McDonalds Corporation v Sheli Lubowski

[2004] ATMO 56

TRADE MARKS ACT 1995

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

Re:Opposition by McDonald's Corporation to registration of trade mark application 897074(42) - McCHINA - filed in the name of Sheli Lubowski.

Delegate:	Deirdre O'Brien
Representation:	Opponent Simon Williams of Spruson & Ferguson Applicant Malcolm Farr of Shelston IP
Decision:	s44 and 60 grounds made out. Registration refused.

Background

1. The trade mark in application 897074 is the word McCHINA and it was accepted for registration in respect of services in class 42.  Those services were amended subsequent to acceptance so that they now read:

   Restaurant services providing Chinese food and other Asian food at Chinese-themed restaurants; take-away food services and catering services providing Chinese food and other Asian food, provided through Chinese-themed outlets; none of the foregoing services relating to the provision of hamburgers or chips (French fries)

   Registration is opposed by McDonald’s Corporation (‘the opponent’).  Both parties filed and served evidence as follows:

Declarant	Date	Annexures
Evidence in support	Phillip Charles Maloney[1]	8 April 2003	PCM-1 to PCM-12
Evidence in answer	Sheli Lubowski Malcolm John Farr	24 November 2003 26 November 2003	MJF-1 to MJF-12
Evidence in reply	Simon Dudley Williams	1 March 2004	SDW-1 to SDW-7

[1] Mr Maloney is Senior Legal Counsel of McDonald’s Australia Ltd, an authorised user of the opponent’s trade marks.

1. The matter was heard by me in Sydney on 21 July 2004.  Mr Simon Williams of Spruson & Ferguson appeared for the opponent.  The applicant was represented by Mr Malcolm Farr of Shelston IP. 

2. Prior to filing and serving its evidence in reply, the opponent asked the applicant to produce documents evidencing her intention to use the trade mark[2].  Mr Farr brought material to the hearing in response to that request and asked for it to be admitted as further evidence which I allowed.  That material consists of declarations by Ms Lubowski and Mr Farr, made 20 July and 21 July 2004 respectively[3].  Mr Williams also asked permission at the hearing to introduce further evidence on behalf of the opponent consisting of another declaration by Phillip Charles Maloney, made 20 July 2004, with exhibit PCM-13.  I allowed that evidence into proceedings as well.  All the aforesaid declarations were on point and did not require evidence in rebuttal.

   [2] Paragraph 5 and Exhibit SDW-5 of the Williams declaration

   [3] The Lubowski declaration has Annexure SL-1; the Farr declaration has Annexures MJF-A to MJF-C.

   Grounds of opposition

3. The grounds pressed by the opponent at the hearing were those under sections 42, 43, 44, 59 and 60 of the Trade Marks Act 1995.

   Section 43

4. In order to find this ground has been made out I must be satisfied of two things:

   ·that at the date of filing this application[4] (‘the relevant date’) McCHINA had a connotation or implied meaning; and

   ·that because of that connotation, use of McCHINA is likely to cause deception and/or confusion[5]. 

   [4] 4 December 2001

   [5] Winton Shire Council v Lomas 56 IPR 72

5. McCHINA is an invented word.  It commences with a prefix commonly used in surnames, however it is not found in a consolidation of surnames taken from Australian electoral rolls[6].  It would, I think, be regarded by many Australians, particularly those of Anglo-Celtic background, as a made-up surname.  The opponent’s evidence shows that, at the relevant date, it was the practice of the opponent to invent trade marks for use in relation to foods and beverages by combining the prefix Mc with words describing or alluding to the nature of the goods/services[7].  Mr Farr for the applicant says trade marks commencing with Mc are not the exclusive provenance of the opponent and points to such trade marks on the Register which are owned by other parties[8].  However most of those trade marks are known surnames.  At the relevant date there was only one registration[9] owned by a party other than the opponent for a trade mark containing an obviously invented ‘surname’ formed by combining the prefix Mc with a descriptive element[10].  Furthermore the trade mark naming practice of the opponent is so notorious that it has been the subject of parody in newspaper articles[11] and was recently noted by the delegate in McDonald’s Corporation v Bellamy[12].  The opponent has provided evidence of extensive use and promotion of its registered and common law trade marks containing or comprising an invented Mc surname[13] and I am satisfied those trade marks had a reputation in Australia at the relevant date. 

   [6] The consolidation is provided to this office by the Australian Electoral Commission

   [7] Paragraph 6 and Exhibits PCM-1 and PCM-2 of first Maloney declaration show that at the relevant date the opponent had registrations for the word trade marks EGG McMUFFIN, McFEAST, McCHICKEN, McRIB, CHICKEN McNUGGETS, McPIZZA, SHANGHAI McNUGGETS, SAUSAGE McMUFFIN, McCOLA, McBURGER, McMUFFIN, THE McBIG ONE, McVEGETABLE, McSHAKER FRIES, McFLURRY, McWRAPS, McCHILLER, McCRISPY and McOZ in respect of food or beverages and for McBURGER, McSTOP, McEXPRESS, McCAFÉ, McDRIVE and McVALUE MEAL in respect of food and beverage services.

   [8]  Paragraphs 9 to 11 and Annexures MJF-4 to MJF-7 to first Farr declaration

   [9] in respect of food and beverages or the provision of food and beverages

   [10] Registration 498009 for MOLLY McBUTTER

   [11] Exhibit PCM-5 to first Maloney declaration

   [12] [2004] ATMO 26

   [13] Paragraphs 5, 6, 9 and 11 and Exhibits PCM-2, PCM-4 and PCM-6 to first Maloney declaration show use of the unregistered trade marks McBACON DELUXE, McBEEFSTEAK, McBREAKFAST BURGER, CHICKEN McDELUXE, McFISH DELUXE, McMALIBU, McCHICK, McBLT, McSALAD ROLL, McPAVLOVA, McDELICIOUS, McCAFÉ, McVALUE MEALS and McVALUE DINNER in respect of food and/or beverages

6. Nevertheless, while these are all matters that go to making out the section 44 and 60 grounds[14], they do not show that McCHINA of itself has any meaning other than that of being an invented word cum surname, comprising the prefix Mc and the name of a country.  McCHINA has no reputation in the appropriate marketplace.  To my knowledge it has not ever been used in Australia.  The opponent has shown that Mc is the common element in many of its well-known trade marks.  It wishes me to extrapolate from this that the presence of Mc in McCHINA will connote to most Australians an association with the opponent.   But it has provided no evidence, such as convincing evidence from a linguistics expert, to support this contention.  In a comparison with the opponent’s Mc invented surname trade marks, McCHINA may well present as a ‘McDonald’s trade mark’.  However I am not satisfied from the material before me that there is anything inherent to McCHINA which would indicate such an association.

   [14] See later discussion

   Sections 44 and 60

7. Both these grounds require a finding that use of the trade mark McCHINA is likely to result in deception and/or confusion, either because of its similarity to the opponent’s earlier trade mark registrations (section 44) or because of the reputation of the opponent’s registered and/or common law trade marks in Australia at the relevant date (section 60).  The test to be applied in deciding this was enunciated by Kitto J in Southern Cross Refrigerating & Co v Toowoomba Foundry Pty Ltd[15] and restated by French J in Registrar of Trade Marks v Woolworths Ltd[16] as follows:

   A trade mark is likely to cause confusion if the result of its use will be that a number of persons are caused to wonder whether it might not be the case that the two products or closely related products and services come from the same source. It is enough if the ordinary person entertains a reasonable doubt.

   [15] (1954) 91 CLR 592 at 595

   [16] 45 IPR 411 at 426

8. Mr Farr points to the decision by Neuberger J in relation to a UK application by another party to register McCHINA[17] for goods in classes 29, 30 and 31 and restaurant services in class 42.  Registration was allowed on appeal.  His Honour found that McCHINA was not deceptively similar[18] to the opponents’ UK registrations for the trade marks McDONALD’s, MACDONALD’S and MAC.  He also rejected the argument that because of the reputation of the opponents’ Mc and MAC trade marks at the date of application[19], a substantial number of persons would have been confused by the other party’s use of McCHINA. However, the following remarks by his Honour in relation to a survey carried out almost four years after the relevant date are pertinent.  He says at paragraph 54:

   During that period, there had been significant growth in the market penetration of the opponents’ business.  Their turnover had substantially increased, and presumably they had opened a number of new restaurants.  Further, their advertising spend, all of which was linked to their marks, had increased in those three and three quarter years.  Accordingly, although it is impossible to know by how much, the likelihood of association, and even of any deception or confusion, would have increased from 1992. [emphasis added]

   [17] Frank Yu Kwan Yuen v McDonald’s Corporation and McDonald’s Restaurants Ltd (2001) WL 1422899 (27 November 2001)

   [18] To use the words of section 44 of the Australian legislation

   [19] 10 June 1992

9. With this in mind, earlier decisions of this office[20] where the delegate found that there was little risk of deception or confusion arising from the use by other parties of the trade marks McMINT[21] and McVEG[22] have to be taken in the context of the circumstances existing in 1993 and 1994 respectively.  In a later decision[23] the delegate refused to register the trade marks McSALAD and McFRESH as he found they were ‘contextually’ deceptively similar to many of the opponent’s Australian trade mark registrations extant in 1996.  In McDonald’s Corporation v Bellamy[24] the delegate held that use of the trade mark McBABY would be likely to deceive or cause confusion because of the reputation in Australia in 2000 of the opponent’s family[25] of registered and unregistered ‘Mc’ trade marks.  

   [20] on which Mr Farr relies

   [21] Mark Euvrard v McDonald’s Corporation [1997] ATMO 63

   [22] Sandy Gaye Cowley v McDonald’s Corporation [1997] ATMO 65

   [23] McDonald’s Corporation v Macri Fruit Distributors Pty Ltd [2000] ATMO 37

   [24] supra

   [25] See Beck & Koller & Co Ltd’s Appn (1947) 64 RPC 76

10. The opponent’s evidence shows that in 2001 the opponent had twenty-five  registrations in classes 29, 30, 32 and 42 for word trade marks consisting of the prefix Mc combined with a word or words with a descriptive tinge.  I am satisfied that when considered in relation to Chinese food, McCHINA is contextually deceptively similar to those registrations[26].  Furthermore, given the aforesaid reputation of the opponent’s registered and unregistered trade marks and its  history at the relevant date of offering ‘ethnic-style’ food for sale as part of special promotions[27] I am satisfied a substantial number of persons would regard McCHINA as the sort of trade mark the opponent would use if it were to provide takeaway Chinese food. On that basis, use of McCHINA by the applicant in connection with a takeaway Chinese food restaurant is likely to result in confusion as a reasonable number of persons will be in doubt as to whether the services are provided by the opponent. Accordingly I find the section 44 and 60 grounds have been made out.

    [26] The CHINA in McCHINA alludes to the nature of the food

    [27] Paragraphs 4 and 5 of the second Maloney declaration show that at the relevant date the opponent had run Chinese, Italian, Hawaiian, Mexican, German and Asian-themed food promotions

    Section 42

11. The opponent is relying on the ground contained in section 42(b), namely that use of the trade mark McCHINA would be contrary to law. To make out this ground the opponent has to establish that use of the trade mark is misleading and/or deceptive conduct and would[28] contravene state fair trading legislation[29] and by extension the common law of passing off.  Mr Farr says I must assume the applicant will be using the trade mark in a fair manner[30] and the applicant herself has attested to this[31].  The opponent has not provided any evidence to the contrary.  Accordingly, while I am satisfied a substantial number of consumers will be confused as to the origin of the services, that is not enough[32] to establish that use of the applicant’s trade mark in a fair manner[33] would contravene state fair trading legislation or that any action taken by the opponent based on the tort of passing off would succeed.  I therefore dismiss this ground of opposition.

    [28] See Advantage Rent-a-Car Inc v Advantage Car Rental Pty Ltd 52 IPR 24

    [29] The Trade Practices Act 1974 does not apply to natural persons such as the applicant.

    [30] See Smith Hayden & Co Ltd’s Application (1946) 63 RPC 101

    [31] Second Lubowski declaration

    [32] See Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd  1A IPR 684 at 688 where Gibbs CJ said:

    …to prove a breach of s52 [of the Trade Practices Act] it is not enough to establish that the conduct complained of was confusing or caused people to wonder whether two products may have come from the same source.

    [33] Hill J in Equity Access Pty Limited v Westpac Banking Corporation 16 IPR 431 says in relation to misleading or deceptive conduct that:

    The conduct must convey in all the circumstances of the case a misrepresentation. [emphasis added]

    Section 59

12. To make out this ground the opponent has to establish that the applicant does not intend to use or to authorise the use of the trade mark ‘in relation to the goods and/or services specified in the application’.  Applying to register a trade mark is prima facie taken as an intention to use the trade mark[34].  Furthermore there are two declarations from the applicant in evidence attesting to her intention.  The onus is clearly upon the opponent to make out the contrary case. 

    [34] Intel Corporation v Magnatex International Pty Ltd (1998) 41 IPR 406

13. Mr Williams says that the relevant date with respect to this ground is the filing date[35]. He points to the fact that the specification of services was amended after filing at the applicant’s request and says that the original specification was broader.  He argues that this indicates the applicant did not intend to use the trade mark with respect to all the services nominated at filing and that her bona fides must be doubted.  I am not persuaded by his argument. 

    [35] Re Trade Mark “Bragatto” (1976) 1 NZIPR 30

14. In Sapient Australia Pty Ltd and Sapient Corporation v SAP Aktiengesellschaft[36] the delegate found section 59 is concerned with an applicant’s present intentions. Many things can happen in the time between applying for trade mark registration and registration being granted[37]. An applicant’s original intention as to how it will use its trade mark may be changed by the discovery of a conflicting trade mark with prior rights or by a threatened trade mark opposition or by a decision to assign the trade mark to another party. It is difficult to reconcile the presumption of registrability underpinning the legislation with the possibility of registration being thwarted simply because an amendment to the original specification is taken to indicate the requisite lack of intention. But even if Mr Williams is correct and the relevant date is the filing date, it does not follow from the fact that the applicant subsequently amended the specification of services that the section 59 ground has been made out. The services as they now stand are still food and beverage services. The amendment has merely qualified the nature of those services.

    [36] 55 IPR 638

    [37] Wal-Mart Stores, Inc v Ozark-London Ltd [2004] ATMO 33

15. Mr Williams also points to the opponent’s request that the applicant produce documents at the hearing evidencing her intended use of the trade mark. He says her failure to do so as part of her further evidence must draw the adverse inference that she has no such intention[38].  Again I am not persuaded. 

    [38] Phillip Morris Products SA v Sean Ngu [2002] ATMO 96

16. As Mr Farr points out, there is no requirement in the Australian legislation for a trade mark to have been used before applying for registration.  An applicant may well consider it prudent to wait and see whether the trade mark achieves registration before incurring further expense[39].  The applicant here says her major concern is to get the trade mark McCHINA registered.  She is an experienced businesswoman, having already run two successful businesses which she started from scratch.  She says her modus operandi is to draw up business plans only when matters are sufficiently advanced.

    [39] Wal-Mart Stores, Inc v Ozark-London Ltd, supra

17. Accordingly this matter can be distinguished on its facts from Phillip Morris Products SA v Sean Ngu, supra, where the applicant made representations about what he had done in preparing to use the trade mark but failed, when challenged by the opponent, to produce any evidence of same.  Here, as in Wal-Mart Stores, Inc v Ozark-London Ltd, I find that ‘all of the applicant's actions appear to have been consistent with a bona fide intention to use the trade mark, including negotiations with [other] traders[40], willingness to actively defend litigation, preparedness to consider settlement[41] …’.

    [40] Second Lubowski and Farr declarations

    [41] It emerged at the hearing that the parties had at one stage been involved in settlement negotiations.

    Decision

18. As I have found the section 44 and 60 grounds of opposition have been made out, I refuse to register trade mark application no 897074.

    Costs

19. The opponent has sought its costs and, as it is the successful party, I hereby award costs against the applicant according to the Official Scale.

    Deirdre O'Brien
    Senior Examiner
    Trade Marks Hearings
    27 October 2004