Liv Pty Ltd & Ors v Accor Australia & New Zealand Hospitality Pty Ltd & Anor

[2018] HCATrans 33

[2018] HCATrans 033

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Brisbane   No B45 of 2017

B e t w e e n -

LIV PTY LTD ACN 093 688 576

First Applicant

IVANA PATALANO

Second Applicant

ELISE WYANDRA WARRING ALSO KNOWN AS ELISE BRADNAM

Third Applicant

and

ACCOR AUSTRALIA & NEW ZEALAND HOSPITALITY PTY LTD

First Respondent

CAIRNS HARBOUR LIGHTS PTY LTD

Second Respondent

Application for special leave to appeal

KIEFEL CJ
GAGELER J

TRANSCRIPT OF PROCEEDINGS

AT BRISBANE ON FRIDAY, 16 FEBRUARY 2018, AT 10.33 AM

Copyright in the High Court of Australia

____________________

MR R. COBDEN, SC:   May it please the Court, I appear for the applicants with my learned friend, MR J.S. COOKE.  (instructed by Morrow Petersen)

MR C. DIMITRIADIS, SC:   May it please the Court, I appear with my learned friend, MR H.P.T. BEVAN, for the respondents.  (instructed by Webb Henderson)

KIEFEL CJ:   Yes, Mr Cobden.

MR COBDEN:   Your Honours, I think the first thing I must do is to seek an order in terms of paragraph 2(a) of our application which is to enlarge the time by a day for the filing ‑ ‑ ‑

KIEFEL CJ:   Is there any objection to that course?

MR DIMITRIADIS:   No.

KIEFEL CJ:   The application is granted.

MR COBDEN:   May it please the Court.  Your Honours, this application concerns two discrete areas of trademark law.  Special leave and success on our part would overturn the findings of infringement made against my clients and although they arise from the same facts and the same case, they are quite different issues but each is a foundational issue in trademark law and of equal importance, in our respectful submission. 

The first is distinctiveness of an important class of marks - marks for buildings - and the second is, what are the limits of the monopoly set by prior use when that is the foundation of ownership.  I propose to address, if it is convenient for the Court, the distinctiveness or building case first, as we do in our outline, and secondly, the proprietorship/composite mark case which involves some consideration of Gallo.  We respectfully submit that it is not in issue that the Full Court applied a case, MID Sydney in the Full Federal Court, which held that the name of a building - there, Chifley Tower - was inherently distinctive.

KIEFEL CJ:   The question is whether or not the point that you now take, that it was either wrong or it has been misapplied, was raised in the court below.

MR COBDEN:   Yes, your Honour. 

KIEFEL CJ:   Is it right that the highest it could be put is that it was argued for your side that it should be distinguished?

MR COBDEN:   Yes, your Honour.  I am sorry, your Honour, the course of the hearing below – this is the one about it not being raised before the Full Court and my saying we do not the Full Court to find it is wrong - the course of it was this, your Honour.  We challenged its correctness in written submissions.  During the course of oral argument, yes, I accept I said your Honours do not need to find MID Sydney is wrong because this is a clearly different case.  MID Sydney is about single‑ownership building; this is multi‑ownership building.  There was also travelling along a document in which the parties identified what arguments they had abandoned or not ‑ ‑ ‑

KIEFEL CJ:   But as a result the court has not addressed the question of whether it is wrong and there are other decisions which would also have had to have been addressed by the court.

MR COBDEN:   We did say that Spagnuolo, which is the Q1 decision, was wrong.  It was an essential part of our argument that that was a multi‑ownership building like we were.  So, in answer to your Honour’s question, I think I am answering it, in this way, if that is right, nevertheless, the question that we did agitate and do agitate, which is, does MID Sydney extend to multi‑ownership buildings, we did agitate it and it remains perfectly open to us and we would say that is a very important class of marks, multi‑ownership buildings.

I would have to point to evidence of this but this very case is one.  Q1 was one, Spagnuolo Case, and it would apply to a very large class of buildings and therefore, if we are correct, to very large groups of traders and individuals who want to license traders to use the names of the buildings that they have bought into.  So it would remain open.  Now, it may well be, to be perfectly frank, we would say to the Court if we got special leave the point that we are making is an illustration of a larger point which is the building names are not per se distinctive but the Court would either tell us that it would entertain that point or not.

GAGELER J:   Why not?  Why are they not distinctive?

MR COBDEN:   They are not distinctive ‑ ‑ ‑

GAGELER J:   Because they are geographical?

MR COBDEN:   Yes.

GAGELER J:   And that is it?

MR COBDEN:   By analogy with the old cases about villages, towns and suburbs – that is our point.

GAGELER J:   At pages 242 to 243 we see in 12 subparagraphs a number of principles set out.  Now, do you take issue with those principles?

MR COBDEN:   Not as principles, no, your Honour.

GAGELER J:   So do you accept the relationship between principle (3) and principle (4)?

MR COBDEN:   Yes, your Honour.  In applying that relationship in relation to geographical names – and I go back to the paradigm example such as Michigan and Oxford ‑ that the courts have held that geographical names, if they are places from which people will trade using the name of the geographical place, then applying those very principles that all those people are not actuated by improper motives in wanting to use that name.

The class of marks that are inherently unadapted to distinguish used to be very important because you could not get registration of them at all and that is what “Michigan for heavy equipment”, “Oxford for books” is.  The distinction remains very important despite the fact that theoretically one could get registration of an inherently unadapted mark such as “Oregon for chainsaw parts” since section 41 was introduced, but it is a very different approach and a very different test.  In other words, one must demonstrate acquired distinctiveness by use as a trademark before the date of application.

So we do not question those larger principles but we do say - there is nothing in the statute, I might say, that says specifically geographical areas or marks are excluded.  This is a judicial explanation but it has been developed over a century or more that geographical areas are excluded.  What we say is that a building such as the Harbour Lights building, or any building like it which is built by one developer and then sold off either in whole or in part to individual people and contains individual businesses, is effectively a vertical suburb.  That is a reality of the modern world. 

We say, by analogy, if a developer, as they have done for 100 years, develops a greenfield suburb, puts all the streets in, names them and gives it a name and then sells the property, it would be contrary to that policy - Michigan, Oxford, et cetera - to allow that developer to, as it were, retain a stranglehold over the commercial activities of the shopping centre in that suburb – be it called – perhaps a new suburb of Canberra called “Gillard”, like “Chifley” or a new suburb of Canberra called “Lakes View”, like Harbour Lights ‑ to hang onto that commercial right and constrain the perfectly legitimate rights of traders either within the area, to trade using the name of the area, or outside the area to trade by reference to the area.

Although the debate has unfolded ‑ in this case it is about the rights of people in the building to use the name, the question is can other people use the name and, indeed, my client’s agency was not in the building for contractual reasons but was located outside.  So, we say, for those reasons it is an important case on that question.  It raises it squarely.  We are not precluded from raising the point about multi‑owner buildings and it is something that ought apply to a large class of marks.

KIEFEL CJ:   Hence your section 58 argument?

MR COBDEN:   Yes, your Honour.  This is a different argument, as I indicated at the opening.  Stepping back for a moment on this question, there are two ways in which ownership and the scope of the monopoly and trademarks arise.  We say the case is important because the scope for the monopoly needs to be circumscribed out of fairness to other traders. 

The classic way of obtaining rights under trademark before the system of registered trademarks was use - use of the mark in respect of goods – way before services.  We are talking late 1800s.  You obtained the proprietorship of the mark.  The registration system then allowed you to register that proprietorship but also added in the very important and very new development in the late 1800s of being able to create ownership by a combination of an application – a piece of paper filed – plus an intention to use. 

Now, in that latter case, the mark that is used is circumscribed precisely by the mark which you put on the paper that you file and the goods or, now, the services in respect of which you are filing are circumscribable – so by the goods that you put into the description.  That circumscribes your monopoly in the appropriate ways of the debate about it continuing that way. 

Where you are relying on prior use, which is what has happened here and what happens always under section 58, then you have to, instead of finding the mark and the goods circumscribed by the application, work out what the limits of the mark itself are and the limits of the goods or services by looking back at the trading history of the party.  That is what has happened here. 

We say that it is important, if there was use of a composite mark, that the pieces of the composite mark not be given a life of their own because the trader has, for good reason, chosen a composite mark.  In the Colorado Case Justice Gyles pointed out that is often for the very good reason that you would not get the word mark alone in many cases and you would need the composite mark to be used.

The very important question, of course, that arose in this case was:  was it a composite mark?  The Full Court asked that question at paragraph 204 at the beginning of their consideration of this question ‑ this is an important point of division between us and our learned friends ‑ is it a composite mark?

KIEFEL CJ:   I am sorry, which paragraph?

MR COBDEN:   Paragraph 204, your Honour, page 233.  This is the critical passage that goes through to 214, which is where the Gallo point arises. 

KIEFEL CJ:   But it did not make a finding to that effect, did it?

MR COBDEN:   It did not make a finding to that effect or not to that effect, we say, your Honour, but the only way that their Honours could have proceeded, we respectfully submit, is on the basis that it was a composite mark.  We say this because their Honours identified the three elements or features.  The reproduction is not especially great but this composite mark, the relevant one, appears at page 283, in the lower advertisement.

GAGELER J:   That is the one with the stars, is it?

MR COBDEN:   That in fact has “Three year fixed rent lease option now available”.  Does your Honour see that?  That in fact has both of the composite marks that we seek leave in relation to - “HARBOUR LIGHTS” with the stars.  It is really an artefact of the reproduction – “A NEW STAR SHINES” is very hard to read there.  It was originally a glossy magazine.  Opposite again your Honours see “HARBOUR LIGHTS” and “A NEW STAR SHINES”.  Similarly, over the page, on page 284, which also raises the Sebel point.  We say that that is the territory staked out by the trademark owner, ultimately, as the territory that they were claiming for their mark. 

Now, back to how their Honours proceeded.  At paragraphs 206 to 208, their Honours identified those elements.  At paragraph 209 their Honours referred to the composite mark.  We accept that they say “as found”.  Then their Honours turned to Gallo, in paragraph 210, and set out the only relevant paragraphs of Gallo, 67 to 69.

KIEFEL CJ:   Did they apply Gallo?

MR COBDEN:   We think they must have, your Honour, because they say at 212:

We respectfully think that the primary judge has fallen into error . . . in the application of the guiding principles derived from Gallo –

Then their Honours have a paragraph that is perhaps in places, with the greatest respect, a little bit hard to sort out.  We respectfully respect that they must be applying Gallo.  Having found that that is the error that they are going to correct, it would be very strange if they were not applying Gallo.  What they do is disagree with his Honour about the addition of five gold stars in combination with words “A New Star Shines”.

We would say that is enough and if that is a misapplication – I need go back a step.  Gallo could only stand, we respectfully submit, for this proposition in relation to a composite mark, that looking at the top of page 235 here, the first full sentence:

The device is an illustration of the word.

At the very best, we respectfully submit, Gallo can only stand for a proposition where you find that the word and the device are saying exactly the same thing to you.  Your Honours recall that was there the word “Barefoot” and that it had been used in a composite thing with a footprint.

KIEFEL CJ:   It illustrated the word itself.

MR COBDEN:   That is the point.

KIEFEL CJ:   But that is not the case here.

MR COBDEN:   That is not the case here, your Honour, yet their Honours seemed to be applying Gallo, we respectfully submit, in 212 and 213 to achieve that result here.  We say that this misapplication, with great respect, of Gallo has now found its way into another case called Pham that we have referred to. 

GAGELER J:   If you were to articulate it as an error of principle, how would you put it?

MR COBDEN:   That Gallo is a very narrow exception to dealing with a composite mark and basically setting aside the pictorial elements and giving primacy to the word.  But we do also say with the greatest respect ‑ ‑ ‑

KIEFEL CJ:   But if that is the point, relying on Gallo, it becomes critical that the Full Court in fact applied it.

MR COBDEN:   Yes.  We say that one cannot escape, by reason of the run of paragraphs from 204 through to 213 ‑ ‑ ‑

KIEFEL CJ:   I would like to see how Gallo arises on the facts of this case, though.

MR COBDEN:   Yes, but their Honours, we believe – or respectfully submit that their Honours were applying it.

KIEFEL CJ:   But you would say it does not apply?

MR COBDEN:   First of all, we say it does not apply because at the most Gallo is where the word and the mark equate entirely.

KIEFEL CJ:   So what would this Court be asked to say about Gallo?

MR COBDEN:   We would also submit with the greatest of respect that Gallo itself was wrong for this reason which we have articulated in the written outline.

KIEFEL CJ:   Would this Court get to that question on your approach?

MR COBDEN:   Yes, your Honour.  If one is assessing what monopoly one gets from prior use of a mark, one needs to be extremely constrained – much more constrained than Gallo, which used the test of substantial identity and infringement tests, we say, while applying the words “not substantially affect the identity of the trademark of the word alone”. 

We accept, of course, that Gallo was a non‑use case, so the use was preservative use, and this is a proprietorship case, but the same words appear in section 7 for this purpose.  What did not happen, we respectfully submit, in the Gallo court is that their Honours’ attention was not drawn to the fact that that very phrase is the phrase used that would allow somebody to amend a mark that is on the register. 

The effect, therefore, of Gallo would be that the “Barefoot” mark, the word, could have been amended by adding the footprint.  These are illustrations of the need to circumscribe both for preservative use but, by exact analogy, proprietorship use very closely.  If I could give

your Honours a quick example.  If the Gallo mark was “Barefoot” but my mark was “Handprint” plus a similar print of a hand, a bit like the ones on…..I would respectfully submit that “Handprint” plus the hand could not possibly infringe the word “Barefoot”.  But if “Barefoot” were amended to include a footprint like a “Man Friday” footprint of the kind that was…..in Gallo there would then be a very serious argument, based on the idea of the mark, that my mark was deceptively similar, yet section 83, which uses this very self‑same phrase that appears in section 7 is entirely directed against not expanding the monopoly of the mark.

So we say that, if one goes back a step, one finds that this notion of mere substantial identity, which is what has been applied really, for proprietorship is an insufficient basis for expanding a monopoly.  For that reason we say it raises an issue of fundamental importance.

GAGELER J:   What I am hearing is that on one branch of your argument you are asking us to overturn MID and the cases that followed it.

MR COBDEN:   Yes.

GAGELER J:   On the other branch of your argument you would be asking us to reconsider Gallo?

MR COBDEN:   Yes, your Honour, with this difference also:  in the case of MID Sydney Case, or explain, in an authoritative way, that it does not apply to multi‑owner buildings, which is a point that we squarely raised and argued and it is equated to Q1, or in the case of Gallo that it has been taken too far as excusing, as it were, or allowing pictorial elements to be set aside far too lightly when the foundation for the monopoly is a composite mark, not plucking the words from it.  Those are our submissions, your Honours.

KIEFEL CJ:   We need not trouble you, Mr Dimitriadis. 

We consider that there are insufficient prospects of success in this matter to warrant the grant of special leave.  Special leave is refused with costs.

AT 10.54 PM THE MATTER WAS CONCLUDED