Honest Tea, Inc v Teavolution Pty Limited

[2007] ATMO 10

TRADE MARKS ACT 1995

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

Re:Opposition by HONEST TEA, INC to registration of trade mark applications 1023558 and 1040949(30, 32 and 43) - HONEST TEA AND HONEST TEA WITH DEVICE - filed in the name of TEAVOLUTION PTY LIMITED.

Delegate:

Don Nancarrow

Representation:

Opponent: James Omond of Omond & Co, Lawyers, Melbourne and Professor Barry Nalebuff, Chairman of Honest Tea Inc., U.S.A.

Applicant: Ken McInnes of Hodgkinson McInnes Pappas, Patent & Trade Mark Attorneys, Sydney.

Decision:

s. 52 Opposition: s. 58 – mark used by opponent in overseas markets not used ‘in the course of trade’ in Australia – other circumstances do not constitute use in Australia – ground not established; grounds under ss 41, 59, 60, 43 and 62(b) not made out. Overall opposition not established. Costs – awarded against opponent.

Background

1. Teavolution Pty Limited (‘the applicant’) is the owner of two applications, trade mark 1023558 for the word trade mark HONEST TEA (made on 5 October 2004) and trade mark 1040949 for the composite trade mark depicted below (made on 8 February 2005).

1. Throughout this decision, I will particularly address application 1023558. This trade mark is closer visually to the trade mark that the opponent relies on than is 1040949. If a ground of opposition is established for 1023558 I will then consider the same ground for 1040949. Otherwise, where I find that a ground has not been established for 1023558 this implies the same finding for 1040949.

2. Both applications nominated the same three classes of the International (‘NICE’) Classification of Goods and Services. The goods and services involved here are:

Class 30	Tea based beverage (1023558), Tea based product (1040949)
Class 32	Tea based beverage (non-alcoholic) (1023558), Non alcoholic beverage (1040949)
Class 43	Service for providing tea and other beverages (1023558), Services for providing food and drink (1040949)

1. The applications were advertised as accepted for registration in the Australian Official Journal of Trade Marks (‘the Journal’) of 17 February 2005 (1023558) and 9 June 2005 (1040949). Honest Tea, Inc. (‘the opponent’) filed Notices of Opposition to registration of the trade marks followed by its evidence in support. The evidence in support, for both matters, comprises a single declaration from Mr. Seth Goldman, Chief Executive Officer of the opponent. The declaration attaches exhibits ‘SG-1’ to ‘SG-7’, inclusive. The applicant chose to not file any evidence in answer.

2. The opponent company came into existence in January 1998 and has been trading in the United States of America from that year. It has expanded the range of its iced tea beverages from five varieties to twenty in seven years of trading – with a particular interest in organic iced tea beverages. It is one of the fastest growing companies in the United States, expanding from no sales to many millions of dollars in just seven years. From the year 2000 sales were first commenced outside the United States and Canada. Goods bearing the trade mark HONEST TEA have now been sold by the opponent in Japan, France, Mexico, United Kingdom, Switzerland, Singapore, Guam, Taiwan, Sweden, Costa Rica and the Caribbean Islands. Mr. Goldman also avers that the opponent’s goods have been available in Australia, with a 12 week delivery interval, since December 2004.

3. Both opposition matters came before me in Canberra on 14 December 2006. The applicant’s representative, Mr. Ken McInnes, of Hodgkinson McInnes Pappas, Patent and Trade Mark Attorneys (Sydney) appeared by telephone whilst the opponent was represented via video conference links by Mr. James Omond, of Omond & Co., Lawyers (Melbourne) and Professor Barry Nalebuff, the Chairman of the opponent, on a link from the United States of America. I note that Ms. Carmen Champion of Counsel assisted with preparation of the applicant’s submissions although she was not involved in presenting the case at the hearing.

Grounds of Opposition

1. The Notices of Opposition nominate virtually all grounds available under the TradeMarks Act 1995 (‘the Act’) but at the hearing the opponent relied on those grounds under sections 41, 58, 59, 60, 43 and 62(b). For the sake of completeness, I find that the other grounds nominated in the Notices of Opposition have not been made out.

Submissions, the Law and Comments

(a) Section 41

1. Under this ground of opposition the opponent did not provide any new material but simply commented that the trade mark could not distinguish the applicant’s goods or services because the trade mark is owned by the opponent. The part of section 41 that has some relevance to the line of argument in this submission reads:

Trade mark not distinguishing applicant's goods or services

41.(1) …
(2) An application for the registration of a trade mark must be rejected if the trade mark is not capable of distinguishing the applicant's goods or services in respect of which the trade mark is sought to be registered (designated goods or services) from the goods or services of other persons.

1. Such an assessment under section 41 of the capability of a trade mark to distinguish the goods or services of one trader is not by comparison with the trade mark of another – but by an assessment of the inherent capability of the trade mark to be able to distinguish a trading source from a mere description of the goods or services.

2. The words HONEST TEA in the trade mark has been assessed, in the course of examination, as having the requisite inherent capability. I am in agreement with that appraisal.

3. I find that this ground of opposition has not been established.

   (b) Section 58

4. The legislation here allows:

Applicant not owner of trade mark

58. The registration of a trade mark may be opposed on the ground that the applicant is not the owner of the trade mark.

Note:  For applicant see section 6.

1. In his submissions, Professor Nalebuff, a cofounder and Chairman of the opponent company, provided a very complete summary of the opponent’s history by reference to the Goldman declaration. In 1998 Professor Nalebuff visited Australia to deliver lectures on business strategies in his role as Professor of Economics at Yale University. During this visit he also scheduled a meeting with the CEO of Coles- Myer Limited with a view to obtaining an agreement to market the opponent’s goods in Australia. Samples were presented but no agreement was reached.

2. Over the years since 1998 the opponent has also received a number of requests from persons living in Australia to act as distributors. None of these potential distributors proved to be suitable and no firm agreement was reached with any party – until, Professor Nalebuff claims, an agreement was signed with Mr. Steven Hibbard in December 2004. A copy of this agreement is not in evidence. I also note that the date at which the agreement is said to have been reached is some months after 5 October 2004, the date of application of 1023558.

3. Professor Nalebuff also submitted that the opponent has hired salespeople, had price sheets available, had already presented samples of the iced tea products in Australia from as early as 1998 and met with potential buyers and distributors over the years. All of this went toward showing use of the trade mark in Australia by the opponent, he claimed.

4. Mr. James Omond, also for the opponent, submitted that the opponent has used the HONEST TEA trade mark in Australia by virtue of the articles and advertisements that appeared in U.S. publications that were brought into Australia. I note that the evidence (at ‘SG-4’) contains one item that is dated prior to the date of application of 1023558, an extract from The Washington Post dated 26 July 2004.

5. The opponent’s website, has been accessible worldwide since July 1998. The submission from the opponent on this fact made the claim that such availability of the goods in Australia constituted use of the trade mark ‘in the course of trade’.

6. The opponent has also made claims concerning the applicant’s website. These claims may more appropriately support opposition grounds under sub-section 42(b), that the applicant’s use of the trade mark would be contrary to law, rather than a ground under section 58. However, as Mr. McInnes quite correctly pointed out, the applicant’s website material was not part of the evidence and so no reliance could be placed upon it. The applicant also strongly contested the assertions made by the opponent on the issue.

7. Australian law is clear on the requirements for an opponent to establish a ground of opposition under this section. The opponent must demonstrate the following three factors:

1. that the respective trade marks of applicant and opponent be either identical or substantially identical (Carnival Cruise Lines Inc. v Sitmar Cruises Limited (1994) 31 IPR 375, (1994) AIPC ¶91-049, (1994) 120 ALR 495)

2. that the  respective goods or services of the parties be the ‘same kind of thing’ (Re:Hicks’s Trade Mark (1897) 22 VLR 636, 3 ALR 75), and

3. that a person other than the applicant has the earlier claim to ownership based on use prior to both the present application to register and actual use of the trade mark by the applicant (Settef SpA v Riv-Oland Marble Co (Vic.) Pty Limited 10 IPR 402 at 413 and Re:Hicks’s Trade Mark, supra, at 639).

1. On the first of these factors, it is clear that the trade mark shown to have been used by the opponent in overseas markets from as early as 1998 is substantially identical with the first of the trade marks applied for. The opponent has used more than one variation but, at times, use has been of the words HONEST TEA in normal typescript – identical with application 1023558.

2. Some items in the respective goods and services of both parties, namely iced tea beverages, are identical and so qualify the goods as being the ‘same kind of thing’.

3. It is only the third of the factors listed above, concerning the claim to earlier use by the opponent that is seriously in dispute between the two parties. I note that the opponent has also submitted that the applicant has not filed any evidence to support its claim to ownership of the trade mark. However, the filing of the applications themselves has already established a prima facie claim to ownership as at the dates of the applications. Thus, it is only if the applicant wished to substantiate a claim for ownership earlier than the dates of the applications that evidence would be of value for the applicant on the issue.

4. Throughout its submissions the opponent has made no claim to an actual sale of their goods in Australia. It seeks to rely on a variety of circumstances that the opponent claims are similar to previously decided cases, where use of a trade mark has been accepted to have occurred, based on various dealings or actions, despite there being no direct sale of the goods in Australia.

5. The circumstances that the opponent outlined are use by means of: (i) samples of the opponent’s products that were distributed at lectures given by Professor Nalebuff in Australia in 1998 and 2003, (ii) discussions and correspondence with prospective Australian distributors from as early as 1998, (iii) the opponent’s intention and readiness to enter the Australian market from 1998, (iv) the potential for sales via the opponent’s U.S. website since July 1998, and (v) advertising and articles in U.S. publications that are (and were) available in Australia from a time prior to the dates of application here.

6. The opponent has claimed that the preliminary activities that it undertook prior to 5 October 2004 (the date of application of 1023558) qualify as use of the trade mark. It has relied on such authority as Moorgate Tobacco Co Limited v Philip Morris Limitedand another (1984) 156 CLR 414, a High Court judgment, where, at 433, Deane J comments:

   The cases establish that it is not necessary that there be an actual dealing in goods bearing the trade mark before there can be a local use of the mark as a trade mark.

7. This statement, however, must be balanced by a consideration of the kind of dealings or other circumstances that have been found to constitute ‘use’ when there is no actual dealing in the goods. In that same judgement, Moorgate v Philip Morris, at 433-434, His Honour continues:

   It may suffice that imported goods which have not actually reached Australia have been offered for sale in Australia under the mark (Re Registered Trade Mark “Yanx”; Ex parte Amalgamated Tobacco Corporation Ltd (1951) 82 CLR at pp. 204-205) or that the mark has been used in an advertisement of the goods in the course of trade: Shell Co. of Australia v Esso Standard Oil (Australia) Ltd. (1963) 109 CLR at p. 422). In such cases, however, it is possible to identify an actual trade or offer to trade in the goods bearing the mark or an existing intention to offer or supply goods bearing the mark in trade. In the present case, there was not, at any relevant time, any actual trade or offer to trade in goods bearing the mark in Australia or any existing intention to offer or supply such goods in trade. There was no local use of the mark as a trade mark at all; there were merely preliminary discussions and negotiations about whether the mark would be so used.

8. Another relevant precedent in this matter is found in Settef SpA v Riv-Oland MarbleCo (Vic) Pty Limited (1987) 10 IPR 402 at 417-418 where McGarvie J said:

   I consider that it follows from the authorities that a mark is used as a trade mark only if it is used with a view to facilitating or promoting the operation of a trading channel which in a business sense had already been opened in Australia. The mark must be used for the purpose of trade : W D & H O Wills (Australia) Limited v RothmansLimited (1956) 94 CLR 182 at 191. The forwarding of samples and brochures is not sufficient to indicate that Settef was ready and willing to fulfil such orders as it received from Australia. The purpose of these items may well have been to ascertain whether there was a market in Australia sufficient for it to be worthwhile for Settef to export here. Use of the mark in such preliminary activities would not be a use in the course of trade : Moorgate Tobacco Co Limited v Philip Morris Limited (No 2) (1984) 59 ALJR 77 at 83.

9. The opponent sought to distinguish the Moorgate case from the present situation by stating that, whereas in Moorgate, ‘there had been no decision as to whether the trade mark would be used,’ in the present matter ‘there was every intention to make commercial sales under the trade mark in Australia – once the appropriate distributor was found’.

10. The effect of those differing circumstances, between the present matter and Moorgate, however, is the same from the point of view of identifying ‘an actual trade or offer to trade in the goods bearing the mark’ or from the point of view of ‘facilitating or promoting the operation of a trading channel’. There is nothing here to adequately demonstrate that the opponent has met these criteria.

11. The individual claims made by the opponent concerning its use amount to preliminary steps that do not clearly show any trade or offer to trade in the goods. The opponent has asserted that it has every intention to trade in the goods from as early as 1998 – but the only concrete step that it has argued concerns the agreement with Mr. Steven Hibbard, for him to act as an Australian distributor for the opponent. This agreement, however, was not in evidence and, in any event, was said to be dated from December 2004 – some two months after the filing date of application 1023558.

12. The planning activities with prospective distributors, and the samples used in Australia by Professor Nalebuff, that the opponent claims demonstrate use of the trade mark in Australia, do not, in my view, meet the standard that McGarvie J discussed in Settef v Riv-Oland, supra, to facilitate or promote ‘the operation of a trading channel which in a business sense had already been opened in Australia’.

13. What of the article in The Washington Post, or the opponent’s use of its website, to advertise its goods?

14. Mr. McInnes pointed out that, in relation to the article in The Washington Post, there was no evidence provided to indicate that anyone in Australia had read the article. I accept this submission. Logically, the article is, therefore, not useful to demonstrate the ‘opening of a trade channel’ or ‘an offer to trade in the goods’ in Australia.

15. The opponent also submitted that it has used the trade mark in Australia by virtue of its U.S. website that has been accessible from Australia since July 1998. Prospective Australian customers could, presumably, order the goods for delivery using the website and gain delivery directly from the United States. Justice Merkel commented on this scenario in Ward Group Pty Limited v Brodie & Stone PLC and others, 64 IPR 1 at 12, in the words:

    [43] In summary, the use of a trade mark on the internet, uploaded on a website outside of Australia, without more, is not use by the website proprietor of the mark in each jurisdiction where the mark is downloaded. However, as explained above, if there is evidence that the use was specifically intended to be made in, or directed or targeted at, a particular jurisdiction then there is likely to be a use in that jurisdiction when the mark is downloaded.

16. Although the opponent has claimed visitors to the website to number as many as 1000 per day, there is no indication on whether these figures are representative of Australian or worldwide interest, or whether these figures are before or after the applicant’s priority date, or whether the results of these website ‘hits’ produced any outcomes for the opponent from the Australian field.

17. Mr. Omond also sought to highlight the factual circumstances in Re Registered Trade Mark “Thunderbird”, 1A IPR 511, (1974) 131 CLR 592, 4 ALR 687 where just one unit of the goods had been imported, and that this was sufficient to constitute ‘use of the trade mark’. I accept that one unit of goods may constitute use – provided that the other relevant details are on all fours with the Thunderbird case, namely that the single item was clearly sold into Australia under the trade mark, as described in that case at 1A IPR 516. Mr. McInnes’s submission on the matter highlighted the same factor – he had earlier asked ‘where could the opponent point to even one actual use of the trade mark?’ In the present matter there is no evidence before me of any commercial transaction involving the opponent’s goods having taken place in the Australian market.

18. I find that none of the circumstances that the opponent has identified qualifies as use of the trade mark HONEST TEA in Australia.

19. I also note that Williams J, in Seven-Up Co v OT Limited (1947) 75 CLR 203, commented (at 211) on circumstances where it had been found that a trade mark has been used in an overseas market by a foreign trader, but not so used in Australia, with the words:

    In my opinion, the effect of these cases is that in the absence of fraud, it is not unlawful for a trader to become a registered proprietor under the Trade Marks Act of a mark which has been used, however extensively, by another trader as a mark for similar goods in a foreign country, provided the foreign mark has not been used at all in Australia at the date of the application for registration.  But the position is different if at that date the mark has become identified with the goods of the foreign trader in Australia because those goods have been brought into Australia by the foreign trader himself or by some importer or in some other manner.  The court frowns upon any attempt by one trader to appropriate the mark of another trader, although that trader is a foreign trader and the mark has only been used by him in a foreign country.  It therefore seizes upon a very small amount of use of the foreign mark in Australia to hold that it has become identified with and distinctive of the goods of the foreign trader in Australia. It is not then a mark which another trader is entitled to apply to register under the Trade Marks Act because it is not his property but the property of the foreign trader. The registrar is entitled to refuse to register the mark for such goods. If it has been registered the court may rectify the register on the ground that the mark is wrongly entered on the register.

1. The opponent has sought to rely upon a number of circumstances in this matter in an attempt to establish use of the HONEST TEA trade mark despite no direct commercial sales. This situation was also discussed in Woolly Bull Enterprises PtyLimited and another v Reynolds, 51 IPR 149, where Drummond J commented at 161:

   Though it is not necessary, for there to be such a use of a mark, that there be an actual trade in the sense of the offering for sale and the sale of goods bearing the mark, the owner will not use its mark unless it has so acted to show that it has gone beyond investigating whether to use the mark and beyond planning to use the mark and has got to the stage where it can be seen objectively to have committed itself to using the mark, ie, to carrying its intention to use the mark into effect.

2. In my opinion, the opponent has not met this threshold in any of the variety of circumstances that it presented to claim use of the trade mark in Australia before 5 October 2004. From the foregoing, I find that this ground of opposition has not been established.  

   (c) Section 59

3. The legislation here allows:

Applicant not intending to use trade mark

59. 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.

1. During the course of the hearing the opponent commented that it was now aware that the applicant is using the trade mark and that it has no submissions concerning the applicant’s intention at the time that the Notices of Opposition were filed.

2. I find that this ground has not been made out.

   (d) Section 60

3. In relation to this ground of opposition the law reads:

Trade mark similar to trade mark that has acquired a reputation in Australia

60. The registration of a trade mark in respect of particular goods or services may be opposed on the ground that:

(a) it is substantially identical with, or deceptively similar to, a trade mark that, before the priority date for the registration of the first-mentioned trade mark in respect of those goods or services, had acquired a reputation in Australia; and
(b) because of the reputation of that other trade mark, the use of the first-mentioned trade mark would be likely to deceive or cause confusion.

Note 1:  For deceptively similar see section 10.

Note 2:  For priority date see section 12.

1. The opponent put forward its HONEST TEA trade mark for me to consider under this ground. As discussed under the heading for section 58 above, the opponent could not show actual use of its trade mark in Australia prior to 5 October 2004, the date of application of 1023558 in the present matter.

2. In relation to reputation Justice Kenny states in McCormick & Co Inc. v McCormick, 51 IPR 102, at 128:

   In ConAgra Inc v McCain Foods (Aust) Pty Ltd (1992) 33 FCR 302 at 343; 23 IPR 193 at 234, Lockhart J said:

   [R]eputation within the jurisdiction may be proved by a variety of means including advertisements on television or radio, or in magazines and newspapers within the forum.

3. Justice Kenny continues at 129 with the words:

   In practice, it is commonplace to infer reputation from a high volume of sales, together with substantial advertising expenditures and other promotions, without any direct evidence of consumer appreciation of the mark, as opposed to the product: …

4. None of the measures of reputation mentioned above – advertisements, sales figures for the goods, advertising expenditure or other promotions within the Australian market are in evidence. Additionally, there are no other circumstances that the opponent drew to my attention from which I would infer reputation.

5. Given this background, I cannot agree with the opponent that its trade mark has any relevant measure of reputation in Australia as at the application dates for either of these applications. If the trade mark that the opponent has put forward for me to consider cannot be shown to have ‘acquired a reputation in Australia’ then the necessary trigger for section 60 has not been met as set out in sub-section 60(a) and the ground of opposition must fail.

6. I find that the ground under section 60 has not been established.

   (e) Section 43

7. For this leg of opposition the legislation reads:

Trade mark likely to deceive or cause confusion

43. 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.

1. Mr. Omond submitted that the source of the connotation was founded in the fact that the applicant’s trade marks either comprised or contained the words HONEST TEA, words which are both the opponent’s corporate name and the opponent’s main brand. This led to the mistaken view, or at least confusion, that the goods or services emanated from the opponent, he said.

2. The concept of ‘connotation’ has been introduced from the outset of the administration of the 1995 Act and precedent authority has now been established. This authority is set out in Big Country Developments PtyLimited v TGI Friday’s Inc and another (2000) 48 IPR 513 at 521 where it is clearly shown that the connotation, or secondary meaning, envisaged here must exist within the trade mark under consideration and not by comparison with another trade mark.

3. This same concept is brought out in the words of Spender J in Winton Shire Council and another v Lomas, 56 IPR 72, at 77:

   Section 43 is directed to the mark itself. It is not concerned with any deception or confusion caused by the reputation in Australia of some other trade mark. That aspect of the matter is dealt with under s 60.

4. A consideration of the trade mark HONEST TEA may bring to mind the phonetically similar word ‘honesty’ or may conjure up the idea of ‘tea that is pure of any additives or impurities’, that is to say, ‘tea and nothing but tea’. Neither of these ideas, in my opinion, would lead a prospective purchaser to suffer ‘deception or confusion’ when the trade mark is used on the goods and services nominated for these applications.

5. I find that this ground of opposition has not been established.

   (f) Section 62

6. The opponent sought to rely on only sub-section (b) of this section which allows:

Application etc. defective etc.

62. The registration of a trade mark may be opposed on any of the following grounds:

(a) ….
(b) that the Registrar accepted the application for registration on the basis of evidence or representations that were false in material particulars.

1. The opponent stated in relation to this ground ‘that the applicant submitted the applications …. knowing that it was not the owner of those trade marks in Australia’ and had therefore contravened sub-section 62(b).

2. I note that paragraph 27(1)(a) impacts upon the opponent’s claim. This reads:

Application—how made

27.(1) A person may apply for the registration of a trade mark in respect of goods and/or services if:

(a) the person claims to be the owner of the trade mark; …

1. Thus, a person who ‘claims to be the owner’ by means of an application does not actually make a false representation at all – merely a claim that is tested elsewhere, namely in terms of section 58.

2. Accordingly, the ground of opposition cannot be established through this channel. 

3. However, as I have already found that the section 58 ground has not been made out, even if I were to use the opponent’s logic (that the sub-section 62(b) ground rests on establishing the ground under section 58) then opposition under sub-section 62(b) would still fail.

4. I find that this ground of opposition has not been established.

Decision

1. I have found that no ground of opposition relied upon by the opponent has been established. My decision, in terms of section 55 of the Act, is that both trade mark applications, numbered 1023558 for the trade mark HONEST TEA, and 1040949 for the trade mark HONEST TEA with leaf device, may proceed to registration one month from the date of this decision. If the Registrar has been served with a notice of appeal before that time, I direct that registration shall not occur until the appeal has been discontinued, or in the event of a decision from the Court, that the applications be subject to that order.

Costs

1. Both parties requested costs in the matter. As the applicant has been the successful party and there is nothing before me to suggest that I should not apply the general rule, I award costs against the opponent in accord with the Official scale as set out in Schedule 8 of the Regulations to the Act.

Don Nancarrow

Hearing Officer

Trade Marks Hearings

9 March 2007