in relation to the goods or in advertisements of which complaint is made: see Mars GB Ltd v Cadbury Ltd [1987] RPC 387 at 402 per Whitford J and Johnson & Johnson at 347 per Gummow J.
Where the sign or mark is an invented word or invented combination of words, it will usually be easy to conclude that use on packaging or on the goods themselves is a trade mark use, although as the Johnson & Johnson case demonstrates some invented words might (while not yet having entered into the English language) themselves suggest a meaning, so that a particular use may not be a trade mark use. Where the word has or a combination of words have a clear meaning in ordinary use, the question will be much more difficult as the word or combination of words may either have taken on a secondary meaning indicating the origin of the goods or may simply convey an ordinary meaning (ie some message other than the trade origin of the goods): see Top Heavy Pty Ltd v Killin (1996) 34 IPR 282 at 286. It is well established that there is not a true dichotomy between words capable of being used as a badge of trade origin and words that are descriptive: see Johnson & Johnson at 347 per Gummow J and at 339 per Lockhart J.
In some ways the present case is the opposite of the Johnson & Johnson case. In that case, the question which arose for decision was whether use by Johnson & Johnson on its packaging of paracetamol products of the word “caplets” infringed the respondents trade mark “caplets”. Lockhart J was of the view that the word, although a made up word, had no meaning other than one that was descriptive of the character or quality of the goods. Accordingly, his Honour would have ordered rectification of the register to expunge the registration and it was unnecessary, therefore, for his Honour to consider whether there would otherwise have been an infringement. However, Burchett J was of the view that in the context in which Johnson & Johnson had used the word “caplets” it had not used the word as a trade mark. His Honour had regard to matters such as the type face and colouring of the lettering used. Relevant also was that the word “caplets” was a combination of familiar sounds which imparted the notions of capsule and tablet. Gummow J was of a similar view, indicating that in the setting on the package on which the word “caplets” was depicted, the word was not used to indicate a connection in the course of trade between the manufacturer and the contents of the package.
The question which here arises for decision may be formulated in the terms used by Gummow J in Johnson & Johnson at 351, altered to meet the facts of the present case, as follows:
Whether, in the setting on the package on which the words “Cheezy Twists” appear, those words possess the character of words which Aldi is using in relation to its extruded cheese snack food product, for the purpose of indicating or so as to indicate a connection in the course of trade between Aldi and the contents of the package. Do the words “Cheezy Twists” appear as a mark for distinguishing an Aldi product from other extruded cheese snack food products in the course of trade?
While the words “Cheezy Twists” are capable of describing the contents of the package, my view is that they do much more than that. Such description is found on the packet in any event in the words “cheese flavoured snacks”, which on no view of the matter were used as a trade mark. While it is no doubt true to say that the word “Chazoos”, with or without logo, is used as a trade mark, the present is a case where two trade marks are used, one a generic word used over a product range and the other used as a badge of origin in respect of a particular product.
It will have been observed that in making this finding I have not found it necessary to take into account the “admission” by Mr Joyce. The objective use of the words “Cheezy Twists” in the context of the packaging requires the conclusion that the words are used as a trade mark. Hence, it is not necessary to consider whether, if there were an admission, that admission would have a bearing upon the question whether there was use as a trade mark. Clearly, if the admission is relevant it supports the conclusion that there was use as a trade mark of the words “Cheezy Twists” on the packaging. However, I would wish to add some additional comments.
The admission came in the course of a lengthy cross-examination by senior counsel for Frito-Lay, during which the following exchange occurred:
“Q: And when you use that expression “Cheezy Twists” on the package you are seeking to distinguish your goods in the eyes of consumers from products of other traders? – Yes”.
There are some difficulties in treating that exchange as an admission binding Aldi. First, it is not at all clear to me that Mr Joyce had authority to bind Frito-Lay by an admission. Perhaps that is why later in the judgment the learned primary judge referred to the failure on the part of Frito-Lay to call executives involved in the making of the decision to use the name “Cheezy Twists” as leading to the more easy making of an inference adverse to that company. Second, there are other passages in the cross-examination which suggest that Mr Joyce may not have understood the question he was asked. For example, earlier Mr Joyce denied, subject to a qualification, that by displaying the words “Cheezy Twists” with such prominence Aldi was stamping its products with a badge of origin. He denied too that the word “cheezy” together with “twists” would help in distinguishing the Aldi “twists” from those of other traders. He asserted that the word “cheezy” had been chosen (as opposed to “cheese”) with the aim of targeting teenage boys, and as a “fun sort of trendy word” used to describe the flavour of the product. Finally, even if it was Mr Joyce’s view that the use of the words was use as a trade mark (or for that matter that it was intended that the words be used as a trade mark) I have difficulty in accepting that view as determinative of the matter, even if relevant.
Whether or not the principle discussed by Dixon and McTiernan JJ in Australian Woollen Mills Ltd v F S Walton & Co Ltd (1937) 58 CLR 641 at 657, to which reference will later be made, is relevant to the question whether a particular use is use as a trade mark or is really confined to the question whether a mark is likely to deceive or confuse is not a matter which needs to be decided in this case. There is no principle which operates to make use of a word other than as a trade mark a trade mark use, any more than there is a principle which could operate to convert use of a word as a trade mark into use otherwise than a use signifying the trade origin of goods. In most, if not all cases, the question whether there has been use as a trade mark will be determined by an objective examination of the use in the context in which it appears.
Whether the two marks “Twisties” and “Cheezy Twists” were deceptively similar
The learned primary judge placed considerable emphasis on two matters in finding for Frito-Lay on this issue. The first was his Honour’s view that the sound of the words “Cheezy Twists” had a close resemblance to the sound of the word “Twisties” in that the sound represented by the letter “y” in “Cheezy” was similar to the sound represented by the letters “ie” in the “Twisties” mark. Both marks were also in the plural. The second was the application of the passage to which reference has already been briefly made, from Australian Woollen Mills, to the facts of the case.
Putting to one side the second of these matters, I fail to see any real similarity between the two marks, accepting that both have the phonetic sound “ee”. First, that sound (and clearly the aural representation of a mark will be relevant) appears at the end of the “Twisties” mark (and with a plural “s”). Second, in relation to the Aldi mark the sound appears not in connection with the word “twist” but in connection with the word “cheese”, albeit spelled with a “z”. In my view the two marks are not so similar that the Aldi mark is likely to deceive or cause confusion. However, I do accept that questions such as this involve matters of perception, and that ordinarily an appellate court should not be quick to set aside on appeal a judgment merely because the question is one in respect of which perceptions might differ: see S & I Publishing Pty Ltd v Australian Surf Life Saver Pty Ltd (1998) 88 FCR 354. It is important, therefore, to consider the second basis for his Honour’s decision.
In Australian Woollen Mills, the appellant had sued alleging fraudulent passing off and, as well, infringement of its trade marks on the grounds that the respondent’s mark was likely to deceive or confuse. At first instance it was held that the two marks were on objective grounds not likely to deceive or confuse and there had been no fraudulent passing off. Both matters were at issue in the appeal, which was dismissed by a majority of the High Court (Evatt J dissenting). There was no issue, nor could there have been, that there had been use by the respondent of a trade mark. However, the majority was of the view both that there had been no conscious imitation of the appellant’s marks and that the respondent’s mark was not sufficiently similar as to be likely to deceive or confuse. However, in what technically is dicta (but emanating from the joint judgment of Dixon and McTiernan JJ, very persuasive dicta) it was said at 657-8:
“The rule that if a mark or get-up for goods is adopted for the purpose of appropriating part of the trade or reputation of a rival, it should be presumed to be fitted for the purpose and therefore likely to deceive or confuse, no doubt, is as just in principle as it is wholesome in tendency. In a question how possible or prospective buyers will be impressed by a given picture, word or appearance, the instinct and judgment of traders is not to be lightly rejected, and when a dishonest trader fashions an implement or weapon for the purpose of misleading potential customers he at least provides a reliable and expert opinion on the question whether what he has done is in fact likely to deceive. Moreover, he can blame no one but himself, even if the conclusion be mistaken that his trade mark or the get-up of his goods will confuse and mislead the public. But the practical application of the principle may sometimes be attended with difficulty. … But, in the end, it becomes a question of fact for the court to decide whether in fact there is such a reasonable probability of deception or confusion that the use of the new mark and title should be restrained.”
It is clear from the report that this comment was not made only with respect to the issue of fraud, but that it went, as well, to the trade mark issue whether the use of the mark might deceive or confuse members of the public. Nevertheless, it is also clear from what was said that their Honours regarded both issues as ultimately questions of fact to be decided by the Court. Their Honour’s were not seeking to enunciate a principle of law. While the presumption would not be lightly rejected, if there is no reasonable probability of deception or confusion then there can be no infringement.
The factual basis is the present case to which the comments in Australian Woollen Mills were said to apply arose from evidence adduced from a Ms O’Regan, who worked for an advertising agency responsible for developing packaging for products proposed to be sold by Aldi and from Mr Joyce to whom reference has already been made.
Ms O’Regan, who had, inter alia, responsibility for the development of packaging for a snack food range of products dealt with Ms Turner, a buying manager employed by Aldi. Ms Turner was not called to give evidence, nor were any other executives of Aldi. Ms Turner was no longer with Aldi, but it was not suggested that she would have been unable to give evidence. No attempt was made to impugn the credit of either Ms O’Regan or Mr Joyce who did give evidence.
Ms O’Regan’s evidence was that she was involved at the time Aldi was working towards the launch of stores in Australia in seeking, inter alia, to develop products for sale by Aldi. Her instructions were to obtain three concept designs from one of four design agencies nominated by her firm and agreed to by Aldi. She chose Brave Communications (“Brave”) as the most appropriate agency in relation to extruded snacks. Although that agency had no immediate conflict of interest it had done some work for Twisties in the past. Indeed this was one of the reasons she chose Brave. I should interpose that it was not suggested that Aldi chose Brave for the job. Indeed, Ms O’Regan’s evidence was that she did not discuss the choice of Brave with Ms Turner.
Relevantly she was told by Ms Turner that Aldi wished to produce and market extruded snack food products which included cheese and bacon balls and cheese rings. It seems that the decision to produce a cheese twist product came later.
It was part of Ms O’Regan’s instructions that Twisties was the brand leader for cheese twist products. Aldi wanted to market a product which would be directly competitive with Twisties and another, unnamed, private label. It is hardly surprising that Aldi wanted to produce a product competitive with Twisties. It was the market leader and the nature of the business which Aldi was to launch was such that it sold popular products under its own brand names, rather than proprietary brands. In this it contrasted with the traditional Australian retail supermarkets, which generally sell branded products. The task Ms O’Regan was given was to arrange the design for the packaging of cheese twists such that the product would appeal to the youth market, predominantly the male youth market.
It should not be thought that snack foods were the only products under investigation at the time. Confidential memoranda disclose similar packaging design briefs for a whole series of products from kitchen towels to packet soups in preparation for the proposed opening of Aldi stores in Australia.
Initially the brand name for the cheese twist product had not been decided. (The reference to “brand name” in the evidence would seem to be a reference to whether the product was to be marketed under the “Chazoos” label or an alternative label.) The product was referred to, in the briefing instructions, as “Cheese Twists”. The task was to give the product “personality”. What the evidence clearly demonstrates is that Aldi wished to produce a cheese twist product, being mainly a “male product for young teenagers”, a product which had to be “cool” and fit in with the teenage life style. At some stage at least the cheese twists were to be called “Ricketys Cheese Twists” rather than “Chazoos”. Three concept versions were prepared for each of the Ricketys and Chazoos labels. The Chazoos brand was ultimately settled upon.
Two of the first concepts prepared by the agency described the product as “Cheezy Twists”; a third, “Cheese Twists”.
According to Ms O’Regan, Brave came up with the name “Cheezy Twists” as an alternative to “Cheese Twists”. Ms O’Regan presented the three initial concept designs to Ms Turner without comment she said. Two of them, as I have indicated, used the words “Cheezy Twists”. Ms Turner expressed a preference for the name “Cheezy Twists”, but otherwise the subject of the name had not been discussed between them. Ms O’Regan said that she did not feel that there was any similarity between “Twisties” and “Cheezy Twists”. She thought the latter name would “help to add a funky, attractive air to the packaging” and help draw consumers to the Aldi product. However, she said her brief was to make the product stand out within the Aldi store, not directly to compete with other traders. The font used in the original concept designs was criticised by Ms Turner (based on advice from Frito-Lay’s patent attorney) and rejected as being too close to “Twisties”. A different font was chosen in an apparent attempt to suggest the twist shape of the product.
Mr Joyce said that he had not been involved in the design of the artwork for the packaging. He pointed out that at the time Aldi was about to launch some 500 products and was looking at many designs and many products. He said that Aldi stores developed products of high quality and if the quality of the products was equivalent to a particular product in the market which was a brand leader then that was the product Aldi was looking at. To develop quality products, Aldi looked at a number of products on the market, normally including the brand leader, and conducted, in the case of edible products at least, a blind sampling session, rating products by reference to quality. Aldi would then benchmark the products being developed against products considered to be of the best quality. He accepted that Aldi wanted a product that was as close to the shape, appearance and flavour of Twisties as possible and that Aldi wished to target the same market as that at which Twisties was targeted.
In my view while this evidence does show that Aldi wished to produce a cheese twist product of similar quality, appearance and flavour to the Twisties product, it does not lead to the conclusion that Aldi set out to appropriate the trade reputation of the product of a trade rival, Twisties, in the sense which would bring into play the presumption referred to in Australian Woollen Mills. In the context of the evidence relating to the proposed Aldi supermarket business and the commercial necessity for that company to sell under its own label for a large number of products, it is clear that Aldi set out to have manufactured for it (or to buy from manufacturers) products of the same or higher quality as market leaders which it could sell under its own brands, rather than under recognised brand names. “Cheese Twists” was an obvious choice for a snack food product to be sold by Aldi. Twisties was the market leader. There is no doubt that the evidence establishes that Aldi set out to produce cheese twists that rivalled Twisties for sale in the same market as Twisties were sold. But that is not to say that Aldi set out to appropriate the Twisties trade reputation for itself or to produce a product the display and ultimate sale of which would trade on the Twisties name. Given the nature of the Aldi concept, purchasers would be likely to know that the products sold only in Aldi stores would be Aldi brands. They may or may not be produced by the same company which produced the market leader. In fact, Cheezy Twists were manufactured by a third company, The Real McCoy Snack Food Co Pty Ltd. The manufacture commenced from late in the year 2000.
That Aldi did not set out to appropriate for itself the trade reputation of Twisties is reflected in the way the products were to be marketed in Aldi stores, that is to say by the display of only part of the front of a series of products on which the name “Chazoos” appeared, each product packaged in a package with a different coloured background and each identified as a particular product, namely, “Cheese Rings”, “Cheese Balls”, “Chicken Snacks”, “Barbecue Snacks” and “Cheezy Twists”.
In my view, the background circumstances in which the packaging was prepared detracts not at all from the impression gained by comparing the two marks. They are not substantially identical to each other, nor are they deceptively similar in the sense defined in s 10 of the Act.
The defences
In view of the conclusions reached, it is unnecessary to deal with the defence raised by Aldi to the alleged infringement in reliance upon s122(1)(f) of the Act.
Conclusion
I would allow the appeal, set aside the orders appealed from and in lieu thereof order that the application be dismissed and the applicant pay the respondent’s costs of it. The respondent should also pay the appellant’s costs of the appeal.
I certify that the preceding forty-nine (49) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Hill.
Associate:
Dated: 21 December 2001
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
N 1189 OF 2001
ON APPEAL FROM A JUDGE OF THE FEDERAL COURT OF AUSTRALIA
BETWEEN:
ALDI STORES LIMITED PARTNERSHIP (PT0022328)
APPELLANTAND:
FRITO-LAY TRADING COMPANY GmbH
RESPONDENT
JUDGES:
HILL, LINDGREN AND CONTI JJ
DATE:
21 DECEMBER 2001
PLACE:
SYDNEY
REASONS FOR JUDGMENT
LINDGREN J:
INTRODUCTION
I have had the benefit of reading the Reasons for Judgment of Hill J and am thankful to be able to adopt his Honour’s account of the factual background to the appeal, which raises three issues:
1.Did the primary Judge err in concluding that the appellant (“Aldi”) had used “CHEEZY TWISTS” “as a trade mark”?
2.Did his Honour err in concluding that “CHEEZY TWISTS” was deceptively similar to the registered trade mark “TWISTIES” of the respondent (“Frito-Lay”)?
3.Did his Honour err in concluding that Aldi had failed to make out the statutory defence provided in par 122(1)(f) of the Trade Marks Act 1995 (Cth) (“the Act”), that is, the defence that Aldi “would obtain registration of the trade mark in [its] name if [it] were to apply for it”?
I will deal with these three questions separately and in sequence.
1. Use of “CHEEZY TWISTS” as a trade mark
1.1 General
Subsections 120 (1) and (2) of the Act provide as follows:
“(1)A person infringes a registered trade mark if the person uses as a trade mark a sign that is substantially identical with, or deceptively similar to, the trade mark in relation to goods or services in respect of which the trade mark is registered.
(2)A person infringes a registered trade mark if the person uses as a trade mark a sign that is substantially identical with, or deceptively similar to, the trade mark in relation to:
(a)goods of the same description as that of goods (registered goods) in respect of which the trade mark is registered; or
(b)services that are closely related to registered goods; or
(c)services of the same description as that of services (registered services) in respect of which the trade mark is registered; or
(d)goods that are closely related to registered services.
However, the person is not taken to have infringed the trade mark if the person establishes that using the sign as the person did is not likely to deceive or cause confusion.”
Aldi used the words “CHEEZY TWISTS” in relation to goods in respect of which Frito-Lay’s registered trade mark “TWISTIES” was registered. It follows that subs 120(1) applies, that Frito-Lay is not obliged to rely on subs 120(2), and that Aldi is not entitled to the benefit of the defence provided by the concluding words of subs 120(2) (“the person is not taken to have infringed the trade mark if the person establishes that using the sign as the person did is not likely to deceive or cause confusion”).
“Sign” is “defined” widely in s 6 of the Act as follows:
“Sign includes the following or any combination of the following, namely, any letter, word, name, signature, numeral, device, brand, heading, label, ticket, aspect of packaging, shape, colour, sound or scent.” (latter emphases mine)
Frito-Lay’s case, which his Honour accepted, was that Aldi had used the words “CHEEZY TWISTS”, and not, for example, an “aspect of packaging”, as a trade mark. Section 6 provides that the expression “trade mark” has the meaning given by s 17. The relevant effect of s 17 and subs 7(4) is that Aldi used the words “CHEEZY TWISTS” as a trade mark if it used them in physical relation to its goods to distinguish those goods from the goods of others which were also dealt with or provided in trade.
Frito-Lay did not allege passing off or contravention of s 52 of the Trade Practices Act 1974 (Cth): the case was infringement of registered trade mark or nothing.
As can be seen from the annexure to the Reasons for Judgment of the members of the Court, the words “CHEEZY TWISTS” appeared in letters which were very large and distinctive in form within a waving banner in a prominent position across the face of the packets. Indeed, those words were the most prominent feature on the packets, and prominence is one factor which has been regarded as suggesting trade mark use: cf James Watt Constructions Pty Ltd v Circle-E Pty Ltd [1970] 3 NSWR 481 (Hope J) (“Barrier Beam”); Berzins Specialty Bakeries Pty Ltd v Monty’s Continental Bakery (Vic) Pty Ltd (1987) 15 FCR 402 (Jenkinson J) (“Pritikin”) esp at 407.
It is difficult in the light of these considerations to think that the purpose and role of “CHEEZY TWISTS” on the packets can be adequately accounted for as that of informing prospective buyers that the packet contains cheese-flavoured twists. Pointing clearly in the same direction is the appearance, in more modest and restrained “regular print” below the banner, of the indubitably descriptive words “cheese flavoured snacks”. Those words soberly inform the reader of the packet’s contents. This suggests that the expression “CHEEZY TWISTS” or “CHAZOOS CHEEZY TWISTS” purports to be the name, rather than descriptor of the particular product contained in the packet.
Unless constrained by any other consideration, on the basis of my impression, recounted in the preceding two paragraphs, I would not discern error in his Honour’s conclusion that “CHEEZY TWISTS” was being used on the packets as a trade mark.
1.2 Primary Judge’s use of expression “entirely descriptive”
Aldi submits as follows:
“The Trial Judge’s finding that the words ‘cheezy twists’ were entirely descriptive, means that the only possible use of a sign as a ‘badge of origin’ was the ‘aspect of packaging’. His Honour expressly found that the use of the trade mark emerged from the ‘particular distinctive form of the words on the packet and not to use of the words in any other form’, [11], ... . That is the relevant sign used as a trade mark was not the words themselves.”
The significance of the reference to “aspects of packaging” in this submission is to be found in the definition of “sign” in s 6 of the Act (set out at [53] above).
Aldi’s submission is to the effect that a word which, devoid of context (as typed on an application for registration of a trade mark) may be understood to be “entirely descriptive”, can never be used as a trade mark. I do not accept the submission. I will have occasion later to discuss in more detail what his Honour meant when he used the expression “entirely descriptive” (see [167]-[172] below), but it suffices for the present to note that it is well established that words which, devoid of any context or which in one particular context may be understood to be descriptive, may nonetheless be used as a trade mark: JB Stone & Co Ltd v Steelace Manufacturing Co Ltd (1929) 46 RPC 406 (CA); Bass, Ratcliff & Gretton Ltd v Nicholson & Sons Ltd (1932) 49 RPC 88 (HL) at 109 per Lord Macmillan; Picot Ltd v Goya Ltd [1967] RPC 573 at 578; James Watt Constructions Pty Ltd v Circle-E Pty Ltd [1970] 3 NSWR 481 (Hope J); Kolotex GloAustralia Pty Ltd v Sara Lee Personal Products (Australia) Pty Ltd(t/a Hilton Hosiery) (1993) 26 IPR 1 per Wilcox J.
Consistently with Aldi’s submission, the only words which could be used as a trade mark on a particular occasion are words which, devoid of any context (again, as typed on an application for registration of a trade mark, for example) can be immediately seen to be, at least in part, non-descriptive. This is not the law, and, as I will explain later, I do not think his Honour meant by the expression “entirely descriptive”, “inherently incapable of ever, in any context, being used as a trade mark”.
It has been said that general laudatory epithets and geographical terms are inherently incapable of ever being used as trade marks (cf In re Joseph Crosfield & Sons Ltd [1910] 1 Ch 130 (“Perfection”); Thomson v B Seppelt & Sons Ltd (1925) 37 CLR 305; Re Yorkshire Copper Works Limited’s Application [1954] 1 All ER 570; Samuel Taylor Pty Ltd v Registrar of Trade Marks (1959) 102 CLR 650), but the trend of modern authority seems to be against a priori categorisation, and bears out the well known dictum of Kitto J in The Shell Co of Australia Ltd v Esso Standard Oil (Australia) Ltd (1963) 109 CLR 407 at 422 that “context is all important”; see, also, for example, Picot Ltd v Goya Ltd [1967] RPC 573 at 578; Johnson & Johnson Australia Pty Ltd v Sterling Pharmaceuticals Pty Ltd (1991) 30 FCR 326 at 335-336, 339 per Lockhart J, at 347-348 per Gummow J; Unilever Aust Ltd v Karounos [2001] FCA 1132 (Hill J) at [46]. In any event, the expression “CHEEZY TWISTS” is not a laudatory epithet or a geographical term. The fact that for registration purposes a descriptive word can acquire a secondary meaning, namely, the denotation of a particular source, also signifies that a descriptive word can be used as a trade mark for infringement purposes. Finally, although “CHEEZY TWISTS” describes twists which are cheese-flavoured or cheese-coloured or cheese-textured (or two or all of these), the misspelling consisting of the use of “z” rather than “s”, itself suggests in a subtle way the possibility that the expression may be being used to do something more than just to describe.
1.3 Did the primary Judge find trade mark use of the words “CHEEZY TWISTS” or of aspects of packaging?
Aldi’s submission set out at [59] above raises the question whether, independently of his having described the expression “CHEEZY TWISTS” as “entirely descriptive”, his Honour may nonetheless have found trade mark use of aspects of the “CHEEZY TWISTS” packaging, and not of those words themselves. In my opinion he did not do so.
His Honour stated (at [11]):
“In my opinion, the words “Cheezy Twists” as they appear on the packaging are a sign used as a trade mark within the meaning of s 120(1) of the Act. They are presented in a distinctive form for which there is no counterpart in the evidence. ... Other uses of the words in other forms does not, in my opinion, derogate from this conclusion. ... It should be clear that this finding as to trade mark use relates to the particular distinctive form of the words on this packet and not to use of the words in any other form.” (my emphasis)
In this passage, his Honour plainly had in mind the possibility that the expression “CHEEZY TWISTS” might be used in various contexts, in some of which it might well be used not as a trade mark, but purely descriptively. His Honour was simply at pains to make it clear that his finding did not relate to contexts other than that on the packets.
1.4 British Sugar Plc v James Robertson & Sons Ltd [1996] RPC 281
Aldi relies heavily on the judgment of Jacob J in British Sugar Plc v James Robertson & Sons Ltd [1996] RPC 281 (“British Sugar”), a case to which, apparently, the primary Judge was not referred. In that case the plaintiff (“British Sugar”) had registered “TREAT” for “dessert, sauces and syrups; all included in Class 30”. British Sugar used that trade mark on “Silver Spoon Treat”, a sweet syrup in a range of flavours to pour onto ice cream. The defendant (“Robertson”) launched a sweet spread, labelled “Robertson’s Toffee Treat”, which it sold along with its range of jams and preserves.
The following passage and picture from Jacob J’s judgment (at 287) provides sufficient background for present purposes:
“The label is primarily dark mauve (with words such as ‘yum yum’, ‘fab’, ‘luscious’) faintly legible. The key wording on this background is ‘Robertson’s Toffee Treat’ coupled with a description ‘Irresistibly rich toffee spread’. ‘Robertson’s’ is in clear white capital lettering. ‘Toffee Treat’ is in a fancy script. ‘Toffee’ is at least twice the size of ‘Treat’. The word ‘New’ also appears in a flash. This is appropriate for the product has no exact equivalent in the market. An example of the most important part of the label is as follows:*
* The label reproduced here does not have the word ‘New’ in a flash on it - Ed [of RPCs].
The product was, when introduced, truly novel. In supermarkets it comes on the shelves containing jams and preserves. It is not presented on the same shelves as the Silver Spoon Treat syrups. Robertson’s see their product as primarily competing with other spreads (e.g. jams) and particularly chocolate spreads. I did not understand this evidence to be challenged.”
Unlike s 120 of the Australian Act, s 10 of the Trade Marks Act 1994 (UK), which implemented EC Directive 89/104, did not contain an express requirement that, in order to infringe, a sign must have been used as a trade mark. It provided, relevantly, as follows:
“(1)A person infringes a registered trade mark if he uses in the course of trade a sign which is identical with the trade mark in relation to goods or services which are identical with those for which it is registered.
(2)A person infringes a registered trade mark if he uses in the course of trade a sign where because –
(a)the sign is identical with the trade mark and is used in relation to goods or services similar to those for which the trade mark is registered, or
(b)the sign is similar to the trade mark and is used in relation to goods or services identical with or similar to those for which the trade mark is registered,
there exists a likelihood of confusion on the part of the public, which includes the likelihood of association with the trade mark.”
The circumstances of the present case would have fallen for consideration under subs (2) of this section and therefore the existence of a likelihood of confusion would have been a necessary element of infringement. But under subs (1) of the Australian s 120, the defence of use of the sign in a manner not likely to deceive or cause confusion (provided by the words at the end of subs 120(2)) is not available to Aldi. However, the relevant defences available to Aldi are set out in s 122, of which that provided in par 122(1)(f) is discussed later.
Jacob J concluded that there was no infringement under either subs 10(1) or 10(2) because Robertson’s goods were neither identical nor similar to those of British Sugar. But, against the possibility that he was wrong, his Honour went on to consider the defence provided by subs 11(2), which was as follows:
“A registered trade mark is not infringed by –
(a) the use by a person of his own name or address,
(b)the use of indications concerning the kind, quality, intended purpose, value, geographical origin, the time of production of goods or of rendering of services, or other characteristics of goods or services, or
(c)the use of the trade mark where it is necessary to indicate the intended purpose of a product or service (in particular, as accessories or spare parts)
provided the use is in accordance with honest practices in industrial or commercial matters.”
Jacob J said that in construing this section he would have regard to the purpose of a trade mark as formulated in the EC Directive, namely, “to guarantee the trade mark as an indication of origin”. His Honour stated (at 299):
“I am, of course, concerned with the word ‘Treat’ alone. I cannot see even a hint that anyone regarded this alone as a trade mark. Mr Young says no matter, once it is incorporated into a phrase which has trade mark significance, i.e. ‘Toffee Treat’ that is enough. If I accept that the whole phrase is indeed a trade mark, I think Mr Young must be right. Section 11(2) does not cover the case where a word, outside the context of the use, is descriptive if, in context, it is part of trade mark use for the defendant’s goods.
I turn to consider how the word ‘Treat’ is used here I have no evidence from the public in relation to this question. I have some evidence of internal thinking at Robertson’s but the most important thing of all must be my own impression from the label and all the surrounding circumstances. Looking at the label I think the average customer would not see ‘Treat’ used as a trade mark. It is true that it is written as part of a phrase ‘Toffee Treat’ but this is done in a context where the maker’s name is plain. It is of course the case that you can have two trade marks used together (‘Ford Prefect’), but whether the secondary word is used as a trade mark is a question of fact. If it is a fancy word, then obviously it is a trade mark because it could not be taken as anything else. But where it is highly descriptive I see no reason why a member of the public should take the mark as a badge of origin. And that is particularly so where the product is a new sort of product, as here. The public are apt to take the name of a novel product as a description rather than a trade mark, particularly where the name is not fancy but is descriptive or laudatory. I do not think Robertson’s use is as a trade mark.” (my emphasis)
Jacob J concluded that “TOFFEE TREAT” was not being used to distinguish the goods of the manufacturer, Robertson, that is, as a trade mark.
I do not find this conclusion persuasive against the primary Judge’s conclusion that “CHEEZY TWISTS” was being used as a trade mark in the present case. The two cases depend on their own facts. In British Sugar the word “treat” was an ordinary English word of general laudatory significance, and the name of the manufacturer (Robertson) appeared nearby to indicate the origin of the goods. In the present case, neither “cheezy” nor “twists” was an ordinary English word of general laudatory significance and Aldi’s name did not appear nearby to indicate the origin of the goods.
Jacob J next turned to the question of the validity of the registration of “TREAT”. Subsection 47(1) of the United Kingdom Act provided that a registration might be declared invalid on the ground that the trade mark was “registered in breach of section 3”. Subsection 3(1) provided as follows:
“The following shall not be registered
(a) signs which do not satisfy the requirements of section 1(1),
(b) trade marks which are devoid of a distinctive character,
(c)trade marks which consist exclusively of signs or indications which may serve, in trade, to designate the kind, quality, quantity, intended purpose, value, geographical origin, the time of production of goods or of rendering of services, or other characteristics of goods or services,
(d)trade marks which consist exclusively of signs or indications which have become customary in the current language or in the bona fide and established practices of the trade.
Provided that, a trade mark shall not be refused registration by virtue of paragraph (b), (c) or (d) above if, before the date of application for registration, it has in fact acquired a distinctive character as a result of the use made of it.”
Subsection 1(1) provided:
“In this Act a ‘trade mark’ means any sign capable of being represented graphically which is capable of distinguishing goods or services of one undertaking from those of other undertakings.” (my emphasis)
Further testimony in the proceedings tendered on behalf of Aldi germane to the issue of infringement was provided by Ms O’Regan, a person having overseas experience in marketing, and who became the Business Director of Interface Advertising Pty Limited, an organisation which undertook all packaging development, marketing communications and advertising for Aldi. It appears that she took instructions from and reported at least mainly to Ms Turner, an Aldi buying manager, who did not give evidence in the proceedings. Ms O’Regan selected Brave Communications for the purpose of providing design concepts for the packaging of extruded snacks. Her testimony under cross-examination included the following:
“Is it then the case that in early April you received the first concepts from Brave?--- For the Cheese Twists product?
Yes?--- Yes.
And on one of the concepts they describe it as Cheese Twists?--- Yes.
And on, I think, two concepts they describe it as Cheezy Twists?--- Yes.
And that was spelt “zy”?--- Yes.
Now what was your reaction when you saw the alternative artworks either Cheese Twists or Cheezy Twists?--- They’d answered the brief. They’d given us three different concepts and I presented all, I thought they were good concepts and my role was to present those on to the client.
Did you form a view that Cheezy Twists was a better name than Cheese Twists?--- I felt it was more funky but I didn’t have a preference at that stage.
It was more funky, more likely to appeal to the market the product was aimed to?--- Yes.
And more likely to give a distinctive character to the product?--- It made the product more flavoursome.
When you say “flavoursome”, you mean more attractive to the customer?--- Yes.
You didn’t think that you needed to use the word “cheezy” in order to tell the consumer what was in the product, did you?--- No.
Right from the very beginning, the words “cheese flavoured snacks” were at the bottom of the various designs?--- Yes.
They remained there all throughout?--- Yes.”
…
You believed you had complied with that requirement by the words, “cheese flavoured snacks”?--- Yes.
You then thought that with this Cheezy Twists that had come back as one of the Brave’s suggestions, that that was quite a funky name, yes?--- Yes, it was a funky and additional descriptor.
Quite a funky name?--- Yes.
Quite appealing and attractive?--- Yes.
…
You said to her, you have got a choice. Cheese Twists, which was the name you gave us, has been presented in a particular fashion. Correct?--- Yes.
You also told her that Brave had come up with an alternative name, Cheezy Twists?--- Yes.
You told her you thought that was a better name?--- I presented all three comments and I didn’t make comment on what I felt was better or stronger.
Ms Turner said to you, I think Cheezy Twists is a better name that Cheese Twists?--- She took preference to that design, yes.”
As I have observed above, Ms Turner did not give evidence in the proceedings.
It would appear that it was in the context of the testimonies of Mr Joyce and Ms O’Regan, including that which I have extracted that the judge at first instance observed that “The Applicant also relies upon admissions in the evidence of witnesses called for the respondent. It is also submitted that the respondent was seeking to take advantage of the reputation of the applicant’s product and that it is appropriate to assume that the respondent has succeeded in doing so”. Subsequently, after referring to what he described as “a good deal of evidence [led by Frito-Lay] to establish the use which has been made of the mark “TWISTIES” by it and its predecessors, his Honour said as follows:
“In my opinion it is relevant to know that the trade mark ‘TWISTIES’ has been widely used over a long period of time, throughout Australia, and that goods bearing the mark reach the consumer by the various channels which have been generally described in the evidence. It is also relevant to know that the mark is one of the best known of marks in the tasty or savoury snack food market and that goods sold under the mark are the market leader in relation to the extruded form of those goods. These facts assist in judging the motives and purpose of the actions of the respondent in devising and using the sign CHEEZY TWISTS on its packet.”
Hence as the judge of fact, his Honour was entitled to decline to accept Mr Joyce’s denials that he ever asked himself why the mark CHEEZY TWISTS was displayed with such prominence on its packaging, or that it was Aldi’s aim to produce a product which was as close to TWISTIES as possible in shape, appearance, taste and personality, or that Aldi used the expression CHEEZY TWISTS, knowing that it was a similar expression to TWISTIES, or that there was a likelihood of deception. The following concessions made towards the culmination of Mr Joyce’s cross examination upon Aldi’s use of the words “Cheesy Twists” in its internal records did not serve to assist Aldi’s protestations:
“QDoes Aldi use the expression ‘Cheese Twists’ [in Exhibit JFJ2 containing internal records of product shipped to stores] to describe this product? A. Yes.
QWhy is that product not described as ‘Cheesy Twists’ (presumably the cross-examiner used words with the intended spelling of “Cheezy Twists” on that document)? A. Within our central buying system computers we put the descriptive words for the name of the product.
…
QIn your view if you are wishing to describe your product to consumers, ‘Cheese Twists’ is a perfectly apt expression to do so? A. Yes, probably.”
Having read in addition to her viva voce testimony the affidavit evidence of Ms O’Regan, I would identify therefrom further support for the findings of the primary judge. She deposed in the affidavit to the circumstance that her firm arranged for the production of these packaging concepts; one to be described as “Cheese Twists” and the other two as “Cheezy Twists”. She accepted that Aldi did not need to use the word “Cheezy” in order to tell the consumer what was in the product package, and further that from the beginning of her involvement, the words “cheese flavoured snacks” were “at the bottom on the various designs”. She claimed that it was an employee of the concept producer who selected as the preferable name CHEEZY TWISTS, instead of “Cheese Twists”. No such person gave evidence in the proceedings.
In the result, I have been unable to identify error in the evidentiary summaries made by the primary judge in the course of his reasoning or in the expression of his conclusions, and in particular any error which would justify appellate intervention or review. I would therefore dismiss the appeal with costs.
I certify that the preceding twenty-four (24) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Conti. Associate:
Dated: 21 December 2001
Counsel for the Applicant:
T K Tobin QC with M Green
Solicitors for the Applicant:
Brophy Bridge & Mirow
Counsel for the Respondent:
J T Gleeson SC
Solicitors for the Respondent:
Allens Arthur Robinson
Date of Hearing:
28 August 2001
Date of Judgment:
21 December 2001
98
13
0