Berlei Hestia Industries Ltd v The Bali Company Inc

[1973] HCA 43

HIGH COURT OF AUSTRALIA

. Barwick C.J., McTiernan, Stephen and Mason JJ.

BERLEI HESTIA INDUSTRIES LTD. v. BALI CO. INC.

(1973) 129 CLR 353

17 October 1973

Trade Marks

Trade Marks—Mark registered seven years—Rectification of register by expunging mark—"Wrongly remaining" on register—"Likely to deceive or cause confusion"—Trade Marks Act 1955-1966 (Cth), ss. 22 (1) (b), 28, 61*. *Section 22 (1) of the Trades Marks Act 1955-1966 (Cth) provides: "Subject to this Act, the High Court may, on the application of a person aggrieved or of the Registrar, order the rectification of the Register—... (b) by the expunging or amendment of an entry wrongly made in or remaining in the Register." Section 28 provides: "A mark—(a) the use of which would be likely to deceive or cause confusion ... shall not be registered as a trade mark." Section 61 provides: "In legal proceedings relating to a trade mark registered in Part A of the Register (including applications under section twenty-two of this Act), the original registration of the trade mark under this Act shall, after the expiration of seven years from the date of the original registration, be taken to be valid in all respects, unless it is shown—... (b) that the trade mark offends against the provisions of section twenty-eight of this Act ..."

Decisions

October 17.
The following written judgments were delivered:-
BARWICK C.J. The appellant is the proprietor of a mark BERLEI registered in the Register of Trade Marks since 1917 and still current in respect of articles of clothing. It sought an order expunging from the Register of Trade Marks an entry BALI-BRA as a mark of the respondent. That mark has been on the Register in Pt A in respect of brassieres since 1947, its registration mean time having been renewed so as to be now effective until 1975. (at p354)

The appellant's application was heard at first instance by Windeyer J. who, after hearing evidence, refused the application (1968) 118 CLR 128 . (at p354)

3. The respondent's mark having been on the Register for more than seven years, its original registration is directed by s. 61 of the Trade Marks Act 1955-1966 ("the Act") to be taken to be valid in all respects unless it is shown (a) that the original registration was obtained by fraud, (b) that the trade mark offends against the provisions of s. 28 of the Act, or (c) that the trade mark was not at the commencement of the proceedings distinctive of the goods of the registered proprietor. (at p354)

4. There was no suggestion in the case that the original registration of the mark was obtained by fraud or that the trade mark was not at the commencement of the proceedings distinctive of the brassieres of the respondent. However, it is said that the mark ought not to have been registered because its use would be likely to deceive or cause confusion, this being the provision of s. 28 of the Act which it is claimed that the mark offends within the meaning of s. 61 (1) (b). (at p354)

5. I have no need to recite the facts of the matter as these are very fully and very carefully set out in his Honour's reasons for judgment (1968) 118 CLR 128 . (at p355)

6. The appellant's evidence consisted entirely of the response of shop attendants to trap orders given on behalf of the appellant and does not, in my opinion, bring any conviction to my mind that there was in truth any actual confusion in the use of the mark. Some part of the reason for that conclusion is that the operatives in retail stores who were asked for goods did not handle both lines of goods and that the type of goods in which the parties respectively trade are and in the past have been at somewhat different levels both of price and of quality. (at p355)

7. But the question whether a mark is likely to confuse is not limited to whether there has been actual confusion in the use of the mark. The question is whether its use is likely to confuse. In answering that question, the capacity of the respondent to apply its mark to merchandise of the same kind as that sold by the appellant must be borne in mind even though as yet it has not done so. The answer to the question cannot be confined to the circumstances of the trade presently obtaining. In this connexion, the appellant's case turns entirely, in my opinion, upon the phonetic similarity of the two words when pronounced in the ordinary course of the retail trade. There would be no likelihood of visual confusion between the two marks. (at p355)

8. Having considered the evidence proffered by the appellant to establish that confusion actually occurred in the retail trade between the appellant's mark and that of the respondent and the argument as to the phonetic similarity of the two words, Windeyer J. said:

"I need say no more of s. 28 (a) than that I am not satisfied that the use of the Bali mark is likely to deceive or cause confusion; and that the better it becomes known, the more Bali goods are sold, in the more shops, the less risk I think

there will be of any confusion." (1968) 118 CLR, at p 140 (at p355)

9. The appellant and the respondent have been in litigation in the Supreme Court of Judicature in England since 1960. Two matters have been in suit; first, the opposition by the appellant to an application by the respondent to register a mark BALI and, second, an application by the appellant to expunge a mark "Bali" in script letters set in a circle with a woman's figure. This mark had been registered by the respondent in England in 1938. Both matters as litigated by the parties raised the same question, namely, whether there was a likelihood of the confusion in the use of the mark BALI with the appellant's mark BERLEI. (at p356)

10. At the time his Honour decided the matter between the parties in this Court, the litigation between them in England had reached the Court of Appeal which had decided by majority that the appellant's opposition and application to expunge should both fail (1968) RPC 426 . However, since his Honour's decision, that litigation has reached the House of Lords. The House unanimously reversed the decision of the Court of Appeal, allowing the appellant's opposition to the registration of the mark BALI and granting an order to expunge the mark of the respondent as registered in 1938 (1969) RPC 472; (1969) 1 WLR 1306; (1969) 2 All ER 812 . The ground of the decision of the House was that the respondent's mark was likely to deceive or cause confusion, this being the basis of opposition to the registration of the mark BALI and the basis for the exercise of discretion to rectify the Register by expunging the earlier mark. (at p356)

11. The only matter of principle involved in the litigation in England and here is the construction of s. 61 (1) of the Act and of its English counterpart, s. 13 (1) of the Trade Marks Act 1938 (U.K.). The question in that connexion is whether s. 61 (1) (b) directs an inquiry as to whether the mark ought not have been registered because, at the time of its registration its use then offended against the provisions of s. 28 in its likelihood of deception or confusion or whether it must be shown the mark at the time of the application to rectify the Register offends against the provisions of that section because its use at that time and thereafter is likely to deceive or confuse. On this question, I would be of the same mind as Lord Diplock, who, as Diplock L.J. thought that:

"The contrast between the past tense in paragraph (a) of s. 13 (1) 'was obtained' and the present tense in par. (b) 'offends' and the change from the words 'that registration' ... in par. (a) to 'the trade mark' in par. (b), appear to me to point strongly to the date of proceedings being the proper date at which to determine whether the use of the mark would be likely to cause confusion". (1968) RPC, at p 434 (at p356)

12. Windeyer J. favoured the same construction. But I do not think that the acceptance or rejection of this construction of the paragraph of s. 61 makes any difference to the conclusion of fact which should be drawn. If it is borne in mind that the respondent may change the nature of its business and if it be accepted that the phonetic similarity of the two words when spoken is sufficient to warrant the conclusion that confusion is likely in the use of the mark, then it seems to me that it does not matter whether one considers its use at the date of the original registration or at the date of the application to rectify the Register. The answer to the question whether the use of the mark would have been likely to cause confusion will be the same as the answer to the question whether the use of the mark now is likely to cause confusion. I am thus presented with a somewhat unique situation in which the precise question of fact which will be decisive of this appeal has been decided by the House of Lords in favour of the appellant, there being no matter of principle involved in the case which can have any effect on the resolution of that question of fact. (at p357)

13. The House in deciding the matter before it had a decision of the primary tribunal in favour of the appellant which had been affirmed by the High Court. It saw no reason to differ from this conclusion and overruled the contrary view expressed by the Court of Appeal. In the case in this Court the primary tribunal has decided the question in favour of the respondent. The question here is whether his Honour was in error in his decision. If the matter could be considered by me as in the first instance I would be far from convinced myself that there was such a likelihood of confusion in the fair and proper use of the respondent's mark in the course of the retail trade, that the long standing mark of the respondent should be expunged. I would not feel so impressed by the suggested similarity in pronunciation as to found a likelihood of confusion upon that clause. Further, on appeal I would be disinclined to hold that Windeyer J.'s conclusion of fact was erroneous. 14. However, not only is the likelihood or unlikelihood of deception or confusion a question of fact but it is very much a matter of impression. The fact has been decided by the English courts in litigation between the same parties in circumstances of trade not radically dissimilar to those appertaining in the trade in the subject goods in Australia. (at p357)

15. After consideration I have reached the conclusion that in the peculiar circumstances of the case I should accept the conclusion of fact which the House of Lords has been prepared to affirm. In addition notwithstanding the inclination of my mind I do not feel so strongly to the contrary of the finding of that House that I would feel warranted in the circumstances in dissenting from that conclusion. Accepting that conclusion I am of opinion that the appeal should be allowed and the application of the appellant granted. (at p357)

McTIERNAN J. This is an appeal from the order of Windeyer J. who dismissed an application based upon s. 22 (1) (b) of the Trade Marks Act 1955-1966 (Cth) (1968) 118 CLR 128 . The appellant, as applicant, on 18th November 1966 made an application to the High Court for an order to rectify Pt A of the Register of Trade Marks by expunging BALI-BRA, trade mark, no. 90,078. This mark was registered in 1947 by the respondent, Bali Brassiere Co. Inc. The registration has been renewed up to 29th January 1975. The mark is registered in respect of brassieres. The appellant, Berlei Hestia Industries Ltd., formerly Berlei Ltd., is registered proprietor of BERLEI, trade mark no. A 21,931. The BERLEI mark was first registered in 1917 and that original registration has been renewed up to 28th August 1973. This mark is registered in respect of articles of clothing. (at p358)

2. Windeyer J. refused the application on the ground, inter alia, that the BALI-BRA mark did not lack distinctiveness and did not actually deceive or cause confusion within the meaning of s. 28 of the Trade Marks Act 1955-1966 (Cth). (at p358)

3. The evidence is too long for condensation into a proper summary. I incline strongly to the opinion that the proof of the appellant's allegations upon which it bases its claim for rectification of the Register of Trade Marks preponderates against the opposing evidence upon which the respondent relies. (at p358)

4. I therefore concur in the conclusion of the Chief Justice that the appeal be allowed and the application of the appellant be granted. (at p358)

STEPHEN J. In my opinion this appeal should be allowed. Here there are two marks which are phonetically alike and there is, I believe, a likelihood of confusion in the minds of the public should the respondent apply its mark to brassieres similar to those manufactured by the appellant; I agree with all that is said by Mason J. on this score. I am, of course, influenced in arriving at this conclusion by the decision of their Lordships in Berlei (U.K.) Ltd. v. Bali Brassiere Co. Inc. (1969) RPC 472; (1969) 1 WLR 1306; (1969) 2 All ER 812 which, as Barwick C.J. has pointed out, involved the same question of fact which is presently before this Court for decision. (at p358)

2. I would therefore grant the appellant's application that the respondent's mark be expunged, allowing the appeal accordingly. (at p358)

MASON J. The appellant is the proprietor of the trade mark "BERLEI" registered in respect of articles of clothing in 1917 and now registered under Pt A of the Register for a period of fourteen years from 28th August 1959. The word "Berlei" has for many years been used by the appellant in Australia to denote goods of its manufacture, in particular brassieres, which have been been sold ordinarily by retail shops in very large numbers, with small cloth labels attached to them on which the word appears. (at p359)

2. The respondent is a company incorporated in the United States of America. Its trade mark BALI-BRA, which the appellant seeks to have removed from the register, was registered in 1947. It is currently registered in Pt A in respect of brassieres. It has been renewed and is now current for fourteen years from 29th January 1961. The respondent has applied the trade mark to brassieres of its manufacture. Its product is not as well known in Australia as are those of the appellant. The respondent's product has been sold in large numbers in the United States (where it is well known) and other parts of the world, but it was not imported for sale here until 1960. Since 1966 or 1967 the respondent's brassieres have been sold in Sydney and Melbourne in large department stores known as David Jones', Farmer's and Myer's, and possibly elsewhere. The sales have not approached the sales of Berlei brassieres which are made in a greater range of sizes and styles. The Berlei brassieres are cheaper and more widely sold whereas the Bali articles are more in the nature of a specialty line. (at p359)

3. Windeyer J. dismissed the appellant's application to have the Register rectified by expunging from it the entry BALI-BRA. The central ground for his Honour's conclusion was that the appellant had not established that the use of the respondent's trade mark was likely to deceive or cause confusion. His Honour had before him the decision of the Court of Appeal in Re "Bali" Trade Mark (1968) RPC 426 on facts which were essentially similar. Although an appeal was then pending to the House of Lords, his Honour gave judgment as the parties desired him to do so, without awaiting the result of the appeal. As it happened, the appeal was successful and the decision of the Court of Appeal was reversed (Berlei (U.K.) Ltd. v. Bali Brassiere Co. Inc. (1969) RPC 472; (1969) 1 WLR 1306; (1969) 2 All ER 812 ). (at p359)

4. The question for decision is whether on the evidence Windeyer J. should have held that the appellant had shown that the use of the respondent's trade mark "would be likely to deceive or cause confusion" within the meaning of s. 28 (a) of the Trade Marks Act 1955-1966 and that it should therefore be expunged under s. 22 (1) (b). To show how the question for decision arises in this form it is necessary to refer to the statutory provisions. (at p359)

5. By s. 22 (1) (b) the Court is empowered to order rectification of the register by expunging an entry "wrongly made in or remaining in" the register. An entry is "wrongly made" in the register if at the time of its registration it "would be likely to deceive or cause confusion" within the meaning of s. 28 (a) for the prohibition contained in that section clearly applies to the original registration of a trade mark. Whether the prohibition also relates to the continuance in the register of a trade mark which offends against the section has been a matter of some debate; it is a question closely connected with the interpretation to be given to s. 61 (1) which creates a conclusive presumption of validity of "the original registration" of a trade mark registered in Pt A after the expiration of seven years from the date of the original registration unless one of the circumstances mentioned in pars. (a), (b) or (c) is shown to exist. The circumstances mentioned in par. (b) is "that the trade mark offends against the provisions of" s. 28. (at p360)

6. Despite earlier authority to the contrary, it may now be accepted that a trade mark "offends against" s. 11 of the Trade Marks Act, 1938 (U.K.) (the counterpart of our s. 28) within the meaning of s. 13 of the 1938 Act (the counterpart of our s. 61) if it would be likely to deceive or cause confusion at the date when application is made to rectify the register (see Re "Bali" Trade Mark (1968) RPC, at p 434 , per Diplock L.J. (as he then was); General Electric Co. (of U.S.A.) v. General Electric Co. Ltd. (1972) 1 WLR 729, at p 749; (1972) 2 All ER 507, at p 525 , per Lord Diplock). A similar, although slightly different, view was taken by Windeyer J. in the present case. His Honour thought that a mark "offends" against s. 28 "at the date when its validity has to be determined", that is, "when the court comes to make or refuse the order for rectification" (1968) 118 CLR, at p 134 . The difference between the accepted English view and that expressed by Windeyer J. is, in the light of the evidence, of no importance in the present case. What is of importance is that for persuasive reasons which need not be reiterated the view that s. 28 (s. 11 of the 1938 Act) was merely a prohibition against original registration was rejected. Although there are differences in the expression of the United Kingdom and Australian provisions, they are not of such significance as to justify a departure from the conclusion, conformably with what has been said, that the words "shall not be registered" in s. 28 refer not only to the act of making an entry in the register but also to permitting the continuance of the entry of a trade mark in the register. (at p360)

7. It was suggested for the respondent that s. 61 confers on a trade mark, after the expiration of seven years from its original registration, an immunity from expungement on any ground which might have operated as a bar to the original registration. The power to rectify given by s. 22, prefaced by the words "subject to this Act", must be read, so it was said, as a subordinate provision. The argument pays insufficient attention to the form and substance of s. 61. The presumption of validity attaches only to the original registration; it does not extend to the continuance of the trade mark in the register. And it is a preliminary condition essential to the existence of the presumption that it is not shown that the mark offends against s. 28. Consequently, if it is shown that the mark sought to be expunged is likely to deceive or cause confusion at the date of the application (or, as Windeyer J. preferred to express it, when the court comes to make its order), no presumption of validity arises by virtue of s. 61 and the power of rectification conferred by s. 22 may be exercised. (at p361)

8. Although not limited to deception or confusion flowing from similarity to another mark, s. 28 (a) extends to deception and confusion so caused (Aristoc Ltd. v. Rysta Ltd (1945) AC 68 ). The meaning of the words "the use of which would be likely to deceive or cause confusion" in s. 28 (a) is influenced by the language in which s. 28 (d) is expressed when it refers to a mark "which would otherwise be not entitled to protection". Thus, a special problem may confront the Court when a mark which was not likely to deceive or cause confusion at the time of its original registration subsequently becomes so or when two marks substantially identical or deceptively similar have been registered following honest concurrent user (see s. 34). (at p361)

9. But problems of that kind do not present themselves in this case, for if it be held that the trade mark BALI-BRA would be likely to deceive or cause confusion there are no circumstances which would entitle it to protection in the courts. And the parties concede that if the evidence establishes the existence of such a likelihood at the date of the proceedings to rectify the register it also establishes the existence of that likelihood at the date of the original registration of the trade mark. The question for decision is then as I have stated it; there is in the circumstances no need to relate it to a specific date. If the question be answered in favour of the appellant the mark may be expunged as an entry wrongly made in or as one wrongly remaining in the register. (at p361)

10. The strength of the appellant's case is in the finding made by his Honour that the two marks are "phonetically alike" - the appellant's mark is commonly pronounced "Burley" and the respondent's mark is commonly pronounced "Barley". The respondent's mark includes the expression "BRA" which is descriptive of the goods to which it is applied. Its inclusion in the mark does not detract from the phonetic similarity between "BERLEI" and "BALI". According to the appellant, so strong is the phonetic likeness that when the two marks are applied to the same class of goods there is every likelihood that confusion will arise in the minds of the public, if not on the part of those engaged in the relevant trade, as to the origin of the goods which the respondent's mark denotes. The appellant relies also on evidence of actual confusion, but primarily its case is of likelihood of confusion stemming from the circumstances already mentioned. It is convenient to deal with that case before turning to the evidence of actual confusion. (at p362)

11. Although the goods sold under the two marks are distinguishable, the appellant's brassieres being mass-produced and inexpensive, the respondent's being a specialty line and expensive, the question whether there is a likelihood of confusion is to be answered, not by reference to the manner in which the respondent has used its mark in the past, but by reference to the use to which it can properly put the mark. The issue is whether that use would give rise to a real danger of confusion. If it be supposed that the respondent were to apply its mark to brassieres of the kind manufactured by the appellant it would be difficult, in my view, to resist the conclusion that there would be a real danger of confusion. (at p362)

12. The evidence indicates that, in general, brassieres are bought and sold after a fitting or over the counter when the article is inspected by the customer, thereby reducing the likelihood of confusion arising from phonetic similarity. But that risk is not eliminated. No doubt orders are sometimes placed by telephone. And in considering the likely reaction of a customer it is important to take into account, not the person whose knowledge of the two marks and the goods sold under them enables her to distinguish between them, but the person who lacks that knowledge. As Luxmoore L.J. said in Rysta Ltd.'s Application (1943) 60 RPC 87, at p 108 ; reversed in Aristoc Ltd. v. Rysta Ltd. (1945) AC 68 : "It is the person who only knows the one word, and has perhaps an imperfect recollection of it, who is likely to be deceived or confused." (at p362)

13. A factor to be taken into account is that no case of actual deception was established. Its significance is diminished by the circumstance that there has been a marked difference in the price and character of the goods manufactured by the parties. It was suggested also that the likelihood of deception would decrease as the respondent expanded its Australian business and as its mark became more widely known. However, even if the respondent's mark becomes more widely known the opportunity for confusion will remain; there can be, as I see it, no assurance that the prospect of confusion will be eliminated. (at p363)

14. Although, as I have said, the evidence adduced by the appellant did not establish actual confusion, to my mind it confirmed the likelihood of confusion. Evidence of trap orders showed that in some instances Berlei brassieres were offered by salesgirls when Bali was requested at a shop at which Bali was not stocked. In some cases Berlei brassieres were offered in response to a request for Bali because the salesgirls had not heard of Bali and therefore misunderstood what had been requested. (at p363)

15. For these reasons I consider that the appellant has shown that there is a likelihood of confusion arising from the use of the respondent's mark and that the Court's discretionary power to order rectification of the register by expunging the mark as an entry wrongly made in or remaining in the register should be exercised adversely to the respondent. I am confirmed in my conclusion by the decision reached by the House of Lords on facts which were essentially similar in Berlei (U.K.) Ltd. v. Bali Brassiere Co. Inc. (1969) RPC 472; (1969) 1 WLR 1306; (1969) 2 All ER 812 . (at p363)

16. Section 28 had no application to the original registration of the BALI-BRA mark as it was registered in 1947 before the Trade Marks Act 1955 became law. The original registration of the mark fell within the prohibition contained in s. 114 of the Trade Marks Act 1905-1948 (the counterpart of s. 28). That Act was entirely repealed by the 1955 Act, but by s. 5 (4) of the 1955 Act the repealed Acts are expressed, nowithstanding their repeal, to apply to and in relation to applications for the registration of trade marks made before the commencement of the 1955 Act and to and in relation to the registration of trade marks on those applications. The BALI-BRA mark is an entry wrongly made in the register, in contravention of s. 114 of that Act, and wrongly remains in the register in contravention of s. 28 of the existing Act. (at p363)

17. In my opinion the appeal should be allowed. (at p364)

Orders

Appeal allowed with costs. Order of Windeyer J. set aside and in lieu thereof order that the application be granted and that the Register of Trade Marks be rectified by expunging therefrom the respondent's registered mark BERLEI-BRA.