Peters (W.A.) Limited v Kellogg Company

[1998] ATMO 6

TRADE MARKS ACT 1955

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

Re:Opposition by KELLOGG COMPANY to registration of trade mark application number 578456 in the name of PETERS (W.A.) LIMITED

As provided for in the transitional provisions of Part 22 of the Trade Marks Act 1995, the provisions of the Trade Marks Act 1955 continue to govern this opposition.  Accordingly, unless otherwise specified, any reference to the Act in this decision is a reference to the Trade Marks Act 1955.

Application number 578456 was lodged on 15 May 1992, in the name of Peters (W.A.) Limited (the applicant).  The application was for the registration of the word mark TOUCAN covering the statement of goods, “Fruit drinks and fruit juices, including fresh as well as long-life juices, and all other goods in this class”, in class 32.  The trade mark was advertised as accepted in the Australian Official Journal of Trade Marks of 29 July 1993.

Notice of opposition to the trade mark’s registration was lodged by Kellogg Company, (the opponent), on 28 January 1994.  The notice of opposition listed a number of grounds.  However, the only matters which were later pursued by the opponent at the hearing were under s.28.  These were that the use of the subject trade mark on the goods claimed would be likely to deceive or cause confusion, that it was a trade mark which would not be entitled to protection in a court of law, and that its use would be contrary to law.

The service and lodgment of the evidence in support, answer and reply from the respective parties were completed by 24 March 1997.  The applicant requested a hearing in the matter and it came before me, as a delegate of the Registrar, in Canberra.  The opponent was represented by Mr Wayne Muddle of Counsel, instructed by H.R.Hodgkinson & Co, Patent & Trade Mark Attorneys, Sydney.  Appearing for the applicant was Mr Rolf Van Wollingen, of Griffith Hack, Patent and Trade Mark Attorneys, Perth.

Evidence
Evidence in Support

• Statutory declaration by Frank Edward Douglas, licensed private enquiry agent, dated 4 November 1994

• Statutory declaration by Jan Sheen, company secretary of a subsidiary of the opponent, dated 3 May 1995, and exhibits JS1 to JS4

• Statutory declaration by David A. Herdman, trade mark counsel of the opponent, dated 7 June 1995 and exhibits DAH1 to DAH11

Evidence in Answer

• Statutory declaration by Peter McKenzie Clark, company secretary of the applicant, dated 19 March 1996, and exhibits PMC1 and PMC2

• Statutory declaration by Joseph John Aloi, director of Farmer Jacks Supermarkets Pty Ltd, dated 14 March 1996

• Statutory declaration by Rolf Van Wollingen, a partner of the applicant’s attorney, dated 21 March 1996 and exhibits RVW1 and RVW2

Evidence in Reply

• Statutory declaration by Herbert John Du Brule, marketing director of a subsidiary of the opponent, dated 21 March 1997 and exhibits HJD1 and HJD2

Background
According to the Sheen and Herdman declarations, the opponent company created, in 1963, a fanciful character to assist in the marketing of its breakfast cereal, Froot Loops.  This character was a cartoon-like representation of a highly coloured South American bird known as a toucan and was known as SAM TOUCAN or TOUCAN SAM.  Since 1964, the opponent registered several trade marks comprising depictions of a toucan in the USA and many other countries and, from 1963, the opponent used in Australia a toucan device on its packaging of Froot Loops.  This toucan device varied in appearance over the years and has ranged from the cartoon representation of a vertical bird with a large bill, through to an almost horizontal bird, and has also included the character wearing a fruit-bedecked hat.  In 1966, the opponent registered a mark combining the words SAM TOUCAN and a toucan device, and several variations of the words and device have been registered over the years.

From 1985 to 1992, over 20 million boxes of Froot Loops bearing a depiction of a toucan were sold in Australia, and extensive print and television advertising has been carried out of the opponent’s goods utilising the toucan character.

According to the Clark declaration, the subject trade mark TOUCAN was conceived and developed by the applicant’s marketing manager.  That word and the realistic depiction of a toucan bird, were adopted by the applicant for use on a new range of fruit juices and fruit drink blends because of the tropical connotations stemming from the exotic and colourful plumage of the toucan bird.  Actual use commenced on fruit drinks and fruit juices on 4 July 1994, and has continued since that date.  The applicant’s goods are sold under the present mark in 250ml and 500ml bottles.  However, some of the juices are also sold in 2 litre bottles.  Sales, up to the time of the Clark declaration, have only been in Western Australia.  The applicant’s fruit drinks and fruit juices are sold in small bottles for consumption with the buyer’s lunch and are intended to be drunk directly from the bottle.  They are therefore generally found in the same refrigeration units in trade outlets as small soft drink cans, mineral water and flavoured milk.

Promotion of the applicant’s goods has been mainly through point of sale material, although advertisements have also appeared in the West Australian newspaper.  At the time of the Clark declaration, the applicant had expended $70,000 on advertising the goods under the TOUCAN mark.  In practice, the applicant’s trade mark is always used in close association with the graphical representation of a toucan bird as shown by the applicant in its evidence.  The applicant’s goods sold under the trade mark are manufactured and distributed by Brownes Dairy Pty Ltd, a wholly owned subsidiary of the applicant.

Submissions
Mr Muddle said that the central issues in the present matter were the grounds relied on by the opponent under s.28(a) and (b), and if it was necessary, s.28(d).  I have attempted to summarise both sides’ arguments only as they relate to those grounds.

Mr Muddle said that it was a question of fact as to whether the use of the present trade mark by the applicant would lead to deception or confusion, - the Yanx case - Amalgamated Tobacco Corporation Limited (1951) 82 CLR 199 at 206, and that the Registrar was entitled to give effect to his or her own opinion as to the likelihood of that confusion - New South Wales Dairy Corp v Murray Goulbourn Co-operative Co Ltd (1990) 24 FCR 370 at 377 (the Moo/Moove case).  He said the test which should be applied was directed at ordinary members of the public and in particular to normal purchasers of the goods who will have imperfect recollections of the marks - Australian Woollen Mills Ltd v F.S. Walton & Co Ltd (1937) 58 CLR 641 at 658. He said that the opponent’s use of its toucan device and the words TOUCAN SAM had been overwhelming and in excess of 30 years duration. He said that the toucan device had been shown in a variety of positions and involved the inclusion, in some instances, of pieces of fruit. References to fruit were also part of the opponent’s promotion of a complete breakfast which included its cereal product, together with toast, fruit juice and coffee.

Mr Muddle said that the onus was on the applicant to show that there was no real danger of confusion, which could well occur if a number of persons would be caused to wonder regarding the source of respective products.  He said that, in the present case, this could well be the result of a purchaser visiting both the cereal and fruit juice shelves of a supermarket and finding products incorporating a TOUCAN mark at each.  He said that the word TOUCAN was not commonly used in Australia and that any use had mainly been in relation to the opponent’s product.  He said that there was no question of comparing fruit juice, on one hand, and cereal on the other.  Rather, all of the surrounding circumstances should be taken into consideration in determining the likelihood of such confusion.  In the present case, this would include such particulars as the fact that both sets of goods would be taken home together from the supermarket and stored in close proximity.  Having regard to the impact of reputation, he said that it was not a necessary condition of confusion that the goods be in the same class or even closely related - Southern Cross Refrigerating Co v Toowoomba Foundry Pty Ltd (1954) 91 CLR 592. He said that a real probability of confusion was sufficient even though the confusion might be unlikely to persist up to the point of, and be a factor in, inducing actual sales - Southern Cross, supra at 595.

Mr Muddle attacked the applicant’s evidence, saying that much of it was irrelevant and unsupported.  He said that the Van Wollingen declaration was conjecture and merely the declarant’s opinion - which Mr Muddle submitted was flawed in any case.  Mr Muddle said that what should be applied were the facts - Allstate Life Insurance co v ANZ Bank (No 33), unreported, Lindgren J., Federal Court of Australia 26 March 1996 at p.9.  He further said that there appeared to be confusion as to whether the applicant’s goods were long-life or fresh juices.  This might then determine in what proximity to the opponent’s goods they were displayed.  He said that, additionally, much of the evidence referred to matters which were post acceptance and were not relevant, given it was the situation at the time of filing which was at issue.

With respect to the matter of whether “blameworthy” conduct needed to be shown in relation to s.28 matters, Mr Muddle submitted that, although the High Court’s decision in the Moo/Moove case required such conduct for success in expungement cases, there was no such requirement in relation to the consideration of original applications for registration.  Mr Muddle then discussed the individual judgments in the above case, saying that in could be inferred that the majority had said that the “blameworthiness” element was limited to expungement actions.

However, he said that if I decided that blameworthy conduct needed to be shown, it appeared that it was present here.  He said that the marketing manager, said to have chosen the presently applied for mark and who could throw more light on the reasons why it had been, had not made a declaration herself, the applicant relying instead upon another declarant with only second-hand knowledge.  This, he said, raised questions as to why such a mark had been adopted in the face of the opponent’s extremely well known mark and went towards his argument that the applicant had not discharged its initial onus of showing that the mark qualified for registration.  Such a choice was extremely suspicious and involved an element of deception, especially given the reputation of the opponent’s marks - John Lysaght Ltd v Reid Bros and Russell Pty Ltd (1907)VLR 432 at 437.

In relation to the opposition as it was based on s.28(b), Mr Muddle said that any conduct which would be misleading or deceptive, or likely to be so, would contravene s.52 of the Trade Practices Act 1974 and thus be contrary to law. He said that such behaviour under that Act must lead to a real, as opposed to remote, chance of deception or confusion. However, there was no requirement under s.52 of that Act that there be an intention to mislead, to be guilty of some negligence or other blameworthiness or moral turpitude - York v Lucas (1985) 158 CLR 661 at 666. He said that, additionally, the matter must be considered by reference to all people who came within the relevant section of the public - Taco Co of Australia Inc v Taco Bell Pty Ltd (1982) 42 ALR 177. In the present case, the particular target market was children, who could be confused when comparing the word TOUCAN with the device of one. Mr Muddle said that it followed that this was a contravention of s.52 of the Trade Practices Act 1974 which then came within s.28(b) of the Trade Marks Act 1955.

Mr Muddle concluded his submissions by asking for an award of costs in the matter in favour of the opponent.

In his submissions on behalf of the applicant as they related to the s.28 grounds of opposition, Mr Van Wollingen said that the test accepted as relevant here could be found in the words of Evershed J in Smith Hayden & Co Ltd's Appn (1946) 63 RPC 97. He said that, in respect of the present matter, this meant that, having regard to the reputation acquired by the opponent’s fanciful advertising character SAM TOUCAN (or TOUCAN SAM as he was sometimes depicted) the Registrar must be satisfied that the use of the subject trade mark, in a normal or fair manner in connection with any of the present goods, would not be reasonably likely to cause deception and confusion amongst a substantial number of persons. He further quoted the well known factors to be considered in determining whether deception would occur from use of the mark as set out in Southern Cross Refrigerating Co v Toowoomba Foundry Pty Ltd, supra, at 607-8.

Mr Van Wollingen said that the opponent’s SAM TOUCAN character was only ever used in close association with the opponent’s trade mark FROOT LOOPS and was aimed particularly at children.  He conceded that, at the time of the present mark’s application, the opponent had a substantial reputation for its SAM TOUCAN character in relation to its particular cereal product but he disputed any assertion that it had any reputation in the word TOUCAN or the device of a toucan for other breakfast cereals, or any other product.  Mr Van Wollingen said that the opponent’s character resembled a chicken and was very different from a real toucan.  Additionally, the goods on which the opponent used the character were very narrow and there had been no suggestion that the use was to be extended to other goods.  He said that the opponent had never registered the names SAM TOUCAN or TOUCAN SAM independently of the toucan character.

Mr Van Wollingen disputed many of the assertions made by the opponent with respect to the way the respective goods were marketed, including where in supermarkets the respective goods were located, and the association which consumers - particularly children - might make between goods consumed at breakfast time.  He said that the average consumer would not assume that a cereal manufacturer also made fruit juice.  Additionally, he said that the applicant’s juices were intended for consumption at any time of the day , while the opponent’s cereal was definitely intended for breakfast use.

He also said that the “doctrine of imperfect recollection” was not applicable in this case because consumers would carry away the impression of a cartoon character called SAM which bore almost no resemblance to a real toucan.

With respect to the Office’s current practice of requiring some blameworthy conduct to be shown, before an opponent could be successful under a s.28 ground of opposition, Mr Van Wollingen said that Heery J. in Nettlefold Advertising Pty Ltd v Nettlefold Signs Pty Ltd (1997) 38 IPR 495 had given an analysis of the Moo/Moove decision, supra, where his Honour had concluded that it was difficult to see how a disjunctive reading of s28 could have been unintended.

Mr Van Wollingen said that, in any case, that there was no evidence that the applicant had engaged in any wrongful conduct.  He said that the reasons that the applicant had chosen the trade mark had been fully explained in the Clark declaration.  He said that it was the applicant’s practice for him to be the person in the organisation authorised to make such statements.  Additionally, the logo of the wholly-owned subsidiary, Brownes Dairy Pty Ltd appeared clearly on the containers in which the juice was sold.  Accordingly, he submitted, there had been no attempt by the applicant to pass off its product as being in any way associated with the opponent’s breakfast cereals.  With respect to his own declaration, which was included in the applicant’s evidence, he said that much of the assertions he had made were common knowledge and were thus admissible as evidence.

Regarding the opponent’s assertion that the use of the applied for trade mark would be contrary to law because it allegedly was in contravention of s.52 of the Trade Practices Act 1974, Mr Van Wollingen said that he did not believe that the Registrar could consider and decide what were breaches of that Act.  He said that, in any case, there would have to be a real chance of a person being misled or deceived and not the remote chance as put forward by the opponent to offend under that Act.

Mr Van Wollingen asked for costs in the matter to be awarded in favour of the applicant.

Discussion
Section 28 - Deception and confusion

The provisions of this section of the Act read as follows:

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.

The test to be applied under paragraph (a) of these provisions, on which the opponent partly relies, has been well established by cases such as Southern Cross Refrigerating Co v Toowoomba Foundry Pty Ltd , supra, where it was said, at 608:

Registration should be refused if it appears that there is a real risk that the result of the user of the mark will be that a number of persons will be caused to wonder whether it might not be the case the two products come from the same source.

However, that risk must extend to a substantial number of people likely to be concerned in the purchasing of the goods - Kendall Co v Mulsyn Paint and Chemicals (1963) 109 CLR 300. In assessing the reputation of the opponents' mark in Australia, the relevant date is that of lodgment of the opposed application, 15 May 1992 - Southern Cross, supra.

The primary concern of s.28 is the public interest in avoiding the deception or confusion which could ensue from the concurrent use of confusingly similar or identical marks.  The trade marks of the respective parties both include the word TOUCAN.  In the applicant’s case, it comprises the entire trade mark, although the evidence shows that it is used in practice with a realistic depiction of a toucan bird.  In contrast, the opponent has used a trade mark which includes the word TOUCAN, together with the word SAM, and a cartoon character with some toucan-like characteristics.  I am inclined to agree with Mr Van Wollingen that the SAM TOUCAN (or TOUCAN SAM) character looks more like the cartoon representation of a chicken, but it does have a large beak and I concede that it is promoted as, and would be perceived as, a toucan.  I think that the opponent’s evidence shows that it had a very substantial reputation for this character in relation to its FROOT LOOPS cereal, particularly amongst children, at the appropriate date.  I am also aware of this from my own experience of providing cereal for my hungry offspring.

In contrast, the applicant would have had no reputation at all for its mark, as at the relevant date.  Mr Muddle said that consumers’ imperfect recollection of the opponent’s use of the word TOUCAN and the accompanying device of a toucan would cause confusion when they encountered the applicant’s mark on its goods.  It is true that the word is a rarely used one in this country and that the major occasion for its use could well be in relation to the opponent’s product.  It follows that a doubt might arise in some purchasers’ minds when encountering any foodstuffs bearing the word, or the depiction of a toucan.  The question which I think should be answered here is whether that doubt would be widespread and strong enough so that the goods of both parties might be thought of as “associated” in some way because of some close trade connection between them.

I think that the use of a toucan to promote fruit-related goods is quite apt.  The Macquarie Dictionary defines the word as: “...any of various fruit-eating birds (family Ramphastidae) of tropical America, with an enormous beak and usu. a striking colouration.”  The opponent has, quite sensibly, tried to incorporate the fruit element into the promotion of its FROOT LOOPS product with the TOUCAN SAM character.  However, I am of the opinion that most children would associate the opponent’s cereal with the personality of SAM rather than a toucan bird per se.  The character has “SAM” emblazoned on his chest on all of the opponent’s FROOT LOOPS packaging and is referred to by that name in the cartoon “adventure” included in the opponent’s evidence.

The applicant also elected to use the word TOUCAN to promote its goods, allegedly because of its “tropical connotations” - although both Mr Van Wollingen and Mr Muddle agreed at the hearing that oranges are not tropical fruit.  Nonetheless, the applicant does produce juice drinks containing mango, guava and passionfruit juices, which are tropical in nature.

The opponent has submitted that use of the same or deceptively similar trade mark on fruit juices on one hand, and breakfast cereal on the other, would lead to deception and confusion amongst a large proportion of users, particularly children.  It has included, in its evidence, advertising material said to illustrate the promotion of these goods in breakfast settings.  However, I have studied the suggested breakfast menus included and note that they also contain eggs, bacon, cheese, yogurt, bread, peanut butter, fruit salad, milk, coffee, tea and other items.  I think that the question which should be answered here is, if the present mark was applied to any of those goods, then could it be seriously maintained that a significant proportion of the relevant public would be deceived or confused in relation to their origin?  In other words, would an average shopper who had a trolley in which there was a packet of Froot Loops cereal - which included the TOUCAN SAM character on the package, faced with, say, TOUCAN bread or TOUCAN coffee, think that all of the goods shared a common source?  I think that the commercial reality is that they would not.

The second question which follows is whether TOUCAN fruit juice would bear a closer relationship to a cereal sold under a trade mark with the device of a toucan character called TOUCAN SAM than would TOUCAN milk or TOUCAN bacon in the minds of those who purchased the respective goods.  Again, it is my opinion that the answer is in the negative.  It is true, as Mr Muddle submitted, that fruit juices and cereal are bought by the same class of customers, in the same outlets - albeit generally in different aisles, stored in close proximity in the home, and may be consumed at breakfast time.  However, so are all of the other goods which the opponent has included in its Breakfast Position Statement as necessary for a healthy start to the day.

For all of the foregoing reasons, I find that use of the applicant's mark will not lead to deception or confusion, having taken into account the considerable reputation which the opponent enjoys.  I am therefore satisfied that the requirements of paragraph 28(a) have not been made out.

Following the High Court decision in the Moo/Moove case, supra, the Registrar now follows the practice as laid out in the decision of Hearing Officer Homann in Titan Manufacturing Co v John Terrence Coyne 22 IPR 613. That is, that all paras of s.28 should be read together. Mr Muddle expressed his disagreement with that practice and made detailed submissions in relation to what he saw as the Court’s intention.

However, in Canon Kabushiki Kaisha v Robert James Brook and Rachel Brook trading as The Cannon Watch Company 36 IPR 88, Tamberlin J, after considering the judgments in the Moo/Moove case, concluded that, in his view, the reasons for judgment delivered by members of the High Court left the matter open as to whether there was a need to find blameworthy conduct in opposition proceedings based on s.28(a) as opposed to expungement proceedings.  He went on to find that:

Notwithstanding the diverse opinions expressed by members of the High Court in New South Wales Dairy Corporation case, I consider that I should follow the views expressed by the Full Federal Court in that case, with the result that in the case presently before me the opponent to the application for registration is required to demonstrate "blameworthy conduct".

This need for a conjunctive reading of s.28 was echoed in the judgment of Heery J in Nettlefold Advertising Pty Ltd v Nettlefold Signs Pty Ltd, supra, as quoted by Mr Van Wollingen.  All of this means that, for the opposition to be successful on the s.28 ground then, if I had found that the use of the trade mark would have been likely to lead to deception and confusion, it would have also been necessary for me to find that the trade mark would not be entitled to protection in a court of law.  However, there is nothing before me to show that there has been any blameworthy conduct on the part of the applicant, nor any other circumstance which would disentitle the mark to protection in a court of justice.  There is simply no evidence to support Mr Muddle’s claim that the applicant chose the mark with any ulterior motive.  I do not believe that the trade mark’s selection can be interpreted as an attempt to benefit from the opponent’s reputation and advertising.

I find, therefore, that the requirements of paragraph 28(d) have not been made out.

On whether the use of the mark would constitute a breach of s.52 of the Trade Practices Act 1974 so as to be contrary to law and thus offend against s28(b), I cannot agree that I, as the Registrar’s delegate, can decide that question. The matter is not within the competence of the Registrar to decide and therefore such action is beyond the scope of these proceedings. In any case, I have found, in relation to the Trade Marks Act 1955, that use of the present mark would not be likely to lead to deception and confusion amongst a substantial number of users of the relevant goods. I find therefore that the opponent’s case fails as it is based on s.28(b).

The opponent's case in terms of s.28 must therefore fail.

Conclusion
I have found that the opponent has failed on the only grounds relied on at the hearing.  It follows that the opposition as a whole is unsuccessful.  I therefore dismiss the opposition in total and direct, subject to any appeal of this decision, that the application should proceed to registration.

Costs
I can see no reason why costs should not follow the result and direct that the opponent pay the applicant’s costs in the matter in accordance with the official scale.

Ian Forno
Hearing Officer

26 February 1998