Flexopack SA Plastics Industry v Flexopack Australia Pty Ltd

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FEDERAL COURT OF AUSTRALIA

Flexopack S.A. Plastics Industry v Flexopack Australia Pty Ltd [2016] FCA 235

File numbers: VID 650 of 2014
VID 52 of 2015
Judge: BEACH J
Date of judgment: 11 March 2016
Catchwords:

TRADE MARKS – infringement – thermoplastic polymers – packaging goods – goods falling within the scope of the registration – goods of the same description – services closely related to registered goods – operation of ss 120(1) and (2) of Trade Marks Act 1995 (Cth) – defences to infringement – defence of use of own name – s 122(1)(a) – defence of “right to register” – s 122(1)(fa) – block to hypothetical registration by s 44(1) – counter-response of honest concurrent use – s 44(3)(a) – block to hypothetical registration by s 60 – further block to hypothetical registration by s 62A – proviso under s 120(2) – defences rejected – infringement claims established

TRADE MARKS – removal from the Register for non-use – application under s 92 – application dismissed – removal from the Register for lack of distinctiveness – application under s 88 – ground under s 41 – operation of the then s 41(5) – grounds not established – s 88 application dismissed

TRADE PRACTICES – misleading or deceptive conduct – ss 18 and 29(1)(a), (g) and (h) of Australian Consumer Law – knowing involvement of director – elements of claims established – passing off – reputation – whether director a joint tortfeasor – elements of claims established

Legislation: Competition and Consumer Act 2010 (Cth) Sch 2, ss 2(1), 18, 29(1)(a), (g), (h)
Evidence Act 1995 (Cth) s 64(2)
Trade Marks Act 1995 (Cth) ss 41, 42(b), 44(1), (3), 57, 60, 62A, 88, 92, 100, 101, 120(1), (2), 122(1)(a), (fa)
Trade Marks Regulations 1995 (Cth) Sch 1
Cases cited:

Accor Australia & New Zealand Hospitality Pty Ltd v Liv Pty Ltd (2015) 112 IPR 494
Anchorage Capital Partners Pty Ltd v ACPA Pty Ltd (2015) 115 IPR 67; [2015] FCA 882
Anheuser-Busch, Inc v Budějovický Budvar, Národní Podnik [2002] FCA 390; (2002) 56 IPR 182
Australian Competition and Consumer Commission v Coles Supermarkets Australia Pty Limited (2014) 317 ALR 73
Australian Competition and Consumer Commission v Dukemaster Pty Ltd [2009] FCA 682
Australian Competition and Consumer Commission v TPG Internet Pty Ltd (2013) 250 CLR 640
Australian Postal Corporation v Digital Post Australia Pty Ltd (2013) 105 IPR 1
Bob Jane Corporation Pty Ltd v ACN 149 801 141 Pty Ltd (2013) 97 ACSR 127
Cadbury Schweppes Pty Ltd v Darrell Lea Chocolate Shops Pty Ltd (2007) 159 FCR 397
Campomar Sociedad, Limitada v Nike International Ltd (2000) 202 CLR 45
Cantarella Bros Pty Ltd v Modena Trading Pty Ltd (2014) 254 CLR 337
Caterpillar Loader Hire (Holdings) Pty Ltd v Caterpillar Tractor Co (1983) 48 ALR 511; 77 FLR 139; 1 IPR 265
Chocolaterie Guylian NV v Registrar of Trade Marks (2009) 180 FCR 60
Comité Interprofessionnel du Vin de Champagne v Powell (2015) 115 IPR…

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Details
Case
[2016] FCA 235
Decision Date

CaseChat Overview and Summary

The Federal Court heard a case involving Flexopack SA Plastics Industry, the plaintiff, against Flexopack Australia Pty Ltd, the defendant, along with an individual defendant, Mr Katelis. The plaintiff sought relief for trademark infringement, misleading or deceptive conduct, and passing off. The plaintiff also requested the removal of the defendant’s trademarks from the Register. The court had to decide whether the defendant’s use of the term “Flexopack” constituted trademark infringement under the Trade Marks Act 1995 (Cth) and whether the defendant's conduct amounted to misleading or deceptive conduct under the Australian Consumer Law.

The court examined the defendant's defences, including the "own name" defence and the defence of honest concurrent use. It found that the defendant's use of the term "Flexopack" without the addition of "Australia" constituted trademark infringement as the goods and services offered by both parties were of the same description or closely related. The court also dismissed the defendant's arguments that it had a right to register the trademark and that it had been using the name in good faith. The court held that the defendant's failure to conduct proper inquiries regarding the plaintiff's trademark did not provide a valid defence.

Regarding the misleading or deceptive conduct claims, the court found that the defendant's actions had indeed created relevant confusion and met the threshold for misleading or deceptive conduct under the Australian Consumer Law. The court also established that Mr Katelis, as a director, was personally liable for the company's actions due to his close involvement in the infringing activities. The court concluded that the defendant's conduct was not merely transitory or ephemeral and that it was likely to mislead a significant number of customers.

The court ordered that the plaintiff prepare and serve proposed minutes of orders within 14 days, followed by the defendant's response. Costs were reserved for a later determination.

Orders

Orders of the court

1. The Applicant file and serve within 14 days of the date hereof proposed minutes of orders and short submissions (no more than three pages) to give effect to these reasons.

2. The Respondents file and serve within 14 days of receipt of the Applicant’s minutes and submissions proposed minutes of orders and short submissions (no more than three pages) to give effect to these reasons.

3. Costs reserved.

Background

Background to the litigation

Full text does not contain this section.

Evidence

Evidence Before The Court

If only subjective knowledge was relevant, a person could use the good faith defence despite not having taken any appropriate steps to inform himself of any relevant existing trade marks. This has the potential to undermine the utility of a registered trade mark. The reasonableness or lack thereof of the steps undertaken by the First Respondent in the choice of its company name is to be considered in light of the effect on the trade mark owner. If good faith were to be construed as merely being satisfied on the basis of a stated subjective belief that one did not know of the other, it could lead to a situation where one could justify trade mark use with one’s ignorance. The failure to make proper inquiries should not place a respondent in a better position than if such inquiries had been made.(b) The Respondents’ evidence The Respondents relied predominantly on the evidence in chief of Mr Katelis to establish this defence. As I have indicated, I do not accept the reliability of his evidence on contentious questions. But let me set out the high point of the Respondents’ version of events for the moment. After Mr Katelis decided in 2010 to start a business that would supply high barrier, multilaminate films to food manufacturers in Australia, and to incorporate a company for that purpose, he gave consideration to a name for that company. He wanted to choose a name that would communicate to customers the nature of the products that his company would be supplying and he wanted a name that had a relevant domain name available. Apparently Mr Katelis’ brother-in-law had described a product to him called “flexo film”. Mr Katelis then considered names that involved variations of the words flexographic, flexo, flexible, packaging and pack. One of the names that he searched, using a domain name supplier website (“Crazy Domains”), was “flexopack”. That search showed that the .com.au domain name was available. Apparently, Mr Katelis also deduced from this that it was unlikely that anyone else was trading under that name in Australia. The search also showed that the .com domain name was not available. When Mr Katelis entered that domain name into a browser apparently there was no website active for that address. Mr Katelis also saw from the domain name supplier website that the word “flexopack” was registered in a number of overseas domains. He looked at a number of such websites (he does not recall specifically which ones) and saw that there appeared to be a number of different packaging companies using a “flexopack” name, and those companies appeared to be unrelated. Because of the existence of such companies, Mr Katelis decided to include the word “Australia” in the name of the company he incorporated. Mr Katelis also performed a search of the ASIC register of company and business names for the name “Flexopack Australia Pty Ltd”. He saw that the name Flexopack Australia Pty Ltd was available and he found two other companies with similar names — FlexoPackaging Australia Pty Ltd and Flexo Australia Pty Ltd. He conducted internet searches on those two businesses and concluded that while they were both connected with the packaging industry, one was focused on flexographic printing services and the other did not appear to have a focus on food. Mr Katelis formed the view that confusion was therefore unlikely.

Decision

Reasons for decision

Now I accept that in Hornsby Building Information Centre Pty Ltd v Sydney Building Information Centre Ltd (1978) 140 CLR 216 at 229, Stephen J noted that there is a “price to be paid” for the advantages of choosing a descriptive trade mark. But that is not the present case.(e) Conclusion I have little doubt that the requisite misrepresentation and misleading or deceptive conduct has occurred with relevant confusion created by the First Respondent’s use of “Flexopack”. Moreover, no “own name” defence applies to these causes of action. I should also add several other points. First, the present case is not one involving rival traders using predominantly descriptive trade marks or concurrent use where both traders have built up their respective reputations largely concurrently. Second, the fact that the First Respondent had what it described as a “disclaimer” on its website (and it was hardly that) did not dispel any association. In any event, customers had been led into the “marketing web” once they had visited the website. Third, it was not necessary for the Applicant to show that any person actually sought to conduct business with the First Respondent under a false impression; alternatively, if it was necessary to do so, then one has the evidence of Ms Edwards. Fourth and finally, whatever be the limitations in the evidence in terms of the effect or likely effect of the conduct on actual customers of the Applicant, one also needs to consider the effect on potential customers.PERSONAL LIABILITY OF MR KATELIS(a) Relevant principles Let me first deal with what is required to establish that an individual director is a joint tortfeasor with the company. Keller v LED Technologies Pty Ltd (2010) 185 FCR 449 elaborates on a number of different approaches to establishing such joint liability. They are variously that the alleged joint tortfeasor must have:(a)done something more than acting as a director and been involved in invading the applicant’s rights (at [83] and [84] per Emmett J);(b)had a close personal involvement in the infringing acts of the company (at [291] per Besanko J); or(c)made the company’s tort his own (at [405] per Jessup J). The variation between these particular formulations is of little moment in the present case although I note that there are conceptual differences but generally broad consistency (see Sporte Leisure Pty Ltd v Paul’s International Pty Ltd (No 3) (2010) 88 IPR 242; 275 ALR 258 at [108] to [118] per Nicholas J). In Complete Technology Integrations Pty Ltd v Green Energy Management Solutions Pty Ltd [2011] FCA 1319 at [94] to [105], Kenny J accepted (albeit in the context of a summary judgment application) that there was a strong prima facie case that two of the directors of the respondent who were “in effective control of the business of [the company]” and who were “intimately involved in the company’s activities” were liable as joint tortfeasors and as persons involved in contraventions of applicable consumer law provisions. Relevantly, Kenny J found that the directors knew that the company’s use of the applicant’s trade mark on business cards and letterhead was, or was likely to be, infringing. Her Honour concluded that there was a strong case that the directors were personally involved in the trade mark infringements, passing off and statutory breaches of the applicable consumer law provisions by the company and used the company for their own wrongdoing.

Ratio Decidendi

Legal Principle Established

Finally, and as I have said, the First Respondent has used the word “Flexopack” without “Australia” in its domain name, on the First Respondent’s website and on a quotation. The “own name” defence does not apply to that use.(d) Failing to cease conduct once put on notice of the Applicant and the Flexopack Registration Further, even if the First Respondent initially adopted its name in good faith, it and Mr Katelis were on notice of the Applicant and its rights by at least 15 May 2014 and the potentiality for confusion. Moreover, Mr Katelis must have known by the conversation with Mr Georgakakis in early 2014 that the Applicant was conducting business in Australia. From that time, the “own name” defence was not available. There was knowledge at that time of the Applicant’s position and the potentiality for confusion. Seventh, for the purposes of s 18, the words “likely to mislead or deceive” demonstrate that it is not necessary to show actual deception. Relatedly, it is not necessary to adduce evidence from persons to show that they were actually misled or deceived. Eighth, there must be a sufficient nexus between the impugned conduct or apprehended conduct and the customer’s misconception or deception. As was said in SAP Australia Pty Ltd v Sapient Australia Pty Ltd (1999) 169 ALR 1 at [51] by French, Heerey and Lindgren JJ:The characterisation of conduct as “misleading or deceptive or likely to mislead or deceive” involves a judgment of a notional cause and effect relationship between the conduct and the putative consumer’s state of mind. Implicit in that judgment is a selection process which can reject some causal connections, which, although theoretically open, are too tenuous or impose responsibility otherwise than in accordance with the policy of the legislation. Subject to one qualification, the error or misconception must result from the respondent’s conduct and not from other circumstances for which the respondent was not responsible. But conduct that exploits or feeds into and thereby reinforces the pre-existing mistaken views of members of the relevant class may be misleading or deceptive or likely to mislead or deceive. Ninth, conduct that is merely transitory or ephemeral where any likely misleading impression is likely to be readily or quickly dispelled or corrected does not constitute conduct that would infringe s 18 (Knight v Beyond Properties Pty Ltd (2007) 242 ALR 586 at [58] per French, Tamberlin and Rares JJ). Tenth, and relatedly, it is one thing to say that the conduct must be more than transitory or ephemeral, but it is another thing to say that the conduct or its effect must endure up to some “point of sale”. There is no such requirement to establish a s 18 contravention. Relatedly, it is not necessary to show any actual or completed transaction entered into. Eleventh, in determining whether a contravention of s 18 has occurred, the focus of the inquiry is on whether a not insignificant number within the class have been misled or deceived or are likely to have been misled or deceived by the respondent’s conduct. There has been some debate about the meaning of “a not insignificant number”. The Campomar formulation looks at the issue in a normative sense. The reactions of the hypothetical individual within the class are considered. The hypothetical individual is a reasonable or ordinary member of the class. Does satisfying the Campomar formulation satisfy the “not insignificant number” requirement? I am inclined to the view that if, applying the Campomar test, reasonable members of the class would be likely to be misled, then such a finding carries with it that a significant proportion of the class would be likely to be misled. But if I am wrong and that a finding of a “not insignificant number” of members of the class being likely to be misled is an additional requirement that needs to be satisfied, then I would make that finding in the present case. For a discussion of these issues, see Greenwood J’s analysis in Peter Bodum A/S v DKSH Australia Pty Ltd (2011) 280 ALR 639 at [206] to [210] and National Exchange Pty Ltd v Australian Securities and Investments Commission (2004) 61 IPR 420 at [70] and [71] per Jacobson and Bennett JJ.