Anheuser-Busch Inc v Budejovicky Budvar
[2002] FCA 390
•5 APRIL 2002 (Corrigenda 13 June 2002)
FEDERAL COURT OF AUSTRALIA
Anheuser-Busch, Inc v Budějovický Budvar, Národní Podnik & Ors [2002] FCA 390
NG 194 of 1998
ALLSOP J
5 APRIL 2002SYDNEY
SUMMARY
1.In accordance with the practice of the Federal Court in certain cases of public interest, I have prepared this brief summary to accompany the reasons for judgment that are being delivered today. This summary is necessarily incomplete; the only authoritative pronouncement of my reasons is that contained in the full reasons for judgment.
2.One further reason for providing this summary is that the evidence discloses that both the applicant and the first respondent, from time to time, in their struggle with each other in various jurisdictions in the world, have employed press releases to advance their own positions. In order to avoid things that I have said being taken out of context, I thought it appropriate to summarise briefly some of my findings.
3.The proceedings were brought by the applicant against three respondents. The case proceeded only against the first respondent. The applicant is a United States corporation and the first respondent is a Czech corporation. Each manufactures and exports beer. The applicant manufactures and exports ‘Budweiser’ beer. It has trade marks in Australia for, amongst other things, the words ‘Budweiser’ and ‘Bud’. The first respondent also sells beer with labels bearing the words ‘Budweiser’ and ‘Budweiser Budvar’ in some parts of the world. In other parts of the world its beer is sold under the label ‘Budějovický Budvar’. Depending on the origin and language of the reader of the label, the syllable ‘Bud’ may be pronounced ‘bud’ as in ‘mud’ or ‘bud’ as in ‘good’. Also depending on the language or origin of the reader of the label, the ‘w’ may be pronounced as a ‘v’ or a ‘w’. The first respondent manufactures beer in a city in the Czech Republic where beer has been manufactured for over seven centuries. It is a town which is called Budweis, in German. It is called České Budějovice, in Czech. In German, the word ‘Budweiser’ is the adjectival form of the proper noun ‘Budweis’, meaning ‘of or from Budweis’. In Czech, the word ‘Budějovický’ is the adjectival form of the proper noun ‘Budějovice’, meaning ‘of or from Budějovice’.
4.This litigation is one of a number of proceedings all around the world in which the applicant and the first respondent have fought, and are fighting, over trade marks and trade mark uses of various words.
5.In these proceedings much of the dispute concerned whether the first respondent’s desire to sell its beer in this country under the brand or label ‘Budějovický Budvar’ was legitimate. I have found that the use of that phrase, in the manner in which it has been used, and in which it is proposed to be used, in Australia, as a trade mark on specific containers, is not, and would not be, an infringement of any trade mark of the applicant, and would not amount to either passing-off or a contravention of the Trade Practices Act 1974 (Cth).
6.Nevertheless, I would make various orders restraining the first respondent selling beer using the particular labels which are proposed. I would make these orders because of the use of other words, less prominently displayed on the labels. These words are ‘Budweiser Budvar’ which are used on the labels as part of the first respondent’s name ‘Budweiser Budvar, National Corporation’. The first respondent has various versions of its name. ‘Budweiser Budvar, National Corporation’ is one. ‘Budějovický Budvar, Národní Podnik’ is another.
7.Thus, whilst I have found that the primary trade mark usage of ‘Budějovický Budvar’ on the bottles in question was not, and is not, unlawful, the desire of the first respondent to use its so called ‘English’ corporate name, should, I think, be restrained, for the reasons I have given in my reasons for judgment.
8.One of the bases upon which I would restrain that use involves a finding that this use of its name was not (in the previous versions of the label), and would not be (in the proposed label), in good faith. In making these findings it is important to understand that I have not concluded that the first respondent intended, or intends, to act dishonestly. Nevertheless, for reasons which I have set out in the reasons for judgment, I have concluded that the use was not, and would not be, in good faith, as that expression is to be understood for the purposes of s 122 of the Trade Marks Act 1995 (Cth).
9.During the course of the hearing, senior counsel for the applicant put to me that I should not accept significant parts of the evidence of Mr Boček, the ‘General Director’, in effect the chief executive, of the first respondent. This was, and is, of course, a serious matter for a person in Mr Boček’s position and for the first respondent, particularly as it was linked to an assertion of lack of good faith. It is sufficient in this summary if I note that my conclusions have not involved any finding other than that Mr Boček was an honest witness.
10.The parties have requested that they be permitted to consider my reasons and formulate, in draft, appropriate orders. As I have said in my reasons, I am content with this course.
Sydney,5 April 2002
This judgment is available in full text on the internet at the following address:
align="center">FEDERAL COURT OF AUSTRALIA
Anheuser-Busch, Inc v Budějovický Budvar, Národní Podnik [2002] FCA 390
ANHEUSER-BUSCH, INC v BUDĚJOVICKÝ BUDVAR, NÁRODNÍ PODNIK & ORS
NG 194 of 1998ALLSOP J
5 APRIL 2002 (Corrigenda 13 June 2002)SYDNEY
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
NG 194 of 1998
BETWEEN:
ANHEUSER-BUSCH, INC
APPLICANTAND:
BUDĚJOVICKÝ BUDVAR, NÁRODNÍ PODNIK
FIRST RESPONDENTF.M. LIQUOR PTY LTD ACN 009 350 378
SECOND RESPONDENTHOUSE OF HOPS (AUST) PTY LTD ACN 072 644 341
THIRD RESPONDENTJUDGE:
ALLSOP J
DATE OF ORDER:
5 APRIL 2002 (Corrigenda 13 June 2002)
WHERE MADE:
SYDNEY
CORRIGENDA TO REASONS FOR JUDGMENT
1.Line 2 of paragraph 117 on page 37 of the reasons for judgment states ‘country who are were prohibited’. The word ‘and’ should be inserted between the words ‘are were’.
2.Line 3 of paragraph 192 on page 63 of the reasons for judgment should have the word ‘time’ removed and it should be replaced with the word ‘line’.
I certify that the preceding two (2) paragraphs are a true copy of the Corrigenda to the Reasons for Judgment of his Honour Justice Allsop Associate:
Dated: 13 June 2002
Counsel for the Applicant: Mr D K Catterns QC Ms S J Goddard Solicitor for the Applicant: Sprusons: Solicitors Counsel for the Respondent: Mr D M Yates SC Ms A Bowne Solicitor for the Respondent: Hazan Hollander Dates of Hearing: 4, 5, 6, 10, 11, 12, 13 and 14 September 2001 Last Submissions Received: 27 September 2001 Date of Judgment: 5 April 2002 (Corrigenda 13 June 2002) FEDERAL COURT OF AUSTRALIA
Anheuser-Busch, Inc v Budějovický Budvar, Národní Podnik [2002] FCA 390
TRADE MARKS – alleged infringement of trade marks ‘Budweiser’ and ‘Bud’ – no infringement by use of one impugned mark, infringement by use of another – use as a trade mark – good faith for the purposes of paragraph 122(1)(a) of the Trade Marks Act 1995 (Cth) not made out – claim under section 129 of the Act for groundless threats of infringement action not made out
TRADE PRACTICES – section 52 and paragraphs 53(c) and (d) of the Trade Practices Act 1974 (Cth) – misleading or deceptive conduct – use of the corporate name of the respondent including the word ‘Budweiser’
PASSING OFF – use of the corporate name of the respondent including the word ‘Budweiser’
Trade Practices Act 1974 (Cth) s 52, paras 53 (c) and (d)
Trade Marks Act 1995 (Cth) ss 6, 7, 10, 17, 117, 120, 122, 129Australian Woollen Mills Ltd v F S Walton & Co Ltd (1937) 58 CLR 641 applied
Euromarket Designs Inc v Peters & Anor [2001] FSR 288 referred to
Registrar of Trade Marks v Woolworths Ltd (1999) 45 IPR 411 applied
The Shell Company of Australia Ltd v Esso Standard Oil (Australia) Ltd (1961) 109 CLR 407 applied
Mark Foys Ltd v Davies Coop & Co Ltd (1956) 95 CLR 190 applied
Angoves Pty Ltd v Johnson (1982) 43 ALR 349 referred to
Seven-Up Co v Bubble Up Co Inc (1987) 9 IPR 259 referred to
Re Smith Hayden & Co Ltd’s Application (1946) 63 RPC 97 applied
Wingate Marketing Pty Ltd v Levi Strauss & Co (1994) 49 FCR 89 applied
Johnson & Johnson v Kalnin (1993) 114 ALR 215 applied
In the Matter of an Application by the Pianotist Company Ltd for the Registration of a Trademark (1906) 23 RPC 774 applied
Cooper Engineering Co Pty Ltd v Sigmund Pumps Ltd (1952) 86 CLR 536 applied
Murray Goulburn Co-operative Co Ltd v NSW Dairy Corporation Ltd (1990) 16 IPR 289 applied
New Zealand Breweries Ltd v Heineken’s Bier Brewerij Maatschappij NV [1964] NZLR 115 referred toPioneer Hi-Bred Corn Co v Hy-line Chicks Pty Ltd [1979] RPC 410 referred to
Parker-Knoll Ltd v Knoll International Ltd [1962] RPC 265 referred to
Southern Cross Refrigerating Co v Toowoomba Foundry Pty Ltd (1954) 91 CLR 592 applied and referred to
Bridge Stockbrokers Ltd v Bridges (1984) 4 FCR 460 referred to
Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd (1982) 149 CLR 191 referred to
Campomar Sociedad, Limitada v Nike International Ltd (2000) 202 CLR 45 applied
Coca-Cola Co v All-Fect Distributors Ltd (2000) 96 FCR 107 applied
Carnival Cruise Lines Inc v Sitmar Cruises Ltd (1994) 31 IPR 375 applied
General Electric Co v General Electric Co Ltd [1973] RPC 297 referred to
Mars GB Ltd v Cadbury Ltd [1987] RPC 387 referred to
In re William Bailey (Birmingham) Ltd’s Trade Mark Application (1935) 52 RPC 136 appliedRe Broadhead’s Application for Registration of a Trade Mark (1950) 67 RPC 209 applied
Pepsico Australia Pty Ltd v The Kettle Chip Company Pty Ltd (1996) 33 IPR 161 referred to
The Sanitas Company Ltd v Condy (1887) 4 RPC 530 referred to
Ravenshead Brick Co Ltd v Ruabon Brick & Terra Cotta Co Ltd (1937) 54 RPC 341 referred toSeltsam Pty Ltd v McGuinness (2000) 49 NSWLR 262 referred to
Luxton v Vines (1952) 85 CLR 352 referred to
Transport Industries Insurance Co Ltd v Longmuir [1997] 1 VR 125 referred to
Australian Competition & Consumer Commission v Amcor Printing Papers Group Ltd (2000) 169 ALR 344 referred to
George Ballantine & Son Ltd v Ballantyne Stewart & Co Ltd [1959] RPC 273 referred to
United Kingdom Tobacco Co Ltd’s Application (1912) 29 RPC 489 referred to
George Ballantine & Son Ltd v Ballantyne Stewart & Co Ltd [1959] RPC 47 referred to
Baume & Co Ltd v A H Moore Ltd [1958] RPC 226 referred to
Polo Textile Industries Pty Ltd v Domestic Textile Corporation Pty Ltd (1993) 26 IPR 246 referred to
RKH Pty Ltd v Christian Dior (1985) 6 IPR 78 referred toSturtevant Engineering Co Ltd v Sturtevant Mill Co of USA Ltd (1936) 53 RPC 430 referred to
Associated Rediffusion Ltd v Scottish Television Ltd [1957] RPC 409 referred to
Crystalate Gramaphone Record Manufacturing Co v British Crystalite Co Ltd (1934) 51 RPC 315 referred to
Aldi Stores Ltd Partnership v Frito-Lay Trading Company GmbH [2001] FCA 1874 applied
Johnson & Johnson Aust Pty Ltd v Sterling Pharmaceuticals Pty Ltd (1991) 30 FCR 326 applied
Musidor BV v Tansing (t/as Apple Music House) (1994) 52 FCR 363 applied
Koninklijke Philips Electronics NV v Remington Products Australia Pty Ltd (2000) 48 IPR 257 applied
Wrigley’s (Australasia) Ltd v Life Savers (Australasia) Ltd (1936) 37 SR (NSW) 9 referred to
Royal Brunei Airlines v Tan [1995] 2 AC 378 applied
Adrema Ltd v Adrema-Werke GmbH [1958] RPC 323 applied
Re Bali Brassiere Co Inc’s Registered Trade Mark and Berlei Ltd’s Application (1968) 118 CLR 128 referred to
Riv-Oland Marble Co (Vic) Pty Ltd v Settef SpA (1988) 19 FCR 569 appliedCA Henschke v Rosemount Estates Pty Ltd (2000) AIPC 91-640 referred to
In re ‘Thunderbird’ Trade Mark (1974) 48 ALJR 456 applied
Pioneer Electronic Corporation v Registrar of Trade Marks (1977) 17 ALR 43 referred to
S & I Publishing Pty Ltd v Australian Surf Life Saver Pty Ltd (1998) 88 FCR 354 applied
Equity Access Pty Ltd v Westpac Banking Corporation (1990) ATPR 40-994 referred to
Cadbury-Schweppes Pty Ltd v Pub Squash Co Pty Ltd [1981] RPC 429; [1980] 2 NSWLR 851 applied
Thai Wood Import and Export Co Ltd v Shuey Shing Pty Ltd (1989) 17 IPR 289 referred to
Taco Company of Australia Inc v Taco Bell Pty Ltd (1982) 42 ALR 177 applied
Parker-Knoll Ltd v Knoll International Britain (Furniture & Textiles) Ltd [1961] RPC 346 referred toShanahan Australian Law of Trade Marks and Passing Off (2nd Ed)
Kerly’s Law of Trade Marks and Trade Names (13th Ed)Anheuser-Busch, Inc v Budějovický Budvar, Národní Podnik & Ors
NG 194 of 1998ALLSOP J
5 APRIL 2002
SYDNEY
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
NG 194 of 1998
BETWEEN:
ANHEUSER-BUSCH, INC
APPLICANTAND:
BUDĚJOVICKÝ BUDVAR, NÁRODNÍ PODNIK
FIRST RESPONDENTF.M. LIQUOR PTY LTD ACN 009 350 378
SECOND RESPONDENTHOUSE OF HOPS (AUST) PTY LTD ACN 072 644 341
THIRD RESPONDENTJUDGE:
ALLSOP J
DATE OF ORDER:
5 APRIL 2002
WHERE MADE:
SYDNEY
THE COURT ORDERS THAT:
1.on or before a date to be fixed, the applicant and the first respondent file agreed proposed short minutes of order, or, failing agreement, separate proposed short minutes of order, giving effect to the reasons published today; and
2.the proceedings be stood over to a date to be fixed for argument, if any, on the form of final orders and for the making of final orders.
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
NG 194 of 1998
BETWEEN:
ANHEUSER-BUSCH, INC
APPLICANTAND:
BUDĚJOVICKÝ BUDVAR, NÁRODNÍ PODNIK
FIRST RESPONDENTF.M. LIQUOR PTY LTD ACN 009 350 378
SECOND RESPONDENTHOUSE OF HOPS (AUST) PTY LTD ACN 072 644 341
THIRD RESPONDENT
JUDGE:
ALLSOP J
DATE:
5 APRIL 2002
PLACE:
SYDNEY
REASONS FOR JUDGMENT
INDEX
Introduction [ 2 ]
the issues [ 2 ] – [ 3 ]
the applicant [ 4 ] – [ 28 ]
the first respondent [ 29 ]
the question of translation and pronunciation [ 30 ] – [ 32 ]
the history of beer making in Ceské Budějovice by
the first respondent and its predecessors [ 33 ] – [ 77 ]the business of the first respondent [ 78 ] – [ 79 ]
the first respondent’s promotion
- Czech Republic and Slovakia [ 80 ]
- abroad [ 81 ] – [ 89 ]the first respondent’s stated attitude [ 90 ]
the issues in more detail [ 91 ] – [ 113 ]
the question of the importation into Australia
of beer labelled ‘Budweiser Budvar’ [ 114 ] – [ 119 ]
exporting beer labelled ‘Budějovický Budvar’
to Australia [ 120 ] – [ 126 ]
The Trade Mark Case [ 127 ] – [ 134 ]
‘Budějovický Budvar’
- substantial identity [ 135 ] – [ 140 ]
- deceptive similarity [ 141 ] – [ 182 ]
‘Budweiser Budvar’ on the front strip [ 183 ]
- trade mark use [ 184 ] – [ 192 ]- defence under s 122 [ 193 ] – [ 196 ]
- good faith [ 197 ] – [ 219 ]
the effect of ‘Budweiser Budvar’ on
‘Budějovický Budvar’ [ 220 ] – [ 228 ]the question of stationery and catalogues:
the qualification to paragraph 2 of the
undertaking [ 229 ] – [ 232 ]Passing-off and the Trade Practices Act Claim [ 233 ] – [ 248 ]
The Cross-Claim [ 249 ] – [ 260 ]
Orders [ 261 ]
INTRODUCTION
the issues
This case primarily concerns the markings on bottles of beer which the first respondent, a Czech brewing company, exported to Australia in 1997 and which it intends to export to Australia. The applicant claims that the first respondent’s past and proposed labels infringe its trade marks registered under the Trade Marks Act 1995 (Cth) (the TM Act) in particular ‘Budweiser’, ‘Bud’ and ‘Budweiser King of Beers’, that the past and proposed conduct has amounted, and will, if allowed, amount to a contravention of s 52 and paras 53(c) and (d) of the Trade Practices Act 1974 (Cth) (the TP Act) and that the conduct has amounted, and will amount, if allowed, to passing-off. Orders have previously been made against the second respondent. The third respondent, which was, for a time, the importing agent of the first respondent, is in liquidation. No application was made by the applicant to continue the proceedings against the third respondent. Various undertakings on a final, but ‘without admissions’, basis have been proffered to the Court by the first respondent. I will deal with these undertakings in due course.
The applicant, Anheuser-Busch, Inc. is a company incorporated in the State of Missouri in the United States of America. It is, and at all relevant times has been, registered as the proprietor of various marks under the TM Act and earlier Commonwealth trade mark legislation. There was no issue in the proceedings about the registration, ownership or validity of the trade marks. The five trade marks pleaded as those in respect of which the applicant complains about the conduct of the first respondent are as follows:
NUMBER
MARK
CLASS
GOODS
163032
BUD
32
Beer, ale and porter and their ingredients included in this class
163033
BUDWEISER
32
Beer, ale and porter and their ingredients included in this class
366841
BUDWEISER KING OF BEERS
32
Beer
549247
BUDWEISER
25
All goods in this class
549248
BUD
25
All goods in this class
the applicant
The applicant is the principal subsidiary of Anheuser-Busch Companies, Inc. which is the parent company of the companies in what might be termed the Anheuser-Busch Group. Whilst the proceedings concern rights of, and complaints by, the applicant, the relevant facts to which I will be referring concern other, and in some cases predecessor, Anhueser-Busch companies. For this reason, from time to time, I will use the expression ‘Anheuser-Busch’ in a generic way to refer to the applicant or corporate interests relevantly connected to the applicant. No particular point was taken by the first respondent about the corporate forms of the applicant and its predecessor and related corporations.
Amongst other things, Anheuser-Busch makes and sells beer in the United States of America, licenses the making and selling of beer in various countries and sells beer in various countries around the world. It is the world’s largest brewing organisation, and has been since about 1957.
Anheuser-Busch sells its beer in Australia and elsewhere under the brand ‘Budweiser’. The beer is also labelled with the word ‘Bud’, and the phrase ‘King of Beers’ immediately after, or proximate to, the word ‘Budweiser’.
Anheuser-Busch has been a producer of large quantities of beer since the nineteenth century. From 1876 until 1895, or thereabouts, when it purchased the business of the brewer C. Conrad & Co (including the label ‘Budweiser’) Anheuser-Busch produced beer under contract for C. Conrad & Co. Since that time, Anheuser-Busch has produced and sold beer branded ‘Budweiser’ in the United States and elsewhere in the world, on its own account.
The applicant’s product is reasonably well known in Australia, at least amongst beer drinkers, as an American beer. For instance, Ms Strachan, who had great experience as a market researcher and marketing consultant in Australia, and who was called by the first respondent, agreed that at least among English speaking people in Australia the only meaning of the word ‘Budweiser’ is the applicant’s beer, and that, in the context of beer, the only meaning of the word ‘Bud’, in Australia, is the applicant’s beer. I should add that the agreement given to the those propositions involved agreement to questions expressed using the syllable and word ‘Bud’ pronounced to rhyme with ‘mud’, not ‘good’.
The views of Ms Strachan, which were shared by Dr Beaton, a ‘strategic marketing and management consultant’, who was called by the applicant, make it necessary to examine the evidence concerning the reputation of the applicant’s products in Australia only in order to give content to these views. It is also appropriate to say something of these matters in order to place my views in connection with the TP Act and passing-off counts, and with some aspects of the TM Act case, in context.
In 1996, ‘Budweiser’ was the largest selling brand of beer in the world and ‘Bud Light’, a low alcohol beer, was the third largest. ‘Bud Light’ has been manufactured and sold since about 1982. The word ‘Bud’ has appeared on packaging of Budweiser beer since about 1953.
In 1920, Anheuser-Busch’s ‘Budweiser’ beer was shipped to 44 countries on 6 continents. It has been sold worldwide since the Second World War. In the 1990s it was brewed under licence in 11 countries and exported from the United States to another 70 countries, including Australia and New Zealand. ‘Budweiser’ beer appears to have been first imported into Australia in 1914, although Anheuser-Busch does not appear to have appointed a distributor in Australia until 1965.
Anheuser-Busch has undertaken an active expansionary export policy since the 1970s, based on significant advertising expenditure worldwide and the development of ‘Budweiser’ and ‘Bud’ as what might be termed, a global brand.
The worldwide advertising has been by a variety of means and in various media: the sponsorship of large sporting events, point of sale advertising, merchandising, print media and, in some countries, particularly the United States, the electronic media. It is unnecessary to be precise about advertising in the many different countries in which it has taken place, but it has occurred in the United States, Europe, the Asia-Pacific region and South America. For example, Anheuser-Busch has advertised in well known and internationally distributed magazines such as Sports Illustrated, Rolling Stone and Life.
Very large sums of money have been spent by Anheuser-Busch sponsoring large scale sporting events broadcast worldwide on television. Anheuser-Busch has sponsored (by using the word ‘Budweiser’) various teams and events. It has sponsored the American Football Superbowl. In 1984 and 1988 it sponsored the United States team at the Olympics. In 1988 it was sponsor of the Winter Olympics. In 1992 it sponsored the United States team at the Olympics. In 1992 it sponsored the United States team at the Winter Olympics. In 1994 it sponsored the United States team at the Winter Olympics and was the exclusive malt beverage advertiser at those Olympics. It was an ‘official partner’ of the Olympics at Atlanta in 1996 and it was a sponsor of the United States team at the 1998 Winter Olympics. Anheuser-Busch has been a major corporate and official sponsor at the soccer World Cup in 1986, 1990, 1994 and 1998. The World Cup was broadcast on television to a great many countries. Anheuser-Busch, as part of its sponsorship of that event, from time to time took highly visible stadium billboard advertising, displaying the word ‘Budweiser’, which could be seen on these worldwide television broadcasts.
Anheuser-Busch has been a significant sponsor of professional boxing in the United States, which is broadcast worldwide, including to Australia. Anheuser-Busch has, since 1983, sponsored ‘Indy Car’ racing in the United States, which is also broadcast worldwide.
There are also various large scale sponsorships by Anheuser-Busch for United States sporting events which are less widely telecast, such as professional basketball and professional baseball. Anheuser-Busch has used point of sale material around the world using the words ‘Budweiser’ and ‘Bud’. It has, for many years, promoted its product by the use of outdoor signs. The Budweiser product has been ‘placed’ (so-called product placement) in many well known movies, many of which have been released in Australia.
Before coming to advertising and promotion in Australia and New Zealand it is appropriate to say that this extensive worldwide advertising must have produced recognition of the brands of ‘Budweiser’ and ‘Bud’ in many people in Australia, by reason of the travel of Australians overseas and the viewing by them, in their travels, of the kinds of advertising to which I have referred, as well as by viewing international television broadcasts within Australia.
In Australia, Budweiser has been imported by a distributor since 1965 and sold in retail outlets, hotels, bars, clubs and restaurants. It has been sold, at least since 1990, on airlines flying to and from Australia, including Air New Zealand, Singapore Airlines, Japan Airlines and United Airlines.
The level of expenditure by Anheuser-Busch on advertising in Australia was contained in a confidential exhibit. However, it would not be a breach of that confidence to say that the levels of direct expenditure in Australia by Anheuser-Busch on advertising and promotion of ‘Budweiser’ beer have been modest. Such modest amounts of money as have been spent have been directed to advertising in trade and liquor magazines, some speciality magazines such as Ralph and rugby magazines, a promotion on a commercial radio station, some advertising on Channel 9 in 1989 and some advertising on Channel 10 in 1998, point of sale material to liquor outlets, the production and sale of merchandise bearing the marks ‘Budweiser’, ‘Bud’ and ‘Budweiser King of Beers’, the funding of product launches at places of entertainment and the sponsoring of some sporting events and local sporting teams.
From about February 1997, there was apparently some change of emphasis or focus from point of sale material to media advertising. The precise extent and degree of that change is not clear from the evidence.
Budweiser beer has been sold in Australia over a number of years in slightly differently shaped containers: in what was called a ‘flagship’ bottle from 1965 to 1994, in a ‘stubbie’ bottle from 1994 to 1996, in a ‘long-neck’ bottle from 1997 and in cans from 1965. All these containers have been sold in cardboard packs and individually. They were often sold in shops and bars where imported or foreign beers were stocked. Not all the exhibits representing these different Anheuser-Busch containers had the mark ‘Bud’ on them. However, most did so, on the neck of the bottle. All carried the mark ‘Budweiser’. All carried the phrase ‘King of Beers’.
The level of sales of Budweiser in Australia over the years is contained in a confidential exhibit. There was evidence that sales in Australia and the Pacific are increasing. However, it is fair to say that sales in Australia have been modest, in a small segment of the Australian beer market for imported beers, which segment is relatively crowded with overseas competitors.
Budweiser has also been sold in New Zealand since at least 1980. It has been sold there in about 60% of liquor stores and 40% of ‘on-premises retail outlets’, which I take to be places where the beer can be drunk on the premises. Once again, the sales figures tendered were in a confidential exhibit, but it can be stated they have been modest.
In New Zealand, as in Australia, Anheuser-Busch has spent modest sums in the advertising and promoting of its beer using the marks ‘Budweiser’, ‘Bud’ and ‘King of Beers’. The methods used to advertise and promote the products in New Zealand have been point of sale material, merchandising, signage, the promotion of social and sporting events and sponsorship.
In all this advertising and promotion in Australia and elsewhere the brand image sought to be conveyed with ‘Budweiser’ and ‘Bud’ is youthful American culture, described by Dr Beaton (and agreed with by Ms Strachan) as the self-image benefits sought to be promoted to the consumer. Dr Beaton described the elements of this self image of ‘Budweiser’ as patriotism in America, sporting prowess, youth, America and Americanisms and ‘hipness’ of being associated with America and Americanisms. Ms Strachan agreed and added one further element: a desire, especially by the young middle class, to associate with ‘blue collar’ values, rather than ‘white collar’.
The above is sufficient to give content to the conclusory views of Ms Strachan and Dr Beaton. Whilst the direct sales and advertising of products bearing the marks ‘Budweiser’ and ‘Bud’ over the years in Australia have been modest, it is clear that there is a relatively clear recognition by many in Australia that, as Ms Strachan says, ‘Budweiser’ refers to American beer of Anheuser-Busch and, when used in the context of beer, ‘Bud’, as a word, evokes the same thing.
The applicant tendered examples of its labels from the time of production for C. Conrad to the present. The marks covering the period since shortly before the applicant appointed a distributor in Australia in 1965 were the following (the dates referred to below being part of the relevant exhibit, Exhibit C):
By way of example of bottles and cans sold by the applicant in Australia and New Zealand in the 1990s, the following photographs, which show the use of ‘Bud’ on the neck, represent the applicant’s product:
the first respondent
The first respondent is a Czech company, wholly owned by the Czech Republic, which manufactures and sells beer. Its principal European brewery is located in a town in the Czech Republic called Ceské Budějovice (in the Czech language) or Budweis (in the German language). The predecessor to the first respondent was established in 1894 or 1895 as a joint stock company named ‘Cesky akciový pivovar v Ceských Budějovicich’ (meaning Czech Joint Stock Brewery in Budějovice).
the question of translation and pronunciation
It is appropriate at this point to say something about translation. The name of the town, Ceské Budějovice, is not ‘translated’ into German as Budweis; rather, for many centuries, German speakers have lived in the town and in this part of Europe (Bohemia), and from time to time have ruled this part of Europe. There is a German name for the town: Budweis. From the seventeenth century (under Habsburg rule), with the growth of the vernacular, German was one of the official languages in Southern Bohemia. The town has a Czech name and a German name, though except for the interruption of the Second World War, the official name since 1918 has been Ceské Budějovice. The point was made by Mr Bocek, the ‘General Director’ (chief executive officer) of the first respondent, when he pointed out in his evidence that Ceské Budějovice is in Bohemia and there is another Budějovice, in Moravia, not called ‘Budweis’ or ‘Moravian Budweis’.
The town name, Ceské Budějovice or Budweis, has adjectival or possessive forms in Czech and German, being Budějovický and Budweiser, respectively.
The pronunciation of the syllable ‘Bud’ in all these Czech and German forms is in a manner approaching rhyming with ‘good’ (represented the phonetic symbol ª), as opposed to rhyming with ‘mud’ (represented by the phonetic symbol Λ). Also, the ‘w’ and the ‘s’ in the German form are pronounced in German as a ‘v’ and resembling a soft ‘z’ in English, respectively.
the history of beer making in Ceské Budějovice by the first respondent and its predecessors
It is necessary to set out a little more history to place this dispute in its commercial context.
The town Ceské Budějovice or Budweis was established in 1265 as a royal town under the then Bohemian King, Ottokar II, as part of the colonisation and renewal of central European regions, including Bohemia. Settlements such as Ceské Budějovice or Budweis were often (as this one was) established under royal, as opposed to local feudal or ecclesiastical, control; and commercial rights were generally granted to such new urban centres. One of the commercial privileges (and a valuable one) given to Ceské Budějovice or Budweis was a brewing right. Free born citizens of the town were granted the right to brew beer in their houses for their own consumption and business. The town itself was also granted this right. From this time brewing has been carried on in the town and brewing rights continued to be attached to homes in the town and to the town itself, down to the formation of the immediate predecessor of the first respondent in 1894 or 1895. A brewery was established in the town in 1495 and later expanded. Under the Habsburg and Austro-Hungarian Empire, regulation made exporting beer from the town or locality, where it was produced, generally not possible. However the beer from Ceské Budějovice or Budweis gained some notoriety for its style and quality in and from the sixteenth century so as to permit some distribution outside the town as beer from the town – in a sense, ‘Budweiser’ beer. Thus, the town has a history of making beer going back over seven centuries.
This long history of beer-making in the town leads to the question as to the extent to which the use of the adjectival forms Budějovický and Budweiser carry the meaning: ‘of or from Budějovice’ and ‘of or from Budweis’. For the purposes of this case it can, I think, be readily accepted that Czech and German speakers, or perhaps, some Czech and German speakers familiar with the brewing of beer in Ceské Budějovice or Budweis, would ascribe this meaning to these possessive or adjectival forms. However, in Australia, few, if any, English speakers would appreciate this linguistic structure.
There is a history in Europe of brands of beer being referable to geographic, especially urban, locations. At least in part, this was because the commercial privilege of beer production was lucrative and often protected by restrictions on who could produce and sell beer in any given town and on the restrictions on export from towns and localities where it was produced. This, together, one assumes, with the difficulties of transport over long distances, led to the practice of beer and foodstuffs being labelled or marked with their geographical or town origins. Examples of such beers still made and sold are Kulmbach Bier (from Kulmbach), Warsteiner Bier (from Warsteiner), Weltenburger Bier (from Weltenburg), Oud Hoegaards Bier (from Hoegaarden in Belgium), Chimay (from Forges-lez-Chimay in Belguim) and Westmalle (from Male in Belgium).
In the late eighteenth century another brewery was established in the town known as the Burgher Brewery which was officially called Die Budweiser Bräuberechtigten-Bürgerliches Bräuhaus. This brewery was German owned (that is owned by German speakers of the town); and the brewery established in 1495 was Czech owned (that is by Czech speakers).
In 1894 or 1895 the joint stock company, Cesky akciový pivovar v. Ceských Budějovicich, was established. I will refer to this entity until the events of, and after, the Second World War as ‘Cesky akciový pivovar’ or ‘the joint stock company’. In 1894 and 1895, there was still in existence the Burgher Brewery, referred to above, the brewery owned by German speakers, which was also producing beer in the town.
At this point it is necessary to understand a little more about events in the United States.
It is not clear on the evidence when Cesky akciový pivovar first began to sell beer in the United States. It does appear that prior to 1911 it was not selling beer in the United States under the name or brand ‘Budweiser’. However, it does appear that the Burgher Brewery was doing so, or wanted to do so. In November 1909 the Burgher Brewery sought cancellation of the registration of trademark number 64,125 for the word ‘Budweiser’, registered on 23 July 1907 in the United States Patent Office in the name of Anheuser-Busch Brewing Association. On 4 September 1911 the Burgher Brewery ‘conferred judgment’ in favour of the ‘registrant’, Anheuser-Busch Brewing Association. From the evidence before me, in particular the cross-examination of Mr Bocek, I infer that this was part of wider arrangement between the two sides, that is Anheuser-Busch and the Burgher Brewery.
Mr Hajn (the archivist of the first respondent) deposed to the fact that Budweiser beer began to be sold abroad and from 1872 on the American market. He produced copies of letters from the nineteenth century in support of this statement. These letters, together with the evidence of Mr Bocek, make it tolerably plain that it was the Burgher Brewery exporting this named beer into America, and probably elsewhere overseas in the nineteenth century.
At about the same time, in 1911, Cesky akciový pivovar and Anheuser-Busch had dealings. On 19 August 1911 a document was signed on behalf of Cesky akciový pivovar by the chairman of the board of the company and a director, both being duly authorised. It was in the following terms:
Anheuser-Busch Brewing Association, a joint-stock company with its principal seat in the city of St. Louis, Missouri, United States of America, uses, while selling and distributing its beer products manufactured in the United States of America, for vessels of all kinds, for bottles and other packaging devices for filling its beer products, as well as for labels, caps and other devices for sealing bottles the verbal trademark ‘Budweiser’, which trademark, as a trademark registered in the name of the joint-stock company Anheuser-Busch Brewing Association, has been entered in the Trademark Register of the Patent Office of the Department of the Interior of the United States of America under ref. no. 64.125.
The undersigned Ceský akciový pivovar in Ceské Budejovice hereby states that Ceský akciový pivovar expressly acknowledges the right of the joint-stock company Anheuser-Busch Brewing Association to use the aforesaid trademark, registered in the name of Anheuser-Busch Brewing Association in the Trademark Register of the Patent Office of the Department of the Interior of the United States of America under ref. no. 64.125, in course of selling and distributing its beer products, as well as in course of marking the same, whether in the territory of the United States of America or in other non-European countries.
Ceský akciový pivovar in Ceské Budejovice therefore recognizes that it is not in the position to hold any objection against the joint-stock company Anheuser-Busch Brewing Association hereafter marking its products, as well as any and all means and aids used for the distribution thereof, with the word ‘Budweiser’, especially on vessels, stoppers, cases and other packages, and against its using the word ‘Budweiser’ in launching its products into distribution, whether per se or in combination with any other marks, patterns or additions chosen by it, with the exception of the word ‘Original’ or any similar designation or depiction that might mislead the public to believe that the beer products of Anheuser-Busch Brewing Association originate from the city of Budejovice in Bohemia.
The foregoing statement of the joint-stock company Ceský akciový pivovar in Ceské Budejovice also applies to the use of the word ‘Budweiser’ for marking of beer products of the joint-stock company Anheuser-Busch Brewing Association on notices, offers, price lists and public announcements.
Ceský akciový pivovar in Ceské Budějovice hereby expressly states that, by virtue of its statement to the effect that it is not in the position to object against the joint-stock company Anheuser-Busch Brewing Association using the aforesaid trademark registered in the Trademark Register of the Patent Office of the Department of the Interior of the United States of America under ref. no. 64.125, it does not waive its right to mark its own products with the word ‘Budweiser’ and/or other marks, patterns or additions for identifying the geographical origin of its beer products in selling or causing such products to be sold anywhere, i.e. including, without limitation to, the territory of the Unites States of America or other non-European countries.
IN WITNESS WHEREOF, Ceský akciový pivovar in Ceské Budejovice affixed its notarized signature hereunto.
Ceské Budejovice, on August 19, 1911.
[diacritical element above the letter ‘e’ lacking in original]
Anheuser-Busch Brewing Associations paid 30,000 crowns for this document. The parties agreed that this sum was not commercially nominal at the time. The signed documentary receipt says ‘against issuance of a document given in Ceské Budějovice on 19 September 1911’. Despite the discrepancy in date, the parties agreed that the document and the 30,000 crowns were directly related.
The first relevant trade mark of the joint stock company was the word mark ‘Ceský budějovický granát’ registered in Ceské Budějovice on 16 August 1922. The word ‘granát’ means garnet.
On 27 March 1925 the trade mark ‘Ceský budějovický crystal’ was registered by the joint stock company in Ceské Budějovice.
On 28 April 1930 the trade mark ‘BUDVAR’ was registered in the name of the joint stock company locally in Czechoslovakia and on 1 March 1932 in the international register in Berne at the Office of International Industrial Property. Mr Hajn explained that the word ‘Budvar’ was a word coined from parts of the words ‘Budějovický’ and ‘Pivovar’: that is, a coined word from the phrase Budějovický Brewery.
In 1931 the joint stock company was registered in the Commercial Register of Ceské Budějovice as ‘Budvar, Ceský akciový pivovar’.
On 13 February 1934 the joint stock company registered in Ceské Budějovice a trademark for use in the English language containing the word ‘Budweiser’. This mark was for the neck and body of a bottle as follows:
On 14 May 1936, by resolution of the general meeting, the joint stock company changed its name from ‘Ceský akciový pivovar v. C.Budějovicich’ to ‘Budvar, Ceský akciovy pivovar v. C. Budějovice’. The resolution also dealt with the company’s name in different languages. After the general meeting of the company on 14 May 1936, section 1 of the Articles of the company was in the following terms:
The firm name, which originally in Czech read as ‘Ceský akciový pivovar v Ceských Budějovicich’ was changed by a resolution of the General Meeting held on May 14, 1936, and reads in Czech as follows now: ‘Budvar, Ceský ackciový pivovar, Ceské Budějovice’, in German: ‘Budbräu, Böhmisches Aktienbräuhaus, Budweis’, in Slovak: ‘Budvar, Ceský úcastinársky pivovar, Ceské Budějovice’, in French: ‘Budvar, Brasserie tchèque par actions à Ceské Budějovice’, in English: ‘Budvar, Czech Joint-Stock-Brewery, Ceské Budějovice’, in Serbo-Croation: ‘Budvar Ceška dionicka pivara, Ceské Budějovice’, in Bulgarian: ‘Budvar, Cechska akcionerna pivovarna fabrika, Ceské Budějovice’ in Hungarian: ‘Budvar, Cseh Részvény-Sörfözde, Ceské Budějovice’.
The word ‘Budvar’ appears to have been placed in the name of the company because beers so marked were very popular. Indeed Mr Hajn said that the company name in fact changed to include ‘Budvar’ two years before the official change in 1936.
After prohibition ended in December 1933, the joint stock company commenced exporting to the United States. There was a debate before me as to whether this was a recommencement or a commencement. I will return to this in due course. It is sufficient here to note that Mr Hajn, who was not cross examined, said (in para 29 of his affidavit of 23 June 1999) that after prohibition in the USA ‘had ended’ the joint stock company ‘started again exporting into this area’. In 1936 the joint stock company filed for registration of a trade mark in America. The mark was registered in 1937. It was as follows:
No claim was made in the American trade mark for the word ‘Budweiser’ or for any wording except ‘Bohemian Brewery Ltd’.
In 1938, Anheuser-Busch requested the joint stock company to give up the words ‘Budweiser’, ‘Budweis’ and ‘Bud’ for the whole world, except Europe. This was refused. After negotiations, an agreement was signed on 11 March 1939 to which Anheuser-Busch Inc. and the joint stock company were parties (together with the latter’s importing agent into the United States). The agreement (not a deed) contained the following recitals:
…
WHEREAS, Ceský, for some time past, has imported its product into the United States under a label which prominently displays the words ‘Budweiser Beer’, which label it caused to be registered in the Patent Office of the United States No.348,769, on August 10, 1937, a copy of which label is hereto attached marked ‘A’; and
…
WHEREAS, since about 1875 A-B Inc. and its predecessors have been brewers of beer in the United States and have sold its product in the United States and elsewhere continuously since that year under the trade-mark ‘Budweiser’; and
WHEREAS, the public in the United States and in other localities where A-B Inc.’s product has been sold, have become accustomed to identify and designate the beer of A-B Inc. and no one else, by the trade-mark ‘Budweiser’ and its abbreviated form ‘Bud’; and
WHEREAS, Ceský through Rudolf is now importing its product into the United States, where it is sold in bottles or other containers bearing the above-mentioned trade-mark and is sold in competition with the product of A-B Inc. identified by its trade-mark ‘Budweiser’, and
WHEREAS, Ceský’s product is frequently passed off and sold as and for the product of A-B Inc. by reason of the fact that the name ‘Budweiser’ is used on the said label and in connection with the sale of its goods, and
WHEREAS, it is the desire of all parties hereto to avoid such confusion and to insure that the product of each is distinctively marked and sold only on its own merits:
…The operative clauses included the following:
…
NOW, THEREFORE, the parties hereto, in consideration of the sum of $/50.000 /fifty thousand Dollars/ or at the option of Ceský its equivalent in Czechoslavak Crowns according to the official exchange value on the day of remittance, to be paid by A-B Inc. to Ceský, and the sum of $15.000 / fifteen thousand Dollars/ or at the option of Rudolf its equivalent in Czechoslavak Crowns according to the official exchange value on the day of remittance, to be paid by A-B Inc. to Rudolf, and of the respective terms of this agreement to be performed by each of the parties hereto, all the said parties agree as follows:1.Ceský and Rudolf admit that A-B Inc. and its predecessors were the first to use the word ‘Budweiser’ in the connection with its beer and others of its products as a trade-mark and trade name, and that since such first use thereof in and about the year 1875 have used ‘Budweiser’ continuously on and in connection with its merchandise as its trade-mark and trade name in the United States and elsewhere. Ceský and Rudolf hereby undertake and agree that within six months from date hereof they will discontinue in countries of the North American Continent north of and including, the Republic of Panama, the West Indies, Philippines, Hawai, [sic] Samoa, and any present territories possessions or protectorates of the United States, all hereinafter referred to as North America, the use of the name ‘Budweiser’, ‘Budweis’, ‘Bud’, or any combinations, derivations, abbreviations or simulations thereof, in or in connection with, their corporate or firm names, or in connection with their merchandise and also will discontinue in said countries the use of any designs or any oral, written,, printed or otherwise reproduced or communicated utterances, publications, designs or pictures similar in style of letter, word, colour or form to those used by A-B Inc.; and that if they desire to indicate, in connection with their merchandise, that such merchandise is brewed or manufactured in Ceské Budějovice, they will not use the words ‘Bud’, Budweis’ or ‘Budweiser’ but will use only the exact words ‘manufactured/or brewed/in Ceské Budějovice, Czechoslovakia’ in inconspicuous letters.
In the event that the official name of Ceské Budějovice is changed to Budweis, the latter name being the only officially admitted name, then if either Ceský and Rudolf desire to indicate in connection with Ceský’s merchandise that such merchandise was brewed or manufactured in Budweis, they may indicate this fact so long as the name remains Budweis, by the exact words ‘brewed / or manufactured/ in Budweis City’, but by no other words.
…In November 1940, the joint stock company registered the trade mark ‘Budweiser Budbräu’ in Ceské Budějovice (now, officially, Budweis). This mark used a script and underlining in the word ‘Budbräu’ similar to the use on containers presently used by the first respondent. I note this because the applicant says that the first respondent has deliberately intended to play on the goodwill of the applicant’s mark. One of the matters pointed to by the applicant is what is said to be the emphasis on the introductory syllable ‘Bud’ by its shape and underlining. This mark, registered in occupied Ceské Budějovice (Budweis) in 1940, at least indicates the lineage of that part of the script. The trade mark was as follows:
In 1941, the joint stock company changed its name to ‘Budwar, Ceský akciový pivovar v C. Budějovicich’ (in Czech) and ‘Budbräu, Böhimisches Aktienbräuhaus, Budweis’ (in German).
During the occupation by the Germans, a Nazi trustee administrator was appointed to the joint stock company, but the Burgher Brewery remained in the hands of its German speaking owners.
In January 1946, the joint stock company was nationalised. By ministerial decree dated 13 September 1946 there was established a brewing industry ‘national enterprise’. The property of the nationalised joint stock company was transferred to the new entity. The name of this nationalised entity was ‘Ceskobudějovický pivovar, národní podnik’ (in Czech) and (according to the translation in Exhibit IH 11 to the affidavit of Mr Hajn) this translates into English as ‘Brewery of Ceske Budějovice, national enterprise’.
In 1946, the Burgher Brewery (whose German ownership I infer was not disturbed by the forces of occupation) was confiscated as a possession of ‘traitors and collaborators’ and was transferred to the national administration. Apparently, there was not at this time (and perhaps unsurprisingly) an official German language name of the nationalised entity. Also, the official name of the town had reverted to Ceské Budějovice.
By ministerial decree of 31 May 1948 the name ‘Ceskobudějovický pivovar, n.p.’ was changed to ‘Ceskobudějovické pivovary, n.p.’ The translation of the ministerial decree of 31 May 1948 effecting this change in Exhibit IH 12 to the affidavit of Mr Hajn contains the following:
… the present corporate name ‘Brewery of Ceské Budějovice, national enterprise’ is replaced by the corporate name ‘Breweries of Ceské Budějovice, national enterprise’.
By ministerial decree dated 10 July 1948, effective as of 1 January 1947, the property of the Burgher Brewery, previously confiscated, was incorporated into the Ceskobudějovické pivovary, n.p. This was described in the English translation (Exhibit IH 13 to the affidavit of Mr Hajn) as the ‘incorporation of the confiscated enterprise… into the … national enterprise.’ The precise jurisprudential nature of the transfer is not important.
By ministerial decree dated 30 August 1948 the ‘Ceskobudějovické pivavory, n.p.’ were renamed ‘Jihoceské pivovary, n.p.’. This latter name is translated in Exhibit IH 14 as ‘South Bohemian Breweries, national enterprise’.
The first respondent was created in 1967. Mr Hajn said (see paragraph 22 of his affidavit of 23 June 1999) that the first respondent ‘was separated in 1967 from Jihoceske pivovary (“Southbohemian Breweries, n.c.”) and it was registered as Budějovický Budvar, národní podnik.’ In the English translation of the extracts from the trade and companies register of the County Court in Ceské Budějovice it appears that the assets, including property and rights, including patent, trade mark, protected designs and designation of origin rights of the former Ceský akciový pivovar (as the joint stock company was called before the Second World War) or Budwar, Ceský akciový pivovar in C. Budějovice (as it was renamed in 1940) were ‘excluded’, which I take to be removed, from the national enterprise known since 30 August 1948 as Jihoceské pivovary, n.p. and were ‘incorporated into’ a (new) national enterprise (which is the first respondent) called Budějovický Budvar, n.p.. Mr Hajn said that after the establishment of the first respondent in 1967, the re-registration of all the trademarks of the joint stock company took place. He also stated that ‘some rights of the original Burgher Brewery’ were transferred to the first respondent.
The new enterprise (the first respondent) was established by a measure of the relevant ministry dated 21 December 1966 with effect from 1 January 1967. According to extracts from the trade and companies register of the County Court in Ceské Budějovice and orders reflected in official notices dated 21 December 1966 and 22 June 1970, the first respondent was created and registered as the following (the various linguistic forms being contained in the original court record of registration):
[Czech] Budějovický Budvar, národní podnik
[English] Budweiser Budvar, National Corporation
[French] Budweiser Budvar, Entreprise Nationale
[German] Budweiser Budvar, NationalunternehmenThe official notices of 21 December 1966 and 22 June 1970 entitled the first respondent, referred to as the ‘national enterprise’ (being the translator’s words in Exhibit IH 16), to be registered in the Register of Companies as at 1 January 1967. The foreign versions of the first respondent’s corporate name were set out in enclosures to the notices, which enclosures were said to form an integral part of the official notices. The English, French and German names are set out above. Each of the Spanish, Italian, Polish and Portuguese versions of the name was ‘Budweiser Budvar’ followed by a comma and a phrase equivalent to ‘national corporation’ in that particular language.
There was evidence before me of the state of the court register in 1986 and 1999. In 1986, there were eight names of the first respondent for countries of various linguistic background: Russian, English, French, German, Spanish, Italian, Polish and Portuguese. All, except Russian, had the phrase ‘Budweiser Budvar’, plus a corporate designation, as the name of the first respondent. In 1999, it seems that the list of names in the Register had been reduced to three – a Czech, an English and a French version.
It is convenient to note at this point that these company registrations entitle, but do not oblige, the first respondent under Czech law to call itself Budweiser Budvar, National Corporation in an English speaking country such as Australia. No Czech law would be infringed by the first respondent calling itself ‘Budějovický Budvar, národní podnik’ in Australia. This question was raised by me during the hearing, which proceeded, in particular in relation to defences under s 122 of the TM Act, on this basis.
It is also convenient to note at this point that discussion took place during the hearing as to the basis of the applicant’s attack on, or resistance to, the pleading of good faith under s 122 of the TM Act by the first respondent. In the course of that discussion, and by the provision of further particulars, it was made clear that no reliance whatever was placed by the applicant on the choice of names reflected in the company register, which was made either by the company or its officers or officials or members of the government of the Socialist Republic of Czechoslovakia in 1967, being people unconnected with those involved in the prosecution of the defence in this case.
I have sought to trace the corporate history of the various companies which can be said to be the predecessors of the first respondent because of matters which were relevant to criticism of Mr Bocek’s evidence. There is a diagrammatic representation of these events (and the later renaming and division of the Jihoceské pivovary, n.p.) in Exhibit IH 17. It is sufficient to say at this point that it is a little simplistic to view the activities of the Burgher Brewery as unrelated to any predecessor of the first respondent.
In 1968 there were registered in the International Office for Protection of Intellectual Property the phrases ‘Budějovický Budvar’ and ‘Budweiser Budvar’ as indications of origin (appellation d’origine).
I note that the official translations of documents from Czech to English made for this case and put into evidence generally do not translate the Czech name Budějovice to Budweis to aid comprehension of the name of the town. It is undoubted that in a German speaking context the town is referred to as Budweis.
Mr Hajn, who was not cross examined, said in his affidavit:
The name of town ‘Budweis’ is used in common practise of Germans and other people, which use German language and for all official translations…
Among the exhibits to Mr Hajn’s affidavit are photographs of traffic signs from Austria (some in English) which all use the word ‘Budweis’; for example ‘Historic Hotel Zvon Budweis Main Square’. Also in those exhibits were envelopes addressed in English to various people at the first respondent, some using the word ‘Budweis’ and others ‘Budějovice’ as the denomination of the town.
The first respondent has the trade mark ‘Budějovický Budvar’ in various countries. Mr Hajn explained that ‘Budějovický’ has never been used on a label otherwise than in conjunction with ‘Budvar’. The word ‘Budvar’ has been used itself (that is without the presence of ‘Budějovický’ or ‘Budweiser’) as a trade mark and on labels.
On a number of occasions since the late nineteenth century the beer produced by the joint stock company, by the entities formed after the Second World War and by the first respondent has been awarded various awards for its quality.
In the second half of the twentieth century Anheuser-Busch entered negotiations with the Czechoslovak Socialist Republic and later the Czech Republic about commercial matters concerning the first respondent and its predecessors. In the 1990s Anheuser-Busch sought to buy the first respondent. These negotiations ended in 1996.
Since 1996 various lawsuits and administrative procedures have been brought around the world, including these proceedings, in which Anheuser-Busch attacks the first respondent’s use of the marks ‘Budweiser’, ‘Budějóvický’, ‘Budvar’ and other marks containing the letters ‘Bud’. These proceedings and actions have been instigated in Argentina, Austria, Bosnia, China, Croatia, the Benelux countries, Great Britain, Greece, Denmark, Egypt, Estonia, Finland, France, Germany, Hong Kong, Hungary, Ireland, Italy, Japan, Kirgizstan, Latvia, Liechtenstein, Lithuania, Macedonia, Moldova, Norway, New Zealand, Portugal, Republic of Korea, Russia, Slovenia, Spain, Sweden, Switzerland, Taiwan, Ukraine, Uzbekistan, Venezuela, Vietnam and Yugoslavia.
the business of the first respondent
The first respondent is the fourth largest brewing company in the Czech Republic. It exports its beer to more than 50 countries under the marks ‘Budweiser Budvar’ and ‘Budějóvický Budvar’. Exports constitute 50% of its annual production. It is the leading beer exporter from the Czech Republic. In 1996 it exported 495,000 hectolitres of beer. In 1996 it was the twenty-fifth largest beer exporter in the world. In 1996 Heineken Nederland NV exported 7,010,000 hectolitres and was the leading exporter. The first respondent’s export sales were of a similar volume in 1996 to those of Tsingtao: 500,000 hectolitres (China), Pabst: 500,000 hectolitres (USA), Grolsche Nederland: 600,000 hectolitres (Netherlands), and Carlton and United: 430,000 hectolitres (Australia). Anheuser-Busch in 1996 was the world’s eighth largest exporter with 2,200,000 hectolitres.
In 1996 the brand of the first respondent’s beer sold in Germany as ‘Budweiser Budvar’ was the second most popular imported beer in that country. In 1996 in England it was (as ‘Budweiser Budvar’) the thirteenth most popular imported beer. In 1996 in Austria it was (as ‘Budweiser Budvar’) the second most popular imported beer.
the first respondent’s promotion
Czech Republic and Slovakia
The first respondent’s beer is promoted and sold in the Czech Republic and Slovakia as a premium brand at the highest price level. The words ‘Budějóvický Budvar’, ‘Budvar’ and ‘Budweiser’ are used on the local label. In the years 1995 to 1998 the first respondent spent US$2,019,200, US$3,718,000, US$3,505,200 and US$4,750,000, respectively, promoting its beer in the Czech Republic and Slovakia by radio, television, billboards and other advertising, including sponsorship of sporting teams from Ćeske Budějovicé. The first respondent sponsors the Czech Film Festival.
abroad
In countries where the first respondent’s beer is sold as ‘Budějóvický Budvar’ point of sale material is provided to importers.
In Finland, at least, there has been advertising on buses using the words ‘Budějóvický’ and ‘Budvar’.
The first respondent participates in international exhibitions, aimed at the drink and food industry and, depending on the location of the exhibition, advertises or has its stall labelled as ‘Budweiser Budvar’ or Budějóvický Budvar’. Such food and drink industry exhibitions from 1994 to 1998 have been held in Germany, Austria, Italy, Switzerland, London, Slovakia, the Czech Republic, Belgium, Poland, Spain, Russia, France, Norway, Hungary, Finland, Holland, Ukraine, America, Japan, Macedonia, Burkina-Faso, Sweden, and Togo.
The mark ‘Budějóvický Budvar’ is also presented on the internet website of the first respondent, though much less prominently than ‘Budweiser Budvar’.
The words ‘Budějóvický Budvar’ are registered or applied for in a number of countries. The first respondent has 345 registrations and applications in 94 countries of ‘Budějóvický’, ‘Budweiser’, ‘Budvar’ and other marks and logos.
Application has been made in Australia for the trade mark ‘Budějóvický Budvar’ as a logo and a label. This has been opposed by Anheuser-Busch.
The first respondent exports beer under the trade mark ‘Budweiser Budvar’ to the following countries:
Germany Nigeria England Italy
Austria Benin Hungary Luxembourg
Switzerland Togo Israel Belgium
Spain France Ireland Netherlands
Norway Croatia Russia Turkey
Poland Latvia Ukraine Macedonia
Azerbaijan Lithuania Bosnia and Herzegovina Armenia
Georgia Estonia Albania Tadzhikistan
Vietnam Kazakhstan Moldavia Portugal
Morocco Mongolia Rumania Slovakia
Kirghizstan Serbia Bulgaria
PakistanThe first respondent exports beer under the trademark ‘Budějovický Budvar’ to the following countries:
Finland Cyprus Sweden Maldives
Malta Japan Denmark Hong-Kong
New Zealand ThailandIt wishes to export beer to Australia under the brand ‘Budějovický Budvar’.
the first respondent’s stated attitude
The ‘General Director’ of the first respondent, Mr Bocek, swore that in countries (such as Australia) in which Anheuser-Busch has first registered ‘Bud’ and ‘Budweiser’ the first respondent ‘respects the present state and registers its long-term used Czech registered trade mark “Budějóvický Budvar” in the special graphical form in order to avoid possible conflicts.’
the issues in more detail
There were, in effect, two trade mark cases pleaded. The first concerns the allegations maintained throughout the hearing that the first respondent was responsible for the sale and distribution in Australia of the so-called ‘first label’ bottles and cans, as defined in paragraphs 13(a) and (b) of the Third Further Amended Statement of Claim (the Statement of Claim). These were the containers bearing the trade mark ‘Budweiser Budvar’ on the front and back labels of the bottle and on the can, and the trade mark ‘Budweiser Budbräu’ on the neck of the bottle. These bottles and cans are found in Exhibits GRB 6, GRB 7, WLM 5 and NRS 7.
The first respondent says, and has said for some time, that it was not and is not responsible for these importations. Notwithstanding this, it has proffered undertakings to the Court, in the ‘Second Amended Permanent Undertaking by First Respondent’ filed in Court on 11 September 2001, which are in the following terms, in so far as they deal with the first label bottles and cans:
1.The first respondent hereby permanently undertakes to the Court, without admissions and subject to paragraph 2 below, that it will not, whether by itself, its servants and agents, without the licence of the applicant, while the registrations of Australian Registered Trade Marks Nos 163033 and 36684, being the trade marks ‘Budweiser’ and ‘Budweiser, King of Beers’ respectively in class 32, are valid
(a)export to Australia or sell, offer for sale, distribute, promote or advertise in Australia, the ‘First Label Beer’ as defined in paragraphs 13(a) and (b) and 16 of the Second Further Amended Statement of Claim filed herein, being beer marketed under the mark ‘Budweiser Budvar’, or any point of sale or other promotional materials to be used in marketing the First Label Beer; or
(b)knowingly assist or authorise any person to import the First Label Beer into Australia or to sell, offer for sale, distribute, promote or advertise such beer in Australia.
2.Save that, in relation to its supply to its authorised distributor from time to time, of the Second Label Beer as defined in paragraphs 13 and 16 of the Second Further Amended Statement of Claim, it will continue to provide to its authorised distributor from time to time solely for the use of the authorised distributor internally in its business and not for the use of any third party
(a)catalogues of point of sale materials relating to the first respondent’s products substantially similar to the catalogue a copy of which is Exhibit TH 12 to the affidavit of Thomas Hraba sworn 5 August 1999;
(b)invoices in the form of the invoice of a copy of which is Exhibit TH 7 to the affidavit of Thomas Hraba sworn 5 August 1999, which have printed in the border of the document the words ‘Budweiser Budvar’ and which display the name of the first respondent as ‘Budweiser Budvar National Enterprise’.
Undertaking 1 is sufficient to remove from the proceedings the substantive claim for injunctive relief against the first respondent based on the TM Act, the TP Act and the law of passing-off. No damages and no account are or is sought by the applicant in relation to the first label bottles and cans, as I understand the case as pressed.
However, the first label bottles and cans remained in the proceedings in four respects. First, the applicant maintained to the end that the first respondent was responsible for the importation of these goods. This responsibility was said to be based on its authorisation of whoever did sell the goods into Australia. The authorisation of the importation was specifically pleaded in para 16A of the Statement of Claim. This was said to be relevant for two reasons: costs and the question of intention. Whilst the parties have asked me to leave costs to be dealt with by agreement (if possible) after publication of these reasons, I understood from what was said before cross-examination of the witnesses began that the parties wanted this issue determined as a matter relevant, amongst other things, to the question of costs. That was also the understanding of Mr Yates SC, senior counsel for the first respondent. There was some discussion with Mr Catterns QC, senior counsel for the applicant about this in the context of the address. In written submissions, the applicant asked me not to deal with the first respondent’s involvement (or lack thereof) in relation to the first label. It was said that there had not been cross-examination of Mr Hraba about the topic, which would have occurred had the matter been in issue. I made plain at the time of this discussion that the first respondent’s involvement (or lack thereof) in the importation was an issue before me. At the time of this discussion Mr Hraba had returned to the Czech Republic. No application to recall him was made. It is appropriate that I deal with the matter as a relevant consideration for the parties to take into account (or for me to take into account, failing agreement) as to costs.
Secondly, it is necessary to deal with the matter in relation to what was referred to as ‘intention’. The chief executive of the first respondent gave evidence. He was cross-examined. It was put to me that, in a number of respects, I should not accept his evidence and that he was seeking to mislead the Court in his affidavit. Allied to these matters, with which I will deal in due course, was the submission that the first respondent had set out to appropriate the reputation and goodwill of the applicant in a way, it was submitted, that should lead me to conclude that the first respondent’s conduct would be adequately summarised by a passage from the reasons for judgment of Dixon J and McTiernan J in Australian Woollen Mills Ltd v F S Walton & Co Ltd (1937) 58 CLR 641 at 657:
… 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.
As part of these allegations, it was put that by authorising the importation of the first label goods, the first respondent was sensitising the market to the Czech product.
These are serious allegations, which demand to be put at rest, one way or the other.
For these reasons, the question of the involvement (or lack thereof) of the first respondent is an issue and is dealt with below.
The third residual aspect of the first label bottles and cans arises from the amended cross-claim of the first respondent. In the cross-claim complaint is made as to what are claimed to have been the unjustified threats of infringement by the letters of the solicitors for the applicant. As part of the justification for those letters, the applicant (as cross-respondent) points to the fact that the importation and sale of the first label bottles and cans involved infringement of its trade marks. Thus, the applicant said that I need to deal with this question in the context of the cross-claim.
Fourthly, and returning to the undertakings referred to in [92] above, it will also be necessary to consider the legitimacy of the qualification contained in paragraph 2 thereof. The first respondent wishes to send catalogues to its authorised distributor or distributors (I would take the singular ‘distributor’ to cover possibly more than one) from time to time, for ‘internal use in its business’ and to send invoices in a particular form. These documents contain wording of a kind used on the first label bottles and cans. The applicant opposes this qualification and, indeed, submits that orders should be made enjoining such conduct. Paragraph 16A of the version of the Statement of Claim filed in Court on 12 September 2001, and which paragraph is relevantly denied, alleges that the first respondent, amongst other things, advertised or promoted or authorised the advertisement or promotion of the first label beer in Australia and paragraph 25 pleads the continuing threat to so infringe. I will deal with the materials referred to in paragraph 2 of the undertaking in due course. There may also arise the question of wider restraint beyond these two examples of materials, but any such debate can occur in the course of discussion of relief, the formulation of which both parties have requested abide the consideration of my reasons.
The above disposes of the issues concerning the first label bottles and cans of the first respondent.
The second trade mark case was, with some qualification, fought to the end. This covered what was referred to as the ‘second label’ beer, as pleaded and particularised in and under para 13(c) of the Statement of Claim. There were a number of versions of the labels described as ‘second label’.
The first of these labels, which the first respondent exported to Australia until May 1998, is found in Exhibit GRB 11 (on a bottle) and in Exhibit TH 10 (as a black and white reproduction). Exhibit TH 10 is set out at [122] below. Changes were made to the label and the first respondent then exported to Australia beer in bottles as found in Exhibit GRB 12 (a bottle) and Exhibit TH 11 (a black and white reproduction of the label). Exhibit TH 11 is set out at [124] below. The third version of the second label is found in Exhibit TH 101 (see [126] below). The first respondent has not exported any beer to Australia under this label. This litigation intervened. However, it is the label presently intended to be used for export to Australia. There are a number of immaterial differences in these three forms. The material variation was on the lower coloured strip (the dark strip on the black and white reproduction). The pre-May 1998 bottle had ‘Budweiser Budvar’ and ‘national enterprise’ on two lines, and the former phrase was in larger print than the latter. Each of Exhibits TH 11 and TH 101 had ‘Budweiser Budvar’, National Corporation’ on one line and in smaller print than ‘Budweiser Budvar’ in Exhibit TH 10.
Paragraph 3 of the ‘Second Amended Permanent Undertaking By First Respondent’ contained a further undertaking dealing with the contents of the coloured strip on the front label. That undertaking was as follows:
3.The First Respondent hereby permanently undertakes to the Court, without admissions, whether by itself, its servants or agents that it:
(a)shall not export to Australia or sell, offer for sale, distribute, promote or advertise in Australia beer displaying a label with the name of the First Respondent over two lines; and
(b)shall only export to Australia or sell, offer for sale, distribute, promote or advertise in Australia beer displaying a label with one of the First Respondent’s registered names as recorded in exhibit HL-8, represented on one line and in the type size shown with respect to ‘BUDWEISER BUDVAR, NATIONAL CORPORATION’ in exhibit TH-101 to the affidavit of Tomás Hraba sworn 27 July 2001 filed 6 August 2001.
Subparagraph 3(a) deals with the organisation of the words on the strip such that they will be in one line. Subparagraph 3(b) deals with the size of the print on that one line. The names recorded in Exhibit HL 8 are ‘Budějovický Budvar, národní podnik’, ‘Budweiser Budvar, National Corporation’ and ‘Budweiser Budvar, Entreprise Nationale’. In effect, the first respondent undertakes not to export to Australia bottles with labels as in Exhibits GRB 11 and TH 10; but it does not undertake to limit the use of its name to the Czech version, ‘Budějovický Budvar, národní podnik’.
The trade mark case considering the second label has a number of aspects. First, was the label on Exhibits GRB 11 and TH 10 an infringement? This involves the following questions:
(a)Whether the phrase ‘Budějovický Budvar’ on the neck seal and front and back white labels (avowedly used as a trademark) was substantially identical with, or deceptively similar to, any of the applicant’s marks.
(b)If, contrary to the submission of the first respondent, the word ‘Budějovický’ was to be looked at as trade mark use, separately from the word ‘Budvar’, whether that word was used in good faith by the respondent to indicate geographical origin for the purposes of para 122(1)(b)(i).
(c)Whether the phrase ‘Budweiser Budvar’ on the coloured strip was trade mark use.
Secondly, the trade mark case concerning the post-May 1998 labels, Exhibits GRB 12, TH 11 (as exported) and TH 101 (as proposed to be exported) is the same as (a), (b) and (c) above, with one additional issue. If the phrase ‘Budweiser Budvar’ on the strip is trade mark use, a defence under para 122(1)(a)(i) in relation to these later labels is propounded, to the effect that the phrase is used as part of the corporate name of the first respondent. The first respondent now has three official corporate names, as set out in Exhibit HL 8 and referred to in [66] above, one in Czech, one in English and one in French. Exhibits GRB 12, TH 11 and TH 101 have the official English language name on the label. This defence is not propounded in respect of the pre-May 1998 label as the words there used ‘Budweiser Budvar, National Enterprise’ did not comprise an official name of the first respondent under any version.
In the light of paragraph 3 of the undertaking, the applicant’s claim for injunctive relief was directed, in effect, to labels of the kind found in Exhibit TH 101.
It is necessary to assess whether the pre-May 1998 labels (Exhibits GRB 11 and TH 10) involved an infringement, not for the purpose of establishing the entitlement to damages or an account of profits which, as I understand the case as pressed, are not claimed, but to assess whether the threats made by the solicitors for the applicant, about which complaint is made in the cross-claim, were justified.
The conduct in respect of which complaint is made under the TM Act also forms the foundation for claims that the first respondent has engaged in, and proposes, unless restrained, to engage in, conduct which is, and would be, in contravention of s 52 and paras 53(c) and (d) of the TP Act, and which amounted, and would, amount to passing-off.
Submissions were filed in relation to these latter claims under the compendious heading ‘s52/passing off’. It was not suggested by either party that I need go beyond the application of s 52 adequately to deal with these matters.
Orders were sought to the effect that the first respondent withdraw or cancel trade mark applications it has made for the mark ‘Budějovický Budvar’, with and without a device. The claim for those orders was not pressed. The applicant will pursue its opposition to those
applications in the normal way.
I should add two things. First, as to the infringement action, TP Act and passing-off claims, it is the labels in question and the marks thereon with which I am dealing. I am not dealing with any other use of the words ‘Budějovický’ or ‘Budvar’. Secondly, save to the extent of the stationery and catalogues dealt with in paragraph 2 of the undertakings (see [92] above), I am not called on to deal with other conduct which may or may not be something about which the applicant might want to complain. For instance, the downloaded contents of the first respondent’s website was tendered (Exhibit K). The tender of this was objected to on the grounds of relevance. The tender was justified on the basis of credit and as further evidence relevant to a conclusion that the first respondent intends Australian consumers to perceive some association between the applicant’s product and the first respondent’s product. Exhibit K contains various references to ‘Budweiser Budvar’ as well as a variety of other information. The rear label on Exhibit TH 101 gives the website address. However, there has not been pleaded or agitated before me, the question whether this site, and any invitation to it is in some way a legal wrong in this country, whether by reference to the TM Act, the TP Act or general law. No questions of the kind dealt with by Jacob J in Euromarket Designs Inc v Peters & Anor [2001] FSR 288 were raised in the proceedings.
the question of the importation into Australia of beer labelled ‘Budweiser Budvar’
It is clear that prior to the institution of these proceedings some beer manufactured and sold (somewhere) by the first respondent and labelled ‘Budweiser Budvar’ and ‘Budweiser Budbräu’ entered Australia and was sold here.
The first respondent claims not to have been responsible for the importation. Nevertheless, without admissions, it has proffered undertakings to the Court in the form to which I have referred ([92] above).
The satisfaction of the requirements of good faith is not concluded by a conclusion of lack of fraud or lack of conscious dishonesty: Johnson & Johnson v Sterling Pharmaceuticals, supra at 355-56 per Gummow J, with whom Lockhart J agreed on this point. In Adrema Ltd v Adrema-Werke GmbH [1958] RPC 323, 334, in a passage referred to with approval by Gummow J in Johnson & Johnson v Sterling Pharmaceuticals, supra, Danckwerts J said at 334:
I think that the Defendants knew that such use was likely to cause confusion, and they were determined to make use of the goodwill in connection with the machines which was associated with the word ‘Adrema’. It may be that the German Company resented the loss of the trade marks and the claim that the goodwill in the United Kingdom associated with the name ‘Adrema’ was the property of an English Company which they had formed and of which they had lost control as a result of the war. But, in my view, these motives do not justify what the Defendants have done or make that bona fide.
Whilst the findings which I have made do not quite reach what Danckwerts J said – that Mr Bocek and the first respondent knew that it was likely that confusion would result from the use of the company name ‘Budweiser Budvar’, they have, I think, the same consequence. This is especially so when one considers the undermining of the benefits and protections intended to be afforded to registration which would occur if the facts, as I have found them, were to be characterised as exhibiting good faith: cf Re Bali Brassiere Co Inc’s Registered Trade Mark and Berlei Ltd’s Application (1968) 118 CLR 128, 133. There was an element of risk taking (cf Riv-Oland Marble Co (Vic) Pty Ltd v Settef SpA (1988) 19 FCR 569, 573, per Bowen CJ), probably as much a function of the strongly felt claim of right to which I have referred as anything else, not entirely dissimilar to the feelings of the German company referred to by Danckwerts J in Adrema, supra at 334 (see [217] above), which is not sufficient to damn the conduct as dishonest or fraudulent, but which is sufficient to deny the conduct the blessing of the characterisation of good faith.
Mr Yates submitted that it is the use which must be in good faith, not the choice of name to use. Ordinarily this will be so; but where there are alternative names available to the party, I do not see why the choice of one over the other is not, or may not, as here, be part of the analysis of the question of use.
the effect of ‘Budweiser Budvar’ on ‘Budějovický Budvar’
I have earlier expressed my conclusion that none of the avowedly trade mark uses of ‘Budějovický Budvar’ on the white front and back labels and the neck seal is an infringement under s 120. That conclusion was expressed to be subject to the presence of what was on the orange and red strips on the front of the label.
The applicant submitted that, whether or not the use of ‘Budweiser Budvar’ on the coloured strip was trade mark use and whether or not s 122 provided a defence for the use of the word ‘Budweiser’ on the coloured strip, I could take into account the use of the word ‘Budweiser’ and the phrase ‘Budweiser Budvar’ on the coloured strip as part of the process of comparison of the marks ‘Budějovický Budvar’ on the white label with the registered marks.
I have already found that the use of ‘Budweiser Budvar’ was and is trade mark usage and is not saved by s 122. Within my reasons for coming to the conclusion that the word ‘Budweiser’ and the phrase ‘Budweiser Budvar’ was and were used, in part, as trade marks, was the fact that the word ‘Budweiser’ is a known trade mark of the applicant, that is the word has acquired a secondary meaning or a reputation in Australia as the mark of the applicant.
Questions now arise whether, in assessing whether the phrase ‘Budějovický Budvar’ so nearly resembles ‘Budweiser’ or ‘Bud’ that it is likely to deceive or cause confusion, I can place the phrase in the context of what appears on the coloured strip and, further, whether in so doing, I can take into account that the ‘Budweiser’ mark has a well known reputation.
First, it is necessary to return briefly to the nature of the comparison being undertaken (see [143] to [149] above). As Gummow J said in Wingate Marketing, supra at 128 the comparison is ‘between any normal use of the plaintiff’s mark comprised within the registration and that which the defendant actually does in the advertisement or an the goods in respect of which there is the alleged infringement, but ignoring any matter added to the allegedly infringing trade mark…’ The comparison is the registered mark (as recalled) with the mark (as used). The applicant submits that one does not take the mark, as used by the alleged infringer, and block out all that is around it, rather one can put it in its context in the label actually used. The first respondent says that one must restrict one’s comparison to the mark as used and not extend it to the mark in its surrounding context. That, Mr Yates says, is the province of the law of passing-off and s 52 of the TP Act.
It is appropriate to return to the terms of the TM Act. It is the use (s 120) of a sign (s 120) if it (that is the sign or impugned mark (s 10)) so nearly resembles that other trade mark that it is likely to cause confusion, that will amount to infringement. The statute directs one to the mark and its resemblance to the other mark. It does not direct attention to the use of the infringing mark: Wingate Marketing, supra at 103-105.
There is a fine distinction between, on the one hand, taking into account surrounding material in order to appreciate the meaning, effect and impression of a word, and, on the other hand, appreciating the meaning, effect and impression of a word and then using surrounding material or context to qualify it or add to the meaning or impression taken from the word. There is clear authority that disclaimers will be of no avail and are to be disregarded, as are questions of get-up, to the extent that they may say something about the true trade source: Wingate Marketing, supra 128-29; Mark Foys Ltd, supra 205; Koninklijke, supra at [9]. These are examples of words surrounding the mark, or get-up, adding to the meaning or effect of the mark, as already ascertained. But if the placement of a word or phrase proximate to the impugned mark gives content or context to the meaning or appearance of the impugned mark making it more likely that a viewer of the impugned mark will be caused to question whether the goods carrying the impugned mark are derived from the same source as those of the registered mark, that may not be impermissible.
However, I need not decide that question because, in my view, the word ‘Budweiser’ and the words ‘Budweiser Budvar’ on the strip does not, and do not, give meaning or context to the mark ‘Budějovický Budvar’ on the white label; rather, I think, each makes its own independent effect which is to be analysed by reference to its own usage – whether as trade mark use or within the context of the overall get-up and effect of the label for the purposes of an analysis under the TP Act and passing-off.
This makes it also unnecessary to deal with the question of the role of reputation in the comparison of trade marks gently touched by counsel: cf CA Henschke v Rosemount Estates Pty Ltd (2000) AIPC 91-640 at [43] to [52]; Coca Cola Company v All Fect, supra; Registrar of Trade Marks v Woolworths Ltd, supra; in respect of which see also Campomar, supra at [86].
the question of stationery and catalogues – the qualification to paragraph 2 of the undertaking
The stationery referred to in para 2(b) of the undertaking set out in [92] above, Exhibit TH7, uses on its border a repeated word arrangement: “BUD… BUDVAR… BUDWEISER… BUDWEISER BUDVAR… BUDWEISER BUDBRÄU…”. The stationery is not intended to be circulated amongst the public generally. It is only for use between the first respondent and its distributor.
The applicant’s marks are plainly used. Each is used as a trade mark on stationery in relation to goods in respect of which the trade mark is registered: In re ‘Thunderbird’ Trade Mark (1974) 48 ALJR 456, 459-60; Pioneer Electronic Corporation v Registrar of Trade Marks (1977) 17 ALR 43, 56 and 57; Shanahan op.cit. pp 21 and 338.
The use of ‘Bud’ and ‘Budweiser’ is plainly infringing. The use of ‘Budweiser Budvar’ and ‘Budweiser Budbräu’ is also infringing. As to the use of the single word ‘Budvar’ on the invoice, its context, immediately adjacent to ‘Bud’ and ‘Budweiser’ does direct attention to the first syllable ‘Bud’ such that it can be seen as part of one continuous trade mark use of ‘Bud’ and ‘Budweiser’ or their essential integer, ‘Bud’, and as such amounts to infringement also. I think the use of this invoice should be restrained.
The point of sale catalogue (Exhibit TH 12) is a large cardboard springback folder with replaceable pages inside. On the outside there are a number of prominent usages of the phrase ‘Budweiser Budvar’ on photographs of a bottle and a glass and otherwise on the cover. The usages are clearly as a trade mark on each occasion. In my view, they infringe, at least, the mark ‘Budweiser’. The contents of the catalogue contain numerous other uses of the phrase. My conclusions about each is the same. Each infringes. I see no reason why the first respondent should be allowed to distribute to its distributor from time to time in relation to the selling of its goods a catalogue containing infringing uses. I think the use of the catalogue should also be restrained.
PASSING-OFF AND THE TRADE PRACTICES ACT CLAIM
The parties approached the matter before me on the basis that a conclusion by reference to the application of s 52 of the TP Act would necessarily carry with it a conclusion in respect of paras 53(c) and (d) of the TP Act and under the law of passing-off.
The principles in relation to s 52 are found conveniently expressed in S & I Publishing Pty Ltd v Australian Surf Life Saver Pty Ltd (1998) 88 FCR 354; Equity Access Pty Ltd v Westpac Banking Corporation (1990) ATPR 40-994 at pp 50,950-951. See also Puxu, supra, and Campomar, supra.
The relevant class of persons by reference to which and whom the first respondent’s conduct must be judged is that of persons in Australia who sell, buy or drink beer and who may sell, buy or drink beer which is imported or is of a ‘specialty’ type. The advertising and promotion by the applicant of its beer has been directed in Australia to younger male drinkers of about 25 to 35 years or thereabouts. However, the advertising worldwide has not been so restricted and I do not think that the appropriate class or group to judge deception should be so limited.
It is necessary to identify in relation to such people why the misconception from the first respondent’s conduct has arisen or is likely to arise, if no injunctive relief be granted: Campomar, supra at [103].
The relevant date to consider the applicant’s reputation is the date at which the first respondent commenced the relevant conduct complained of: Cadbury-Schweppes Pty Ltd v Pub Squash Co Pty Ltd [1981] RPC 429, 494; [1980] 2 NSWLR 851, 861; Thai Wood Import and Export Co Ltd v Shuey Shing Pty Ltd (1989) 17 IPR 289, 302, that is 1997.
The impugned conduct must be judged as contemplating the effect of the conduct on reasonable members of the relevant class not displaying extreme or fanciful reactions, though including the astute and the gullible, the intelligent and the not so intelligent, the well-educated and the poorly educated: Puxu, supra at 199 per Gibbs CJ, Campomar, supra at [105]; Taco Company of Australia Inc v Taco Bell Pty Ltd (1982) 42 ALR 177, 202 per Deane J and Fitzgerald J.
It is a question of fact to be judged in all the circumstances as to whether the conduct of the first respondent engaged in, and threatened, is, or would be, misleading or deceptive or likely to mislead or deceive: S & I Publishing, supra at 363, Taco Bell, supra at 202, referred to with approval by the High Court in Campomar, supra at [100].
The first respondent was critical of the evidence concerning reputation led by the applicant. It certainly was the case that the deponents to the affidavits read by the applicant gave significant parts of their evidence, as it turned out, on a hearsay basis. But, in the end, in the light of the clarity of the agreement of Dr Beaton and Ms Strachan on the matter and the fact that most of the primary facts upon which the reputation was based were not seriously in issue, I am reasonably confident that the conclusions that I have reached about reputation earlier in these reasons accurately reflect the position.
As I have said, it appears to be the case that promotion has been to what might be described as the primary market, being males of 25 to 35 years, perhaps older, in the medium to upper socio-economic market. While this may be accurate, I do not think I should conclude that this is the only group in which ‘Budweiser’ and ‘Bud’ is likely to have a reputation or that it is the only group whose members might be looking at these products as part of a decision to buy a specialty or imported beer.
Likewise, the direction of the applicant’s promotion of such matters as ‘hipness’ and American culture referred to [25] above does not mean that only those people who associate or wish to associate with such values will be the persons who will be looking at these products in making a decision to buy a specialty or imported beer.
It is also fair to say that there was no attempt to prove through direct evidence that people were or would be misled. Given the sophistication of marketing research and the widespread use of ‘focus groups’ qualitatively to analyse products, it is legitimate for the first respondent to point to the absence of such material. I do not think that such evidence would necessarily be fanciful. However, I am not prepared to put too much weight on the absence of direct evidence in circumstances where the question ultimately, I think, comes down to one of impression and judgment. This is especially so in circumstances where both sides called highly experienced and articulate expert witnesses with long experience in marketing and promotion. There was evidence of a number of conversations between investigators and shop owners or attendants. I think that this evidence does little to show any confusion or deception likely to arise from these bottles. If anything, the evidence tended to prove the recognition, at least in the trade, of the different American and Czech products.
I do not intend any disrespect either to the carefully expressed views of Dr Beaton and Ms Strachan or to the careful and thoughtful submissions of counsel, but I do not propose to analyse exhaustively their evidence and the differences between them. I will, however, make some general comments. First, I benefited greatly, not only from their written evidence, but also from their cross-examination in the formulation of my thought processes. If I may say so, without disrespect to Dr Beaton, this was especially so in the cross-examination of Ms Strachan, who was always prepared to make appropriate concessions in the course of dialogue with counsel. Secondly, there are elements in the evidence of each of them which I find persuasive, to which I will come in a moment. Thirdly, I do not think that the answer to the questions posed by s 52 and the law of passing-off is answered by the conceptual and theoretical construct or approach put forward by Dr Beaton; though I think the notion that part of what is written on a label, if visually distinctive, can very easily provide the ‘hook’ upon which a consumer’s perceptions are hung, is persuasive. To this extent, I do not think that the degree of emphasis laid by Ms Strachan on the ‘Gestalt’ of the packaging provides the correct answer. Of course, overall get-up, feel or ‘Gestalt’ of a product is very important in brand and product differentiation; but I do not think that in any particular case that denies the importance of the existence and recognition of a particular word or syllable, if sufficiently clear and distinctive.
If the labelling of the bottles, whether Exhibit GRB 11 or GRB 12 or TH 101 did not have ‘Budweiser Budvar’ on the coloured strip I would conclude that, just as there was no likelihood of deception or confusion for the purposes of ss 120 and 10 of the TM Act, there was no misleading or deceptive conduct or passing-off. For the reasons I have already set out, I do not think the mark ‘Budějovický Budvar’ evokes ‘Budweiser’ or ‘Bud’ as it appears on the labels and neck seal. Further, the get-up of the first respondent’s product, its colour, style and Europeanness, all create and reinforce a product distinct from that of the applicant.
However, on the front label appears the word ‘Budweiser’. It is visible. It can be plainly seen from a number of feet. In Exhibits GRB 11 and TH 10, of course, the word ‘Budweiser’ could be seen from a greater distance than could the word appearing on Exhibits GRB 12, TH 11 and TH 101. In Exhibits GRB 11 and TH 10 ‘Budweiser’ is in clear white letters against a strong contrasting colour. Ms Strachan’s view was that the totality of the effect of the label, its Gestalt, was sufficiently strong as to overwhelm any effect of ‘Budweiser’ on the strip, or that people would not read or look at this part of the label. I do not agree. The word is tolerably well-known. It means or evokes the applicant’s beer. It is used on the front label. It tells the reader of an association with ‘Budweiser’. That the brewery is in the Czech Republic (as the smaller writing says) does not deny the association brought about by the word. The bottle may well be placed adjacent or near to the applicant’s beer in the specialty beer section of shops. I accept that perhaps not everyone looking at the bottle will take in this part of the label, but a significant number, I think, will. For them, this is the hook which associates the first respondent’s beer with the applicant’s. I do not think that the balance of the get-up or information on the bottle would prevent the assumption being created in a consumer that this was a European version of the applicant’s beer. Whilst this would be contrary to the applicant’s promotion of the values referred to at [25], it would be a result, I think, of the usage of ‘Budweiser’ with its clear associations with the applicant, and could be perceived as a product or brand extension.
Even if I had been of the view that the first respondent had made out a case under para 122(1)(a)(i) of the TM Act, my views as to s 52 and passing-off are such that I would be prepared to grant relief under these heads. In that circumstance, it may have been appropriate to make orders with the qualifying effect referred to by Upjohn LJ in Parker-Knoll Ltd v Knoll International Britain (Furniture & Textiles) Ltd [1961] RPC 346, 362.
It was legitimately put by the first respondent that from evidence of Mr Noonan and Mr Gerendasi it could be said that the trade was not confused or misled by these bottles; that the trade saw a difference between the American and the Czech ‘Budweiser’ as different products and saw that they came from different sources. Also, it very well may be that consumers with a European heritage would not be misled. These were Mr Gerendasi’s customers. However, I think that for many people in the class of consumers purchasing imported or specialty beer, which I have identified, the clear association of ‘Budweiser’ with the maker of the applicant’s beer could well lead some of them to think that there is an association between the first respondent’s beer and the applicant’s beer even though, otherwise, the product is quite differently got up.
THE CROSS-CLAIM
The first respondent as first cross-claimant complains about the threats of legal proceedings made by the solicitors for the applicant that there had been trade mark infringement.
There were a significant number of letters. They are particularised under paragraphs 3 and 8 of the amended cross-claim filed in August 2001.
Many of the letters relate to beer sold under the first label, ‘Budweiser Budvar’, not the label with which these reasons are principally concerned: ‘Budějovický Budvar’. The first label would, subject to para 122(1)(b)(i), have plainly infringed the applicant’s trade mark. I doubt whether para 122(1)(b)(i) could be successfully invoked in the light of the reputation of the applicant and the lack of any substantial local linguistic knowledge that it is an adjective in German, meaning ‘of or from Budweis’. No debate took place on the application of para 122(1)(b)(i) to ‘Budweiser’. No reliance was made on this paragraph in the defence.
Whilst I have found that the first respondent was not responsible for the importation into Australia of the first labelled beer – the ‘Budweiser Budvar’ beer – I do not think that there could be any basis to criticise the applicant for the threats made about this beer, to the extent that they were asking people who were selling it to give undertakings not to sell it in Australia.
If it is necessary to find that the trade mark use of ‘Budweiser Budvar’ (not ‘Budějovický Budvar’) was infringement I would do so. The first respondent recognised and recognises the applicant’s trade mark in this country. I have difficulty in seeing how it could be successfully put that ‘Budweiser’ was a use in good faith to describe in Australia the geographical origin of the first respondent’s product. Further, even if para 122(1)(b)(i) did apply, I would have little hesitation in restraining its use as a contravention of s 52 of the TP Act.
The letters were based not only on alleged trade mark infringement, but also passing-off and s 52.
The letters which dealt with the ‘Budějovický Budvar’ label complained (wrongly in my view) that these words were substantially identical with, or deceptively similar to, the applicant’s marks; but, they also complained (rightly in my view) about the use of ‘Budweiser Budvar’ on the coloured strip and of the proximity, on the front label, to ‘Budějovický Budvar’.
In these circumstances, whilst the width of some of the assertions or opinions in the letters was wider than my findings, that does not affect the substantive complaint about the letters by the cross-claimant. That complaint was that there was no entitlement to seek these undertakings from people and to interfere with the first respondent’s business. On the findings I have made, the letters were justified in relation to both the first and second labels.
I do not propose to parse and analyse each letter. In so far as the letters deal with the ‘Budějovický Budvar’ product, there is a statement that the proximity of ‘Budějovický Budvar’ to ‘Budweiser’ was calculated to deceive and confuse. However, immediately after this paragraph is a statement of the advice that had been provided by Sprusons to the applicant. It was not suggested that Sprusons had not provided advice to the following substantive effect reflected in the letters:
-The mark ‘BUDĚJOVICKÝ BUDVAR’ is a mark substantially identical with or deceptively similar to our client’s ‘BUDWEISER’ and ‘BUD’ trade marks;
-the importation, offering for sale and sale of the (New) Offending Products in Australia is calculated to and will deceive members of the trade and members of the public and will pass off those products as products manufactured by or on behalf of our client;
-the importation, offering for sale and sale of the (New) Offending Products in Australia will infringe one or more of the Trade Mark Registrations (as defined in our letter to you dated 17 February 1997) including the use of the reference ‘BUDWEISER BUDVAR national enterprise’ on the front labelling of the Offending Products:
-your conduct (and that of persons aiding, abetting, counselling or procuring that conduct) in importing, offering for sale and selling the (New) Offending Products in Australia will constitute a breach of Section 52 and 53 of Trade Practices Act 1974 in that it is conduct which is misleading or deceptive or is likely to mislead or deceive members of the Australian public into believing that the (New) Offending Products are products manufactured by or on behalf of our client, or with the licence, sponsorship or approval of our client: and
-your conduct in importing, offering for sale and selling the Offending Products (being imported food products) without the Importer’s Labels in Australia will constitute an offence under Section 13 of the Food Act, 1989.
The letter expressly and impliedly alleges an infringement of the TM Act. I have found that there was such an infringement. The letter sets out advice which, in part, I find to be correct and, in part, incorrect. That, however, does not make the statement of what the advice was misleading or deceptive.
There was an express and implied threat of legal action for infringement. There was an infringement, though not entirely for the reasons contemplated by the advice. Thus, it cannot be said that there was no ground for making the threat. A claim under s 129 of the TM Act has not been made out.
To the extent that it might be said that there was an incorrect assertion as to the reasons for the applicant’s stated position of infringement and misleading or deceptive conduct or passing-off, in the light of the whole content of the letters and the accurate statement of the advice given by the solicitors, I do not think that the letters were misleading or deceptive or likely to mislead or deceive and so I conclude that they were not a contravention of s 52 of the TP Act.
ORDERS
The parties asked me to hand down my reasons, indicating the nature of the orders to be made. I am content to do this. These reasons, I think, conform to that request. Any debate about the appropriate form of the orders can take place on a date to be fixed. Should either party be of the view that I have overlooked any contention, I would expect this to be taken up in the debate about the orders. The orders to be agreed should include an order dealing with the safe custody of all exhibits by one or both solicitors. Numerous bottles and other physical exhibits were placed in evidence. It would be preferable for the solicitors to store these exhibits safely.
I would like to express my thanks to solicitors and counsel, senior and junior, for the efficient and helpful manner in which the case was conducted.
I certify that the preceding two hundred and sixty two (262) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Allsop. Associate:
Dated: 5 April 2002
Counsel for the Applicant: Mr D K Catterns QC Ms S J Goddard Solicitor for the Applicant: Sprusons Counsel for the Respondent: Mr D M Yates SC Ms A Bowne Solicitor for the Respondent: Hazan Hollander Dates of Hearing: 4, 5, 6, 10, 11, 12, 13 and 14 September 2001 Last Submissions Received: 27 September 2001 Date of Judgment: 5 April 2002
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