Chandru International Limited v Qantas Airways Limited

[1998] ATMO 14

TRADE MARKS ACT 1955

DECISION OF A DELEGATE OF THE REGISTRAR OF TRADE MARKS WITH REASONS

Re:Opposition by QANTAS AIRWAYS LIMITED to registration of trade mark application number 604686 in the name of CHANDRU INTERNATIONAL PTY LIMITED for the trade mark FREQUENT FLYER in class 18

As provided for in the transitional provisions of Part 22 of the Trade Marks Act 1995, the provisions of the Trade Marks Act 1955 continue to govern this opposition.  Accordingly, unless otherwise specified, any reference to the Act in this decision is a reference to the 1955 legislation.

Application number 604686 was lodged on 16 June 1993, in the name of Chandru International Pty Ltd (the applicant).  The application was for the registration of the word mark FREQUENT FLYER and covered the statement of goods in class 18:

All goods in this class including luggage in this class, travel bags and accessories in this class, cases in this class, suitcases in this class, briefcases in this class, wallets and purses in this class, and luggage accessories in this class.

The trade mark was advertised as accepted in the Australian Official Journal of Trade Marks of 21 September 1995.

Notice of opposition to the trade mark’s registration was lodged by Qantas Airways Limited, (the opponent), on 23 January 1996.  The notice of opposition listed a number of grounds.  However, the only matters which were later pursued in depth by the opponent at the hearing were under ss.24 and 25, that the trade mark was not distinctive or capable of becoming distinctive of the applicant’s goods, and also under s.40, that the applicant was not the proprietor of the applied for trade mark.  The ground under s.28, that the use of the mark would lead to deception and confusion was still formally pressed, although no submissions were made at the hearing.

The service and lodgment of the evidence in support and answer from the respective parties were completed by 23 June 1997.  The opponent requested a hearing in the matter and it came before me, as a delegate of the Registrar, in Sydney on 10 March 1998.  The opponent was represented by Mr Richard Cobden of Counsel, instructed by Minter Ellison.  Appearing for the applicant was Ms Angela Bowne of Counsel, instructed by Pizzeys.

Evidence
Evidence in Support

• Statutory declaration by John Flanagan, the Manager-Membership for Customer Loyalty Programs, dated 19 July 1996 and exhibits JF1 to JF7

Evidence in Answer

• Statutory declaration by Jakishen Tolani, a Director of the applicant, dated 18 April 1997, and exhibits JT-1 and JT-2

• Statutory declaration by Vivek Krishan, a marketing executive and director of Pacific Cosmetics Pty Limited, dated 18 April 1997

• Statutory declaration by Dennis Cooney, a solicitor and principal of Dennis Cooney Solicitors, dated 8 May 1997

• Statutory declaration by Paul Peto, the proprietor of Sky High Fashions, dated 16 June 1997

• Statutory declaration by Harold Neumann, proprietor of Go Lo retail stores, dated 12 June 1997

There was no evidence in reply served.

Background
The applicant has used the subject trade mark on luggage and other travel goods since June 1993.  Mr Tolani claimed, in his declaration, that his company has sold about 870,000 of these goods since that time.  Mr Tolani further declared that the goods on which the mark is used are relatively low cost items and cost approximately 50% of comparable merchandise in the travel goods market.  The goods are apparently sold in such discount outlets as Go-Lo, The Reject Shop, Fair Dinkum Bargains, Red Dot Stores, Overflow and King Kong Sales - amongst others.

The opponent is a major Australian airline which merged, in 1992, with Australian Airlines.  One or both of these parties have operated customer loyalty programs which date back to January 1987.  The scheme now run by the opponent was initially called the Qantas Frequent Flyer program and, latterly, Qantas Australian Frequent Flyer Program.  Mr Flanagan, in his declaration, said that there were now approximately a million Qantas “frequent flyer members”.  He said that this type of program was started, in the early 1980s, in the United States.  Under these programs, airline customers are rewarded for their loyalty with free flights, in return for building up of kilometres flown with that, or associated airlines.  He declared that these schemes were branded under various names but were all referred to as “frequent flyer” programs.

Mr Flanagan declared that, sometime after the launch of the Qantas Frequent Flyer program, Qantas gave cabin bags as free gifts to its most frequent customers.  He said further that Australian Airlines had, from the launch of its own program, and until it merged with Qantas, provided frequent users of its services with cabin bags embossed with the words FREQUENT FLYER.  He said that , since 1994, “silver status” members of the present scheme were provided with a free gift of a cabin bag with the subject words and the Qantas logo embossed on them.

Submissions
At the hearing, Mr Cobden said that he would limit his submissions to the grounds of the alleged lack of distinctiveness, or capacity of becoming so (s.24), that the applicant was not the proprietor of the mark (s.40), and that the registration should be refused in the exercise of the discretion of the Registrar.  He said that the ground that use of the mark would be likely to deceive or cause confusion was still formally relied upon (s.28).  However, given the current practice of the Registrar, as outlined in Titan Manufacturing Co v John Terrence Coyne 22 IPR 613, that some form of blameworthy conduct needed to be shown, in addition to the likelihood of deception and confusion, to mount a successful opposition under this section, he would not be putting any submissions on that ground.

With respect to the ss.24 and 25 grounds, Mr Cobden said that the term FREQUENT FLYER was a generic term commonly used by many airlines, including the opponent, in relation to customer loyalty programs.  He referred for support here to the declaration of Mr Flanagan comprising the evidence in answer.  He submitted that the words in the present mark had direct reference to the character or quality of the goods for which registration was sought.  He said that, although the mark could be inferred, at its simplest level, to be a reference to luggage which flies frequently, the main reference in the mark was to goods which were suitable for persons who were themselves frequent flyers, referring for support here to the well known test enunciated by Dixon CJ in Mark Foy’s Ltd v Davies Coop & Co Ltd (1956) 95 CLR 190 - the Tub Happy case.  He said that the reference did not need to be an attribute that was inherent to the product but may have something to do with it.  He submitted that the present case was similar to that considered in the case of the Chin Chin Trade Mark (1965) RPC 136, where it was found that the offending reference could be to something that consumers would do with the product, or had some reference to the users themselves.

Mr Cobden said that any examination of the distinctiveness of a trade mark must be governed by s.26  He said that the mark must be adapted to distinguish the goods of the applicant from the goods of others and the inquiry must follow two paths - firstly regard to the extent of inherent adaptation to distinguish, and then regard to the use of the mark or other circumstances.  He said that the appropriate test was described by Kitto in Clark Equipment Co v Registrar of Trade Marks, 111 CLR 511 at 513 (the Michigan case).  He said that this was whether other traders would be likely to honestly wish to use the mark in connection with their own goods and the evidence clearly showed that this would be the case in the present instance.  He said that, therefore, the mark was either incapable of distinguishing the goods or had a very low level of inherent adaptation.  He said that, if it was assumed there was some degree of inherent adaptation to distinguish, then the applicant’s evidence of use, intended to show acquired distinctiveness, was deficient in many respects, especially in that the only use shown on the appropriate goods was after the date of application.  The sales of the goods quoted in the applicant’s evidence were after the application date and also the versions shown of the mark in use included other material.  There were, he said, questions about the impartiality of the declarants, their small number and geographical concentration, and the framework of their questioning.  Mr Cobden said that, in the light of the foregoing, the mark was not registrable under either ss.24 or 25.

In relation to the ground under s.40, that the applicant was allegedly not the proprietor of the trade mark, Mr Cobden said that the term “frequent flyer” cannot, under the 1955 Act, become the property of one trader.  However, if the words were so capable of belonging to one party, then it would be the opponent because of its own prior use.  He said that the evidence showed the opponent had given cabin bags as gifts to its most travelled customers from as early as 1989 and certainly by 1991, and that this predated the applicant’s first claimed use in June 1993.  This use had sometimes included other material but also on its own.  He said that, in any case, the use with another mark was not fatal in showing proprietorship of those words by the opponent.  He submitted that the provision of cabin bags to members of the opponent’s frequent flyer program who achieved a certain level of frequency of flying represented a commercial transaction sufficient for proprietorship under the Act.

Although he made no formal submissions in relation to the s.28 ground, Mr Cobden did say that, if the luggage of frequent flyers with a particular airline was handled in a more favourable way, then it was possible that bags which bore a trade mark comprising such words would be likely to deceive and confuse.

Mr Cobden said that, unlike the situation under the Trade Marks Act 1995, there was no presumption of registrability under the 1955 Act.  He said that, under the 1955 legislation, if the Registrar had some doubts as to the registrability of the mark, then it should be refused registration, pointing for support to the judgment in case of Eclipse Sleep Products and The Registrar of Trade Marks (1957) 99 CLR 300 at 314 (the Springwall case).

He closed his submissions by saying that registration of the present trade mark should be refused and that costs be awarded in favour of the opponent.

Ms Bowne, in her submissions in reply, commented on the respective parties’ evidence, saying that the applicant’s evidence was the more credible of the two.  She said that the opponent’s evidence was deficient in that that much of it was only concerned with the use of the words FREQUENT FLYER in relation to loyalty programs after the relevant date and also because the only declarant was an employee of the opponent company.  She said that this contrasted with the applicant’s evidence, which contained supporting declarations from people who were members of the relevant luggage retail trade, and also from people who were both regular national and international flyers and also members of the opponent’s frequent flyer program.

She said that mark’s registrability under s.24 had been considered by an Examiner of Trade Marks and no objection had been taken at that time.  The mark had then been accepted for registration.  She said that, despite the opponent’s evidence that the expression FREQUENT FLYER was well known in the aviation industry as a generic term referring to airlines’ incentive and loyalty programs, this did not mean that the present mark was incapable of distinguishing the applicant’s goods.  She said that the test of whether a word was directly descriptive lay in the probability of ordinary persons inferring a meaning from its use as a trade mark in relation to the goods which it covered.  She pointed for support here to the Tub Happy case, supra.  She said that the words FREQUENT FLYER, when used on travel goods, did not refer directly to their character or quality as being suitable for use by frequent air travellers.  She submitted that the words were perhaps allusory, implying the excitement of frequent travelling.  However, the goods on which the mark was used could equally be suitable for all travellers - whether by air, train, bus, cars or on foot, and also for those merely going to school or work.  She pointed to the well known statement by Dixon J in the Tub Happy case, supra, regarding assumptions which might be made about meanings contained in a mark.  She said that, in any case, the fact that a mark might be descriptive did not necessarily prevent it from becoming distinctive of a trader’s goods - Joseph Crosfield & Sons Ltd’s Appn (1909) 26 RPC 837.

Ms Bowne said that the opponent did not have a registered trade mark for the words FREQUENT FLYER for its particular services.  The opponent had also not commenced any trade practices or passing off actions against the applicant during the nearly five years that the latter party had been using the same words as a trade mark on travel goods.  She said that the applicant had demonstrated in its evidence that others in the relevant trade would not suffer disadvantage if the mark was registered and that the mark did not have a function in relation to the goods - apart from its use as a trade mark.

She said that, if there was any doubt about whether the present mark lacked the necessary degree of inherent distinctiveness to be accepted as prima facie registrable, then it clearly qualified as being factually distinctive because of actual use or other circumstances - Burger King Corp. v Registrar of Trade Marks (1973) 128 CLR 417 (the Whopper case).

In relation to the disputed proprietorship of the mark, Ms Bowne said that, while the opponent may have used the words FREQUENT FLYER before the applicant, that use was not of a kind which would entitle it to claim to be the proprietor of the mark for travel goods or luggage.  She referred for support here to the Office decision Boeing Co v DMH Imports (Aust) Pty Ltd (1995) 31 IPR 621 at 628-630, which she said concerned a similar situation. She conceded that the words in the mark were used by the opponent on free cabin bags which it and its predecessor provided as gifts to a particular class of “frequent flyer” customer sometime after 1989, but she said that the distinctive Qantas logo, or other words, were usually used in close proximity. She said that these bags, from the opponent’s own evidence, were very distinctive and that this promotional material emphasised that the bag would not be confused with other travellers’ luggage. She said that there had been no offer to trade in these cabin bags which had been given as gifts, the only transactions residing in the incentive programs run by the opponent. She said that it was the applicant who had first used the mark on the relevant goods and therefore it was that party which could rightfully claim to be the proprietor of the mark for the goods included in the specification.

Ms Bowne also made some submissions relating to the ground under s.28 but I will not summarise them here in detail, given Mr Cobden made few submissions of his own on this aspect of the opposition.  However, the main thrust of her argument here was that the opponent had not established any reputation in relation to the relevant goods - Nettlefold Advertising Pty Ltd v Nettlefold Signs Pty Ltd (1997) 38 IPR 495 and that it had not been shown that a substantial number of people in the relevant market might be caused to wonder as to the source of both parties’ goods and services - Pelikan International v Lifinia Pty Ltd (1994) 30 IPR 615 at 622-623.

Discussion

Section 24 - Distinctiveness

Section 24 (1) reads:

A trade mark is registrable in Part A of the Register if it contains or consists of-

(a) the name of a person represented in a special or particular manner;
           (b) the signature of the applicant for registration or of some predecessor in his   business;
           (c) an invented word;

(d) a word not having direct reference to the character or quality of the goods or services in respect of which registration is sought and not being, according to its ordinary meaning, a geographical name or a surname; or

(e) any other distinctive mark.

Mr Cobden said that the words FREQUENT FLYER directly referred to the character or quality of the applicant’s goods as being luggage which was suitable for use by frequent air travellers.  In the contrary, Ms Bowne submitted that it was not only those who flew who would purchase the goods but also those who travelled by other means.

The basic requirement for the registration of any trade mark in Part A is that it is distinctive, i.e. adapted to distinguish the goods of its owner from the similar goods of other traders.  The test as to whether or not a mark is adapted to distinguish is well established.  As Mr Cobden submitted, if the mark is one which other traders would desire to use, without improper motive, upon or in connection with their own goods, then registration will generally be denied - the Michigan case, supra.  I must therefore determine whether other producers of travel goods would want to use the words in the present mark to describe their own luggage.

I think that what first needs to be determined here are the criteria which frequent flyers might specify - as opposed to bus or train travellers, or indeed those who only flew occasionally.  I am of the opinion that lightness and durability are the prime qualities a “frequent flyer” would desire in his or her luggage.  However, I am sure that would be the case for the other categories of traveller which I referred to previously.  With this in mind, I do not think that the travel bags of choice of someone who is a constant air traveller would be any different from those desired by the humblest coach passenger - the difference residing in the quality which a particular traveller could afford.  I agree with Ms Bowne that, in the present context, the words FREQUENT FLYER are several steps removed from referring directly to the character or quality of the applicant’s goods.  They are, I believe, merely an allusion to the excitement of being a “jet-setter” and is in the realm of such marks as TUB HAPPY.

Mr Cobden said that others might wish to use the trade mark honestly to describe their own goods.  I cannot agree.  It is, of course, fundamental to the Act that registration should not interfere with the right of another trader to describe his or her product.  That right has been recognised at common law and is expressly preserved by s.64(1)(b).  However, I am of the opinion that the words FREQUENT FLYER used together on travel goods have the degree of inventiveness necessary to qualify for registration.  As I have said, I believe that the combination has merely a fanciful association to the goods.  I do not think that the term is the usual way to describe luggage and there are many descriptive terms which are available for alternative use.  I accordingly believe that any other trader who used that combination, in relation to travel goods, would only do so with suspect motives.  Accordingly, I believe that, in relation to this ground of opposition, the present mark is adapted to distinguish the goods on which it is used.  I therefore find that the opposition fails, as it is based upon this ground.

Section 40 - Proprietorship

Section 40(1) reads:

A person who claims to be the proprietor of a trade mark may make application to the Registrar for registration of that trade mark in Part A or Part B of the Register

On that subject, McGarvie J. said in the case of Settef S.p.A. v Riv-Oland Marble Co (Vic) Pty Ltd 10 IPR 402:

The basic common law principle is that the first person who uses a trade mark of an appropriate type within a country becomes the proprietor of the mark there: Re Registered Trade Mark YANX; Ex parte Amalgamated Tobacco Corp Ltd (1951) 82 CLR 199 at 203; Thunderbird Products Corp v Thunderbird Marine Products Pty Ltd (1974) 131 CLR 592 at 603; Moorgate Tobacco Co Ltd v Philip Morris Ltd(No 2) 59 ALJR 77 at 83.

 ...

In considering who, within s.40(1) of the Act, was at the time of Settef's application for registration the proprietor of the trade mark, one considers who at common law was the proprietor in Australia: The Shell Co of Australia Ltd v Rohm & Haas (1949) 78 CLR 601 at 625 and 627.

In other words, the first user of the mark in Australia (for relevant goods and prior to the date of application) becomes the owner at common law.  That ownership, however, is limited to "the same kind of thing", as per Holroyd J in Hicks’ Trade Mark (1897) 22 VLR 636. Any small amount of use will suffice, but the effect of the act relied on to constitute use must be the creation, in the minds of those concerned, of an impression that goods of a particular trader are being offered for sale, in Australia, under the trade mark. This has been affirmed in later cases such as in Seven Up Co v O.T. Ltd (1947) 75 CLR 203.

It is undisputed that the opponent, and other airlines have, from the evidence and from my own knowledge, used the words FREQUENT FLYER in relation to customer loyalty programs from a time well before the date of the present application.  However, I do not think that such use has been shown to be on the “same kind of thing” - as contemplated in the Hicks’ case, supra - as the goods included in the specification of the present application.  From the evidence, it would appear that the opponent provided free cabin bags to frequent travellers from at least 1991.  Mr Cobden said that this amounted to the kind of use in trade sufficient to show proprietorship.  I cannot agree.  I cannot believe that constant air travellers joined the opponent’s customer loyalty programmes for the purpose of receiving a free cabin bag.  I am of the opinion that the award of the bags was promotional in nature and not the offer to trade in the accepted sense.  As Mr Shanahan says at p.32 of his book, Australian Law of Trade Marks and Passing Off (Second Edition):

...the distribution of a product free of charge does not ordinarily involve trade in that product.  Thus it was held in Ferodo Ltd’s Appn [(1948) 62 RPC 111] that the application of a trade mark to gifts such as matchboxes and pencils distributed to promote trade in the applicant’s automotive products was not trade mark use in relation to the goods comprising the goods.

Such is the case here.  I think that the receipt of free cabin bags is incidental to the real purpose that people join the loyalty program run by the opponent - to earn points toward airline travel.  The gift of the cabin bags is therefore insufficient to qualify the opponent for the status of proprietor of the mark for the present goods.  I therefore find that the opponent also fails on this ground of its opposition.

Section 28 - Deception and confusion

The provisions of this section of the Act read as follows:

A mark -

(a) the use of which would be likely to deceive or cause confusion;
           (b) the use of which would be contrary to law;
           (c) which comprises or contains scandalous matter; or

(d) which would otherwise be not entitled to protection in a court of justice,

shall not be registered as a trade mark.

Mr Cobden made few submissions on the s.28 ground.  His only real reference was that an if an airline gave preferred service to “frequent flyers” luggage then the use of those words on other luggage would lead to deception and confusion.  I cannot accept that this is the case.  As Ms Bowne said, there was no evidence of instances of deception and confusion occurring.  Additionally, from my own knowledge of being a reasonably constant air traveller in Australia and overseas, the luggage of such a class of passenger is very clearly marked with colourful tags etc, thus reducing the possibility of such a promotion “up the order” for any luggage bearing the applicant’s mark.  I therefore cannot agree that the use of the applicant's mark would, prima facie, lead to deception or confusion.  Consequently, the application has not been successful under paragraph 28(a).

As Mr Cobden said in his submissions, following the High Court decision in the case of New South Wales Dairy Corp v Murray Goulbourn Co-operative Co Ltd (1990) 24 FCR 370, the Registrar now follows the practice as laid out in the decision of Hearing Officer Homann in Titan Manufacturing Co v John Terrence Coyne, supra.  That is, that all paras of s.28 should be read together.  This view has been recently supported in Canon Kabushiki Kaisha v Robert James Brook and Rachel Brook trading as The Cannon Watch Company 36 IPR 88, where Tamberlin J, after considering the judgments in the Moo/Moove case, concluded that, in his view, the reasons for judgment delivered by members of the High Court left the matter open as to whether there was a need to find blameworthy conduct in opposition proceedings based on s.28(a) as opposed to expungement proceedings. He went on to find that:

Notwithstanding the diverse opinions expressed by members of the High Court in New South Wales Dairy Corporation case, I consider that I should follow the views expressed by the Full Federal Court in that case, with the result that in the case presently before me the opponent to the application for registration is required to demonstrate "blameworthy conduct".

This need for a conjunctive reading of s.28 was echoed in the judgment of Heery J in the Nettlefold decision, supra.  As Mr Cobden observed, all of this means that, for the opposition to be successful on the s.28 ground then, if I had found that the use of the trade mark would have been likely to lead to deception and confusion, it would have also been necessary for me to find that the trade mark would not be entitled to protection in a court of law.  Given I have already found against the opponent with regard to the s.28(a) ground, it is solely for the sake of completeness, that I register a finding on s.28(d).  There is nothing before me to show that there has been any blameworthy conduct on the part of the applicant, nor any other circumstance which would disentitle the mark to protection in a court of justice.  I find, therefore, that the requirements of paragraph 28(d) have also not been made out.  The opponent's case in terms of s.28 must therefore fail.

Conclusion
I have found that the opponent has failed on all of the grounds relied on at the hearing and I have no doubts about the registrability of the mark.  Given this, I cannot see any reason why I should exercise the discretion of the Registrar to refuse registration to the present trade mark.  It follows that the opposition as a whole is unsuccessful.  I therefore dismiss the opposition in total.  Providing all other matters are in order, including the payment of the registration fee and, subject to any appeal from the decision, the application should now proceed to registration.

Costs
I can see no reason why costs should not follow the result.  I therefore direct that the opponent pay the applicant’s costs in the matter in accordance with the official scale, the costs being taxed, allowed and certified by officers of the Trade Marks Office, appointed by the Registrar for that purpose.

Ian Forno
Hearing Officer

22 April 1998