Nike International Ltd v Champion Socks Pty Ltd

[2001] ATMO 117

TRADE MARKS ACT 1995

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

Re:Opposition by Nike International Ltd to registration of trade mark application 743694(25) - NILE - filed in the name of Champion Socks Pty Ltd.

Background

On 10 September 1997, (‘the priority date’) Champion Socks Pty Ltd (‘Champion’), of Coburg in Victoria, filed application in Class 25 of the International (Nice) Classification of Goods and Services to register the trade mark appearing below in respect of “socks”:

(‘the NILE trade mark’)

During examination, the examiner stated that there were grounds for rejecting the application in terms of subsection 44(1) of the Trade Marks Act 1995, (‘the Act’), citing registration 668463(25) NILE which is registered in the name of Pacific Dunlop Limited for “clothing”.

The applicant submitted a statutory declaration by Mr Oreste Schiavello, (‘the Schiavello declaration’), a director of Champion, who averred that the trade mark had, at the priority date, remained in continuous use in relation to socks since 1994. Consequently, a delegate of the Registrar accepted the application for registration under the provisions of subsection 44(4) of the Act which provides:

(4)If the Registrar in either case is satisfied that the applicant, or the applicant and the predecessor in title of the applicant, have continuously used the applicant’s trade mark for a period:

(a)beginning before the priority date for the registration of the other trade mark in respect of:

(i)        the similar goods or closely related services; or

(ii)       the similar services or closely related goods; and

(b)ending on the priority date for the registration of the applicant’s trade mark;

the Registrar may not reject the application because of the existence of the other trade mark.

On 15 October 1999, within the time allowed to do so, Nike International Limited, (‘Nike’) filed Notice of Opposition (‘the Notice’) to the registration of the trade mark.  The Notice recites these grounds of opposition:

1. The trade mark is not capable of distinguishing the applicant’s goods in respect of which the trade mark is sought to be registered from the goods or services of other persons.

2. The use of the trade mark would be contrary to law.

3. The trade mark is substantially identical with or deceptively similar to one or more of the trade marks registered by the opponent in respect of the same or similar goods or closely related services, including trade mark registration 355648 “NIKE” in Class 25, and the priority dated for the registration of the trade mark in respect of the applicant’s goods is not earlier than the priority date for the registration of the other marks in respect of the same or closely related goods or closely related services.

4. The Registrar should not have been satisfied that the applicant, or the applicant, or the applicant and the predecessor in title of the applicant (if any), have continuously used the trade mark referred to in section 44(4) of the Trade Marks Act 1995, and the Registrar should therefore have rejected the above application because of the existence of one or more trade mark registered by the opponent in respect of similar goods or closely related services, including trade mark registration 355648.

5. The applicant does not intend:

   ·To use or authorise the use of the trade mark in Australia; or,

   ·To assign the trade mark to a body corporate to use by the body corporate in Australia

   in relation to the goods specified in the application for registration.

6. The Trade Mark is sought to be registered in respect of particular goods and is:

   ·     Substantially identical with, or deceptively similar to, a trade mark that, before the priority date for the registration of the first-mentioned trade mark in respect of those goods, had acquired a reputation in Australia; and,

   ·     because of the reputation of that other trade mark, the use of the trade mark would be likely to confuse or cause confusion.

7. By reason of the matters set forth in any one or more of the foregoing paragraphs or any other ground, the Registrar, in the exercise of his discretion ought to refuse the registration of the trade mark.

Ground 4, above, refers to Nike’s trade marks which were not cited by the examiner.  Subsequent to the hearing, Nike applied to amend the ground so that it refers to registration 668463(25) NILE, in the name of Pacific Dunlop, which was cited by the examiner.  I have not agreed to this amendment as it would not be procedurally fair to Champion who must be presumed to have filed its evidence and prepared its submissions in response to the Notice as served and filed. 

As a delegate of the Registrar of Trade marks, I heard the issue in Canberra on Tuesday 9 October 2001.  Stephen Burley of Counsel, instructed by Spruson & Ferguson, represented Nike.  Elspeth Strong of Counsel, instructed by Freehills, Carter Smith Beadle, represented the opponent.

Evidence

Nike and Champion have served evidence in support, evidence in answer and evidence in reply – details of which in tabular form are:

Declarant	Known as	Date Made	Exhibits
Evidence in Support
Richard Paul Stanwix	Stanwix 1	8 September 2000	RPS-1 to RPS-10
Khajaque Kortian	Kortian	14 September 2000	KK-1 to KK-8
Richard Paul Stanwix	Stanwix 2	9 January 2001
Evidence in Answer
Peter Robert Smith	Smith	12 April 2001	PRS-1
Evidence in Reply
Jenny Markovic	Markovic	12 July 2001	JM-1 to JM-2

The exhibit to the Smith declaration is the Schiavello declaration filed during examination of this application.

Nike, of Oregon in the United States of America, makes athletic footwear and sports clothing (‘the Nike goods’) and its trade marks have a significant reputation in Australia in respect of these goods.  This reputation, as Mr Burley observed during the hearing, has had judicial notice in:

·     Nike International Ltd & Anor v Campomar Sociedad, Limitada; United Pharmaceutical Industries (Australia) Pty Ltd & Anor [1996] 688 FCA 1 (20 August 1996)

·     Campomar Sociedad, Limitada & Anor v Nike International Ltd & Anor [1998] 776 FCA (7 July 1998)

·     Campomar Sociedad, Limitada v Nike International Limited [2000] HCA 12 (9 March 2000)

Champion did not agree to confidentiality conditions which Nike sought to impose on some of the evidence in Stanwix 1.  However, material other than this in Stanwix 1 and 2 shows the continuing reputation of the Nike trade marks in respect of the Nike goods.  Stanwix 1 refers to some of Nike’s Australian trade mark registrations, these are:

Reg Number:   284351
Priority Date:  8 January 1975

Class:25

Goods:Athletic shoes for sports, athletic shoes for training, and athletic shoes for general use; and athletic uniforms

Trade Mark:    NIKE

Reg Number:   331650
Priority Date:  19 April 1979
Class:              28
Goods:           All goods included in this class
Trade Mark:    Nike

Reg Number:   355648
Priority Date:  21 January 1981
Class:              25
Goods:           All goods included in this class
Trade Mark:    NIKE

Reg Number:   489050
Priority Date:  16 June 1988
Class:              25
Goods:           Clothing, footwear, headgear
Trade Mark:   

Mr Stanwix avers that he twice arranged for investigations to be conducted by commercial investigators into the use of the NILE trade mark.  The investigators twice visited the Champion premises at Coburg in Victoria.  Despite access to the Champion showroom, neither of these visits revealed any use of the trade mark on socks.  However, the investigators discovered that Champion supplies socks to stallholders at various markets in Victoria and a cut-price chain-store.  Extensive inquiries at major markets in Victoria and at four outlets of the chain-store in Victoria and eleven of these stores in New South Wales did not reveal any of socks bearing the trade mark on sale.

Mr Kortian, in his declaration, avers that he caused an ASIC search to be carried out.  This search reveals that Champion and its associated company Pantex Hosiery Mills Pty Ltd (‘Pantex’) share addresses, directors and shareholders.  Mr Kortian then attests to a course of dealing involving Pantex in which Pantex’s principal, Mr Schiavello, without authorisation by Nike, requested a third party to make packaging bearing Nike trade marks for socks.  However, while this is well documented in the evidence, it involves Pantex and not Champion, and thus involves behaviour of a third party to the current proceedings and I disregard it.

Mr Smith’s declaration brings into evidence the declaration of Mr Schiavello filed during examination of the application.  Mr Schiavello attests that the trade mark has been used since 1994, that the use (as at the priority date) had been continuous and that 90,000 pairs of socks bearing the trade mark have been sold – there are no exhibits to the Schiavello declaration.

Ms Markovic, in her declaration, details a telephone survey she conducted of 33 retail outlets listed in the Yellow Pages as selling socks.  Of these, one person possibly had some faint recollection of the NILE trade mark and two had heard of Champion.

The Submissions

At the hearing, Mr Burley formally abandoned the grounds in the Notice under sections 41, 42 and 59. The remaining grounds are thus those under sections 44 and 60 with reference to the Nike trade marks. Mr Burley drew my attention to the reputation of Nike, and to implications raised by Nike’s evidence, and submitted that it was open to me to draw a negative inference from the non-response of Champion to the implications in the evidence in the Stanwix, Kortian and Markovic declarations: Jones v. Dunkel (1959) 101 CLR 298. Mr Burley submitted that the Nile trade marks are deceptively similar to the Nike trade marks and argued the similarities of the trade marks. He drew my attention to the way in which socks are bought and sold and submitted that the likelihood of deception and confusion is high.

Ms Strong drew my attention to the presumption of registrability.  She observed that the trade mark contains a humorous reference to the Nile crocodile – the letter ‘L’ in the word forming the jaws of the beast.  Ms Strong drew my attention to the presence of the Nile crocodile in literature including Shakespeare, Anthony and Cleopatra, and Sheridan, The Rivals, and contrasted both the look and idea of the Nike trade marks which evoke the winged Greek Goddess of Victory. Ms Strong directed my attention to the usual bases of comparison of the trade marks and those for assessing reputation and the likelihood of deception and confusion in terms of sections 44 and 60 of the Act.

In response, Mr Burley submitted that Champion had not made adequate disclosure of its use of the Nile trade mark in relation to the provisions of section 44(4) and the Nike trade marks. He submitted that the clear failure of Champion to address the evidence indicates that the Registrar ought not entertain an application under subsections 44(3) or 44(4).

I drew counsels’ attention to the fact that the provisions of subsection 44(4) had been applied to the opposed application not in relation to a Nike trade mark but in relation to that of Pacific Dunlop. Oppositions to trade mark registrations might succeed on the basis of the trade marks of third parties because the provisions of subsection 52(1) provide that ‘a person’ may oppose registration of a trade mark. I consider, from the responses of counsel, and the written outlines of their submissions, that the reference in ground 4 of the Notice to the trade mark of Nike, and not of Pacific Dunlop, is not an apparent mistake. Both parties prepared for the hearing with the Nike trade marks in mind and I will give my reasons on that basis.

Section 44

Relevant to these proceedings, section 44 of the Act provides:

44  Identical etc. trade marks

(1)     Subject to subsections (3) and (4), an application for the registration of a trade mark (applicant’s trade mark) in respect of goods (applicant’s goods) must be rejected if:

(a)       the applicant’s trade mark is substantially identical with, or deceptively similar to:

(i)        a trade mark registered by another person in respect of similar goods or closely related services; or

(ii)       a trade mark whose registration in respect of similar goods or closely related services is being sought by another person; and

(b)       the priority date for the registration of the applicant’s trade mark in respect of the applicant’s goods is not earlier than the priority date for the registration of the other trade mark in respect of the similar goods or closely related services.

Note 1: For deceptively similar see section 10.

Note 2: For similar goods see subsection 14(1).

Note 3: For priority date see section 12.

…

(3)       If the Registrar in either case is satisfied:

(a)       that there has been honest concurrent use of the 2 trade marks; or

(b)       that, because of other circumstances, it is proper to do so;

the Registrar may accept the application for the registration of the applicant’s trade mark subject to any conditions or limitations that the Registrar thinks fit to impose. If the applicant’s trade mark has been used only in a particular area, the limitations may include that the use of the trade mark is to be restricted to that particular area.

Note:    For limitations see section 6.

(4)       If the Registrar in either case is satisfied that the applicant, or the applicant and the predecessor in title of the applicant, have continuously used the applicant’s trade mark for a period:

(a)       beginning before the priority date for the registration of the other trade mark in respect of:

(i)        the similar goods or closely related services; or

(ii)       the similar services or closely related goods; and

(b)       ending on the priority date for the registration of the applicant’s trade mark;

the Registrar may not reject the application because of the existence of the other trade mark.

Note 1: An authorised use of the trade mark by a person is taken to be a use of the trade mark by the owner of the trade mark (see subsection 7(3)).

Note 2: For predecessor in title see section 6.

Note 3: For priority date see section 12.

The term ‘deceptively similar’, within subsection 44(1), is defined by section 10 of the Act:

10  Definition of deceptively similar

For the purposes of this Act, a trade mark is taken to be deceptively similar to another trade mark if it so nearly resembles that other trade mark that it is likely to deceive or cause confusion.

In terms of section 44(1), the issues for my consideration are whether:

·     the trade marks are substantially identical or deceptively similar;

·     the goods involved are the same or similar goods; and, whether

·     the priority dates of the Nike trade marks are earlier than that of the opposed trade mark

Given that the goods of the opposed Champion trade mark are enclosed by the specifications of Nike registrations 284351, 355648 and 489050, the goods involved are the same goods.  The Nike registrations also have earlier priority dates than that of the opposed NILE trade mark.  Accordingly, the issue left for my consideration is whether the trade marks involved are substantially identical or deceptively similar.

Substantial identity is an objective comparison of the trade marks.  In the words of Windeyer J in The Shell Co of Australia Limited v Esso Standard Oil (Australia) Limited (1962) 109 CLR 407, at 414:

In considering whether marks are substantially identical they should, I think, be compared side by side, their similarities and differences noted and the importance of these assessed having regard to the essential features of the registered mark and the total impression of resemblance or dissimilarity that emerges from the comparison.

Although there is only one letter’s difference between the words NIKE and NILE, the denotations of these words are so different that the words present themselves in different ways and bring different things to mind.  The differences between the trade marks is greater when the graphical element in the Nile trade mark is considered alongside the Nike registrations.

Deceptive similarity is a subjective assessment of the resemblance of the trade marks.  In the words Dixon CJ and McTiernan J. in Australian Woollen Mills Limited v F S Walton & Co Limited (1937) 58 CLR 641 at 658:

In deciding this question, the marks ought not, of course, to be compared side by side. An attempt should be made to estimate the effect or impression produced on the mind of potential customers by the mark or device for which the protection of an injunction is sought. The impression or recollection which is carried away and retained is necessarily the basis of any mistaken belief that the challenged mark or device is the same. The effect of spoken description must be considered. If a mark is in fact or from its nature likely to be the source of some name or verbal description by which buyers will express their desire to have the goods, then similarities both of sound and of meaning may play an important part. The usual manner in which ordinary people behave must be the test of what confusion or deception may be expected. Potential buyers of goods are not to be credited with any high perception or habitual caution. On the other hand, exceptional carelessness or stupidity may be disregarded. The course of business and the way in which the particular class of goods are sold gives, it may be said, the setting, and the habits and observation of men considered in the mass affords the standard. Evidence of actual cases of deception, if forthcoming, is of great weight.

Mr Burley submitted that socks are low cost items and are displayed for selection directly by consumers.  He drew my attention to an exhibit in the evidence which shows that is is common for socks to be sold in bins or racks within stores where the only signage in relation to the goods is the packaging in which the socks is wrapped.  There is, Mr Burley said, a multiplicity of brands of socks, frequently co-located for sale and the purchase is likely to be made on casual scrutiny of the features of the goods.

Ms Strong drew my attention to the visual and aural differences between the trade marks.  She submitted that the denotations and connotations carried by the trade marks in question are quite different.

Deceptive similarity is defined in section 10 of the Act, above, in terms of the likelihood of deception or confusion arising from the similarity of the trademarks at issue. In Registrar of Trade Marks v Woolworths [1999] FCA 1020 (29 July 1999), at paragraph 45, French J said:

The position now is that the Registrar and the Court at first instance would need to be satisfied that there was a reasonable likelihood of deception or confusion before denying acceptance of the application for registration.

At paragraph 50 of Woolworths, above, French J also said, of the expression ‘deception and confusion’:

In Southern Cross Refrigerating Co v Toowoomba Foundry Pty Ltd (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 (1973) 129 CLR 353 at 362:

...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.

I am not satisfied that the trade marks are deceptively similar as there is, I consider, no reasonable likelihood of deception or confusion.  I note that, as Mr Burley submitted, the goods are low-priced and customers will often select these goods for themselves.  However, the Nike trade marks and the Nile trade mark strike me as being quite different.  They denote different things: a Greek Goddess on the one hand and a river in Egypt on the other.  It is unlikely that most Australians would see the oblique reference to Cleopatra and ‘the Nile crocodile’ within the trade mark or recall Mrs Malaprop in The Rivals talking of allegories basking on the banks of the river Nile; but, I am satisfied that the trade marks will be seen as being distinct from each other.  A person knowing of the Nike trade marks and seeking socks bearing that trade mark is not likely to mis-recollect the Nike trade mark and take the Nile trade mark for such.

Accordingly, Nike have not established their ground under section 44 of the Act.

Nike’s opposition under section 60 of the Act also relies on a finding that the trade marks are deceptively similar. As I have found that the trade marks are not deceptively similar, Nike cannot establish its ground under section 60 of the Act.

Decision

Section 55 of the Act provides:

55  Decision

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

(a)to refuse to register the trade mark; or

(b)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.

Note:For limitations see section 6.

As Nike has not established its grounds of opposition, I decide that, upon payment of the registration fees and the elapse of the period in which Nike may appeal this decision, the application may be registered.

Costs

Section 221 of the Act provides:

221  Costs awarded by Registrar

(1)       The Registrar may award costs in respect of the matters, and in the amounts, provided for in the regulations against any party to proceedings brought before him or her.

(2)       A party desiring to obtain costs must apply to the Registrar in accordance with the regulations.

(3)       If a party is ordered to pay the costs of another party, the costs may be recovered in a court of competent jurisdiction as a debt due by the first party to the other party.

Champion has sought its costs in this matter if Nike not establish its grounds of opposition.  Therefore, in accordance with subparagraph 221(a), I that costs, at the scale provided for in the regulations, be paid by Nike.

Ian Thompson
Hearing Officer

26 November 2001