Larry John Powell v Glow Zone Products Pty Ltd

[1996] FCA 1021

CATCHWORDS

TRADE MARKS - applicant registered proprietor of trade mark "CAPS THE GAME" - mark registered in relation to goods in Class 28 - mark intended to be used and later used in connection with discs used by children in connection with a game known variously as "caps", "milkcaps" and "POGS" - respondent marketing similar products using the mark "GLO-CAPS" - respondent's product all "glow in the dark" products, i.e. they exhibit a luminescence when in darkness - whether two marks substantially identical - whether two marks deceptively similar - discussion of principles applicable in relation to the determination of these questions - whether registration of applicant's mark valid - whether applicant's mark capable of being distinctive of its goods - whether the word "caps" was a word which was used generically in the relevant context or was likely to become used by the trade and persons purchasing the goods as generally descriptive of them - discussion of evidence and of relevant principles - whether "CAPS", after the registration of the applicant's mark, was used as the name or description of the goods in question - significance for this case of conclusion that it was - discussion of implications of s.56 of Trade Marks Act 1955 and of relevant principles.

Trade Marks Act 1955, ss.6, 22, 24, 26, 28, 32, 56, 62, 64.
Trade Marks Act 1995, ss.2, 24, 87, 250, 252, 255.
Evidence Act 1995, ss.76, 135, 136.

LARRY JOHN POWELL v GLOW ZONE PRODUCTS PTY LIMITED

No. NG 907 of 1994

CORAM:    SHEPPARD J

PLACE:    SYDNEY

DATE:     25 NOVEMBER 1996

IN THE FEDERAL COURT OF AUSTRALIA )
  )
NEW SOUTH WALES DISTRICT REGISTRY )    No. NG 907 of 1994
  )
GENERAL DIVISION                 )

BETWEEN:LARRY JOHN POWELL

Applicant

AND:GLOW ZONE PRODUCTS PTY LIMITED

Respondent

CORAM:    SHEPPARD J

PLACE:    SYDNEY

DATE:     25 NOVEMBER 1996

REASONS FOR JUDGMENT

HIS HONOUR:   In this action the applicant seeks injunctive and other relief against the respondent to restrain the alleged infringement of a trade mark which is owned by the applicant.  The certificate of registration of the trade mark is dated 5 December 1994.  The mark in question is "CAPS THE GAME".  The mark is registered in Part A of the Register of Trade Marks in respect of games and amusement goods in Class 28; components of games sold individually or in a set such as discs and playing boards, but not including any goods which use toy percussion caps such as cap pistols.  Class 28 comprises games and playthings; gymnastic and sporting articles not included in other classes; and decorations for Christmas trees.

The allegedly infringing mark is "GLO-CAPS".  The respondent has applied for the registration of that mark but the application has not been dealt with and remains pending.

The issues in the case involve the question of infringement and also a number of questions arising from matters relied upon by the respondent concerning the validity of the applicant's mark.

The Act which applies to the proceedings is the Trade Marks Act 1955 ("the Act"). That was the assumption upon which the case was presented by both parties. The Trade Marks Act 1995 came into force on 1 January 1996 after the hearing of this matter had concluded; see s.2. But ss. 250 and 252 of the 1995 Act provide that proceedings to rectify the Register and for infringement pending at the time the 1995 Act came into force are to remain under the applicable provisions of the 1955 Act. There may be a question whether so much of the proceedings as depend on s.56 of the 1955 Act are properly to be treated as remaining under the 1955 Act; see s.255 of the 1995 Act. If that were not the case, the applicable provisions of the Act would appear to be ss.24 and 87. No submission was made that this was in fact the case. Eventually it will be seen that, in the view I take of the matter, the considerations to which s.56 of the 1955 Act give rise, would not change the outcome of the proceedings. I have therefore approached the matter in the same way as did the
parties, i.e. upon the basis that issues arising under s.56 of the 1955 Act are to be dealt with under that Act.

The background of the case is a game played by children in the United States.  It apparently originated in Hawaii many years ago.  The game was first played with milkcaps, that being the expression for the caps or tops placed on milk bottles in order to seal them.  The caps were saved and collected by children usually under 10 years of age but sometimes slightly older.  The object of the game was to strike a stack or pile of milkcaps with a harder disc or cap known as a slammer.  The player striking the stack was entitled to those caps which were turned over after they were struck.  Later the game was played with caps taken from fruit juice bottles.  These became known as "POGS".  The name "POGS" was derived from the admixture of juices which were in bottles and which consisted of a combination of passionfruit, orange and guava juices.  Some of the evidence suggests that, instead of passionfruit, pineapple or papaya juice was sometimes used.  Nothing turns on this.

The game became very popular at the beginning of the 1990s after a school teacher in Hawaii revived it.  As I understand the evidence, she did so with what were known as POGS rather than milkcaps.  There then developed something of a craze which spread from Hawaii into California and other parts of the United States.  A number of companies began to
purvey these caps, one being known as, "The World Pog Federation".

The word "cap" is an ordinary English word.  It has a Latin derivation.  Its primary meaning is a covering for the head; see the Oxford English Dictionary (1989).  It has a number of secondary meanings.  Under the heading, "Things of similar shape, position or use" it is defined as a cap-like covering of any kind.  Thus it means a cap-like cover or similar part on the end of anything and a cover or a case.  The current edition (1994) of the Shorter Oxford English Dictionary gives a number of examples of the use of the word including a cap-like part fitting over or forming the top or end of an object, a cap-like cover or case, a device sealing the opening of a bottle or protecting the lens of a camera or the nib of a fountain pen.  The word is given a similar meaning in the previous edition of the Shorter Oxford English Dictionary (1955) but there is no express reference there to the use of the word "cap" in relation to the seal on a milk bottle.  The Macquarie Dictionary (1987) defines "cap" as primarily a covering for the head.  Amongst the meanings referred to is that of a detachable protective top of a fountain pen or a jar.  There is no specific reference to the covering for a milk bottle.  Not surprisingly Webster's Dictionary (3rd Ed.) does include this as a meaning of the word but that is obviously American usage.

I have mentioned these various meanings of the word because there is a real question whether or not the word "caps" was capable of being sufficiently distinctive to warrant its registration as a trade mark.  There is a great deal of evidence from the trade about when the word "caps" began to be used in Australia in connection with the marketing of these products by the parties in this case.  The applicant's case is that, at the time of the registration of the trade mark, i.e. 31 May 1994 there was no such use.  His case is that, whilst the word may have been used in the United States as descriptive of the discs or tops which sealed milk or fruit juice bottles, there was no such use in Australia.  Such use of the term as developed occurred after the trade mark was registered.

I should say something about so much of the trade mark as consists of the words "THE GAME". "Game" is an ordinary English word. It would not itself be entitled to registration as a trade mark in relation to an object used in the playing of a game. Counsel for the applicant was inclined to concede this but referred to s.32 of the Act which, so far as relevant, provides that, if a trade mark contains matter which is common to the trade or is otherwise not distinctive, the registrar or a prescribed court, in deciding whether the trade mark shall be registered or shall remain upon the Register, may, in his or its discretion require as a condition that the proprietor shall disclaim any right to the exclusive use of any of those parts to the exclusive use of which the registrar
or the court holds the proprietor not to be entitled.  Alternatively, the registrar or the court may require that the proprietor make such other disclaimer as the registrar or the court considers to be proper for the purpose of defining the rights of the proprietor under the registration.  Counsel for the applicant would not oppose an appropriate requirement being imposed under that provision in relation to so much of the trade mark as consists of the words "THE GAME".

It is next necessary to say something of the evidence which was led to the case.  All the evidence was given in chief by affidavit.  The only witness to be cross-examined at any length was the applicant himself.  Subject to what I am about to say about the applicant's evidence, I accept generally the purport of the evidence given by each of the witnesses.  As the account I am about to give will indicate, there are differences between them, mainly as to their observation of what went on in the trade in relation to the advent of the caps game in the latter months of 1994.  But I think that those differences are due to different perceptions and different experiences and not to there being any question of dishonesty or other unreliability in relation to the evidence.  I think the witnesses endeavoured to give an honest account of their own observations and perceptions of events as they occurred.

I need to refer to the applicant's evidence in a little detail.
     The applicant said that his product comprised three elements, namely, collectible game discs, throwing game discs and a playing board.  He said that the product was sold individually or in sets.  Additionally, other merchandising accessories such as a storage tube and a collector's storage folder were sold separately.  He said that the collectible game discs comprised either cardboard, laminated cardboard, or cardboard foil game discs.  One side of the game disc depicted a different piece of coloured original artwork developed by him in Australia designed to appeal to children between five and 14 years of age.  The reverse side of the game disc depicted the trade mark "CAPS THE GAME" and the allocated collectors' number for the artwork.  The game discs are manufactured in sets.  A set might comprise five to 500 collectible game discs per series.  Each disc in the series is allocated its own collector number.  The applicant said that he intended manufacturing at least 10 different series of game discs which contained his own artwork as he believed that an essential element of their appeal would prove to be their "collectability".  Each was to have its "own branded theme".  He said that he had four series in the market place at the time he gave his evidence.  He said that these displayed his own "developed and owned artwork."  Moreover he said that he held the Australasian licences for some other artwork suitable for placing on discs.  He also said that he had developed, and was continuing to develop, what would eventually constitute eight separate series in relation to "these licensed properties."  He said that he believed that collectible game discs had considerable corporate appeal to companies which marketed merchandise to children between the ages of five and 14 years and instanced Kellogs, Cadburys, Mars and United Dairies.

The applicant went on to refer to the throwing game discs which he said were sold under the name "CAP SLAMMERS" which is the subject of an application for registration as a trade mark.  The throwing discs comprise plastic, metal or wood throwing game discs.  The throwing disc has the same diameter as the collectible disc but is thicker and heavier.  It is designed for "slamming" on to a stack of mounted collectible games discs.  The object of the game is to flip the collectible game discs over on to their numbered side.  As I understand it, a player who succeeds in overturning his opponent's discs in this way wins those discs, whether temporarily or permanently being a matter for the players.

The playing board comprises a plastic laminated wood compound board which is laid flat on a table or on the ground.  There are two sizes.  Each collector game series has its own collector games playing board which matches the theme of that series.  Each playing board contains artwork comprising four colours.  The colours and the artwork are designed to form part of the series to which the playing board relates.  The applicant said that the game originated in Hawaii and derived its name from "milk covers".  These were disposable cardboard discs used to cover the carafe-shaped neck of milk bottles used in Hawaii.  The milk cover was inserted into the neck of the bottle to restrain and cover the milk.

The applicant said that there were many words used to describe the cardboard disc game which he had described in his affidavit.  He said that the game discs and the game were referred to in Australia and New Zealand as "POGS", "STAX", "TROVS", "YABS", "TONX", "FLIPPERS", "GAME DISCS" and "COLLECTOR DISCS".

Mr Powell said that he believed that a company, Crown & Andrews Pty Ltd, was the sole distributor of World Pog Federation products, being products of the World Pog Federation located in Orange County in California in the United States.  He said that he had inspected a number of stores, Target, K-Mart and Toys R Us in both Sydney and Melbourne.  He said that "many hundreds" of the game discs branded POGS were sold and distributed by Crown & Andrews as well as other branded game discs such as TONX and GLO-CAPS.  He said that, except for the respondent's product, no game disc which he had inspected in Australia used the words "caps" or "milkcaps" on the game disc itself.  He said that the game disc was generically described as a POG or a game disc.

The applicant said that, since June 1994, he had been extensively involved in the development of a business plan to commercially exploit the trade mark.  He said that in November 1994, he had a meeting with Mr Alexander, the national sales and marketing manager and Mr Booth, the national marketing co-ordinator, of Newsagents Direct Distribution Pty Ltd (referred to in the evidence as "NDD").  He met Mr Alexander and Mr Booth for the purpose of presenting to them his range of products utilising his trade marks and of seeking their agreement to act as national distributors of his product to newsagents and chain stores throughout Australia from January 1995.

Amongst other things, Mr Alexander told him that NDD had been distributing GLO-CAPS for the respondent for about six weeks.  According to the applicant, Mr Alexander said that they claimed that they owned the CAPS trade mark.  Mr Alexander said that, by Christmas, NDD would have sold in excess of $1,000,000 worth of GLO-CAPS.  He expected they would launch a range of Disney and Simpsons caps before Christmas manufactured by Glowzone products, i.e. the respondent.  The reference to "Simpsons" is a reference to the television program of that name.

The applicant said that he asserted that he had the trade mark in the word CAPS.  Mr Booth asked him what he intended to do about the "infringement".  The applicant replied that he would first try to come to a "commercial arrangement" whereby he would grant infringers a limited licence for a royalty plus some compensation for past sales.  If no arrangement could be entered into, he would take steps to enforce his trade mark rights.  He added, so he said, "Let me make it quite clear that nobody will be allowed to use the word 'CAPS' in relation to the game without my approval."

The applicant deposed to some further conversations with Mr Alexander but I do not find it necessary to refer to the detail of these.

Also in evidence is a statutory declaration by the applicant made on 24 August 1995.  The declaration was used in opposition to trade mark applications for the word "POG" and other phrases using that word including "World Pog Federation".  The applicant said that he was concerned by the acceptance of these applications, not only to preserve his own position to use ordinary descriptive terms in the description of his products in Australia, but also to ensure that another corporation did not obtain unfair advantage in Australia by the exclusive appropriation of such terms.  The applicant said that the word "POG" related to cardboard circular discs which resembled milk bottle lids.  He said that the cardboard discs had come to form the basis of a "craze" or novelty as regards collectible items which could be used in the playing of games.  He referred to the history of the development of the game in the United States.  Eventually he said that it was his belief that in Australia the word POG was a term which generically referred to a collectible cardboard disc and a game played utilising such collectible discs.  He said that the term POG was "the type of term" which he, or other people involved in the marketing of games, publications, and collectible discs would desire to use in a proper descriptive context in Australia to describe the character or nature of such products.  He said that he was concerned that, if the trade marks under opposition were to proceed to registration in circumstances where it appeared that exclusive rights were conferred in respect of the word POG, it would unduly prejudice the use of an established descriptive term in the conduct of normal business activity and would confer an unfair advantage upon the applicant for registration in the conduct of its business in Australia.

In the course of his cross-examination, the applicant said that he started making presentations in relation to his product in Australia in about September 1994.  He said the first sale of his product was made in December 1994.  The sale was to Australia's Wonderland.  His main sales had been late in January 1995.

The applicant denied that he had heard the word "caps" in the United States prior to May 1994.  He had, however, heard the expression milkcap.  The applicant said that he had not done a great deal of investigation into the product in the United States until he made a visit to the United States in May 1994.

The applicant agreed that he intended, if he could, to "lock" anyone else out of the market who might have wanted to trade using the word "cap" or "caps", "POG" or "POGS", or "milkcaps" and variants such as "Cap Slammers", "Collector Caps" and "Classic Caps".  Later the applicant gave the following evidence:

"What I am putting to you is that you were intending to use the trade mark to exclude from the market those entities which were not prepared as it were to buy the licences from you? - I was prepared to negotiate a licence providing I had something to licence them, certainly."

Counsel for the respondent pressed the applicant with a suggestion that he had conducted himself in relation to the respondent and others with the intention of allowing people using the name "caps" to entrench themselves in the market at which time the applicant intended to approach them "with what I will put to his Honour was little short of blackmail asserting your rights under the mark".  This suggestion was vehemently denied by the applicant.  The applicant was pressed at some length with this suggestion.  He was asked why he had not acted in November when he heard of the Glo-Caps marketing campaign.  The applicant maintained his denials.  In re-examination it emerged that the certificate of registration was dated 5 December 1994.  I find it difficult to take much from this cross-examination.  I shall need to say more of this in due course, but two matters should now be mentioned.  The first is that, for reasons which I do not understand, the respondent, through its trade mark attorneys, made no search of the Register before it began to use the expression "Glo-Caps".  A search of the Register would have disclosed the existence of the application made by the applicant and alerted

the respondent to the fact that there might be a problem in its using an expression which contained the word "caps".  Apart from this, it seems to me to be very difficult for there to be the sort of criticism which was made of the applicant, bearing in mind that the trade mark was not finally registered until 5 December 1994 by which time the respondent was committed to the course of action which it pursued.

I indicated earlier that I had some reservations about some aspects of the applicant's evidence.  These arise because of his assertion that in the United States the game was referred to either by the name "POGS" or by the name "milkcaps" but not by the name "caps".  At one point in his cross-examination he seemed to concede that it was known in the United States as either "POGS" or "caps" but at others he resisted this.  His affidavit evidence of course denies that the word "caps" was used generically in the United States.  In a moment I shall refer to other evidence in the case which establishes to my satisfaction that the word "caps" was used generically in the United States prior to May 1994.  There is, however, a real question whether it was used in that way in Australia prior to that time.  Furthermore, the applicant denied that he himself used the word "caps" in discussions he had with others as a generic indication of what he was talking about.  It is plain to me on the face of other evidence that he did use it generically in his discussions.  Notes taken at one of the meetings establish this.  To the extent that the applicant's evidence is otherwise, I reject it.

Mr D.S. Miller is a director of the respondent.  He said that its business commenced in 1987.  It was engaged in manufacturing, distributing and selling products to the toy industry.  In particular it sold "Glow-In-The-Dark" products which were printed using a luminescent process.  Mr Miller said that the respondent has had an extensive involvement in selling "luminescent" products to the toy industry and has established a significant reputation in relation to the sale of such products.  He said that it used the name "Glow Zone" widely in connection with its product range and believed that it had established significant goodwill by reference to the mark "Glo".

Mr Miller said that the respondent was based in Melbourne and employed a full-time staff of 11, four people on a consultative basis and a further 35 people on a sub-contract basis for product packing.  It sub-contracted the printing of its products to local printing companies and supervised the use made by them of technology that the respondent had developed for the making of luminescent products.

This paragraph was objected to. Reference was made to s.135 of the Evidence Act 1995 which provides that the court may refuse to admit evidence if its probative value is substantially outweighed by the danger that the evidence might be unfairly prejudicial to a party or be misleading or confusing or cause or result in undue waste of time. The basis of counsel's objection is that the paragraph is not expressed in a correct form. It gives none of the detail of the facts which underlie the various statements in it. Counsel contended that it ought therefore be rejected or, if thought to be admissible, excluded under s.135 or, if not, under s.136 which provides that the Court may limit the use to be made of evidence if there is a danger that a particular use of the evidence might be unfairly prejudicial to a party or misleading or confusing.

I do not take anything from the paragraph except that it reinforces Mr Miller's evidence that the respondent is in a substantial way of business.  So much appears in any event from other parts of his affidavit and from the whole of the facts and circumstances of the case.  I am not particularly concerned whether he has a full-time, a casual or a part-time staff or whether he contracts out all work.  The fact is that Glow Zone products are on the market, they are well known in the trade as appears from the evidence of a number of witnesses later to be referred to and the respondent must have an operation of some significance and size.  I take no more from the paragraph than that.  On that basis I do not propose to reject it nor to exclude it.

Mr Miller said that the respondent spent over $200,000 in research and development of its product range.  He said that he visited the United States in August 1994.  He then became aware of the great popularity of a game known in the United States as "the cap game".  He said that the game had its origins in children collecting round wax coated cardboard discs which sealed milk bottles.  Children would set up a stack of these discs, known as caps, face down, and knock over the stack with a cylindrical device known as a slammer.  If any of the caps were turned over with their picture up, the turned over caps were won by the person who threw the slammer.  The cap game was marketed by a range of companies.  Mr Miller obtained examples of the products being marketed in the United States which he brought back to Australia.  These are in evidence.  He said that the game had become extraordinarily popular in the United States and other countries as a game in which players would collect and swap caps.

Upon his return to Australia, he developed, at the request of the Target retail chain, the idea of introducing the cap game into Australia using the respondent's luminescent process.  In October 1994 it commenced the marketing, distributing and selling of a range of cap products.  The marketing activity for the products commenced with a television advertising campaign with a budget of $130,000.  Mr Miller said that the products proved to be "enormously popular".  In evidence are examples of the respondent's cap game products.  Some of the products use Disney characters or characters from the television program, "The Simpsons".

Mr Miller said that during the latter part of 1994 and early in 1995 he became aware of a wide variety of cap game products being sold in Australia.  He acquired examples of such products from toy shops and other retail outlets in Melbourne.  These are also in evidence.

Mr Miller said that the respondent sold its cap game products throughout Australia to a wide range of outlets including newsagencies as well as major retail outlets such as Toys "R" Us, Toyworld, World For Kids, Target and Big W.  The details of the respondent's sales are in evidence but are the subject of an order for confidentiality.  It can be said that they have been substantial.

The respondent has carried out extensive advertising for its cap game products.  Details of this are provided as are indications of the amount spent on advertising and sales promotions.

Trade mark rights used in the respondent's business are owned by an associated company, Zone Properties Pty Limited.  Mr Miller is also a director of that company.  The respondent has applied to register the mark "Glo-Caps".  The application is pending.  It was lodged on 26 October 1994, that is almost five months after the applicant's application for the registration of "CAPS THE GAME".  Registration is sought in respect of "toys, games and playthings including parts, accessories and peripherals for the aforementioned goods in Class 28 and all other goods in that class".  The respondent, through Zone Properties Pty Ltd, also has pending an
application for the registration of the mark "Glo Slammers" again in Class 28.  It was also lodged on 26 October 1994.

Mr Miller made a further affidavit on 23 March 1995.  He said that in February 1995 he attended the New York Toy Fair.  During his visit he brought a number of caps game products from a toy shop there known as FAO Schwarz.  He said that all the products were described as caps and a number referred to "The Cap Game".  Examples of some of the games Mr Miller bought are in evidence.

In yet a later affidavit, Mr Miller said that, whilst he believed that there was a game played with caps and slammers known as "caps", it was his impression of the market for the products that the game usage of the products had not been enthusiastically received by the public.  On the other hand there was considerable interest in the products as collectibles and for their novelty value, particularly because of their "glow" feature.  He thought that most sales for the products were attributable to children obtaining the products for novelty or collection purposes.  Mr Miller also said that the name "Glo Caps" derived from the term "glo" indicating the fluorescent quality of the caps.  The term "caps" and also "slammers" were derived from the American names for the kinds of products in question.  These he ascertained during his August 1994 visit to America.  Mr Miller disagreed with the view of a Ms Hrdlicka, to whose evidence I shall refer in a moment, concerning the term "Pog" being descriptive of the products.  He thought that the term was associated with products distributed by Crown & Andrews Pty Ltd.

In the course of his oral evidence, Mr Miller said that all products manufactured by the respondent were "glow in the dark" products.  He added, "Everything at Glow Zone glows in the dark... we've got a specific branding for the Glow Zone concept."

Mr Miller thought that the respondent had about 50 per cent of the market.  He thought that the fact that the respondent had that large share was due, at least in part, to the fact that the product glowed in the dark.  He referred also to the extent of the respondent's marketing.  He said that, by the end of Christmas 1994, the respondent had spent in the vicinity of $250,000 on advertising and promotions.  He said this had "paid off".  The reason why it did was because, during his travels in the United States in late August, he saw that a huge craze was in America.  He added, "but with crazes you have a short life cycle and what we encourage - we were very encouraged at the time Target caused us to enter the market place... they were doing very well within a general Glow Zone range".  Later Mr Miller said that he thought the craze was dying.

Mr J.D. Hunter is the managing director of a company, Hunter Toyline Pty Ltd.  It is an importer, manufacturer and distributor of products for the toy industry.  Since October 1994 Hunter Toyline has been importing from the United States and selling in Australia a product known as "Power Rangers Caps".  It consists of 10 round milk cap-sized cardboard discs sold in foil packaging which are used by children in playing a game.  Mr Hunter said that the discs were known as caps and were printed with "Power Rangers" graphics which were used under licence.  He said that since October 1994, 50,000 sets of these products had been sold for approximately $75,000.  The sales had been to a range of toy outlets.

Mr Hunter said that he had a "strong awareness of the market in Australia" for the products in question.  He said that he was of opinion that the products were known by manufacturers and consumers generally in Australia as "caps".  He said that he was in regular communication with toy manufacturers and distributors in the United States and became aware of the caps game craze in the United States in December 1993.  He was then supplied with samples of caps game products from the United States which were supplied to him with a view to his company taking orders for the sale of such products in Australia.  He had not retained the samples but he recalled that the packages in which they were contained referred to the articles as "caps".  Mr Hunter said that he regularly attended the New York Toy Fair, which is the major international toy fair in the world, held each year in February.  He said that the toy fair was widely attended by the trade in Australia.  He attended the fair in February 1994 and saw there a wide range of caps game products being promoted under or by reference to the name "caps".  He said that his company did not take any further steps in relation to the importation or sale of cap game products until July 1994 when he was approached by a representative of Target stores who were interested in buying a significant quantity of cap products if he could supply them.  A substantial order was placed by Target for the cap products in August 1994.  Mr Hunter's supply of the products originates from a United States company known as Classic Games.

Mr Hunter said that he believed that caps game products became well known to the trade in Australia after the New York Toy Fair in February 1994.  He said that he became aware of the commercial usage of the "caps" terminology as the name of a game and of discs used in the game following the supply of product samples in December 1993 to which he referred in his earlier affidavit.  He said that he had not retained the samples.

Mr Hunter said that during late 1993 and early in 1994 he also became aware of the use of the term "POGS" in connection with the caps game.  He understood the term "POGS" to refer to a popular brand of the caps game in the United States.

In a later affidavit Mr Hunter said that he had located a letter dated 14 October 1993 which had been received during October 1993 from Classic Games advising of the appointment of Hunter Toyline as exclusive distributor for TONX products.  Mr Hunter also located a letter to Classic Games dated 28 October 1993 referring to a presentation of TONX products to K-Mart on 29 October 1993.  Also amongst the company's records were an invoice and a consignment note dated in October 1993 which Mr Hunter believed dealt with the receipt of sampled TONX products referred to in the letter of 14 October 1993.  None of these documents uses the word "caps" or "milkcaps".  The product appears to have been referred to as "TONX" but, so Mr Hunter said, the samples were all packaged with the words, "The Milkcaps Game".

Mr Hunter said that he believed that the word "caps" had wide usage as a descriptive term for the disc products amongst the trade and public in Australia.  He said he referred to the products himself as "caps" or "milkcaps".  He referred to the game played with the products as the "caps game" or "milkcap game".

I should mention at this point that objections were taken to statements in the evidence of Mr Hunter and of other witnesses who used expressions such as, "I am of opinion that..." or, "I believe that..." the products were known by manufacturers and consumers, sometimes in the United States and sometimes in Australia, as caps or milkcaps. Reference was made to s.76 of the Evidence Act as well as to ss.135 and 136 earlier mentioned. Section 76 provides that evidence of an opinion is not admissible to prove the existence of a fact about the existence of which the opinion was expressed.

I do not think it correct to read statements such as these as true statements of opinion.  What the witnesses are really saying is that, in their experience, the articles in question were in fact known in the trade as "caps", whether in the United States or here, at the time at which they are speaking.  It should be said that Mr Hunter did not specify a time.  Importantly he did not distinguish between the position which existed before the end of May 1994 and the position as it became thereafter.

But there was the more general objection that the evidence was so widely and generally expressed that it was not really probative of that which it was intended to establish.  I have taken this submission into account, but the approach is a common one in this case and was adopted by some of the applicant's witnesses as well.  If a case such as this is not to be too drawn out, some latitude in the giving of evidence of this kind must be allowed.  All the witnesses were from the trade.  They had gained an impression of what words were used to describe the articles in question at various times.  They gave evidence of that impression.  Furthermore, the applicant himself, at least towards the end of 1994, used the word "caps" in a generic way as I have earlier found to be the case.  I need to refer to the other evidence which was given but I do not think that there can be any doubt that in Australia the word "caps" was used in a generic way in relation to the product after October 1994 by those engaged in the trade and, to a degree, by consumers.  As I have mentioned, similar objections were taken to evidence given by other witnesses expressed in the same way.  I do not propose to deal with these objections independently.  What I have said is intended to cover the objections which were made on this ground to the evidence of each of the relevant witnesses.

Ms Sally Marks is the marketing manager of Kroner-Tyco Toys Pty Ltd which is engaged in the importation and sale of toy products.  Ms Marks has been the marketing manager of the company since 1994.  Previously she was senior product manager.  She said that Kroner-Tyco Toys Pty Ltd had been importing and selling cap and slammer products since October 1994.  The Kroner product is known as "Slammer Jammers".  It is sold in packets of 24 caps and two slammers.  The packet also contains the rules of the game.  These refer throughout to the discs used in the game as "caps".

Mr G. Bertolini is a director of Trading Cards Australia Pty Limited which is an importer, wholesaler and distributor of trading cards.  In April 1993 he placed an order from Melbourne with a distributor in the United States known as Capital City Distribution for a product known as "Sky Caps".  This consisted of a foil pack containing six cardboard discs known as "caps".  The discs were printed with comic book characters which were used under licence from DC Comics.  Mr Bertolini said that he received delivery of two boxes of the product containing 36 foil packs in each box in June 1993.  Exhibited to his affidavit is a copy of an invoice dated 23 June 1993 from Capital City Distribution which was delivered with the product.  He offered the products for sale to hobby shops, comic shops, trading card shops, newsagents and toyshops.  He also offered them for sale to the public at retail premises he then operated in Moonee Ponds.  In February 1994 he received a further delivery of Sky Caps similar to those received in June 1993 with the exception that they were printed with different cartoon characters.  Since that time he has continued to import Sky Caps together with a range of other cap products.  He said that the product was widely known throughout the toy, hobby and trading card industry as "caps".  Mr Bertolini was not cross-examined.

Mr Scott Edgley is a director of Hot Shots Australia Pty Ltd, a company engaged in distributing collector card products.  He said that he had been aware of the "caps game" products since 1993 through his regular contact with suppliers of such products in the United States.  He said that he refers to the cardboard discs used in the games as "caps" and believed that the term was widely used by the trade and public in Australia in this way.  Mr Edgley was not cross-examined but it needs to be borne in mind that his affidavit was sworn on 10 February 1995, i.e. over eight months after the applicant's registration took effect.  Mr Edgley said that he regularly received trade publications concerned with the toy industry.  In September 1993 he received a trade magazine from the United States which promoted the "cap game" product and which sought orders from the trade for the products.  Apparently Mr Edgley did not at that stage order any such products.

Mr G.P. Clarke is the principal games buyer for Target Australia Pty Ltd.  Target, he said, is a large retail department store in Australia which has a large toy and game section.  Mr Clarke is responsible for selecting all games to be sold by Target.  He has held the position of games buyer for six months - he swore the affidavit on 24 April 1995 - and was previously the trainee games buyer for Target for approximately six years.  He said that he first became aware of the "Milkcaps" game in August 1994 when a Mr Crown of Crown & Andrews Pty Ltd approached him in relation to the sale and distribution of cap products "under the POG Trade Mark."  Mr Clarke explained his understanding of the game.  He said that from his dealings in the industry he understood the word "caps" to be a generic term used to refer to the cardboard discs used in the milkcaps game.  He also described his understanding of the word "slammer".

Mr Gerald Crown is a director of Crown & Andrews Pty Ltd.  He said that Crown & Andrews was one of the best known game manufacturers in Australia.  The company manufactured and distributed games and toys for the Australian and overseas markets.  It has been engaged in the toy and game industry for the past 29 years.  Mr Crown has been engaged in the industry since 1966.

Mr Crown said that he understood that the word "caps" was a generic term used in the toy and game industry to refer to cardboard discs used in the milkcaps game.  He said that he first became aware of milkcaps after watching a feature on television on or about 28 July 1994.  On or about 15 August 1994 he received a facsimile from a Canadian toy distributor, Canada Games, advising that they were to become the distributor for the World Pog Federation in Canada.  Mr Crown went to the United States on 18 August 1994 to negotiate a licence from Pog Unlimited trading as the World Pog Federation which owned all copyright and trade mark rights in the name "POG" and associated merchandise.  Mr Crown said the World Pog Federation was one of the largest manufacturers and distributors of milkcap products in the United States and worldwide.  Subsequently Crown & Andrews became the exclusive licensee for the World Pog Federation in Australia and first released "authentic Pog brand milkcaps" on the Australian market on 17 October 1994.  An example of the product is in evidence.

Mr Crown said that the success of milkcaps lay in their appeal both as collectible items and as a game which is played with the milkcaps.  He described the way in which the game is played in the same way as was described by the applicant and Mr Miller.  He said that the World Pog Federation marketed its milkcap game under the trade mark, "POG THE GAME".

Mr Crown said that the milkcaps game and caps generally had been well received by the Australian public.  He said there were now a number of different cap products on the Australian market and instanced "TROV CAPS", "ACTION CAPS", "Sky Caps", "KROME KAPS", "QUICKSILVER CAPS", "STAX SURF CAPS", "American Game Caps", "Surf Caps", "Tonx Caps", "KINI CAPS", "Power Caps", "GLOW CAPS", "Sports Caps" and "POG CAPS".

There is some other material in Mr Crown's affidavit to which I need not refer in detail.  It includes an account of some negotiations had by the applicant and Mr Crown.  These did not lead to the two organisations doing any business and I do not think they are helpful in resolving the issues here to be decided.

There is a great deal of material exhibited to Mr Crown's affidavit.  The material is of general relevance but I do not refer to the detail of it other than I have so far done.  I have taken it generally into account in reaching my conclusions.

Mr R.D. Booth is the manager of a company, Copyright Promotions International.  It carries on a marketing business which provides consulting services to a range of customers.  Its major customer is Newsagents Direct Distribution Pty Ltd ("NDD").  Copyright Promotions specialises in marketing consulting services related to the licensing of entertainment and sports based products.  It assists manufacturers and distributors to obtain licences for the use on products of well-known entertainment and sporting images.  Mr Booth has been involved in the marketing industry for 25 years.  The company also provides consulting services to the Australian Meat and Livestock Corporation and to Kellogs.

Mr Booth said that he first became aware of cap products when he went to the United States in October 1993 for the specific purpose of arranging for the appointment of agents to "source" collectibles, including collectibles and trading cards for NDD.  He had discussions in the United States with a Ms Tanquary and a Mr Morrison who were marketing agents.  They drew Mr Booth's attention to the emerging interest in the United States in what they referred to as "milkcap products".  They explained the development of the "milkcap phenomenon" in Hawaii and said that the popularity of milkcap or cap products had spread across to the mainland and, in particular, to California.  They said that they thought that cap products would significantly increase in their popularity in the United States and would be marketable in Australia.  During these discussions Ms Tanquary and Mr Morrison used the terms "milkcaps" and "caps" interchangeably to denote the game which they described in the same way as other witnesses had done.

Mr Booth retained Ms Tanquary and Mr Morrison to commence "sourcing" such products, including cap products, for NDD's consideration.  They were to locate samples of products which might be suitable for distribution by NDD in Australia and generally keep Mr Booth informed of developments in relation to the market in the United States for the products.

In his affidavit Mr Booth said that from February 1994, he commenced to receive samples of cap products from the United States.  He said that he had retained some of the samples which he received in February 1994.  These are exhibited to his affidavit.  He said that he formed the impression from his dealings with the American agents that there was a very wide range of cap products in existence in the United States from which a selection could be made for distribution by NDD subject to pricing considerations.  In oral evidence Mr Booth made a correction to this part of his affidavit.  He said that the period in which he received the samples was between February and late May or early in June 1994.  The relevant exhibit is marked RDB 1.  He said that he had isolated from the exhibit a product about which he was unsure whether it had been received in late May or the first part of June.  This was marked RDB1A.  As I understand Mr Booth's evidence, the remaining samples were received prior to the end of May 1994.

Few of the discs produced by Mr Booth have the word "cap" or "milkcap" on them although some have.  I instance, "Promo Milk CAPS".  The word "CAPS" is by far the most prominent word.  There are also "Foil Caps" and a product described as "DANKZ" on the packet for which are the words "CAP GAME".  And there is a plastic envelope which has prominently written on it the words, "The Original Milk Cap Saver".

In his oral evidence Mr Booth said that he was aware of sales of "SkyCaps" in the Australian Market.  He said that he had commenced the sale of these in Australia on 1 January 1995.  Approximately 12,500 packets were imported.  The product was placed in the Australian market from the beginning of January 1995.

Mr Booth said that prior to May 1994, the product was known in his company as either "milkcaps" or "caps".

In his affidavit, Mr Booth said that, in February 1994, he had telephone discussions with SkyBox Company of the United States concerning the possibility of manufacturing Lion King caps for distribution by NDD.  Mr Wood of the SkyBox Company told him that SkyBox had the licence for manufacturing collectibles with Lion King images.  Mr Booth said that he told Mr Wood that he was interested in importing all of the Lion King card products and also any cap products.  During the course of subsequent negotiations it was resolved that the SkyBox Company would not produce Lion King cap products suitable for NDD but it would produce Lion King cards.  These were imported.

Mr Booth said that from February until July 1994, Copyright Promotions continued to receive samples of a wide range of caps from their agents.  However, he made the decision that he should delay taking further steps in relation to the ordering of cap products for distribution by NDD until he went to America himself in July 1994 to attend the San Diego Comic Convention.  He attended that convention and another card and cap convention in Houston in Texas in July 1994.  In San Diego Mr Booth made an effort to obtain distribution rights for a number of products including the "'POGS' brand cap products".  He was informed that Mr Crown of Crown & Andrews had secured the distribution for "POGS" cap products for Australia shortly before he, Mr Booth, was able to do so.

Mr Booth said that, following his return from San Diego, he arranged for NDD to obtain official character merchandising licences in order to promote cap products with "desirable product associations".  He obtained exclusive licences for NDD for Disney, Agro, Marvel and Simpson character images for use with cap products.

In October 1994 there were discussions between Mr Alexander of NDD, Mr Crown of Crown & Andrews and Mr Booth.  An arrangement was agreed upon whereby Crown & Andrews would make cap products for exclusive distribution by NDD reproducing a domestic character merchandising image being the Agro image in respect of which NDD had an exclusive licence for cap products.  NDD also commenced newsagency distribution
of other caps made by Crown & Andrews pursuant to the arrangement.  This occurred in November 1994.

On 26 October 1994 Mr Booth had a meeting with Mr Miller concerning the possible distribution of the respondent's Glo-Cap products.  The meeting was attended by Mr Alexander of NDD.  As a result of the negotiations NDD purchased cap products bearing the respondent's designs and also Disney and Simpsons designs from the respondent.  Supply of the product commenced in November 1994.

Mr Booth said that NDD was the first mass marketer of cap products in Australia.  It had, since commencement of distribution of cap products by it in November 1994, been the leading distributor of cap products in Australia.  He estimated that NDD had supplied several million dollars worth of cap products (based on retail value) since the commencement of distribution.  Mr Booth said he believed that there had been a small amount of selling of cap products otherwise than by distribution by NDD through suppliers such as smaller wholesalers importing other United States products, but the market for cap products in Australia was essentially dominated by cap products distributed by NDD.  NDD's best selling cap products had been those manufactured by the respondent and he believed that the respondent was the dominant manufacturer of cap products in Australia.

The applicant also had negotiations with Mr Booth.  These are described in Mr Booth's affidavit in some detail.  I do not find it necessary to refer to them.

Mr Booth said that his overall impression from his dealings with the trade and the public in relation to cap products was that the words "milkcaps" were identified as being the names for the cardboard discs and the game played with those cardboard discs.  He said that he regarded the word "caps" as having the "same level of descriptiveness" as the words "trading cards" in relation to collector cards such as basketball or football cards.

Mr R.W. Alexander, as mentioned, is the national sales and marketing manager of NDD.  He has held that position for two years.  Prior to that time he worked for about 25 years in the publishing industry.  Mr Alexander said that NDD is a major national distributor of magazines and "peripheral products" to newsagencies, convenience stores and chain stores.  In his job with NDD he has regular contact with the trade and public for products distributed by NDD.  He said that NDD had been very active in the distribution of cap products of the kind which are the subject of these proceedings and which are known as "caps".  He said that he believed that NDD was the largest distributor of cap products, including caps and slammers, also known as milkcaps, kinis and trouncers, in Australia.  That had been the case since it commenced distribution of the products in November 1994.
     Mr Alexander said that he first developed an awareness of the cap products in about mid-1994 after Mr Booth returned from the United States where he had seen cap products on display at the San Diego Convention.  He said that he believed that the products had potential and, with Mr Booth, secured for NDD the character merchandising licence rights for the use of the Disney and Simpson character images "for the category of collectible cap products in Australia".  He said their plan was that NDD would contract with manufacturers of cap products for them to manufacture and supply Disney and Simpson character caps and slammers to NDD for their distribution to newsagencies and other retailers throughout Australia.

In September 1994 Mr Alexander met Mr Miller of the respondent.  Mr Miller showed him the respondent's "generic-imaged" cap products.  An arrangement was entered into in October 1994 for the respondent to supply NDD with these products for distribution to the newsagency trade and to manufacture and supply Disney and Simpson cap products exclusively to NDD.  The first order placed with the respondent was for the supply of their generic Glo-Cap and Slammer range for 96,000 packets of Glo-Caps and 24,000 packets of Glo Slammers.  These were supplied by the respondent to NDD for distribution on 14 November 1994.

At about the same time discussions were being conducted with Mr Crown of Crown & Andrews.  Eventually 48,000 packets of "POG POURRI" brand milkcaps were supplied.  NDD also entered into an exclusive supply arrangement with Mr Crown's company concerning the supply of cap and slammer products bearing the Agro character image in respect of which NDD had the licence.  Mr Alexander said that approximately 65 per cent of all cap products sold by NDD were supplied by the respondent.  NDD had, to the date of Mr Alexander's affidavit, ordered in excess of one million packets of cap products.

The applicant, so Mr Alexander said, was a supplier of cap products to NDD on a smaller scale than the respondent.  NDD had ordered approximately 200,000 packets of cap products from him.  Mr Alexander referred to negotiations he had had with the applicant.  Again I do not find it necessary to refer to the detail of this evidence.

Mr Alexander said that, since first becoming aware of the cap products in the middle of 1994, he had always known the printed cardboard discs of the kind manufactured by the respondent and known as Glo-Caps, as milkcaps or caps.  All NDD's suppliers of cap products referred in their discussions with Mr Alexander about the products, to the printed cardboard discs as caps or milkcaps.  Mr Alexander said that he regarded the name "caps" as descriptive of the discs.  The discs were also referred to as "caps" and "milkcaps" in trade literature and by the public.  He was aware of the occasional but limited use of the term "bottle caps" to refer to the discs but said that "caps" or "milkcaps" were by far the most common names used to describe the discs.
     Mr Alexander said that, in his opinion, the game which is intended to be played with the caps and slammers was not widely perceived as the primary reason for acquiring the products.  They were regarded essentially as collectors' items.  He said, however, that since his first awareness of the game from discussions with Mr Booth in the middle of 1994 it had mostly been referred to as the "caps game" or the "milkcap game".  He said he regarded these names as descriptive of the name of the game played with the cap products.

All the witnesses to whom I have so far referred except the applicant himself, were called in the respondent's case.  Those to whose evidence I am about to refer were called in the applicant's case, some being called in response to the evidence led by the respondent.  I have not distinguished between evidence called in the applicant's case in chief and that called in reply.  Counsel for the parties did not disagree with this approach.

Mr B.G. Devine is a director of a company, Creative Packaging Services Pty Ltd.  The company is primarily involved in contract packaging of retail and promotional products for manufacturers and distributors throughout Australia.  Because of the nature of the business of some of Creative Packaging's customers, Creative Packaging is required to maintain an awareness of the trading and related segments of the toy and hobby market.  To keep itself up to date representatives of Creative Packaging regularly attend major trade shows in Australia and the United States, Germany and other European countries.  Creative Packaging also subscribes to trade journals and engages in regular discussions with customers regarding their markets.

Mr Devine said he first became aware of the POG type product range when he visited a trading card manufacturer in Dallas in the United States in July 1993.  He noted that "the latest and greatest craze sweeping the US" was a game composed of collectible discs called POGS being a game invented by a school teacher in Hawaii.  He said the name POGS referred to the circular cardboard pieces which fitted inside the lid of a bottle containing passion, orange and guava juices.

Mr Devine said he had no knowledge of the POGS game in Australia and began to research the product as it seemed highly likely the game would be introduced in Australia and he could advise customers of the newest product options.  He found that the collectible trading card magazines and the toy and hobby trade suppliers in the United States referred to the game as POGS.  This research comprised reviewing a number of trade journals and magazines and interviewing representatives of United States companies involved in the production and marketing of the POGS game.  Mr Devine said that, as a result of his research, he was keen to see the product reach Australia but did not see any sign of POGS until August 1994 when Creative Packaging was engaged by Crown & Andrews to pack their POG product.  Packaging was done for Crown & Andrews from August to December 1994.

Mr Devine referred to some large undertakings which were connected with POG products in the latter part of 1994.  He instanced Coca Cola Amatil Limited and the New South Wales Rugby League.  He also became aware that during the first half of 1995 Sydney television station Channel 7 childrens' morning show, "AGRO", had referred to the POGS disc product range as AGRO POGS.  He said that in all his dealings with customers and wholesalers of other POG type products he always used the expression POG to refer to the product.  He had never used the expression "caps" to refer to any "POG-type" product until the applicant began to use the name.

In the course of his cross-examination, Mr Devine agreed that the products to which he referred were today known as "caps".  He said he understood that to be a description of a round cardboard disc that also goes by other names that is used in the game of POGS or caps.  He agreed that he had understood that to be the case since he first discussed the matter with the applicant in 1994.  However, Mr Devine would not agree that the disc was referred to generally today as a "cap".  But he did agree that it was one of the terms used to describe what he preferred to call a POG.

Mr R.E. Hammond is the treasurer of a company, Hanna Match (Australia) Pty Ltd.  According to him, Hanna Match held a "material share" of the market for the manufacture of board printing products.  Mr Hammond said that the applicant engaged Hanna Match to manufacture its circular cardboard game disc product range used in the product, "CAPS THE GAME".  Mr Hammond said that he first met the applicant in October 1994 when the applicant raised with him the possible manufacture by Hanna Match of the applicant's disc game product.  Hanna Match had not previously received any manufacturing orders or any manufacturing enquiries from any person in Australia for the manufacture of the cardboard disc game of the kind manufactured by the applicant.  Mr Hammond said that Hanna Match had adopted the name "CAP".  He said that the name was used inside Hanna Match when referring to the actual manufacture of the disc product for the plaintiff.  It was used by Hanna Match because it was the applicant's brand name for the game disc.  It was also the name of the applicant's business, namely "World Caps Game Co."  Mr Hammond said that, so far as he was aware, the game disc was generally best known and referred to in the collector's game card industry as POGS.  He said, however, that the words "game disc" and "milkcaps" were also used.

Ms C.G. Hrdlicka is the managing director of Dynamic Marketing & Printing Pty Ltd which she described as the "market leader" in the trading card industry in Australia.  She estimated that Dynamic Marketing supplied between 65 and 73 per cent of all trading cards sold or distributed to the retail trading card market in Australia.
     Prior to her coming to Australia in May 1993, Ms Hrdlicka lived in the United States and was employed there as the director of strategic planning for SkyBox International Inc. It is a leading company in the trading card industry in the United States.  She said that SkyBox manufactured, marketed and distributed POG trading card merchandise under the name "SKYCAPS".  She referred to Mr Bertolini's affidavit.  She said that she was familiar with the marketing and distribution policy of SkyBox.  She said that the policy prohibited the direct distribution and/or the sale of SKYCAP products outside the United States.  This was because SkyBox held no international distribution rights for any of its products.  Moreover SkyBox had not completed registration of its brands in territories outside the United States.  She added, "Although impossible to control, distributors of the SKYCAP product were not permitted to sell and distribute such product outside the USA as it was outside their defined distribution area."

Ms Hrdlicka said that she first became aware of the POGS product whilst in the United States.  She said that she was not aware of a POGS product, or a product of a similar kind to POGS, bearing the name "caps" being sold or distributed in Australia prior to May 1994.  She said that because of her position in the trading card industry, she was confident that she would have been aware of such a product had it existed at that time.  She also said that, at the present time, it was her opinion that POGS was the best known and most frequently used name.  It was used by both the suppliers and operators in the trading card industry and also by the retailers who sell POGS type product and their customers.  She said that the POGS name had been quickly incorporated into normal trading card jargon in Australia because of the natural transfer of information and concepts from the United States into the Australian market place as well as the Australian marketing profile developed by Crown & Andrews in their marketing and promotion of the POGS product over the last 12 months.

Ms Hrdlicka said that, for the reasons she had given, she generally referred to the game discs as POGS.  She believed that this was now the generic name for the product both in Australia as well as in the United States.  She said that in her opinion, drawing on her knowledge and experience gained whilst in the trading card industry in Australia, it did not really matter what brand names were used for the product as the product was generically called POGS.  She said she began to investigate the POGS product early in 1994.  She monitored the United States market as she wished to know whether there was any long term potential for POGS in Australia, perhaps as a new product category.  She said that no POGS branded product was sold or distributed by Dynamic Marketing prior to July 1994.  She formed the view that the product itself had a limited "fad" market appeal and was not capable of sustaining a long term presence in Australia.

Ms Hrdlicka said that in June or July 1994 Dynamic Marketing was commissioned by Coca Cola to manufacture for them a POGS type product which was called "FOOTY FLIPPERS".  Some consideration was given to calling the product "FOOTY POGS".  One of the reasons why this name was not used was because Crown & Andrews had applied for a trade mark registration in the name of "POGS".

Ms Hrdlicka said that the only other well used name for the POG product used in the trading card industry was the word "disc" as this was essentially all that the product was, namely a flat cardboard disc.  She said that, in her experience, the word "CAP" was not generically used to describe the POG product.

In the course of her cross-examination, Ms Hrdlicka asserted that "caps" was a brand name and was not a description given to a type of article.  She said that it did not describe a game or anything of that kind but added, "I mean it could, but the purpose of the name SKYCAPS was like SKYMOTION and many other products that are created by SkyBox using other technologies and borrowing from other types of product forms.  They create a brand name and SKYCAPS was the name used."

Ms Hrdlicka was asked about the derivation of the term "SKYCAPS" and said that it evolved from milkcaps in Hawaii.  She said milkcaps were a "physical product" from which POGS evolved.  Later Ms Hrdlicka said, "The only thing that I can say is that SKYCAPS was created as a brand name for a product that was created on a cardboard disc; it was marketed as SKYCAPS.  We tried to use the word POGS because that was the most descriptive representation that we could use, but it was registered previously and we did not want to fight the legal issue."

Ms Hrdlicka was cross-examined at some length.  I must say that, at times, I found her answers confusing but I did not take an adverse view of her as a witness.  I think she was endeavouring to be careful in answering quite specific questions about the way in which products of this kind were described both in the United States and subsequently in Australia.  She did not depart from her assertion in her affidavit that the discs were not generically known as "caps".  She did, however, come to acknowledge that the discs were, particularly in the United States, often referred to as milkcaps because that was their origin.  She seemed to say at times that POGS was the generic name and I think that is her view but she had difficulty in maintaining this because of the fact that "POGS" is a registered trade mark and so it is tied up.

I think that I should accept Ms Hrdlicka's evidence as being truthful evidence of her recollections and observations in the industry both in the United States and in Australia at various times.  That indeed is how I should treat the evidence of each of the witnesses to whose evidence I have referred.  The majority of these were not cross-examined so that their evidence needs to be accepted at face value in any event.  But each has his or her own experience in the industry and looks at the matter through the eyes of a person having had that experience.  I am satisfied each has given me an honest and as accurate a picture as possible of his or her recollection.  To the extent that there are differences in perceptions as to what went on in the industry here or there at various times I think the explanation lies in the fact that everybody looks at the matter somewhat differently and in the light of the recollection of the experience which the person has undergone.  Thus some people will say that POGS is the descriptive name; others will say caps is the descriptive name; and still others will say that the descriptive name is milkcaps or, perhaps, discs.

There are two matters in Ms Hrdlicka's oral evidence that I find interesting.  Firstly, in answer to a question concerning the age range to which this sort of product appealed, she said that it depended on whether or not it is a product "that's got glow in the dark ink on it, but if it's got - if it doesn't have glow in the dark ink on it, it's from the age of 3½, 4, to 7, 8 and if it's got glow in the dark ink on it, it can be as young as 1½ to 2 because of the novelty value of turning off the light and spreading them on the floor."  Ms Hrdlicka said that she believed that the age range was up to seven for the glow in the dark inks and it was probably slightly beyond that for the non-glow in the dark ink.  For these products it might go up to 10 or 11 but she did not expect that it would be older than that.  She thought that the 14 years espoused by the applicant was too old.

Further evidence given by Ms Hrdlicka on this matter was as follows.

"Does the fact that the competing product here or the product that is said to be an infringing product, the Glow Caps, the fact that it glows in the dark, is that a big feature of its command in the market?---Again, I don't have any research data, but from my point of view, yes.

In other words, without being sure about it, the fact that they glow in the dark might be a reason why some children would buy caps, otherwise they might not buy them at all?----Possibly.  The subject matter, the property that's being depicted on the disc is also of relevance.  Some kids will buy Disney no matter what you put it on, but the fact that it glows in the dark draws people into it that probably otherwise wouldn't have participated, particularly the really young ones.

MR GOLVAN:  Your Honour, I may ask some questions in light of those responses.  You would know the products Glow Cap, the Glow Caps product, you know them?---Yes.

And do you say that they have quite a distinctive place in the market in their own right because they glow?---In my mind it is a distinctive feature of that particular product, yes."

The two matters that come out of this evidence are, firstly, the age range of children interested in the product and, secondly, the fact that glow in the dark products have particular appeal especially to younger children.  It is unlikely that they would appeal in the same way to older children.  And it is unlikely, in Ms Hrdlicka's opinion, that the product will appeal to anyone, whether it is glow in the dark or not, beyond the age of about 11 years.  Ms Hrdlicka was careful to say that she had no research to base her impressions on but she is experienced in the trade and it seems to me that her assessment of the situation is deserving of acceptance.  To the extent that it is relevant to take these matters into account, I think I should proceed on the basis that her evidence is correct.

It remains to mention the evidence of two further witnesses both called on behalf of the applicant.  The first of these was Mr T.B. Allison who is national marketing manager of Sega Ozisoft Pty Limited.  The Sega group of companies is a very large manufacturer and seller of video game software and hardware.  Mr Allison has been a marketing manager with Sega Ozisoft in Australia since late 1989.

Mr Allison said that he was concerned with consumers in the five years to 18 years of age category.  His duties have included the observation of trends of other consumer products directed to this age group both in Australia and overseas.  He said that these trends had a direct influence on how Sega products were marketed.  He said that as at 31 May 1994, i.e. the date from which the applicant's trade mark took effect, the only use of the word "CAPS" in relation to any games or children's toys of which he was aware was in relation to cap pistols which were used in toy guns.  He was not aware at that time of any use in Australia of the word "CAPS" in relation to game discs or other games.  He did not learn of the other use of the word caps until he met the applicant early in November 1994.  Prior to then he had been aware of the game disc concept in the United States but had always known it by the name POGS and by no other name.

Mr Allison said that he first heard the word POGS in July 1994 when he had a conversation with a Mr Dyne who is an American director of Sega Ozisoft in the United States.  An account of the conversation appears in Mr Allison's affidavit.  He said that in August and September 1994 he spent some time trying to locate suppliers of POGS in Australia but was unsuccessful until his meeting with the applicant in November 1994.  He concluded by saying that, by reason of his exposure to children's games and his work experience, he believed that as at 31 May 1994, had the word CAPS been in use in Australia as the name of or as describing a game or the components of a game such as game discs, he would have been aware of it.  Mr Allison was not cross-examined.

I refer finally to the affidavit of Mr Dennis Rutzou who is the managing director of Dennis Rutzou Public Relations Pty Ltd.  Business requires Mr Rutzou to manage communications between customers, the media and the sections of the public which are being targeted by the particular customers.  He said that over the last 20 years he had worked for a number of customers in the toy and hobby industry who operated both in Australia and overseas.  He said that he had gained a great deal of knowledge about the toy and hobby industry and the brands within the industry which were available.  He kept himself up to date.

Mr Rutzou said that he first became aware of the name CAPS in connection with game discs from his discussions with the applicant in September and October 1994.  The applicant had subsequently become one of his customers.  Prior to that time Mr Rutzou was not aware of the word "CAPS" in use as the name of a game or as game discs nor had he seen the name CAPS in the context of game discs mentioned or referred to in any Australian published newspaper, magazine or trade journal which formed part of his extensive media surveillance service.  Mr Rutzou said that, when he heard the applicant mention the word CAPS during the course of his conversations with him in September and October 1994, he believed that the applicant was referring to headwear apparel such as baseball or basketball caps for children.  It was only when he was shown collectible discs and had explained to him the history, particularly the Hawaiian derivation of the word CAPS, that he understood that the applicant used the word CAPS to refer to the name of his collectible game discs played by children.  He said that he was not aware of any use in Australia of the word CAPS in relation to game discs as at 31 May 1994.  He said that, because of his background, he believed that as at 31 May 1994, had the name "caps" been in use in Australia as the name of a game or as describing a game, or the components of a game such as game discs, he would have been aware of it.  Mr Rutzou was not cross-examined.

I can now turn to the various questions to be decided. The first matter with which I propose to deal is that of infringement. The relevant provisions of the Act are to be found in s.62 and para. 64(1)(b). So far as relevant s.62 is as follows:

"(1) A registered trade mark is infringed by a person who, not being the registered proprietor of the trade mark or a registered user of the trade mark using by way of permitted use, uses a mark which is substantially identical with, or deceptively similar to, the trade mark, in the course of trade, in relation to goods or services in respect of which the trade mark is registered."

With s.62 needs to be read subsec. 6(3) which provides that, for the purposes of the Act, a trade mark shall be deemed to be deceptively similar to another trade mark if it so nearly resembles that other trade mark as to be likely to deceive or to cause confusion.

The infringing mark is here said to be "GLO-CAPS".  At times there seemed to be a suggestion in the way in which the respondent's case was presented that Glo-Caps was used only in a descriptive way and not as a trade mark to designate or to mark the respondent's product.  I do not think that that matter was eventually relied upon but I make it clear that, on the balance of the evidence, there is no question in my mind that the respondent has used and is continuing to use the word
Glo-Cap as a trade mark to designate its product. In making that statement, I am not to be taken as having pre-empted the respondent's reliance on para. 64(1)(b) of the Act. The immediate question, however, is whether the two marks are substantially identical or deceptively similar, bearing in mind that the latter expression involves it being established that the mark Glo-Caps so nearly resembles the mark CAPS THE GAME as to be likely to deceive or cause confusion.

In his judgment at first instance in The Shell Company of Australia Ltd v Esso Standard Oil (Australia) Limited (1961) 109 CLR 407. Windeyer J said (at 414) that substantial identity and deceptive similarity, the phrases used in s.62 of the Act, involved two independent criteria. He said that they were to be judged in different ways and continued (at 414-5):

"In considering whether marks are substantially identical they should, I think, be compared side by side, their similarities and differences noted and the importance of these assessed having regard to the essential features of the registered mark and the total impression of resemblance or dissimilarity that emerges from the comparison.  'The identification of an essential feature depends', it has been said, 'partly on the Court's own judgment and partly on the burden of the evidence that is placed before it':  de Cordova v. Vick Chemical Co. (1951) 68 R.P.C. 103, at p. 106. Whether there is substantial identity is a question of fact: see Fraser Henleins Pty Ltd v. Cody (1945) 70 C.L.R. 100, per Latham C.J. (1945) 70 C.L.R., at pp. 114, 115, and Ex parte O'Sullivan; Re Craig (1944) 44 S.R. (N.S.W.) 291, per Jordan C.J. (1944) 44 S.R. (N.S.W.), at p. 298, where the meaning of the expression was considered. Judging by the eye alone, as I think is proper for the determination of substantial identity, my opinion is that in each film there are one or more moments when the personified figure of the oil-drop appears in a form that is substantially identical with the registered mark. If the films were arrested at these moments and the image displayed in still form, I consider that use of a substantially identical mark would be established. But that is not what happens. The figure does not stand still. It does not hold its pose or expression for long enough, nor is it sufficiently isolated from its surroundings for long enough to establish infringement by the use of a substantially identical mark. That is my conclusion. But these fleeting glimpses of substantial identity are, I think, significant when one comes to consider deceptive similarity. To that I now turn.

On the question of deceptive similarity a different comparison must be made from that which is necessary when substantial identity is in question.  The marks are not now to be looked at side by side.  The issue is not abstract similarity, but deceptive similarity.  Therefore the comparison is the familiar one of trade mark law.  It is between, on the one hand, the impression based on recollection of the plaintiff's mark that persons of ordinary intelligence and memory would have; and, on the other hand, the impressions that such persons would get from the defendant's television exhibitions.  To quote Lord Radcliff again [in de Cordova]:  'The likelihood of confusion or deception in such cases is not disproved by placing the two marks side by side and demonstrating how small is the chance of error in any customer who places his order for goods with both the marks clearly before him....  It is more useful to observe that in most persons the eye is not an accurate recorder of visual detail, and that marks are remembered rather by general impressions or by some significant detail than by any photographic recollection of the whole':  de Cordova v. Vick Chemical Co (1951) 68 R.P.C., at p. 106. An in Australian Woollen Mills Ltd v. F.S. Walton & Co. Ltd (1937) 58 C.L.R. 641 Dixon and McTiernan JJ. said:  'In deciding this question, the marks ought not, of course, to be compared side by side.  An attempt should be made to estimate the effect or impression produced on the mind of potential customers by the mark or device for which the protection of an injunction is sought.  The impression or recollection which is carried away and retained is necessarily the basis of any mistaken belief that the challenged mark or device is the same' (1937) 58 C.L.R., at p.658."

Windeyer J was reversed on appeal ((1963) 109 CLR 407 at 420 et seq) but what he said in the passage which I have

Counsel for the applicant referred to evidence given by Ms Hrdlicka's which was to the effect that the policy of SkyBox prohibited the direct distribution and/or the sale of SkyCap product outside the United States. She said that this was because SkyBox held no national distribution rights for any of its products. Furthermore, so counsel for the applicant submitted, the distributor could not be advanced as being the foreign proprietor. The definition of trade mark in subsec. 6(1) of the Act makes it clear that a mark is to be used so as to indicate a connection in the course of trade between the goods or services and a person who has the right, either as proprietor or registered user, to use the mark.

I think that these submissions of counsel for the applicant should be accepted.  No real answer to them was made by counsel for the respondent.  But the fact remains that, although Mr Bertolini's evidence will not establish that the word "caps" was used as a trade mark in Australia prior to 31 May 1994, it does tend to establish that the word "caps" was used in the trade as descriptive of goods which were being sold.  They were caps.  That is an ordinary English word.  I have referred to the dictionary meanings of it earlier.  One of those meanings is a cap-like part fitting over or forming the top or end of an object.  Examples are given of a cap to protect the lens of a camera and of a device sealing the opening of a bottle.  It may not have been customary in Australia to describe a cardboard or foil seal on a bottle such as a milk bottle as a cap but it would have been a perfectly appropriate use of the word to use it in this way.  Of course, it must be remembered that the objects here were not in fact milk or fruit juice bottle caps or tops.  The objects were indirectly derived from such objects but they were manufactured to be part of a game and not for the purpose of sealing bottles.  The importance of Mr Bertolini's evidence lies in the fact that his observation of the trade from the middle of 1993 was that these objects were being described as caps in some areas of the trade and to a degree by the public.  The submissions made by counsel for the applicant emphasise that there was no use of the word "caps" as a mark by Mr Bertolini, by Capital City Distribution which had sold the product to him or by SkyBox which was entitled to the mark in the United States.  But counsel for the respondent do not seek to use the evidence as indicative of the use of a mark in Australia; they seek to use it as an indication that the word "caps" had become generic of the product in question here before the applicant applied for registration of the trade mark.  That is the significance of the evidence for their case.

Counsel for the applicant sought to dispose of Mr Edgley's evidence in the same way.  Mr Edgley's awareness of the product derived from his contact with suppliers of the products in the United States and from reading United States trade magazines.  He referred in particular to a trade magazine he had received in September 1993.  It promoted the "CAP GAME" product and sought orders from the trade but there was no evidence that Mr Edgley then ordered any product.  I agree with counsel for the applicant that Mr Edgley's evidence is of no assistance in the present case.

There is then the evidence of Mr Booth.  He received samples of milkcap or cap products between February and late May 1994.  There was then usage generically of the name "caps" within his organisation.  There is no evidence that that use went outside the organisation but Mr Booth referred to the extensive use in the United States of the word "caps" to denote the game or the discs with which it was played.  His evidence does not suggest wide use in Australia of the word "caps" in the generic sense but it does provide some evidence of usage in that regard.  Again, it is correct to say, as counsel for the applicant submitted it was, that the use of the expression in the way that Mr Booth described was not use as a trade mark in Australia at the time, that is before the end of May 1994.  Mr Booth's evidence does establish, especially when taken together with other evidence, that "caps" was a name used generically in Australia to denote the product and the game from about October 1994.  I shall say a little more of this when I come to deal with the other evidence.

In a similar category is the evidence of Mr Hunter.  He became aware of the product in the United States which, according to his evidence which I accept, was described there as "caps".  He imported samples of the product but he did not begin to market or distribute the product in Australia until well after May 1994.  Undoubtedly his evidence establishes a generic use of the term "caps" to describe the discs and the game from October 1994 onwards.  He has given limited evidence which tends to suggest that there was some generic use of the expression in that way in Australia prior to the end of May 1994.

The evidence of Mr Bertolini, Mr Booth and Mr Hunter is the entirety of the evidence which would be capable of suggesting a generic use of the term in relation to the discs and the game in Australia prior to the end of May 1994.  None of the evidence will establish this use as a trade mark use.  A question which may need to be considered is whether such generic use of the expression "caps" prior to the end of May 1994 as there was in Australia is sufficient to establish that the expression was used generically, and thus not distinctively, here in relation to discs used in the playing of the caps game and in relation to the game itself.  But in the way the case was put, I do not think that the answer to that question is necessarily determinative of the issue of distinctiveness.  In the respondent's submission, the word "CAPS" could never have been distinctive of the applicant's product.

It was submitted that the mark lacked distinctiveness because of the inherently descriptive nature of the word "CAPS" and, in the alternative, if the mark were originally distinctive of the product, that distinctiveness was lost through generic use of the word "CAPS". This generic use was claimed to have occurred before registration and to have continued after registration. The submission based on generic use prior to registration flows from the evidence of prior use which I have already considered. As I have said, I am satisfied that there was some limited use of the word prior to May 1994, but not use as a trade mark. The other submission based on the generic use of the mark concerns the post-registration use of the word. This is dealt with in s.56 of the Act. I leave s.56 aside for the time being. I propose to deal firstly with the submission that the word "CAPS" itself was inherently descriptive of the goods and that for that reason, the mark was not distinctive of the applicant's product.

Section 24, so far as it is relevant, provides that a trade mark is registrable in Part A of the Register if it contains or consists of an invented word, a word not having direct reference to the character or quality of the goods or services in respect of which registration is sought and not being a geographical name or a surname, or any other distinctive mark.  I think it is very difficult for the applicant to suggest that the word "caps", in the context in which it is applied here, was an invented word so that he is required to rely on the phrase in subsec. 24(1), "any other distinctive mark."

It is important when considering the validity of the registration of a particular mark to bear in mind the purpose of a trade mark.  The purpose of a mark is not to describe a trader's goods, but rather to distinguish his goods from other goods, perhaps of the same type, distributed by another trader.  In Smith Kline and French Laboratories (Australia) Ltd v Registrar of Trade Marks (1967) 116 CLR 628 Windeyer J considered s.24 in relation to an appeal from the Registrar's refusal to register as a mark a description of a pharmaceutical capsule which was half opaque and half translucent in appearance. His Honour said (at 637) that the definition of a trade mark assumes that the mark is something distinct from the goods, and that "the mark is not of the essence of the goods". His Honour further said (at 640) that he did not that that "a mere description of goods simply by shape, size or colour can be a trade mark in respect of those goods."

Subsection 26(1) of the Act provides that, for the purposes of the Act, a trade mark is not distinctive of the goods or services of a person unless it is adapted to distinguish goods or services with which that person is or may be connected in the course of trade from goods or services in respect of which no such connection subsists. Subsec. 26(2) provides that, in determining whether a trade mark is distinctive, regard may be had to the extent to which the trade mark is inherently adapted so to distinguish and, by reason of the use of the trade mark or of any other circumstances, the trade mark does so distinguish.

In Clarke Equipment Co. v Registrar of Trade Marks (1964) 111 CLR 511 Kitto J said (at 514) that the test to be applied was by reference to the likelihood that other persons, trading in goods of the relevant kind and being actuated only by proper motives, will think of the word and want to use it in connection with similar goods in any manner which would infringe a registered trade mark granted in respect of it. The test formulated by Kitto J was applied by Gibbs J (as he then was) in Burger King Corporation v Registrar of Trade Marks (1973) 128 CLR 417 at 424.

The test was also applied by King J of the Supreme Court of Victoria in Seven-Up Co. v Bubble Up Co. Inc. (1987) 9 IPR 259. In that case King J held that the words "bubble up" were descriptive of the product, being carbonated beverages, and not of its origin. He said (at 261):

"Anyone seeing for the first time the mark used in relation to aerated drinks would take it to be a reference to their effervescence and not to their manufacturing or trade origin.  I think therefore that the mark is not distinctive."

Later his Honour said (at 264):

"Traders would normally and properly wish to describe their goods by elementary terms indicating or emphasising the nature of their goods to the general public.  I should expect them to wish to say that their product is 'bubbly' or that it 'bubbles up'.  The fact that there are other words customarily used to identify the class of goods concerned would not render it less likely that other traders would wish to use a term which, although it would not appeal to an official as apt description, would nevertheless be thought to appeal to the general public.  If by reason of the registration sought, if granted, the applicant were placed in a position where he could successfully contend that the use of such a term would infringe the registered mark, the mark is inherently unregistrable."

Each case must depend upon its own facts and circumstances.  This case can be approached either with the aid of such evidence as there is of generic use of the term "caps" in this context prior to 31 May 1994, or, independently of that evidence by adopting an approach similar to that adopted by Kitto J in Clarke Equipment and by King J in Seven-Up.  The critical question is whether "caps", at the time the application was made, was capable of being distinctive of the goods in respect of which the mark was sought to be registered.

I should emphasise that, upon the findings I have made, the word "caps" was not being used in Australia prior to the end of May 1994 as a trade mark.  There was no trade mark use of it.  Thus the considerations dealt with by Deane J in his judgment in Moorgate (at 432) have no application.  That was the point which counsel for the applicant emphasised in the course of their treatment of the evidence of the various witnesses.  But what the evidence does is to show that,
because of the use of the word "caps" in the United States well before the end of May 1994 and the dealings which occurred between some organisations and United States companies in relation to the importation or proposed importation of either product or samples before that time, the word "caps" was in fact a word which traders, acting reasonably and in good faith, would be likely to wish to use in connection with a similar product if it were imported into Australia.  The assistance which the evidence provides is to enable the Court more confidently to draw the conclusion that the word "caps" was at the relevant time indeed a word which traders would normally and properly wish to use to describe their goods as indicating or emphasising the nature of their goods to the general public.

The evidence called in the respondent's case establishes to my satisfaction that the word "caps" was being used in the United States well prior to May 1994 to describe the discs and the game in which the discs were used.  I am conscious that the applicant called a body of evidence which would suggest that this was not the case.  I have earlier said that I accept that the impression and recollection of these witnesses was that "caps" was not being used generically in the United States.  That, as earlier said, may have been their experience but the other evidence which I accept establishes that the position was the contrary.  I cannot accept the proposition implicit in some of the applicant's evidence that "POGS" was the generic game by which the game was known.  I think it may have been used within some companies or in some areas of the trade to describe the game but it has to be remembered that at all material times "POGS" was a registered trade mark in the United States owned by The World Pog Federation.  In Australia the mark eventually was registered by Crown & Andrews.  Thus it was only natural that when manufacturers and distributors in the United States began to talk to representatives of Australian companies about the product, they should in many cases describe the product as "caps".  That was the expression that was brought back to Australia by the Australians who were in the United States or who had dealings with the United States companies prior to May 1994.  It became used within those companies.  The use may not have been extensive.  Indeed it would appear that the only extensive use of it was made by Mr Bertolini and others in Trading Cards Australia Pty Limited.  But the fact that they so easily slipped into the habit of using it tends to establish that it was a word that traders in dealing with these products would expect to use.  That, I am sure, is how it came about that the respondent itself described its product as GLO-CAPS.  I express no view on the validity of the mark which it seeks to have registered.  But unquestionably those responsible for the design of the mark intended it to convey to purchasers and others that the product consisted of caps, used in a generic sense, which glowed in the dark as did all other products manufactured or distributed by the respondent.

For all these reasons I take the view that the mark "CAPS THE GAME" was not distinctive of the applicant's product.  If the applicant in some way can rely on a mark which consists only of the word "CAPS", my conclusion is the same.  Indeed, I would in that case be more strongly of the view which I have expressed.

It follows that the registration of the mark "CAPS THE GAME" was wrongly made within the meaning of para. 22(1)(b) of the Act. The mark should be expunged from the Register.

Before I leave this part of the case, I should mention two decisions of the High Court.  The first is Mark Foy's Limited v Davies Coop & Company Limited (1956) 95 CLR 190. This case is known as the "Tub Happy" case and has been discussed in a number of more recent decisions. In my opinion, it is distinguishable from the present case because of the meaning of "tub happy" attributed to the expression by Dixon CJ; see particularly at 194-5. In my opinion the Tub Happy case is a very different type of case from the present.  I regard this case as governed primarily by Clarke Equipment and the other cases which applied it to which I have referred.  I would add that, although it is not often referred to, there is in the Tub Happy case, a very strong dissent by Kitto J.  Amongst other things he said (at 209-10):

"It [the expression 'tub happy'] compresses a sentence into three syllables, and if there is some lack of clarity at a first encounter it is the price of condensation.  But the quaintness of the expression tends to hold the reader's attention, and its meaning seems to me to emerge clearly enough.

Then if, as I think is the case, the mark has a reference to the quality of the goods, is not the reference direct?  The words do not, by pointing first to something else, lead the mind by a round-about route to the conclusion that some quality is intended to be claimed for the goods.  They do not wrap up in a cunningly-devised name some echo of a directly descriptive word, or some distant allusion containing a hint of a quality.  They do not depend for their descriptive force upon some overtone of meaning.  They form an adjectival expression having one significance only, and that a significance which attributes a quality to the goods.  Indeed, an obvious merit from an advertiser's point of view is that they come straight to the point--a merit which is all the greater because of the element of half-humour in the manner of their doing so.  In mild and cheerful slang, with a good salesman's feeling for what is likely to appeal to his audience, they give a straight answer to the question:  How are these goods for washing quality?  It is a broad answer, without particularity, but a direct answer nevertheless.  A claim for superlative washability might easily be made with more restraint and dignity, but hardly, I should think more directly."

There is then the decision of Windeyer J in Smith Kline and French Laboratories v Registrar of Trade Marks (supra), Windeyer J took into account evidence of overseas use of the mark there in question.  His Honour referred (at 641) to Reddaway & Co Ltd's Application (1925) 42 RPC 397 in which Pollock MR said (at 401-2), "I think the Court is entitled and ought to look at all the circumstances of the case, including the evidence as to user in markets at home and abroad, for I cannot agree with the learned judge that in the first instance distinctiveness in the home market alone is to be considered." His Lordship added that markets at home and in foreign countries interact with each other and that those trading in a particular commodity will become familiar with the trade marks
registered in them.  This is the situation in the present case.  Reference may also be made to the decision of Davies J in Anheuser-Bush Inc. v Castlebrae Pty Limited (1991) 21 IPR 54 at 58.

My conclusions on the question of distinctiveness are sufficient to determine the case on invalidity adversely to the applicant. But I should say something about s.56. Had I found that the mark was distinctive at the time of registration, evidence of subsequent generic use of the word may have brought the case within the scope of s.56.

So far as relevant, s.56 of the Act provides as follows:

"(1)Subject to this section, the registration of a trade mark does not become invalid by reason only of the use, after the date of the registration, of a word or words which the trade mark contains, or of which it consists, as the name or description of an article, substance or service.

(2)The succeeding subsections have effect where:

(a)there is a well-known and established use of a word as the name of description of an article, substance or service by a person or persons carrying on a trade in that article, substance or service, not being use in relation to goods or services connected in the course of trade with the proprietor or a registered user of the trade mark or, in the case of a certification trade mark, in relation to goods or services certified by the proprietor; or

........ ........ ........ ........ ........ ........ ....

(3)If the trade mark consists solely of that word, the registration of the trade mark, so far as regards registration in respect of the article or substance or of any goods of the same description, or of the services or of any services of the same description, as the case requires, shall be deemed for the purposes of section 22 to be an entry wrongly remaining in the Register.

(4)If the trade mark contains that word and other matter, a prescribed court, in deciding whether the trade mark shall remain in the Register, so far as regards registration in respect of the article or substance or of any goods of the same description, or of the services or of any services of the same description, may, in the case of a decision in favour of the trade mark remaining in the Register, require as a condition that the proprietor shall disclaim any right to the exclusive use of that word in relation to that article or substance or to any goods of the same description, or to the service or to any service of the same description, as the case may be, but no such disclaimer affects any rights of the proprietor of the trade mark except such as arise out of the registration of the trade mark in respect of which the disclaimer is made.

(5)For the purposes of any other legal proceedings relating to the trade mark--

(a)if the trade mark consists solely of that word, all rights of the registered proprietor to the exclusive use of the trade mark; or

(b)if the trade mark contains that word and other matter, all rights of the registered proprietor to the exclusive use of that word,

in relation to the article or substance or to any goods of the same description, or to the service or to any services of the same description, as the case requires, shall be deemed to have ceased on the date at which the use mentioned in paragraph (a) of sub-section (2) first became well-known and established..."

The emphasis in subsec. 56(4) is added.

It is to be emphasised once more that the trade mark here consists of more than one word. The trade mark is "CAPS THE GAME". It is clear, as I have previously inferred, that counsel for the applicant would have preferred to be dealing with a mark which consisted merely of the word "CAPS". But that is not the case. The applicant chose to register the mark "CAPS THE GAME" and not "CAPS". Perhaps this was done in order to ensure registration or at least to give the application a better chance than it might otherwise have had. Whatever the reason, the applicant must proceed upon the basis of the mark he has. That being the case, it seems to me that there is no room for the operation of subsec. 56(3). It will only apply if the trade mark consists solely of a word for which there is a well-known and established use; para. 56(2)(a). In this case, the presence of other words in the mark brings it within the scope of s.56(4). Pursuant to s.56(4) the mark may remain on the Register or it may be expunged. The court may, under s.56(4), if it decides to leave the mark on the Register, require the proprietor to disclaim the exclusive use of the generic term. In this case, I do not need to decide this question, but there seems little point in leaving the mark on the Register and requiring a disclaimer of the word "CAPS". There is, after all, no value in the mark if neither the word "CAPS" not the words "THE GAME" offer any monopoly to the proprietor.

Para. 56(5)(b) is also relevant.  It provides that, for the purposes of any other legal proceedings relating to the trade mark (i.e. proceedings other than those referred to in subsec. 56(4)) in relation to any goods of the same description) all exclusive rights to the use of the word shall be deemed to have ceased on the date at which the use mentioned in para. (a) of subsec. (2) first became well known and established.  Paragraph 56(2)(a) refers to there being a well-known and established use of a word as the name or description of an article.

The evidence which I have accepted establishes that, whatever the position may have been before November 1994, there was a well-known and established use of the word "CAPS" as the name or description of the articles in question from about October or November 1994.  That use was certainly widespread in the trade and it should be inferred that it existed also amongst customers for the product no matter who was the manufacturer, distributor or vendor of it.  As from November 1994, therefore, subsec. 56(5) operated to deprive the applicant of the right of action for infringement of trade mark which he seeks to pursue in this action.  That is enough to dispose of the case in itself.

In the course of the argument reference was made to the decision of the High Court in F.H. Faulding & Co. Limited v Imperial Chemical Industries of Australia and New Zealand Limited (1965) 112 CLR 537. That case was concerned with a trade mark consisting of the single word "Barrier". It was accordingly a subsec. 56(3) case. Although there is discussion of s.56 in the judgment of Kitto J who wrote the principal judgment of the majority of the Court, Kitto J approached the matter otherwise than pursuant to subsec. 56(2). But it was held by the majority that for there to be a "well-known and established use of a word as the name or description of an article or substance" within para. 56(2)(a) of the Act, the word must be in use as the whole name or the whole description of the article or substance, not as part of the name or part of the description thereof.

Kitto J said (at 553) that he thought that the question of distinctiveness was the crux of the case, but that question had been overshadowed at the hearing at first instance by contentions based upon s.56. His Honour said that the section was, however, directed to a case of a different sort. His Honour said (at 553-4):

"The language of the section makes it necessary, I think, to distinguish carefully between, on the one hand, a word which in well-known and established use is employed as a descriptive epithet in conjunction with a substantive, so that only the composite expression is used as the name or description of an article or substance, and, on the other hand, a word which in well-known and established use is employed 'as', i.e. as constituting by itself, the name or description of an article or substance. The tenor of the section, as I read it, confines the application of the provision to a word of the second kind. To satisfy the provision, it is not enough that a word is in use as part of the name or part of the description: what is required is that the word be in use as the whole name or the whole description. The evidence which the learned Judge accepted and summarized in his judgment showed beyond question a well-known and established use of the whole expression Barrier Cream as the name or description of a kind or class of skin protective creams; but there is nothing in the evidence to suggest, nor is it now contended, that the word Barrier is used or has ever been used as the name or description. It is of course used descriptively, but that is not to say that it is used 'as' the description, or even 'as' a description. In my opinion the respondent's reliance upon s.56 was misplaced, for (to express the reason shortly) it depends upon maintaining the somewhat bold proposition that the use of a word as an adjective is a use of it as a substantive.

His Honour then went on to explain why the reliance at the trial upon s.56 diverted attention from what seemed to him to be the real defence to the action and the real ground for rectification of the Register, namely that the word Barrier, unexceptionable though it might be as a trade mark for other kinds of chemical substances prepared for use in medicine and pharmacy, was, in its application to skin protection creams, one of that class of words which are so apt for normal description that no trade mark use and momentary distinctiveness could justify a permanent monopoly. His Honour referred to Dunlop Rubber Co's Application (1942) 59 RPC 134 at 137.

In this case, I am satisfied that the mark was used generically subsequent to registration and s.56(4) would have applied, but for the finding on validity. Had it been necessary to deal with the s.56 issue, one would have needed to consider the provisions of s.22 of the Act relating to entries wrongly remaining in the Register. The relevant provision in that section is para. 22(1)(b) which enables the rectification of the Register by the expunging or amendment of an entry wrongly remaining in the Register. It was that provision with which I dealt recently in Nike International Limited v United Pharmaceutical Industries (Aust.) Pty Limited (8 August 1996, unreported).  In that case I referred to the
decision of the Full Court of this Court in Riv-Oland Marble Co. (Vic) Pty Limited v Settef SpA (1988) 19 FCR 569 and to the decision of the High Court in New South Wales Dairy Corporation v Murray Goulburn Co-operative Company Limited (1990) 171 CLR 363. I concluded that a party seeking the expungement of a trade mark pursuant to the provisions of para. 22(1)(b) on an application under para. 28(d) of the Act could not succeed unless blameworthy conduct was demonstrated on the part of the owner of the trade mark.

In the present case counsel for the applicant contended that because of the application of para. 22(1)(b) of the Act, there could be no expungement unless blameworthy conduct was established on the part of the applicant here, he being the owner of the trade mark. Counsel for the respondent appeared to agree in their submissions that this was a proper approach to the problem.

Before I turn to the submissions made in relation to alleged blameworthy conduct by the applicant, I should say that I am not convinced that it is necessary in a case like this to establish blameworthy conduct on the part of the proprietor of the mark. Subsection 56(3) operates to deem an entry affected by the section to be wrongly remaining in the Register. Under subsec. 56(4), the fate of the mark is in the discretion of the Court. In these circumstances, it may be correct to conclude that, if, contrary to my conclusion, the case were governed by subsec. 56(3), that subsection would operate to deem the entry to have been wrongly made in the Register. No question of blameworthy conduct for the application of para. 28(d) of the Act would then arise. There was, however, no argument about this matter and I would not, in those circumstances, express an opinion on it without seeking further submissions. In relation to the matter I have raised, however, it may possibly be said that the treatment of the equivalent English provision in Kerly's Law of Trade Marks and Trade Names 12th ed. (1986) at 186 tends to militate against the provisional view which I have expressed.

I deal briefly with the submissions made in relation to blameworthy conduct.

A number of factors constituting blameworthy conduct were relied upon.  In summary these were:

(a)The selectiveness of the proceeding, i.e. proceedings had not been instituted against other companies which were using the name "caps".

(b)The failure of the applicant to assert his trade mark interests "as he ought to have done".  This was based upon the applicant's, failure to threaten action before 5 December 1996 by which time the respondent's use of the word "caps" was entrenched.

(c)Usage by the applicant inconsistent with trade mark usage.  This was based on the use by the applicant on at least one occasion of the word "caps" to describe the product he was attempting to market.  A note of the conversation was made in which there are attributed to the applicant the word "caps" as descriptive of the product he was selling.  Despite denials by the applicant that he used the word "caps" in this way, I am satisfied upon the evidence that he did.

(d)A failure of the applicant to give prompt and proper notice directly to the respondent.

(e)The abandonment of an application for an interlocutory injunction.

(f)The proposal to Mr Booth to publish a price guide which would advertise the caps products from other distributors whilst at the same time asserting infringement by them.

In my opinion none of the matters relied upon, whether taken singly or cumulatively, amounts to blameworthy conduct. It was a matter entirely for the applicant whether he sued the respondent alone or others as well.  It cannot be blameworthy conduct to sue the respondent only.  I do not regard the alleged failure of the applicant to assert his trade mark rights earlier than 5 December 1996, the date of the certificate of registration, as a failure to give prompt and proper notice directly to the respondent or the abandonment of the interlocutory injunction application as constituting blameworthy conduct in the sense in which that expression is understood.  It was a matter entirely for the applicant to decide whether he would pursue an application for interlocutory relief.  After all, if the application had been successful, he would have been required to give an undertaking as to damages.  As earlier said, it is somewhat surprising that those advising the respondent did not carry out a search of the trade mark register prior to its embarking upon the venture which it undertook.  A search of the Register would have revealed the fact that the application had been accepted in August 1994 thus warning the respondent that by using the word "CAPS" it was running a risk.  I do not consider the fact that the applicant used the word "caps" to describe his product as warranting a conclusion of blameworthy conduct any more than I do in relation to the proposed publication of a "collector caps price guide".  What that evidence does of course is to establish that the applicant himself, not unnaturally, was doing what the rest of the trade was doing, namely, using the word "caps" as describing generically the articles in question.

In the result then I have reached the conclusion that the applicant's action for infringement fails.  The respondent's counter-claim based on the invalidity of the mark succeeds with the consequence that an order should be made for the expungement of the mark from the Register.  I do not propose to make orders today.  I shall stand this matter for a short time to enable the parties and their legal representatives to consider what I have said.  When the matter is again in the list, the parties are to bring in short minutes of order to give effect to my decision.

I certify that this and the eighty-nine (89) preceding pages are a true copy of the reasons for judgment herein of the Honourable Justice Sheppard.

Associate

Dated

APPEARANCES

Counsel for the Applicant:       D.K. Catterns QC
  J.R. Baird

Solicitors for the Applicant:        McCrohon Bergseng Partners

Counsel for the Respondent:      T.K. Tobin QC
  C. Golvan

Solicitors for the Respondent:    Aroni Colman

Dates of Hearing:                31 October, 1, 2 and

3 November 1995

Place of Hearing:                Sydney

Date of Judgment:                25 November 1996