Nylon Films Pty Ltd v Nylon Studios Pty Limited

[2008] ATMO 81

TRADE MARKS ACT 1995

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

Re:Opposition by NYLON FILMS PTY LTD to registration of trade mark application 1054652(41) - NYLON - filed in the name of NYLON STUDIOS PTY LIMITED.

Delegate:	Claudia Murray
Representation:	Opponent: Ms Vicki Niehus, Executive Director of opponent Applicant: Mr Christian Dimitriadis of Counsel, instructed by DLA Phillips Fox
Decision:	2008 ATMO 81 Section 52 opposition: sections 43 and 60 – opposition successful under section 60 – application refused - costs awarded against applicant.

Background

1. Nylon Studios Pty Limited (“the applicant”) filed trade mark application number 1054652 on 10 May 2005. The subject trade mark is the plain word NYLON. The application was filed in class 41 of the International (Nice) Classification of Goods and Services, in respect of:

   Organisation, creation, production, post-production and arrangement of music, audio and audio-visual material including albums, soundtracks for TV, radio, video, film and Internet based media; organisation, creation, production, post-production and arrangement of music, audio and audio-visual material including for commercials and promotional presentations, corporate presentations (including sales presentations and product launches) and as promotional material for TV and radio; recording studio services; music composition services including song writing; radio production services; production of film and video; distribution of music, audio and audio-visual material including radio, television and film material; consulting services, namely, the selection of audio, music and musical recordings for use by others in advertising, film, television, radio, Internet, and other media productions; music publishing services; performance of musical works and music performance services; production of audio and audio-visual recordings for advertising and marketing purposes; and all other audio and music services in this class

2. No grounds for rejection under the Trade Marks Act 1995 (“the Act”) were raised against the application during examination. After a minor amendment to the application’s statement of services, it was advertised accepted for registration in the Australian Official Journal of Trade Marks on 8 September 2005.

3. On 8 November 2005, Nylon Films Pty Ltd (“the opponent”) filed notice of opposition to registration of the trade mark. Two grounds of opposition, under sections 43 and 60, were identified in the notice.

4. The evidence in support, evidence in answer and evidence in reply was duly served and filed. On 10 May 2007, the Office received a request from the applicant for the opposition to be heard. Then followed an exchange of further evidence between the parties, initiated by the applicant. After some delay, a hearing was held before me, as a delegate of the Registrar of Trade Marks, in Canberra, on 11 June 2008. Mr Christian Dimitriadis of Counsel, instructed by Ms Caitlin Whale (not present), solicitor, of DLA Phillips Fox, Sydney, represented the applicant at the hearing. The opponent was represented at the hearing by its Executive Producer, Ms Vicki Niehus, assisted by her husband, Mr Dion Stanbury.

   Evidence

   Evidence in Support

   ØStatutory declaration of Vicki Niehus with Annexures VN1 to VN 11 (First Niehus declaration) dated 7 February 2006.

   ØStatutory declaration of Peter Withy dated 8 February 2006.

   Evidence in Answer

   ØStatutory declaration of David Gaddie dated 7 November 2006.

   ØStatutory declaration of Simon Lister dated 8 November 2006.

   ØStatutory declaration of Mark Beckhaus with Annexures A to T and Confidential Exhibits 1 to 4, dated 8 November 2006.[1]

   [1] During the course of the opposition, there was some debate over whether the confidential exhibits could be accorded due weight in these proceedings. The opponent had indicated that it had not been able to view the material, due to the insistence of the applicant that it first provide consent to be bound by an agreement of confidentiality which was not forthcoming. In the event, nothing in my findings turned on the absence or presence of these exhibits.

   Evidence in Reply

   ØStatutory declaration of Robyn Watt dated 6 February 2007.

   ØStatutory declaration of Vicki Niehus with Annexures VN1 to VN 17 (Second Niehus declaration) dated 7 February 2007.

   Applicant’s Further Evidence

   ØStatutory declaration of Mark Beckhaus with Annexures A to E (Second Beckhaus declaration) dated 29 October 2007.

   Opponent’s Further Evidence

   ØStatutory declaration of Vicki Niehus with Annexure VN1 (Third Niehus declaration) dated 12 March 2008.

   ØStatutory declaration of Robyn Watt with Annexures RJW1 to RJW3 (Second Watt declaration) dated 14 March 2008.

5. Both the opponent’s and the applicant’s evidence describe a little of the histories and target customer groups of their respective companies. The First Niehus declaration traces the development of Ms Niehus’ career in the film industry since 1983, where she performed various roles, including design assistant, set dresser, art director and production designer, and worked on both television commercials and also well-known feature films such as “Napoleon”, “Shine” and “Heaven’s Burning”. In 2002, Ms Niehus started her own production company, Nylon Films Pty Ltd, which produces television commercials. She is Executive Producer of the company. The company established a website and domain name, at Ms Niehus declares that, since she began working full-time as a television producer, her clients have included Renault, Mitsubishi Motors, Faulding (Mayne), Cadbury, Red Cross Australia and OPSM. Further, the growing success of her business has also led to her being invited to attend trade missions with the Premier of South Australia for the purpose of attracting work to Australia, which in turn enabled her company to win a contract for one of India’s largest beer companies.

6. Ms Niehus explains in her declaration the lengthy and expensive creative process by which television commercials are made. Briefly, a client with a product to be advertised will initially approach an advertising agency. The agency’s writer then writes a script for a commercial. Once the client approves a script, the advertising company usually invites three production companies (such as Nylon Films Pty Ltd) to tender for the contract. Each production company which responds to the tender and applies for the contract will submit a creative proposal for the commercial, based on the script. The advertising agency then chooses the proposal which it believes best suits its client’s needs, and nominates the successful tenderer on that basis. Once the chosen production company has produced the commercial, and sent it to the advertising agency, the agency selects a sound studio (such as Nylon Studios Pty Limited) to complete the commercial with the desired sound and music. According to Ms Niehus, the total production costs of an advertising commercial can range between 100,000 and a million Australian dollars.

7. The First Beckhaus declaration also describes the recent history of the company, Nylon Studios Pty Limited. Mr Beckhaus is an Executive Producer employed by the company. The company was incorporated in 2002, and was originally known as Human Sydney Pty Ltd, but around December 2004, a decision was made to rebrand. Mr Beckhaus declares that the name NYLON was proposed by one of its directors, being a combination of the letters NY for New York, and LON for London. The name was intended to give the company “more of an international flavour”, which it was hoped would in turn help to promote its services in overseas markets. Between February and July 2005, the company commenced the rebranding process. The domain name was registered, and the company designed a website and a stylised NYLON logo, prepared a variety of promotional material and filed the subject application for the plain word NYLON in class 41. Mr Beckhaus describes his company’s services as a broad range of “audio services for television commercials”. He attests to his belief that the company has between 40 and 45% of the local Australian market share for the provision of these services, and lists amongst its clients Telstra, Toyota, Subaru, Virgin Blue and Tiger Beer.

8. It must be said here that much of the evidence in answer, evidence in reply, and the parties’ further evidence deals with conflicting claims and assertions concerning the history and nature of various professional dealings and mutual business contacts between them, and the potential, or lack thereof, for this to have influenced the applicant’s decision to choose NYLON as its rebranding name.

   Grounds of opposition

9. At the hearing, Ms Niehus pursued the grounds raised under sections 43 and 60 in her notice of opposition.

   Section 43 - trade mark likely to deceive or cause confusion

10. Section 43 provides that an application for the registration of a trade mark in respect of particular goods or services must be rejected if, because of some connotation that the trade mark or a sign contained in the trade mark has, the use of the trade mark in relation to those goods or services would be likely to deceive or cause confusion. Examples of the kinds of circumstances most clearly intended to be addressed by the section occurred in the VITAMIN[2] and ORLWOOLA[3] cases. In those cases, there was a danger the public might make a reasonable, but incorrect, assumption about a product based upon the trade mark, which could not easily be confirmed or discounted by even close inspection of the product.

    [2] J. Kitchen & Sons Pty LTD v Inman (1939) 9 AOJP 1383 (Reg).

    [3] Re Trade Mark "Orlwoola" (1909) 26 RPC 850 (C.A.).

11. In Big Country Developments Pty Ltdv TGI Friday's Inc, [2000] FCA 720, 48 IPR 513, at 521, Wilcox, Kiefel and Emmett JJ commented in this manner upon the scope of section 43:

    The case on deception and confusion sought to be made by Big Country and Friday's Australia in the present proceedings is one that falls outside the reasons specified in [section 43]. It does not depend upon some connotation in the registered mark, but upon its similarity to a name used by Big Country and others. So the alleged deception or confusion is not for a reason covered by s 43.

12. Similarly, as the applicant pointed out, Ms Niehus’ submissions regarding deception and confusion of the public in terms of section 43 did not go to any connotation inherent within the applicant's trade mark application for the word NYLON, but rather relied upon its similarity to the opponent's common law trade mark for the same word. These are issues that are properly dealt with under section 60, also relied upon by the opponent. Accordingly, I will discuss her arguments further in the context of that section. Here, applying the precedent quoted above, I find the ground of opposition under section 43 not to have been established.

    Section 60 - trade mark with a reputation in Australia

13. As Mr Dimitriadis noted in his submissions, the subject application was filed before a significant amendment to section 60 came into force on 23 October 2006 and accordingly the pre-amendment version of the section applies.[4] That earlier wording provides:

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

    (a)     it 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 or services, had acquired a reputation in Australia; and

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

    [4] Apple Computer Inc. v Todaytech Group Pty Ltd, 2007 ATMO 40

14. To satisfy section 60, an opponent must demonstrate that, at the time of filing of the opposed application (10 May 2005), it had a reputation in a substantially identical or deceptively similar trade mark, such that use of the applicant's trade mark would likely cause the public to be deceived or confused. The opponent's trade mark need not be subject of an application or registration, in order to be able to be relied upon under this section.

15. The deceptive similarity between the applicant’s trade mark NYLON, and the common law trade mark NYLON FILMS upon which the opponent relied, was not disputed by the applicant. Further, as Ms Niehus explained in her evidence and submissions, her company has become widely known in the industry by a shortening of its name to simply NYLON. I find that this threshold test of section 60 is satisfied.

16. The question for me now, therefore, is whether the opponent had such a reputation in the Australian film and advertising industry at the time the applicant filed its trade mark, that the applicant's use of that mark on its services of interest would likely result in deception or confusion of the public. Ms Niehus outlined in evidence the history of her company’s use of its name as a trade mark for its television commercial production services in Australia, over three years prior to the filing date of the opposed application. She provided several examples of actual confusion occurring in the relevant marketplace, which in this case is clearly a tight knit and specialized one. The examples range from the relatively minor irritation of receiving a Christmas card intended for someone else, through billing and payment mistakes made by advertising agencies and other industry bodies with both companies on their books, to what Ms Niehus described at the hearing as the most serious and potentially damaging example. That example involved the loss of the opponent’s subscription to the national database company Portfolio and Reel, which provides information to subscribers about commercials produced around Australia. In 2005, the year the applicant began using the opposed trade mark, Portfolio and Reel cancelled the opponent’s subscription in the mistaken belief that it was a duplication of the subscription already paid for by the applicant. As Ms Niehus emphasized, the select process used by advertising agencies of inviting only limited tenders by production companies for any particular advertising contract, means that the maintenance of an entry for a production company’s name and portfolio of work in the only available national listing database is critical for its very survival. Also tendered in the opponent’s evidence is an email (VN 17) from Portfolio and Reel to its subscribers following the discovery of its error, attempting to “clear up some confusion”, within the “film, television and advertising industries” around the name NYLON.

17. It is true, as Mr Dimitriadis pointed out, that the incidences of confusion cited by the opponent all occurred after the filing date of the opposed application. This is hardly surprising, since no confusion in the marketplace would have been expected prior to commencement of the applicant’s own use of the trade mark. However, I do not agree with the applicant that this timing means that the examples of confusion carry no weight in terms of section 60. They form part of the total picture supporting the opponent’s case that, by implementing a variety of strategies documented in its evidence, it had already established a strong reputation in its field in the three years prior to the adoption of the name NYLON by the applicant. I do not understand the logic of Mr Dimitriadis’ submissions that:

    The opponent has attempted to put forward evidence of actual instances of confusion. However, the evidence put forward does not establish confusion "because of” any relevant reputation for the purposes of s 60. The relevant date for the assessment of reputation is 10 May 2005, being the date of filing of the opposed application. The alleged instances of confusion all post-date that date - in some cases by significant periods of time. In particular, they all post-date the very significant advertising and promotional activities on the part of the applicant. These exceed any such activities of the opponent. If there has been any confusion, it has occurred in the context of the strong reputation built up by the applicant in the NYLON trade mark after the filing of the opposed application, and is not due to any prior reputation of the opponent.

18. The applicant may indeed have made a considerable investment in rebranding itself as NYLON STUDIOS, but I do not accept that the documented confusion which began occurring in the marketplace soon after it began operating under its new name was purely the result of its own “instant success”, as it were. Even allowing for the fact that the business of advertising is the bread and butter of both opposing parties, this is stretching credibility a little too far. For confusion to have occurred at all in the marketplace, there must have been an awareness of the existence of more than one source of similar services being provided under a similar name. The opponent has supported in evidence its claim to significant first use in the Australian advertising industry of the name NYLON, notwithstanding that much of the applicant’s evidence goes to its claims of having been unaware of that use in choosing a new name for its own rebranding. The likeliest explanation for the instances of confusion documented by the opponent is that which satisfies the requirements of section 60: “because of the reputation of [the opponent’s earlier-used] trade mark the use of the [applicant’s] trade mark would be likely to deceive or cause confusion”.

19. I should mention here that a second leg of the applicant’s argument against the opponent’s success under section 60 relates to its contention that the respective services of the parties have no similarity or overlap. Mr Dimitriadis pointed out at the hearing that the opponent’s services, essentially “television commercial production”, would be correctly classified in class 35, whereas the applicant’s specified services all fall in class 41. Closer inspection of the opposed application reveals that many of the services covered by it may in fact themselves arguably be classified in class 35. It appears to be something of an anomaly in the Australian classification system that such similar services as “commercials (production of radio, television and cinema - )” and “production of radio and television programmes” should be disparately classified in classes 35 and 41.

20. In any event, Mr Dimitriadis is not correct in arguing that the relevant comparison for the purposes of section 60 is between “the actual services of the opponent, and the services specified in the opposed application”. Section 60 makes no mention of the opponent’s services at all. It deals in far more general terms with the likelihood of confusion resulting from the applicant’s use of its trade mark on the services specified in its application, in the face of the opponent’s reputation in its trade mark, irrespective of how that trade mark has actually been used.

21. The courts have recognised that, for the purposes of section 60, an opponent's reputation can have accrued from a variety of sources. Kenny J in McCormick & Co v Mary McCormick (2001) 51 IPR 102, at page 129, quoted with approval the following discussion, by Hearing Officer Iain Thompson, of how reputation can be developed:

    [I]t is true that the assessment of the reputation of a trade mark goes far beyond mere examination of sales or turnover of goods sold under that trade mark and contemplation of the advertising and promotional figures.

    As regards a trade mark, its reputation derives both from the quantum of sales under that mark and also the esteem, or image, projected by that trade mark. The quantum of sales, advertising and promotion contributes to the `recognition' component of the trade mark's reputation. The credit, image and values projected by a trade mark attaches to the `esteem' component of the reputation as do the public events and other trader's marks with which [the] owner of the trade marks in question chooses to associate the trade marks via sponsorships, cross-promotions, `contra deals' and so forth.

    It follows that a trade mark used in relation to goods with comparatively low sales may have a high and strong reputation by virtue of the high credit or esteem in which it is held or, conversely, that a trade mark which has very high sales may have a strong reputation notwithstanding the lack of esteem that attaches to it. The particular popular images, or sets of values, that attach to the trade mark are also, therefore, important parts of the reputation of the trade mark and may be as strong an associative force in the minds of the public as the association of the trade marks with the goods or services themselves.[5]

    [5] See Hugo Boss AG v Jackson International Trading Co Kurt D Bruhl GmbH & Co KG (1999) 47 IPR 423 at 436.

1. In conclusion, I accept Ms Niehus’ claims to a significant reputation within the highly specialized, close-knit industry in which her television commercial production company operates in this country. I also accept her claims to having considerable first-hand experience of the deception and confusion caused to members of that industry by the applicant's use of its trade mark on its sound production services, in the face of that reputation. I find the opponent's ground of opposition under section 60 to be successful.

   Decision

2. As the applicant noted in its submissions, the onus is upon the opponent to establish one or more of its grounds of opposition. In Pfizer Products Inc v Karam [2006] FCA 1663 (1 December 2006), Justice Gyles has recently referred to the standard of proof required in terms of a “balance of probabilities”. I find that the opponent has met the onus upon it, in terms of the ground of opposition under section 60 argued at the hearing. Therefore, subject to a successful appeal from my decision, I refuse to register trade mark application number 1054652.

   Costs

3. It is usual for costs to follow the event, and I see no reason to depart from that principle here. I award costs, according to the official scale set out in Schedule 8 of the Trade Marks Regulations 1995, against the unsuccessful trade mark applicant, Nylon Studios Pty Limited.

   Claudia Murray
   Hearing Officer
   Trade Marks Hearings
   25 September 2008