Opposition by Luckin Coffee Group Co Ltd to registration of trade mark application number 1987084 (Class 43) – Luckin – in the name of A&ZZ Pty Ltd.

[2022] ATMO 43

TRADE MARKS ACT 1995

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

Re: Opposition by Luckin Coffee Group Co Ltd to registration of trade mark application number 1987084 (Class 43) – Luckin – in the name of A&ZZ Pty Ltd.

Delegate:

Blake Knowles

Representation:

Opponent: Ben Gardiner of counsel, instructed by McCullough Robertson Lawyers.
Applicant: Self-represented.

Decision:

2022 ATMO 43

Trade Marks Act 1995 (Cth) – opposition under section 52 – grounds for opposition pressed under ss 42(b), 60, and 62A – s 60 considered and established – registration refused.

Background

1. This is a decision in the opposition by Luckin Coffee Group Co Ltd (‘Opponent’)[1] to trade mark application number 1987084 (‘Application’) filed by A&ZZ Pty Ltd (‘Applicant’) on 3 February 2019 (‘Relevant Date’) for the trade mark ‘Luckin’ (‘Trade Mark’) for cafes; cafe services; restaurants; salad bar restaurant services; coffee shop services; bistro services; washoku restaurant services; inn keeping (bar, restaurant and accommodation); restaurant services; cocktail lounge services; coffee bar and coffee house services (provision of food and drink); snack-bars; theatre restaurants (provision of food and drink); bakery services; wine bar services; taverns; bar services; takeaway food and drink services; tea room services; restaurant reservation services; food and drink catering; snack bars (provision of food and drink); ice cream parlour services; self-service restaurants; udon and soba restaurant services in Class 43 (‘Applicant’s Services’).

   [1] The opposition was initially filed by another company Beijing Luckin Coffee Technology Co Ltd. However, the rights upon which the opposition were based were subsequently assigned to the Luckin Coffee Group Co Ltd, and that company subsequently requested on 25 February 2022 to become the opponent in these proceedings. As such, references to the ‘Opponent’ in this decision are references collectively to Luckin Coffee Group Co Ltd as the current Opponent, and Beijing Luckin Coffee Technology Co Ltd as its predecessor.

2. The Application was accepted for registration and subsequently advertised for opposition on 4 August 2019.  The Opponent filed a notice of intention to oppose on 3 October 2019, followed by a statement of grounds and particulars (‘SGP’) on 1 November 2019. The Applicant filed a notice of intention to defend on 11 February 2020.

3. The parties had the opportunity to file evidence in accordance with reg 5.14.[2] The Opponent filed Evidence in Support (‘EIS’) on 12 August and 7 September 2020. The Applicant filed Evidence in Answer (‘EIA’) on 3 February 2021. The Opponent did not file Evidence in Reply.  

   [2]   Unless otherwise stated, each reference to a section or regulation is a reference to a section of the Trade Marks Act 1995 (Cth) (‘Act’) or regulation of the Trade Marks Regulations 1995 (Cth) (‘Regulations’).

4. The parties were given the opportunity to request an oral hearing or be heard by written submissions. The Opponent requested that the matter be decided based on written submissions and paid the relevant fee. Ben Gardiner of counsel instructed by McCullough Robertson Lawyers filed written submissions on behalf of the Opponent. The Applicant did not request to be heard. I have decided this matter based on the particulars set out in the SGP, the evidence of the parties, and the submissions of the Opponent.

   Grounds and onus

5. The SGP nominated grounds of opposition under ss 42(b), 58, 59, 60, and 62A. However, the Opponent in submissions only pressed grounds under ss 42(b), 60, and 62A.

6. The Opponent carries the burden of establishing one or more of the grounds of opposition on the balance of probabilities.[3] The rights of the parties are assessed as at the Relevant Date.[4]

   [3] Pfizer Products Inc v Karam [2006] FCA 1663, [22] (Gyles J); Telstra Corporation Limited v Phone Directories Company Pty Ltd [2015] FCAFC 156, [133] (Besanko, Jagot and Edelman JJ).

   [4] Southern Cross Refrigerating Co v Toowoomba Foundry Pty Ltd (1954) 91 CLR 592, 595 (Kitto J).

   Evidence

7. The following evidence was filed:

   EIS

   Declarations by Jinyi Guo, CEO of the Opponent, made 11 August 2020 (with Exhibits 1-11) and 4 September 2020 (with confidential Exhibit JG-1).   

   EIA

   Declaration of Fei Yuan, director of the Applicant, made on 20 December 2020, with one annexure.

   EIS

8. Mr Guo declares that the Opponent was founded in China in June 2017, and that by early 2019, the Opponent had surpassed Starbucks as the largest coffee-chain and coffee brand in China. At the time of Mr Guo’s first declaration (August 2020), the Opponent had over 4,900 coffee stores operating under the brand ‘Luckin’ (‘Opponent’s Mark’) in China.

9. Mr Guo declares that the Opponent chose the Opponent’s Mark due to its association with luck, felicity, and happiness, amongst other positive connotations. Mr Guo opines that the exponential growth of the Opponent’s business was due to its technology driven retail model and competitive price point. Mr Guo states that the extraordinary growth of the Opponent resulted in its subsequent public listing on the NASDAQ exchange in early 2019.

10. Mr Guo declares that the Opponent’s Mark has gained significant media publicity, including in Australia. Mr Guo annexes various Australia media articles published prior to the Relevant Date, including from the Australian (dated 1 August 2018 and 15 October 2018), the Australian Financial Review (dated 3 August 2018 and 11 October 2018), Daily Mail Australia (dated 3 January 2019), and the Sydney Morning Herald (dated 17 January 2019). I note that the articles in Daily Mail Australia and Sydney Morning Herald are specifically focused on the Opponent’s business and in particular its challenge to Starbucks in the Chinese market. 

11. Mr Guo declares that the Opponent’s website, has had approximately 11.3 billion hits since July 2017. Mr Guo also annexes various exhibits which show the Opponent’s Mark (and the substantially identical variation, ‘Luckin Coffee’) in use in China on the Opponent’s website, signage, packaging, and in promotional contexts such as the sponsorship of events such as the Beijing Marathon in September 2018, the Huawei Connect conference in October 2018, and the Tencen Connect Conference in November 2018.

12. Mr Guo declares that the Opponent has been recognised as one of the world’s fastest growing companies, and from 2017 to 2019, the Opponent was awarded over 70 industry awards.

13. Mr Guo declares that during the period 2018-2019, there were 9.3 million short term visitor arrivals to Australia from overseas, and that China alone was the origin of over 1.4 million visitors. Mr Guo annexes an extract from the Australian Bureau of Statistics website from which the information regarding visitor numbers was sourced.

14. Mr Guo provides revenue and promotional expenditure figures for 2018 to 2019 relating to use of the Opponent’s Mark in China. These figures are significant, as one would expect given the rapid growth of the Opponent’s business.  

    EIA

15. The EIA consists solely of the results of a written survey taken in late 2020. Respondents to the survey answered the question “Do you know of any other ‘Luckin Café’”. No information is given about where or in what circumstances the survey was taken. The majority of respondents answered “no”. Some respondents answered yes, but there is no elaboration regarding the other ‘Luckin Café’ of which they are aware.  

    Discussion

    Section 60

16. To establish this ground, the Opponent must demonstrate a reputation in a trade mark existing in Australia at the Relevant Date. The Opponent must then prove that because of this reputation, use of the opposed Trade Mark is likely to deceive or cause confusion.

17. The Opponent must establish a reputation and a likelihood of confusion exists amongst a substantial number of consumers.[5] Reputation can be demonstrated in several ways. For instance, it can be established by demonstrating that a significant number of consumers are regularly exposed to a particular trade mark. It may also be inferred from a high volume of sales combined with substantial advertising figures and other promotions.[6] The length of use of a trade mark will also be relevant in determining the existence of and extent of reputation. However, it is also possible for a trade mark to accrue reputation in a relatively short period of time, particularly given the capacity of the Internet and social media to bring immediate and widespread attention to new businesses and brands.

    [5] Renaud Cointreau v Cordon Bleu International Ltee [2001] FCA 1170, [74]-[75] (Moore, Tamberlin and Goldberg JJ).

    [6] McCormick & Company Inc v McCormick [2000] FCA 1335, [86] (Kenny J).

18. A trader may also establish reputation even in situations where they are not trading in Australia, or where trading activities have been minimal. For instance, the success of a brand overseas, particularly in a jurisdiction to which Australian consumers regularly travel or are otherwise exposed, can give rise to reputation in the Australian market. In In-N-Out Burgers, Inc v Hashtag Burgers Pty Ltd (‘In-N-Out’), Katzmann J held that, despite minimal trading activity in Australia by the applicant, a substantial number of persons in the Australian market were aware of the applicant’s ‘In-N-Out’ brand of burger restaurants in the USA, considering such factors as the media attention the brand had received in Australia and consumers in Australia who had visited an ‘In-N-Out restaurants in the USA. Justice Katzmann subsequently held that in the circumstances, the use of the similar brand ‘Down-N-Out’ and particular getup by the respondent constituted misleading and deceptive conduct.[7] However, allegations of likelihood of confusion based on ‘spill-over’ reputation in Australia must also be treated with a degree of caution. The mere fact that a trade mark is used in another country and there is evidence that persons regularly travel between that country and Australia will not in itself suffice to prove reputation. In ConAgra Inc v McCain Foods (Aust) Pty Ltd, Lockhart J said:

    With respect to travellers to Australia from the United States, whether as long or short term visitors, there was no evidence as to the extent to which such people were or were likely to be buyers of frozen food products including, in particular, dinners in the United States or likely to be aware of the appellant's Healthy Choice products. Nor was there evidence of whether such people were or were likely to be the purchasers of frozen dinners in Australia during their visit here. The most that one could conclude from this evidence, in my opinion, would be that some of the persons departing Australia for the United States or departing the United States for Australia, whether for short or long term visits, would be aware of the appellant's frozen food products, but whether it would be a small or large number of the travellers is virtually impossible to assess. While some assistance to the appellant's case is given by the evidence that the appellant's frozen food products were generally well known in the United States amongst a substantial percentage of the population (47%) and in particular among the buyers of frozen food dinners at the premium end of the market (about 68%), it seems to me, at the end of the day, that the statistics of travel of persons between the two countries is a rather flimsy twig on which to support evidence of reputation of a truly worthwhile kind.[8]

    [7] [2020] FCA 193, [193] to [263].

    [8] [1992] FCA 176, [139].

19. The Opponent’s evidence of reputation in China is not challenged by the Applicant. As such, I have no reason to conclude that the information provided by Mr Guo is not accurate. Further, the evidence provided by Mr Guo is supported by the annexed media articles referring to the rapid growth of the Opponent’s business and its challenge to Starbucks.

20. There are however some reasonable critiques that can be made regarding the EIS. First, the length of use of the Opponent’s Mark prior to the Relevant Date in China is relatively short (approximately 18 months). Second, the Opponent’s business was at the Relevant Date exclusively trading in the Chinese market. In most circumstances, these two facts would likely be fatal to the Opponent’s case. Further, the present case is not directly analogous to In-N-Out, as there were other factors considered in In-N-Out in determining that use of the Down-N-Out branding was misleading and deceptive. These include evidence as to the intentions of the respondent, the use of similar getup, and more widespread media attention in Australia given to the In-N-Out brand than is shown in the present case.  

21. On balance, I consider that the short period of use of the Opponent’s Mark in this case is significantly outweighed by the significant extent of use. While the Opponent’s Mark has only been used for a relatively short period of time, the growth of the Opponent’s business during that time has been exponential (going from nothing to overtaking Starbucks as the largest coffee store chain in China in the space of 18 months). The enormous growth of a business in such a short space of time contributes to, rather than detracts from, reputation in the Opponent’s Mark. Further, while caution must be exercised in determining the existence of reputation in Australia based solely on use in a foreign market, I give weight to the fact that at the Relevant Date (which was prior to the disruptions to international travel caused by Covid 19), the number of Chinese travellers to Australia was significant. Further, it is a matter of general knowledge that in addition to Chinese tourists, many Chinese students travel to Australia for education each year. It can be reasonably assumed that many Chinese students would have been exposed to the Opponent’s Mark in China, and would also consume takeaway food and beverage products while living in Australia. I must also consider the potential modes of use of the Trade Mark. While the use of the Trade Mark in a small suburban café may carry less risk of confusion, coffee shops and restaurants are also commonly located in airports and near popular tourist locations. The exposure of the Trade Mark to consumers in these contexts increases the risk of confusion.

22. I have considered the Applicant’s survey evidence. The survey was taken at the height of the Covid 19 epidemic. As such, it is likely that the respondents to the survey did not include many recent visitors to China, or Chinese visitors currently in Australia. Further, as the Opponent has noted in submissions, there is no context as to how the participants came to contribute to the survey, or other information as to how the survey was conducted. If the survey was taken in a small suburban coffee store, then it may not be reflective of the likelihood of confusion if the Trade Mark were used in locations more commonly frequented by Chinese tourists or temporary residents. As such, I do not find the survey evidence compelling.

23. I am satisfied, in the absence of arguments to the contrary by the Applicant, and considering that the Opponent’s business is the largest of its kind in China (at least in terms of number of stores) and the sheer number of regular visitors to Australia from China as at the Relevant Date, that it is likely that a significant number of persons in Australia (particularly visitors or students from China and/or Australians who have returned from China) who saw the Trade Mark may be caused to wonder whether it is associated with the Opponent. The potential for confusion is increased by the fact that the Opponent’s Mark is substantially identical to the Trade Mark, and covers services that are the same or the same kind of thing as those provided by the Opponent. I also give some weight to the media attention the Opponent’s business has received in Australia as contributing to the potential for confusion, although I do not consider that this media attention would have been sufficient in itself to establish the requisite level of reputation in Australia had the scale of the Opponent’s business in China been appreciably smaller.

24. I am therefore satisfied that the Opponent has established the ground of opposition under s 60 in respect of all the Applicant’s Services. As the Opponent has established a ground of opposition under s 60, it is not necessary to consider the other grounds of opposition relied on.

    Decision and award of costs

25. The Opponent has established a ground of opposition. As such, I have decided to refuse registration of the Trade Mark. Noting the appeal period, this refusal will be recorded one month from the date of this decision unless the Registrar of Trade Marks is served with a notice of appeal. If an appeal is filed, the disposition of this opposition will be for the court.

26. The Opponent has requested an award of costs in its favour. Costs usually follow the event. There being no reason to make an exception here, I award costs against the Applicant.

    Blake Knowles

    Delegate of the Registrar of Trade Marks

    24 March 2022