Enrique Nernat F SA v Zeta Espacial S.A

[2002] ATMO 115

TRADE MARKS ACT 1995

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

Re:Opposition by ENRIQUE BERNAT F., S.A. to registration of trade mark application 790936(30) - POPPING CANDY - filed in the name of ZETA ESPACIAL S.A.

DATE OF DECISION:	16 December 2002
DELEGATE:	Senior Examiner Rachel Dunn
REPRESENTATION:	Opponent Celia Cumming and Bill Ladas of Freehills, Carter, Smith, Beadle. Applicant Stephen Burley of Counsel, instructed by Cullen & Co.
DECISION:	Section 41 ground successful: registration refused, section 55(a) Applicant to pay Opponent's costs.

Background

Zeta Espacial S.A. (the applicant) filed trade mark number 790936 for the words POPPING CANDY on 13 April 1999. The trade mark was examined and a ground for rejection in terms of section 41 of the Trade Marks Act 1995 (the Act) was raised in the first report and maintained in a second report.  At the third report and following submissions made by the applicant, the trade mark was accepted for registration for the goods in class 30 of candies, chewing gum, bubble gums and confectionery products.  This acceptance was advertised in the Official Journal of Trade Marks on 17 February 2000.

On 16 May 2000 Enrique Bernat F., S.A. (the opponent) filed a notice of opposition which read "All ground specified in Division 2 of Part 5 of the Trade Marks Act 1991, and including:", the notice went on to paraphrase grounds for objection in accordance with sections 41, 43, 58 and 60 of the Act. Despite the clerical errors of use of the singular term 'ground' and the reference to a 1991 Act, the notice was accepted as filed. All of the evidence was served and filed by 5 July 2002 and the opponent requested a Hearing.

The matter came before me, as a delegate of the Registrar, on 23 September 2002 in Canberra.  Ms Celia Cumming and Mr Bill Ladas of Freehills Carter Smith Beadle represented the opponent.  Mr Stephen Burley of Counsel, instructed by Mr Helmut Eichberger of Cullen & Co., represented the applicant.

Evidence

The following evidence was served and filed.

Evidence in support:

Name and position	Date	Exhibits	Referred to as
Luis Maria Gutierrez de Quijano Sainz - in-house Counsel of the Opponent	3/11/2000	LMG1-LMG4	Sainz
Dr. Stuart Spencer - Federal Director and CEO of the Confectionery Manufacturers of Australia	14/11/2000	Spencer

Evidence in answer:

Name and position	Date	Exhibits	Referred to as
Ramon Escola - the founder of the applicant.	25/10/2001	RE1-RE10	Escola
Robert Auld - CEO and General Manager of Network Foods Limited	29/10/2001	Auld

Evidence in reply:

Name and position	Date	Exhibits	Referred to as
Andrea Coyle - solicitor for the Opponent	3/7/2002	AC1-AC12	Coyle
Bill Ladas	2/7/2002	BL1-BL4	Ladas
David Greenwood	24/6/2002	DG1	Greenwood

Evidence in Support
By way of summary the Sainz declaration states that a confectionery product created when candy is gasified with carbon dioxide offers the consumer an exploding sensation when put in the mouth.  This product is commonly referred to as 'popping candy' and is believed to be available in Australia.  The exhibits display press releases, Internet research and samples of confectionery packaging showing the term 'popping candy' being used as a description.  The Spencer declaration contends that 'popping candy' are purely descriptive words for products that create a popping sensation when put in the mouth and that all traders of confectionery in Australia should be free to use these words to describe their own goods.

Evidence in Answer
The Escola declaration states that the product in question is properly referred to as 'gasified' or 'carbonated confectionery'.  Evidence of use of POPPING CANDY in Australia is shown.  It is pointed out that a number of the articles referred to in exhibits 1 and 3 of the Sainz declaration actually refer to products containing the applicant's goods or use trade marks owned by the applicant.  Exhibits 5-7 shows how the applicant uses the trade mark POPPING CANDY on product wrappers and company promotional material.  Details of the Australian distributors and advertising expenditure for the applicant's goods are provided in the Auld declaration.

Evidence in Reply
The Coyle declaration and exhibits provide Internet research, product catalogues, the examination file for the subject application, and details of the applicant's POPPING CANDY trade mark application in the United States.  It also includes a contested piece of evidence that I will deal with below.  Further material from the Internet showing the term POPPING CANDY used in a generic fashion and a product wrapper for goods containing 'popping candy' are supplied with the Ladas declaration.  The Greenwood declaration states that use of the individual words CANDY and POPPING in the confectionery trade are generic and that the term 'popping candy' should be free for all to use if it is appropriate to the actions of the products as ones that pop in the mouth.

Grounds of Opposition

On 19 September 2002 the opponent wrote to both this office and the applicant to inform us that the only grounds of opposition that would be pursued would be those under sections 41, 43 and 59 of the Act. These sections of the Act are different to those specified in the original notice of opposition, which were sections 41, 43, 58 and 60. In the same letter an amendment pursuant to section 66 of the Act was requested to change two 'obvious typographical errors' in the first line of the notice of opposition. The first line would then read as:

"All grounds specified in Division 2 of Part 5 of the Trade Marks Act 1995, and including:...". 

At the Hearing the applicant objected to these amendments being allowed. Submissions made by Mr Burley contend that these changes broaden the scope of the notice of opposition and that the opponent should not be allowed to add a new ground at this stage in the proceedings. In particular, it was submitted that as the ground in relation to section 59 was not specifically pleaded in the original notice of opposition, it would be unfair to the applicant to adduce it now. Mr Burley submitted that if the amendment were granted, the applicant would require time in which to serve further evidence and make submissions on the matter. Additionally, Mr Burley contended that the applicant should be entitled to receive costs in relation to its effort expended upon grounds that were not pursued, and also to any further evidence served.

Ms Cumming responded with oral submissions in support of the amendment. She relied on the fact that the original notice of opposition contained the words "All ground specified in Division 2 of Part 5 of the Trade Marks Act 1991...". Ms Cumming submitted that these words constituted an opposition pursuant to all grounds in respect of Division 2 of Part 5 of the Act, not withstanding the typographical error of 1991 instead of 1995. As such, she contended, any reliance upon a ground pursuant to section 59 was not an addition to the notice of opposition nor an expansion of the scope of the original notice.

I accept Ms Cumming's premise that the original claim, though obviously slightly flawed in its typographical details, did constitute a notice of opposition covering all possible grounds for opposition. The words in the notice that are under dispute can have no other meaning, there can be no confusion that there is more than one ground of opposition in Division 2 of Part 5 of the Trade Marks Act 1995. There has never been a Trade Marks Act of 1991. Therefore, notification by the opponent five days before the Hearing, that it intended to pursue a ground of opposition under section 59 was not an addition to the original notice of opposition. It was always open for the applicant to prepare its evidence and submissions with all grounds of opposition in mind, it cannot now expect that further time will be offered in these circumstances. I have allowed the amendment to the notice of opposition pursuant to section 66 and therefore all the grounds argued by the opponent at the Hearing are also allowed.

Submissions and discussion

Trade mark not distinguishing applicant's goods or services

Section 41 of the Act requires that a trade mark application must be rejected if the trade mark is not capable of distinguishing the applicant's goods or services from the goods and services of other traders. When deciding a trade mark's capacity to distinguish it is open to the Registrar to conclude that the trade mark is inherently adapted to distinguish (subsection 41(3)) or is not at all inherently adapted to distinguish (subsection 41(6)). In the third alternative, the trade mark may be to some degree inherently adapted but not capable of distinguishing on that basis alone (subsection 41(5)). If the Registrar is satisfied that the trade mark is capable of distinguishing, subsection 33(1) binds the Registrar to accept the trade mark, provided there are no other grounds for rejecting it and that the application was made in accordance with the Act. If the Registrar is not satisfied that the trade mark is capable of distinguishing, and the applicant fails to show otherwise, the Registrar must reject the application in terms of subsections 41(2) and 33(3).

The operation of section 41 was considered by Branson J in Blount Inc v Registrar of Trade Marks 40 IPR 498 (Oregon case) and her analysis was approved by Wilcox J in Oceanspray Cranberries Inc v Registrar of Trade Marks (2000) AIPC 91-539 (the Cranberry Classic case).  The inherent adaptation of a trade mark to distinguish the goods of a trader is to be assessed with reference to the question of Kitto J in Clark Equipment Co v Registrar of Trade Marks (1964) 111 CLR 511, at 514, which may be summarised as follows:

The question to be asked in order to test whether a word is adapted to distinguish one trader's goods from the goods of all others is whether the word is one which other traders are likely in the ordinary course of their business and without any improper motive, to desire to use upon or in connection with their goods.

Submissions

Ms Cumming submitted that the question posed by Kitto J is one of fact to be determined in light of the nature of the goods and the relevant consumer, and that section 41 requires a practical evaluative judgement about the effect of the trade mark in the real world. (Kenman Kandy Australia Pty Ltd v Registrar of Trade Marks (2002) FCAFC 273 - the Kenman Kandy decision).  It is her contention that POPPING CANDY is not to any extent inherently adapted to distinguish.  She argued that there are many meanings for the term POPPING CANDY, but all of them are descriptive as 'pop' or 'popping' describes the effect and noise of the designated goods.  Ms Cumming submitted that POPPING CANDY is a generic term that should be available for all traders needing to describe their products which contain, or are comprised of, gasified candy or confectionery with popping characteristics.

Ms Cumming also argued that the evidence shows descriptive use of the phrase POPPING CANDY by the applicant and other traders, and that the applicant itself has used POPPING CANDY as a descriptor, whilst using the terms 'gasified' or 'carbonated' candy as technical terms for the goods.  It is admitted that some of the evidence shows use of POPPING CANDY on the applicant's products, but it is contended that even on the products originating from the applicant, use of POPPING CANDY is as a descriptor rather than trade mark use.  Ms Cumming proposed that this use by the applicant is not sufficient to fulfil the provisions of subsections 41(6) or 41(5).  However, she suggested that if it was decided that the trade mark could proceed to registration, it should only do so for the goods of gasified candy, those being the goods to which the applicant's reputation attaches. (Re application by Estee LauderCosmetics Limited 50 IPR 131)

Mr Burley submitted that POPPING CANDY is inherently distinctive and that any references to consumer's sensations of their candy 'popping' upon consumption are imaginative experiences and not descriptive references.  He argued that any attempt to attribute a descriptive meaning to the term was erroneous, in line with the findings in Mark Foy's Ltd v Davies Coop & Co Ltd (1956) 95 CLR 190. Mr Burley also referred to the Kenman Kandy decision, citing the words of Stone J at 156:

In the above examples the trade marks were held to be inherently adapted not because of any positive content but because they had no associations or significations that prevented then from being inherently adapted to distinguish a trader's goods.

Mr Burley submitted that the opponent has not provided evidence to show that any such associations exist in this application. 

The examples of use of POPPING CANDY provided by the opponent are contended to be 'unhelpful' by Mr Burley, in that they mostly originate from overseas or are actually examples of the trade mark in use by the applicant.  He further submitted that, in any case, the provisions of either subsection 41(5) or (6) could be fulfilled through the applicant's evidence of use.

Discussion

Before I begin to discuss the substantive matter I will briefly address the fact that a certain piece of evidence tendered by the opponent has been objected to by the applicant as having legal professional privilege attached.  This would, according to the applicant, make it inadmissible as evidence in this opposition.  It has not been necessary within the course of this decision to refer to or rely upon the information contained in the exhibit in question.  As such it is not necessary for me to make a determination upon the proper use of this document or its relevance to these proceedings, and I decline to do so.

Upon hearing the words POPPING CANDY for the first time, and having them connected to the goods of confectionery, I believe that the ordinary consumer would understand intuitively the meaning of the term.  There is no need to institute a search for a meaning in this case as POPPING CANDY directly describes candy and confectionery that pops, either through the noise it makes or through the action of the goods upon consumption.  POPPING CANDY would be understood as a reference to an attribute of the goods themselves and not to their manufacturing or trade origin.  I am not satisfied by the applicant's contention that POPPING CANDY is a 'clever collocation', inviting the consumer to imagine a popping sensation. POPPING CANDY is an apt term for candies, chewing gum, bubble gums and confectionery products, and accordingly the trade mark offends the direct description test set out in Burger King Corp. V Register of Trade Marks (1973) 128 CLR 417. It is likely that other traders would desire to use the term to describe their own confectionery products without improper motive.

The applicant has argued that POPPING CANDY is not a normal description for the goods, 'gasified' or 'carbonated' candy or confectionery being the true and proper technical terms for the goods.  This does not mean that POPPING CANDY is therefore prima facie acceptable however.  King J said in Seven-Up Co v Bubble Up Co Ltd 9 (1987) IPR 259 at 264

Traders would normally and properly wish to describe their goods by elementary terms indicating or emphasising the nature of their goods to the general public. ... The fact that there are other words customarily used to identify the class of goods concerned would not render it less likely that other traders would wish to use a term which, although it would not appeal to an official as an apt description, would nevertheless be thought to appeal to the general public.

POPPING CANDY, as the opponent's evidence has shown, is exactly such a term.  It appeals to the public in that it offers a simple description of the goods, even though the applicant does not use it as the technical term for its product.  The existence of the technical terms of 'gasified' or 'carbonated' confectionery does not mitigate the fact that POPPING CANDY is an apt description for the goods of interest and I conclude that the trade mark has no inherent adaptation to distinguish.

As I have determined POPPING CANDY has no inherent capacity to distinguish the applicant' goods from those of other traders, the provisions of subsection 41(6) must be satisfied before the trade mark can proceed to registration.  In order to satisfy this provision the evidence of use provided by the applicant needs to show that at the time of filing (13 April 1999) the trade mark was factually distinctive of its goods in Australia.

The applicant's evidence of use includes sales figures since 1983, invoices showing shipments of goods to Australia before the filing date, an indication of current promotion of the trade mark and some samples of the trade mark in use on the goods themselves and in the applicant's marketing brochures.  Whilst the evidence does show the applicant's goods were in use in Australia before the filing date, there are weaknesses in the lack of detail provided.  Some of the sales figures refer to "bulk" rather than giving individual units sold, Australian distributors are listed but no details are provided on where the goods were sold or what retailers were involved, and no details of any marketing or promotion are given before the year 2001, well after the filing date.  The total sales figures for the goods in Australia appear small, however I assume the goods are relatively low cost items.  The invoices tendered do not show use of POPPING CANDY as a trade mark, but show instead the term used as a description of the merchandise provided, for example "1x20kg drum of uncoloured unflavoured popping candy".  The proper technical terms of 'gasified' or 'carbonated' confectionery lauded by the applicant are not to be found.

According to the applicant's evidence its goods of gasified or carbonated confectionery are sold to manufacturers such as Nestle and Cadbury as well as directly to the ordinary consumer in a finished product.  Although there is nothing before me regarding the manufacturers' recognition of POPPING CANDY as a trade mark, I envisage that when they see an invoice for "uncoated, unflavoured, uncoloured popping candy" they know they are being supplied with gasified/carbonated confectionery.  Even in this relatively narrow and educated field of buyers I am not satisfied that POPPING CANDY is seen as anything other than a description of the goods.  Even if these manufacturers using bulk amounts of POPPING CANDY as an ingredient in their own products are aware that the gasified/carbonated confectionery originates from the applicant, I can not extrapolate that into trade mark awareness of the term POPPING CANDY.

Use of POPPING CANDY on wrappers for confectionery products has been supplied in the form of actual wrappers, photographs, print-outs from the Internet and through the applicant's brochures.  In some cases examples of the very same wrapper or reference to a specific product has been tendered by both parties.  The wrappers provided show finished products containing the applicant's gasified/carbonated confectionery as an ingredient.  However, the finished product does not necessarily originate from the applicant, it may originate from suppliers such as Nestle or Kraft Foods.  In any case, the use of POPPING CANDY on these wrappers shows use in a descriptive sense, the words do not function as a trade mark on these wrappers.  For example, the POP ROCKS® products that originate from the applicant have the following appearing on the wrappers:

POP ROCKS®
Black Cherry
Artificially Flavoured
POPPING CANDY

The small print on the wrappers goes on to explain that POP ROCKS® is a trade mark licensed to the applicant, no other trade marks are identified through use of either the ® symbol or the ™ symbol.  Whilst this is of course not fatal to the application, it only enhances the appearance of POPPING CANDY as a simple description of the goods.  This example is typical of all of the wrappers tendered in evidence, and they simply do not show POPPING CANDY functioning as a trade mark.  Use of this type does not assist the applicant in satisfying the provisions of subsection 41(6).

The applicant has declared that in the early days of gasified/carbonated candy production it was for a time the only producer of such goods, and that its production of POPPING CANDY began in 1979.  It is declared that POPPING CANDY was well known and recognized as a trade mark for the goods of interest by 1986.  There was no use in Australia of POPPING CANDY until 1983 and no trade mark application was made for the term until 1999.  It may be the case that at the time of first production of gasified/carbonated candy the term POPPING CANDY, if thoughtfully used by the applicant, may have gone on to function adequately as a trade mark.  By the time of filing, however, use of the term in the marketplace has become clearly descriptive and generic.

None of the use of POPPING CANDY shown satisfies me that it is currently functioning as a trade mark, let alone that it did in fact serve to distinguish the goods of the application at the time of filing.  As a consequence, I am not satisfied that the provisions of subsection 41(6) are made out.

The opposition is successful on the section 41 ground.

Trade mark likely to deceive or cause confusion

Section 43 of the Act reads:

An application for the registration of a trade mark in respect of particular goods or services must be rejected if, because of some connotation that the trade mark or a sign contained in the trade mark has, the use of the trade mark in relation to those goods or services would be likely to deceive or cause confusion.

Submissions

Ms Cumming submitted that any use of POPPING CANDY upon products which do not pop would be reasonably likely to deceive or cause confusion as the consumer would expect the product marked as POPPING CANDY to contain candy that pops.  Mr Burley submitted that there is no basis upon which it can seriously be contended that this ground of opposition can be made out.

Discussion

It is established that the connotation with regard to section 43 must be in the trade mark itself, and cannot incorporate external considerations such as reputation or similarity to a name used by other traders. (T.G.I. Friday's Australia Pty Limited v TGI Friday's Inc [2000] FCA 720). Connotation refers to that which is implied in a trade mark in addition to its primary or essential meaning, and Hearing Officer Forno observed in Down to Earth (Victoria) Co-Operative Society Ltd v Schmidt, (1998) 41 IPR 632 at 643:

The prominence and context of the potentially deceptive or confusing element in the trade mark is important in deciding whether the trade mark is likely to deceive or cause confusion. Considerations under Section 43 concentrate on the matter within the trade mark that could cause deception or confusion in the mind of the relevant buying public.

Deception or confusion will occur if a descriptive word or sign is taken to imply a specific characteristic of the goods that is not actually present.

There is nothing before me to show that the applicant's products do not in fact pop nor fulfill their description of 'popping candy'.  The evidence shows that the applicant produces a range of confectionery products, including the gasified/carbonated candy of which the majority of evidence and submissions from both parties focus upon.  Items such as popping bubble gums and lollypops, cereals, ice creams and yogurts containing gasified/carbonated candy in one form or another are exhibited in the applicant's evidence.  There is no evidence before me to show that POPPING CANDY is in fact used on goods which do not pop, in fact the evidence shows that the entire range of products claimed by the applicant have the capacity to pop in one way or another.

In Registrar of Trade Marks v Woolworths (1999) AIPC 91-499 at 39,695 French J considered the application of the words "likely to deceive or cause confusion" and said:

The use of the word 'likely' in this context does not import a requirement that it be more probably than not that the mark has that effect.  The probability of deception or confusion must be finite and non-trivial.  There must be a 'real tangible danger of it occurring'.

I am not satisfied of the opponent's case that use of POPPING CANDY by the opponent on the goods specified in its application would be reasonably likely to deceive or cause confusion.  There is no evidence before me to support the necessary real tangible danger, and there is no other information presented showing that deception or confusion has already occurred or will probably occur in the future.

The opposition is unsuccessful on the ground under section 43.

Applicant not intending to use trade mark.

Section 59 of the Act reads:

The registration of a trade mark may be opposed on the ground that the applicant does not intend:

(a) to use, or authorise the use of, the trade mark in Australia; or

(b) to assign the trade mark to a body corporate for use by the body corporate in Australia;

in relation to the goods and/or services specified in the application.

Note:  For applicant see section 6.

Submissions

Ms Cumming argued two courses of opposition with regard to section 59. She firstly submitted that the evidence shows the applicant uses POPPING CANDY only in relation to gasified/carbonated candy and not upon the other goods claimed in the specification. Ms Cumming secondly argued that as the applicant does not use, or does not intend to use, POPPING CANDY as a trade mark but uses it as a description instead, that the trade mark should be refused for all goods.  Mr Burley submitted that the applicant had satisfied the requirements for establishing intention to use through its evidence of use since 1983 and the act of the application itself.  He also referred me to the case of Aston v Harlee ManufActuring Company (1960) 103 CLR 391 (Aston v Harlee).

Discussion

The making of a trade mark application is prima facie indication of intent to use that trade mark. (Aston v Harlee).  The burden of proof is squarely placed upon the opponent to provide evidence of the applicant's negative intent.  Whilst the opponent's submissions about the applicant's evidence of use do concentrate upon the goods of gasified/carbonated candy, it is clear that the goods of bubble gum and chewing gum and other confectionery items are produced by the applicant.  There is nothing to show that the applicant does not intend to extend its use of POPPING CANDY to its gum products, and it currently uses 'popping bubble gum' as a description upon some of its gum wrappers.  In Intel Corporation v Magnatex International Pty Ltd (1998) 41 IPR 406 Hearing Officer Homann said:

It is not appropriate in opposition proceedings for the Registrar to instigate an investigation in detail of the use or intention to use in respect of each and every item which might be covered in the applicant's specification and the lodgment of the application and the applicant's statement of use or intention to use must on the principles explained in Aston v Harlee be accepted as prima facie evidence of the relevant use or intention to use.  The onus must be on the opponent to lead evidence showing a lack of intention or incapacity to use the mark for the relevant goods.

The opponent has not discharged the onus on it of displacing the prima facie evidence of the applicant's intention to use the mark in respect of the first of Ms Cumming's submissions.

I have already detailed above that the applicant has not shown any use of POPPING CANDY in a trade mark sense. This finding appears to lend some weight to the opponent's contention that POPPING CANDY has not been used as a trade mark and must therefore fall foul of section 59. However, information pertinent to 'use of a trade mark' is defined in sections 6 through 9 of the Act.  POPPING CANDY is being used in relation to goods, thus section 6 tell us that subsection 7(4) is relevant.  This subsection reads:

7(4) In this Act:

Use of a trade mark in relation to goods means use of the trade mark upon, in physical or other relation to, the goods...

Paragraph 9(1)(b) reads:

a trade mark is taken to be applied in relation to goods or services:

(ii) if it is used in a manner likely to lead persons to believe that it refers to, describes or designates the goods or services...

Application and use of a trade mark in relation to goods may therefore be fulfilled if POPPING CANDY is used to describe or indicate the goods, which I have already decided is indeed the case.  The precise meaning of 'use' of a trade mark can vary with the context in which the word is used, according to Elkington in Trade Mark Law in Australia, (2000) at p23, Elkington et al, Butterworths, Sydney.

The wording of section 59 does not clearly require use of the term applied for as a trade mark.  Conversely, section 120, ('When is a registered trade mark infringed?'), clearly requires an infringing trade mark to be used as a trade mark otherwise there can be no infringement.  In Johnson & Johnson Australia Pty Ltd v Sterling Pharmaceuticals Pty Ltd (1991) 30 FCR 326 at 335 Lockhart J indicated that infringing use "must be actual use as a trade mark indicating origin in the sense of a badge of origin". No such certainty is attached to a literal reading of section 59.

Taking all of the above into account I am satisfied that the applicant has fulfilled the requirements for establishing intention to use within section 59 of the Act.

The opposition is unsuccessful on the section 59 ground.

Decision

I find that the opposition is successful on the section 41 ground and in accordance with section 55 of the Act I refuse to register the application.

Costs

Both parties sought their costs in this matter.  As the opponent has been successful in its opposition, I award costs against the applicant and direct that the applicant pay the costs of the opponent in accordance with the official scale.

Rachel Dunn
Senior Examiner
Trade Marks Hearings