Next Retail Limited v Nest Homewares Pty Ltd

[2010] ATMO 54

TRADE MARKS ACT 1995

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

Re:Opposition by NEXT RETAIL LIMITED to registration of trade mark application 1169993 (25, 35) - NEST - filed in the name of NEST HOMEWARES PTY LTD.

Delegate:	Bianca Irgang
Opponent: Ms Siobhan Ryan of counsel, instructed by Griffith Hack Applicant: Did not participate in the hearing
Decision:	2010 ATMO 54 s.52 opposition: sections 42(b) and 60 pressed – s 60 ground of opposition not established for any goods or services – opponent does not have sufficient reputation in Australia – s 42(b) ground of opposition not established – evidence insufficient - Costs awarded against the opponent.

Background

1. Nest Homewares Pty Ltd (‘the applicant’), filed application number 1169993 on 5 April 2007 in classes 25 and 35 of the International Classification of Goods and Services (‘Nice’ classification). Current details of the application are set out below.

   Trade mark:  NEST

   Trade mark application:        1169993

   Filing Date:  5 April 2007

   Specification:  Class 25: Clothing, footwear, headgear; clothing, footwear and headgear accessories

   Class 35:Wholesaling and retailing services; organisation, operation and management of customer loyalty programs

   Endorsements:  Registration is limited to the state of VICTORIA in respect of the class 35 services

2. Next Retail Limited (‘the opponent’) filed a Notice of Opposition (‘the Notice’) to the registration of the application dated 11 February 2008. Thereafter the parties served and filed evidence in accord with the provisions of the Trade Mark Regulations 1995 (‘the Regulations’).

3. I heard the matter in Melbourne as a delegate of the Registrar of Trade Marks on 13 April 2010. The opponent was represented by Ms Siobhan Ryan of Counsel instructed by Griffith Hack. The applicant provided written submissions.

   Grounds of Opposition

4. The Notice nominated most of the grounds of opposition under the Trade Marks Act 1995 (‘the Act’).  However, only those grounds under subsections 42(b) and 60 were pursued at the hearing. As a formal matter, I note the remaining grounds listed in the Notice have not been established.

5. The onus is upon the opponent to establish one or more of its grounds of opposition. Gyles J has referred to the standard of proof required in terms of a ‘balance of probabilities’.[1] His findings upon that issue, arrived at after a consideration of the relevant authorities, have been discussed with approval by Sundberg J in Chocolaterie Guylian NV v Registrar of Trade Marks[2].

   [1] Pfizer Products Inc v Karam [2006] FCA 1663; (2006) 70 IPR 599;

   [2] [2009] FCA 891, para 22-27

   Evidence

6. The evidence of the parties consists of the following declarations:

Declarant	Position	Date Made	Exhibits
Evidence in Support
Sarah Louise Noble	Company Secretary of Next Retail Limited	3 February 2009	SLN-1 to SLN-5 and SLN-7 to SLN-10[3]
Evidence in Answer
Kevin Alan Mowles	Director of Nest Homewares Pty Ltd	19 June 2009	-

[3] Exhibit SLN-6 was not served on the applicant so is not to be considered.

Opponent’s Evidence

1. The statutory declaration of Ms Sarah Louise Noble (‘the Noble declaration’) states that the opponent first adopted and used the trade mark NEXT in 1982 in the United Kingdom. The Noble declaration asserts that the opponent has used its NEXT trade mark on a wide range of clothing continuously since that date and that in 1985 the opponent expanded its business to include the retail of home wares and home furnishings under its NEXT trade mark.

2. The evidence shows that the opponent sells its goods through around 450 retail outlets located in most cities within the UK which are owned and controlled by the opponent. The Noble declaration also states the opponent sells its NEXT branded goods through NEXT branded retail stores in Denmark, Iceland, Bahrain, Czech Republic, Cyprus, Malta, UAE, Oman, Qatar, Saudi Arabia, Lebanon, Kuwait, Jersey, Guernsey, Indonesia, India, Turkey, Russia, Ukraine, Slovakia, Hungary, Pakistan and Japan.

3. In 1988 the opponent launched a mail order catalogue service which recorded its millionth active customer in 2000. In 1999 the opponent launched its online shopping website: The mail order catalogue and the website sell a wide variety of goods under the opponent’s NEXT trade mark which include clothing, fashion accessories, homewares, furniture, lighting and kitchenware. Regardless of all the different trade channels employed by the opponent, there is no evidence that the opponent has ever sold any of its NEXT branded goods within Australia. The opponent also makes no claims of ever having sold its NEXT branded goods within Australia.

4. Exhibit SLN-5 contains extracts from the Australian Bureau of Statistics website which show that between 1992 and 2002 the UK was the third largest source for short-term visitor arrivals in Australia. The opponent has put forward this exhibit in order to support its claims of a ‘spill over’ reputation into Australia which it hopes will be sufficient to succeed under the section 60 ground of opposition.

5. The Noble declaration outlines very significant overall turnover figures and advertising figures relating to its NEXT branded goods over the last 10 years. Exhibits SLN-1 to SLN- 4 and SLN-7 to SLN-10 all demonstrate that the opponent has slowly and steadily developed its reputation in its NEXT trade mark.

   Applicant’s Evidence

6. The statutory declaration of Mr Kevin Mowles (‘the Mowles declaration’) states that the applicant was incorporated in 1999 and has worked since then to establish NEST as its core brand. Mr Mowles states that the applicant has used its NEST trade mark continuously since 1999 in relation to the retailing and wholesaling of homewares, household and kitchen utensils and furniture. The Mowles declaration goes on to state that since 2002 the applicant has also used its NEST trade mark in relation to a range of textiles and textile goods including tea towels, bath linen, bed linen and napery. Mr Mowles also states that the NEST trade mark has been used on infant clothing since 2004 and the range was expanded to include adult clothing in 2005. However, there is no evidence to support these claims.

7. The Mowles declaration states that over the last ten years the applicant has received extensive exposure amongst Australian consumers through advertising and editorial pieces in magazines such as Inside Out, Vogue Home Living, Home Beautiful and Country Style. Once again, the applicant has not provided any documentary evidence to support these statements.

Section 60 - Trade mark similar to trade mark that has acquired a reputation in Australia

1. Section 60 of the Act provides:

   60       Trade mark similar to trade mark that has acquired a reputation in Australia

   The registration of a trade mark in respect of particular goods or services may be opposed on the ground that:

   (a)another trade mark had, before the priority date for the registration of the first‑mentioned trade mark in respect of those goods or services, acquired a reputation in Australia; and

   (b)because of the reputation of that other trade mark, the use of the first‑mentioned trade mark would be likely to deceive or cause confusion.

2. To establish the ground of opposition under section 60, the opponent must demonstrate:

   ØThat, at the priority date of the opposed application, another trade mark had acquired a reputation in Australia; and

   ØThat because of the reputation of the second trade mark, use of the applicant’s trade mark would be likely to deceive or cause confusion.

3. Section 60 does not require that the goods and services upon which the opponent uses its trade mark be of a specified standard of similarity with the goods and services of interest to the applicant, nor is there a requirement that the trade marks be substantially identical or deceptively similar. Instead, it is for me to determine if the opponent has acquired a reputation in Australia for its NEXT trade mark. This reputation must also be sufficient to establish that use of the opposed mark would be likely to deceive or cause confusion. More than merely indicating prior use, the opponent’s trade mark needs to be “associated in the minds of the Australian public”[4].

   [4] Seven Up Co v OT Ltd (1947) 75 CLR 203 at 211

4. The relevant principles to the assessment of the likelihood of confusion, etc, are set out by French J in Registrar of Trade Marks v  Woolworths[5]:

   [5] [1999] FCA 1020 at paragraph 50

   In Southern Cross Refrigerating Co v Toowoomba Foundry Pty Ltd [1953] HCA 73; (1954) 91 CLR 592 at 594-5, which concerned the 1905 Act, Kitto J set out a number of propositions which have frequently been quoted and applied to the 1955 Act. The essential elements of those propositions continue to apply to the issue of deceptive similarity under the 1995 Act. Applied also to service marks and absent the imposition of an onus upon the applicant they may be restated as follows:

   (i) To show that a trade mark is deceptively similar to another it is necessary to show a real tangible danger of deception or confusion occurring. A mere possibility is not sufficient.

   (ii) 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.

   It may be interpolated that this is another way of expressing the proposition that the trade mark is likely to cause confusion if there is a real likelihood that some people will wonder or be left in doubt about whether the two sets of products or the products and services in question come from the same source.

   (iii) In considering whether there is a likelihood of deception or confusion all surrounding circumstances have to be taken into consideration. These include the circumstances in which the marks will be used, the circumstances in which the goods or services will be bought and sold and the character of the probable acquirers of the goods and services.

   (iv) The rights of the parties are to be determined as at the date of the application.

   (v) The question of deceptive similarity must be considered in respect of all goods or services coming within the specification in the application and in respect of which registration is desired, not only in respect of those goods or services on which it is proposed to immediately use the mark. The question is not limited to whether a particular use will give rise to deception or confusion. It must be based upon what the applicant can do if registration is obtained.

   In respect of the last proposition, Mason J observed in Berlei Hestia Industries Ltd v The Bali Company Inc[6]:

   “...the question whether there is a likelihood of confusion is to be answered, not by reference to the manner in which the respondent has used its mark in the past, but by reference to the use to which it can properly put the mark. The issue is whether that use would give rise to a real danger of confusion.”

   [6] [1973] HCA 43; (1973) 129 CLR 353 at 362

5. Reputation is to be assessed according to the test set out in McCormick & Company Inc v McCormick[7] by Kenny J at paragraph 81:

   What is intended by the word “reputation” in s 60? The word is defined in The Macquarie Dictionary as follows:

   reputation ... 1. the estimation in which a person or thing is held, esp. by the community or the public generally; repute ... 2. favourable repute; good name ... 3. A favourable and publicly recognised name or standing for merit, achievement, etc. ... 4. The estimation or name of being, having done, etc, something specified.

   Cf. The Oxford English Dictionary. In s 60, the word is, I think, apt to refer to “the recognition of the McCormick & Co marks by the public generally”.

   Does the evidence establish that in Australia before 9 March 1992 th  McCormick  & Co marks were recognised by the public generally and, because of that, the use by Mary  McCormick  of her marks would be likely to cause the public confusion, as for example, by the public’s mistakenly attributing a business connection between the two or attributing her product to the company?

   [7] [2000] FCA 1335

6. Considering the evidence, there is little doubt that the opponent enjoys a very extensive reputation for its NEXT branded goods and services in the UK. However, the onus is on the opponent to demonstrate that a reputation in its NEXT trade mark existed in Australia before the priority date of the opposed mark such that use of the opposed mark would be likely to deceive or cause confusion. This is more than merely indicating prior use, the opponent’s trade mark needs to be “associated in the minds of the Australian public”[8].

   [8] Seven Up Co v OT Ltd (1947) 75 CLR 203 at 211

7. The opponent concedes that they have not sold any of its NEXT branded goods or services in Australia. However, Ms Ryan pointed to the ‘spillover’ of the opponent’s international reputation into Australia as a result of visitors from the UK and other countries in which the opponent uses its mark and foreigners likewise bringing their knowledge of the opponent’s mark to Australia. She referred to the decision of Hearing Officer Nancarrow in Ferdinando Giordana SpA v Walton International Ltd[9] where it was observed by the Hearing Officer that there was a ‘greater awareness of the significance of international trade marks’.

   [9] (1999) 48 IPR 423

8. I agree that consumers are now more aware of international trade marks then they have been in the past. However, while the evidence provided by the opponent does demonstrate that it has a very significant reputation for its NEXT branded goods and services in the UK, the figures provided for tourism from the UK do not demonstrate how much of this reputation has been transferred into Australia by means of the spill-over effect. In line with Hearing Officer Nancarrow’s reasoning in Giordana, supra, I believe that the spillover effect of the opponent’s reputation by means of tourism between the UK and Australia is extremely difficult to quantify.

9. While I am satisfied that the opponent has a significant reputation for its NEXT branded goods and services overseas, there is nothing before me in the evidence which is sufficient to demonstrate that such a reputation also exists in Australia. Additionally, there is no evidence before me of actual confusion in the marketplace in relation to the origin of the applicant’s goods and services and the opponent’s goods and services provided under the respective trade marks.

10. Even if I were to be persuaded that the opponent had established a spillover reputation in Australia (which I am not), I am not satisfied that the Australian consumer is likely to be deceived or confused between the two marks. As mentioned earlier, section 60 does not require that the goods upon which the opponent uses its trade mark be of a specified standard of similarity with the goods and services of interest to the applicant, nor is there a requirement that the trade marks be substantially identical or deceptively similar. However, to dispel any lingering doubt on the matter, I believe it is necessary to consider the similarities between the trade marks. This is because there is more likely to be deception and confusion in the market place in the situation where the respective marks are applied to the same or similar goods and services and if both trade marks share a commonality of features.

11. To this end, Ms Ryan submitted the trade marks are deceptively similar to each other because the marks are visually and aurally similar. The relevant principles of what constitutes deceptive similarity are often quoted, familiar and well-established and it is neither necessary nor appropriate to restate them all here.[10]

    [10]Those principles are enunciated in the following authorities: In the matter of an Application by the Pianotist Company Limited for the Registration of a Trade Mark (1906) 23 RPC 774 at 777 (per Justice Parker); Australian Woollen Mills Limited v F.S. Walton & Co.Limited (1937) 58 CLR 641 at 658 (per Justices Dixon and McTiernan); Application by Smith Hayden & Co.Limited (1946) 63 RPC 97 at 101 (per Justice Evershed); Cooper Engineering Co. Pty. Limited v Sigmumd Pumps Limited (1952) 86 CLR 536 at 538; Southern Cross Refrigerating Co. v Toowoomba Foundry Pty. Limited (1954) 91 CLR 592 at 594-5 and 607; Berlei Hestia Industries Limited v The Bali Company Inc. (1973) 129 CLR 353; and Registrar of Trade Marks v Woolworths Limited (1999) AIPC 91-499 at 36, 697-8 (per Justice French) and 39, 703-4 (per Justice Branson).

12. The two trade marks are the respective words NEXT and NEST. They are both depicted in plain text, consist of four letters and differ in spelling by only a single letter. While I agree that the trade marks share some visual and aural similarities, I am not satisfied that the average Australian consumer would become confused between them. Both of the trade marks are common words in the English language which have distinct and very different meanings.

13. The opponent’s trade mark is the word NEXT which is defined by the Macquarie Dictionary as:

    1. immediately following in time, order, importance, etc.: the next day.
    2. nearest in place or position: the next room.
    3. nearest in relationship or kinship.

14. The applicant’s trade mark is the word NEST which is defined by the Macquarie Dictionary as:

    1. a structure formed or a place used by a bird for incubation and the rearing of its young.
    2. a place used by insects, fishes, turtles, rabbits, or the like, for depositing their eggs or young.
    3. a number of birds or animals inhabiting one such place.
    
    

15. The meanings of the respective trade marks do not appear to have any direct relevance to the goods and services being provided by the parties. I can see the connotation the applicant’s mark NEST may have. This connotation is best expressed by the idiom ‘to feather one’s nest’ meaning to decorate and furnish a home in style and comfort which is an allusion to birds lining their nests. However, this connotation is not directly related to the applicant’s goods or services and does not exist in the opponent’s mark NEXT.

16. On this point, Ms Ryan argued that the opponent’s retail of homewares and furniture created a NEST type connotation in the minds of consumers. She stated that this connotation would emphasis the similarities between the respective marks and lead to deception and confusion in the marketplace. I can see the point which Ms Ryan is driving at, however, I am not persuaded that the average Australian consumer is likely to be deceived or confused between the two marks. Ms Ryan’s submission is based upon the belief that the average Australian consumer would come to the above conclusion because they were aware of the opponent’s NEXT stores and aware that the opponent sold homewares and furniture in these stores. This submission assumes that the opponent’s reputation in its NEXT mark is well established within the Australia marketplace and I am not satisfied this is the case. The opponent’s evidence is simply not sufficient for this purpose.

17. The well known and different meanings which can be attributed to these common English words makes it less likely that the average consumer would be deceived or confused between them. While deception or confusion may arise either visually or aurally, aural deception is unlikely to occur with goods which are generally inspected before purchase, such as clothes.[11] The likelihood of visual deception is also reduced as the goods are ‘likely to be subjected to a careful visual examination by any intending purchaser’.[12] I am not satisfied there is a real tangible chance of these respective trade marks being confused in the marketplace. Therefore, the opponent has not established the section 60 ground of opposition.

    [11] Conde Nast Publications Pty Ltd v Taylor (1998) 41 IPR 505, per Burchett J at 510

    [12] Ibid

    Section 42(b) - Contrary to Law

1. The ground based on subsection 42(b) is indicated in the Notice as “The use of the [opposed trade marks] would be contrary to the law”, echoing the words of subsection 42(b) which simply state “An application for the registration of a trade mark must be rejected if its use would be contrary to law.”

2. At the hearing Ms Ryan submitted use of the opposed trade marks would be contrary to law because it would offend against sections 52 and 53 of the Trade Practices Act 1974 (“the TPA”). These sections deal respectively with misleading or deceptive conduct and with the making of false or misleading representations and are reproduced below:

   S.52 Misleading or deceptive conduct

   (1)  A corporation shall not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive.

   (2)  Nothing in the succeeding provisions of this Division shall be taken as limiting by implication the generality of subsection (1).

   Note:          For rules relating to representations as to the country of origin of goods, see Division 1AA (sections 65AA to 65AN).

   S.53 False or misleading representations

   A corporation shall not, in trade or commerce, in connexion with the supply or possible supply of goods or services or in connexion with the promotion by any means of the supply or use of goods or services:

   (a)  falsely represent that goods are of a particular standard, quality, value, grade, composition, style or model or have had a particular history or particular previous use;

   (aa)  falsely represent that services are of a particular standard, quality, value or grade;

   (b)  falsely represent that goods are new;

   (bb)  falsely represent that a particular person has agreed to acquire goods or services;

   (c)  represent that goods or services have sponsorship, approval, performance characteristics, accessories, uses or benefits they do not have;

   (d)  represent that the corporation has a sponsorship, approval or affiliation it does not have;

   (e)  make a false or misleading representation with respect to the price of goods or services;

   (ea)  make a false or misleading representation concerning the availability of facilities for the repair of goods or of spare parts for goods;

   (eb)  make a false or misleading representation concerning the place of origin of goods;

   (f)  make a false or misleading representation concerning the need for any goods or services; or

   (g)  make a false or misleading representation concerning the existence, exclusion or effect of any condition, warranty, guarantee, right or remedy.

   Note:          For rules relating to representations as to the country of origin of goods, see Division 1AA (sections 65AA to 65AN).

3. Ms Ryan’s submission was simply that “as a consequence of the notoriety of the opponent’s NEXT corporate name and trade mark in the clothing and retailing industry in Australia, the mark is directly and exclusively associated with the opponent”. I cannot agree with this submission. I have already found that the use of the opposed trade mark is not going to cause deception or confusion in terms of section 60 of the Act since I am not satisfied the opponent has established sufficient reputation in its mark in Australia. There are several decided cases confirming that more is required to establish a likelihood of misleading or deceptive conduct, (or by extension conduct amounting to the making of false representations), than is the case with trade marks likely to deceive or cause confusion under sections 44 or 60. In Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd[13], by way of example, Gibbs, CJ noted (at 688):

   In McWilliam's Wines Pty Ltd v McDonald's System of Australia Pty Ltd (1980) 33 ALR 394 it was rightly held by Smithers J and by Fisher J that to prove a breach of s 52 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, and that Southern Cross Refrigerating Co v Toowoomba Foundry Pty Ltd (1954) 91 CLR 592; 1A IPR 465, a decision on the Trade Marks Act 1905 (Cth) as amended, is distinguishable.

   [13] (1982) 1a IPR 684

4. As I have found that the use of the opposed trade marks is not, at a minimum, likely to “confuse”, it follows that use is not, on the stricter test posited by the TPA, likely to mislead or deceive, nor do I believe use would amount to a false representation in terms of section 53 of the TPA. Thus, I find that the opponent has not established its ground under section 42.

   Decision

5. Section 55 of the Act provides:

   Decision
   Unless the proceedings are discontinued or dismissed, the Registrar must, at the end, decide:

   to refuse to register the trade mark; or

   to register the trade mark (with or without conditions or limitations) in respect of the goods and/or services then specified in the application;

   having regard to the extent (if any) to which any ground on which the application was opposed has been established.

6. The opponent has not established any of its grounds of opposition.  The trade mark application may therefore proceed to registration one month from the date of this decision.  If the Registrar has been served with a notice of appeal before that time, I direct that registration shall not occur until the appeal has been discontinued or in the event of a decision from the Court, that the application be subject to that order. 

   Costs

7. Both parties made a claim for costs. As there is nothing before me suggesting that costs should not follow the general rule, I award costs against the opponent in accord with Schedule 8 of the Trade Mark Regulations 1995.

   Bianca Irgang
   Hearing Officer
   Trade Marks Hearings
   30 June 2010