Metricon Homes Pty Ltd v Zac Homes Pty Ltd
[2021] FCCA 394
•10 March 2021
FEDERAL CIRCUIT COURT OF AUSTRALIA
METRICON HOMES PTY LTD v ZAC HOMES PTY LTD [2021] FCCA 394
Catchwords:
INTELLECTUAL PROPERTY – TRADE MARKS – Infringement - separate question – where applicant alleges respondent by use of phrases ‘love where you live’/‘you love where you live’ has infringed applicant’s trade mark – whether website and radio use of impugned phrase by respondent constituted use as a trade mark for the purposes of s.120 of the Trade Marks Act 1995 (Cth) of registered trade mark – whether impugned phrase used to distinguish respondent’s services from services provided by others – whether the use of impugned phrase acted as a badge of origin – the separate question is answered ‘No’.
Legislation:
Federal Circuit Court Rules 2001 (Cth), r.17.02
Trade Marks Act 1995 (Cth), ss.17, 120.
Cases cited:
Aldi Stores Ltd Partnership v Frito-Lay Trading Co GmbH [2001] FCA 187;
(2001) 54 IPR 344
Anheuser-Busch Inc v Budejovicky Budvar [2002] FCA 390; (2002) 56 IPR 182
Coca-Cola Co v All-Fect Distributors Ltd [1999] FCA 1721; (1999) 96 FCR 107; (1999) 47 IPR 481
Christodoulou v Disney Enterprises Inc [2005] FCA 1401; (2005) 156 FCR 344
E & J Gallo Winery v Lion Nathan Australia Pty Ltd [2010] HCA 15; (2010) 241 CLR 144; (2010) 86 IPR 224
Hoser v Sportsbet Pty Ltd [2018] FCA 1557
Johnson & Johnson Australia Pty Ltd v Sterling Pharmaceuticals Pty Ltd (1991) 30 FCR 326
Nature’s Blend Pty Ltd v Nestlé Australia Ltd [2010] FCAFC 117; (2010) 87 IPR 464
Playgro Pty Ltd v Playgo Art & Craft Manufactory Ltd (No 2) [2016] FCA 478; (2016) 118 IPR 514
Shell Co (Aust) Ltd v Esso Standard Oil (Aust) Ltd [1963] HCA 66; (1963) 109 CLR 407
Sports Warehouse Inc v Fry Consulting Pty Ltd [2010] FCA 664; (2010) 87 IPR 300
Applicant: METRICON HOMES PTY LTD
Respondent: ZAC HOMES PTY LTD
File Number: MLG 1484 of 2019
Judgment of: Judge Baird
Hearing date: 8 October 2019
Date of Last Submission: 27 September 2019
Delivered at: Sydney
Delivered on: 10 March 2021 REPRESENTATION
Counsel for the Applicant: Ms C Cunliffe
Solicitors for the Applicant: K&L Gates
Counsel for the Respondent: Ms J M Beaumont and Ms M Evetts
Solicitors for the Respondent: Reimer Winter Williamson ORDERS
THE COURT ORDERS THAT:
(1)The separate question ordered by the Court on 13 August 2019:
Whether each of the following uses by or on behalf of the respondent of the phrases “Love where you live” and/or “You love where you live” (Phrases) constitutes use "as a trade mark" for the purpose of section 120 of the Trade Marks Act 1995 (Cth):
(i)the use in the radio advertisement referred to at paragraph 7(a) of the Respondent's Concise Response; and
(ii)the use on the website at zachomes.com.au referred to at paragraph 7(b) of the Respondent's Concise Response
is answered: ‘No’.
(2)The proceeding is listed for case management and any argument on costs on a date to be advised after consultation with the parties.
FEDERAL CIRCUIT COURT
OF AUSTRALIA
AT SydneyMLG 1484 of 2019
Metricon Homes Pty Ltd Applicant
And
Zac Homes Pty Ltd Respondent
REASONS FOR JUDGMENT
Overview
1.The applicant, Metricon Homes Pty Ltd, claims that the respondent, Zac Homes Pty Ltd, has infringed Metricon’s Australian registered trade mark number 1018759 for the word mark ‘LOVE WHERE YOU LIVE’ (Trade Mark), engaged in misleading and deceptive conduct in contravention of ss.18 and 29 of the Australian Consumer Law, and committed the tort of passing off.
2.Relevant to the present application before me, the parties agree that Zac Homes’ conduct of which Metricon complains comprises the following 2 instances of use:
(i)the sentence ‘You love where you live.’ in a 33 second radio advertisement aired on 21 November 2018, being one of about 6 radio advertisements it arranged to be broadcast on Smooth FM during September, October and November 2018 (Zac Radio Ad use); and
(ii)the sentence ‘Love where you live?’ on the ‘Knock Down Rebuild’ webpage of Zac Homes’ website at the domain name located at for ‘no more than a few months’ from about September 2018 (Zac Webpage use).
See further below, at [9] to [13].
3.On 25 July 2019, pursuant to r.17.02 of the Federal Circuit Court Rules2001 (Cth), I made orders for the hearing and determination of a separate question. Further to a proposal agreed between counsel, by order made 13 August 2019, I ordered that the question to be heard separately be whether each of the above uses of the phrases of which Metricon complains constitutes use ‘as a trade mark’ for the purpose of s.120 of the Trade Marks Act 1995 (Cth).
4.The separate question ordered is:
Whether each of the following uses by or on behalf of the respondent of the phrases “Love where you live” and/or “You love where you live” (Phrases) constitutes use “as a trade mark” for the purpose of section 120 of the Trade Marks Act 1995 (Cth):
(i)the use in the radio advertisement referred to at paragraph 7(a) of the Respondent's Concise Response [that is, the use I have referred to as the Zac Radio Ad]; and
(ii)the use on the website at zachomes.com.au referred to at paragraph 7(b) of the Respondent's Concise Response [that is, the use I have referred to as the Zac Webpage use].
5.For the reasons I set out below, I have concluded that the separate question should be answered ‘no’. None of the impugned uses of the above phrases by Zac Homes is use as a trade mark within the meaning of the Act.
The parties
6.Metricon, conducting its business under the name and mark ‘Metricon Homes’, is a designer, seller, and builder of residential homes in Australia. Metricon commenced its operations in Victoria in 1976, and has since expanded its business to New South Wales, Queensland, and South Australia.
7.Zac Homes, under the name and mark ‘Zac Homes’, is a builder of residential homes in New South Wales, based in Western Sydney. It has been in operation as a builder since 1993. Zac Homes provides design services for custom design homes and project homes, and specialises among other activities in the services of home ‘knock down, rebuild’.
The Trade Mark
8.Metricon is the owner of the Trade Mark registered in respect of certain services in classes 35, 36, 37, 42, and 44 of the Register of Trade Marks. The Trade Mark has a priority date of 3 September 2004. The full specification of services in respect of which the Trade Mark is registered is set out in Attachment A to these reasons.
Alleged infringing uses – for separate question
9.The parties have agreed a Statement of Agreed Facts in which they identified each of the uses nominated in the separate question. Use (i) is identified by way of an audio file exhibited to the Statement, and use (ii) by reference to an annexed printout and screenshots of the pages of the Zac Homes website. The printout dated 14 January 2019 comprises the text of the ‘Knock Down Rebuild’ page of the Zac Homes website. The screenshots are of an archive of that page of the website as at 26 November 2018, and screenshots of the home page of the website and the pages of the website that can be accessed via the banner at the top of each page of the website as at August 2019.
Zac Webpage use
10.Zac Homes submits that for no more than a few months from about September 2018, the ‘Knock Down Rebuild’ webpage of the Zac Homes website included, among other text, the following:
Knock Down Rebuild
Love where you live? Stay where you are!
11.The above phrases appeared as a white superscript over a photographic image of a close up of the front portico and façade of a house. Above the image and 2 lines of text, the banner menu ribbon of the Zac Homes website appears. The first item (left to right) is the name ‘ZACHomes’ in a stylised font. Below the image and 2 lines of text is further text appearing in bold and slightly larger font than the line ‘Love where you live? Stay where you are!’. This text reads: ‘Stay Where You Are …With A Knock Down Rebuild’. Below that line further text continues ‘Knock down and rebuild…’. A copy of the screenshot of part of the page appears at Attachment B to these reasons.
Zac Radio Ad use
12.The Zac Radio Ad is 33 seconds long. The impugned phrase appears at the 2 second mark, for approximately a second. The transcript of the Zac Radio Ad is as follows :
SFX MUSIC UNDER
You love where you live.
The kids and the family are all settled.
But you’re running out of space.
Don’t move – knock down and rebuild with Zac Homes.
This is the perfect way to improve the value of your existing block without the hassle and disruption of moving. Best of all – Zac Homes take care of everything.
From the big picture, to the little details, when it comes to knock down rebuild, Zac Homes take the stress out of building.
For details visit zachomes.com.au That’s zed aye sea homes.com.au
13.None of the other advertisements in Zac Homes’ radio campaign broadcast in the same period as the Zac Radio Ad include the impugned phrase. The other radio advertisements variously begin with the following phrases:
(i)When you’re building your dream home – Zac Homes understand that the little details are important;
(ii)Whether you’re an empty-nester, an investor, or simply looking to make the most of your block of land, duplex living makes plenty of sense…and Zac Homes are the duplex experts;
(iii)From trophy homes that make a statement…To something more subtle that only reveals itself once you start to explore;
(iv)At Zac Homes, the little details are important. Plus, everything’s included in the cost of your tender – Even little changes to plans, so you can add your own touches,
While the sixth advertisement comprises 3 sponsorship credits broadcast in rotation, the first being: Let Zac Homes take the stress out of your custom build. From the big picture to all the little details visit z a c homes.com.au.
Relevant statutory provision and legal principles
14.Section 120(1) of the Act relevantly provides:
A person infringes a registered trade mark if the person uses as a trade mark a sign that is substantially identical with, or deceptively similar to, the trade mark in relation to goods or services in respect of which the trade mark is registered.
15.A ‘trade mark’ is defined by s.17 of the Act, as ‘a sign used, or intended to be used, to distinguish goods or services dealt with or provided in the course of trade by a person from goods or services so dealt with or provided by any other person.’
Use as a trade mark
16.The legal principles are well established and were not in dispute. Use as a trade mark is use of the sign (mark) as a ‘badge of origin’, a sign used to distinguish goods dealt with in the course of trade by a person from goods dealt with by someone else: see Coca-Cola Co v All-Fect Distributors Ltd [1999] FCA 1721; (1999) 96 FCR 107; (1999) 47 IPR 481 at [19], approved by the High Court of Australia in E & J Gallo Winery v Lion Nathan Australia Pty Ltd [2010] HCA 15; (2010) 241 CLR 144; (2010) 86 IPR 224 at [43].
17.In Nature’s Blend Pty Ltd v Nestlé Australia Ltd [2010] FCAFC 117; (2010) 87 IPR 464, the Full Court of the Federal Court of Australia summarised the relevant principles at [19], referring to the principles I have set out above, and also stating:
(i)a mark may contain descriptive elements but still be a ‘badge of origin’;
(ii)the appropriate question to ask is whether the impugned words would appear to consumers as possessing the character of the brand;
(iii)the purpose and nature of the impugned use is the relevant inquiry in answering the question whether the use complained of is a use ‘as a trade mark’;
(iv)consideration of the totality of the packaging, including the way in which the words are displayed in relation to the goods and the existence of a label of a clear and dominant brand, are relevant in determining the purpose and nature (or ‘context’) of the impugned words;
(v)in determining the nature and purpose of the impugned words, the court must ask what a person looking at the label would see and take from it,
citing Shell Co (Aust) Ltd v Esso Standard Oil (Aust) Ltd [1963] HCA 66; (1963) 109 CLR 407 at 426; Johnson & Johnson Australia Pty Ltd v Sterling Pharmaceuticals Pty Ltd (1991) 30 FCR 326 at 347‑348 per Gummow J, and Anheuser-Busch Inc v Budejovicky Budvar [2002] FCA 390; (2002) 56 IPR 182
18.In the seminal decision of Shell, Justice Kitto explained the question to be asked in assessing use ‘as a trade mark’ as follows (at 425):
With the aid of the definition of ‘trade mark’ in s 6 of the [Trade Marks Act 1955], the adverbial expression [use as a trade mark] may be expanded so that the question becomes whether, in the setting in which the particular pictures referred to were presented, they would have appeared to the television viewer as possessing the character of devices, or brands, which the appellant was using or proposing to use in relation to petrol for the purpose of indicating, or so as to indicate, a connection in the course of trade between the petrol and the appellant. Did they appear to be thrown on the screen as being marks for distinguishing Shell petrol from other petrol in the course of trade?
19.The Federal Court in Christodoulou v Disney Enterprises Inc [2005] FCA 1401; (2005) 156 FCR 344 at [35], further explained that whether an impugned use is use as a trade mark “involves consideration of the context in which the allegedly infringing use occurs. This can encompass factors such as the positioning of the sign, the type of font, the size of the words or letters and the colours which are used, as well as how the sign is applied to advertising materials or the packaging of the goods in relation to other features…”
20.In Aldi Stores Ltd Partnership v Frito-Lay Trading Co GmbH [2001] FCA 187; (2001) 54 IPR 344, Justice Hill in the Full Court at [23] explained that where words/a phrase have a clear meaning in ordinary use, the question of whether the use is trade mark use is more difficult than in the case of an inverted word or combination of word, ‘as the word or combination of words may either have taken on a secondary meaning indicating the origin of the goods or may simply convey an ordinary meaning (ie some message other than the trade origin of the goods)…’.
Submissions and Consideration
21.I turn first to the Zac Webpage use, the second form of use identified in the separate question.
Zac Webpage use
22.Metricon submits that the use of the phrase ‘Love where you live’ as part of the tagline ‘Love where you live? Stay where you are!’ on Zac Homes’ ‘Knock Down Rebuild’ services webpage of the Zac Homes website, constitutes ‘use as a trade mark’ within the meaning of the Act.
23.It says the phrase was a prominent aspect of Zac Homes’ internet promotion of the ‘Knock Down Rebuild’ services, and not merely a component of marketing copy. Metricon submits I should find that the phrase is more prominent than the use of the Zac Homes name and that the use of the phrase was intended to distinguish Zac Homes’ services from the services provided by other persons. Metricon describes the use of the phrase as ‘striking and dominant’. It draws attention to its position in a heading, and not buried in copy in the body of the website. Metricon submits that in context, the use acts as a badge of origin inviting consumers to purchase Zac Homes’ ‘Knock Down Rebuild’ services, intending to distinguish its services from other services partly because the services have the features of the sign.
24.Metricon submits that the Zac Webpage use was designed to promote Zac Homes’ services, and sought to entice customers to purchase its services: relying on Sports Warehouse Inc v Fry Consulting Pty Ltd [2010] FCA 664; (2010) 87 IPR 300. It submits that the fact that the Zac Homes’ name is also featured on its website does not prevent Zac Homes’ use of the phrase ‘Love where you live’ from being ‘use as a trade mark’: see Aldi Stores; Playgro Pty Ltd v Playgo Art & Craft Manufactory Ltd (No 2) [2016] FCA 478; (2016) 118 IPR 514.
25.Zac Homes submits that Metricon seeks to ask the wrong question when asking whether the use of the phrase was designed to entice customers to purchase its services. The question to be answered is whether Zac Webpage use of the phrase was used, or was intended to be used, to distinguish Zac Homes’ services from others. Zac Homes submits that it was not so used.
Consideration
26.The question to be answered is, as Kitto J stated in Shell at 425 (see [18] above), ‘…whether in the setting in which [the phrase is] presented … [Zac Homes] was using [the phrase] in relation to [the building services]…so as to indicate a connection in the course of trade between the [services] and [Zac Homes] … Did [it] appear…as being [a] mark for distinguishing [the Zac Homes’ building services] from other [building services] in the course of trade?’
27.Authority directs that the impugned phrase should not be viewed in isolation but in its context (see principles set out above at [16] to [20]). I consider that the phrase ‘Love where you live?’ is posing a question, which is answered by the statement following - ‘Stay where you are!’. So viewed, in context, the question acts as an introduction to the description of the characteristics of the services being advertised as offered. The statement ‘Stay where you are!’ provides a solution. In the Zac Homes Webpage use Zac Homes asks those potential customers who wish to improve their homes if they love where they live, and if the answer to that question is that they do (or might do so), then they have the opportunity to stay where they are presently living and improve their living space and amenities by accessing Zac Homes’ ‘Knock Down Rebuild’ services. I consider that in the context in which it appears the impugned phrase is introductory, and descriptive of potential consumers of the services offered by Zac Homes.
28.I do not accept Metricon’s submission that the impugned phrase is ‘striking and dominant’. The impugned phrase appears in smaller font directly under the phrase ‘Knock Down Rebuild’, which directly describes the services. Visually, the first letter of each word of the impugned phrase is presented in lower case, and the whole phrase appears as a subscript under the more visually prominent words ‘Knock Down Rebuild’. The phrase ‘Knock Down Rebuild’ also appears in the URL of that page of the Zac Homes website. ‘Knock Down Rebuild’ simply states the very services provided by Zac Homes. The use of the Zac Homes’ name on the webpage provides comparative context which allows for an assessment of the purpose and nature of the use of the impugned phrase. The Zac Homes’ mark appears several times. The impugned phrase appears once. Comparatively, the way in which the Zac Homes’ mark appears on the webpage in the menu ribbon above the page, and for example, in uses such as ‘Why Zac Homes?’ pointing consumers to ‘ clearly indicates a connection between that mark as the origin of the brand and the services offered.
29.In contrast, the impugned phrase poses a question. It is interrogatory. In tone it is conversational. It asks a simple question, using words with their ordinary English meanings, in a context where an answer – a solution – is then presented, and an explanation provided. That solution leads to the presentation of services provided by the supplier and the identification of the supplier – Zac Homes. That the impugned phrase is answered by directing the reader/viewer to the services of Zac Homes as the provider of a solution to the question posed does not transform the phrase from its ordinary meaning to one having, or taking on, a secondary meaning: as indicating the origin of particular services. The impugned phrase does not function as a badge of origin so as to distinguish Zac Homes’ services from similar services offered by other persons. The message conveyed by the phrase asks the reader whether they describe themselves as persons – who ‘love where you live’. In context, the phrase merely conveys its ordinary meaning, and invites the reader to interrogate themselves as to whether they fit the description.
30.The ‘Knock Down Rebuild’ webpage was one of over 25 webpages of services offered by Zac Homes. The impugned phrase was used once on the ‘Knock Down Rebuild’ services webpage. To access the webpage, a user had to access the Zac Homes’ home webpage of the website, and then select the ‘KnockDownRebuild’ menu tab from 7 webpage options under ‘Our Services’ positioned next to ‘Why ZAC Homes’. This context further supports the ordinary meaning of the impugned phrase, and its lack of any secondary meaning as having the character of the brand.
31.I find the impugned phrase in the Zac Webpage use does not act as a badge of origin. I have concluded that use of the phrase ‘Love where you live?’ on the Zac Homes’ website does not constitute use as a trade mark.
32.It follows that the answer to (ii) of the separate question is ‘No’.
Zac Radio Ad use
33.Metricon submits that the phrase ‘you love where you live’ is the most memorable aspect of the Zac Radio Ad. As with the website use, Metricon submits the purpose of the phrase is to invite consumers to purchase the ‘Knock Down Rebuild’ services.
34.Metricon distinguishes Zac Homes’ use from the use of the phrase ‘OI, SNAKE MAN!’ in a Sportsbet television advertisement at issue in Hoser v Sportsbet Pty Ltd [2018] FCA 1557. Roberston J there found that the phrase was use as a trade mark because, inter alia, the words ‘snake man’ were used for the purpose of narrative structure, and were merely introductory to the premise of the commercial. By contrast, Metricon submits, the Zac Radio Ad use had a direct connection to, and was used to characterise the services provided by, Zac Homes, and to that end acted as a badge of origin. Metricon submits the listener was also directed by the radio advertisement to the Zac Homes’ website where they would find the phrase ‘Love where you live? Stay where you are!’, that is, the webpage use I have considered above.
35.The impugned phrase is used once, for approximately a second at the beginning of the Zac Radio Ad. Comparatively, the Zac Homes mark is mentioned a total of 5 times (see above at [12]).
36.I have formed the view that the Zac Radio Ad use of the impugned phrase is, as was found in Hoser v Sportsbet, merely introductory, and used to give narrative context to the announcement that followed. It does not strike the listener as a badge of origin. Contrary to Metricon’s submission, I do not find the impugned phrase the most memorable aspect of the Zac Radio Ad.
37.Analysed in the context of the radio advertisement as a whole, the phrase is used to describe the type of person who might be interested to access Zac Homes’ services. It calls to the listener and asks of them, are you such a person? If you [the listener] are a person who ‘loves where you live’ then listen further, as what is next said in this radio advertisement might be of interest to you. Unlike the Zac Homes mark, the impugned phrase does not indicate the origin of the advertised services.
38.In its settling the Zac Radio Ad use performs a narrative role, inviting the listener to consider whether they might be the kind of person being described as the advertisement unfolds. The phrase asks – does this story describe you?
39.I have observed that the use of the impugned phrase plays an introductory, or prefatory role to set the scene for the content that then follows. Whilst each of the Zac Homes radio advertisements must be considered separately, and none of the other radio advertisements contain the impugned phrase. The Zac Radio Ad use acts in the same way, and to the same effect, as the introductory wording of other advertisements in the Zac Homes’ radio campaign:
(i)‘When you’re building your dream home…’;
(ii)‘Whether you’re an empty-nester, an investor, or simply looking to make the most of your block of land…’; and
(iii)‘From trophy homes that make a statement’.
40.The proposition that the purpose of the impugned phrase is to invite customers to purchase the services cannot substitute for the proper question – again, adopting (and adapting to the present case) the words of Kitto J in Shell: ‘does the phrase possess the character of a device or brand used in relation to particular services so as to indicate a connection in the course of trade between the services and Zac Homes?’ The assessment of the nature and purpose of the use is to determine whether the phrase is used to distinguish the services of Zac Homes from the services of other persons. As s.17 of the Act provides: is the impugned phrase, as it is presented in the advertisement – a sign intended to be used to distinguish services provided in the course of trade by Zac Homes from services provided by any other person?
41.In the context in which the Zac Radio Ad use appears I find that the impugned phrase does not function as a trade mark. It does not constitute use as a trade mark.
42.It follows that the answer to (i) of the separate question is ‘No’.
Conclusion
43.The separate question is answered ‘No’.
44.I will make orders accordingly.
I certify that the preceding forty-four (44) paragraphs are a true copy of the reasons for judgment of Judge Baird
Associate:
Date: 10 March 2021
Attachment A
Trade mark no
Trade mark
Classes and specification
Priority date
1018759
LOVE WHERE YOU LIVE
Class 35: Advertising, publicity, promotion and marketing services namely the marketing of homes and residential developments including by way of display homes; business and information services in this class in respect of building and construction; the provision of the above services by way of the global communications network
Class 36: Real estate management; property management; financial services including financing services and lending services; real estate services including the sale of land and buildings including housing, units and townhouses; real estate agencies; real estate leasing; real estate appraisal; real estate brokers; real estate management; real estate development; the above services provided by way of the global communications network
Class 37: Building construction services; building construction supervision services; dwelling construction; construction information services; construction advisory services; building project management, including the building and project management of homes and residential developments; installation of home fittings; repair and maintenance services for buildings; the contracting and sub-contracting of building services; the provision of information in respect of the preceding services including information provided by way of the global communication network
Class 42: Design services namely the design of homes, display villages and residential developments; architectural services; architectural construction services; preparation and drawing up of house, property development and/or building plans; advisory and consultancy (non-business) services in relation to home dwelling property developments; all the foregoing provided personally or by way of the global communications network
Class 44: Landscape gardening services;
3 September
2004
Attachment B
0
13
3