SPHP(IP) Pty Ltd

[2000] ATMO 20

TRADE MARKS ACT 1995

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

Re:Trade mark application number 753367(42) - blue curved stripe device - in the name of SPHC(IP) PTY LIMITED.

Background

SPHC(IP) Pty Ltd (SPHC) filed trade mark application no. 753367 on 20 January 1998.  The application was for the sign shown below:

 

The trade mark was originally filed as a series, incorporating two versions of the above device, one coloured black and the second coloured a dark blue.  The applicant refers to this device as the "Parkroyal Wave logo", and I shall refer to it as the Wave device.  The application was filed for the following services in class 42: 

Services rendered in connection with hotel and/or motel operation and management; services rendered in providing lodgings, rooms and meals by hotels, motels and other places of accommodation; restaurant services and services rendered in relation to the provision of food and drink prepared for consumption; services in this class rendered in relation to conference facilities.

Upon examination, the examiner, in the first report, raised grounds for rejection under the provisions of section 41.  He claimed that the trade mark was not capable of distinguishing the applicant's services from those of other traders because it was material commonly used in the trade, that is, a stripe or decorative feature used in relation to the services.  The examiner stated that "such devices have little or no inherent value as indicators of trade origin, but serve rather in the presentation of the product".  He then proposed that the applicant provide examples of the trade mark in use, as well as evidence of use, in an attempt to demonstrate the device's capacity to be recognised as an indicator of trade origin.  He commented that the evidence would need to be "very substantial indeed".

In addition to the grounds for rejection raised under section 41, the examiner cited an application consisting of a cobalt blue colour (used in relation to various non-alcoholic drinks).  That citation subsequently lapsed, and therefore need not be considered further here.

The agent for the applicant, Mr James Maxwell of Peter Maxwell & Associates, replied, disputing the grounds for rejection.  His reply included evidence attesting to the applicant's claimed use of the trade mark throughout Australia and the Asia-Pacific region.  A Principal Examiner, however, after considering this evidence, declined to give it significant weight.  She advised the applicant that the trade mark would proceed under the provisions of section 41(6), as she considered it was a trade mark devoid of inherent adaptation to distinguish.  She described the wave device as "mere corporate livery" and suggested that the distinguishing feature of the applicant's trade mark usage is the word PARKROYAL, to which the wave device is subsidiary.  She suggested that the evidence did not show trade mark use, and advised that a Hearing, or a decision on the written record would be appropriate..

The agent replied in detail, and I shall go into these submissions later in my decision.  In this letter, the attorney also made a request to delete the black version of the trade mark from the application, which then proceeded for the blue coloured version only.  The agent also requested a decision on the written record.  As the Registrar's delegate, I am now issuing this decision.

Evidence

The evidence on file consists of a Statutory Declaration sworn by Mark Justin Baker, Company Secretary of SPHC.  Attached to this declaration are exhibits marked MJB1 to MJB6. 

In his declaration, Mr Baker specifies that the trade mark, described as the Parkroyal Wave Logo was first used in Australia in 1996 in respect of the services quoted above.  He says it is used in relation to the provision of goods and services via a list of 13 hotels in Australia, and 12 others throughout the Asia-Pacific region.  The sales figures given are extremely large, being in the hundreds of millions of dollars per annum, though it is not clear whether these figures apply to all 25 hotels, or just those in Australia. 

The exhibits to the Baker declaration consist of company brochures, the design guidelines for use of the corporate livery and various examples of promotional literature for individual hotels in the chain.  The wave device does not appear in all this material, but in a significant proportion of it. 

Submissions

Mr Maxwell made detailed submissions in the letter which also requested this decision. He first discussed the definition of a trade mark, set out in Section 17 of the Trade Marks Act 1995 as follows:

A trade mark is a sign used, or intended to be used, to distinguish goods or services dealt with or provided in the course of trade by a person from goods or services so dealt with or provided by any other person.

Referring also to the definition of sign in section 6 of the legislation, he argued:

A trade mark, therefore, can be a number of things, and can be represented in a number of forms provided the trade mark, which is used or is intended to be used, is capable of distinguishing the goods or services dealt with or provided by an applicant from those of other traders.  The present trade mark is not only a distinctive cobalt blue colour but is also a device.  By definition, we submit that the Trade Mark is a valid trade mark as is contemplated by the Act, and, further, the level of inherent adaptability to distinguish the Trade Mark, combined with substantial evidence of use, indicate clearly that the Trade Mark is capable of distinguishing the applicant's services from the services of other traders.

Mr Maxwell then said that the fact that the applicant had applied for the trade mark indicated that there was at least an intention to use it, and that the applicant had adopted it for the purpose of distinguishing its services from those of others.  Having thus adopted and used the device as a trade mark, in terms of the definitions in the Act, he said there was no basis for the Examiner to claim that the wave device was no more than ornamentation or corporate livery.

Mr Maxwell then went on to discuss the applicant's use of the trade mark as a tool to advertise and promote its services, and stressed that it is used in conjunction with the delivery of these services as well.  He referred to the annual sales income, but again did not make it clear whether the figures refer to Australian use, or to use over the wider geographical area, or indeed whether the sales income was related solely to the mark, the subject of this decision.  He also referred to the amount spent by the applicant in respect of advertising and promoting its services, and the amount of effort the applicant has put into promoting the trade mark.

A large part of the remainder of the submissions involve a consideration of the matter of inherent adaptation to distinguish and section 41 as a whole, with detailed reference to the findings of Justice Branson in the Oregon case, (Blount Inc v The Registrar of Trade Marks, 40 IPR 498). Following a discussion of Justice Branson's findings in Oregon, Mr Maxwell submitted that the wave device, presented in a "distinctive blue colour", was not devoid of inherent adaptation to distinguish.  Therefore, he said, it should be considered under the provisions of section 41(5) rather than 41(6).  He said the examiner should take into account the combined effect of the extent to which the trade mark is inherently adapted to distinguish the designated services; the use of the trade mark and any other circumstances when determining if the trade mark meets the requirements of section 41.  He again stressed the mark's inherent adaptability to distinguish, and pointed again to the substantial and significant sales in respect of the relevant services.  He also suggested that even if the examiner chose to maintain that the provisions of 41(6) did apply, the extent of the sales was such that it would clearly show that the trade mark does distinguish the services of the applicant.  Mr Maxwell also commented that many traders use multiple trade marks on one product, and this trade mark should be considered on its own merits and in isolation from any other marks which the applicant may or may not use.

Mr Maxwell then moved on to a consideration of the presumption of registrability, and referred to the Woolworths decision, (Registrar of Trade Marks V Woolworths [1999] FCA 1020) which he relied upon to support his contention that there was a lack of "positive satisfaction" on the part of the Registrar that there were grounds for rejecting the trade mark. He stated that the inherent adaptability of a mark to distinguish the goods or services of the applicant is determined by considering whether or not other traders in the ordinary course of business and without improper motive would seek to use the trade mark in respect of their similar goods or related services. He stressed that neither the examiner nor the applicant were aware of any other trader in the applicant's industry using the same or a similar trade mark. This, he submitted, was support for his contention that the objection raised by the examiner could not be maintained, and that the presumption of registrability must be exercised in the applicant's favour.

The final submissions were in respect of the evidence of use.  Mr Maxwell stated that the applicant is a well known international hotel corporation with over one billion dollars in sales since 1996.  He considered that this volume of sales could not just be ignored, as he felt the examiners had tended to do, but must surely prove the wave device was distinctive, and inherently capable of distinguishing the applicant's services within the relevant industry.  He considered that the applicant's use of the wave device throughout the marketplace had given it a favourable reputation and a degree of recognition as an exclusive reference to the applicant's services.  He considered that the sales alone were sufficient to ensure the trade mark did distinguish the applicant's services from those of others.

Legislative background

The issue for consideration in this decision is whether the wave device is capable of meeting the requirements of the Trade Marks Act 1995 such that it can be registered as a trade mark. Section 17, as quoted previously, defines a trade mark. In doing so, it refers to the word sign, defined in section 6 as follows: 

sign includes the following or any combination of the following, namely, any letter, word, name, signature, numeral, device, brand, heading, label, ticket, aspect of packaging, shape, colour, sound or scent.

This definition is inclusive rather than exclusive. It details a range of things that can be regarded as signs for the purpose of section 17, but it does not give an exhaustive list.

Having determined that a sign meets the requirements of section 17, it must be considered in respect of other relevant sections of the Act. Section 31 specifies as follows:

31. The Registrar must, in accordance with the regulations, examine and report on:

(a) whether the application has been made in accordance with this Act; and  (b) whether there are grounds under Division 2 for rejecting it.

Section 33 then comes into play - the Registrar must, after examining the application either accept it or reject it.  Accepting the application depends on whether there are grounds for rejecting it, and these grounds will be found in Division 2 of the Act.  Section 41 of the Act is the section within Division 2 pertinent to the examination of this trade mark.

Branson J, in the Oregon case, supra, dealt with section 41 in some detail.  In addition, she considered the relationship between sections 41 and 33 in the context of trade mark examination.  Section 33, in theory, presumes registrability of a trade mark unless the Registrar is satisfied (my emphasis) there are grounds for rejecting it.  The concept of the Registrar being satisfied is, according to Justice Branson,

"to be understood as requiring that he or she be persuaded of the matter according to the balance of probabilities (Rejfeck v McElroy (1965) 112 CLR 517 at 521). That is, that the Registrar be persuaded, having given proper consideration to those factors and circumstances that the Act requires him or her to give consideration to, that such matter is more probable than not."

Justice Branson then goes into the matter of section 41 and how it is meant to control the process by which the Registrar reaches the conclusion whether or not the trade mark is capable of distinguishing the relevant goods.  She says:

If the trade mark is not so capable, the application for its registration must be rejected (s 41(2)).  Subsection (3) requires the Registrar first to "take into account the extent to which the trade mark is inherently adapted to distinguish the designated goods or services from the goods or services of other persons".  Having taken such matter into account, it is theoretically open to the Registrar to conclude:

(a) that the trade mark is inherently adapted to distinguish the designated goods or services from the goods or services of other persons and capable, on that basis alone, of so distinguishing the designated goods or services; or

(b) that the trade mark is not to any extend inherently adapted to distinguish the designated goods or services from the goods or services of other persons; or

(c) that the trade mark is to some extent inherently adapted to distinguish the designated goods or services from the goods or services of other persons, but there is uncertainty, on that basis alone, that the trade mark is actually capable of so distinguishing the designated goods or services.

Justice Branson said that the structure of section 41 dictates the actions which must follow if the Registrar makes certain conclusions.  If the conclusion reached is that in paragraph (a), and the application is properly made according to the Act, then the Registrar is required to accept the application by reasons of the provisions of section 33(1).  However, if the Registrar reaches conclusions (b) or (c), according to section 41(4), the Registrar is "unable to decide the question".  Additional information must then provided and be taken into account before a decision can be made.

Discussion

Paragraphs (b) and (c) in this discussion are those which have been considered in respect of the wave device.  The Principal Examiner maintained that paragraph (b) was relevant as she considered the trade mark to be completely devoid of inherent adaptation to distinguish, and that the evidence of use did not overcome this view.  The applicant's agent considers that paragraph (c) applies, and that the evidence of use supplied so far should be more than sufficient to persuade the Registrar to accept the trade mark for registration.  I must decide which, if either, of these views, applies.

Section 17 gives the definition of a trade mark, and uses the terminology "sign" within this definition. The applicant's trade mark clearly fits into the definition of a "sign" as set out in section 6, because it is a coloured stripe. There is no question then, that the device claimed as a trade mark meets the technical requirements for a trade mark, as defined in section 17 of the Act. It is a sign which could be used to distinguish goods or services of one trader from those of another.

However, the device which is the subject of the application is, in my view, not a memorable sign.  It is a stripe, one side being straight, and the other consisting of a simple curve.  The resultant device is thus wider towards one end than the other, the broader piece incorporating only a moderate swelling which forms a curved edge.  It is the sort of device you can imagine being formed by a brush stroke, but a brush stroke applied against a flat edge such as a ruler.  In itself, it is not outstandingly memorable.

The other element of the device is its colour.  The applicant defines this colour in its corporate livery guide as being dark blue, PMS 5405, but also refers to black and white versions.  In the corporate livery guidelines, a specific reference is made to the importance of making sure that this colour is accurate when it is applied to the standard buff colour of the company brochure.  The colour thus adds a little to the wave device.  It is this combination of colour and curved stripe which must be considered under the provisions of section 41 of the Act.

Inherent adaptation to distinguish

The initial investigation of a trade mark under section 41 is to its degree of inherent adaptation to distinguish (s41(3)).  Mr Maxwell referred to the words of Kitto J in the Michigan case, Clark Equipment Co. v Registrar of Trade Marks 111 CLR 511 at 513, in his submissions in support of the wave device.  The quotation he relies upon is as follows:

the question whether a mark is adapted to distinguish be tested by reference to the likelihood that other persons, trading in goods of the relevant kind and being actuated only by proper motives - in the exercise, that is to say, of the common right of the public to make honest use of words forming part of the common heritage, for the sake of the signification which they ordinarily possess - will think of the word and want to use it in connection with similar goods in any manner which would infringe a registered trade mark granted in respect of it.

However, that part of Justice Kitto's decision, read in isolation from the remainder of the paragraph, does not give the whole picture.  Of greater relevance to this particular device, I think, are the following lines from the same decision: 

… the applicant's chance of success … must, I think, largely depend on whether other traders are likely, in the ordinary course of their businesses and without any improper motive, to desire to use the same mark, or some mark nearly resembling it, upon or in connection with their own goods. (My emphasis)

This concept, I believe, forms the basis for the examiner's original ground for rejection.  The examiner saw the applicant's trade mark as lacking inherent adaptation to distinguish because it was a simple stripe device, not even at that stage restricted to a single colour. He saw it as a decoration used in relation to the applicant's services, the sort of stripe device which others would wish to use in similar circumstances when advertising their similar services.  The principal examiner saw the device as being a mere part of the applicant's corporate livery, and considered it devoid of inherent adaptation to distinguish.

I agree with the findings of the examiner - that is, that the trade mark does not have sufficient inherent adaptation to distinguish to be registrable prima facie.  Section 41(4) thus comes into play. As I am "unable to decide the question", I must move on to the consideration of the remainder of section 41. 

Having taken into account the amount of inherent adaptation to distinguish, and having found it deficient, I have to decide whether paragraph (5) or paragraph (6) of section 41 now applies.  Is the trade mark completely devoid of adaptation to distinguish (section 41(6) of the Act), and thus subject to consideration under paragraph (b) in Justice Branson's analysis quoted earlier? Or is it to some extent inherently adapted to distinguish (section 41(5)), subject to paragraph (c) in Justice Branson's analysis?

Inherent adaptation is a concept referring to qualities of the trade mark itself.  Inherent qualities are present within the trade mark itself at the outset, and cannot be acquired through use in the market.  In the words of Justice Gibbs (Burger King Corporation v Registrar of Trade Marks (the Whopper case), [1973] 128 CLR 417

Inherent adaptability is something which depends on the nature of the trade mark itself … and therefore is not something that can be acquired; the inherent nature of the trade mark itself cannot be changed by use or otherwise.

The trade mark applied for, being a wave or stripe device claimed in a dark blue colour, has, I believe, some small amount of inherent adaptation.  While I can envisage the stripe being formed by a brush stroke in the circumscribed situation I described earlier, the same action could result in a completely different device.  The stripe or wave device, therefore, is not one which other traders will need to use as they would, for example, a single line underline.  The blue wave device has some small amount of novelty, and thus some small amount, perhaps a scintilla, of inherent adaptation to distinguish.  I therefore consider that section 41(5) applies.

Section 41(5)

I must now consider the combined effect on the trade mark's capability to distinguish of its small amount of inherent adaptation, along with the examples and evidence of use of the trade mark supplied by the applicant, and any other circumstances presented to me.  I believe it is a reasonable approach that the smaller the amount of inherent adaptation, the greater is the onus on the applicant to demonstrate that use in the marketplace had made up for the deficiencies in the mark itself.

The applicant's submissions refer to substantial sales, in excess of $1 billion dollars, over a period of three years.  However, it is not at all clear whether these receipts are for the hotels in Australia alone, or for all the hotels in Australia and Asia-Pacific region.  That notwithstanding, the sales are certainly significant, and definitely should not be ignored.

But I do not consider that the sales alone are sufficient.  Justice Jacobs, in British Sugar PLC v James Robertson & Sons Ltd, 1996 RPC 281 (the Treats case) at p303said the following:

There is an unspoken and illogical assumption that "use equals distinctiveness".  The illogicality can be seen from an example; no matter how much use a manufacturer made of the word "Soap" as an unsupported trade mark for soap the word would not be distinctive of his goods …. I do not consider that the evidence filed to support the registration was anywhere near enough to support the conclusion that when the mark was registered, it was distinctive … it was not proved that the public regarded it as a trade mark … a reliable badge of trade origin …

Even the huge volume of sales claimed by the applicant is not an automatic cachet for this trade mark.  It still must be shown that the trade mark is capable of being distinctive - that it is a badge of origin for the applicant.  I am not at all convinced that the evidence put before me does this.

Apart from the Baker declaration, the evidence consists of exhibits MJB1 to MJB6. These exhibits comprise various brochures and company information supplied by the applicant.  MJB1 is a brochure headed PARKROYAL CENTRA TRAVELODGE HOTELS & RESORTS.  The applicant's identity, SPHC Group, also appears.  The brochure has a dark blue cover, and blue stripes on the edge of each page.  None of these are the wave device claimed as a trade mark.  The trade mark does not appear in this exhibit at all.

MJB2 consists of a photocopy of a company brochure labelled SPHC Group - FAST FACTS.  This brochure is yellow with a black wavy stripe on the left hand edge of the first two pages.  The stripe device on these pages is not the wave device claimed as a trade mark.

Exhibit MJB3 consists of two photocopied documents labelled respectively DESIGN GUIDELINES FOR PARKROYAL DL BROCHURES and PARKROYAL PRINT ADVERTISING GUIDELINES. Included as well is a single sheet labelled SPHC PARKROYAL CORPORATE WAVE LOGO SHEET.  All three of these documents refer to precise methods of usage for the wave device when it is put into corporate literature, including references to the appropriate blue colour.

MJB4 consists of photocopies of a number of single sheet advertisements for various Parkroyal hotels.  In each advertisement, the wave device appears on the bottom of the page.  Each advertisement is clearly identified as being for a Parkroyal hotel.

MJB5 consists of various corporate brochures and promotional materials.  The wave device appears in all of these brochures.  In all brochures it appears in addition to the words Parkroyal. 

MJB6 consists of further brochures pertinent to specific Parkroyal hotels.  The wave device appears at the foot of each page, but each brochure is identified by the name Parkroyal, and the city in which the hotel is situated.

It is clear from these examples that the applicant uses its wave device when promoting its hotel services.  What is not clear is that the buying public recognises the wave device as a trade mark, and whether the device, if used divorced from the registered trade mark PARKROYAL, would serve to identify the origin of the services.

Throughout the evidentiary material, no mention is made of use of the wave device in a trade mark sense.  As most of the brochures are presented in the corporate colours of buff and blue, the wave device appears, as the Principal Examiner noted, merely as part of the corporate livery.  It does not stand out as an identifier, it merely appears as an additional decorative use of the blue corporate colour.  And the applicant does not refer to it as a trade mark in any of the brochures, neither does it draw attention to it in any way.

In addition, the wave device is always used in brochures alongside the already registered trade mark PARKROYAL, a matter which was also mentioned by the Principal Examiner in her reports.  Mr Maxwell commented on this, and said that the trade mark had to be assessed on its own merits and in isolation from any other trade marks which the applicant used.  I agree that the trade mark should be assessed in this way, but how to do this when it is overwhelmed by an already registered and well known word is problematical. 

At best, I consider the wave device could be seen as a "limping mark", referred to by Jacob J in Philips Electronics NV v Remington Consumer Products (40 IPR 279 at page 301) as one "always used with what is obviously a proper trade mark". Similarly, he referred to an analogous situation in respect of the word TREAT in British Sugar, supra, at page 302 where he said

It is precisely because a common laudatory word is naturally capable of application to the goods of any trader that one must be careful before concluding that merely its use, however substantial, has displaced its common meaning and has come to denote the mark of a particular trader.  This is all the more so when the mark has been used in conjunction with what is obviously taken as a trade mark.

If a the wave device is to be seen as a trade mark, rather than as a decoration, it needs to be clearly designated as such.  It is my opinion that the evidence put before me does not do this.  The brochures all rely on the word PARKROYAL to identify the service provider, and secondary to that the owners own name, SPHC.  There is simply no clear indication that the wave device is anything other than an extension of the applicant's corporate colours onto the brochures.

Even the sales figures, huge as they are, must be regarded with a degree of suspicion. Do they refer to sales under the PARKROYAL trade mark, the combination of PARKROYAL and wave device, or the wave device itself?  The worth of the sales figures is thus much less than it would have been if it was clear which trade mark identified the services to which these sales apply. Therefore, despite the claim for a huge volume of sales, I do not consider the wave device even falls into the category of a "limping mark".  It appears to me as merely a decorative adjunct to an already registered mark, and is therefore not adapted to distinguish the applicant's services.

Section 41(6)

Because of comments in the agent's submissions, I think it is appropriate for me to consider the applicant's evidence in respect of the provisions of section 41(6). Mr Maxwell submitted that, even if the trade mark was to be considered under section 41(6) (as a trade mark devoid of any inherent adaptation to distinguish), the evidence of use "is so substantial that it is sufficient to establish that the trade mark does distinguish the services of the Applicant".  I do not agree with Mr Maxwell on this point.  For consideration under 41(6) the applicant needs to show that it has developed a reputation in the trade mark as at the date of application. It needs to show that the wave device has lost its primary signification as a decorative part of the corporate livery, and has gained a new signification as a trade mark distinguishing the applicant's services.  To achieve this, the applicant needs to show more than just impressive sales.  It must to be able to demonstrate that a reputation exists, and that the purchasing public clearly recognises the wave device as an indicator of trade source.  Despite the impressive sales, the evidence on hand in this case simply is unable to meet this requirement.  Had I decided that consideration under 41(6) was appropriate, the evidence would not have overcome the grounds for rejection. 

Decision

I have found that the trade mark subject of this application has an extremely small amount of inherent adaptation to distinguish, and therefore falls under the provisions of subsection 41(5) of the Act.  Having considered the evidence on file, I have found that the applicant has not established that the trade mark does or will distinguish its services in terms of paragraph 41(5)(a).  In  accordance with the provisions of subsection 41(2), I therefore reject application 753367.

Alison Windsor
Senior Examiner

8 March 2000