Nike International Ltd v United Pharmaceutical Industries (Aust) Pty Ltd
[1996] FCA 688
•8 AUGUST 1996
CATCHWORDS
TRADE MARKS - application for expungement of registered trade mark - mark claimed to be wrongly remaining in register because of the likelihood of its causing deception or confusion - likelihood of deception or confusion claimed to be brought about by conduct of proprietor of mark - such conduct said to be "blameworthy conduct" within the applicable principles - whether applicant for expungement "person aggrieved" - whether mark should be expunged.
Trade Marks Act 1955, ss.22, 24, 28, 16
Trade Marks Act 1995, ss.250, 251
TRADE MARKS (CONSUMER PROTECTION) - respondents marketing perfumes and toiletries under the same name as well known brand of athletic footwear and sporting goods marketed by applicant - whether members of public misled into thinking that respondents connected or associated with applicant - whether members of public erroneously assumed this to be the case - whether respondents aided, abetted, counselled or procured a contravention of s.52 of Trade Practices Act 1974 or were, directly or indirectly, knowingly concerned in such a contravention.
Trade Practices Act 1974, ss.52, 75B
NIKE INTERNATIONAL LIMITED & ANOR v CAMPOMAR SOCIEDAD, LIMITADA
NG 333 of 1994
NIKE INTERNATIONAL LIMITED & ANOR v UNITED PHARMACEUTICAL INDUSTRIES (AUST) PTY LTD & ORS
NG 241 of 1994
CORAM: SHEPPARD J
PLACE: SYDNEY
DATE: 8 AUGUST 1996
IN THE FEDERAL COURT OF AUSTRALIA )
)
NEW SOUTH WALES DISTRICT REGISTRY )
)
GENERAL DIVISION )
NG 241 of 1994
BETWEEN:NIKE INTERNATIONAL LIMITED & ANOR
AND:UNITED PHARMACEUTICAL INDUSTRIES (AUST) PTY LTD
(ACN 006 971 151)
First Respondent
MORRY WROBEL
Second Respondent
CAMPOMAR SOCIEDAD, LIMITADA
Third Respondent
NIKE COSMETICS SA
Fourth Respondent
NG 333 of 1994
BETWEEN:NIKE INTERNATIONAL LIMITED & ANOR
Applicant
AND:CAMPOMAR SOCIEDAD, LIMITADA
Respondent
CORAM: SHEPPARD J
PLACE: SYDNEY
DATE: 8 AUGUST 1996
REASONS FOR JUDGMENT
HIS HONOUR: These actions are brought by members of the group of companies which market the well known NIKE brand of athletic footwear, sports clothing and sporting accessories of
various kinds. The first of the matters was originally brought against four respondents. The proceedings against the first and second respondents have been concluded. The remaining respondents are Spanish companies, Campomar Sociedad, Limitada ("Campomar") and Nike Cosmetics SA. As its name suggests, the respondent Nike company is not engaged in the sale of athletic footwear or sportswear but rather in the manufacture and sale of cosmetics and toiletries of various kinds.
The causes of action upon which the applicants (hereafter referred to as "Nike International") rely are based upon provisions of Parts V and VI of the Trade Practices Act 1974 and s.22 and other sections of the Trade Marks Act 1955. In the second matter Nike International sues Campomar pursuant to the provisions of s.22 of the Trade Marks Act for an order that the register of trade marks be rectified by expunging the registration of a trade mark registered by Campomar consisting of the name NIKE or, alternatively, for an order that that trade mark be removed from the register. At one stage Nike International also sought relief under s.23 of the Trade Marks Act. This section deals with removal of a trade mark from the register where no use of the trade mark has been made. In the result, Nike International did not press its case under s.23.
I should mention that the Trade Marks Act 1955 has been repealed by the Trade Marks Act 1995. Nevertheless, proceedings under both s.22 and s.23 commenced prior to 1 January 1996 are to be decided under the 1955 Act. An application under s.22 is to be decided "as if the old register were to be rectified"; see s.250 of the Trade Marks Act 1995. Section 251 of that Act deals with applications made under s.23 commenced before 1 January 1996 and provides that they, like applications under s.22, are to continue under the former Act.
Although there are two separate proceedings, the issues raised in the first proceedings cover substantially the same ground as those raised in the second proceedings. For the time being, therefore, I shall concentrate on the first of the proceedings and come to the second proceedings after I have decided what relief, if any, should be granted in the first.
Nike International and other companies in the Nike group have a number of registered trade marks in Australia and elsewhere. These have been registered for many years and have been used, and continue to be used, in connection with products, athletic footwear and sporting apparel and other sporting goods, manufactured and/or distributed by or on behalf of Nike International. It has built up a significant reputation in Australia. It is well known as a manufacturer and distributor of athletic footwear. There is no issue about this. Paragraph 11 of the Nike International statement of claim alleges that, at all material times since about September 1972, Nike footwear and clothing have been extensively advertised, promoted and sold in Australia under and by reference to the trade mark NIKE. For that reason Nike International, so it is alleged in the statement of claim, acquired a substantial reputation in Australia in the name NIKE when used in connection with the advertising, promotion or sale of athletic footwear and clothing bearing that name. The statement of claim alleges that the use in Australia of the name NIKE in connection with the manufacture, advertising, promotion or sale of athletic footwear and clothing signifies, or is likely to signify, to a significant number of persons that such articles are manufactured by or on behalf of Nike International, that they are manufactured and sold with its licence or consent, and that there is a business relationship between the manufacturer of such articles and Nike International. In their defence the respondents admit these allegations except that they do not admit that Nike's advertising, promotions and selling in Australia between September 1972 and 29 August 1986 were extensive. They do admit that these activities were extensive after that date. From their point of view, the date, 29 August 1986, is significant because the Australian registration of Campomar's trade mark "NIKE", although not accepted until 1989, took effect from that date.
The evidence includes a substantial amount of material concerning Nike International's reputation and use of its trade marks in Australia. Amongst the exhibits are a number of examples of the products which it either markets or uses as promotional material. Evidence was also given of its various trade marks. I have not found it necessary to refer to the detail of this evidence but I should make it clear that I accept it. There is no issue about it and there is no point in dwelling on it. In taking that course, however, I do not wish to be thought to be underestimating the significance of Nike International and its products as a force in the market in Australia for athletic footwear and sporting gear. Obviously Nike International is very well known in this connection throughout the country. It is perhaps unnecessary to add that there is no issue about the validity of any of the Nike International trade marks. They are not in question in either case.
It is convenient next to refer to Campomar's evidence concerning the origins and use of its mark and also its marketing activities, particularly its marketing activities in Australia, which precipitated this litigation.
Mr Antonio Ruiz-Corrales is the managing director of Campomar. He was referred to in the evidence as Mr Ruiz and I shall refer to him by that name. Mr Ruiz resides in Spain. He swore two affidavits and was cross-examined. He gave his oral evidence with the aid of an interpreter. Mr Ruiz said that he had been an employee or director of Campomar all his "professional life." He was the founder of Nike Cosmetics, the other respondent which is owned exclusively by his father, Mr Antonio Gonzalez, and Mr Ruiz. Campomar was incorporated in 1964, as I understand it, in Spain. Since then it has specialised in the manufacture, distribution and wholesaling of cosmetic and perfume products. It presently owns a number of trade marks registered in Spain consisting of or containing the word "Nike" in "international class 3". These include "NIKE" which was registered on 10 June 1940 in respect of perfumes and essences of all types and a number of other trade marks containing the word "NIKE", for instance, "NIKE TULIPAN", "LAVENDA PURE NIKE" and "GEL MOUSSANT NIKE". These have been registered at various times after June 1940. The registrations date from 1955 through to 1967.
Class 3 comprises bleaching preparations and other substances for laundry use; cleaning, polishing, scouring and abrasive preparations; soap; perfumery, essential oils, cosmetics, hair lotions; and dentifrices. The Nike International trade marks are not registered in class 3. They are registered in class 25 which consists of clothing, footwear and head gear. In some instances they are registered in class 28 which includes gymnastic and sporting articles not included in other classes.
Mr Ruiz said that Campomar had always manufactured perfume products. Between 1967 and 1984 it maintained a trade relationship with a firm known as "Perfumes Nike". This company was owned by a Senor Mateos who, so Mr Ruiz understood, founded it in 1928. Senor Mateos then adopted "Perfumes Nike" as a business name and NIKE as a trade mark. Perfumes Nike specialised in manufacturing perfume products. Senor Mateos owned another firm which supplied Campomar with essential oils and other raw materials between 1967 and 1984. From 1980 the relationship was "enlarged" and Campomar began to distribute products bearing the Nike trade mark manufactured by Perfumes Nike in Spain and North Africa.
It would appear that until then there had been no marketing of any of the Campomar products outside Spain. In 1984 Campomar bought the business and assets of Perfumes Nike. The purchase of the business and assets of Perfumes Nike included the purchase of all of its intellectual property including the assignment to Campomar of the trade mark registrations and also of US Trade Mark Registration No. 775529 Nike in international class 3 with a priority date of 18 August 1964.
Previously Senor Mateos had obtained registrations of Nike trade marks in some other countries. These are referred to in Mr Ruiz' affidavit. They did not include Australia.
Mr Ruiz said that, after Campomar purchased Perfumes Nike in 1984, it continued to use the NIKE trade mark in the same way as Perfumes Nike had used it. He said that Campomar was keen to expand the world wide market for NIKE products because of the success which they had had in Spain "and elsewhere". Campomar began making preparations to enter new markets by applying for trade mark registrations in new countries. Between 1985 and 1994 applications for the registration of the NIKE trade mark in the name of Campomar were lodged in a great many countries. These included Australia.
As mentioned, the Australian application was lodged on 29 August 1986. Although it was not accepted until 15 June 1989, it took effect from 29 August 1986. A second application, this time for the registration of the mark NIKE in class 3 but in respect of bleaching preparations and other substances for laundry use, cleaning, polishing, scouring and abrasive preparations; and soaps, was lodged on 2 August 1992. The earlier mark had been registered in relation to perfumed products of all kinds and essential oils. The second application was accepted on 6 January 1994 but, of course, took effect from 2 August 1992.
Mr Ruiz said that, from about 1980, he was aware of the existence of Nike Inc., that being a reference to a Nike International United States company, and its related companies and their business of selling footwear and clothing. He said that it seemed to him that there existed a possibility for co-operation between Campomar and Nike Inc. in Spain and other countries. In August 1985 he sent a telex to Mr Knight of Nike Inc. explaining his wish to launch a sports fragrance and inviting Nike Inc. to be "our partner." Amongst other things, the telex said that Campomar was aware of the nature and "awareness level" of products bearing the NIKE trade mark "and sincerely believe that this fragrance line could achieve a high level of international acceptance." A number of points were made including the fact that the sporting movement "had not yet been taken advantage of by fragrance manufacturers", and also that there were "no true sporting fragrances". The market potential was said to be "enormous".
Nike Inc. responded to this telex by an undated telex from a Mr Lucas which said, amongst other things, that Mr Knight had requested him to respond to Campomar's telex. Mr Lucas said:
"As our company is the creator of the internationally renowned Nike name and we are responsible for defining and promoting the Nike image throughout the world, we are of course interested in any new products associated with the Nike name. Before we can determine if we desire to participate in your project, we would require specific information about the nature and extent of your trade mark rights to the Nike name in Spain, the US and other countries."
Information was sought concerning the registered owner of the Nike trade mark in Spain, the countries and categories in which the trade mark was registered, brochures, pamphlets, reports about Campomar and further details about the project.
Mr Ruiz responded to this telex on 24 September 1985 and provided the required information. He said that he was convinced that within five years his company would be able to integrate itself into the "sporting revolution" with a fragrance and other sport cosmetics. He said, "we could achieve a success so great such as occurred with sporting shoes or sandals. Our aim is to place within this market
segment a NIKE fragrance line, using a sporty fragrance which we are currently researching, using designs which are clearly sportive. In order of preference the initial launch would comprise...". There followed a list of products including a deodorant, a bath gel and a shower gel. Mr Ruiz said that his company was "healthy financially" but for a project of this magnitude it would need the support of a strong company.
Some further information was sent in a telex dated 25 September 1985.
Nothing further seems to have happened until 6 June 1986 when Mr Ruiz sent a facsimile to Mr Lucas. Mr Ruiz remarked that a substantial amount of time had passed since the last communication and added, "We wish to remind you of this and yet let you know where we now stand." Some information was included and the facsimile concluded with a complaint that Nike Inc. had not paid sufficient attention to Mr Ruiz' letters. Mr Lucas replied on 9 June 1986 saying, "We have decided we do not wish to participate in your project, as we do not believe perfume and cosmetic products are part of this company's image." Mr Lucas added a caution that Campomar was not to suggest or imply that any NIKE products it produced were sponsored or approved by Nike Inc.
In his affidavit, Mr Ruiz said that no complaint was made by Nike Inc. about the existing manner of use of the name NIKE or Campomar's international expansion. He said that he had always understood that the use of the NIKE trade mark on Campomar's perfume and cosmetic products throughout the world was not regarded by Nike Inc. as suggesting sponsorship or approval of Campomar's product by it. He said that he took the words in the telex of 9 June 1986 that Nike did not believe perfume and cosmetic products were part of its image as indicating that Nike Inc. considered the perfume and fragrance market distinct from its field of sports clothing and footwear. He understood that this meant that Nike Inc. had no intention to extend its brand into perfume and cosmetic products.
On 6 October 1989 Mr Ruiz caused Nike Cosmetics SA to be incorporated. He and his father were the only shareholders and directors. That company ("Cosmetics") became the manufacturer and vendor of perfume products bearing the NIKE trade mark. Campomar granted Cosmetics an exclusive licence to use its trade marks in any country in which it was or might become registered.
After Cosmetics was incorporated, an international campaign was undertaken by it and its distributors. Cosmetics contacted possible distributors in many European countries and also in countries in Africa, Asia and Oceania. Evidence was given of the countries in which sales had been made and the amount of those sales. Net sales since 1991 have yielded the equivalent of $A4 million. Cosmetics' share of advertising expenses since 1991 has been more than $A1 million.
Prior to the incorporation of Cosmetics, Campomar had instructed trade mark attorneys in Australia to register the trade mark NIKE in class 3 in Australia in respect of perfumery products of all kinds and essential oils. This led to the filing of the application for registration of the trade mark on 29 August 1986. There was no objection to the registration of the mark. The application was advertised as accepted on 15 June 1989 and subsequently proceeded to registration without any opposition. Mr Ruiz said that Campomar would not have incurred the costs of registering the mark if he had known that Nike Inc. or companies in the Nike group would bring legal action to prevent the sale of perfume and cosmetic products under the name NIKE in Australia. At the time of filing the application for registration in Australia, he believed, as a result of the correspondence which had taken place between Campomar and Nike Inc. in 1985 and 1986, that Nike Inc. and the other Nike companies had no interest in perfume and cosmetic products and accepted that Campomar could use the trade mark NIKE in international class 3 in respect of perfumes and essences.
According to Mr Ruiz, he had a discussion with Campomar's patent attorney in 1992. He was advised that, if Campomar wished to market its full range of products (particularly the shampoo range), it would be necessary to extend "its international class 3 trade mark registration to include bleaching powders, abrasives and soaps." Mr Ruiz said that Campomar then manufactured and marketed hair and body shampoo, soaps, children's soaps and after shaves which the attorney did not believe to be covered by the current registration. Accordingly, Mr Ruiz instructed him to apply for registration of the mark in respect of these additional products in a number of countries including Australia. This is how the application for registration of the second Nike mark owned by Campomar came to be made.
Mr Ruiz said that Campomar's original men's fragrance, "KIBLA for Men" was not very successful and was discontinued in the late 1970's leaving the market to Perfume Nike's "Vigoroso Doncel" and the somewhat lesser known product known as "COUNTRY". In evidence is a box which is an example of the packaging used to market Vigoroso Doncel. On one side it has a drawing of a polo player on a horse in the course of a game. On the other side is a drawing of a tennis player. The box was said to be an example of Campomar's marketing of men's perfumes with a sporting image. The product was marketed in Spain well before Campomar's entry into the Australian and other markets.
Mr Ruiz said that he thought the labels of Perfumes Nike were old fashioned and its image needed to be modernised. The original trade mark registration of NIKE was in a bold lettering and he thought that this style was a better one for Campomar to use. This was a reference to the way in which "NIKE" had, up to that time, been usually depicted. On the box designed to contain the Vigoroso Doncel product, the word NIKE is not depicted in block letters but appears in script. The first letter is "N" and the following letters are in small type. The letters are joined as they would be if they were written in neat handwriting. The depiction of the name Nike in that way was changed so that it now appears in block letters in bold print. One of the principal products marketed in Australia was "NIKE Sport Fragrance". The word NIKE appears in much bolder and larger print than do the other words. In evidence are a number of other examples of Campomar packaging before it adopted its new style. I do not refer to the detail of the various labels which are shown but the word NIKE is in each case written in script in the way in which I have endeavoured to describe it. I have appended to these reasons an example of this method of depicting the name and also of the current method.
The way in which Nike International depicts the NIKE name is different again. The letters used for the word "NIKE" are block letters but the print is slanted. The word usually appears over a mark which is a figure shaped somewhat like an inverted crescent except that one projection from its lowest point is longer than the other. It is difficult to describe - counsel described it as a "swoosh". But this does not help the reader who has not seen it. Accordingly, I have annexed a copy of the way in which the Nike International mark is depicted when it is used in connection with athletic footwear, sports clothing and so on. The mark is usually written in colour, often red on a black background. It is clear that the slant of the print used for the word "NIKE" and its appearance above the crescent or "swoosh" is designed to communicate the idea of speed and perhaps power.
Plainly there are differences in the way the word NIKE is used by Nike International on the one hand and Campomar on the other. Amongst the matters relied upon by counsel for Campomar in resisting the claim based on the Trade Practices Act are these differences which counsel claims to be significant especially when the different products marketed by the two groups of companies are taken into account.
Mr Ruiz said that, from the early 1980's in Spain, sporting activities as a leisure pursuit became popular. He was very much aware of the emergence of this trend. He thought his ideas for a new men's fragrance line with a sporting image like Vigoroso Doncel would fit well with this trend. He said the process of developing and bringing to market a new fragrance line with a quality image required a large investment of capital and resources. Campomar could not immediately make the necessary investment. It was in those circumstances that he wrote the first telex to Mr Knight to which I have earlier referred.
The first respondent ("United") came into the matter in July 1993. The second respondent, Mr Wrobel, who is United's managing director, wrote to Mr Mosch, the international manager of Cosmetics, referring to a meeting he had had with Mr Mosch in Hong Kong at a trade fair. Mr Wrobel said that he was anxious to begin selling Nike products and ordered a dozen of each product except the deodorant. He said that United was producing a special display case for Nike for its representatives to do justice to the presentation. He said that United was looking forward to marketing and selling Nike products (i.e. those distributed by Campomar) and would put a lot of time and effort to ensure their success in Australia. Mr Mosch replied on 9 July 1993. He said, amongst other things, that he hoped that "this would be the beginning of a fruitful relationship." Arrangements were being put in hand to send the products ordered by United. The order was confirmed on 20 September 1993. United's marketing of the Campomar products led to their appearing in pharmacies and eventually to this litigation. The proceedings were not contested by United nor by Mr Wrobel.
I found Mr Ruiz not only an interesting witness but also a particularly engaging one. There is to be found in parts of his evidence an expression of dismay at the thought that his and his family's honour have in some way been called into question by the allegations made in this case. I am sure that his reactions in this respect are not assumed or exaggerated and I respect his feelings. Nevertheless, there are matters, in the main arising from the objective facts and circumstances of the case, which raise questions about the purpose and effect of the Campomar marketing of its products.
The trade marks which are owned by Campomar have been in existence for much longer than those of Nike International. Until about 1986 or a little earlier, its marketing activities were limited to Spain and North Africa. The present problem did not arise until Campomar began to expand its activities into a number of international markets. By that time Nike International was established as a well known supplier of athletic footwear and sports clothing. Campomar's marketing began to concern it. Particularly was that the case when Nike discovered that the product Campomar was promoting was a "sport fragrance". It was then that Nike International perceived the possibility of confusion and reacted as it has.
Mr Ruiz said that Campomar had not appointed another distributor in Australia for its products. It has suspended its exports to Australia pending the outcome of these proceedings. He said that he wished to resume trade as soon as it was clear that he could do so without the risk of expensive litigation.
One matter that needs to be emphasised is that there was no registration of any Campomar trade mark in Australia until 1989 and no attempt to market any of the Campomar Nike products in Australia until 1993. The products would not have been known, at least to any significant extent, in Australia until 1993 at the earliest and even then did not become widely known because the marketing ceased not long after it had commenced.
In order to understand the way in which Nike's case is put in relation to the causes of action upon which it relies under the Trade Practices Act, it is necessary to refer to evidence called in Nike's case. I can do this comprehensively. There is no issue about its accuracy. Exhibited to affidavits filed on behalf of Nike were examples of the Nike cosmetic products which were marketed under the name "NIKE Sport Fragrance". Some of the evidence establishes that this product was found displayed in pharmacies beside or underneath other sports fragrances including a sports fragrance marketed under the name "Adidas". Evidence establishes that the well-known sporting organisation Adidas does either itself, or through other companies which it authorises, market a sports fragrance bearing its name. Essentially the Nike International case is that the placing of the NIKE sport fragrance in the same area of pharmacies as other sports fragrances, particularly the Adidas sports fragrance, was likely to mislead or deceive members of the public into thinking that the NIKE sports fragrance was in some way promoted or distributed by Nike International itself or with its consent and approval.
There was evidence of Nike International being telephoned by pharmacies who were out of NIKE sport fragrance stock asking how they could obtain further supplies. This indicated that the pharmacies themselves thought that the NIKE sports fragrance product had some connection with Nike International.
Mr P.L. Blanket is a lecturer in advertising and promotions at the Macquarie University. He gave evidence of an expert kind without objection. He dealt with the matter of brand extension and explained it as a practice by which an existing brand name that has been established and used in relation to one category of product is adapted for use in relation to a new category of product. He said the practice had occurred for more than 50 years. During the last 20 years the practice had become very widespread. A study in the United States in 1989 found that 70 per cent of all new products launched into the grocery trade were brand extensions. Mr Blanket said that brand extension occurred in two ways. It was often carried out by the same manufacturer who used an existing brand in relation to a new product. A number of examples were given.
Mr Blanket said that brand extension also occurred when one manufacturer licensed another to use an existing brand name in relation to a new product. He said that the manufacturer of Porsche motor vehicles had licensed the use of the Porsche name on sunglasses. Mr Blanket said that many fragrances currently sold in Australia were the result of brand extensions. Thus the name Chanel was first used in relation to designer clothing and not perfume. Other examples were given. He referred to the fact that the brand name Adidas, which he described as a famous and successful brand name built around sporting footwear and apparel, was also used on fragrances. He said that this enabled the manufacturer of the fragrance to draw upon existing consumer awareness and perceptions of the Adidas name for the purpose of promoting sales. He instanced Dunhill as another example, it having originally manufactured tobacco products and subsequently licensed the Dunhill name in connection with a range of men's clothing and fragrances.
Mr Blanket said that, of the many markets in which brand extension was practised, the fragrance market was one of the best examples of what was referred to as a "derivative market". By this he meant that many of the brand names used in the fragrance market were first used in relation to totally different products. This was because the attractiveness of a fragrance had a great deal to do with the imagery associated with the brand name used rather than the physical characteristics of the product itself. The practice of brand extension allowed the manufacturer to minimise the risk of entering a new market by transferring existing consumer awareness that could flow from one product category to another. In those areas where sales depended heavily upon the creation of an artificial image, the transference of that artificial image from an existing product category to a new fragrance product was often an attractive proposition from a marketing point of view.
Mr Blanket said that the brand name NIKE was an extremely well-known brand name which had been heavily advertised and promoted. It was well adapted for use in relation to personal care products such as fragrances, shampoos, deodorants and aftershaves. The use of the NIKE name on such products would be a natural extension from sporting footwear and clothing from both the manufacturers' and the consumers' standpoint. The imagery associated with the NIKE name when used in connection with a range of personal care products would be likely to give rise to a highly desirable set of "emotional responses" flowing from extensive consumer awareness and "attractive product imaging" associated with the NIKE name.
In a sense, Mr Blanket's evidence may be said to be of tangential relevance. It is the evidence of investigators engaged on behalf of Nike International and of pharmacists that is more directly in point. But I have found Mr Blanket's analysis helpful because it tends to summarise the effect of the direct evidence which has been led and also to crystallise my own reactions to that evidence. I think there can be no question but that many persons seeing the NIKE cosmetic products, particularly products entitled "NIKE Sports Fragrance", on pharmacy shelves, whether in the vicinity of similar products or not, would immediately associate the product with Nike International in some way. They would be likely to think that the product had Nike's approval or was sponsored by it (cf. para. 53(c) of the Trade Practices Act). Some would be likely to consider that it was a product manufactured or distributed by Nike International itself.
But those findings do not conclude the matter. There are two questions to be considered. The first is whether customers believing that Campomar products were in some way connected with Nike were misled into thinking as they did by Campomar or whether the erroneous assumption they made was made because they misled themselves; cf Parkdale Custom Built Furniture Pty Limited v Puxu Pty Limited (1982) 149 CLR 191 and also McWilliam's Wines Pty Limited v McDonald's System of Australia Pty Limited (1980) 49 FLR 455.
The second question arises because Nike has not sued either Campomar or Cosmetics for a breach of s.52 or s.53 of the Trade Practices Act. No respondent was sued for a breach of s.53 of that Act. Only United was sued for a breach of s.52. The causes of action against Campomar and Cosmetics, like that against Mr Wrobel, are based on s.75B of the Trade Practices Act. In particular para. 22 of the statement of claim alleges that Campomar and Cosmetics aided, abetted, counselled and procured, and were also, directly or indirectly, knowingly concerned in the contravention of the breach of s.52 alleged against United. It is convenient at this point to note also that, although the statement of claim contains causes of action based on passing off, those causes of action were brought only against United and Mr Wrobel. Mr Wrobel was said to have procured and aided and abetted United to engage in the passing off pleaded against it.
It is, of course, trite law that a breach of s.52 of the Trade Practices Act may be committed innocently. No subjective intent is required. But the position is more complicated in cases where a person is alleged to have aided, abetted, counselled and procured a breach of s.52 or to have been knowingly concerned in such a breach. In the former case an applicant must establish that the respondent intentionally aided, abetted, counselled or procured a contravention of s.52. In order to establish that the respondent was, directly or indirectly, knowingly concerned in the contravention of the section, it must be established that it was an intentional participant. What is involved is the need to demonstrate the fact that the respondent had knowledge of the essential matters which constituted the contravention. But it is not necessary to show that the matters of which a respondent had knowledge in fact amounted to a contravention of the section; see generally Yorke v Lucas (1985) 158 CLR 661. It follows that, in order to deal with this aspect of the case, I need to consider whether Campomar and Cosmetics had the requisite state of mind. Since Mr Ruiz was at all material times their managing director and thus their guiding hand, it is his intention which it is relevant to consider. That is the matter upon which I need to make findings unless, of course, I come to the conclusion that those who were misled about the origins of NIKE Sport Fragrance misled or deceived themselves rather than that they were misled or deceived by Campomar.
In the run of the argument in the case, I raised with counsel the question whether I should determine the trade practices issues before determining the trade mark issues or whether I should approach the matter the other way. It occurred to me that, in determining the question of the respondents' liability under the Trade Practices Act, it may be relevant to know whether Campomar's trade mark registrations, particularly the first one, were valid. If I refuse to expunge them, I can proceed to the trade practices question on the footing that Campomar had valid trade marks in this country consisting of the word NIKE in respect of goods different from those in respect of which the Nike International marks were registered. On the other hand, if I decide that the mark should be expunged, the position may be more complicated. It might be that the respondents would be able to say that they thought they had valid marks; after all the marks had been registered and there had been no objection to their registration. But there is a question whether their belief in this regard would be relevant.
Importantly for present purposes, it may be that the respondents' conduct in relation to the use of the word NIKE in connection with their products has a relevance to whether or not the trade marks should be expunged. That is because the conduct of the respondents in marketing their products may have been such as to constitute "blameworthy conduct" in the sense in which that expression is used in the judgments of the High Court in New South Wales Dairy Corporation v Murray Goulburn Co-operative Company Limited (1990) 171 CLR 363. If I find blameworthy conduct, it would seem not unlikely that I would also find a breach of s.75B of the Act by the two respondents. Of course it is possible for a party who has a valid trade mark, or perhaps believes he has such a mark, to commit a breach of the Trade Practices Act; see Conagra Inc. v McCain Foods (Aust) Pty Ltd (1992) 23 IPR 193 per Gummow J at 259-60. Each case has to be considered in the light of its own facts and circumstances. That may be the outcome of this case. Even so, I think the better course is to proceed to consider the trade mark issues first of all. That is the course I propose to take.
The relevant provisions of the Trade Marks Act are ss.22, 24, 28 and 61. Subsection 22(1) of the Trade Marks Act provides as follows:
"22 (1) Subject to this Act, a prescribed court may, on the application of a person aggrieved or of the Registrar, order the rectification of the Register:
(a)by the making of an entry wrongly omitted to be made in the Register;
(b)by the expunging or amendment of an entry wrongly made in or remaining in the Register;
(c)by the insertion in the Register of a condition or limitation affecting the registration of a trade mark which ought to be inserted; or
(d)by the correction of an error or defect in the Register."
Subsection 22(2) provides that, on application to a prescribed court by a person aggrieved or by the Registrar, the prescribed court may make such order as it thinks fit for expunging or varying the registration of a trade mark on the ground of a contravention of, or failure to observe, the conditional limitation entered in the register in relation to the trade mark.
So far as it is relevant, subsec. 24(1) of the Act is as follows:
"24 (1) A trade mark is registrable in Part A of the register if it contains or consists of:
........ ........ ........ ........ ........ ........ ....
(c)an invented word;
(d)a word not having direct reference to the character or quality of the goods or services in respect of which registration is sought and not being, according to its ordinary meaning, a geographical name or a surname; or
(d)any other distinctive mark."
The word "Nike" falls within these provisions. Either it is an invented word, as counsel for Nike International submitted it was, or a word not having direct reference to the character or quality of the goods or services in respect of which registration is sought. It is in fact a reference to the Greek goddess of victory. That no doubt explains how a guided missile used for military purposes came to have the name "Nike".
Section 28 of the Act is as follows:
"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."
Section 61 of the Act, so far as material, provides that, in legal proceedings relating to a trade mark registered in Part A of the Register (including applications under s.22), the original registration of a trade mark under the Act shall, after the expiration of seven years from the date of the original registration, be taken to be valid in all respects unless it is shown, inter alia, that the trade mark offends against the provisions of s.28.
The issues which arise for determination under these provisions are as follows:
(a)whether Nike is a "person aggrieved" within the meaning of s.22 of the Act;
(b)if so, whether the registration obtained by Campomar was wrongly made in or is wrongly remaining in the Register;
(c)in relation to (b), has Campomar been guilty, either at the time of registration or subsequently, of "blameworthy conduct" in the sense in which that expression is understood in the applicable authorities?
I deal first with the question whether Nike is a person aggrieved. In The Ritz Hotel Limited v Charles of the Ritz Limited (1988) 12 IPR 417, McLelland J said (at 454-455) after referring to a number of authorities:
"It is sufficient for present purposes to hold that the expression ["person aggrieved"] would embrace any person having a real interest in having the register rectified, or the trade mark removed in respect of any goods, as the case may be, in the manner claimed, and thus would include any person who would be, or in respect of whom there is a reasonable possibility of his being, appreciably disadvantaged in a legal or practical sense by the register remaining unrectified, or by the trade mark remaining unremoved in respect of any goods, as the case may be, in the manner claimed. In my opinion the concept does not admit of further refinement. In deference to a submission by the defendants based on, inter alia, 'Consort' Trade Mark [1980] RPC 160 at 166, I would merely add that in my view there is no legitimate basis for introducing into the concept of 'person aggrieved' for the purposes of ss 22(1) or 23(1) any restriction based on the conditions required to be fulfilled by an applicant for registration of a trade mark. I reject the defendants' submission that 'the plaintiff must show a trade rivalry by demonstrating that it is either in trade or has a fixed and present intention to enter trade in Australia in goods sufficiently similar to those covered by Classes 3 and 26 as to be likely to cause confusion'. In the present case the question whether the plaintiff is a 'person aggrieved' in relation to any of the claims made in the proceedings has no necessary relationship to the question whether the plaintiff could itself successfully apply for registration of any of the subject marks:..."
The Ritz case was distinguished by the Full Court of this Court in Kraft Foods Inc. v Gaines Pet Foods Corporation (1996) 34 IPR 198. The principal judgment was delivered by Sackville J who, after referring to a portion of the passage cited from McLelland J's judgment, said (at 207):
"I think that the remarks of McLelland J. are helpful in construing the expression 'person aggrieved' in the present context. I also agree with his Honour's comment that there is no legitimate basis for introducing into the concept, for the purposes of s.23(1) of the Trade Marks Act, any restriction based on the conditions required to be fulfilled by an applicant for registration of a trade mark."
As mentioned earlier, subsec. 23(1) of the Trade Marks Act, which also uses the expression "person aggrieved", deals with cases of the non-use of trade marks.
Sackville J added that, while care must be taken not to introduce too much refinement, the authorities had identified certain circumstances in which an applicant for removal of a trade mark was, or was very likely to be, a person aggrieved.
McLelland J held that the parties seeking relief under s.23 in The Ritz case were persons aggrieved. He did so in the context of a case where the evidence established that those controlling the activities of the plaintiff were preparing to give effect to their desire to make money for the plaintiff from the exploitation of the word "Ritz" by a number of methods but predominantly by the procedure sometimes referred to as "character merchandising" in respect of many different kinds of goods and in many different countries. His Honour said that such commercial activity was not unlawful and might well be highly profitable. Activity of that kind by the plaintiff would be likely to be appreciably inhibited by the registration by someone else of the mark intended to be the subject of merchandising or a mark of which that mark was a significant element in similar or associated goods (see at 456-7).
On the other hand, Gaines Petfoods was a case where the appellant, who was an applicant for relief under subsec. 23(1), had failed to lead any evidence, or any satisfactory evidence, to show that it had used the mark, or that it had formulated plans to use it (see at 209). Sackville J said (at 209) that the only evidence from which it might be inferred that Kraft intended to use the mark in June 1989, which was the material date, was the filing of its application for registration on 22 June of that year. He said that the filing of the application, of itself, did not necessarily require an inference to be drawn that the applicant intended to use the mark. If the application had been accompanied by a clear statement of such an intention, the position was likely to have been different. But the application was accompanied by a statement of user that carried no probative weight on the issue of intention to use.
The principal argument in support of the view that Nike International is not, in this case, a person aggrieved is based upon the fact that Campomar's registrations are in respect of goods in class 3 of the register; the Nike International registrations are in respect of goods in different classes. That is a not uncommon situation.
Nike International wants to secure the expunging of Campomar's NIKE marks upon the basis that its two marks wrongly remain in the register within the meaning of para. 22(1)(b) of the Trade Marks Act. To support that submission, Nike needs to rely on the provisions of s.28. Paragraph (a) of that section provides that a mark, the use of which would be likely to deceive or cause confusion, is not to be registered as a trade mark. Paragraph 28(d) provides that a mark which would otherwise be not entitled to protection in a court of justice is not to be registered as a trade mark. As has been said in some of the authorities, the provisions of s.28 at first sight tend to lead one to the view that the section was not intended to have an effect which would enable it to be used to ground the expungement of a mark which is already on the register. That was claimed by counsel for Campomar to be particularly so when one had regard to s.61 at least so far as the first of the Campomar marks was concerned. The first of the Campomar registrations was effected more than seven years prior to the institution of these proceedings. I say that on the basis that the date of the original
registration must be taken to be 29 August 1986. The present proceedings were commenced in 1995.
But s.61 will not apply, inter alia, in cases where the trade mark offends against the provisions of s.28. So s.61 appears to contemplate that there may be cases, even cases where a mark has been the subject of registration for a period in excess of seven years, in which the registration may be lost. Furthermore, para. 28(a) is speaking prospectively. It refers to a mark, the use of which would be likely to deceive or cause confusion. When one adds to this the use in para. 22(1)(b) of the words "remaining in the Register", it is difficult not to draw the conclusion that in appropriate circumstances a mark, although duly registered, may be removed because it wrongly remains in the register as a consequence of the fact that its use would (in the sense of "becomes" or "has become") be likely to deceive or cause confusion.
The immediate question is whether Nike International is a person aggrieved. In Ritz Hotel, McLelland J referred, in the passage quoted from his judgment, to a reasonable possibility of a person being appreciably disadvantaged in a legal or practical sense by the register remaining unrectified. I would respectfully agree that this is an appropriate statement of the test which should be applied. Here, I think it is clear that there is a reasonable possibility of Nike International being appreciably disadvantaged. If the fact be that it is open to the court to expunge an entry wrongly remaining in the register even though it may not have been an entry of that kind when it was first made, then Nike has at least a reasonable prospect of succeeding in its endeavour to have the marks expunged. Its case is that the respondents have used the mark NIKE of which Campomar is the proprietor, to engage in conduct which would be likely to deceive or cause confusion; cf para. 28(a) of the Trade Marks Act. The removal of the mark from the register would make it less likely that such conduct, which is disadvantageous to Nike International, would continue. A possible consequence of leaving the mark on the register is that Nike International will continue to be disadvantaged. That is enough, in my opinion, to make it a person aggrieved.
The real issues which have to be faced are those which I have already foreshadowed. I have indicated provisionally my view of the way the Act operates in a context such as this. But it must be conceded that that view has not found favour with every judge who has had to deal with the problem. The most significant case in this area is New South Wales Dairy Corporation v Murray Goulburn Co-operative Company Limited (supra). In November 1978 the New South Wales Dairy Corporation was granted registration of the trade mark "MOOVE" in relation to dairy products. In January 1979 it began marketing flavoured milk under that mark. The Murray Goulburn Co-operative manufactured a range of dairy products under the name "Devondale". In February 1988, by assignment from another company, it became registered as proprietor of the trade mark "Moo". In August 1988 Murray Goulburn began marketing flavoured milk in New South Wales under that mark. The Dairy Corporation applied to the Court for the removal of Moo from the register on the ground that at the time of the institution of the proceedings, the registration infringed s.28 of the Trade Marks Act.
At first instance, Gummow J found that the Moo trade mark wrongly remained in the register in respect of goods other than cheese and ordered rectification of the register accordingly ((1989) 86 ALR 549). An appeal against the judgment was allowed ((1990) 24 FCR 370), but the Court nevertheless ordered rectification of the register by limiting the goods in respect of which the trade mark Moo was registered to cheese and flavoured milk. Gummow J had concluded (86 ALR at 558) that the use of Moo in relation to flavoured milk products was such that a substantial number of purchasers and prospective purchasers, being persons who knew of Moove flavoured milk, would be caused to wonder whether it might not be the case that the two products came from the same source. His Honour said (at 594) that he accepted that Murray Goulburn was not acting fraudulently in the sense of choosing Moo in the hope or expectation of deriving benefit from its resemblance to Moove.
In the present case counsel for Campomar submitted that the only circumstances in which a regularly registered mark may be expunged after registration are where the registered proprietor of the mark sought to be expunged has engaged in some blameworthy conduct using that expression in the sense in which it is used in the authorities, particularly some of the judgments in the High Court in the Murray Goulburn case. Counsel for Nike resisted this proposition but also submitted that, if it were correct, Campomar had engaged in blameworthy conduct of the relevant kind. Counsel for Campomar denied this to be the case.
The submissions necessitate an analysis of the judgments written in the Murray Goulburn case. With respect, there is a degree of unevenness in the approaches taken to the problem by the seven judges who comprised the court in that case. What I propose to do is to endeavour to analyse the respective views of the seven judges who sat on the appeal and to reach a conclusion as to what I think the law in relation to this matter presently is. I have approached the task with a degree of diffidence because I do not think it is easy to select which of the dicta may properly be regarded as part of the ratio of the case. What I think becomes clear is that the preponderance of judicial opinion as it emerges from the analysis I am about to undertake is in accordance with the views of Bowen CJ and Lockhart J in Riv-Oland Marble Co. (Vic) Pty Limited v Settef SpA (1988) 19 FCR 569; see at 570, 574 and at 596-600. Their views will emerge as I discuss the Murray Goulburn judgments.
In the course of his judgment Mason CJ said (at 373) that the central question before Gummow J was whether the fact that a mark had, since its registration, become one the use of which was likely to deceive or confuse was of itself a sufficient basis for ordering its expungement. The Dairy Corporation contended that the words of para. 28(a) demanded an affirmative answer to that question. On the other hand, the respondent submitted that s.28 was directed only to that deception or confusion which caused the mark to be disentitled "to protection in a court of justice"; these words come from para. 28(d) of the Trade Marks Act. In other words, para. 28(d) was said to limit the operation of para. 28(a) in relation to the removal of a mark which had been duly registered, and to import a requirement of culpability on the part of the registered proprietor before a mark could be removed for offending against the paragraph by reason of circumstances arising after the mark's initial registration.
Mason CJ reached the conclusion (at 384) that the approach adopted in Riv-Oland and by Gummow J in Murray Goulburn was correct. He differed from the decision of the Full Court only because he considered that the conduct relied upon as blameworthy conduct was indeed blameworthy in the sense in which that expression is used in the authorities. The Full Court had reached a different view. For that reason, Mason J would have allowed the appeal. As will be seen in a moment, he was in a minority on the ultimate decision of the Court. There is a question, however, whether he was amongst the majority in relation to the principles to be applied and in the overall approach which should be adopted in a case such as this.
Earlier Mason CJ referred (at 373-4) to what was decided by the Full Court. He said (at 374) that the Full Court had relied upon the view expressed by Bowen CJ and Lockhart J in Riv-Oland to the effect that para. 28(d) referred back to and limited the scope of para. 28(a). Importantly for present purposes the Full Court in that case had accepted the proposition that a lawfully registered trade mark was only liable to expungement under para. 28(a) by reason of supervening likelihood of deception or confusion if that likelihood was the result of some blameworthy conduct on the part of the registered proprietor.
In Murray Goulburn Mason CJ referred (at 378-9) to the speech of Lord Diplock in General Electric Co. (of USA) v General Electric Co. Limited [1972] 1 WLR 729 where his Lordship held that, if the likelihood of deception or confusion was the result of events occurring after initial registration of the trade mark, the mark could not be expunged as one wrongly remaining in the register unless that likelihood resulted from some blameworthy conduct on the part of the registered proprietor of the mark or of a predecessor in title of the registered proprietor. This view had been endorsed by Fox J in HTX International Pty Ltd v Semco Pty Limited (1983) 78 FLR 57 at 64.
After further discussion, Mason CJ reached his conclusion at 384 where he said:
"...as Bowen C.J. pointed out in Riv-Oland Marble (at 573-4), echoing the words of Windeyer J. in Re Bali Brassiere Co. Inc.'s Registered Trade Mark and Berlei Ltd.'s Application (1968) 118 C.L.R. 128, at p. 133 (at first instance --- reversed on appeal (1973) 129 C.L.R. 353), it is legitimate to lean against the literal construction of s. 28(a) on the ground that it would not protect the registered proprietor from 'the assiduous efforts of a misappropriating user'. That consideration, taken in conjunction with the presence of the provisions permitting identical or similar marks to be entered and to remain in the register, supports the adoption of the interpretation of s.28 (a) favoured by the Full Court of the Federal Court in Riv-Oland Marble and in this case. But I should say that it may not be necessary to read s. 28(a) as though it were governed by s. 28(d). So to read s. 28(a) is a difficult exercise as a matter of construction. It may be sufficient to say that in the context of the entire statutory scheme a trade mark is only liable to be expunged under s. 28(a) if the use of it becomes likely to deceive or cause confusion and that likelihood is due to the fault or blameworthy conduct of the registered proprietor. However, for the purpose of this appeal, I am content to accept that the fault or blameworthy conduct must be such as to disentitle the mark to protection in a court of justice."
Brennan J (as he then was) said (at 388-9) that, for the reasons given by Mason CJ, he was of opinion that para. 61(1)(b) of the Trade Marks Act applied, if, at the time when the validity of the original registration of a trade mark was attacked, the mark offended against the provisions of s.28 and s.28 had a continuing operation after original registration. Because it had that continuing operation Brennan J thought that a registered trade mark which offended against its provisions might constitute, for the purposes of para. 22(1)(b), an entry "wrongly... remaining in the Register". But he added (at 389) that he would not hold that a registered trade mark was necessarily remaining wrongly in the register merely because its use had become likely to deceive or cause confusion by reason of circumstances occurring after registration.
After some discussion, Brennan J reached the conclusion (at 391) that provided the term "blameworthy" was given the meaning to which he referred - I shall come to this in a moment - he would agree with the speech of Lord Diplock in General Electric to the effect that, if the likelihood of causing confusion did not exist at the time when the mark was first registered but was the result of events occurring between that date and the date of application to expunge it, the mark could not be expunged from the register as an entry wrongly remaining on the register unless the likelihood of causing deception resulted from some blameworthy act of the registered proprietor of the mark or of one of his predecessors in title. Brennan J said (at 391) that he would take to be blameworthy any conduct (whether by act or omission) on the part of a registered proprietor or his predecessor in title which he knew or ought to have known would result in the likelihood that the use of the mark would deceive or cause confusion and which had in fact caused or contributed to that result.
Brennan J then referred (at 391) to the Full Court's "acquittal" of Murray Goulburn of blameworthy conduct. He said that he was unable to accept that conclusion. Amongst other things, his Honour said (at 392) that, in evaluating the conduct of a registered proprietor in such a case, much depended on what he knew or ought to have known of the other person's use of a trade mark in respect of the relevant class of products, the length of time during which the registered proprietor remained supine, the opportunities for objection and the scale of the deception or confusion that was likely to result from the further use of his registered trade mark. His Honour said that it might be going too far to say that the registered proprietor must, in all circumstances, protect his statutory right by applying for an injunction; some other objection might suffice in particular circumstances. Eventually he concluded (at 393) that the facts found by Gummow J taken in conjunction with facts which were not in issue were sufficient to show that the registered proprietor of the trade mark Moo was guilty of blameworthy conduct in the relevant sense. He agreed that the appeal should be allowed.
Thus Brennan J agreed with Mason CJ both in approach and in his conclusion.
Deane J adopted a different approach. He concluded (at 398) that s.28 should be read as directed to the act of registering and not to the state of remaining registered. So construed, the section prohibited the original entry in the register of a mark of the designated kind. The section, in that way, had an indirect continuing operation to the extent that a mark whose original registration was unlawful in the sense that it contravened the prohibition of s.28 might be expunged from the register for that reason. But, so Deane J thought (at 399), the section did not have a direct continuing operation in the sense that it required what it did not say, namely, that a mark which was validly registered without contravention of the section must be removed from the register if the circumstances specified in s.28 arose by reason of subsequent conduct or events.
As his Honour said (at 399), the effect of his construction of s.28 was that the appeal must be dismissed but for different reasons from those adopted in the Full Court. However, his Honour went on to say that it was appropriate for him to indicate that he would have been in favour of dismissing the appeal even if he had been of the view that s.28 should be construed in the manner favoured by Mason CJ. He said that if he had been of that view, the question would have arisen whether Murray Goulburn's registered Moo mark had, notwithstanding its registration and the failure of the Dairy Corporation's case based on alleged non-use, become disentitled to protection in the courts by reason of some blameworthy conduct on the part of Murray Goulburn or its predecessor as owner of the Moo mark. Deane J said that, in the light of the findings of Gummow J, including the specific finding to the effect that there was no belief (or intent) on the part of the respondent that its conduct would encourage deception or confusion or involve or lead to the appropriation to itself of any of the Moove goodwill, he would have agreed with Dawson and Toohey JJ (to whose judgment I shall refer in a moment) that that question should be answered in the negative. In view of the specific finding and of the failure of the Dairy Corporation to make out its claim for expungement for non-use, the fact that laches or acquiescence on the part of the Dairy Corporation might have given rise to personal equities in the Corporation if Murray Goulburn had brought proceedings to prevent or restrain continued registration or use of the Moove mark by the Corporation did not, in his view, mean that Murray Goulburn could, in the absence of such proceedings, be said to have been guilty of blameworthy conduct or that its registered Moo trade mark could be said to be disentitled to protection under the Act.
After referring to s.114 of the Trade Marks Act 1905, which their Honours said was the predecessor of s.28, Dawson and Toohey JJ said (at 406):
"The doctrine of honest concurrent user meant that a degree of confusion had to be tolerated within the system. The mere fact that the use of a mark would be likely to deceive or cause confusion was not necessarily sufficient to support an injunction restraining that use. That, Lord Diplock explained (The General Electric case [1972] 1 W.L.R., at 745, 748) was how s.11 [of the Trade Marks Act 1938 (UK)] and its predecessors came to be interpreted in such a way that something more than mere deception or confusion was required to disentitle a trade mark to protection in a court of justice.
The doctrine of honest concurrent user is also an explanation of the form of s.114 of the Trade Marks Act 1905 (Cth) and if, as we think is the case, s.28 was not intended to effect any relevant change in meaning, it is an explanation of the use of the word 'otherwise' in s.28(d). It is a reference back to s.28(a). Section 28(a) must be read together with s.28(d) so that the reference in s.28(a) to a 'use... which would be likely to deceive or cause confusion' is a reference to a use which would not only be likely to deceive or cause confusion but would be not entitled to protection in a court of justice. The word 'otherwise' in s.28(d) is thus given some work to do. It means then that the inquiry must in every case be whether some remedy would or would not be available."
Later their Honours said (at 406-7):
"This view of s.28 is, we think, supported by the scheme of the Act. Not only is it consonant with s.34 which permits the registration of trade marks which are substantially identical or deceptively similar in the case of honest concurrent user, but any other construction would allow a person who 'assiduously infringed' a trade mark to exploit the infringement by producing a situation in which the use of the registered mark would be likely to deceive or cause confusion: see Re Bali Brassiere Co. Inc.'s Registered Trade Mark and Berlei Ltd.'s Application (1968) 118 C.L.R. 128, at p. 133, per Windeyer J. The greater the infringement, the greater the probability that the infringing user would have a ground for claiming rectification against the registered user. There may be a residual discretion to refuse relief, but it seems preferable to construe the provision in such a way as to give no encouragement to such conduct."
Later their Honours said (at 409) that the use of the term "blameworthy act" was no more than a shorthand method of referring to all those circumstances which might disentitle an applicant to relief in a court of equity. They said that it was not intended to posit an all-embracing test. They referred to what Lord Diplock had said in the General Electric
case (at 752), namely, that it would be impossible to hold that there was blameworthy conduct by the appellants in the General Electric case as would amount to an equitable ground for disentitling them to protection for the use of the mark. Dawson and Toohey JJ continued (at 409):
"It would, in our view, be quite wrong to use the term to erect an independent standard against which a registered proprietor's conduct must be judged. Not only would it be an impermissible extension of the language of the section, but it would shift the focus from the true question and introduce notions of a subjective kind."
The emphasis is added.
I have emphasised the last sentence of the quotation to mark my concern that the view expressed by Dawson and Toohey JJ may not be quite the same as that expressed by Mason CJ and Brennan J. There appears to be some difference in the two approaches. The difference may not be significant in numbers of cases but in some it may be important. It should be observed at this point that Deane J, if he had come to the question of blameworthy conduct, would have adopted the approach followed by Dawson and Toohey JJ; see at 399 and at 40 of these reasons. The difference in approach has perhaps especial significance because Dawson and Toohey JJ were amongst the majority in concluding (at 414) that the appeal should be dismissed.
Gaudron J agreed (at 414) with the judgment of Dawson and Toohey JJ. It is to be observed that her Honour agreed specifically with their judgment and did not mention the judgments of Mason CJ and Brennan J. It may be that the only reason for this was that Dawson and Toohey JJ reached a different conclusion on the facts from that reached by the other judges. I find it difficult to be sure that this is the only reason for the difference. It may be that different approaches led the judges to have different views about what the outcome of the case should be.
Gaudron J pointed out that the argument in the Murray Goulburn case proceeded on the basis of an assumption that a properly registered trade mark could, by reason of a supervening event, offend against s.28 which, "in terms, does no more than specify those marks that 'shall not be registered as a trade mark'". Gaudron J agreed with Deane J that there was no authority requiring the Court to treat s.28 as having that operation. Her Honour added, however, that the issues raised by the case were such that she was content to decide it on the basis upon which it was argued. But she emphasised that the assumption inherent in the argument did not appear to her to be well founded. She thought it contrary to the language of s.28 and that it created a number of difficulties, "including the difficulty in the present case, for which the Act provides no ready solution."
After a lengthy discussion of the provisions of the legislation and the authorities, McHugh J said (at 426) that his inclination was that the section should be seen as operating as at the time of registration and not afterwards. But, his Honour said, the conduct of the case required the Court to proceed on the basis that the section applied to events occurring after registration. His Honour then considered the question whether the paragraphs of s.28 were to be read disjunctively. McHugh J concluded (at 428-431) that the paragraphs were to be read disjunctively so that para. 28(a) should be given its natural meaning (see at 431) and was thus unaffected by the language of para. 28(d). He thought that a mark offended against para. 28(a) if, at the time of registration or later, it was likely to deceive or cause confusion. Gummow J had found that it was. The appeal should therefore be allowed.
In the result, therefore, three judges, Mason CJ, Brennan J and McHugh J thought the appeal should be allowed. The remaining four judges thought that it should be dismissed. That, however, although a relevant circumstance, does not tell one what one needs to know in relation to the approach which should be adopted in a case such as this.
Mason CJ, Brennan J, Dawson J, Toohey J, and perhaps, Gaudron J, decided the case on the question whether there was blameworthy conduct. Deane J and McHugh J approached the matter differently although Deane J expressed views on the subject and is to be understood as preferring the approach taken by Dawson and Toohey JJ to that taken by Mason CJ and Brennan J. Gaudron J was of a similar mind. And McHugh J did say (at 426) that the requirement of blameworthy conduct was derived from the equitable doctrine of unclean hands which Lord Diplock in the General Electric case perceived as subsumed under the words "disentitled to protection in a court of justice"; cf para. 28(d) of the Trade Marks Act.
I began this discussion by saying that I thought there was a preponderance of judicial opinion in favour of the proposition that s.28 did have a continuing operation and that, in so far as marks which were likely to deceive or cause confusion were concerned, that operation was limited to cases where there was established blameworthy conduct on the part of the registered proprietor. Absent that conduct and the application for expungement must fail. I consider that the analysis I have undertaken bears this out. But the unevenness in the approach of the various members of the Court in Murray Goulburn which I have detected requires me to approach the matter in accordance with the views of Dawson and Toohey JJ rather than with those of Mason CJ and Brennan J. As earlier said, the different approaches may not be significant in many cases. This will certainly be so where, on the one hand, one would not conclude that there was blameworthy conduct no matter which view were adopted and, on the other hand, where the case was one where one would conclude that there was blameworthy conduct no matter what approach was followed. It seems likely that most cases will fall into one or other of these categories.
Of course, I am not bound by the underlying assumption implicit in the argument in Murray Goulburn upon which the members of the court proceeded. Indeed counsel for Nike International submitted that I should not follow the course of requiring his client to establish blameworthy conduct. It was enough for his purposes that there was the likelihood of confusion for which he contended. This is in accordance with the approach adopted by McHugh J. I see the force of this submission, but the dicta in the judgments in Murray Goulburn in this Court as well as in the High Court and the decision of the Full Court of this Court in Riv-Oland militate against the taking of such a view especially by a judge sitting at first instance.
I propose to approach the matter on the basis that, for Nike International to succeed, it has to establish the likelihood of confusion and, if that be found to be the case, that it is so because of blameworthy conduct committed by Campomar using that expression in the sense explained in the judgment of Dawson and Toohey JJ. The question then is whether the likelihood of confusion and blameworthy conduct on the part of Campomar have been established.
A starting point for a consideration of these matters in this case is the fact that, unlike the marks in the Murray Goulburn case, the marks here are registered in different classes. They are used in connection with different categories of goods. Nike International's categories are athletic footwear, sports wear and sporting equipment. Campomar's categories are perfumes and toiletries. The contest between the two categories arises only because the goods marketed by Campomar were marketed in circumstances where people might consider that the Campomar goods were in some way produced by, distributed by, approved by or sponsored by Nike International.
I have earlier referred to the evidence of the way in which Campomar's Nike products came to be marketed and distributed in Australia. The evidence is not contentious. Directly involved were the first respondent, United, and its managing director, Mr Wrobel. The proceedings against them have been concluded. An initial question is what part, directly or indirectly, was played by Campomar in the marketing and distribution of its products in Australia. Certainly its marketing activities in this country did not last very long because of the action taken by Nike International and the reaction of United and Mr Wrobel to the proceedings. Mr Ruiz decided not to persist in any marketing activities until this case had been decided. The evidence to which I referred earlier establishes plainly enough that the marketing of the Campomar products led to confusion amongst customers or potential customers and members of the staff of pharmacies where the Campomar products were displayed. For reasons explained by Mr Blanket in his evidence, persons seeing the Campomar products displayed who knew of the reputation which products distributed by Nike International had in Australia were likely to have been confused in the sense that they would either have been led to believe that Nike International, like Adidas, was marketing a sports perfume as a brand extension to its brands of athletic footwear and sporting goods for which it was well known or at least would have had cause to wonder whether or not that was the case.
The evidence establishes that in the mid-1980s Mr Ruiz perceived the possibility of marketing the Nike brand of cosmetics in conjunction with Nike International. The correspondence he had with Nike Inc. in 1985 and 1986 demonstrates this. He endeavoured to induce Nike Inc. to enter into an arrangement with Campomar which he thought would be beneficial to both and which would lead to a successful venture not only for Campomar but also for Nike Inc. In making this proposal, he was acting in good faith. The proposal was not without merit but it did not appeal to Nike Inc. The matter was left open until the middle of 1986 when Mr Lucas indicated to him that Nike Inc. was not interested. It was then that he said to him, somewhat pointedly, that Campomar was not to suggest or imply that any NIKE products it produced were sponsored or approved by Nike Inc. But, Mr Ruiz took this as an indication that this part of the market, i.e. the market for toiletries and cosmetics for use by persons engaged in sport, was being left to him so that he could take advantage of it himself. This is what he decided to do.
Registrations of his trade marks were effected in a number of countries including Australia and in 1993 he began his marketing activities here. Before he did so, he changed the way in which the word Nike was printed to block letters in bold print. Previously it had appeared in a script form in a less prominent way. Furthermore, he described his product as "SPORT FRAGRANCE" again in block letters although not printed in as prominent a way as was NIKE itself. It seems difficult to avoid the conclusion that Mr Ruiz was engaging in this conduct in order to take advantage of the goodwill and reputation of Nike International.
In this connection, it is necessary to mention some further documents which were tendered by counsel for Nike International and objected to by counsel for the respondents. I did not deal with the objection in the run of the case but received the documents as an exhibit saying that I would deal with the question of admissibility, as necessary, when I came to give judgment.
The documents, for the main part, are letters written to or by Mr Mosch to whom reference was earlier made. He is described as International Divisional Manager. In a letter written to United on 9 July 1993 Mr Mosch said that he was responsible for all export activities by Nike Sport Cosmetic SA. Mr Mosch was not called to give evidence in the respondents' case. He had sworn an affidavit in the proceedings but this was not read. He was thus not available for cross-examination. Some of the documents which were relied upon were written in Spanish. They have been translated.
On 7 June 1993 Mr Mosch, on the letterhead of Nike Sport Cosmetics SA, wrote to a company, Rimafe LDA, in Lisbon in Portugal. Amongst other things he said that "our" main aim has been to position a high quality product in the selective perfumery market, "with the image of a brand renowned the world over in the field of sports." This was obviously a reference to Nike Inc. Then there is a letter dated 28 May 1993 from a company named Nekko Industries Limited which carries on business in Hong Kong. It is addressed to Nike Sport Cosmetics SA and marked for the attention of Mr Mosch and a Mr Salado. Under a heading, "Re: Japan", the letter said that Nekko had influential customers in Japan which had indicated interest in Nike Sport Cosmetics. The letter continued, "In the meantime, however, we have found, that for reasons of NIKE sportswear in Japan, it is NOT possible to offer there. We suggest you to be very careful if you should think about the Japanese market." The letter then asked for clarification concerning the position of Nike sport fragrance in Hong Kong, Macau and China. It continued, "Please be so good and let us know that there is NO PROBLEM with that and that you have the proper papers registered and approved. It is absolutely essential that neither you nor we run into any kind of negative publicity or legal problems."
A number of other documents were relied upon. I have taken these generally into account but the ones to which I have referred are perhaps the strongest from Nike International's point of view.
Objection to the tender of the documents was made on a number of grounds. These included the fact that none of them was put to Mr Ruiz in the course of his cross-examination so that he had no opportunity of explaining them or dealing with them. I am not sure that this is a proper ground of objection. Rather it may be a question of weight. But the documents are either Mr Mosch's documents or documents sent to him. They are business records within the meaning of the relevant provisions of the Evidence Act 1995, s.69, and in any event admissible on that basis. They tend to reinforce my view that Campomar, through Mr Ruiz, was well aware of the benefit which would be likely to flow to it in using the name Nike in association with a sports fragrance and other toiletries simply because of the likelihood of potential customers being led to believe that the two Nike products were in some way connected in the sense of coming either from the same source or, in the case of the toiletries and perfumes, from a source authorised by Nike International.
I have taken into account the fact that the documents were not put to Mr Ruiz in the course of his cross-examination. But none was addressed to him and none written by him. I see nothing unfair in the course taken by counsel for Nike International. Especially is that so when it would appear that it was at one stage intended to call Mr Mosch in the respondent's case. An affidavit sworn by him was filed. There is nothing to suggest that he was not available to give evidence.
The documents to which I have referred and other documents in the case, particularly the letters written in 1985 and 1986, re-inforce me in my conclusion that Mr Ruiz had for a number of years perceived the advantage his organisation could expect to gain by the world-wide marketing of its products under the Nike name in conjunction with, or with the approval of, Nike International or one or more of its associated companies. Campomar had no reputation in Australia when its marketing activities were commenced in 1993. Nike International Limited had a world wide reputation. By 1993 its products had become very well known in Australia.
The one advantage which Campomar had was that it, like Nike International, had the Nike name registered as a trade mark, not, of course, in relation to sporting goods or athletic footwear, but in connection with perfumes and toiletries. Mr Ruiz said more than once that Nike International had left this part of the market to him. It did not want it. It was not prepared to join in his venture which he suggested to it in 1985. But what he appears not to understand is that that did not entitle him, as he seems to have thought, to market his goods in such a way as to give the impression that they were or might be connected with Nike International. Mr Lucas' letter written in June 1986 was not an invitation to Mr Ruiz to act in the way he appears to have thought he could. Indeed it contained a clear warning that that was the very thing to which Nike Inc. would object.
It follows that Campomar engaged in a course of conduct which led to its products, described as "NIKE SPORT FRAGRANCE", being marketed in circumstances where it was likely that they would be confused by customers and others by reason of the reputation which Nike International had in athletic footwear and other sporting products. On any view of the appropriate principle I think that this amounts to blameworthy conduct within the meaning ascribed to that expression by the judges in Murray Goulburn. That is because the Campomar trade mark was central to the course of conduct in which Campomar engaged. Without the mark this case would have been seen for what it really is; a contest between two traders one claiming that the other was wrongfully taking advantage of its reputation in the market place in order to increase the other's sales and, perhaps to lend the other's product an aura or ambience, even a respectability, to which it was not entitled. It follows that Nike International has
made out its case for the expungement of the two marks from the register.
That then takes me back to the cause of action under the Trade Practices Act. I can come to that against the background that the respondents are not entitled to rely upon the existence of registered trade marks as a defence. This time it is not enough to say that the conduct engaged in was a cause of confusion. For Nike International to succeed I must be satisfied that it was likely that customers and others dealing with Campomar would be misled or deceived by the get up of its product into thinking that the product was in some way connected with Nike International. If that be established, I must be further satisfied that, within the meaning of s.75B of the Trade Practices Act, Campomar aided, abetted, counselled or procured the contravention of s.52 by United and/or was, directly or indirectly, knowingly concerned in that contravention. Such knowledge as it had would be that of Mr Ruiz. I am satisfied that the evidence establishes the likelihood of persons being actually misled or deceived. In other words there is primarily a case under s.52 against United which marketed the goods. This indeed is the effect of the evidence from the trade. I have accepted that evidence. Apart from this, however, I would myself infer from the whole of the evidence that this was likely to have been the situation. The Nike name used in connection with products marketed by Nike International was so well known in relation to sporting goods that it was almost certain that numbers of persons looking to buy toiletries or fragrances would be led to believe that such products marketed under the Nike name were marketed either by Nike International itself or with its authority.
I do not think that this is a case in which the evidence establishes that those who were misled or deceived, misled or deceived themselves by making an assumption they were not entitled to make. Those making the assumption did so because they were intended by Campomar to make it. I think that it must have been well appreciated by Campomar that a sports fragrance such as was marketed would be placed alongside other sports fragrances in pharmacies and other outlets and that this, because of the use of the name Nike, would give the product an advantage that it would not otherwise have had.
The evidence establishes that Campomar through Mr Ruiz did knowingly contravene s.52. I agree that it may not have appreciated that it was committing a breach of the law. But it knew precisely what was occurring. In particular, the evidence establishes that its marketing activities were intended to enable it to take advantage of the Nike International reputation. On the findings I have made, that is what was in fact occurring when United decided not to defend the proceedings brought against it.
It follows that Nike International has made out a case for the relief it seeks in the first of the applications. It seems likely that it has made out a case for relief in the second application also. I shall hear counsel as necessary on that question.
I do not propose to make orders today. I shall stand this matter over for a short time to enable the parties and their legal advisers to consider what I have said. When the matter is next in the list, counsel for the applicants are to bring in short minutes of order to give effect to my decision. I shall then also deal with the question of costs.
I certify that this and the fifty-seven (57) preceding pages are a true copy of the reasons for judgment herein of the Honourable Justice Sheppard.
Associate
Dated: 8 August 1996
APPEARANCES
Counsel for the Applicant: J.V. Nicholas
R. Rasmussen
Solicitors for the Applicant: Williams Niblett
Counsel for the Respondent: D.K. Catterns QC
J.R. Baird
Solicitors for the Respondent: Mallesons Stephen Jaques
Date of Hearing: 4 December 1995 to
7 December 1995
Place of Hearing: Sydney
Date of Judgment: 8 August 1996
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