Trade mark application number 2063359 and 2065970 (classes 9 and 42) – SMARTSCAN - in the name of Expensify, Inc.

[2022] ATMO 35

TRADE MARKS ACT 1995

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

Re:Trade mark application number 2063359 and 2065970 (classes 9 and 42) – SMARTSCAN - in the name of Expensify, Inc.

Delegate:	Tracey Berger
Representation:	Applicant: David Moore of Henry Hughes IP Ltd
Decision:	2022 ATMO 35 Trade Marks Act 1995 (Cth) – section 33 proceeding – section 41 considered- trade mark not inherently capable of distinguishing – evidence of use sufficient – trade mark application accepted

Background

1. This matter is an ex parte proceeding involving the applications detailed below for registration of the trade mark SMARTSCAN (‘Trade Mark’) under the Trade Marks Act 1995 (Cth)[1]:

   [1] Each reference to a section in these reasons is a reference to a section of the Trade Marks Act 1995 (Cth) (‘Act’).

   Trade Mark Number: 2063359

   Filing Date:                17 January 2020         

   Priority Date:             18 July 2019

   Specification:             Class 9: Computer software for accounting, bookkeeping, tax preparation, tax return filing, transaction processing, transaction management, business process management, and financial planning; computer software to track sales, expenses, and payments; computer software to analyze the financial status of businesses; computer software for data management, data aggregation, data analysis, data reporting, and data transmission; computer software for use in reviewing transactions, transaction reconciliation, and providing a summary of all transactions; computer software for use in improving the accuracy of data; computer software for use in identifying transactions that deviate from historical and trend-based actions; computer software for use in highlighting abnormal behaviour to proactively prevent mistakes or errors

   Class 42:  Providing temporary use of online non-downloadable software for accounting, bookkeeping, tax preparation, tax return filing, transaction processing, transaction management, business process management, and financial planning; providing temporary use of online non-downloadable computer software to track sales, expenses, and payments; providing temporary use of online non-downloadable software to analyze the financial status of businesses; providing temporary use of online non-downloadable software for data management, data aggregation, data analysis, data reporting, and data transmission; providing temporary use of online non-downloadable software for reviewing transactions, transaction reconciliation, and providing a summary of all transactions; providing temporary use of online non-downloadable software for use in improving the accuracy of data; providing temporary use of online non-downloadable software for use in identifying transactions that deviate from historical and trend-based actions; providing use of online non-downloadable software for use in highlighting abnormal behaviour to proactively prevent mistakes or errors

   Trade Mark Number: 2065970

   Filing Date:                30 January 2020         

   Priority Date:             18 October 2019

   Specification:             Class 9: Downloadable computer application software for mobile phones and handheld computers, namely, software that enables users to scan receipts, odometer readings, and business cards and to allow character recognition of them for use in an automated generation of expense reports that are categorized according to individuals, entities, and/or expense categories; Downloadable computer application software for mobile phones and handheld computers, namely, software which enables users to perform scanning and character recognition to track expenses and payments; Downloadable computer application software for mobile phones and handheld computers, namely, software which enables users to perform scanning and character recognition for accounting, bookkeeping, tax preparation, transaction processing, transaction management, business process management, and financial planning

   Class 42:  Hosting a website which features on-line non-downloadable software which enables users to perform scanning and character recognition of receipts, odometer readings, and business cards for use in an automated generation of expense reports that are categorized according to individuals, entities, and/or expense categories; Hosting a website that features non-downloadable computer software which enables users to perform scanning and character recognition to track expenses and payments; Providing temporary use of online non-downloadable software which enables users to perform scanning and character recognition of receipts, odometer readings, and business cards for use in an automated generation of expense reports that are categorized according to individuals, entities, and/or expense categories; Software as a service (SAAS) services featuring a computer software platform which enables users to perform scanning and character recognition of receipts, odometer readings, and business cards for use in an automated generation of expense reports that are categorized according to individuals, entities, and/or expense categories

   (collectively referred to as the ‘Applications’).

2. The Applications were examined as required by s 31 and the primary ground for objection raised in the Examiner’s first reports was that the Trade Mark lacked sufficient inherent distinctiveness under s 41(4).[2]

   [2] The other objections raised were resolved during examination.

3. Consistent with the practice outlined in the Australian Trade Marks Office Manual of Practice & Procedure[3] (‘Manual’) for marks containing “SMART”, the Examiner concluded that the Trade Mark indicates that the Applicant’s “software and software as a service incorporates technology which allows for intelligent/programmable/automated reading and/or digitising of documents”.

   [3] Part 22.14.3 Manual.

4. To overcome the ground for rejection, the Applicant filed evidence of use which consisted of an Affidavit with Exhibits 1-61 made on 20 December 2021 by Cole Eason, Chief Compliance Officer of the Applicant (‘Eason Affidavit’).  The Eason Affidavit outlines the Applicant’s launch in 2011 of the Trade Mark globally, including in Australia, with the Trade Mark having been used since at least January 2012.  The Trade Mark is used in relation to the main feature of the Applicant’s Expensify mobile app and website involving software and software as a service that automates expense management and receipt tracking (‘Applicant’s Goods and Services’).

5. The Examiner maintained the objection explaining that the evidence demonstrated use of the Trade Mark in conjunction with the more distinctive brand Expensify so it was not clear to what extent the use and promotion is directly related to the Trade Mark as opposed to the Expensify mark. Consequently, the Examiner was unable to ascertain whether the Trade Mark acts as a badge of origin in its own right.  As such, the s 41(4) ground for rejection was maintained and the Applicant was invited to submit further evidence. 

6. The Applicant then requested to be heard by the Registrar of Trade Marks under s 33(4) and the matter was listed for hearing before me on 2 March 2022.  On 28 February 2022, the Applicant filed submissions to supplement the earlier evidence and arguments made by the Applicant to the Examiner (collectively ‘Applicant’s Submissions’).  At the hearing, David Moore (with Sophia Katsoulis in attendance) made additional oral submissions to support the Applicant’s Submissions.

7. As a preliminary observation, I note that the ground for rejection must be considered afresh. Furthermore, s 33 of the Act embodies a presumption of registrability which provides that the Registrar must accept an application for registration, unless it is satisfied that there are grounds under the Act for rejecting it or the application has not been made in accordance with the Act.

   Section 41

8. Section 41 of the Act relevantly provides:

   41  Trade mark not distinguishing applicant’s goods or services

   (1)  An application for the registration of a trade mark must be rejected if the trade mark is not capable of distinguishing the applicant’s goods or services in respect of which the trade mark is sought to be registered (the designated goods or services) from the goods or services of other persons.

   Note:          For goods of a person and services of a person see section 6.

   (2)  A trade mark is taken not to be capable of distinguishing the designated goods or services from the goods or services of other persons only if either subsection (3) or (4) applies to the trade mark.

   (3)  This subsection applies to a trade mark if:

   (a)  the trade mark is not to any extent inherently adapted to distinguish the designated goods or services from the goods or services of other persons; and

   (b)  the applicant has not used the trade mark before the filing date in respect of the application to such an extent that the trade mark does in fact distinguish the designated goods or services as being those of the applicant.

   (4)  This subsection applies to a trade mark if:

   (a)  the trade mark is, to some extent, but not sufficiently, inherently adapted to distinguish the designated goods or services from the goods or services of other persons; and

   (b)  the trade mark does not and will not distinguish the designated goods or services as being those of the applicant having regard to the combined effect of the following:

   (i)  the extent to which the trade mark is inherently adapted to distinguish the goods or services from the goods or services of other persons;

   (ii)  the use, or intended use, of the trade mark by the applicant;

   (iii)  any other circumstances.

   Note 1:       Trade marks that are not inherently adapted to distinguish goods or services are mostly trade marks that consist wholly of a sign that is ordinarily used to indicate:

   (a)    the kind, quality, quantity, intended purpose, value, geographical origin, or some other characteristic, of goods or services; or

   (b)    the time of production of goods or of the rendering of services.

   Note 2:       For goods of a person and services of a person see section 6.

   Note 3:       Use of a trade mark by a predecessor in title of an applicant and an authorised use of a trade mark by another person are each taken to be use of the trade mark by the applicant (see subsections (5) and 7(3) and section 8).

   (5)  For the purposes of this section, the use of a trade mark by a predecessor in title of an applicant for the registration of the trade mark is taken to be a use of the trade mark by the applicant.

   Note 1:       For applicant and predecessor in title see section 6.

   Note 2:       If a predecessor in title had authorised another person to use the trade mark, any authorised use of the trade mark by the other person is taken to be a use of the trade mark by the predecessor in title (see subsection 7(3) and section 8).

9. To determine the merits of the s 41 ground for rejection, the extent of the Trade Mark’s inherent adaptation to distinguish the Applicant’s Goods and Services must be considered. This is assessed :

   [B]y 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 connexion with similar goods in any manner which would infringe a registered trade mark granted in respect of it.[4]

   [4] Clark Equipment Co v Registrar of Trade Marks [1964] HCA 55, [5] (Kitto J) (emphasis added).

10. The majority of the High Court in Cantarella Bros Pty Limited v Modena Trading Pty Limited[5] indicated that the test for distinctiveness under s 41 of the Act is a two-step process. First, it is necessary to determine the ordinary meaning of the trade mark, in Australia, to persons who will purchase, consume or trade in the goods and services.[6]  Once the ordinary signification is established, consideration must then be given to whether other traders might legitimately desire to use the trade mark for the sake of its ordinary signification in respect of the same or similar goods.[7]

    [5] [2014] HCA 48 (‘Cantarella’) (French CJ, Hayne, Crennan and Kiefel JJ).

    [6] Ibid [71].

    [7] Ibid.

11. Whilst the Applicant believes that the Trade Mark is inherently registrable as a distinctive mark, the Applicant did not argue this point at the hearing.  Instead the Applicant’s Submissions focussed on the extent to which the Trade Mark is inherently distinctive.  In this regard, the Applicant pointed to the “continuum of distinctiveness from highly descriptive trade marks to highly distinctive trade marks”.[8]  The Applicant contends that the Trade Mark falls further towards the end of highly distinctive marks on this continuum.

    [8] Moroccanoil Israel Ltd v Aldi Foods Pty Ltd [2017] FCA 823, [638].

    Ordinary Signification

12. The Trade Mark is an obvious conjoining of the common and well understood words ‘SMART’ and ‘SCAN’ which would be readily pronounced as such given the natural break between the two syllables.  ‘SMART’ would be understood by most of the Australian population as indicating the use of artificial intelligence, automation, computerised or other technological means of processing information.  The element SCAN, as defined in the Macquarie Dictionary and generally known particularly to consumers of computerised or electronic products, means to “read (an image, barcode or text) in order to reproduce it” or to “digitise (a text)”.[9]  Hence when considered as a whole phrase, the Trade Mark’s ordinary signification is that the goods and services incorporate technology which allows for intelligent, programmable and/or automated reading and digitising of documents.  The Applicant contends that this explanation of the Trade Mark does not convey a sufficiently definite connotation about the Applicant’s Goods and Services.  The Applicant’s Goods and Services perform a number of functions in that users can categorise and organise their expenses, allocate them against a particular budget, send them for approval directly to a manager or accountant and produce reports.  The Trade Mark is not descriptive of these aspects of the Applicant’s Goods and Services.  However, the  Eason Affidavit explains that once consumers have taken a photograph or uploaded an image of their receipt, the “SmartScan technology then automatically inspects (or reads) the relevant receipt, extracts and transcribes the details”.  The Trade Mark does not convey the full picture of the Applicant’s Goods and Services but it does indicate that an aspect of those Goods and Services involves the automated reading and digitising of documents being receipts or other invoices.

    [9] Macquarie Dictionary (online at 10 March 2022) ‘scan’ (def 7).

    Other traders

13. The next step involves determining whether other traders would legitimately desire to use the Trade Mark, or some mark nearly resembling it, for the sake of its ordinary signification in respect of their own good and/or services.

14. In my assessment, it is possible that other traders may legitimately wish to use the Trade Mark to indicate that their expense management and  receipt tracking software utilises technology that automates the reading and digitising of the receipts and expense documents. 

15. However, as the Applicant has pointed out it is a question of degree and where on the continuum the Trade Mark sits in terms of its inherent distinctiveness. Throughout this process, the Applicant pointed a number of times to its registration of the Trade Mark in New Zealand where the mark was found inherently registrable. I agree with the Applicant’s Submissions that the tests for registrability in Australia and New Zealand are similar and that Australia/New Zealand is generally regarded as one business market. However, there can be differences in the state of the Registers and/or practice which justifies a change in approach in Australia as compared to New Zealand. In the present circumstances, I am not aware of any practice in New Zealand on ‘SMART’ marks and do not know whether there is a prevalence of ‘SMART’ marks on the Register. I am satisfied that under Australian law and practice, that the Trade Mark is not directly descriptive of the Applicant’s Goods and Services. Given that the Trade Mark makes reference to one feature of the Applicant’s Goods and Services, in my assessment, it falls to some degree closer to the directly descriptive end of the spectrum than the allusive end. Having found that the Trade Mark may be regarded as to some extent inherently adapted to distinguish the Applicant’s Goods and Services under s 41(4)(a), I must consider the ‘combined effect’ of the inherent adaptation to distinguish, use or intended use of the Trade Mark and any other circumstances, to determine whether the Trade Mark will or will not distinguish the Applicant’s Goods and Services from those of other persons.

    Evidence of Use

16. In assessing whether the Trade Mark does or will distinguish the Applicant’s Goods and Services, the Applicant relies on the presumption of registrability as well as use of the Trade Mark in Australia and globally since at least 2012.  The Eason Affidavit is over 1,000 pages and hence this decision contains only a brief summary and evaluation of the evidence.

17. Some of the key points of the Eason Affidavit are:

    • The Applicant is the fastest growing receipt and expense company in the world, with more customers than the rest of the industry combined.  It has received numerous awards including from Forbes as one of the hottest start-ups of 2015 and Best 100 Cloud Companies in 2016.
    • The Expensify app is integrated with all major accounting packages and credit cards.
    • The Goods and Services offered under the Trade Mark are used by sole traders, companies and their employees, and accountants such as Deloitte, PwC and Ernest & Young.
    • Globally, more than 8 million people and 75,000 companies use Expensify and hence, SmartScan, with billions of dollars of receipts/expenses processed by the Applicant’s Goods and Services.  Global revenue of Expensify is in the order of tens of millions of US dollars.
    • The Applicant’s advertising expenditure and promotion including sales and marketing presentations directly to potential Australian customers, press releases, third party publications and attendance at or sponsorship of industry events/conferences.  Australians would also have had some exposure to the Applicant’s advertising overseas including for example its commercial and music video produced in 2019 that was broadcast during the Superbowl (watched by more than 98 million people) which heavily promoted the Trade Mark.
    • There have been over 220,000 downloads of the Expensify app by Australian consumers with significant growth year on year.  The Applicant has millions of AUD revenue for 2017-2020 for Australia and New Zealand and showed significant growth year on year.

18. The Applicant’s Submissions explain that the Trade Mark and house mark Expensify are intertwined.  It is not possible to use the Applicant’s Goods and Services offered under the Trade Mark without subscribing to the Applicant’s Expensify goods and services.  At the hearing, the Applicant’s attorneys compared the situation to other subscription services where customers automatically become exposed to new brands by being given access to new tools/products as they are launched.  Some examples, the Applicant pointed to include: Apple customers who automatically became aware of and had access to iCloud when it launched; Microsoft users who were given access to Edge; or subscribers to Foxtel who are given access to new channels on launch such as Arena.  Existing customers are exposed to the new brand through their current subscription to a ‘house branded’ product.  The success of a new tool or product can also attract additional subscribers.  I agree with the Applicant that each of these products (iCloud, Edge and Arena) has its own reputation.  For these reasons, I accept that evidence of use of Expensify is relevant to assessing the level of use and likely reputation of the Trade Mark. 

1. Also, it is apparent from the evidence that the Trade Mark is often used on its own apart and the Trade Mark is separately, and extensively, promoted to existing and potential customers.

2. Use of the Trade Mark has been demonstrated for 7 years prior to the priority dates of the Applications and the subsequent use after the priority dates is relevant to whether the Trade Mark will distinguish the Applicant’s Goods and Services.  There has been significant year on year growth which is projected to continue.  Weighing the evidence of use of the Trade Mark and the degree of inherent distinctiveness, I am satisfied that it qualifies for registration. 

   Decision

3. Section 33 relevantly provides:

   33  Application accepted or rejected

   (1)  The Registrar must, after the examination, accept the application unless he or she is satisfied that:

   (a)  the application has not been made in accordance with this Act; or

   (b)  there are grounds under this Act for rejecting it.

   Note:          For this Act see section 6.

   (2)  The Registrar may accept the application subject to conditions or limitations.

   Note:          For limitations see section 6.

4. The Trade Mark is to some extent, but not sufficiently, inherently adapted to distinguish the Applicant’s Goods and Services from those of other persons. However, due to the extent to which the Trade Mark is inherently adapted to distinguish and the evidence of use of the Trade Mark, I am satisfied that the Trade Mark is in fact capable of distinguishing. Accordingly, I accept the Applications, with an appropriate endorsement to be added to the Register.

   Tracey Berger
   Hearing Officer
   Oppositions and Hearings
   Trade Marks and Designs
   11 March 2022