Societe Des Produits Nestle SA v Vincent Thomas O'Connor

[2000] ATMO 81

TRADE MARKS ACT 1995

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

Re:Opposition by Société des Produits Nestlé SA to the registration of trade mark application number 720372 in the name of Vincent Thomas O'Connor for the trade mark comprising the words KIT KAT CLUB and device in Class 41.

Background

Trade mark application number 720372 was filed on 24 October 1996 in the name of Vincent Thomas O'Connor (the applicant).  The application was for the registration of the trade mark shown below and covered the statement of services, "Entertainment" in Class 41.  Subsequent to examination, the trade mark was advertised as accepted in the Australian Official Journal of Trade Marks of 19 June 1997.

Société des Produits Nestlé SA (the opponent) filed a notice of opposition to the trade mark’s registration on 18 September 1997.  That notice listed a number of grounds.  However, at the hearing held to determine the matter, the opponent's legal representative only made submissions in relation to the ground based on s.58 - that the applicant is not the owner of the mark.

The opponent requested that the matter be decided by the Registrar and it came before me, as a delegate of the Registrar, for hearing in Canberra on 2 May 2000.  Representing the opponent at the hearing was Mr Michael Ellicott of Counsel instructed by Mr Peter Lloyd of Minter Ellison, Lawyers.  The applicant advised prior to the hearing that he would not be attending proceedings.

The Evidence
The evidence in support includes a declaration by Graham Whyte.  He declares that he, together with his wife, Gaynor Whyte, his wife's brother, John Bunning and his wife, Sandy Bunning, set up a venue called the Kit Kat Club in Adelaide in 1987.  Mr Whyte gives details of the range of activities conducted at the club, including the establishment of an 18 piece big-band, the organisation of musical arrangements and venue, the design and manufacture of stage sets, lighting, bandstands, venue decoration, costumes for staff, and the organisation of promotions in the print radio and television media.  He also declares that he had artwork prepared, which became the Kit Kat club trade mark.  This logo featured on drink coasters, key rings, newsletters, posters, matches, and the like.  Mr Whyte relates the history of the club, including the number of club members, shifts in location and the changes in the personnel who were associated with the running of the activities.  He describes an informal agreement reached with John Bywaters in 1996 regarding the running of the club's activities and the later involvement of Vincent O'Connor - the applicant here - with Mr Bywaters as a partner in the running of the club's activities until 1997.  Mr Whyte then terminated the franchise arrangement with them because of their alleged non-payment of monies due in relation to club functions.  Mr Whyte then says that, from that time, he reached an agreement regarding the operation of the club with Peter Hurley, the owner of the Arkaba Hotel in Adelaide, until he terminated that agreement in February 1999.  Attached as exhibits to his declaration are club newsletters, invitations, a drink coaster and key ring - all featuring the original Kit Kat Club logo [as shown on page 6], and copies of a magazine article relating to the club and also a South Australian Certificate of Registration of a Business Name for the words KIT KAT CLUB, issued on 31 March 1987.

Also included in the evidence is a declaration from Gaynor Whyte, who declares that she agrees with the contents of Graham Whyte's declaration in its entirety.

Completing the evidence in support is a declaration by Odette Gourley, the legal representative of the opponent, who attaches, as an exhibit to her declaration, a copy of a deed executed between the opponent and Mr and Mrs Whyte, on 27 July 1999.  This deed is an agreement between the Whytes and the opponent regarding the assignment to the latter party of "…all rights owned by them in the name, trade mark and trading style Kit Kat Club and Kit Kat Club logo, including copyright in the logo."  Also exhibited to Ms Gourley's declaration are copies of various correspondence between Mr Whyte and Messrs Bywaters and O'Connor.  Part of this correspondence is an exchange of faxed letters between Mr Whyte and Mr Bywaters, on 3 April 1996, where Mr Whyte offered an informal franchise agreement to Mr Bywaters for him to "use the Kit Kat Club name" and for him to operate the club, for an indefinite period and under certain conditions, and Mr Bywaters enthusiastic acceptance of this.

The evidence in answer comprises a declaration by Vincent O'Connor, the present applicant.  Mr O'Connor gives his version of negotiations between himself and the present opponent regarding the subject trade mark.  He attaches, as exhibits to his declaration, various correspondence between himself and Minter Ellison, and a draft Settlement Agreement which Minter Ellison had sent to him for his comment.  He gives additional details of further negotiations between the parties and relates changes that he says he requested in the draft agreement, attaching further correspondence to this effect and also regarding the ultimate breakdown in negotiations.

Submissions
In his submissions on behalf of the opponent, Mr Ellicott said that the notice of opposition contained six grounds, of which the opponent was particularly pressing, at this hearing, the ground under s. 58 - that the applicant was not the owner of the trade mark for which he had applied to be registered.  Mr Ellicott referred to the tests, normally used to determine the ownership of a trade mark, which were laid down in Shell Company (Australia) Limited v Rohm and Haas Co (1949) 78 CLR 601. These included, he said, that such a person needed to be the author of a trade mark, or its first user in this country. He said that, here, the first users of the subject mark in Australia were persons other than the applicant. He said that the opponent's evidence showed clearly who were the authors of the trade mark and that this use had taken place before the involvement of the applicant at the Kit Kat Club in Adelaide. He said that any involvement which the applicant did have with the mark was as a licensee at best. Mr Ellicott said that that there had been no transfer of title of the mark from the original owners to the applicant and that Mr O'Connor had produced no evidence at all to show that he was the owner of the mark applied for.

Mr Ellicott concluded his submissions by saying that an unanswered prima facie case had been established in the present proceedings that, despite the applicant applying for its registration, he was not the true owner of the present trade mark. Mr Ellicott sought costs in the matter on behalf of the opponent.

Analysis
In these, the reasons for my decision as the delegate of the Registrar of Trade Marks, I will discuss the ground relied upon by Mr Ellicott and any other grounds properly listed in the notice, which I believe may be relevant to the proceedings.

Section 58
This section reads:

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

The term "owner" in the Trade Marks Act 1995 equates to that of "proprietor", as referred to in the Trade Marks Act 1955 - see p.2 of the Readers' Guide to the 1995 Act.  The initial onus, with respect to ownership, is on the applicant for registration.  As is stated in s.27 of the Act:

27.(1) A person may apply for the registration of a trade mark in respect of goods and/or services if:

(a)the person claims to be the owner of the trade mark; and

(b)one of the following applies:

(i)the person is using or intends to use the trade mark in relation to the goods and/or services;

(ii)the person has authorised or intends to authorise another person to use the trade mark in relation to the goods and/or services;

(iii)the person intends to assign the trade mark to a body corporate that is about to be constituted with a view to the use by the body corporate of the trade mark in relation to the goods and/or services.

The basis of a claim to proprietorship (read ownership) of a trade mark was explained by McGarvie J, who said in Settef S.p.A. v Riv-Oland Marble Co (Vic) Pty Ltd 10 IPR 402 at 413:

The basic common law principle is that the first person who uses a trade mark of an appropriate type within a country becomes the proprietor of the mark there: Re Registered Trade Mark "Yanx"; Ex parte Amalgamated Tobacco Corp Ltd (1951) 82 CLR 199 at 203; Thunderbird Products Corp v Thunderbird Marine Products Pty Ltd (1974) 131 CLR 592 at 603; Moorgate Tobacco Co Ltd v Philip Morris Ltd(No 2) 59 ALJR 77 at 83.
 ...
In considering who, within s.40(1) of the Act, was at the time of Settef's application for registration the proprietor of the trade mark, one considers who at common law was the proprietor in Australia: The Shell Co of Australia Ltd v Rohm & Haas (1949) 78 CLR 601 at 625 and 627.

In other words, the first user of the mark in Australia (for the relevant services and prior to the date of application) becomes the owner at common law.  That ownership, however, is limited to "the same kind of thing", as per Holroyd J in Hicks' Trade Mark (1897) 22 VLR 636. Any small amount of use will suffice, but the effect of the act relied on to constitute use must be the creation, in the minds of those concerned, of an impression that the services of a particular trader are being offered for sale, in Australia, under the trade mark.

The services provided under the respective marks here are clearly the same or similar.  The opponent's evidence shows that the Whytes and others provided nightclub-type services at the Kit Kat nightclub in Adelaide, while the present application covers, simply, "entertainment".  The evidence further shows that the Whytes' nightclub had been in operation since 1987 and that a particular trade mark, which included the club's name and other features, was used in relation to it.  That trade mark is shown on the following page.  The applicant applied for the registration of the present trade mark on 24 October 1996.  He submitted no evidence as to having used the mark before that date.  The opponent can therefore claim to have used a trade mark, which included the words THE KIT KAT CLUB and a particular device, from an earlier date than the priority date of the present trade mark.

However, the dispute of a claim to ownership of a mark can only proceed to be considered where the opponent can also show that the word or words it relies upon as being owned by itself or another person is substantially identical with the mark, the subject of the application for registration.  As Gummow J. said in Carnival Cruise Lines Inc v Sitmar Cruises Ltd. (1994) AIPC 91-049 at 38,114, when referring to the concept of proprietorship in the Trade Marks Act 1955, and to Shell Co. (Aust.) Ltd v Rohm and Haas, supra:

[Shell v Rohm and Haas] does not supply any general authority for the proposition that in the case of disputed claims to proprietorship under the present statute anything less than substantial identity between the two marks will suffice. The phrase "substantially identical" was discussed by Windeyer J. in The Shell Company of Australia Limited v Esso Standard Oil (Australia) Limited (1961-1963) 109 CLR 407 at 414.

That particular passage, reporting his Honour, Justice Windeyer's words reads:

In considering whether marks are substantially identical they should, I think, be compared side by side, their similarities and differences noted and the importance of these assessed having regard to the essential features of the  mark and the total impression of resemblance or dissimilarity that emerges from the comparison.

The trade mark for which registration has been opposed is shown on page one of these reasons for my decision. There is another version of this mark.  It is featured in the opponent's evidence as being the one used by the Whytes in relation to the original Kit Kat Club from 1987.  For ease of comparison, I will reproduce the two marks below:

The opposed trade mark

The original mark as used in relation to the Kit Kat Club by the Whytes.

The opposed mark contains the words KIT KAT CLUB with the words KIT KAT in art deco style, a female vocalist with a "big-band" style orchestra and palm tree within an arch, a musical stave containing notes, together with a foreground depiction of a couple ballroom dancing and a white-coated conductor/band leader.  The mark used by the Whytes in their club contains all of these features except for the three figures in the foreground.  I believe that the prominence of these figures in the subject mark is the major determining factor in assessing what, at first glance, are two very similar marks.  It is enough, in my opinion, to be an "essential feature" which differentiates the marks, using Windeyer J's test for substantial identity in the above Shell case, supra.  I will say that, if the devices of the two dancers and the conductor/band leader had been somewhat less prominent in the subject mark, then I would have found differently on this point - given the total similarity of all of the other features in the two marks.

At this point, I will note that the presently applied for mark was on the letterhead of the faxed letter from Mr Whyte to Mr Bywaters on the 3 April 1996, which offered him a franchise of the club.  However, this is the only use of that version of the mark by Mr Whyte which is included in the evidence.  Therefore, despite it being included in his letter before the date of application here, it does not amount to its use as a trade mark on the services here.

Given all of the foregoing, I find that the competing marks here are not substantially identical.  The legislation, as Gummow J. in the above Carnival Cruise Lines case, supra, pointed out, implies that nothing less than substantial identity will suffice in relation to the success of an opposition based on this section of the Act.  Accordingly, I have no other choice than to find that the opposition, as it is based on the ground of the lack of ownership of the applied-for trade mark, is not successful.

Section 60
Notwithstanding my findings in relation to the s.58 ground, I will now consider the matter as it relates to a ground under s.60 of the Act - ground 6 of the present notice of opposition.  Despite it being listed among the grounds in the notice of opposition, Mr Ellicott did not pursue the ground in his submissions at the hearing.  Despite this, I believe that it is relevant to the present proceedings - as I will now explain.

This section reads:

60. 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.

I have already found that the two marks are not substantially identical, using the accepted tests to come to that conclusion.  However, in the context of this particular ground of opposition, I will now consider whether the two marks are deceptively similar.  The second of Windeyer J's tests in the Shell case, supra was in relation to determining that concept.  It was:

The marks are not now to be looked at side by side.  The issue is not abstract similarity, but deceptive similarity.  Therefore the comparison is the familiar one of trade mark law.  It is between, on the one hand, the impression based on recollection of the plaintiff's mark that persons of ordinary intelligence and memory would have; and, on the other hand, the impressions that such persons would get from the defendant's television exhibitions.

As I have already noted, the marks of the two parties here are the same except for the prominent features, in the applicant's case, of the two ballroom dancers and the white-coated conductor/band leader.  Despite those differences, I believe that, for the normal observer, the foreground figures would blend into the more memorable background tableau of a 1920s or 1930s nightclub scene comprising, typically, a nightclub big band and singer providing music for entertainment - and dancing.  Thus, I feel that the inferences which would be taken away by someone, when encountering the competing marks, would be the same - that they were both the Kit Kat nightclub logo.  I therefore have no hesitation in finding here that the two parties' competing trade marks are deceptively similar.

Having so found, I now turn to determine whether deception or confusion would occur because of the use of the present mark.  In relation to this question, I believe that there is no change in the law from the Trade Marks Act 1955, that there is an evidentiary onus on the opponent, in the first instance, to establish the extent of its reputation in Australia - re Heerey J., when referring to s.28 of that Act, in Nettlefold Advertising Pty Ltd v Nettlefold Signs Pty Ltd (1997) 38 IPR 495 at 501. Any deception or confusion, which might ensue because of the use of the applicant's mark, should be bound to occur amongst a substantial number of people who were likely to be concerned in the purchasing of the particular services - as per Kendall Company v Mulsyn Paint and Chemicals 109 CLR 300. The test for deception or confusion was recently dealt with in the decision of French J. in Registrar of Trade Marks v Woolworths, (1999) AIPC 91-499 at 39,695 (paragraph 43). In considering the phrase, "likely to deceive or cause confusion" his Honour says:

The use of the word "likely" in this context does not import a requirement that it be more probable than not that the mark has that effect.  The probability of deception or confusion must be finite and non-trivial. There must be a "real tangible danger of its occurring".

The date at which such deception or confusion should be considered is that of the filing of the present application - Southern Cross Refrigerating Co v Toowoomba Foundry Pty Ltd (1954) 91 CLR 592 - here 24 October 1996.

The opponent's evidence, where it refers to the reputation of the Kit Kat Club, its original logo, and its connection with the Whytes and their business partners, has not been challenged by the applicant.  That evidence shows that the club was opened in Adelaide by the Whytes and others in 1987, and that it received wide exposure in the local and national media for its distinctive supper-club type atmosphere, art deco settings, and big-band type entertainment.  The club was situated in a large Adelaide hotel and later moved to other well-known venues.  It had a membership in Adelaide of approximately 2,000 members, had regular functions over a nine year period, and was the "theme of special corporate and New Year's functions and several Adelaide Grand Prix balls.  Any use of the mark in relation to the club, with which the applicant may have been involved, would seem to have been as the informal licensee of the Whytes.  Any such use would therefore be on their behalf, or their legitimate successors in title to the trade mark.  All of this leads me to the conclusion that the Whytes, or the subsequent assignees of the original Kit Kat Club logo, had a significant reputation in that mark, well before the date of application here.

The applicant's evidence all appears to go towards supporting his case in a dispute with the opponent on an alleged breach of contract matter.  Such questions are not within the Registrar's competence to decide.  What I am determining, in the present case, as the Registrar's delegate, is a matter under the Trade Marks Act 1995 and, specifically, whether deception or confusion would be caused by the use by the applicant of the subject trade mark on the services in the specification.

Given all of the above, I have come to the conclusion that it is the case that deception or confusion would be highly likely to occur amongst a significant number of the users of the applicant's services provided under his trade mark.  I have already found that mark to be deceptively similar to the original Kit Kat Club mark, for which the Whytes and their business partners had achieved a substantial reputation in the trade.

I therefore find that the opponent is successful on this ground of its opposition.

Section 55
This section reads:

55. Unless the proceedings are discontinued or dismissed, the Registrar must, at the end, decide:

(a)to refuse to register the trade mark; or

(b)to register the trade mark (with or without conditions or limitations) in respect of the goods and/or services then specified in the application;

having regard to the extent (if any) to which any ground on which the application was opposed has been established.

As I have said, Mr Ellicott, in his submissions at the hearing, only referred to the unsuccessful ground under s.58.  However, I have noted that the ground under s.60 - under which I have found that the opponent has been successful - was included in the original notice of opposition and I am therefore correct in considering it in my decision.  In any event, even if it had not been included in that notice, I think that the correct course, in relation to my deliberation under s.55, is as outlined in the Trade Marks Office Draft Manual of Practice and Procedure, at paragraph 2 of Part 46, where it is stated, inter alia, in that paragraph:

The Registrar is not bound to have regard to, or have regard only to, the extent if any on which a ground relied on by the opponent has been established.  This is consistent with R v CD (1976) 1 NZLR 436 at 437, where Somers J. noted that "shall have regard to" is not synonymous with "shall take into account' but leaves the discretion as unfettered as it otherwise was.

Therefore, in relation to the provisions of s.55, I am convinced, as the delegate of the Registrar, that I should decide to refuse to register the trade mark, the subject of this application.

Decision
I have found that, while the opponent has not established its ground of opposition under s.58, it has been successful on the s.60 ground listed in its notice of opposition.  Accordingly, I refuse to register the trade mark for which registration has been sought in the present instance.

Costs
Having been the successful party here, the opponent is entitled to its costs.  Consequently, I order that the applicant pay the opponent's costs in the matter, in accordance with the Official Scale (Schedule 8 of the Trade Marks Regulations 1995).  On application, those costs will be taxed and allowed by an officer of the Trade Marks Office, appointed for that purpose.

Ian Forno
Hearing Officer

31 July 2000