Susanne Lang Fragrance Inc. v the Lip Lab Pty Ltd

[2018] ATMO 82

TRADE MARKS ACT 1995

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

Re:Opposition by Susanne Lang Fragrance Inc. to registration of trade mark application 1722762, 1722763(40, 44) - THE LIP LAB, THE LIP LAB (Logo) - filed in the name of The Lip Lab Pty Ltd.

Delegate:

Jock McDonagh

Representation:

Opponent: Edwina Whitby of Counsel instructed by Ashurst

Applicant: Sonia Stewart of Counsel instructed by Clayton Utz

Decision:

2018 ATMO 82

Trade Marks Act 1995 (Cth) - Section 52 opposition: ss 42, 43, and 62A considered – no grounds established – trade mark to proceed to registration

Background

1. This matter relates to oppositions under section 52 of the Trade Marks Act 1995 (‘the Act’) to the registration of the trade marks filed by The Lip Lab Pty Ltd (‘the Applicant’). Relevant details of the applications (collectively ‘the Trade Marks’) are set out below.

Trade Mark No:	1722762	1722763
Trade Mark:	THE LIP LAB
Filing Date:	18 October 2015 (‘the relevant date’)
Specification:	Class 40: Custom preparation and blending of personal cosmetics; custom make-up services being the custom blending of cosmetics for the lips Class 44: Consultancy relating to cosmetics; Consultancy services relating to personal appearance (hair, beauty, cosmetics); Cosmetic make-up services; Make-up services (‘the Designated Services’)

1. The applications were examined in compliance with section 31 of the Act and were advertised as accepted for possible registration in the Australian Official Journal of Trade Marks on 25 February 2016. Susanne Lang Fragrance Inc. (‘the Opponent’) filed Notices of Intention to Oppose the registration of the Trade Marks on 22 April 2016. The Opponent then filed a Statement of Grounds and Particulars (‘SGP’) for both Oppositions on 20 May 2016. The SGP raised grounds of opposition under ss42, 43 and 62A of the Act.

2. Thereafter the parties filed evidence as provided by the Trade Mark Regulations 1995 (‘the Regulations’).

3. I heard the matter as one hearing in Canberra on 5 February 2018 as a delegate of the Registrar of Trade Marks. Edwina Whitby of counsel, instructed by Ashurst Lawyers, represented the Opponent. The Applicant was represented by Sonia Stewart of counsel, instructed by Clayton Utz Lawyers.

   Grounds of Opposition

4. The Opponent nominated grounds of opposition under sections 42, 43, and 62A of the Act, all of which were pursued at the hearing. The onus is upon the Opponent to establish one or more of its grounds of opposition on the ‘balance of probabilities’.[1]

   [1] Following Pfizer Products Inc v Karam (2006) 70 IPR 599, [6]-[26], and Telstra Corporation Limited v Phone Directories Company Pty Ltd [2015] FCAFC 156, [133].

5. The time at which the grounds of opposition must be established is the date of filing of the application for registration[2]. I will discuss this issue later in this decision.

   [2] See Southern Cross Refrigerating v Toowoomba Foundry Pty Ltd (1953) 91 CLR 592 at 595

   Evidence

6. The evidence consists of the following declarations:

Declarant	Position	Date Made	Exhibits
Evidence in Support
Susanne Louise Langmuir (‘First Langmuir Declaration’)	Founder and CCO of the Opponent	18.10.16	Annexures A to CC
Evidence in Answer
Courtney Sylvia Treacy (‘Courtney Declaration’)	Co-founder of THE LIP LAB business and sole director, secretary and shareholder of the Applicant.	24.01.17	Annexures A to L
Kimberley Treacy (‘Kimberley Declaration’)	Co-founder of THE LIP LAB business and sister of Courtney	24.01.17
Daniel James Smith (‘Smith Declaration’)	Solicitor at LegalVision, Applicant’s former legal representative	24.01.17	Annexures A to H
Evidence in Reply
Susanne Louise Langmuir (‘Second Langmuir Declaration’)	Founder and CCO of the Opponent	24.03.17
Melissa Louise Preston (‘Preston Declaration’)	Senior Associate at Opponent’s legal representative	23.03.17	Annexure 1

1. The First Langmuir Declaration informs me that the Opponent manufactures and sells a range of cosmetic products, including lipsticks, lip gloss, lip cosmetics, and lip care products under its BITE BEAUTY brands around the world, including in Australia, Canada and the United States. The Opponent provides an in-store service of manufacturing customisable lipstick in its ‘Lip Lab’ from retail locations in the United States and Canada.

2. The Courtney and Kimberley Declarations provide a background to the genesis of Applicant’s Australian business. The Applicant sells cosmetic products and provides services that allow customers to produce their own lipstick products. The Applicant uses products and processes provided by Colorlab Cosmetics Inc, a USA company, and entered an exclusive supply agreement for Colorlab’s products and processes in Australia.

3. In the Courtney Declaration, Ms Treacy has expressly stated that “At the time the mark THE LIP LAB was adopted, I had not heard of, and was not aware of, the Opponent’s use of the phrase ‘Lip Lab’ in relation to their custom cosmetics business. I am informed by Kimberley and Janine [the mother of Courtney Treacy and Kimberley Treacy] that they were not aware of the Opponent’s use of the phrase ‘Lip Lab’ at that time either.”[3]

   [3] Courtney Declaration at [23].

   Discussion

   Section 42

   11. Section 42(b) of the Act is reproduced below:

   42 Trade mark scandalous or its use contrary to law

   An application for the registration of a trade mark must be rejected if:

   (a) …

   (b) its use would be contrary to law.

   12.       The onus is on the Opponents to establish that use of the Trade Marks would be, rather than could be, contrary to law on the balance of probabilities.[4]

   [4] Advantage Rent-a-Car Inc v Advantage Car Rental Pty Ltd [2001] FCA 683.

   13. The Opponent relies on sections 18 and 29(1) of the Australian Consumer Law 2010 (‘the ACL’), and the common law tort of passing off.

   14. The Opponent’s case is that use of the Trade Marks in respect of the Services would be contrary to s 18 of the Australian Consumer Law (which proscribes conduct and representations in trade or commerce that are or are likely to be misleading or deceptive) on the basis that such use as at the priority date is in trade and commerce and misrepresents to persons that:

   ·     by reason of the Opponent’s reputation in the LIP LAB trade mark before the priority date in relation to cosmetics; and

   ·     by falsely suggesting that the Applicant’s goods are those of the Opponent or that the Applicant or its goods are related to the Opponent or are sponsored, approved, affiliated or licensed by the Opponent

   15.       A fatal flaw in the Opponent’s argument is that, as at the priority date, the Opponent has not established that it had a reputation in Australia in the LIP LAB trade mark. As I mentioned above, Opponent manufactures and sells a range of cosmetic products, including lipsticks, lip gloss, lip cosmetics, and lip care products under its BITE BEAUTY trade mark around the world, including in Australia, Canada and the United States.

   16.       The Opponent provides an in-store service from retail locations in the United States and Canada, where it creates lipstick to order in an area of the store known as the Lip Lab. The bespoke lipsticks are created from the Opponent’s BITE BEAUTY range of lipsticks. The Lip Lab service is only available in North America.

   17.       The Opponent’s evidence in relation to its reputation in the BITE BEAUTY brand and product is extensive. The Opposed Marks, however, have nothing to do with the Opponent’s reputation in the BITE BEAUTY brand and the Opponent’s evidence in relation to its BITE BEAUTY products and sales are largely irrelevant to this ground of opposition. There is no specific evidence in relation to an reputation in Australia for the Opponent’s Lip Lab services and hence no basis to conclude that consumers in Australia would be misled or deceived by use of either of the Trade Marks for the designated services.

   18.       As stated in Shanahan[5] at [50.2060], “Evidence is required to support assertions that use of the trade mark by persons other than the opponent would lead to deception or confusion and evidence of mere wonderment ‘does not necessarily rise to the level required to satisfy s 42(b).”

   19. It was also the Opponent’s case is that use of the Trade Marks in respect of the Services would be contrary to s 29 of the Australian Consumer Law (which proscribes convey false and misleading representations to the public) on the basis that such use as at the priority date is in trade and commerce and misrepresents to persons that:

   ·the services provided by the Applicant are associated with, affiliated with, approved or authorised by the Opponent; and

   ·the Applicant's services are of a similar standard, quality or grade as the Opponent's goods and services provided under the LIP LAB brand.

   20.       Paraphrasing the statement of the Registrar’s Delegate in A G Professional Hair Care Products Ltd v Geagroup Invest SRL[6], where a trade mark does not run afoul of s 18 of the ACL, neither will it run afoul of s 29 of the ACL, nor the tort of passing off. In Pacific Publications Pty Ltd v IPC Media Pty Ltd, Beaumont J considered—in connection with the superseded Trade Practices Act1974 (‘TPA’)—that ‘the Court’s conclusion on s 52 would necessarily carry with it a conclusion on s 53(c) and (d)’.[7] Sections 52 and 53 of the TPA were, respectively, the equivalent provisions to ss 18 and 29 of the ACL.

   21.       Hill J in Re Equity Access Pty Ltd v Westpac Banking Corporation also addressed the relationship between s 52 of the TPA and passing off. His Honour considered that:

   The scope for the operation of s 52 will thus be broader than that involved in the tort of passing off so that in a case such as the present where the claim is for the protection of the reputation in a name against the use of that name by another, failure to succeed under s 52 or s 53 will invariably mean that proceedings for passing off would likewise fail.[8]

   22. For these reasons I am not satisfied that use of the Trade Marks by the Applicant would be contrary to law. Therefore, the Opponent has failed to establish the ground of opposition under s 42(b).

   [5] Shanahan’s Australian Law of Trade Marks and Passing Off (6th edition), M. Davidson and I. Horak, published by Lawbook Co. 2016

   [6] [2014] ATMO 65, [50].

   [7] [2003] FCA 104, [107].

   [8] [1989] FCA 506, [40] (citations omitted).

   Section 43

   23. Section 43 provides:

   43Trade mark likely to deceive or cause confusion

   An application for the registration of a trade mark in respect of particular goods or services must be rejected if, because of some connotation that the trade mark or a sign contained in the trade mark has, the use of the trade mark in relation to those goods or services would be likely to deceive or cause confusion.

4. To establish a ground of opposition under section 43, there must be an inherent connotation within the Trade Marks which is likely to deceive or cause confusion. The comments of Gyles J in Pfizer Products Inc v Karam[9] outlined the history of section 43 of the Act, stating that:

   [9] Pfizer Products Inc v Karam (2006) 70 IPR 599 (at [52 -53]).

   Section 43 does not have a long pedigree. It was enacted pursuant to Australia’s obligations under the Agreement on Trade Related Aspects of Intellectual Property Rights (TRIPS). TRIPS and the 1992 Working Party Report led to a 1994 Bill containing the following cl 42(2):

   ‘An application for the registration of a trade mark in respect of particular goods or services must be rejected if the use of the trade mark in relation to those goods or services would be likely to deceive or cause confusion regarding:

   (a)the nature, quality, origin, intended purpose, or some other characteristic, of the goods or services; or

   
   (b) any connection or relationship that they may have with any particular person.’

   That Bill was enacted but never came into force. In the 1995 Bill (and Act) cl 42(2) of the 1994 Bill was replaced by what is now s 43 of the 1995 Act. The Explanatory Memorandum stated that cl 43 provides:

   ‘That an application for registration must be rejected if the trade mark ... because of some signification inherent to it, would be likely to deceive or cause confusion regarding a characteristic of the goods or services.’
   [Emphasis added]

   It seems that the final form of s 43 is a wider version of the earlier clause with a similar purpose.

   ‘Connotation’ is a secondary meaning implied by the mark. The likelihood of deception or confusion must flow from the secondary meaning inherent in the mark itself. It is apparent that the underlying purpose of s 43 is a similar purpose to that lying behind ss 52, 53 and 55 of the Trade Practices Act 1974 (Cth). It is to prevent the public being deceived or confused as to the nature of the goods offered by reason of a secondary meaning connoted by the mark in question…

5. Recently, in Primary Health Care Limited v Commonwealth of Australia [2016] FCA 313 at [17] Jagot J stated:

   Insofar as use of a trade mark would be likely to deceive or cause confusion is concerned (the s 43 issue, on which the respondents bear the onus):

   (1)      The section:

   looks to the inherent qualities of the trade mark of which registration is sought for the purpose of identifying whether the use of the trade mark would be likely to deceive or cause confusion... (Woolworths at [79]).

   (2) “In order for s 43 to apply, the Court must be satisfied that there is a reasonable likelihood of deception or confusion arising because of the connotation within the mark, having regard to the nature of the goods or services to which it is to apply and other relevant considerations” (McCorquodale v Masterson [2004] FCA 1247; (2004) 63 IPR 582 at [26]).

   (3) The purpose of s 43:

   is to prevent the public being deceived or confused as to the nature of the goods offered by reason of a secondary meaning connoted by the mark in question, rather than, for example, deception by reason of similarity with other marks... (Pfizer Products at [53]).

   (4)      “Whether there is a likelihood of deception or confusion is to be answered ‘not by reference to the manner in which the applicant for registration has used its mark in the past, but by reference to the use to which it can properly put the mark if it becomes registered’: Berlei v Hestia Industries Ltd [1973] HCA 43; (1973) 129 CLR 353 at 362” (Scotch Whisky Association v De Witt [2007] FCA 1649; (2007) 74 IPR 382 (Scotch Whisky Association) at [52]). Deceptive similarity must be considered against the “background of the usages in the particular trade” (Shell Co of Australia Ltd v Esso Standard Oil (Aust) Ltd [1963] HCA 66; (1963) 109 CLR 407 at 410).

   (5)      “The probability of deception or confusion must be finite and non-trivial. There must be a ‘real tangible danger of its occurring’ - Southern Cross Refrigerating Co v Toowoomba Foundry Pty Ltd [1955] HCA 15; (1954) 91 CLR 529 (sic) at 594-5 per Kitto J” (Woolworths at [43]). As such, the mere possibility of confusion is insufficient (Southern Cross Refrigerating Co v Toowoomba Foundry Pty Ltd [1954] HCA 82; (1954) 91 CLR 592 (Southern Cross Refrigerating) at 595). Further, that “exceptionally stupid or careless consumers might be confused does not suffice” (Scotch Whisky Association at [61]).

   (6) “In order for s 43 to apply, the connotation must be clear and there must be a real and tangible danger that the trade mark, in the context of the relevant services, would be likely to deceive or cause confusion. It would be sufficient if there is ‘real and tangible danger’ of consumers having ‘reasonable doubt’ or being ‘caused to wonder’ about this issue: cf Southern Cross Refrigerating...at 595, per Kitto J” (Accor Australia at [269]).

   (7)      All surrounding circumstances must be considered including the circumstances in which the marks will be used, the circumstances in which the services will be provided, and the character of the probable users of the services (Southern Cross Refrigerating at 595).

   (8)      The test is not confined to a particular method of use of the marks; the question is “what can the applicant do if he obtains registration?” (Southern Cross Refrigerating at 595).

6. The case of deception and confusion sought to be made by the Opponent in this matter one that falls outside the reasons specified in s 43. It does not depend upon some connotation in the Trade Marks, but upon its similarity to a name used by the Applicant. So the alleged deception or confusion is not for that reason covered by s 43.

7. The provision does not apply to deception or confusion that might arise from conflict between two trade marks.

8. As a consequence, I am not satisfied that if the Trade Marks are used in relation to the Designated Services, there is an apparent connotation within them which is likely to result in deception or confusion. I find that the ground of opposition under section 43 has not been established.

   Section 62A

9. Section 62A of the Act provides:

   Application made in bad faith

   The registration of a trade mark may be opposed on the ground that the application was made in bad faith.

10. Bad faith was judicially considered in Fry Consulting Pty Ltd v Sports Warehouse (No 2) wherein Dodds-Streeton J stated:

    Bad faith, in the context of s 62A, does not, in my opinion, require, although it includes, dishonesty or fraud. It is a wider notion, potentially applicable to diverse species of conduct.

    The formulation in United Kingdom authority of bad faith as falling short of the standards of acceptable commercial behaviour observed by reasonable and experienced persons in a particular area is, in my view, an apt touchstone. An overly literal application may, however, tend to negate the relevance attributed to the applicant’s mental state in the combined test preferred in Harrison.

    Further, in my view, mere negligence, incompetence or a lack of prudence to reasonable and experienced standards would not, in themselves, suffice, as the concept of bad faith imports conduct which, irrespective of the form it takes, is of an unscrupulous, underhand or unconscientious character…

    The question is whether, in all the particular circumstances, the applicant’s knowledge was such that his decision to apply for registration at the relevant date would be regarded as in bad faith by persons adopting proper standards.[10]

    [10] [2012] FCA 81 [164].

11. The Opponent alleges that the Applicant has misappropriated its branding, concept and business model, including

    ·     an allegation that the Applicant’s business premises in Paddington have a similar look and feel to the Opponent’s LIP LAB business in New York;

    ·     an allegation that the Applicant “also uses similar processes, equipment and techniques in providing customised lipsticks to those used by the Opponent;

    ·     an allegation that a video on the Applicant’s website states that the Applicant “discovered” the business concept while travelling in the United States, when in fact that video states Courtney Treacy discovered the business concept in Dallas; and

    ·     an allegation that Kimberly Treacy “likes” or is following the Opponent’s Facebook page.

12. In their declarations, both Courtney Treacy and Kimberley Treacy have given clear evidence as to the independent genesis of the business idea that led to the creation of their business “The Lip Lab”. The products and techniques are sourced from an unrelated party based in the United States, Colorlab, which has been in business since approximately 1996 and whose processes differ significantly from those of the Opponent.

13. While it is true that the Applicant discovered the business concept in the United States, the cited video states that Courtney Treacy discovered the business concept in Dallas, Texas, not from the Opponent.

14. The ‘liking’ of a Facebook page, without further evidence of what the particular Facebook page looked like as at or before the priority date Or that it existed at all), cannot be used to draw any adverse inference. The Opponent has not demonstrated that before the priority date, its Facebook page referred to LIP LAB at all, which is necessary in order to assert that Kimberley Treacy could have formed the alleged intention to act in bad faith before the Priority Date. In any event, even if the evidence is equivocal, this means that the Opponent has not discharged its onus.

1. I am not persuaded that the Opponent has discharged the onus of establishing that the Applicant, as at the Priority Date, applied for the Trade Mark in bad faith, in the sense that in all the circumstances, persons adopting proper standards would regard the decision to apply to register the Trade Mark as being in bad faith, or that reasonable and experienced persons in the field would view such conduct as falling short of acceptable commercial behaviour.

2. Accordingly I find that the s 62A ground of opposition has not been established.

   Decision and Costs

3. Section 55(1) of the Act provides:

   Unless subsection (3) applies to the proceedings, 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.

   Note: For limitations see section 6.

4. Subsection (3) does not apply to these proceedings.

5. The Opponent has not established its opposition to the registration of the Trade Marks. The Trade Marks may then proceed to registration one month 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 and that the disposition of the Application should be in accordance with the Court’s order or direction.

6. Cost may follow the event and I order costs against the Opponent at the scale set out in the regulations. In respect of trade mark number 1722762 I award costs against the Applicant under s 221 of the Act in the relevant amounts under Schedule 8 of the Trade Mark Regulations 1995. In respect of trade mark number 1722763 I award reduced costs against the Applicant under s 221 of the Act in the same manner as Hume Industries (Malaysia) Berhard v James Hardie & Coy PtyLtd.[11]

   [11] [2001] ATMO 78.

   Jock McDonagh

   Hearing Officer

   Hearings and Oppositions

   30 May 2018