Societe Des Produits Nestle SA v Cosi Sandwich Bar, Inc

[2002] ATMO 113

TRADE MARKS ACT 1995

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

Re:Opposition by SOCIÉTÉ DES PRODUITS NESTLÉ S.A. to registration of trade mark application 788972(42) - COSI - filed in the name of COSI SANDWICH BAR, INC.

DATE OF DECISION:

29 November 2002

DELEGATE:

Hearing Officer Claudia Murray

REPRESENTATION:

Opponent
Simon Kneebone, of Banki Haddock Fiora, Lawyers

Applicant
Sean McManis, of Baldwin Shelston Waters, Patent and Trade Mark Attorneys

DECISION:

1. Section 52 Opposition: registration allowed - s 55(b)

2. Costs awarded against opponent

Background

Cosi Sandwich Bar, Inc. (the applicant) filed trade mark application no. 788972 on 19 March 1999. The subject of the application is the plain word trade mark:

COSI

The application is in class 42 of the International (Nice) Classification of Goods and Services, for "Restaurant services".

The trade mark application was accepted for registration at the second report, after the applicant had provided and agreed to the following translation endorsement:

The applicant has advised that the translation of the Italian word COSI in the trade mark is LIKE THIS.

Acceptance was advertised in the Official Journal of Trade Marks on 22 June 2000.

Swiss company, Société Des Produits Nestlé S.A. (the opponent) filed notice of opposition on 21 September 2000. Eight grounds of opposition were listed in the notice.

By 20 September 2001, the opponent's evidence in support had been served and filed. The applicant did not serve or file any evidence in answer, despite extending by six months the time allowed for doing so. At the end of that time, it applied for a hearing on the matter. This came before me, as a delegate of the Registrar, in Canberra, on 25 July 2002. Mr Sean McManis of Baldwin Shelston Waters, Patent and Trade Mark Attorneys, Sydney represented the applicant at the hearing. Mr Simon Kneebone, of Banki Haddock Fiora, Lawyers, Sydney represented the opponent.

Evidence

The opponent's evidence in support comprises a statutory declaration, dated 19 September 2001, by Mr Richard Graham Anderson. Mr Anderson is Company Secretary of Nestlé Australia Ltd (Nestlé Australia), the opponent's Australian branch, founded in 1921 and authorised user of its trade marks. According to Mr Anderson, the opponent is the world's largest food company. It was founded in 1866 and its head office is in Vevey, Switzerland. It manufactures and sells a wide range of food and beverages that are available in nearly every country of the world. It employs a total workforce of around 231,000 people and has over 500 factories worldwide.

Mr Anderson refers in his declaration to the opponent's following two registrations:

TM No	Trade Mark	Class	Filing Date	Statement of Goods
479860	COSI	32	19 Jan 1988	Mineral waters and other non-alcoholic drinks, syrups, extracts and essences for making non-alcoholic beverages
479861	COSI	30	19 Jan 1988	Coffee and coffee extracts; coffee substitutes and extracts of coffee substitutes; tea and tea extracts; cocoa and preparations having a base of cocoa, chocolate, confectionery, sweets; sugar; bakery products, pastry; desserts, puddings; ice cream, products for the preparation of ice cream; honey and honey substitutes; foodstuffs having a base of rice, of flour or of cereals, also in the form of ready-made dishes; sauces; aromatising or seasoning products for food

Mr Anderson explains that the trade mark COSI is used by the opponent or its authorised licensees worldwide, and that Nestlé Australia is its authorised user in this country. He says that, in particular, Nestlé Australia uses the trade mark COSI in Australia in respect of a variety of coffee within its NESPRESSO range of coffee. The NESPRESSO range of coffee is sold in Australia and around the world, in "portioned capsules for use with particular coffee making machines to make espresso coffee of a consistent quality". This is known as the NESPRESSO system. The NESPRESSO range of coffees, including the COSI variety, was launched in Switzerland in 1986, and in Australia, where it is currently one of eight flavour options available, in 1995. COSI coffee is promoted, along with the other coffees in the NESPRESSO range and the machines to be used with them, in department stores such as Grace brothers and David Jones.

In addition to the above information, Mr Anderson also declares his belief that:

The provision of eat-in and beverage restaurant services and take-away food and beverage services by the one restaurant is usual in Australia and it is not uncommon for these restaurants to also offer for retail sale ingredients or produce bearing the restaurant name. These can range from salad dressing, sauces, biscuits, confectionery and fresh coffee.

In particular, a coffee shop restaurant will not uncommonly sell eat-in and take-away foods and coffee beverages, and ground coffee and coffee beans bearing the restaurant name for making coffee at home.

Exhibits A to C accompany Mr Anderson's declaration. Exhibit C comprises printouts from the websites of two coffee shop restaurant chains, "Baristas" and "Starbucks" described by Mr Anderson as having a substantial number of stores in Australia, and (as can be seen from their advertising) offering the kind of mixture of restaurant, take-away and retail services described above.

Grounds of Opposition

At the hearing, Mr Kneebone indicated that the opponent only sought to rely on the grounds listed in the notice of opposition pertaining to sections 44, 58 and 60 of the Trade Marks Act 1995 (the Act), together with "any other grounds as the Registrar may see fit to allow".

Section 44 - substantially identical or deceptively similar trade marks

The relevant subsection (and notes) of section 44 provides:

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

(a) it is substantially identical with, or deceptively similar to:

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

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

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

Note 1:        For deceptively similar see section 10.

Note 2:        For similar services see subsection 14(2).
Note 3:        For priority date see section 12.

The definition of "deceptively similar" in section 10 is that "a trade mark is taken to be deceptively similar to another trade mark if it so nearly resembles that other trade mark that it is likely to deceive or cause confusion". While subsection 14(2) provides that services are similar to other services if they are the same as, or of the same description as, those other services, the legislation provides no further elaboration upon how "closely related goods" to a particular service may be determined.

In this case, there is no dispute between the parties as to whether or not the trade marks in question are substantially identical or deceptively similar. They are literally identical. There is also no question that the opponent's registrations have an earlier priority date than the subject application. The question I must decide under section 44 is whether the opponent's beverages and foods in classes 32 and 30 are closely related to the applicant's "restaurant services".

Submissions
Mr Kneebone began his submissions for the opponent by arguing that the applicant's services and the opponent's foods and beverages were in fact "intimately connected". He cited the findings in Rowntree Plc v Rollbits Pty Limited 10 IPR 539, Re: Aussat 17 IPR 309, McDonald's Corporation v Macri Fruit Distributors Pty Limited [2000] ATMO 37 and Caltex Corporation v Y.E. Choices Merchandising SDN BHD [2000] ATMO 97 (the Caltex case) in support of his argument. He also cited the findings of (then) Hearing Officer Hardie in Sizzler Restaurants International Inc, v Sabra International Pty Limited 20 IPR 331 (the Sizzler case). However, he argued that, while Ms Hardie's findings in relation to take-away services and foods were very relevant, her findings in relation to non-take-away restaurant services and foods were distinguishable from the facts of the present opposition. He said:

The nature of restaurants and the way people view and use restaurants has changed since the Sizzler case was decided in 1990. People eat out and eat prepared foods at home much more than previously. Supermarkets provide prepared and semi-prepared cook-yourself meals; some "designed" by leading chefs. People regularly purchase take-away meals that are either cooked while they wait or are already prepared from establishments that may or may not have full or partial table service...The distinction between an eat-in restaurant, take-away or other sources of food is blurred. The kinds of services provided by sandwich bars, cafés, restaurants, take-away establishments, food halls and coffee shops are very similar and indeed overlap with each other and with other food providers such as catering and specialist food retail outlets and even supermarkets.

Focus on food generally is much greater. Australia has become a nation of "foodies"...Your local deli now includes a coffee shop; your fish shop has an eat-in sushi bar as well as a take-away service with fresh salads and sauces, as well as the standard battered fish...

One constant in take-away and eat-in restaurants and all establishments where food and beverages can be consumed is the presence of coffee and the emphasis of the brand of the coffee. Airlines tell their passengers that they proudly serve Starbuck's coffee on board their aircraft, coffee shops and restaurants carefully identify the brand of coffee they prepare for consumption either on or off the premises even if they identify no other brand of good they sell. Therefore the greatest likelihood of deception or confusion between a food or beverage product and any type of restaurant service lies in the product "coffee".

To distinguish between foods and beverages as against restaurant eat-ins and take-away services is an artificial difference in the food consuming environment we now live in.

Mr McManis responded by citing the findings in Mid Sydney Pty Limited v Australian Tourism Co. Limited (1998) 1616 FCA (18 December 1998) and Finradio S.R.L. v Hardrock Café International (USA) Inc. (1999) ATMO 14 that it is necessary to consider the basic business in defining what services are being offered and explained. He said:

Consequently it is essential to consider the fundamental nature of the services concerned and what they typically involve. Incidental services take their character from the whole and do not change its essential nature. In the present case, we are concerned with what are the typical and essential characteristics of restaurants and restaurant services.

Of Rowntree v Rollbits, supra, Mr McManis pointed out that this was an early decision in the history of service trade marks in Australia. (They were introduced via an amendment to the Trade Marks Act 1955 (the old Act) in 1978.) Further, it gave "scant consideration" to the issues of closely related goods and services, and being decided under the old Act, was affected by the onus being upon the applicant to satisfy the Registrar or the Court that there was no reasonable probability of confusion. Mr McManis argued in relation to the Sizzler case that it, too, was decided under the reversed onus applicable under the old Act. In any case, he said, it could not be viewed as a decision establishing that take-away food services are closely related to foods, although restaurant services are not. This was because the take-away services had already been deleted from the application before it was accepted, and therefore there had been no need to make a decision upon those particular services.

Mr McManis then went on to rely on the findings in Winton Shire Council v Lomas [2002] FCA 288, saying in that case, Spender J found that restaurant services are not closely related to beverages, which he also found were not similar to class 30 goods. Further, in relation to the likelihood of deception or confusion occurring in relation to coffee, which Mr Kneebone had highlighted as particularly strong, Mr McManis said:

There are many brands of coffee and it is very unusual for the name of a brand of coffee to be developed in a restaurant branding. One need only contemplate the number of coffee brands on the market, particularly when contemplating the number of sub-brands and the number of sub-sub-brands (like COSI), to see what little likelihood there is of a direct connection being assumed.

Discussion
The issues surrounding the manner in which goods and services can be "closely related" are difficult. In common with all issues covered in the grounds of opposition, they must necessarily be approached somewhat differently in response to the new legislation. Under the Trade Marks Act 1955, as under its predecessor, the applicant for registration bore the onus, both in examination and in opposition proceedings, of demonstrating that its trade mark qualified for registration. That onus has shifted under the Trade Marks Act 1995. Lahore, Patents, Trade Marks and Related Rights (2001), says at paragraph 66,320:

Under the 1955 Act it was well established that in opposition proceedings the onus of proof lay with the applicant. The opponent needed only to establish that there were matters for the applicant to answer. (Re Appn by Karachi Aerosol Co Ltd(1985) 6 IPR 33 at 34; Camelot Design Industries Group Pty Ltd v Bernard Leser Publications Pty Ltd(1987) 9 IPR 596 at 598.) A “reversed” onus of proof operates under the 1995 Act. The applicant is entitled to acceptance unless grounds for opposition are established — “[t]he onus is on the opponent to convince the registrar of the validity of the grounds of opposition that they have cited." (Trade Marks Office Draft Manual of Practice and Procedure, Part 46.)

Then, as Mr McManis has observed, the concept of closely related services and goods is itself relatively new. Prior to 1978, trade marks were not able to be registered in Australia in respect of the provision of services at all. Lahore, supra, says at paragraph 46,190:

Writing in 1979 Frank Smith, then Registrar of Trade Marks and Designs and Commissioner of Patents, acknowledged that there would be cases in which the use of similar trade marks by different proprietors for goods and services would cause confusion:

… the use of identical or deceptively similar marks in respect of prepared foods and in respect of a take-away food service would suggest that both the goods and the service might be attributable to the same source. Motor vehicles and vehicle hire service, cosmetics and beauty salon services, insecticides and pest eradication services are other examples. These are all likely to fall within the concept of “closely related goods and services” as it will occur in ss 23, 33 and 36 of the amended Act. [F J Smith, "The Trade Marks Amendment Act 1978" (1979) ALJ 118, 119]

There is a certain poignancy in these remarks given the decision of the Federal Court in Registrar of Trade Marks v Woolworths Ltd [(1999) 45 IPR 411] and the interpretation of that decision by the Trade Marks Office.

The potential tension between goods marks and service marks was described by Lockhart J in Caterpillar Loader Hire (Holdings) Pty Ltd v Caterpillar Tractor Co [(1983) 1 IPR 265 at 276-8] where he said:

Although service marks are in their infancy in Australia they may give rise to problems of confusion between service marks themselves, and between goods marks on the one hand and service marks on the other, of greater difficulty and subtlety than has previously been experienced in the case of goods marks alone. It is obvious that there is likely to be confusion if substantially the same or deceptively similar trade marks are used by different proprietors, one for goods and the other for services, where the goods and services are closely related. Examples that present practical difficulties are the sale of goods such as data processing equipment and the sale of programs for their operation; the sale of curtains and furnishing materials on the one hand, and the sewing of curtains on the other … Once the same trade mark is registered for both goods and services in the name of one proprietor questions of infringement enter a grey area, especially where those goods and services are closely related. (Emphasis added.)

Lockhart J's last sentence is particularly relevant in the present "poignant" circumstances to which Lahore has referred. Individual findings that goods and services are closely related are likely to be affected by the surrounding circumstances of use by trade mark owners. In Kellogg Company v Exxon Company [2001] ATMO 67 (the Tiger Mart case), Hearing Officer Williams discussed the earlier findings of Hearing Officer Thompson in the Caltex case, that clothing was closely related to retailing services of the type provided by a service-station convenience store, which might sell such clothing. In finding the reverse was true in the case before him, in relation to class 30 food items and similar convenience store retailing services, Mr Williams referred, at page 10, to the following questions asked by Mr Thompson in Caltex:

·are the services performed directly upon or by means of the goods? if so,

·are the goods and services generally regarded by the ordinary consumer as originating in, or being part of, the one industry or trade, or, a closely related trade or industry?

He went on:

I will not repeat the list of supplemental factors that Mr Thompson set out. Most of them are applicable to specialised goods or services such as those that applied in Aussat, supra. This case, on the other hand, is one of simplicity: basic products vs the operation of a store that sells them.

I have already said that I do not think that the fact that the retailing service must, of necessity, be performed "by means of" the goods is decisive. The service performed upon the goods is of the most superficial kind. Indeed, were it not for the fact that the International (Nice) Classification confirms the existence of retailing as a service in its own right, I would be tempted to ask if there is any service being performed at all.

As things are, I put great weight, in approaching the second question posed by Mr Thompson, on the positive requirement that there be some expectation, on the part of the public, that the two are part of the one trade or industry. There is certainly no evidence here that the public would see the running of convenience stores, particularly those in association with gasoline service stations, as part of the business of an ordinary trader in food products. The same applies to such convenience stores vis a vis clothing, and again with respect to the toys and games in class 28. True, perhaps, some such "expansion" might not surprise consumers, but no reason has been put forward for why it would be thought of, unprompted, or seen as a natural or convenient arrangement. Therefore, I do not think that there is any reason for ordinary people to see such a development as either likely or predictable with any degree of confidence. Much will depend on the specifics of each case: who is the opponent, what is its mark, how has it used that mark and others? Thus it is possible for an opposition based on clothing versus clothing retail to succeed in Caltex Corporation v Y.E. Choices Merchandising, supra, yet essentially the same controversy here has not. The fact that there is so much disparity between one retailer and another suggests strongly to me that the question of goods versus the retailing of goods should not generally be settled under the terms of s 44. Subject to the facts that are generally applicable to the particular trade, it should usually be left to s 60 as part of the opposition process.

I believe the circumstances in the present case are very similar, if at a point once removed from Mr Williams' decision. He had to decide a purer question of whether a connection existed between convenience store retailing services, and goods that might be sold via such services. I must make a decision here against the background of questioning whether the ordinary public of today automatically expects that restaurants, in addition to their fundamental functions of preparation and service of meals and beverages, will also be food and beverage retailers. Mr Kneebone's general submissions about Australia becoming a nation of "foodies", and all that entails, are not without merit. However, he has not convinced me that exceptions such as "Starbucks" and "Baristas" now prove the rule in relation to a merging in the public mind of restaurant and retailing services. And still, (remembering the words of Lockhart J quoted above, and following the reasoning in the Tiger Mart case) the crux of the matter must come down to the specifics of how the COSI trade mark has been used. Then, whether that use might have created a consumers' expectation that a COSI restaurant must, of course, both serve and retail the opponent's COSI food and beverages. The opponent has led no convincing evidence of this. Indeed, it tells upon the strength of these supposed connections that the largest food company in the world has provided not one example of its own use of any of its food or beverage brands on restaurant services, let alone use of its COSI trade mark in this manner.

In Winton Shire Council v Lomas, supra, Spender J referred to the observations of French J (in Registrar of Trade Marks v Woolworths Ltd, supra) upon the question of closely related goods and services. These in turn referred to Lockhart J's comments about difficult and subtle problems of confusion, quoted at length above. Spender J also remarked that the submissions before him upon the section 44 issue were very limited (paragraph 57). He said, at paragraphs 55 and 56:

The only services of relevance in this context are those relating to the conduct of outlets for the supply and provision of meals and refreshments. The registered goods are beverages, purchased for domestic or restaurant use. Outlets for the supply of meals and refreshments are a catering service where food is prepared and beverages are made available to be consumed on the premises of the outlet. Are beverages goods which are “closely related” to a catering service, where food and beverages are made available to be consumed on the premises? The goods and the relevant services have different trade channels.

The question is not without difficulty but, on balance, I am not satisfied that the operational outlets for the supply and provision of meals and refreshments should be considered as being “closely related” to the registered goods, namely beverages.

Equally, I find the question before me "not without difficulty" but on balance, I find the opponent has failed to discharge the onus upon it to convince me that the restaurant services of interest to the applicant are closely related to the foods and beverages of interest to the opponent. Therefore, as the important third criterion under section 44 has not been satisfied, I find the opponent's ground of opposition under section 44 has not been made out.

Section 58 - ownership of the trade mark

Section 58 of the Act provides:

The registration of a trade mark may be opposed on the ground that the applicant is not the owner of the trade mark.

Note:    For applicant see section 6.

Submissions
Mr Kneebone argued in terms of section 58 that, in line with the findings of Holroyd J in Re Hick's Trade Mark (1897) 22 VLR 636 (the Hick's case), the opponent, not the applicant, was the owner of the trade mark. He based this argument, not upon evidence of prior use by the opponent of the trade mark, but upon the earlier priority dates of its registrations. He further argued that the applicant's restaurant services were "the same kind of thing" (in terms of the Hick's case) as the foods and beverages covered by the opponent's registrations.

In reply, Mr McManis remarked he was "most surprised" that the opponent had elected to press this ground of opposition at the hearing. He said that reference to Hicks, supra, could not help but disprove any suggestion by the opponent that the goods and services in question were, in any way, the same kind of thing.

Discussion

It is interesting that Mr Kneebone has not based the opponent's arguments relating to ownership on prior use of its trade mark, despite the evidence having dealt with its use of the mark on coffee capsules. Instead, he claimed that the opponent simply needed a pre-existing trade mark to satisfy this ground. "Ownership" under the present Act has the same meaning as "proprietorship" under the previous Act, the Trade Marks Act 1955 (see the Reader's Guide, page iii, of the Trade Marks Act 1995). In The Shell Company of Australia Ltd v Rohm and Haas Company and Anor (1948-1949) 78 CLR 601, Dixon J said, at page 627:

The basis of a claim to proprietorship in a trade mark so far unused has been found in the combined effect of authorship of the mark, the intention to use it upon or in connection with the goods and the applying for registration. (Emphasis added.)

He also said, at page 628:

A man cannot be said to have adopted a name if someone else has done so before him.

The provisions of section 44, which cast a wider net than section 58, are specifically designed to cater for opposing claims arising from who was the first to file for registration of a trade mark. In Trade Mark Law in Australia, (2000) Elkington, Hall and Kell do not consider the possibility that ownership disputes under section 58 may be fought solely on this basis. At page 77, they say:

The battle therefore is between the party who was first to file and an opponent who claims to have been first to use. In such cases the first user prevails. But this ground of opposition is tightly confined. The use must have been commercial use, as a trade mark, of the very mark applied for or one extremely close to it, and for the goods or services of application or "the same type of thing".

The opponent has used its trade mark commercially, prior to the applicant's filing date, but on very limited goods: coffee capsules. The trade mark in question is "the very mark applied for". However, as I have found above that none of the goods of the opponent's registrations are "closely related" to the applicant's restaurant services, it clearly follows that none of them, including coffee capsules, are the "same type of thing" as those services. Therefore, it cannot be said "in a real sense a claim to proprietorship of the one [trade mark] extends to the other." (Carnival Cruise Lines Inc v Sitmar Cruises Ltd, 31 IPR 375, at page 391.) Accordingly, the opponent has not made out its ground of opposition under section 58.

Section 60 - trade mark with a reputation in Australia

Section 60 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.

Note 1:        For deceptively similar see section 10.

Note 2:        For priority date see section 12.

Submissions
Mr Kneebone reminded me that, according to the threshold test under section 60, the opponent's trade mark is substantially identical to the applicant's trade mark. He then drew my attention to the opponent's evidence of use of its trade mark COSI in Australia. He argued that the evidence demonstrated the opponent had acquired a sufficient reputation in its trade mark, at the filing date of the application, such that use of the applicant's trade mark on its restaurant services would likely deceive or confuse the public. Mr Kneebone rightly observed that, for the opponent's purposes in claiming reputation in a trade mark, section 60 does not require that the goods and services upon which the opponent uses its mark must be of a specified standard of similarity with goods and services of interest to an applicant. This is in contrast with the requirements under sections 44 and 58, discussed above.

Mr McManis responded that the manner of use by the opponent of COSI, the extent of its use and its general branding did not establish such a large reputation that persons would assume a connection between restaurant services and any of the opponent's goods. He said, moreover, there was no evidence of a general public reputation, no general advertising, and the COSI coffee capsule product appeared designed for use only in NESPRESSO coffee machines.

Discussion
I agree with the applicant's submissions in this matter. The evidence before me does not paint a compelling picture of the opponent's reputation in its trade mark. The COSI trade mark is used to identify a single flavour of coffee capsule, (out of a choice of eight), designed for use in a specific kind of coffee making machine. Irrespective of the extent of sales of those particular coffee capsules, the opponent faced an uphill battle to demonstrate it automatically followed that the public would assume a connection between the name of those capsules and any COSI restaurant they might come across. The evidence provided by the opponent in support of this case certainly hasn't made the grade. I find the final ground of opposition under section 60 has not been made out.

Decision

I have found that the opponent has not succeeded under any of the three grounds pursued at the hearing. For completeness, and as I have no basis to be satisfied that any of the other grounds raised in the notice of opposition have been made out, I find each of those grounds also to be unsuccessful. I direct that the application may proceed to registration six weeks from the date of this decision. If the Registrar has been served with a notice of appeal before that time, I direct that registration shall not occur until the appeal has been decided or discontinued.

Costs

Both sides have claimed costs in this opposition. I award costs, according to the official scale, against the unsuccessful opponent, Société Des Produits Nestlé S.A.

Claudia Murray
Hearing Officer
Trade Marks Hearings
29 November 2002