Unilever Australia Ltd v PB Foods Ltd

[1999] FCA 1083

FEDERAL COURT OF AUSTRALIA

Unilever Australia Ltd v PB Foods Ltd  [1999] FCA 1083

PRACTICE AND PROCEDURE – application to strike out defence – applicant alleges infringement of trade marks and respondent raises defence that infringing marks would be registered if application made – whether defence is hopeless having regard to terms of s 122(1) of the Trade Marks Act 1995 (Cth)-whether defence available to authorised user or owner of mark or whether prior refusal of application for registration of infringing mark denies defence in s 122(1)(f).

Trade Marks Act1995 Cth s 122(1)(f)
Federal Court Rules 1978 (Cth) O 11 r 16

UNILEVER AUSTRALIA LTD v PB FOODS LTD
N 287 OF 1999

MOORE J
SYDNEY
12 AUGUST 1999

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	N 287 OF 1999

BETWEEN:	UNILEVER AUSTRALIA LTD Applicant
AND:	PB FOODS LTD Respondent
JUDGE:	MOORE J
DATE OF ORDER:	12 AUGUST 1999
WHERE MADE:	SYDNEY

THE COURT ORDERS THAT:

(1)       The notice of motion is dismissed with costs.

Note:    Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	N 287 OF 1999

BETWEEN:	UNILEVER AUSTRALIA LTD Applicant
AND:	PB FOODS LTD Respondent

JUDGE:	MOORE J
DATE:	12 AUGUST 1999
PLACE:	SYDNEY

REASONS FOR JUDGMENT

1. On 8 April 1999 Unilever Australia Ltd (“Unilever”) commenced proceedings under the Trade Marks Act1995 (Cth) (“the 1995 Act”) against PB Foods Ltd (“PB Foods”). Unilever is the proprietor in Australia of, relevantly, three registered trade marks registered in respect of specified goods; namely, ice cream, frozen confectionary and water ices (“the Unilever marks”).

2. In its statement of claim Unilever alleges that PB Foods has since at least 1998 used as a trade mark in Australia in relation to ice confections, three signs which are substantially identical with or deceptively similar to each of the Unilever marks.  Unilever further alleges that PB Foods has infringed the Unilever marks in contravention of s 120 of the 1995 Act.  In its application Unilever seeks injunctive relief, an order for delivery up and damages or an account of profits.

3. PB Foods filed a defence on 3 June 1999.  The defence includes the following:

   3Alternatively, the Respondent says that it is using the signs depicted in annexures “A” and “B” to the Application (“the Cadbury signs”) under authorisation from Cadbury Limited, which would obtain registration of the Cadbury signs as trademarks in its name in relation to goods including Ice Confections (as defined in the Statement of Claim) if it were to apply for registration.

   4Further, the Respondent says that it would obtain registration of the signs depicted in Annexure C to the Application (“the Brownes Signs”) as trade marks on or in relation to Ice Confections in its name if it were to apply for such registration.

   5By reason of the matters set out in paragraphs 3 and 4, by virtue of the operation of sub section 122(1)(f) of the Trade Marks Act (Cth) 1995, the Respondent has not infringed the Unilever Marks.

   By notice of motion filed 25 June 1999 Unilever sought an order that paras 3, 4 and 5 of the defence be struck out pursuant to O 11 r 16 of the Federal Court Rules. The order was ultimately sought on one basis only, namely that as a matter of construction of the 1995 Act, the defence founded on s 122(1)(f) was simply not available for three reasons (one relating to all paragraphs and the other two relating to paras 3 and 5 only).

4. In order to deal with the submissions made by the parties it is necessary to set out various provisions of the 1995 Act.   Section 6 contains definitions of “registered trade mark”, “sign” and “trade mark” which provide:

   registered trade mark means a trade mark whose particulars are entered in the Register under this Act.

   …

   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.

   …

   trade mark has the meaning given by section 17

   ….

   The expanded definition of trade mark in s 17 provides:

   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.                

   The 1995 Act deals, relevantly, with the use of a trade mark in s 7(3) which provides:

   (3)An authorised use of a trade mark by a person (see section 8) is taken, for the purposes of this Act, to be a use of the trade mark by the owner of the trade mark.

   and s 8(1) which provides:

   (1)A person is an authorised user of a trade mark if the person uses the trade mark in relation to goods or services under the control of the owner of the trade mark.

   (2)…

   The 1995 Act deals with the registration and use of marks which are substantially identical with or deceptively similar to a trade mark registered by another person in respect of similar goods.  Section 44 declares that an application for the registration of a trade mark which is substantially identical with or deceptively similar to a registered trade mark (of the type mentioned) must be rejected.  A qualification to this requirement is found in s 44(3) which provides:

   (3)      If the Registrar in either case is satisfied:

   (a)that there has been honest concurrent use of the 2 trade marks; or

   (b)that, because of other circumstances, it is proper to do so;

   the Registrar may accept the application for the registration of the applicant’s trade mark subject to any conditions or limitations that the Registrar thinks fit to impose.  If the applicant’s trade mark has been used only in a particular area, the limitations may include that the use of the trade mark is to be restricted to that particular area.

   Section 23 deals with the rights of different persons who are the proprietors of trade marks which have been registered but which are substantially identical or deceptively similar.  That section provides:

   If trade marks that are substantially identical or deceptively similar have been registered by more than one person (whether in respect of the same or different goods or services), the registered owner of any one of those trade marks does not have the right to prevent the registered owner of any other of those trade marks from using that trade mark except to the extent that the first-mentioned owner is authorised to do so under the registration of his or her trade mark.

   Part 12 of the 1995 Act deals with the infringement of trade marks.  Section 120 relevantly provides:

   (1)A person infringes a registered trade mark if the person uses as a trade mark a sign that is substantially identical with, or deceptively similar to, the trade mark in relation to goods or services in respect of which the trade mark is registered.

   Sections 122, 123 and 124 identify circumstances in which, notwithstanding s 120, a person does not infringe a registered trade mark.  Section 122 provides:

   (1)      In spite of section 120, a person does not infringe a registered trade mark when:

   (a)       the person uses in good faith:

   (i)the person’s name or the name of the person’s place of business; or

   (ii)the name of a predecessor in business of the person or the name of the predecessor’s place of business; or

   (b)       the person uses a sign in good faith to indicate:

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

   (ii)the time of production of goods or of the rendering of services; or

   (c)the person uses a trade mark in good faith to indicate the intended purpose of goods (in particular as accessories or spare parts) or services; or

   (d)the person uses the trade mark for the purposes of comparative advertising; or

   (e)the person exercises a right to use a trade mark given to the person under this Act; or

   (f)the court is of the opinion that the person would obtain registration of the trade mark in his or her name if the person were to apply for it; or

   (g)the person, in using a sign referred to in subsection 120(1), (2) or (3) in a manner referred to in that subsection, does not (because of a condition or limitation subject to which the trade mark is registered) infringe the exclusive right of the registered owner to use the trade mark.

   (2)In spite of section 120, if a disclaimer has been registered in respect of a part of a registered trade mark, a person does not infringe the trade mark by using that part of the trade mark.  

   In relation to the use of a trade mark which is substantially identical with or deceptively similar to a registered trade mark, s 124 provides:

   (1)A person does not infringe a registered trade mark by using an unregistered trade mark that is substantially identical with, or deceptively similar to, the registered trade mark in relation to:

   (a)goods similar to goods (registered goods) in respect of which the trade mark is registered; or

   (b)services closely related to registered goods; or

   (c)services similar to services (registered services) in respect of which the trade mark is registered; or

   (d)goods closely related to registered services;

   if the person, or the person and the person’s predecessor in title, have continuously used in the course of trade the unregistered trade mark in relation to those goods or services from a time before:

   (e)the date of registration of the registered trade mark; or

   (f)the registered owner of the registered trade mark, or a predecessor in title, or a person who was a registered user of the trade mark under the repealed Act, first used the trade mark;

   whichever is earlier.

   (2)If the unregistered trade mark has continuously been used only in a particular area of Australia, subsection (1) applies only to the use of the trade mark by the person in that area.

5. As earlier noted PB Foods based the defence identified in paragraphs 3, 4 and 5 on s 122(1)(f). The primary submission of Unilever in this interlocutory application is that the reference to “the trade mark” in s 123(1)(f) is to the trade mark which is registered and the defence created by s 122(1)(f) arises only in circumstances where the mark used by the putative infringer is the precise mark of the registered proprietor who maintains the proceedings under Part 12.

6. It was accepted by counsel for Unilever that in order to succeed on this primary submission it was necessary to establish that s 122(1)(f) was susceptible of no other tenable construction. The construction advanced by counsel for Unilever was that the expression “the trade mark” had a constant meaning in s 122 which is consistent with the defined meaning and the scheme of the Act as a whole. Counsel drew attention to the use of the expression “the trade mark” in paras (c), (d) and (g) of s 122(1) and its use in the context of the prefatory words in s 122(1) in which reference is made to “a registered trade mark”. In each instance, it was submitted, the reference to “the trade mark” was a reference to the registered trade mark referred to in those prefatory words. It was submitted that in relation to each paragraph containing the words “the trade mark” the purpose of the paragraph was to effectively authorise, in certain limited circumstances, the use of the registered trade mark which would otherwise be an infringing use. Para (c) permits, for example, the use of a registered trade mark to promote spare parts or accessories of a product itself identified by the registered trade mark, in order to identify and link or associate those parts and accessories with the product. Para (d) is, as it states, intended to permit the use of a registered trade mark for the purposes of comparative advertising. Moreover, it was submitted, not only is the expression “the trade mark” used consistently in s 122, its use can be contrasted with the use of the expression “a trade mark” found in para (e) and the use of the word “a sign” in para (b).

7. Counsel for PB Foods submitted that the expression “the trade mark” in para (f) could have a wider meaning. It was a reference to the trade mark used by the putative infringer which may not only be a trade mark which was identical to the registered trade mark but also a trade mark which was substantially identical or deceptively similar to that registered mark. Reference was made to the rights conferred on the proprietor of a trade mark which was substantially identical with or deceptively similar to a registered trade mark. That person could make application for the registration of the trade mark on the footing that while, prima facie, the application would be rejected there existed nonetheless a residual discretion in the Registrar to accept the application for the registration of the trade mark if the conditions identified in s 44(3) had been satisfied. If so, then s 23 would operate to delineate the rights of the two registered proprietors of trade marks which were substantially identical or deceptively similar. It was submitted that one purpose of s 122(1)(f) is to preserve the position of a person who might secure registration of a trade mark which is, prima facie, an infringing trade mark if that trade mark could be registered. A registerable trade mark would include a trade mark capable of registration by operation of s 44(3). Section 122(1)(f) operated in this way notwithstanding the specific defence identified in s 124.

8. It is unnecessary to discuss in detail the comparative strengths or otherwise of these competing constructions of s 122(1)(f). There are, however, textual and contextual arguments of substance in support of the construction advanced by counsel for Unilever and it is a construction apparently consistent with the objects of the 1995 Act. However the critical question, for present purposes, is whether the construction advanced by counsel for PB Foods is so tenuous as to warrant the conclusion that the defence raised by paras 3, 4 and 5 of the defence is so untenable that it cannot possibly succeed or is manifestly hopeless. This is an appropriate adaptation of the relevant principles to be applied in determining whether to strike out pleadings, in whole or in part, which are often anchored on the remarks of Barwick CJ in General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125 at 129. The formulation and reformation of the applicable principles are found in innumerable judgments which often contain reference to other considerations apt for the case in question. A comparatively recent example of their application in a case that has some similarities to the present is found in Deputy Commissioner of Taxation v England (as liquidator of VB Minerals Inc. (Nevada) (1997) 37 ATR 422.

9. In the present case, I do not view the construction advanced by counsel for PB Foods as so tenuous to warrant a conclusion that the defence cannot succeed or is manifestly hopeless.  The 1995 Act repeats significant elements of the Trade Marks Act 1955 (“the 1955 Act”) but contains several significant changes. Section 122(1)(f) has no exact counterpart in the 1955 Act and some caution, in my view, should be exercised in reaching a concluded view about its construction in interlocutory proceedings of this type. On the construction advanced by counsel for PB Foods, paras (c), (d) and (f) of s 122(1) would protect the use of not only the registered trade mark but a trade mark which, in some minor respect, differed from the registered trade mark but was substantially identical. There is no obvious legislative policy which would dictate the more limited operation of s 121(1)(c), (d) and (f) contended for by counsel for Unilever. While a wider protection of a similar character to s 122(1)(c) and s 122(1)(f) might derive from s 122(1)(b) and from s 124 respectively, the operation of s 122(1)(d) would be limited and, arguably, no protection would be afforded to a person who, for the purposes of comparative advertising, replicates imperfectly the registered trade mark of a competitor. In addition the construction of the expression “the registered trade mark” in s 122(1)(f) advanced by counsel for PB Foods finds some support in the commentaries of the 1995 Act: see para 58, 205 of the CCH Australian Industrial and Intellectual Property Reporter, but to opposite effect see para 250 of LBC’s The Laws of Australia.  Moreover it cannot be assumed that the expression “the trade mark” where it is plainly a reference, in context, to a registered trade mark is inherently unambiguous.  An example of a division of judicial opinion on whether that expression in s 58 of the 1955 Act was a reference only to the exact registered mark only when used by itself is found in Angove’s Pty Ltd v Johnson and Eclar Investments Pty Ltd (1981) 55 FLR 1 at 8 and (1982) 66 FLR 216 at 219 per Franki J at 230 per Deane J and 240 per Fitzgerald J.

10. Counsel for Unilever abandoned a submission that if the contentious paragraphs of the defence were not struck out, the scope of the factual inquiry would be widened, further parties would have to be added and the cost and complexity of the litigation unnecessarily expanded. Nonetheless Unilever may harbour an unstated concern that if the defence remains as pleaded, a factual inquiry will be undertaken by the Court, findings made and opinions expressed about whether trade marks used by PB Foods (which are not the Unilever marks but, at the least, arguably similar to them in some respects) would be registered if application was made to register them. The concern may be that those views might be expressed by the Court and favour PB Foods even though the construction of s 122(1)(f) advanced by PB Foods was rejected at a final hearing. While I am not able to indicate now in any concluded way how the matter will be approached at a final hearing or how reasons for judgment might be expressed, it presently appears to me that there would be cogent reasons for not expressing views in a final judgment about the registerability of marks used by PB Foods if s 122(1)(f) operates in the more limited way contended for by Unilever. To express such views might create a situation prejudicial to Unilever (or for that matter PB Foods). That is because the Registrar might come to consider an application to register those or similar marks (there is such an application presently on foot) and exercise discretionary powers conferred by the 1995 Act against a background in which the Court might have expressed views about how those powers might, or perhaps even should be exercised even though no order was made based on those views.

11. It is necessary to deal with two further reasons advanced by counsel for Unilever why paras 3 and 5 of the defence should be struck out. PB Foods uses two of the contentious signs on the basis, according to the defence as pleaded, that it is a use authorised by Cadbury Ltd which is a UK corporation. First, counsel for Unilever submitted that s 122(1)(f), properly construed, only protects use of a trade mark by the person who would obtain registration of the trade mark. The defence, as pleaded, is to the effect that PB Foods can rely on s 122(1)(f) because Cadbury Ltd would obtain registration of the two contentious signs. It was submitted, in effect, by counsel for Unilever, that a defence pleaded this way is plainly beyond the purview of s 122(1)(f). However that may depend on the scope of s 7(3). It may be, as submitted by counsel for Unilever, that s 7(3) (together with s 8), operates only to provide some protection to registered proprietors whose marks are used in the territory of Australia by third parties authorised by it. However s 7(3) is cast in wide terms and I am not satisfied that the language deployed patently limits its operation in the way contended for by counsel for Unilever.

1. The second additional reason advanced by counsel for Unilever for striking out paras 3 and 5 of PB Food’s defence is that they relate to marks that have already been the subject of an unsuccessful application by Cadbury Ltd for registration.  That fact answers, it was submitted, the question posed by s 121(1)(f).  That is, Cadbury Ltd would not obtain registration of the marks.   However, the earlier rejection of the application was founded on opinions formed by the Registrar.   Section 121(1)(f) is, in terms, directed to the opinion of the Court.   The extent to which, if at all, the Court seeks to ascertain what the opinion of the Registrar might be were an application considered under s 44 of the 1995 Act, is an issue of potentially some complexity.  I am not presently satisfied that the fact of earlier refusal warrants the striking out of paras 3 and 5 of the defence.

2. I dismiss the notice of motion with costs.

I certify that the preceding thirteen (13) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Moore.

Associate:

Dated:             12 August 1999

Counsel for the Applicant:	R  Webb
Solicitor for the Applicant:	Mallesons Stephen Jaques
Counsel for the Respondent:	J  Gleeson
Solicitor for the Respondent:	Freehill Hollingdale & Page
Date of Hearing:	2 August 1999
Date of Judgment:	12 August 1999