Nettlefold Advertising Pty Ltd v Nettlefold Signs Pty Ltd

[1997] FCA 623

CATCHWORDS

TRADE MARKS - appeal from Registrar - trademark "nettlefold signs" - whether likely to deceive or cause confusion - whether otherwise entitled to protection in a court of justice - whether s 28(a) and (d) cumulative

Trade Marks Act 1955 (Cth) s 28

Jafferjee v Scarlett (1937) 57 CLR 115

Arthur Fairest Limited's Application (1951) 68 RPC 197

Cooper Brookes (Wollongong) Pty Ltd v Commissioner of Taxation(1980-1989 147 CLR 297

Enno v Dunn (1890) 15 App Cas 252

Southern Cross Refrigerating Co v Toowoomba Foundry Pty Ltd

(1953) 91 CLR 592

Kendall v Muslyn Paint & Chemicals (1963) 109 CLR 300

Re Hack's Application (1940) 58 RPC 9

Reckitt & Colman (Australia) Ltd v Baden (1945) 70 CLR at 84

Murray Goulburn Co-operative Ltd v New South Wales Dairy Corporation (1990) 24 FCR 370

New South Wales Dairy Corporation v Murray Goulburn Co-operative Company Ltd (1989) 86 ALR 549

New South Wales Dairy Corporation v Murray Goulburn Co-operative Company Ltd (1990) 171 CLR 363

General Electric Co v General Electric [1972] 1 WLR 729

Berlei Hestia Industries Ltd v Bali Co Inc (1973) 129 CLR 353

Great Western Railway Co v Owners of SS Mostyn [1928] AC 57

Victoria v Commonwealth (1971) 122 CLR 353

Federation Insurance Ltd v Wasson (1987) 163 CLR 303

Pioneer Hi-Bred Corn Co v Hy-Line Chicks Pty Ltd [1978] 2 NZLR 50

Riv-Oland Marble Co (Vic) Pty Ltd v Settef SpA (1988) 19 FCR 569

Nettlefold Advertising Pty Ltd -v- Nettlefold Signs Pty Ltd

(No. VG 11 of 1996

Judge: Heerey J

Date: 11 July 1997

Place: Melbourne

IN THE FEDERAL COURT OF AUSTRALIA

VICTORIA DISTRICT REGISTRY No. VG 11 of 1996

GENERAL DIVISION

B E T W E E N:

NETTLEFOLD ADVERTISING PTY LTD

Applicant

- and -

NETTLEFOLD SIGNS PTY LTD

Respondent

JUDGE: Heerey J

DATE: 11 July 1997

PLACE: Melbourne

MINUTES OF ORDER

The Court orders that:

The application be dismissed with costs, including reserved costs.

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

IN THE FEDERAL COURT OF AUSTRALIA

VICTORIA DISTRICT REGISTRY No VG 11 of 1996

GENERAL DIVISION

B E T W E N:

NETTLEFOLD ADVERTISING PTY LTD

Applicant

- and -

NETTLEFOLD SIGNS PTY LTD

Respondent

JUDGE: Heerey J

DATE: 11 July 1997

PLACE: Melbourne

REASONS FOR JUDGMENT

The applicant appeals against a decision of a delegate of the Registrar of Trade Marks given on 22 December 1995. The respondent had on 27 July 1989 (the priority date) lodged Trade Mark Application No. 515704. The delegate dismissed the applicant's opposition to the registration of the mark and directed that the mark proceed to registration.

The appeal is governed by the provisions of the Trade Marks Act 1955 (Cth) (the Act) - see Trade Marks Act 1995 (Cth) s 51. The appeal is by way of hearing de novo: Jafferjee v Scarlett (1937) 57 CLR 115.

The mark in suit comprises the words "nettlefold signs" in lower case in conjunction with a chevron device as follows:

The mark is registered in respect of "illuminated signs including electric and neon signs being goods included in Class No. 9".

The applicable provision of the Act was s 28, which was in the following terms:

28.A mark:

(a)the use of which would be likely to deceive or cause confusion;

(b)the use of which would be contrary to law;

(c)which comprises or contains scandalous matter; or

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

shall not be registered as a trade mark.

Before the delegate and on this appeal the applicant relied on ss 28(a) and (d).

The evidence before me concerned not only the user and reputation of the name "Nettlefold" but also the commercial relationship between the parties.

Outdoor Advertising

Outdoor advertising signs in Australia are regarded by those in the trade as falling into four main categories:

(i)Posters and painted signs,

(ii)Transport advertising signs,

(iii)Electrical/neon signs,

(iv)Street furniture signs.

Outdoor advertising (sometimes called "third party" advertising) is characterised by the fact that the goods or services advertised on the sign are not provided at the site. Outdoor advertising signs are regarded as generically different from locational signs, which advertise the business carried on at the premises where the sign is displayed.

The outdoor advertising industry also tends to divide along functional lines. Some firms are primarily concerned with the manufacture of signs and some with installation. Others, including the applicant, carry on the business of site leasing and dealing, that is to the say the identification, acquisition and leasing of sign sites.

User By Applicant

The dominant figure in the applicant at the priority date, and thereafter until April 1992, was Mr David Nettlefold. He has had some 40 years experience in outdoor advertising.

In 1972 Mr Nettlefold formed his own outdoor advertising agency in Melbourne and carried on business under the name "Nettlefold & Associates", specialising in posters and painted signs. In 1976 Mr Nettlefold sold that business to the 3M organisation who thereafter carried it on by means of a company called Pacific Outdoor Advertising Pty Ltd.

In 1983 Mr Nettlefold returned to outdoor advertising. In that year the applicant commenced business as a joint venture between the Nettlefold family and Corporation Australia Pty Ltd, a company owned and controlled by Mr Alan Palmer and Mr Andrew Peterson. The Corporation Australia interests contributed some $430,000 as capital. Mr Nettlefold was to work in the business and make his contribution in that way. The directors were Mr Nettlefold, his wife Mrs Elizabeth Nettlefold, and Messrs Palmer and Peterson.

The applicant was initially called David Nettlefold Holdings Pty Ltd, and traded as Nettlefold Outdoor Advertising. Like Mr Nettlefold's earlier business, it specialised in posters and painted signs. Between 1983 and 1984 operations were confined to Victoria but in 1985 the business expanded into New South Wales, Queensland and South Australia.

In May 1986 the applicant acquired 75 per cent of the equity of the respondent, a Queensland company then called Art Craft (Holdings) Pty Ltd which carried on the business of constructing and erecting neon directional signs. The applicant acquired the remaining 25 per cent in February 1987. On 28 August 1987 the respondent changed its name to Nettlefold Neon Pty Ltd. In addition to manufacturing premises in Brisbane it also had offices in Sydney and Melbourne.

The applicant changed its name to Nettlefold Advertising Pty Ltd on 7 July 1986.

From 1983 up until the priority date (and after) the name "Nettlefold" appeared on a large number of outdoor signs around Australia. In 1985 and 1986 the applicant had nearly 1,000 sites spread through Victoria, Queensland, New South Wales and South Australia. By the end of 1988 the number of sites had increased to approximately 2,500. As might be expected with advertising signs, each site was selected in order to catch the attention of as many passers-by as possible. Each sign has, since 1983, displayed the name "Nettlefold", although in earlier years not necessarily always in the same format. From about 1988 the name has been used by the applicant with all letters in lower case.

From 1987 onwards the applicant acquired a number of "super sites", that is to say sites at which extremely large advertising signs - usually 42 feet by 11 feet - were displayed. The first of these was at the St Kilda Road junction in Melbourne. By the end of 1988 there were approximately 1,000 Nettlefold super sites around Australia.

In October 1988 the applicant retained a company trading as Front Page Productions (FPP) for advice on advertising and marketing. The principal of FPP was Mr Robert Parsons. In about October and November 1988 Mr Parsons examined aspects of the applicant's promotions, marketing and corporate personality. At about this time the market shares in outdoor advertising were roughly as follows:

Australian Posters 35%

Claude Neon 25%

Levingstons 20%

Nettlefold 12%

Others 8%

Mr Parsons found that the name "Nettlefold" appeared on outdoor advertising signs managed by the applicant, although not in a consistent style. Sometimes it appeared in upper case, sometimes in lower case, sometimes with a plain border and sometimes on a solid plain background. Mr Parsons found that when advertising agency personnel and customers referred to the applicant they usually shortened the name to "Nettlefold" or Nettlefolds".

Mr Parsons advised that a consistent format of name should be used. He settled a design which involved the use of the name "Nettlefold" with all letters in lower case in white lettering on black background with the letters "t" closely joined within the name as follows:

From January 1989 this design appeared uniformly on Nettlefold sign sites throughout Australia. Mr Parsons told Mr Nettlefold that the applicant should place top priority on placement of signs bearing the name "Nettlefold" immediately upon the acquisition of sites. He also recommended that each of approximately 1,000 super sites around the country should be fitted with a transparency of the Nettlefold name so that the name would be illuminated on every super site managed by the applicant. Notwithstanding some initial protest from Mr Nettlefold on the grounds of expense, this recommendation was carried out by February 1989.

In late 1988 Mr Parsons devised a campaign for the applicant under the slogan "Nettlefold Be Seen". Between January and June 1989 the applicant expended $100,000 in promotion of the Nettlefold name through FPP. The campaign was officially launched on 28 June 1989 at a party in Melbourne attended "by most of Australia's senior advertising community" and featuring Kate Ceberano. Some 130 customers in Sydney were entertained at a luncheon at the Rockpool Restaurant. The campaign included promotion by means of posters displayed on Nettlefold sites, a corporate video, press advertisements, brochures and handbills.

Sale to Hoyts

On 23 December 1988 the Nettlefold interests and the Corporation Australia interests sold their shares in the applicant to the Hoyts organisation.

Hoyts did not wish to acquire the respondent (which, it will be recalled, was then called Nettlefold Neon Pty Ltd). At a critical stage of the negotiations Mr Nettlefold told Messrs Palmer and Peterson that unless they acquired his interests in the respondent the sale to Hoyts (which was of the order of approximately $9 million) would fall through. Palmer and Peterson finally agreed to purchase the Nettlefold interests in the respondent at a price based on a valuation of the company at $750,000. At the time of the sale the books showed net assets of $361,513, excluding inter-company loan accounts which were subsequently forgiven. After taking into account those loan accounts, the Corporation Australia interests were paying a premium of $380,487 on top of net tangible assets.

Mr Nettlefold deposed to a conversation with Messrs Palmer and Peterson at the time of these negotiations. According to Mr Nettlefold, he said that he would sell his family interests in Nettlefold Neon but

You can't have the name because Barclay [Mr Nettlefold's son] and I don't want to lose control of the name.

The following dialogue then took place.

Mr Palmer:

Don't worry, I will be changing the name in a short time to something not including the word `Nettlefold'.

Mr Nettlefold:

How long is a short time, are we talking weeks or months?

Mr Palmer:

Within a reasonable period of say, say 24 months, to enable me to re-establish the company under my own identity.

Mr Nettlefold:

That will be all right but I want a clause in the agreement that if you sell the company before the change of name, you must give me and, if I am dead, Barclay, the right to object to the name being given to the purchaser as well as the business so we can guard against the name going to someone disreputable or financially unsound.

Mr Nettlefold swears that Mr Palmer agreed to the inclusion of such a clause.

According to Messrs Palmer and Peterson, there was only a promise by them that the rights to use the Nettlefold name would not be sold to a competitor of the applicant within two years.

I reject Mr Nettlefold's version of these events. I found Mr Palmer and Mr Peterson more credible witnesses. Moreover, Mr Nettlefold's version is inherently unbelievable. Why would the Corporation Australia interests agree to pay almost $400,000, effectively for goodwill largely connected with the Nettlefold name, on the basis that the name would be changed "in a short time"? Moreover, the terms of the written agreement dated 23 December 1988 are consistent only with the Palmer version. Clause 10 provides:

10.NAME

The Purchaser [Corporation Australia Pty Ltd] covenants that if either the units in the Artcraft Holdings Unit Trust or the business conducted by the Artcraft Holdings Unit Trust are sold within two (2) years after the Completion Date [3 January 1989], the terms of such sale shall not include the right for the proposed purchaser to use the name "Nettlefold Neon" without the prior approval of David Barclay Nettlefold or in the event of his death, Barclay Nettlefold (provided such approval shall not be unreasonably withheld). The approval of David Barclay Nettlefold or Barclay Nettlefold (as the case may be) referred to above shall not be required at any time after two (2) years after the Completion Date.

Respondent's Change of Name

On 6 June 1989, that is after its acquisition by Corporation Australia, the respondent changed its name from Nettlefold Neon to Nettlefold Signs Pty Ltd. Mr Palmer, whose evidence I accept, said that the change of name was made after complaints from his staff. The former name was thought to be misleading as the company was involved in the manufacture of a wide range of signage products, not limited to neon signs, and the old name implied that neon signs were the only products sold.

Since its acquisition by Corporation Australia the respondent has used the name "Nettlefold Signs" in order forms, promotional material, letterheads, business cards and the like. In the year ended 30 June 1989 it spent approximately $62,000 in advertising and promotional expenses. The company's manufacturing activities are confined to Queensland but it supplies signs to customers throughout Australia.

Evidence of Actual Confusion

Mr Robert Grimwade attended Chisholm Institute at the same time as Mr Barclay Nettlefold. Through his friendship with Barclay Nettlefold, Mr Grimwade was aware of the Nettlefold advertising business and recalls from about 1987 seeing the super site at St Kilda junction which then displayed a Swan Brewing advertisement.

In February 1991 Mr Grimwade was looking for a new job in marketing sales or advertising. On about 13 February he saw an advertisement in the employment section of the Age. This was an advertisement placed by the respondent. In his affidavit Mr Grimwade deposed:

As the organisation advertising the position was Nettlefold Signs I presumed that the job was being offered by an entity associated with David Nettlefold or Nettlefold Advertising. As I knew that Nettlefold Advertising was based in South Melbourne I thought that they had moved or located a sub-office in Richmond, the address given for Nettlefold Signs in the advertisement. I telephoned the number given in the advertisement but was unable to get through.

He then rang Mr Barclay Nettlefold and told him that he had seen that "they" were advertising for an account executive or sales representative. He also commented on the fact that "their logo had changed". Mr Barclay Nettlefold told Mr Grimwade that he did not know anything about the job and suggested that he check with somebody at the company. Mr Grimwade then discovered that the advertisement had nothing to do with the applicant. He again telephoned the phone number in the advertisement and spoke with Mr Garry Campbell, the State Sales Manager of the respondent listed in the advertisement. After speaking with him, Mr Grimwade says that he "was left with the impression that he had some connection with the Nettlefold Advertising organisation although I did not understand precisely what the connection was".

Applicable Legal Principles

With one major exception, the legal principles applicable to this case are not in dispute. They may be summarised as follows:

(i)The opponent bears the initial onus of establishing a reputation in its mark sufficient to found an objection under s 28: Arthur Fairest Limited's Application (1951) 68 RPC 197.

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

(iii)The rights of the parties are to be determined as at the date of application for registration (here 27 July 1989): Southern Cross Refrigerating Co v Toowoomba Foundry Pty Ltd (1953) 91 CLR 592 at 594.

(iv)The onus is on the party seeking registration to satisfy the Court that there is no reasonable possibility of deception or confusion: Southern Cross at 594-5.

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

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

(vii)A probability of confusion, if it is real, is sufficient even though the confusion may be unlikely to persist up to the point of, and be a factor in, inducing actual sales: Southern Cross at 495. There may be confusion or deception in the minds of persons to whom the mark is addressed, even if actual purchasers will not ultimately be deceived: Re Hack's Application (1940) 58 RPC 9 at 103-104.

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

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

I now turn to the disputed question of law, namely whether the requirements of s 28(a) and (d) are cumulative. In other words, is the issue whether the use of the mark would be likely to deceive or cause confusion and would otherwise not be entitled to protection in a court of justice?

Does s 28(d) Impose a Cumulative Requirement?

This question, and the further question as to the nature of the s 28(d) requirement, require careful consideration of the decision of the High Court in New South Wales Dairy Corporation v Murray Goulburn Co-operative Company Ltd (1990) 171 CLR 363.

NSW Dairy in November 1978 obtained registration of the mark "Moove" in respect of goods in Class 29, which included milk and other dairy products. In January 1979 it commenced to market a flavoured milk product under that mark. In September 1987 Murray Goulburn became the registered proprietor of the trade mark "Moo" by assignment from a company called Healthway Dairy Products Pty Ltd, which had initially obtained registration in 1966. Healthway had not used the mark since about 1974. Murray Goulburn in November 1987 commenced to market a packaged cheese product under the Moo mark, and in August 1988 flavoured milk under the same mark.

In August 1988 NSW Dairy commenced proceedings in the Federal Court seeking, amongst other things, removal of the mark Moo from the register on the ground that at the time of the institution of the proceeding the registration infringed s 28.

The trial judge (Gummow J) found that para (d) of s 28 qualified para (a), that Murray Goulburn's use of the Moo mark was likely to deceive or cause confusion, and that the mark was otherwise not entitled to protection in a court of justice because of the lack of distinctiveness and lengthy period of disuse: (1989) 86 ALR 549. He ordered that the register be rectified by removing the registration of Moo in respect of milk. His Honour held that s 28(d) was not limited to cases where the registered proprietor was guilty of "blameworthy conduct" (a concept which comes from the speech of Lord Diplock in General Electric Co v General Electric [1972] 1 WLR 729 at 746). He held that Murray Goulburn had not acted fraudulently in the sense of choosing the mark in the hope or expectation of deriving benefit from its resemblance to the Moove mark. His Honour found (at 594) that Murray Goulburn's products would "be directed at different `target' markets and be promoted accordingly".

The Full Court of the Federal Court allowed an appeal: (1990) 24 FCR 370. Their Honours (at 382) agreed that blameworthy conduct was not the only circumstance which rendered a mark "not entitled to protection in a court of justice". However the Full Court held (at 383-386) that lack of distinctiveness was not relevant.

Before the High Court, an issue was raised as to whether s 28 applied at all where rectification of the register was being sought in respect of events which occurred after registration. In the courts below, the applicability of s 28 to post registration events had been largely assumed because of dicta in Berlei Hestia Industries Ltd v Bali Co Inc (1973) 129 CLR 353 at 360. In Murray Goulburn a majority followed the Berlei approach: Mason CJ (at 372, 376-382), Brennan J (at 389) (although his Honour thought that after registration s 28(a) operates "in a different regime"), Dawson and Toohey JJ (at 402-403). The contrary view was expressed by Deane J (at 394-399), Gaudron J at 414 and McHugh J (at 417-426).

On the question whether para (d) of s 28 imposes a requirement cumulative on para (a), Mason CJ (at 383-384), Brennan J (at 389), Dawson and Toohey JJ (at 403-408) and Gaudron J (at 414) gave an affirmative answer. Deane J (at 398) and McHugh J (at 426-431) disagreed. However Brennan J drew a distinction between the post-registration regime of s 28, and an application for original registration. In the latter case, his Honour thought that s 28(a) "prohibits the original registration of a mark the use of which would be likely to deceive or cause confusion" - implicitly this would be a sufficient ground in itself.

A third question was whether, assuming s 28(d) to be an additional requirement, it only applied to cases where there was "blameworthy conduct". An affirmative answer was given by Mason CJ (at 384), Brennan J (at 391) and Deane J (at 399). Dawson and Toohey JJ (at 409) and Gaudron J (at 414) disagreed. McHugh J expressed no opinion.

As to the content of "blameworthy conduct" in the circumstances of the case, Mason CJ (at 385-388) held that it was constituted by Murray Goulburn's failure to restrain the use of NSW Dairy's mark; Brennan J (at 391) thought that conduct would be blameworthy if it was conduct which the proprietor knew or ought to have known would result in confusion and actually did; Deane J (at 399) would have required a belief or intent to encourage deception or confusion; Dawson and Toohey JJ held that the lack of distinctiveness, non-use or failure to restrain the appellant's use were not sufficient (at 411). Gaudron J at 414 agreed with Dawson and Toohey JJ. McHugh J did not express an opinion.

In the event the appeal was dismissed, the members of the court in favour of that result being Deane, Dawson, Toohey and Gaudron JJ. Thus of the majority, only three Justices (Dawson, Toohey and Gaudron JJ) held that para (a) of s 28 was cumulative on para (a). The remaining member of the majority (Deane J) was to the contrary on that issue but joined the majority on the ground that s 28 did not have a post-registration operation. Of the minority, only Mason CJ supported the cumulative view in terms applicable to the present case. Brennan J is to be taken as saying that in registration as distinct from post-registration, context, para (d) would not be cumulative.

The leading authority as to the precedential value of a case where no clear ratio decidendi appears is Great Western Railway Co v Owners of SS Mostyn [1928] AC 57, a case decided at a time when the House of Lords considered itself bound by its own decisions. Viscount Dunedin (at 73) discussed how the earlier decision of the House of Lords in River Wear Commissioners v Adamson (1877) 2 App Cas 743 had been dealt with by the Court of Appeal. His Lordship said:

Now, when any tribunal is bound by the judgment of another Court, either superior or co-ordinate, it is, of course, bound by the judgment itself. And if from the opinions delivered it is clear - as is the case in most instances - what the ratio decidendi was which led to the judgment, then that ratio decidendi is also binding. But if it is not clear, then I do not think it is part of the tribunal's duty to spell out with great difficulty a ratio decidendi in order to be bound by it. That is what the Court of Appeal has done here. With great hesitation they have added the opinion of Lord Hatherley to that of Lord Cairns and then, with still greater difficulty, that of Lord Blackburn, and so have secured what they think was a majority in favour of Lord Cairns's very clear view. I do not think that the respect which they hold and have expressed for the judgments of your Lordships' House compelled them to go through this difficult and most unsatisfactory performance. As I have said, our own position is just the same as theirs, and I say unhesitatingly that I agree with Lord Herschell that you cannot extract from the judgments in Wear v Adamson such a ratio decidendi as is binding. That, however, is far from wiping Wear v Adamson off the slate. It remains for two purposes. First, for the judgment itself and, second, for the opinions of the noble Lords, which are entitled to the greatest respect. Now, the judgment is binding. What, therefore, I think is our duty on this occasion is to consider the statute for ourselves in the light of the opinions, diverging as they are, and to give an interpretation; but that interpretation must necessarily be one which would not, if it was applied to the facts of Wear v Adamson lead to a different result.

That passage was cited with approval by Barwick CJ in Victoria v Commonwealth (1971) 122 CLR 353 at 382 and by Mason CJ, Wilson, Dawson and Toohey JJ in Federation Insurance Ltd v Wasson (1987) 163 CLR 303 at 314.

As to the judgment itself, to take the first of Viscount Dunedin's "purposes" for which the judgment remains, the present case is not on all fours with Murray Goulburn because the latter was a post-registration case. In any event the facts of the present case are quite different, particularly in terms of the user of the respective marks and the relationship between the parties.

As to the second purpose, that is to say considering the statute in the light of the diverging opinions, I would respectfully prefer the opinion of Deane and McHugh JJ. As a matter of language, the use of the conjunction "or" at the end of para (c), in combination with the words "which would otherwise be" at the beginning of para (d), convey to the reader that:

(i)all four paragraphs are speaking of a mark which would not be entitled to protection in a court of justice;

(ii)each of the first three paragraphs refers to non-entitlement on a particular ground specified in the paragraph;

(iii)paragraph (d) refers to non-entitlement to protection in a court of justice on some other ground or grounds, that is to say ones not specified in (a), (b) or (c); and

(iv)it is sufficient to bring a mark within the section if a ground specified in (a), (b), (c) or (d) exists.

The section presents as a response to a familiar drafting task. The desired provision is that a particular criterion (non-entitlement of a mark to protection in a court of justice) will bring about a particular result (non-registration of the mark). But the criterion in question is a very broad one. The legal and factual situations which might constitute that criterion are almost infinitely variable. Exhaustive definition is not possible. So what the draftsman does is to select from the shared experience of the law some particular examples of non-entitlement commonly encountered and/or rationally predictable and set them down in paras (a), (b) and (c). He then concludes with a catch-all residuary provision to cover all situations of non-entitlement not specifically provided for. The provision now gives much more in the way of practical guidance than one which simply linked non-entitlement to protection with non-registration. But each of the four paragraphs, independently of the others, provides a ground for non-registration.

The contrary reading depends largely on the historical context of trade mark protection at common law and under statute, commencing with the Trade Marks Registration Act 1875 (UK). In General Electric (at 741-751) Lord Diplock discusses this history. In short, from about the early 19th Century a mark which was distinctive of a trader's goods was protected by the Court of Chancery. To be distinctive, the mark had to be recognisable by a purchaser of goods to which the mark was affixed as indicating that they were of the same origin as other goods which bore the same mark and whose quality had engendered goodwill. At this time, trade was largely local, so that similar marks might be innocently used by traders in different parts of the country without any deception or confusion being caused. But with the rapid development of the railway network in England, markets expanded and the products of two traders bearing similar marks often came to be on sale to the same potential purchasers. Also, the goodwill of a business, and the adjunct trade marks, might be divided up, as for example between partners, so that again there were two traders using the same or similar marks. Lord Diplock (at 743) describes how the law coped with these developments:

To meet this kind of situation the doctrine of honest concurrent user was evolved. Under this doctrine a trade mark remained entitled to protection in cases where the use of it had not originally been deceptive but a risk of deception had subsequently arisen as a result of events which did not involve any dishonesty or other wrongful conduct upon the part of the proprietor of the mark. If, however, his own wrongful conduct had played a part in making the use of the mark deceptive, the Court of Chancery would not grant him an injunction against infringement. This was but a particular application of the general equitable doctrine that he who seeks equity must come with clean hands

In cases of honest concurrent user, neither of the owners of the mark could restrict the other from using it, but as against a usurper who infringed it either owner of the mark could obtain an injunction: Dent v Turpin (1861) 2 J. & H. 139 and Southern v. Reynolds (1865) 12 L.T. 75.

The legislative provision under consideration in General Electric was s 11 of the Trade Marks Act 1938 (UK) which provided (in terms not materially different from the 1905 and 1875 Acts):

11.It shall not be lawful to register as a trade mark or part of a trade mark any matter the use of which would, by reason of its being likely to deceive or cause confusion or otherwise, be disentitled to protection in a court of justice, or would be contrary to law or morality, or any scandalous design.

Turning to the Australian Act, it is said that the statute, by specific provision, contemplates the use of a registered mark in a way that may cause deception or confusion, as, for example, in the case of honest concurrent user under s 34: Murray Goulburn at first instance, 86 ALR at 577. So something more than deception or confusion is required to prevent or remove registration. Similarly, it is said that if deception or confusion were the sole criteria, removal of registration could be achieved to the benefit of a wrongdoer because the likelihood of confusion might be created by "the assiduous efforts of an infringer" (Windeyer J in Berlei, 118 CLR at 133 - although it is to be noted that his Honour's much quoted aphorism was directed specifically to the post-registration situation).

The arguments on these issues are not all the one way; see the judgment of McHugh J in Murray Goulburn, especially at 430-431, with which I would respectfully agree. But in any event one comes back to the force of the statute's words. The case calls for the application of the principle stated by Mason and Wilson JJ in Cooper Brookes (Wollongong) Pty Ltd v Federal Commissioner of Taxation (1981) 147 CLR 297 at 321:

If, however, one interpretation has a powerful advantage in ordinary meaning and grammatical sense, it will only be displaced if its operation is perceived to be unintended.

It is difficult to see how a disjunctive reading of s 28 could have been unintended. After all, if para (d) is to be read conjunctively with para (a), presumably the same reading must apply to paras (b) and (c). It does seem odd, to say the least, that if a mark contained scandalous matter, a finding to that effect would not be sufficient in itself to prevent (or expunge) registration.

As to authority, the New Zealand Court of Appeal in Pioneer Hi-Bred Corn Co v Hy-Line Chicks Pty Ltd [1978] 2 NZLR 50 in dealing with a statutory provision very similar to s 28 (see Murray Goulburn at 427) rejected a cumulative construction. Richmond P (at 52) considered that the New Zealand legislature had "deliberately departed" from the wording of the UK provision. His Honour said:

The result is that in this country the words "the use of which would be likely to deceive or cause confusion" are no longer governed by the words "would ... otherwise, be disentitled to protection in a Court of justice". They should accordingly be given effect in accordance with their ordinary and natural meaning.

Pioneer was a case of opposition to registration and thus, unlike Murray Goulburn, on all fours with the present case.

However, there remains the decision of the Full Court of this Court in Riv-Oland Marble Co (Vic) Pty Ltd v Settef SpA (1988) 19 FCR 569. Although not an appeal from the Registrar, the issue of contravention of s 28 was considered as at the date of registration and in this respect is indistinguishable from the present case. It was held by a majority (Bowen CJ and Lockhart J, Northrop J dissenting) that s 28 was not to be construed disjunctively. Moreover the Full Court in Murray Goulburn (at 380-383) adopted the construction of the majority in Riv-Oland, although, as already noted, their Honours considered that the circumstances in which a mark was "not otherwise entitled to protection in a court of justice" were not confined to "blameworthy conduct" on the part of the applicant for registration. (As also appears above, a determination of this issue was not part of the ratio decidendi of the High Court in Murray Goulburn.)

I conclude that I am bound by the decisions of the Full Court in Riv-Oland and Murray Goulburn to hold that the requirement of 28(d) is cumulative on s 28(a).

Likelihood of Deception or Confusion

I am satisfied that at the priority date the applicant had a substantial reputation in connection with the name "Nettlefold". The applicant's promotional campaign in early 1989 would have been likely to increase public awareness of a name already well known in connection with outdoor advertising since the early 1970s. Moreover the display of the name on the applicant's advertising sites - which are necessarily in highly visible locations - would indicate to the public that a business using the name "Nettlefold" had a connection with the organisation of the advertisement (as distinct from the product being advertised).

That conclusion is not weakened by the fact that many people, of whom Mr Grimwade is an example, would have known that members of the Nettlefold family had a connection with the business. (Mr Grimwade of course spoke of an event after the priority date, but his evidence is useful as a practical example of how, looking prospectively from that date, it might be reasonably expected that confusion would arise.) Once a family name gains a reputation in connection with a business, that reputation will usually enure as something distinct from the proprietorship of people who bear that name. Thus the reputation will continue, notwithstanding a sale by those proprietors of their interest in the business - as subsequently happened in the present case.

In my opinion, as at the priority date a substantial number of persons would be caused to wonder whether advertising signs marketed under the mark in suit were connected with the applicant's business. Indeed, many persons might positively believe that such was the case.

First, the mark in suit and the applicant's mark use a name which is obviously a surname. Perhaps surprisingly, it is a com- paratively rare name in Australia. A computer search of the consolidated Australian Electoral Rolls disclosed only 98 instances where the name was found. Secondly, since the present case is concerned with visual rather than aural deception or confusion, there is considerable significance in the fact that both marks are in lower case. In normal usage in English of course surnames commence with an upper case letter. Exceptions to this rule, such as the name styles adopted by the poet e e cummings and the singer k d lang, are striking by the very reason of their exception to this almost universal practice. The fact that the mark in suit has this unusual feature - as well as a very similar typeface - would be likely to make people think that the mark in suit was merely a variation or re-modelling of the applicant's mark, just as Mr Grimwade wondered whether the applicant had a new logo. The chevron device and other embellishments in the respondent's mark would not be enough to counter such a reaction in the minds of most people.

Thirdly, this case is not about an asserted right to absolute use of the name "Nettlefold", but in relation to signs. I do not think the use of the mark in suit would be any the less deceptive or confusing because as at the priority date the applicant had confined its business to the acquisition and leasing of sign sites, as distinct from the manufacture of signs. As a matter of ordinary language, "signs" is a non-technical term and the expression "nettlefold signs" was quite apt to describe the applicant's business. It was a business involving the provision or arranging of advertising by means of signs. In any case, even if, contrary to my opinion, the expression "nettlefold signs" would always be understood as limited to the manufacture of signs, such activity would be "by no means an incongruous addition" to the kind of business the applicant carried on: Southern Cross at 597. Conversely, the Court, standing in the shoes of the Registrar, has to consider all the potential legitimate ways in which the respondent could develop its use following registration: Berlei 129 CLR at 355. That use could involve the kind of site leasing and dealing business carried on by the applicant.

Section 28(d)

But I am not satisfied there was "blameworthy conduct" on the part of the respondent. Nor is there any reason other than blameworthy conduct why the mark in suit would not be entitled to protection in a court of justice.

As already mentioned, I accept the evidence of Mr Palmer as to the reasons why the respondent changed its name from Nettlefold Neon Pty Ltd to Nettlefold Signs Pty Ltd. The application for registration of the mark in suit was a logical consequence of that change. The respondent's conduct also has to be viewed in the context that the present controllers paid a large amount of money essentially for the use of the name "Nettlefold" in connection with a business which could properly be described as a sign business. The case makes a neat contrast with Riv-Oland where the applicant for registration wrongly appropriated the mark in question.

I am satisfied that the change of the respondent's name, and the application for registration of the mark in suit, were not motivated by any intention to injure the applicant or its business. Nor were these acts done fraudulently, in the hope or expectation of deriving benefit from a resemblance between the mark in suit and the applicant's mark: cf Murray Goulburn at first instance, 86 ALR at 594. The issue here is not the same as that of deception or confusion under s 28(a). There the Court must consider the potential use of the mark in suit and the opponent's mark. But in considering the entitlement of the mark in suit to protection in a court of justice it is relevant to take into account that the respondent's activity as at the priority date, that is to say the manufacturing of signs, was directed to a different market; Murray Goulburn, ibid. I see no significance in the fact that the respondent did not inform Mr Nettlefold of its change of name. There was no legal or moral obligation to do so. In any case, the change of a company's name, with consequential change to its letterhead, invoices and the like, are public acts. There is no issue here such as non-use or failure to restrain the use of the applicant's mark. Questions as to lack of distinctiveness do not arise; Murray Goulburn (Full Court).

Orders

There will be orders that the application be dismissed with costs including reserved costs.

I certify that this and the preceding twenty-seven (27) pages are a true copy of the reasons for judgment of the Honourable Justice Heerey.

Dated: 11 July 1997

Associate

Appearances

Counsel for the applicant:B N Caine

Solicitor for the applicant:Minter Ellison

Counsel for the respondent:R L Berglund

Solicitor for the respondent:James Taylor & Co.

Date of hearing: 5, 6 and 7 May 1997