Kellogg Company v PB Foods Ltd

[1999] FCA 1610

FEDERAL COURT OF AUSTRALIA

Kellogg Company v PB Foods Ltd [1999] FCA 1610

TRADE MARKS – appeal against Registrar’s dismissal of opposition to registration of word mark “TOUCAN” in respect of class 32 (fruit drinks) – existing registrations of three word and device marks of opponent in respect of class 30 (breakfast cereals) – opponent’s existing marks consisting of fanciful cartoon bird character and his name “SAM TOUCAN” – extensive use by opponent of its trade marks since 1964 in connection with promotion of its children’s breakfast cereal “Froot Loops” – association between opponent’s fruit theme and applicant for registration’s fruit drinks – whether use of word mark “TOUCAN” would be likely to cause confusion – use of survey evidence in trade mark cases.

Trade Marks Act 1955 (Cth) s 28(a)

Nettlefold Advertising Pty Ltd v Nettlefold Signs Pty Ltd  (1997) 38 IPR 495, followed
Radio Corporation Pty Ltd v Disney (1937) 57 CLR 448, applied
Bali Trade Mark [1969] RPC 472, referred to
Smith Hayden & Co Ltd’s Application (1946) 63 RPC 97, followed
Pioneer Hi-Bred Corn Co v Hy-Line Chicks Pty Ltd [1979] RPC 410, cited
In re Remfry’s Trade Mark (1897) 23 VLR 44, cited
Reckitt & Colman (Aust) Ltd v Boden (1945) 70 CLR 84, referred to
Southern Cross Refrigerating Co v Toowoomba Foundry Pty Ltd (1954) 91 CLR 592, applied
Blount v Registrar of Trade Marks (1998) 83 FCR 50, cited
Jafferjee v Scarlett (1937) 57 CLR 115, cited
Nettlefold Advertising Pty Ltd v Nettlefold Signs Pty Ltd (1998) 160 ALR 184, referred to
Musidor BV v Tansing (t/a Apple Music House) (1994) 29 IPR 203, cited
Shoshana Pty Ltd v 10^th Cantanae Pty Ltd (1987) 79 ALR 279, cited
TV-am plc v Amalgamated Television Services Pty Ltd (ATN Channel 7) (1988) 12 IPR 85, cited
Arnotts Ltd v Trade Practices Commission (1990) 24 FCR 313, cited
Sterling Pharmaceuticals Pty Ltd v Johnson & Johnson Australia Pty Ltd (1990) 96 ALR 277, cited
Interlego AG v Croner Trading Pty Ltd (1991) 102 ALR 379, cited
State Government Insurance Corporation v GIO (NSW) (1991) 28 FCR 511, cited
Gas Corporation v Phasetwo Nominees Pty Ltd (1998) ATPR 41-644, cited
Centurion Roller Shutters Pty Ltd v Automatic Technology (Australia) Pty Ltd [1999] FCA 1118, cited

KELLOGG COMPANY v PB FOODS LIMITED

NG 270 of 1998

LINDGREN J
19 NOVEMBER 1999

SYDNEY

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	NG 270 OF 1998

On appeal from the Registrar of Trade Marks

BETWEEN:	KELLOGG COMPANY Applicant
AND:	PB FOODS LIMITED (ACN 008 668 602) Respondent
JUDGE:	LINDGREN J
DATE OF ORDER:	19 NOVEMBER 1999
WHERE MADE:	SYDNEY

THE COURT ORDERS THAT:

1.The application be dismissed.

2.The applicant pay the respondent’s costs.

Note:   Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	NG 270 OF 1998

On appeal from the Registrar of Trade Marks

BETWEEN:	KELLOGG COMPANY Applicant
AND:	PB FOODS LIMITED (ACN 008 668 602) Respondent

JUDGE:	LINDGREN J
DATE:	19 NOVEMBER 1999
PLACE:	SYDNEY

REASONS FOR JUDGMENT

INTRODUCTION

1. The applicant (“Kellogg”) appeals under s 51 of the Trade Marks Act 1955 (Cth) (“the Act” and “the 1955 Act”) from a decision of the Registrar of Trade Marks (“the Registrar”) under s 50 of the Act determining an application by the respondent (“PB”) for registration of the word mark “TOUCAN”. The Delegate of the Registrar decided to register the trade mark: see Kellogg Company v Peters (WA) Ltd (1998) 41 IPR 97.

2. The Macquarie dictionary defines a “toucan” as:

   “any of various fruit-eating birds (family Ramphastidae) of tropical America, with an enormous beak and usu.  a striking colouration.”

   The Encyclopaedia Brittanica also emphasises the colouration and size of the toucan’s bill which, it states, “may be a third of the bird’s length.”

3. Kellogg is a United States Corporation. For over thirty years it has used a lively fanciful cartoon bird character, which it has variously called “Sam”, “Sam Toucan” or “Toucan Sam”, to promote its “Froot Loops” breakfast cereal.  The cereal was introduced in the United States in 1963 and in Australia in 1964.  Since 1964 Kellogg has registered in the United States and many other countries trade marks consisting of the cartoon bird device, which has varied in appearance over the years, either alone or in conjunction with the words “SAM TOUCAN”.

4. The Delegate thought that the cartoon character looked “more like the cartoon representation of a chicken” (at 103).  In  my opinion, notwithstanding its long curved beak and bright colours, very few Australian children or their parents (to whom the Fruit Loops cereal is marketed) would recognise the fanciful bird character with its exaggerated features and poses as the exotic “toucan”, at least unless they were “probed” by questioning to make an association with a real bird or had been prompted to make the association by Kellogg’s use of the word “toucan” in association with the image on the same or a previous occasion.  Although Kellogg first registered a relevant trade mark in Australia as early as 1966 and described the artificial bird image forming part of it as a toucan “device”, for a long while the image alone, with or without the uninformative name “Sam”, appeared on its Froot Loops packets.

5. PB was incorporated in Western Australia on 15 July 1929.  Its former names include “Peters Ice Cream (WA) Limited” and “Peters (WA) Limited”.  It adopted its present name on 19 August 1997.  It trades under the registered business name “Peters & Brownes Group”.  PB’s primary product line is dairy products.  It sells fruit juices as a secondary product line under the registered word and device mark which appears as Annexure “A” to these Reasons (“the Brownes mark”).  There is evidence that PB uses the Brownes mark “as a generic reference to all products” of PB.  PB sells ice cream and ice confections nationally under the “Brownes” mark and in Western Australia under both “Brownes” and “Peters”.  The labels on PB’s toucan fruit juice containers depict a “realistic” toucan image and bear the printed word “TOUCAN” and the Brownes mark. 

6. When it was named “Peters (WA) Limited”, PB applied to register the word “TOUCAN” as a trade mark for fruit drinks, fruit juices and other like products.  In substance, Kellogg’s contention has been that PB’s use of that mark in relation to such goods “would be likely to deceive or cause confusion” because a substantial number of consumers or prospective consumers would be caused to wonder whether PB’s products marketed under it came from the same source as Kellogg’s Froot Loops. 

   LEGISLATION AND PROCEDURAL BACKGROUND

7. PB lodged its application (578456) on 15 May 1992 (“the relevant date”) in class 32 in respect of:

   “Fruit drinks and fruit juices, including fresh as well as long-life juices, and all other goods in this class.”

8. Class 32 is as follows:

   “Beers; mineral and aerated waters and other non-alcoholic drinks; fruit drinks and fruit juices; syrups and other preparations for making beverages.”

9. On 29 July 1993, the trade mark application was advertised as accepted in the Australian Official Journal of Trade Marks.  Kellogg lodged its notice of opposition on 28 January 1994.  On 26 February 1998, the Registrar’s delegate dismissed the opposition in total and directed that PB’s application should proceed to registration.

10. The Trade Marks Act 1995 (Cth) (“the 1995 Act”), other than Part 1, commenced on 1 January 1996. Section 232 repealed the 1955 Act. The 1995 Act refers to the 1955 Act as “the repealed Act”. Where an application was pending, or had been accepted under the 1955 Act and the acceptance was in force immediately before 1 January 1996, the 1955 Act continues to apply in relation to the application: ss 241(1) and (2), and the definition of “pending” in s 11(2), of the 1995 Act. Accordingly, registrability in the present case is assessable under the 1955 Act, and Kellogg’s opposition, its determination and Kellogg’s appeal to this Court, were and are pursuant to ss 49 to 51 of that Act.

11. Section 28 of the Act provides, relevantly, as follows:

    “28     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)       ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ .... or;

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

    shall not be registered as a trade mark.” (emphasis supplied)

12. The expressions “mark” and “trade mark” are defined in s 6(1) of the Act, relevantly as follows:

    “‘mark’ includes a device, brand, heading, label, ticket, name, signature, word, letter or numeral, or any combination thereof;”

    “‘trade mark’ means:

    (a)... a mark used or proposed to be used in relation to goods ... for the purpose of indicating, or so as to indicate, a connexion in the course of trade between the goods  ... and a person who has the right, either as proprietor or as registered user, to use the mark, whether with or without an indication of the identity of that person; ... ”

13. Kellogg relies on three grounds of opposition. It accepts, however, that if it fails on the first, it will not succeed on the second or third. The first ground, that provided for in s 28(a) (“the use of which would be likely to deceive or cause confusion”), was noted above. The second ground (“the use of which would be contrary to law” - s 28(b)) is based on Kellogg’s contention that the use by PB of the trade mark “TOUCAN” would be likely to mislead or deceive in contravention of s 52 of the Trade Practices Act 1974 (Cth) (“the TP Act”). Kellogg accepts that since the notion of “causing confusion” referred to in s 28(a) of the Act would be satisfied by “causing to wonder”, it involves a lower threshold than the “likely to mislead or deceive” of s 52 of the TP Act. Kellogg’s third ground (“otherwise be not entitled to protection in a court of justice” – s 28(d)) is based on the alleged non-distinctiveness of the mark (cf s 24(2) of the Act). Kellogg accepts that if it fails on the s 28(a) ground, it cannot succeed on the ground of lack of distinctiveness.

14. For the above reasons, I need deal only with the “likely to cause confusion” limb of the ground referred to in s 28(a), and a conclusion that confusion is not likely to be caused will carry with it a conclusion that deception is not likely to be caused.

15. It is convenient to note two well recognised principles as they apply to this ground:

    (1)The onus is on PB to prove that no legitimate use which might fairly be made of the word “TOUCAN” as a trade mark in relation to any of the goods in class 32 would be “likely to … cause confusion”, having regard to Kellogg’s activity down to the relevant date and any legitimate use which might fairly be made of its registered trade marks after that date in respect of any of the goods in class 30: Eno v Dunn (1890) 15 App Cas 252 at 257 (Lord Watson), 261-262 (Lord Herschell); Standard Paint Co v Hales Ltd (1920) 27 CLR 350 at 353,354; Reckitt & Colman (Aust) Ltd v Boden (1945) 70 CLR 84 at 94-95 (the passage is set out in para 71 point 4 later); Southern Cross Refrigerating Co v Toowoomba Foundry Pty Ltd (1954) 91 CLR 592 (“Southern Cross”) at 594-5 (s 44 of the Act requires the Registrar to accept an application for registration only if the Registrar is satisfied that there is no subsisting lawful ground of objection, whereas s 33 of the 1995 Act now provides that the Registrar must do so unless satisfied that the application has not been made in accordance with that Act or that there are grounds for rejecting it: cf Blount v Registrar of Trade Marks (1998) 83 FCR 50 (Branson J) at 56);

    (2)The likelihood of confusion to which s 28(a) refers is to be assessed as at the date of PB’s application (here 15 May 1992): Southern Cross at 594.

16. The second requirement just mentioned signifies, not that events occurring after 15 May 1992 are necessarily irrelevant, but that they are relevant only in so far as they can rationally affect the assessment as at 15 May 1992, of the likelihood of confusion.

    FURTHER BACKGROUND

17. The marketing of Kellogg’s Froot Loops has always emphasised a connection with fruit and colour.  On the original packaging of 1964 the fanciful bird image appeared and on its head a tall straw hat containing fruit piled precariously high.  The picture was colourful.  Later packaging was more brightly coloured.  The end line of early television commercials was “Tastes just like fruit and goes crunch to boot”.  The individual pieces of the Froot Loops cereal have always been coloured. 

18. In Australia, Kellogg is the registered proprietor of the following trade marks (“the Toucan trade marks”):

Registration Number	Registration Date	Mark	Goods
184016	19-04-66	“SAM TOUCAN” and device being a cartoon bird wearing a party hat	Class 30: “Preparations made from cereals; biscuits, cake, confectionery”
295713	6-04-76	“SAM TOUCAN” and device being a cartoon bird	Class 30: “Preparations made from cereals; biscuits, cake, confectionery”
386745	27-01-83	“SAM” and device being a series of cartoon birds in various poses	Class 30: “All goods included in this class”

1. Copies of the Toucan trade marks appear in Annexure “B” to these Reasons. An examination of the Toucan trade marks shows that they consist of a combination of elements.  The first two use the words “SAM TOUCAN” in conjunction with the cartoon depiction of a bird.  The third consists of the word “SAM” alone and such a device: the word “TOUCAN” does not feature in that mark.  It is important to note that the names “SAM TOUCAN” and “SAM” which form part of the Toucan trade marks, are clearly names of the cartoon bird character.

2. Class 30 is as follows:

   “30.     Coffee, tea, cocoa, sugar, rice, tapioca, sago, artificial coffee; flour and preparations made from cereals, bread, pastry and confectionery, ices; honey, treacle; yeast, baking-powder; salt, mustard; vinegar, sauces (condiments); spices; ice”

3. The goods described in classes 30 and 32 are mutually exclusive.

4. Kellogg (Australia) Pty Ltd (“Kellogg Australia”) is a subsidiary of Kellogg and is the authorised user in Australia of the Toucan trade marks.  Like Kellogg, Kellogg Australia has used those marks throughout Australia in the promotion and sale of Froot Loops.  Kellogg has registered the name “TOUCAN SAM” (often translated into the local language) and one or other of the devices mentioned as trade marks in at least forty-three countries and has sold Froot Loops in at least twenty-nine countries in addition to the United States and Australia.

5. In Australia, Kellogg’s sales of Fruit Loops in association with the Toucan device and one or both of the names “SAM” and “TOUCAN” have been extensive.  The sales for the years 1985 to 1992 are as follows:

Year	Number of Packs	Value of Sales ($AU)
1985	2,437,440	3,759,000
1986	2,450,076	3,778,000
1987	2,257,932	3,807,000
1988	2,546,808	4,916,000
1989	2,494,104	5,253,000
1990	2,769,096	6,471,000
1991	2,951,532	7,755,000
1992	2,859,324	8,144,000

1. PB is the registered owner of three “Toucan” trade marks.  The first (No. 642577) is a realistic toucan device shown in Annexure “C” to these Reasons (“the real toucan mark”).  It is effective for ten years from 6 October 1994 in relation to “[f]ruit drinks and fruit juices, including fresh and long-life juices; and all other goods in…class 32”.  The full wording of class 32 was set out earlier.

2. PB’s second trade mark (No. 663144), the word mark “TOUCAN”, effective for ten years from 6 June 1995, is for “ice cream; ice cream products; frozen confections; sorbets (ices), sherbets (ices) and other water products being goods in class 30”.  The full wording of class 30 was set out earlier.

3. PB’s third mark (No. 730969), the word mark “TOUCAN SLING”, effective for ten years from 27 March 1997, is for “milk and milk products, including fruit juice flavoured milk; dairy products … in class 29” and “[f]ruit drinks and fruit juices, including fruit juice drinks; syrups and other preparations for making beverages being goods in class 32”.  In full, class 29 is as follows:

   “29.Meat, fish, poultry and game; meat extracts; preserved, dried and cooked fruits and vegetables; jellies, jams; eggs, milk and milk products, edible oils and fats”

4. Since 4 July 1994, PB has been selling fruit juices and drinks in Western Australia under the trade mark “TOUCAN”. From 1995 to 1997, PB manufactured and sold a mixed fruit and milk drink called “TOUCAN SLING”. PB also manufactures and markets throughout Australia the ice confection, “TOUCAN twin stick icy poles”, the packaging of which bears the Brownes trade mark and the “Brownes Dairy” address. 

   THE DECISION OF THE DELEGATE OF THE REGISTRAR

5. The present “appeal” is in the nature of a fresh hearing: cf Jafferjee v Scarlett (1937) 57 CLR 115 at 119 (per Latham CJ), and any reference to “appeal” in these Reasons is to be understood accordingly. Nonetheless, the Delegate’s decision forms a convenient starting point for discussion.

6. Kellogg submits that that decision is affected by two principal errors.  The first is that the Delegate erred by not being prepared to find that the word “TOUCAN”, divorced from any association with the character Sam Toucan, was associated with Kellogg.  The second is that he erroneously thought that Kellogg had to demonstrate that PB had been guilty of “blameworthy conduct”.  It is common ground on the appeal that in the light of the supervening decision of the Full Court of this Court in Nettlefold Advertising Pty Ltd v Nettlefold Signs Pty Ltd (1998) 160 ALR 184, paras (a) and (d) of s 28 of the Act are to be read disjunctively, at least for the purpose of an opposition to an application for a first registration, with the result that Kellogg is not required to establish blameworthy conduct on the part of PB. Accordingly, as noted earlier, the appeal is to be decided by reference to s 28(a) alone.

   KELLOGG’S STATEMENT OF POINTS IN SUPPORT OF THE APPEAL

7. In its Statement of Points in Support of the Appeal, Kellogg advances the following arguments:

   “6.By reason of the extensive use of the Toucan Trade Marks throughout Australia over many years by itself and its authorised user, [Kellogg] has acquired a valuable reputation and goodwill in the sale and promotion of goods, and particularly fruit-based food products, by reference to the Toucan Trade Marks.

   ……………………………………………………………………………………

   14.The word TOUCAN is substantially identical with or deceptively similar to each of the Toucan Trade Marks.

   15.The goods covered by application 578456 are the same as or goods of the same description as the goods covered by the Toucan Trade Marks.

   16.      [PB] adopted the mark TOUCAN in the knowledge:

   (a)of [Kellogg’s] reputation and goodwill in the Toucan Trade Marks and the International Toucan Trade Marks; and

   (b)       that [PB] would therefore benefit from the connection that

   would be made in the minds of purchasers and potential purchasers between the word TOUCAN and [Kellogg] and its products.

   17.      By reason of the facts, matters and circumstances set out in this      statement of points in support of the appeal:

   (a)purchasers and prospective purchasers of [PB’s] products promoted and sold by reference to the word TOUCAN are likely to believe that or to be caused to wonder whether such products are products of [Kellogg], are sold with the licence or authority of [Kellogg], or are manufactured by [Kellogg] or the manufacturer of [Kellogg’s] products; 

   (b) in the alternative ... [PB] cannot establish that purchasers and prospective purchasers of [PB’s] products promoted and sold by reference to the word TOUCAN are not likely to believe that or to be caused to wonder whether such products are products of [Kellogg], are sold with the licence or authority of [Kellogg] or are manufactured by [Kellogg] or the manufacturer of [Kellogg’s] products;

   (c)the use of the word TOUCAN as a trade mark is likely to deceive or cause confusion…”

   THE FACTS IN MORE DETAIL

   Kellogg’s “Sam Toucan” character

1. Over the years Kellogg’s cartoon character has undergone several changes.  The first (1964) Fruit Loops cereal package in Australia depicted a colourful bird with a black, pink, red and yellow striped beak, and a tall straw hat brimming with assorted fruits, including lemons, cherries and oranges, balanced on its head.  The bird was a cartoon character with exaggerated features and artificial colouring.  The fruit theme was continued in the graphics used in the lettering for “FROOT LOOPS”: a cherry completed the “R”, an apple formed the first “O”, and a lemon formed the second “O”.  Neither “SAM” nor “TOUCAN” appeared.  The brand name “Kellogg” appeared at the top of the packet.  The cereal is described as “Froot Flavored Loops”, a description which is reinforced by the colours and fruit.  The cereal was depicted in a bowl bearing the label “REAL FRUIT FLAVOR IN A SUGAR-CRYSTALLED OAT CEREAL”. 

2. Down to the relevant date, variations on this packaging were used.  The “fruit theme” and the use of vibrant colours were continued.  The name “SAM” came to appear on the bird’s chest.  In some cases, Sam was shown as saying in a speech bubble, “Taste like Fruit and goes crunch to boot!”  In some cases he was portrayed with outstretched wings flying above a bowl of Froot Loops.  But only the most recent of the pre-1992 forms of packaging used the word “TOUCAN” and this was as part of the name “Sam Toucan”, and appeared, not prominently, but in small writing on a children’s promotion on the side of the packet.  Accordingly, so far as packaging is concerned, Kellogg’s relevant “reputation” down to 15 May 1992 was, in substance, limited to whatever arose from the appearance of the cartoon bird image alone, in association with the Froot Loops product.

3. Since the relevant date, Kellogg has continued to feature the lively bird character on the front of the Froot Loops packaging, and also as part of children’s promotions and games which appeared in varying places on the packaging.  There have been increased references to the cartoon bird character as “Sam Toucan” (or “Toucan Sam”).  For example, the back of one cereal box portrayed “The Adventures of Sam Toucan”, and another featured a circular maze with a purple Froot Loop at its centre accompanied by the caption, “Help Toucan Sam to follow his nose and find the Purple Loop!” 

4. On television, however, since at least 1975 Kellogg has used the “Toucan Sam” name as well as the bird image to advertise Froot Loops extensively throughout Australia.  In the advertisements, the character is identified as “Sam Toucan”, “Sam”, or simply “a toucan”.  The television commercials (which I have viewed) down to the relevant date were as follows:

   1.“Nephews” (17 July 1975)

   2.“Mountaineers” (3 October 1978)

   3.“Garden” (31 July 1979)

   4.“Tree House” (14 March 1983)

   5.“Chuck Waggon” (5 February 1986)

   6.“Surfin’ Sam” (4 February 1988)

   7.“Ski Bunny” (24 January 1991)

   All the advertisements emphasise the association between Froot Loops and fruit.  In a television advertisement called “Nephews” produced as early as 17 July 1975, the character is referred to as “Sam Toucan “ and “Sam” (“He can, he can, Sam Toucan can, Sam can do anything”).  “Sam” states:

   “ … [Froot] Loops …They taste like fruit and go crunch to boot.  Those beaut fruit flavours and loopy loops – Kellogg’s [Froot] Loops.  Try some for breakfast.”

   The television commercial entitled “Ski Bunny” produced on 24 January 1991, some sixteen months before the relevant date, was as follows:

   “Pink octopus:           I can, you can, we can ... Sam Toucan.

   Toucan Sam:              Come on. I’m feeling pecky and Kellogg’s [Froot] Loops are my favourite brekkie.  Follow my nose it always knows.

   Pink octopus:             Loopy, Loopy, Loopy.

   Toucan Sam:              No.  Fruity [Froot] Loops.  They taste like fruit and go crunch to boot.

   Voice over:Kellogg’s Fruit Loops with fruit flavours – orange, lemon and cherry.  Part of this complete breakfast.

   Toucan Sam:              Thanks pal.  You’re a life saver.

   Bunny in dog suit:      No, I’m a ski bunny.

   Toucan Sam:              He’s hopping mad.” (emphasis supplied)

   A television commercial called “Cool Cat” produced on 18 May 1992, three days after the relevant date, uses no term of reference to the bird character.

5. The name “Sam Toucan” is spoken in commercials 1, 4, 6 and 7 above and the shorter name “Sam” in commercial 3.  The word “toucan” is used as a common noun in 2.  In the remaining commercial 5 (and “Cool Cat”), the words “Sam” and “Toucan” are not spoken at all. 

6. Although Kellogg could not find the records of media schedules for the television advertising of Froot Loops from 1975 to 1991, Jane Porter, Kellogg Australia’s Marketing Manager since May 1998, affirmed that television advertising of Kellogg’s children’s cereal, such as Froot Loops, is usually aired in all capital cities and “major regional advertising markets” at peak children’s viewing times, such as week-day afternoons and Saturday mornings, over five to six “bursts” a year, each “burst” occupying four days of a week over a period of three to four weeks.  Kellogg spent $553,412 in 1990 on television advertising promoting Froot Loops, and attained 3050 “target audience rating points” (“TARPs ”), and $527,766 in 1991 reaching 3350 TARPs.  According to Ms Porter’s evidence, “TARPs” “are a measure [of] the percentage of people in the target audience that are tuned to a particular television station at a particular time.  One TARP indicates that the particular television advertisement has reached 1 per cent of the target audience once”. 

   PB’s TOUCAN fruit juice products

7. According to Ms Cassidy-Norrish, PB’s Marketing Manager for Dairy Products, there are three types of juice in the Brownes “Toucan Fruit Juice” range: black label “Toucan Fresh”, which is a “premium” fruit juice containing a significant amount of fruit pulp; green label “Toucan Real Juice”, which is free of pulp and contains no added sugar; and white label “25% Fruit Drink”, which is free of pulp and is a combination of reconstituted fruit juice and water.  All three juices are sold in plastic containers which have labels bearing the word “TOUCAN” in prominent black capital letters.  In the case of the 500 ml black label, the word appears as part of the composite expression “TOUCAN FRESH”.  All labels bear the Brownes trade mark at the side of images of a real toucan against a background picture of fruit corresponding to the kind of fruit juice in the container.  The word “TOUCAN” (or “TOUCAN FRESH”) appear in striking large print across the bottom of the label, below the pictures just described.

8. PB moved into the fruit juice market as it was compatible with the distribution system used for its milk products.  Its milk and juice are sold in supermarkets, delicatessens, lunch bars and route outlets.  In supermarkets, PB sells TOUCAN single serve juices and 2 litre TOUCAN FRESH orange juice products, as well as 2 litre cartons under the name “Brownes Orange C”.  At present, PB sells Toucan  juice only in Western Australia, however, in New South Wales, Victoria and Queensland, it sells ice confections, including TOUCAN Twin Stick icy poles, in a joint venture with Cadbury Schweppes.  According to Ms Cassidy-Norrish, the distribution of juice nationally is compatible with PB’s ice confection distribution network, and PB may distribute Toucan Juice nationally in the future.  Due to a modest advertising budget, PB has relied on eye-catching packaging to attract consumers. 

9. In 1992, Ms Cassidy-Norrish was given the task of repositioning the Brownes juice then marketed under the Brownes trade mark, in order to update the juice products in line with competing chilled beverages on the market.  She chose the name “TOUCAN” as it evoked “an exotic and colourful image” suitable for the marketing of fruit juices.  To her knowledge, no other juice producer had previously used a bird to promote the sale of fruit juice.  Ms Cassidy-Norrish’s testimony is that it was the use of a bird of paradise logo on the label of South Pacific Lager, which inspired her to develop the realistic toucan image for PB’s juice products, as it was “bright exotic, sophisticated and tropical which was the look that [she] wanted for PB Foods’ juice product”. 

10. According to the “Brownes Dairy Presentation Toucan Fresh Fruit Juice” (May 1994), which constituted a brief given to PB’s consultant agency, Marketforce Australia, to develop the TOUCAN concept:

    “The Toucan label was designed for maximum shelf impact to stand out from all other bottled juices.  The quality Toucan Fresh flavour also stands out, as squeezed from the very freshest oranges.”

11. Before deciding on the name “TOUCAN”, PB engaged Griffith Hack & Co, Patent and Trade Mark Attorneys of Perth (“Griffith Hack”), to conduct a trade mark search regarding the availability of the word “TOUCAN” as a trade mark in relation to fruit juice.  Their report advised that there was no pending application or existing registration which would pose an obstacle but that a search could not exclude the possibility of unregistered, that is, common law, trade mark rights.

12. Attached to the report were copies of Kellogg’s registered trade marks numbers 295713 and 184016, each consisting of the Toucan device and the name “SAM TOUCAN”.  (Trade mark 386745 (the Toucan device and the name “SAM”) would not have been caught by the instructions for the search.)  Ms Cassidy-Norrish affirmed that she was aware at the time of Kellogg’s Froot Loops product and the Toucan Sam character, but said that because PB’s fruit juice was marketed to the over eighteen age group while Froot Loops was directed to “under twelves”, and because of the distinction between the realistic and cartoon characters, she did not believe there was a conflict.  The over eighteen market targeted by PB consists primarily of people who frequent milk bars or route trade outlets, and who, when buying a single serve drink, are moved by the eye-catching appeal or “shelf-impact” of the juice.  According to Ms Cassidy-Norrish, there is little “spill down” effect from fruit products to children.  She states that in Western Australia most fruit juices that are sold to children are sold to them at school at reduced prices and in inexpensive cartoons.  She testified:

    “I did not want the juvenile character of Sam Toucan to be associated with TOUCAN juices, as the juice is appealing to an older, more sophisticated market, so I wanted to emphasise the freshness of the juices.”

13. PB’s expert marketing witness, Patrick Henry Weissenberg of Q2 Strategic Market Research, also emphasised the age difference between the markets to which Kellogg’s Froot Loops and PB’s fruit juice are directed, and also observed that fruit juice is consumed on more occasions than is cereal, and, in particular, that it is consumed between meals.

    Public perception of an association between Kellogg’s cereals and PB’s fruit drinks

14. Kellogg submits that its Froot Loops and PB’s juices are consumed on the same occasion (breakfast) and that this is apt to contribute to confusion.  According to the 1995 National Nutrition Survey conducted jointly by the Australian Bureau of Statistics and the Commonwealth Department of Health and Family Services, 56 per cent of males aged 8-11, 44 per cent of males aged nineteen and above, and 43 per cent of females aged nineteen and above consume cold cereal at breakfast, while the figures in relation to the consumption of juice at breakfast are 20 per cent, 14 per cent and 13 per cent respectively.  Kellogg’s expansion into cereal bars, which are consumed at any time, means that a Kellogg cereal product may also be consumed with a fruit juice product other than at breakfast, for example, as part of a child’s play lunch.

15. Kellogg also refers to the fruit theme of its Froot Loops and the fact that PB’s drinks are fruit drinks.

    Co-promotion

16. Kellogg submits that confusion may arise from the fact that its Froot Loops and PB’s juices may be “co-promoted”.  Anthony Stoker, National Sales Manager for Kellogg Australia, gave evidence to the following effect in relation to the co-promotion of breakfast cereals and juices.  Supermarkets rent out the space at the end of shopping aisles, called “gondolas”, to manufacturers for the promotion of their goods. These promotions are called “gondola end promotions”.  The supermarkets often co-promote compatible products, such as two breakfast items.  Gondola end co-promotions of Kellogg cereal and fruit juice products have in fact taken place, such as of Kellogg’s NUTRI-GRAIN cereal and “Just Juice” fruit juices, and of Kellogg’s COCO POPS cereal and “Pure & Natural” fruit juices.

17. Moreover, as products are often grouped together in categories in supermarkets, such as “convenience foods” or “breakfast foods”, breakfast cereals are sometimes positioned adjacent to or opposite shelf-stable fruit juices and even chilled fruit juices.  Sanitarium Health Food Company’s (“Sanitarium”) “UP & GO” liquid breakfast product has, at least in one supermarket, been shelved alongside fresh fruit juice products. 

18. According to Stuart Johnson, PB’s Group Research and Development Manager, PB’s TOUCAN range of juices are preserved with materials that extend their “shelf life” for about thirty days, provided they are stored at below four or five degrees centigrade.  Therefore they must be stored in chilled display cabinets where they may be stored alongside milk and other dairy products, but they cannot be stored with dry products, such as cereal, which must be kept away from moisture.  John Sampson, the owner of the “Farmer Jacks” supermarket in Thornlie, Western Australia, affirmed that he would never display TOUCAN juice adjacent to or on the same shelf as Froot Loops, as the juice requires refrigeration in chilled cabinets.  Douglas Campbell, the Managing Director of “The Great Escape”, a route outlet in Sorrento, Western Australia, which is located at a park and is frequented by many children, sells single serve Toucan juices from chilled cabinets.  He does not, however, sell cereal at all.  In his experience, customers recognise Brownes as the manufacturer of the juice, as the Brownes trade mark is displayed on the labels on the containers.  Similarly, Jan Wright, the Co-ordinator of the Fremantle Hospital Ladies’ Auxiliary Kiosk, affirmed that for the reasons given by Mr Campbell, she sells single serve TOUCAN juices from a chilled cabinet, and cereal from a shelf some distance away.  The evidence of Grant Garrett, the Manager of the Dewsons-Padbury Store in the Padbury Shopping Centre, Padbury, Western Australia, was to a similar effect.  Neville Gale, the owner of “Advantage Supermarkets”, a chain of stores in Western Australia, affirmed that he stored cereals and chilled milk and fruit juice separately to “encourage store traffic”.

19. Mr Weissenberg testified that merely placing products near one another on a supermarket shelf “does not have the potential to confuse a customer as to the identity of the manufacturer”, and does no more than to suggest to consumers the complementarity of the products. 

20. PB has participated in co-promotions of its milk products and Kellogg’s cereal.  For example between 23 November 1998 and 28 December 1998, PB conducted two joint venture promotions with Kellogg in Western Australia.  Both were conducted at BP Express and selected Shell route outlets.  The first combined Kellogg’s Coco Pops with Brownes’ “Chill” chocolate milk.  Customers who bought a 600ml Brownes’ Chill chocolate milk flavoured drink received a free Coco Pops cereal bar. Another co-promotion was of Kellogg’s “Cerola Muesli” and Brownes’ “Calcium Plus” milk.  In this case Kellogg carried out sixty-nine demonstrations in supermarkets throughout Western Australia and PB provided the milk free of charge to Kellogg for the purpose.

    Kellogg’s potential brand extension beyond cereal

21. Kellogg argues that although it does not at present produce juice in Australia, it may do so in the future as such a “brand extension” would be in keeping with the “Complete Breakfast philosophy” it has developed to promote its cereal.  A “Breakfast Position Statement” of Kellogg reads as follows:

    “Kellogg products should be shown as the main part of a breakfast meal, consistent with cultural practices and local dietary guidelines for the promotion of health.”

22. Under the “Complete Breakfast philosophy”, Kellogg “typically portrays its cereal products in advertising in conjunction with milk, fruit juice or fresh fruit and bread”.  For example, Fruit Loops packaging has featured a breakfast consisting of cereal, fruit juice and bread.  Kellogg Australia is currently working closely with The Australian Dairy Corporation on a joint advertising campaign to promote the benefits of milk and Kellogg’s cereals.  Ms Porter states that the association with milk could feasibly lead Kellogg “into milk beverages in the future” and “to enter the beverage market leveraging [its] existing umbrella brand name and sub-brands”.

23. In the United States, Kellogg already sells more than just the familiar “loose” cereal as a single product.  For a start, it sells “packaged breakfast products”.  Its “Breakfast Mates”, launched in 1997, incorporates Froot Loops cereal, a 118ml carton of shelf-stable milk, a bowl and a spoon.  Breakfast Mates does not, however, include fruit juice.  In February 1999, Kellogg launched “Snack a Longs”, consisting of Froot Loops or other cereal, shelf-stable fruit punch, a Kellogg NUTRI-GRAIN bar and a hard plastic carry case.  Kellogg purchases the fruit punch from The Coca-Cola Company.  

24. Although Kellogg does not manufacture beverages, it has extended its product range in the Australian market to “cereal bars”, which are designed to be consumed throughout the day, including as part of a child’s lunch. For example, Kellogg manufactures “SUSTAIN” cereal bars, “JUST RIGHT cereal bars” and “COCO POPS” cereal bars.  Kellogg’s prime Australian competitors, Sanitarium and The Uncle Tobys Company Limited (“Uncle Tobys”), have also moved into new food product lines, such as, in the case of Sanitarium, a “Brekky Kit”, consisting of corn cereal, long-life milk, sugar, sultanas, plastic spoon and bowl, “Apricot Delight” and “Fruity-Bix bars”, and in the case of Uncle Tobys, “Real Fruit Bars”, “Microwave popcorn”, “muesli bars” and “breakfast bars”. 

25. Some companies which have traditionally manufactured cereals have ventured into the manufacture of drink products.  Sanitarium markets soy drinks called “SO GOOD” and, more recently, fruit-flavoured liquid breakfast drinks under the name “UP & GO”.  Both drinks are long life products sold in “tetra packs” which do not require refrigeration. In the United States, Kraft Foods Inc now produces both cereal and orange-flavoured drinks. 

26. Expert evidence led by Kellogg suggested that a brand extension by Kellogg into fruit juices would “fit” with its present sale of cereal products.  Paul Blanket, a Lecturer in Advertising and Promotions at Macquarie University’s Graduate School of Management, and a marketing, advertising and promotional consultant, testified that such an expansion would be an example of an “occasional brand extension”, that is, an extension of a brand, “Kellogg”, around a particular consumer occasion, activity or life-style, in this instance, breakfast.  He cited Sanitarium’s extension from breakfast cereals to breakfast drinks as an example.   The products need not be similar: it suffices that the consumer be able to recognise a “fit” in terms of “similar consumer end benefits in the specific usage occasion”, as in the case of Sanitarium’s “healthy” image and its extension from cereals to soy drinks.  According to Mr Blanket, Kellogg’s child oriented breakfast cereals would target the same audience as fruit juices, primarily mothers aged between twenty-five and forty-nine of children aged between six and fifteen, and secondarily, those children themselves. The similarity of distribution channels for breakfast cereals and juices (supermarkets and grocery outlets) would facilitate the extension. 

1. But in the opinion of Mr Weissenberg, if Kellogg were to enter the fruit juice market, it would be unlikely to do so under the Kellogg brand name, as Kellogg’s “equity as a manufacturer of breakfast cereals”, while arguably extending to other “dry applications” such as snack foods or bread, would not extend to different breakfast areas, such as juices, where it has no perceived expertise.  According to Mr Weissenberg, Kellogg would be more likely to launch an entirely new brand name, such as “Sunshine Fruit Juices”.  In his opinion, it would be extremely unlikely that Kellogg would market such a juice brand as “Froot Loops juice” or “Toucan Sam juice”, as this would be contrary to its existing strategy of promoting goods under the umbrella “Kellogg” brand, while using product names and devices to differentiate between products sold under that brand.  It would, therefore, confuse the “existing loyal consumer base”, as the name “Froot Loops” or the Toucan device would become the brand itself without the protection of the “Kellogg” brand.

   Survey evidence

2. A major point of contention on the hearing was the relevance and reliability of a survey conducted for Kellogg by James Alexander, Managing Director of International Research of AC Nielsen Research Pty Ltd (“Nielsen”) in late November to early December 1998.  In fact there were two surveys within the one exercise.  The first, a “word association survey” (called “the Toucan survey”) was intended to assess the extent to which the simple word ‘Toucan’ is associated with breakfast cereals, and, in particular, with Kellogg’s Froot Loops.  The second survey, a “character association study” (called “the Cereal survey”) was intended to “assess what animals and birds are associated with breakfast cereals, with particular interest in the strength of the toucan bird association”.  Mr Alexander purported to “translate” the results back to 1992 in an attempt to show that there was a strong association in consumers’ minds between the word “TOUCAN” and Kellogg’s Froot Loops at the relevant date. 

3. The surveys targeted two groups: children aged seven to fifteen and their parents.  The surveys were conducted face to face in Sydney.  The following shows the sample size of each survey:

Obtained sample size  size counts	Parents	Children	Ch 7-9 yrs	Ch 10-12 yrs	Ch 13-15 yrs
Survey A: Toucan survey	182	220	63	80	77
Survey B: Cereal survey	199	203	66	65	72

1. Parental permission was obtained for a child’s participation.  Interviewers were instructed to interview child or parent, but not both.  Sydney was chosen as:

   “the types of food products being considered [had] no particular geographic concentration, and the restriction to Sydney allowed for substantial cost savings.”

   Due to the narrow target audience, an “intercept” rather than a door to door method was chosen.  The intercepts took place:

   “near schools, shops and sporting venues across Sydney.  A range of locations were used to ensure a representative spread of socio-economic groups …”

   Interviewers were instructed to approach every second person (or more, depending on the density of the flow), who passed a certain point, and to alternate interviews between adults and children.

2. The questionnaire for the Toucan (or word association) survey commenced with the interviewer’s introducing himself or herself as an employee of Nielsen and saying:

   “Today we are doing some very quick research on food and drink products, which will only take about two minutes at most.  I was wondering if you (and your child) could spare a couple of minutes to participate?”

3. Preliminary questions were asked, such as questions as to the employment background of the interviewee and his or her family, and whether the interviewee had children in the 7-9, 10-12 or 13-15 age groups.  If the interviewee or his or her family worked in any of the advertising, marketing, food manufacture or sale, law or market research areas, the interview did not proceed.  Likewise, if an adult interviewee did not have children in the age groups mentioned.  

4. The child or adult interviewed was then shown a card on which the word “TOUCAN” was written and was asked: “Does this word “TOUCAN” make you think of anything that people can eat or drink?”.  If the interviewer named a packaged product, he or she was asked which company made the product.  After each question, the interviewer “probed” for more information. The interviewers had undergone training and had been instructed in interviewing techniques, such as “probing”.  For example, if a person mentioned a general food category, the interviewer was to probe for the product name. An example of probing reproduced in the “interviewer instructions” was as follows:

   “[Interviewer]: does this word Toucan make you think of anything people
     can eat or drink?

   Resp:              um, soup maybe

   [Interviewer]:  any particular type of soup?

   Resp:              the one with a bird on it

   [Interviewer]:  do you know the brand of that soup?

   Resp:              is it rosella?

   In such a case, an interviewer was to record:  “soup maybe/ the one with a bird on it/ is it rosella?”  But ultimately, the response would be classified in the summary of results on the simple basis that the word “TOUCAN” had made the respondent think of Rosella soup.

5. The survey methodology and results were compiled in a report and summarised as follows in relation to the “TOUCAN” word association survey:

   “ When asked:

   I have a card with the word ‘Toucan’ on it. Does this word ‘Toucan’ make you think of anything that people  might eat or drink?

   ·[t]he most common association for parents was with a cereal (33% of all parents – accounting for well over half of the 46% of parents who could make an association); and

   ·[t]he association with cereal for parents (33%) was at least three times as strong as the association for either ice confection (10%) or drinks (9%),

   ·[h]owever among children the most common association was with ice confection (32% of all children),

   ·with cereal just marginally behind (28% of all children), and both ice confection and cereal well ahead of the proportion associating the word Toucan with drinks (14%),

   ·[w]hile older children were more likely to be able to make an association than younger children, this ordering of association (ice confection, then cereal, then drinks) held for the two younger age groups (7-9 years, and 10-12 years).  It was only among children aged 13-15 that the cereal association (35%) was stronger than the ice confection association (25%).

   The following table prepared by Nielsen shows the full range of responses to the question (I do not attempt to reconcile or “rationalise” all the figures in this table or a further one that is reproduced below):

Does this word Toucan make you think of anything that people might eat or drink?	Parents (n=182)	Children (n=220)	Ch 7-9 yrs (n=63)	Ch 10-12 yrs (n=80)	Ch 13-15 yrs (n=77)
Cereal   Froot Loops   Other   Type unspecified	33% 26% 2% 4%	28% 25% 1% 1%	16% 13% 2% 2%	30% 28% 1% 1%	35% 24% 0% 1%
Ice blocks/ Ice confection   Toucan Ice block   Type unspecified	10% 3% 7%	32% 10% 22%	29% 13% 16%	43% 11% 31%	25% 8% 17%
Drink   Fruit juice or fruit drink   Guiness or other beer   Specifically a drink in a   Can   Some other type of drink   Type unspecified	9% 2% 2% 3% 2% 2%	14% 4% 1% 3% 4% 3%	5% 0% 0% 2% 2% 2%	16% 5% 0% 4% 3% 5%	19% 6% 3% 4% 8% 1%
Lollies/ sweets Fruit Other	1% 1% 3%	0% 1% 4%	0% 0% 10%	0% 1% 0%	1% 3% 4%
No association	54%	34%	46%	33%	26%

As shown in another table, which it is not necessary to reproduce here, of the sixty-one adults (33 per cent of all adults) and sixty-one children (28 per cent of all children) who associated the word “TOUCAN” with cereal, 90 per cent of the adults and 79 per cent of the children also identified Kellogg as the manufacturer.

1. The Cereal (character association) survey followed the same general pattern.  The preliminary questions were identical.  Question three, however, focused on breakfast cereals; and was as follows:

   “I’d like to ask you to think about breakfast cereal boxes.  What sort of animals or birds have you seen on breakfast cereal boxes?” 

2. Probing questions were again asked, such as

   “And what else? (What other animals or birds?)”

3. The character association survey results were summarised in the Nielsen report as follows:

   “When asked

   I’d like you to think about breakfast cereal boxes.  What sort of
     animals or birds have you seen on breakfast cereal boxes?

   ·the monkey was the most frequently cited creature, among both parents (mentioned by 48%) and children (57%)

   ·the toucan was the second most frequently cited creature, again among both parents (40%) and children (44%)

   ·apart from the monkey, the toucan is mentioned more than twice as often as any other single creature

   ·even among young children (aged 7-9), monkeys and toucans are the most frequently cited creatures.

   The full range of responses to the survey question are documented by Nielsen in the table below:

   
   

What sort of animals or birds have you seen on breakfast cereal boxes?	Parents (n=199)	Children (n=203)	Ch 7-9 yrs (n=66)	Ch 10-12 yrs (n=65)	Ch 13-15 yrs (n=72)
Monkey/Coco the monkey	48%	57%	48%	55%	67%
Toucan/Sam Toucan	40%	44%	26%	49%	57%
Bright coloured or big beaked bird Parrot Bird – unable to name type Rooster/hen/chook Tiger/Tony the tiger Bee Bear/Honey Bear Kangaroo Lion/Leopard/cheetah Kookaburra/Olympic animals Other	1%   3%   4% 20% 16%   8%   5%   7%   3%   4%   2%	4%   1%   5% 15% 14%   5%   3%   1%   3%   2% 1%	3%   2% 11% 15%   8%   3%   3%   3%   2%   5%   2%	3%   0%   3% 18% 15%   5%   5%   0%   2%   3%   3%	6%   3%   3% 13% 19%   7%   3%   1%   7%   0%   0%
Could not name any animal or bird	21%	15%	20%	15%	10%

As shown in another table not reproduced here, of the eighty parents and ninety children who had seen either a toucan or “Sam Toucan” on breakfast cereal boxes, 84 per cent of the parents and 71 per cent of the children identified Kellogg as the manufacturer.

1. On the basis of the two surveys taken together, Mr Alexander concluded as follows:

   “·       The word Toucan is very strongly associated with breakfast cereal:

   ·particularly among parents – it conjures up the thought of breakfast cereals for 33% of parents, at least three times as many as those who think of ice confection (10%) or drinks (9%), or any other food or drink item (no more than 5% for any item or group of items)

   ·and among older children (those aged 13-15), 35% associate the word Toucan with cereal, which is one and a half times as many associating it with an ice confection (25%), and nearly twice as many associating it with a drink (19%)

   ·among younger children (aged 7-12) however, the word toucan is associated with a cereal by only around two thirds of those who associate it with an ice confection (24% compared with 36%), but still by more than double those who associate it with a drink (11%)

   ·In the majority of cases (86% overall), the association with a cereal is specifically with Kellogg’s Froot Loops.  Most of the remainder are those who could not name a particular cereal, rather than those who associated the word Toucan with some other cereal.

   ·Association with ice confections is either with Toucan ice confection, or an unspecified ice confection – respondents were generally only able to visualise the product, but not name it.

   ·Association with drinks however is very fragmented – only one quarter of all associations were with a fruit type drink; the remainder varied from beers (Guinness had a ‘two-can’ advertisement some years ago), to anything in a can, to a strongly branded drink such as Coca-cola.

   ·Toucans are also very much top of mind when it comes to animals or birds seen on breakfast cereal boxes;

   ·they are the second-most frequently cited creature, behind only monkeys, for all agegroups

   ·[t]hey are well ahead of the third and fourth most mentioned creature (hen/rooster, and tiger)

   ·when the Toucan is mentioned in relation to breakfast cereals, it is almost [invariably] associated with Kellogg’s Froot Loops.

   Together these results suggest that the Toucan word is very strongly associated with Kellogg’s Froot Loops cereal, and the use of a Toucan image on the Kellogg’s Froot Loops cereal has made the Toucan a very well recognised creature.”

2. Mr Alexander purported to translate the results back to 15 May 1992.  He was asked to assume that PB “did not sell fruit juices or fruit drinks under the TOUCAN brand name until 4 July 1994” and that PB “registered the word TOUCAN in respect of ice confections from 6 June 1995 and did not use the name as a brand for ice confections on or before 15 May 1992”.  Mr Alexander examined a graph showing the national and New South Wales volume of Froot Loops sales in tonnes over the period 1990 to 1998 and a graph showing the estimated resident population of Australia and New South Wales over that period.  They showed similar patterns for 1992 and 1998.  Mr Alexander concluded that the strength of association of the word “TOUCAN” with Kellogg’s Froot Loops cereal would have been at least similar to, but if anything stronger than, that association as it was at the time of the survey at the end of 1998, unless there were other products using the Toucan image in 1992 (he was not aware of any).

   REASONING

   General principles

3. The parties agree that the principles relevant to the issue under s 28(a) whether the use of the mark “TOUCAN” would be likely to cause confusion are as summarised by Heerey J in Nettlefold Advertising Pty Ltd v Nettlefold Signs Pty Ltd  (1997) 38 IPR 495 (“Nettlefold”) at 501-502, and quoted with implied approval by the Full Court on appeal from his Honour at ((1998) 160 ALR 184 at 186-187 (Wilcox J, with whom Tamberlin J and Merkel J agreed). Omitting two principles to which I referred to in para 15 above, his Honour’s summary was as follows:

   “(i) The opponent [here, Kellogg] bears the initial onus of establishing a reputation in its mark sufficient to found an objection under s 28: Re Arthur Fairest Ltd’s Application (1951) 68 RPC 197.

   (ii) However, once this onus is discharged the burden shifts to the party seeking registration [here, PB]: Eno v Dunn (1890) 15 App Cas 252 at 261; Jafferjee v Scarlett at 119.

   (iii) ………………………………………………………………………………………

   (iv) ………………………………………………………………………………………

   (v) In order to defeat the application for registration it is not necessary for the opponent [here, Kellogg] to establish that there is an actual probability of deception which will amount to a passing off.  While a mere possibility of confusion is not enough – for there must be a real, tangible danger of it occurring – it is sufficient that the result of the user of the mark will be that a substantial number of persons will be caused to wonder whether it might not be the case that the two products come from the same source.  It is enough that the ordinary person entertains a reasonable doubt: Southern Cross at CLR 594-5, 608; Kendall Co v Mulsyn Paint & Chemicals (1963) 109 CLR 300 at 305.

   (vi) In considering the issue of deception all the surrounding circumstances must be taken into consideration.  The factors to be considered include the circumstances in which the marks will be used, the circumstances in which the goods will be bought and sold and the character of the probable purchaser of the goods: Jafferjee v Scarlett at 120.

   (vii) A probability of confusion, if it is real, is sufficient even though the confusion may be unlikely to persist up to the point of, and be a factor in, inducing actual sales: Southern Cross at CLR 495.  There may be confusion or deception in the minds of persons to whom the mark is addressed, even if actual purchasers will not ultimately be deceived: Re Hack’s Application (1940) 58 RPC 91 at 103-4.

   (viii) It is not enough for the party seeking registration [here, PB] to negative the likelihood of confusion in relation to the actual trade carried on by the opponent at the time of the registration and to the manner in which the latter then uses his mark.  The applicant [here, PB] must also take into account all legitimate uses which the opponent [here, Kellogg] may reasonably make of his mark within the ambit of his registration: Reckitt & Colman (Aust) Ltd v Boden (1945) 70 CLR 84 at 94; Southern Cross at CLR 608.

   (ix) The question whether the use of a mark is likely to deceive or cause confusion is in the end a question of impression and common sense; it is a ‘jury question’ in which the judge is entitled to give effect to his or her own opinion as to the likelihood of deception or confusion: Murray Goulburn Co-op Ltd v New South Wales Dairy Corp (1990) 24 FCR 370 at 377; 16 IPR 289 at 296.” (emphasis supplied)

4. Notwithstanding their agreement that I should apply these principles, counsel differed in certain respects as to their true significance.  I will deal now with their submissions and make additional observations.

   1.Counsel for Kellogg refers to the expressions “a reputation in its mark” in para (i), “the marks will be used” in para (vi), and “may reasonably make of his mark within the ambit of his registration” in para (viii). He submits that there is no warrant in the general terms of s 28(a) of the Act for thinking that the only potential source of confusion able to be considered is an existing registered mark of the opponent of registration. He points out that in Nettlefold itself the opponent had extensively promoted its “mark” but had taken no steps to register it. 

   I accept counsel’s submission. There is no warrant in the terms of s 28(a) for thinking that the provision contemplates only confusion arising from the use of a mark, whether registered or not. The source of confusion might be previous promotional activity by the opponent or someone else, not involving the use of a registered or common law trade mark. References in the decided cases to an opponent’s competing mark should, like all judicial pronouncements, be understood in the context of the facts of the cases in which they were made. In many of the cases the source of confusion relied on has in fact been the use of an existing mark of the opponent.

   In Radio Corporation Pty Ltd v Disney (1937) 57 CLR 448, Radio Corporation Pty Ltd had applied for registration of the words “Mickey Mouse” and “Minnie Mouse” in relation to radio receiving sets and kits. It appealed to the High Court against the Registrar’s decision upholding the opposition of Walter E Disney and others and refusing registration. The High Court dismissed the appeal on the basis that the prohibition contained in s 114 of the Trade Marks Act 1905 (Cth) applied. That section was, relevantly, as follows:

   “No … mark the use of which would by reason of its being likely to deceive or otherwise be deemed disentitled to protection in a court of justice, or the use of which would be contrary to law or morality, shall be used or registered as a trade mark or part of a trade mark.”

   The opponents had not used the names “Mickey Mouse” and “Minnie Mouse” as trade marks but had established an “extensive system of licensing” entitling traders to use depictions of the two well known cartoon characters and their names to promote their goods.  Radio Corporation Pty Ltd unsuccessfully contended that the opponents must fail because they had not used the names as trade marks or as part of the “get-up” of their goods.  Latham CJ, Rich and McTiernan J held that the use of the two names as trade marks by the company was “likely to deceive” the public.  Dixon J held that it was “disentitled to protection in a court of justice”.  For all four judges, it was immaterial that the opponents’ reputation did not arise out of trade mark use.

   My acceptance of Kellogg’s present submission does not mean, however, that there cannot be a significant difference between the use of a mark and other forms of conduct of an opponent.  The opponent’s conduct and the nature of its resulting reputation must be closely analysed in each case.  As will appear later, in my view the difference between Kellogg’s promotional use of the cartoon bird character named “Sam Toucan” and PB’s use of the bare word “TOUCAN” as a trade mark is a weighty consideration in the present case.  In fact there appears to be no evidence of any use by Kellogg of its first and second registered marks referred to earlier, comprising as they do both the bird character and his accompanying name “SAM TOUCAN”. 

   2.Counsel for Kellogg draws attention to two matters mentioned by Lord Upjohn in Bali Trade Mark [1969] RPC 472 (HL) (“Bali Trade Mark”).  In the earlier case, Smith Hayden & Co Ltd’s Application (1946) 63 RPC 97 (“Smith Hayden”), decided in relation to s 11 of the Trade Marks Act 1938 (UK), Evershed J had said (at 101):

   “Having regard to the reputation acquired by the name ‘Hovis’, is the Court satisfied that the mark applied for, if used in a normal and fair manner in connection with any goods covered by the registration proposed, will not be reasonably likely to cause deception and confusion [sic – s 11 said ‘or’ not ‘and’] amongst a substantial number of persons?” (emphasis supplied)

   In Bali Trade Mark, Lord Upjohn said (at 496) that Evershed J should have said, not “reputation acquired by”, but “user of”, although on the facts of Smith Hayden the difference had been inconsequential. Lord Upjohn also observed that the reference to “a substantial number of persons” was a matter of judicial gloss, which was unobjectionable only if it was “properly and sensibly applied” (at 496).

   With respect, where an opposition is based on the opponent’s use of an existing mark, it is difficult to understand how the use of the mark of which registration is sought could cause confusion if there had not been such a use of the existing mark as had given rise to a “reputation” of some kind.  In the present case, it is necessary, and a convenient starting point, to inquire into the reputation that Kellogg had built up as a result of its use of the Toucan device and the associated names “Sam”, “Sam Toucan” and “Toucan Sam” in the ways in which it had used them, down to the relevant date.

   3.Counsel for Kellogg submits in relation to para (viii) that the reference to “all legitimate uses which the opponent may reasonably make of his mark within the ambit of his registration” should be taken to mean “all legitimate uses which the opponent may reasonably make of his mark within areas of business that are not an incongruous addition or not an unnatural extension of his business”. 

   The expressions “incongruous addition” and “unnatural extension” come from Southern Cross at 597. In that case there was an application for registration of the word mark “Southern Cross” in respect of refrigerators. The opponent already had those words registered as trade marks in respect of various forms of machinery and engines. Kitto J thought that it would not be “an incongruous addition” to, or an “unnatural extension” of, the opponent's business for it to supply refrigerators. His Honour thought that the hypothesised use of the words “Southern Cross” on refrigerators manufactured by the applicant for registration of the mark, would be very likely to cause a substantial portion of the public to be confused as to whether those refrigerators emanated from the opponent and represented an addition to, or extension of, its business of manufacturing engines and machinery.  An appeal from Kitto J was dismissed, but in the joint judgment on the appeal there is no reference to the present issue. 

   It may at first be thought odd that Kellogg should be able to oppose registration of a mark by reference to a hypothetical expansion of its business into a product area not covered by its existing registrations.  But it is important to understand what Kitto J was saying. 

   The objective of the provision with which we are concerned is to protect the public against confusion (In re Remfry’s Trade Mark (1897) 23 VLR 44; Pioneer Hi-Bred Corn Co v Hy-Line Chicks Pty Ltd [1979] RPC 410 at 424 (Richardson J)). Consistently with Southern Cross, if PB’s use of the trade mark “TOUCAN” in relation to fruit juices would cause the public to suppose that Kellogg had extended its product range to include fruit juice, it would have caused confusion.  But Southern Cross would not make relevant evidence that Kellogg subjectively intended to extend its product range to fruit juices unless that subjective intention was probative in relation to the question whether the public would be likely to perceive PB’s use of the “TOUCAN” trade mark in relation to fruit juices as signifying that Kellogg had extended its business into that area.

   4.It is useful to set out the following passage from the judgment of Dixon J in Reckitt & Colman (Aust) Ltd v Boden (1945) 70 CLR 84, referred to by Heerey J in his para (viii), which refers to several of the principles applicable to the present case. Dixon J said (at 94-95):

   “ … the applicant must negative all substantial likelihood of deception or confusion in consequence of the use of his proposed mark, notwithstanding that the descriptions of goods are different.  The burden rests upon him of establishing that there will be no real risk of confusion and, if he leaves the matter in doubt, his application must be refused.  Further, it is not enough for him to negative the likelihood of confusion in relation to the actual trade carried on by the opponent at the time of registration and to the manner in which the latter then uses his mark.  The applicant must also take into account all legitimate uses which the opponent may reasonably make of his mark within the ambit of his registration.  Conversely, he must exclude the possibility of future deceptive or confusing uses of the mark for which he is applying.  But he is not bound to satisfy the Registrar that merely speculative and fanciful risks will not arise.”

   As will appear, I have formed the view that the risks of confusion relied on by Kellogg, taking into account the possible developments suggested by it, are of the “speculative and fanciful” kind.

   5.Section 28(a) does not identify any particular kind of “confusion” as that to which it refers. Kellogg’s case is that persons would be confused as to whether fruit juices and other beverages within class 32 in respect of which the word “TOUCAN” was used as a trade mark were sourced to Kellogg. Accordingly, it is not necessary for me to discuss other “non-trade mark” kinds of confusion which may fall within the provision. I note, in passing, however, that the use of a trade mark in respect of particular goods might be confusing on its face and without reference to the conduct of the opponent of registration (cf Bali Trade Mark [1969] RPC 472 (HL) at 493 (Lord Upjohn)).

   General position as at 15 May 1992

1. It is important

   ·     that Kellogg does not have the word “TOUCAN” registered, and has not used it, as a trade mark even in respect of class 30 goods;

   ·     that Kellogg’s three registrations are in respect of a cartoon bird figure and that character’s accompanying name – in two cases “Sam Toucan” and in the third just “Sam”;

   ·     that in Australia Kellogg’s registrations are in respect of class 30 goods and that Kellogg has used them only in respect of cereals.

   ·     that in my view, while a consumer might ask for “TOUCAN” fruit juice, he or she would not ask for “TOUCAN SAM” cereal as distinct from “FROOT LOOPS” cereal;

   ·     that Froot Loops and the “Sam Toucan” or “Sam” name and character are directed to children and, indirectly, their parents, while PB’s juice and the accompanying trade mark “TOUCAN” are directed to the adult public generally.

2. In relation to packaging of its “Froot Loops” product, down to 15 May 1992 Kellogg had used the word “TOUCAN” only on one of the various forms of packet that had been used over the years, and then only on the side of the packet as part of the character name “Sam Toucan”.  Accordingly, virtually all of the packets bore, relevantly, the images of the exaggerated lively bird character without the accompanying name “Toucan”.

3. Kellogg had, however, over the period from 1975 to the relevant date, used the name “Sam” or “Sam Toucan” (and on one occasion the common noun “toucan”) in the television commercials to the extent noted in para 35 above. 

4. I think that the colourful cartoon bird character with the long beak, alone and without a name, would have brought to the minds of very few, if any, Australian children and adults the idea of the exotic toucan bird.  Nearly all children and adults would have recognised the image as nothing more than a figure of the cartoonist’s imagination.

5. No doubt the “Froot Loops” packets would have been viewed in different circumstances by different people.  Some would have given them a passing glance on supermarket shelves while others would have seen them morning after morning on the breakfast table.  But I think that even most people in the latter group would not have identified the cartoon character alone with the real toucan bird.  Indeed, some people aware of the character’s name would not have done so because they would not have known of the existence of the toucan in the real world.

6. On the basis of the use of the word “TOUCAN”, however, in the television commercials and once on the packaging, I would expect some children and parents, by 15 May 1992, to have associated the name “Sam Toucan” as the name of the cartoon bird character with Kellogg through its Froot Loops cereal.  But whether they would have associated the single word “TOUCAN” in isolation with Kellogg is a far different matter.  I do not think they would have done so.  Kellogg’s use of the word was as an identifier of the cartoon character, rather than as an identifier of the cereal or of its manufacturer (cf Musidor BV v Tansing (t/a Apple Music House) (1994) 29 IPR 203 (FCA/FC) – the “Rolling Stones” infringement case).

7. In my view, even people whose understanding, however derived, was that the character was based on the real toucan would have recognised simply that Kellogg’s cartoonist was using the real bird as an inspiration.  They would not have thought that Kellogg was making a claim to be the originator of all products, or even of all consumables, bearing the trade mark “TOUCAN”.  Accordingly, I do not think that if they saw the word “TOUCAN” used as a trade mark on a container of fruit juice, they would have wondered whether it emanated from Kellogg.  I think they would have distinguished between Kellogg’s promotional exploitation of the character name “Sam Toucan” and the fruit juice manufacturer’s trade mark.

8. Since 1994, PB has used the word “TOUCAN” in rather stark, solemn, prominent black letters accompanied by both the Brownes mark and the real toucan mark.  These two elements have assisted to identify the product with a trade source other than Kellogg.  But I have not taken them into account in arriving at the conclusions expressed above.  PB would be entitled to use the supposedly registered trade mark “TOUCAN” in respect of class 32 goods without the accompanying Brownes mark or the real toucan mark.  It is in fact unlikely that it would market its fruit juices without using the Brownes mark or some other means of identifying itself as the manufacturer somewhere on the containers.  But I approach the matter on the basis, most favourable to Kellogg, that only the word “TOUCAN” is visible to the consumer.

9. In sum, while I accept that at the relevant date some people would have associated the Froot Loops product and through it Kellogg with the lively cartoon bird image called “Sam Toucan”, and that some of those people would have recognised that image as one based on the real toucan, virtually none of those people would have wondered whether a different kind of product (fruit drinks) sold under the word mark “TOUCAN” was also associated in some way with Kellogg. 

10. Counsel for PB suggested an imperfect but useful analogy.  As  is well known, the Walt Disney cartoon character Mickey Mouse is used in association with the sale of a wide variety of goods.  It does not follow that the public would wonder whether goods sold under the trade mark “MOUSE” emanated from the Disney enterprise.  Like all analogies, this one is imperfect.  A toucan is more rare and distinctive than a mouse.  The Mickey Mouse character is used in association with a wide variety of goods, whereas the “Sam Toucan” character is used only in association with cereals, and Froot Loops cereals at that.  The former distinction favours Kellogg’s case; the latter PB’s.  The general proposition is, however, supported: the common noun which constitutes the name of a bird or animal, even an exotic one, if registered and used as a trade mark, will not necessarily suggest a link with a different class of goods which are marketed in association with a cartoon character bearing a name which includes the common noun as, in effect, a surname.

11. Although I have, in the preceding paragraphs addressed the situation as at 15 May 1992, in substance they apply in respect of the subsequent years, notwithstanding that the Sam Toucan character has now become better known and therefore more people would now connect him with Kellogg.

    Perception of association between cereals and fruit drinks

12. It is not conclusive that PB’s and Kellogg’s trade marks would be registered in respect of different classes of goods.  Confusion may still arise if there is sufficient association between the goods: cf Southern Cross Refrigerating Co v Toowoomba Foundry Pty Ltd (1954) 91 CLR 592 at 607-608; Lever Bros Ltd v Abrams (1909) 8 CLR 609; Reckitt & Colman (Aust) Ltd v Boden (1945) 70 CLR 84. In various situations the courts have been called upon to determine trade mark registration, expungement or infringement, passing off, and misleading conduct issues in relation to the use of names or trade marks in relation to goods or services of different kinds: for some recent illustrations, see Avirone Pty Ltd v ICI Australia Operations Pty Ltd (1989) 17 IPR 262 (Hearing Officer); Karu Pty Ltd v Jose (1994) 53 FCR 15 (Drummond J); Twentieth Century Fox Film Corporation v South Australian Brewery Co Ltd (1996) 66 FCR 451 (Tamberlin J); McIlhenny Co v Blue Yonder Holdings Pty Ltd (1997) 149 ALR 496 (FCA/Lehane J); Campomar Sociedad Limitada v Nike International Ltd (1998) 156 ALR 316 (FCA/FC); MID Sydney Pty Ltd v Australian Tourism Company Ltd (1998) 42 IPR 561 (FCA/FC). It is necessary in any particular case to identify carefully and precisely the issue for decision. Each case turns on its own facts.

13. I take into account that the difference between cereal and fruit juice, or, more generally, between class 30 and class 32 goods, is not as great as the difference between the classes of goods that have been involved in some other cases.  Both are things that people eat or drink.  But the other factors to which I have referred lead me to think that PB’s use of the word mark “TOUCAN” in relation to the fruit drinks and other beverages in class 32 would, nonetheless, be not likely to cause confusion on account of Kellogg’s existing reputation founded on its Sam Toucan character.

14. Kellogg has relied on suggested links between the markets for cereal and juices and the co-promotion of both kinds of good.

15. A “fruit” element is common to both products.  Apart from the name “Froot Loops”, over the years Kellogg has emphasised the cereal’s connection with fruit through the use of slogans such as “real fruit flavoured cereal”; “50% RDI vitamin C”, and the depiction of fruit on Froot Loops packets, as well as many references to fruit in its television advertisements.  The toucan is a fruit-eating bird of tropical America.

16. Mr Weissenberg asserted that in the case of PB’s fruit juice, the mark “TOUCAN’ was a strong element, as was the graphic device of a realistic toucan bird, while the Brownes mark was present to provide a quality assurance guarantee.  Ms Porter thought that the Brownes mark, due to its size and its location on the side of the label, was not an important part of the label.  It is true that the Brownes mark is not as prominent as the Kellogg logo, but the overall impression of the packaging of the two products differs so much that even a fleeting glance gives the clear impression that they come from different trade sources.  The vibrant colours of the Froot Loops packaging, the childlike script, the “riot of colour” and the disorganised clutter of the Froot Loops packet, stand in stark contrast to PB’s less “busy” and more streamlined and stylish Toucan label, which realised Ms Cassidy-Norrish’s aim of creating a sophisticated tropical label.  Ms Porter conceded that it was highly unlikely that a consumer who looked at PB’s container would think the product was a new product of Kellogg’s.

17. It is clear that Froot Loops is aimed at children and PB’s “TOUCAN” juices at adults or, at least the general public.  Ms Porter properly conceded that PB’s label design would appeal to an older more sophisticated market more than Kellogg’s product would do, and agreed with Mr Weissenberg that Froot Loops cereal is targeted at children of five to twelve years of age.  There is, however, as noted above, some overlap in the markets for the two products.  In my opinion, the adults who consume Froot Loops would unhesitatingly recognise that the Sam Toucan promotional device was directed to children.  Kellogg’s Froot Loops cereal and PB’s fruit drinks may both be consumed at breakfast, and the two litre “Toucan Fresh” orange juice in particular may well be placed beside a packet of Froot Loops on the breakfast table.  More generally, as Kellogg moves into cereal snack bars, its products may be consumed alongside PB’s single serve fruit drinks and juices at other times. 

18. Moreover, I must take into account all legitimate uses that PB might reasonably make of the word mark, “TOUCAN”, not only use it has made of it to date.  PB may use the mark, not only in respect of chilled juices, but in respect of shelf stable ones, and, for that matter, all goods within class 32.  It may do so without displaying the realistic toucan mark.  As noted earlier, it would be unreasonable to think that it would do so without using the Brownes mark or otherwise identifying itself as the manufacturer somewhere on the container, but that identification may appear elsewhere than near the “TOUCAN” trade mark and may not be visible with that trade mark. 

19. But in the circumstances most favourable to Kellogg, no realistic toucan mark, no visible identification of the manufacturer, and PB’s containers being seen in close proximity to Froot Loops cereal packets, I still do not think that there would be a real possibility of confusion.  My reason, again, is that I think children and adults alike would distinguish between the colourful, lively, cartoon bird character named “Sam Toucan”, obviously devised and used as a promotional technique to capture the attention of children on the one hand, and the trade mark use of the simple unadorned word “TOUCAN”, directed to the public generally, in respect of containers of fruit juice on the other.

    
    

    Co-promotion

20. What I have said above is sufficient to dispose of Kellogg’s case based on the co-promotions of cereals and juices, but I make the following additional observations in respect of this aspect of Kellogg’s case.

21. As PB’s juices to date have had to be refrigerated, they have not been able to be promoted alongside Froot Loops in a gondola end promotion or to be placed near Froot Loops on a supermarket shelf.  It is true that alternative promotional methods could be adopted, and in fact were, in the case of the co-promotion of Kellogg’s Coco-Pops and Brownes Chill chocolate milk drink.  However, I accept Ms Cassidy-Norrish’s evidence that on that occasion there was a symmetry of the products: the chocolate element was common to both products and a commonality of interests supported the promotion.  Although “fruit” is an element common to both Froot Loops and PB's Toucan fruit juices, the manufacturers' interests do not coincide.  In particular, I accept Ms Cassidy-Norrish’s testimony that it would be incompatible with PB’s product strategy of establishing a “premium product” to promote its juices alongside Kellogg’s Froot Loops, a product that targets children.  Further, the evidence of Anthony Stoker in cross-examination suggests that should the two products be co-promoted by a supermarket, Counterpoint Marketing Services Pty Ltd would become aware of this and promptly inform Kellogg which could recommend that the supermarket cease the co-promotion.  Though the final decision would remain that of the supermarket, Mr Stoker said he thought that generally the supermarket would conform to Kellogg’s view.  All in all, I think that co-promotions are so unlikely that the possibility should be put to one side as not a “real” one. 

22. PB might manufacture, and sell under the word mark “TOUCAN”, shelf stable juices not requiring refrigeration.  Such juices could be placed on supermarket shelves near Kellogg’s Froot Loops and the two products could be the subject of gondola end promotions.  But even if, contrary to my conclusion in the preceding paragraph, this were to happen, while the possibility that some individual might be confused cannot be excluded, for the reasons given earlier I do not think that confusion is a “real” or “tangible” possibility.

23. Kellogg has led no evidence of confusion to date, even though PB’s TOUCAN juice has been on the market for the last five years.  On the other hand, PB led evidence from several owners and managers of stores that they were not aware of any instance of a consumer having been deceived or confused.  I do not attach great weight to these factors, although they do assist PB to some extent and are consistent with the conclusions I have reached otherwise.

    Kellogg’s potential brand extension beyond cereal

24. I attempted to explain earlier the only and narrow basis on which the possibility that Kellogg might expand into the fruit drink market could arguably be relevant to any issue I have to decide.  In my opinion, for reasons given earlier, consumers would not, on seeing TOUCAN juice, think that Kellogg may have expanded its business.  But I make the following further observations on this aspect of Kellogg’s case.

25. It was, of course, a possibility as at the relevant date that Kellogg would expand its product range so as to include fruit juices and other goods within class 32.  However, today, some seven years after the relevant date, it has not done so.  On the evidence, I am satisfied that it was at the relevant date, and is today, unlikely to do so.

26. Ms Porter testified that Kellogg would not use “Sam Toucan” as a product name, for example, as “Sam Toucan cereal” or “Sam Toucan juice”.  Kellogg’s case in the present respect is that Kellogg will expand into the beverage, and, in particular, the fruit juice market, under the umbrella brand “Kellogg”.

27. Kellogg argues for a finding that it is highly likely that it will move into the beverage market.  It cites its development of the Complete Breakfast philosophy and current promotions in the United States in which Froot Loops are sold in packs alongside tetra juice packs.  According to Ms Porter, although the Kellogg “umbrella brand” is well established in relation to cereals, Kellogg could extend into the beverage market as its “brand equity” is “based around superior nutrition for overall well being of the community” and is therefore synergistic with the total breakfast experience.  This is supported by Mr Blanket's evidence that “Kellogg’s image of healthy breakfast products for the family could easily translate to, or ‘fit’ with, healthy food or beverage breakfast products, including fresh and shelf stable juice”.  Ms Porter refers to Kellogg’s proposed joint advertising venture with the Australian Dairy Corporation, which, she says, could lead to Kellogg’s entering the milk beverage market.  Kellogg has already moved beyond pure breakfast products to “convenience bars”.  However, whether Kellogg will in fact move into the beverage market is mere speculation.  A fortiori, the fruit drink beverage market.  Ms Porter said that there have been “discussions of entering into the beverage market” but conceded that at present Kellogg has not entered a joint or strategic alliance that would be expected to precede such a development.

28. It is common ground that no cereal manufacturer to date has moved into fruit juices in Australia.  Ms Porter argues, however, that Kellogg’s main Australian competitors, Sanitarium and Uncle Tobys, like Kellogg, have moved beyond cereals.  For example, Sanitarium has ventured into breakfast drinks and soy milk drinks. But Sanitarium is an established manufacturer of a wide range of health products ranging from peanut butter to nutmeat and is therefore not readily comparable to Kellogg, and Uncle Tobys, although it has extended its range beyond cereal to snack bars and bread, has not ventured beyond grain based products

29. It is disputed whether, if Kellogg did enter the beverage market, it would do so under its umbrella and sub-brand names.  In Ms Porter’s opinion, Kellogg could “leverage” its successful equity in cereals to encompass compatible products such as juices.  However, I think it doubtful that Kellogg would market juices under the Kellogg umbrella brand.  Although Ms Porter argues that Kellogg’s established “equity” is based on superior nutrition, she concedes that a consumer’s familiarity with the Kellogg umbrella brand may be overshadowed by that brand’s association with the questionable nutritional credibility of such a product as Froot Loops.  For these reasons, Kellogg is in fact considering minimising or eliminating the appearance of the umbrella brand on Froot Loops and similar products.  Mr Weissenberg’s evidence is that past experience of attempted brand extensions have failed due to the manufacturer’s perceived lack of expertise in the new area, and that it is often preferable for a manufacturer to launch the new product under a new name.

30. If, contrary to my assessment, Kellogg were in fact to manufacture and market juice under its umbrella name, I would not conclude that Kellogg’s association with the word “toucan” through Sam Toucan and Froot Loops would cause people to wonder whether PB’s TOUCAN juice was also part of the family of Kellogg juice products. 

31. I regard Kellogg’s case based on brand extension as speculative.

    Kellogg’s survey evidence

32. In conformity with the Court’s Practice Note 11, PB made known to Kellogg its objections to the methodology of Kellogg’s proposed survey.  Kellogg modified its methodology in some respects.  Counsel for PB submits that survey evidence is hearsay and that it is a matter for the Court’s discretion under O 33 r 3 whether it is allowed to be adduced.  Order 33 r 3(b) provides as follows:

    “3.      The Court may at any stage of the proceedings –

    (a)……………………………………………………………………;

    (b)dispense with compliance with the rules of evidence where such compliance might occasion or involve unnecessary or unreasonable expense or delay, … .”

    No doubt PB’s submission is referable to the expense and delay in calling as witnesses all respondents to the survey.

1. Counsel for PB submits as follows:

   “ … any exercise of discretion is dependent upon compliance with a number of criteria, eg, proof of a correct methodology;

   proof that the proper universe was examined, and a representative sample drawn from that universe;

   whether the mode of interviewing was correct;

   whether the data gathered was accurately reported; and

   whether the sample design, the questionnaire and the interviewing were in accordance with generally accepted standards of objective procedure and statistics in the field of such surveys.  Where survey evidence does not satisfy these criteria, it should be accorded little weight (Arnotts v TPC (1990) 97 ALR 555 at 608).”

   Counsel also submits that Kellogg’s survey evidence “should be given no weight at all.”

2. It is not entirely clear whether PB submits that the evidence should be excluded, or should be admitted but given no weight, or whether it makes both submissions in the alternative.  I will treat the submission as being of the latter form.

3. Practice Note 11 includes the following:

   “The admissibility of surveys is always a matter for the trial judge to determine but the risk of the survey being rejected or given little, if any, weight at the trial may be diminished if the following procedure is followed when a party seeks to have a survey conducted.”

4. Clearly, the Practice Note assumes that evidence of the carrying out of a survey and of its results may be admissible.  This assumption is consistent with several decisions in the Court: see, for example, Shoshana Pty Ltd v 10^th Cantanae Pty Ltd (1987) 79 ALR 279 (FCA/Burchett J); TV-am plc v Amalgamated Television Services Pty Ltd (ATN Channel 7) (1988) 12 IPR 85 (FCA/Einfeld J) at 90-91 Arnotts Ltd v Trade Practices Commission (1990) 24 FCR 313 (FC) at 358-364; Sterling Pharmaceuticals Pty Ltd v Johnson & Johnson Australia Pty Ltd (1990) 96 ALR 277 (FCA/Hill J) at 291-293 (and on appeal at (1991) 21 IPR 1 (FC) at 21 (Burchett J); Interlego AG v Croner Trading Pty Ltd (1991) 102 ALR 379 (FCA/Sheppard J) at 407-416; State Government Insurance Corporation v GIO (NSW) (1991) 28 FCR 511 (French J) at 543; and on Practice Note 11, see Gas Corporation v Phasetwo Nominees Pty Ltd (1998) ATPR 41-644 (FCA/RD Nicholson J); Centurion Roller Shutters Pty Ltd v Automatic Technology (Australia) Pty Ltd [1999] FCA 1118 (French J). The questions of the admissibility of, and the weight to be attributed to, survey evidence have attracted much extra-curial discussion; recent examples are J D Heydon, Cross on Evidence (5^th ed) [29155], [37090]; Justice M J Beazley, “Hearsay and Related Evidence – a New Era?” (1995) 18(1) NSWLJ 39 esp at 61-66; Rachel Mulheron, “Survey Evidence in Passing-Off and Trademark Litigation - Admissibility and Weight” (1996) 26(5) Qld L Soc J 449; Skinnon and McDermott, “Market Surveys as Evidence – Courts Still Finding Fault” (1998) 26 ABLR 435; Gary Lea, “Masters of All They Survey? Some Thoughts upon Official Attitudes to Market Survey Evidence in UK Trade Mark Practice” [1999] 2 IPQ 191). 

5. I will not add to the discussion of the general question of the admissibility of survey evidence.  In this Court, such evidence is not excluded a priori as hearsay.  Rather, the attacks made on the survey evidence tendered in a particular case, while they may lead to the exclusion of that evidence, are treated as going to reduce, even to nil, the weight to be attributed to it.  If the conclusion is reached that the survey evidence should be given no weight, the effect will be the same as if it had been excluded.  I proceed accordingly.

6. Before dealing with Kellogg’s survey carried out for the purpose of this case, I note a reference in the evidence to another “survey”. Ms Porter refers to “Kellogg Australia’s consumer tracking survey for the final quarter of 1998”.  This is a piece of paper which Ms Porter says shows that 94 per cent of the children surveyed between the age of six and twelve associated the Toucan Sam character with Froot Loops, and that 25 per cent of those surveyed could recall the name “Sam Toucan” unprompted.  But there was no evidence of the carrying out of the study, and therefore no evidence of the identity or selection of “the children surveyed”, the methodology of the survey or the manner of recording the results.  In any event, it is not directed to the question with which I am concerned.  I place no weight on this “evidence” and will henceforth ignore it.

7. I have three major concerns with Kellogg’s survey evidence.  The first is a methodological one: the use of “probing” and the manner in which the answers given after probing were recorded in the survey results.  Mr Alexander, Kellogg’s expert witness, said that the aim of probing is to elicit a response and to clarify the answer first given.  An illustration was given in the instructions to those who were to conduct the survey and was reproduced earlier in these Reasons.  Although the initial response to the question: “Does this word Toucan make you think of anything people can eat or drink?”, was “um soup maybe”, according to Mr Alexander, the response that would be recorded would be that obtained only after probing by the interviewer, that is, “Rosella”.  But having regard to the purpose of the survey in the context of the issues in this case, this manner of recording the result suggests that the word “TOUCAN” alone triggered the response “Rosella”. 

8. Both Mr Alexander and Mr Weissenberg accepted that probing was a standard survey technique.  Mr Weissenberg said that companies were content to base their planning on surveys in which probing was used.  This is perhaps understandable: companies must plan and in doing so wish to take into account the best guidance available to them.  But the question before me is of a different order.  It is whether use of the word “TOUCAN” as a trade mark in relation to class 32 goods would itself be likely to confuse the public by suggesting a connection with Kellogg, or at least a trade source other than PB.  It seems to me that a member of the public who would not be confused by that use unless asked probing questions is to be ignored.  Such a person would be confused, not by the use of the word mark TOUCAN, but because the probing had caused him or her to recall an association which otherwise would probably not have come to mind. 

9. In assessing the likelihood of confusion one must imagine the consumer in contexts in which he or she would see or hear the word “TOUCAN” being used as a trade mark in relation to class 32 goods, such as in a supermarket.  This context itself is removed from that in which the survey questions were asked.  But to take into account what the consumer would have remembered if a companion in the supermarket aisle had “probed” introduces a further and unacceptable degree of artificiality, and prevents the results from reflecting the association, if any, that consumers would in fact make in real life.

10. My second major concern is that the survey evidence did not address the critical issue in the case.  Let it be assumed that the bare word “TOUCAN” makes consumers think of Kellogg’s Froot Loops cereal.  Let it be further assumed that children and their parents have seen images of toucans more than those of any other animal or bird on breakfast cereal boxes.  These assumptions do not go so far as to suggest that consumers seeing the word “TOUCAN” used as a trade mark on fruit juice containers would be confused as to whether that product emanated from Kellogg.  Consumers who associate the word “TOUCAN” with Kellogg do so by means of the colourful bird character and his name “Toucan Sam”.  I do not think that persons who made that association would be caused to wonder whether a fruit drink and juices in containers bearing the bare word mark “TOUCAN” came from the same manufacturer.  In my view, it does not attribute sufficient discernment to consumers to think that they would fail to make the distinction between the word mark “TOUCAN” applied to class 32 goods and the colourful toucan bird named “Sam Toucan” in association with which Kellogg markets its cereal.  I take into account the fact that some consumers will see the word mark on the containers only fleetingly.  Again, it is not possible to be sure that no single consumer would be confused.  But in my view the possibility is not to be considered a “real” or “tangible” one.

11. Mr Alexander conceded that it could not be said that survey results showing that people associated the word “TOUCAN” with cereals necessarily indicated that if the word were on a different product, those people would think that product emanated from the same manufacturer.  Strength of association does not necessarily prove the likelihood of confusion.  Associations may be of different kinds.  A response to a survey question to the effect that in the context of food or drink a person associates the word “TOUCAN” with cereals does not mean that in all such contexts that association will be made.  The context, for example, the packaging of the product, are a reader’s guide.  This is not to ignore the assorted stored associations which consumers carry with them, but to question their automatic and immediate application of an association in a different context.  Even a spontaneous response associating the word “TOUCAN” with cereals does not necessarily mean that in all circumstances a consumer would make that association.

12. My third major concern relates to the “translation” of the survey results obtained in late 1998 to the relevant date in 1992.  Mr Alexander conceded that his reasoning that as at that date the association between the word “TOUCAN” and Froot Loops would have been stronger because there were then no other “Toucan products” in the market, was weakened by cross-examination directed to showing that there were in fact several such products, including an alcoholic drink manufactured by United Breweries.  However, there was no evidence as to the actual existence, market share and influence of those products.  Mr Alexander’s evidence, in particular his analysis of graphical data, suggested that gross indicators such as the sale and consumption of Froot Loops and Kellogg’s advertising expenditure on that product were the same for 1992 and 1998.  Yet he conceded he had failed to take into consideration any difference as between 1992 and 1998 in the emphasis placed on the name “Sam Toucan” in Kellogg's advertising.  Mr Alexander should have taken into account the minimal use of the character’s name prior to the relevant date, at least on the packaging.  In my opinion, the strength of the association between the word “TOUCAN” and Froot Loops and Kellogg was much less in 1992 than in 1998.  Accordingly, the strength of association revealed by the survey results would have to be discounted very much indeed, in order to reflect the strength of the same association in 1992.

13. The three shortcomings mentioned above lead me to derive little or no assistance from the survey evidence.  This conclusion relieves me of the necessity of discussing other criticisms which PB levelled against that evidence, but I will mention them.

14. Mr Alexander’s brief was to “look at the strengths of association between the word, the concepts, and a product”.  The relevant date is 15 May 1992, at which time PB had not used any “TOUCAN” mark on its products.  Accordingly, I accept Kellogg’s submission that the best indication would be in a market such as Sydney, in which PB’s fruit juice has not yet appeared.  (It was not suggested that PB’s “Toucan Twin Stick Icy Pole” would have had a significant impact for present purposes).  A survey conducted in 1998 in Western Australia may have indicated that the word “TOUCAN” is primarily associated with PB’s juices or with juices generally or with both cereal and juices, especially as TOUCAN juice is marketed in Western Australia in conjunction with the Brownes mark, which, apparently, is itself very well known in Western Australia.

15. PB also argued that the question referring to “anything people can eat or drink” suggested an association between what people eat and drink and the word “TOUCAN”.  Given that both Kellogg’s and PB’s products fall within this category, I do not see how the question is prejudicial to PB or otherwise detracts from the value of the survey.  It is only any association in the context of food and drink that was relevant in the present proceeding, and it was fair to direct respondents’ minds to that general area, rather than to express the question in a more general manner which may have generated a multitude of unhelpful responses.

16. In the same way, I do not accept PB’s criticism of the sample size or of the use of the method of intercept sampling.  PB argued that although intercept sampling is a well accepted technique, it does not give a truly random sample in that not everyone in Sydney had an equal chance of being selected for questioning, and therefore the statistical method used by Nielsen does not apply.  Mr Alexander accepted that not all persons in Sydney had the same chance of being questioned, but he said that interviewers were carefully trained to adopt consistent procedures to ensure accuracy.  He conceded that, all other factors being equal, the larger the sample size the more limited the margin of error.  He accepted that in the present case, in which, according to the results of the Toucan word association survey, 33 per cent of the 182 parents surveyed associated the word “TOUCAN” with cereal, there would be an error margin of approximately 6.6 per cent, so that the real percentage figure lies between 26.4 and 39.6.  However, in light of the survey’s aim of exploring an “association”, I do not think an error margin of 6.6 per cent destroys the evidentiary value of the results.  Mr Alexander said a sample size of approximately 200 is adequate for an “indicative response”.  Similarly, although the intercept method may not give a true random sample, I take a similar view of it.

17. In the case of the Toucan word association survey, 26 per cent of parents and 25 per cent of children associated the word “TOUCAN” with Froot Loops, and 94 per cent of the forty-eight adults who identified the cereal, and 85 per cent of the fifty-six children who did so, went on to identify Kellogg as its manufacturer.  In the character association survey, 40 per cent of parents and 44 per cent of children identified a toucan or the character Sam Toucan as a bird they had seen on breakfast cereal packaging.  Of those people, 84 per cent of parents and 71 per cent of children identified Kellogg as the manufacturer.  On their face, the combined results of the two surveys indicate only that in late 1998 for a significant number of people, there was an association through the Sam Toucan character but otherwise of an unidentified kind, whether subconscious or not, between the word “TOUCAN” and Kellogg.

18. For the reasons given earlier, however, I place little weight on the survey results and I am not satisfied that the survey tends to show that at the relevant date, use of the simple word “TOUCAN” as a trade mark in relation to class 32 goods would cause people to be confused as to whether the source of those goods was Kellogg or some other manufacturer other than PB.

    CONCLUSION

19. For the above reasons, I am satisfied that the use of the word “TOUCAN” in a fair and natural manner as a trade mark in relation to goods within class 32 would not be likely to deceive or cause confusion.  Kellogg’s appeal should therefore be dismissed.

I certify that the preceding one hundred and twenty-two (122) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Lindgren.

Associate:

Dated:            19 November 1999

Counsel for the Applicant:	Mr R Cobden
Solicitors for the Applicant:	Baker & McKenzie
Counsel for the Respondent:	Ms A H Bowne
Solicitors for the Respondent:	Griffith Hack
Dates of Hearing:	26, 27, 28 July 1999
Date of Judgment:	19 November 1999