Union Knitting Mills Pty Ltd v Esprit International

[1998] ATMO 59

TRADE MARKS ACT 1995

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

Re:Opposition by ESPRIT INTERNATIONAL to the registration of trade mark application number 598177 in the name of UNION KNITTING MILLS PTY.

LTD.

Background

This matter concerns opposition to registration of a series of trade marks under the provisions of section 52 of the Trade Marks Act 1995.

On 15 March 1993, Greta Lingerie (Aust) Pty Ltd filed application number 598177 to register a series of trade marks for the goods "ladies' and girls' sleepwear including ladies' and girls' nightgowns and pyjamas".  Subsequently, a Deed of Assignment was recorded by the Trade Marks Office and the application was allowed to proceed in the name of Union Knitting Mills Pty Limited (the applicant).  The series of trade marks in respect of which registration is sought is shown here

 

Acceptance of the application, under the provisions of subsection 44(4), was advertised in the Australian Official Journal of Trade Marks of 28 March 1996.

Notice of opposition to registration of the series of trade marks was filed on 24 September 1996 by Esprit International.

The parties served and filed their respective evidence by 9 April 1998.  At the hearing the applicant sought permission, pursuant to regulation 5.15(1), to serve a copy of further evidence on the opponent. 

The matter was heard in Sydney, Mr Trevor Stevens of Davies Collison Cave, patent and trade mark attorneys of Sydney, appearing for the opponent, while Mr Philip Macken of Watermark, also patent and trade mark attorneys of Sydney, represented the applicant by telephone.   

Issues
As the applicant has applied for permission to serve a copy of further evidence on the opponent, I will need to deal first with that application. 

Another matter that requires my attention before a full consideration of the major issues concerns an application from the opponent, pursuant to the provisions of section 66 of the Act, requesting an amendment to the notice of opposition by adding two further grounds to the existing six grounds.  I indicated at the hearing that the requested amendments will be carefully considered by me and invited the parties to proceed by making submissions in relation to both grounds, which are: 

• that the Registrar accepted the application for registration on the basis of evidence or representations that were false in material particulars (section 62)

• that the registration of the trade mark is prohibited by section 44 of the Act.

In addition to these grounds of opposition, the opponent focussed its attention on the submissions and evidence based on the grounds:

• that use of the trade mark will be likely to deceive or cause confusion contrary to section 60 of the Act; and

• given the reputation the opponent has in the trade mark ESPRIT the use of the trade mark ESLEEP in relation to the goods for which registration is sought is likely to mislead or deceive and pass off the applicant's goods as being those of or associated with the opponent (section 60).

The opponent also briefly referred to the last ground in the notice of opposition:

• that the registration of the trade mark ought to be refused in the exercise of the Registrar's discretion, by reason of the conduct of the applicant and/or the nature of the mark and/or its use.

Evidence
The evidence in support comprises one statutory declaration by Ronald J Lehrman, the assistant secretary of the opponent company, reciting the history of the company, the nature of its business, providing a summary of use of its marks in Australia, including confidential sales and advertising figures, as well as reputation, sales and advertising information relating to its trade marks worldwide.  He has affixed to his declaration a large volume of exhibits as evidentiary material.

As the evidence in answer, Peter Neenan, financial controller of Red Robin Pty Ltd (formerly known as Union Knitting Mills Pty Ltd) has affixed to his statutory declaration a copy of a statutory declaration by Raymond George Magid, which, he says, had been filed in relation to earlier opposition proceedings concerning the trade mark ESLEEEP, a copy of a statutory declaration by Roze Bohun, filed in support of a claim in terms of subsection 44(4) and copies of statutory declarations from members involved in the retailing of sleepwear products who have no connection with the applicant.  He also provides wholesale value of sales concerning the applicant's products for the years 1994 and 1995.

Statutory declarations by Trevor Stevens and Catherine Busby, both of Davies Collison Cave, the opponent's attorneys, constitute evidence in reply.  In the former, with reference to the statements in the copies of the statutory declarations affixed to Mr Neenan's declaration, Mr Stevens expresses doubt that the declarants have actually made statements in relation the trade marks of the present application because Mr Magid's declaration refers to a mark refused registration and the supporting declarations do not relate to the marks of the subject application.  Given the purported differences in the marks, he questions whether the provisions of subsection 44(4) applied to the application.  Ms Busby reports on telephone enquiries she conducted from retailers on sales of the applicant's goods under the mark ESLEEP, or their awareness of the mark. 

As further evidence, Mr Philip James Macken of Watermark, the applicant's attorneys, has filed a statutory declaration, with annexures, in rebuttal to Ms Busby's enquiries. 

Submissions and discussion of the issues

Whether the application made shortly before the hearing seeking permission to serve further evidence on the opponent is allowable 

The reason upon which the applicant bases its request to produce further evidence is given in the application.  It is the statements contained in Ms Busby's declaration which, it is said, had cast some doubt on the veracity of the applicant's evidence in answer, particularly to the alleged absence of sales of the applicant's products carrying the mark ESLEEP in Australia.  It is explained that the applicant had some difficulty in collating the relevant information showing the contrary, as the officer entrusted the responsibility had been absent from the office for a prolonged period of time.  At the hearing, Mr Stevens, having perused the application, did not raise any objections in the event of the application being granted. 

Given the entirely negative responses by a number of persons contacted in major retail stores in the states of New South Wales and Victoria in relation to the applicant's trading activities under the mark ESLEEP, it would be reasonable for the applicant to decide that a response to the opponent's allegations, which came to light only upon receipt of the evidence in reply in April 1998, was essential.  Although the applicant ought to have shown more diligence in procuring the evidence, perhaps by contacting other sources to obtain the required information, once it became aware of the delays caused by the officer's unavailability, I do not think the period of two months is excessively long.  Besides, the opponent did not endeavour to convince me that it would be in any way unduly disadvantaged, nor did it opt to reserve its right to reply to the further evidence.  Thus, having applied the long established directives of Lord Denning in Ladd v Marshall (1954) 1 WLR 1489 in relation to further evidence to the present circumstances, I am satisfied that the applicant has met the criteria. I am also mindful of the fact that the Registrar need not strictly adhere to Lord Denning's rules because, in an appeal from the Registrar, being a hearing de novo, the court would not exclude further evidence or additional grounds. Hence, the Registrar would be inclined to admit further evidence in opposition proceedings - Studio Srl v Buying Systems (Aust) Pty Ltd (1992) AIPC 90-858 and Horphag Research Ltd v Schwitters (1998) 40 IPR 613. In addition, as noted in Pioneer Hi-Bred Corn Co v Hy-line Chicks Pty Ltd (1979) RPC 410, it is important to have access to as much material as possible if allegations of deception or confusion of the marks have been raised. In light of these precedents, the applicant's further evidence, which has been served on the opponent, should be admitted.

The proposed amendments to the notice of opposition
Mr Stevens submitted that the section 62 ground the opponent sought to add to the notice of opposition only became apparent to the opponent following the receipt of the evidence in answer, which indicated that some issues needed to be addressed in the context of that ground.  Such a ground had, in fact, been implied in his statutory declaration in the evidence in reply, he said.

Under the provisions of section 66 -

66. The Registrar may, at the written request of the person who has filed an application (other than an application for the registration of a trade mark), a notice or other document for the purposes of this Act or at the written request of the person's agent, amend the application, notice or document:

(a)  to correct a clerical error or an obvious mistake; or

(b)  if the Registrar is of the opinion that it is fair and reasonable in all the
      circumstances of the case to do so.

In the present circumstances, the opponent has chosen to request an amendment to the notice of opposition at a stage in the proceedings when the applicant would have been in possession of the opponent's complete evidence relied upon.  The applicant has had ample time to prepare its submissions in light of the grounds stated in the notice of opposition and the evidence supporting those grounds.  By raising the amendment question at the hearing, the opponent has placed the applicant at considerable disadvantage, depriving it of an opportunity to fully consider the new ground and prepare appropriate responses.  The declaration by Mr Stevens in the evidence in reply has suggested that, according to the evidence in answer, one of the series of marks in respect of which the present application was accepted under the provisions of subsection 44(4) of the Act, does not correspond with the mark used by the applicant in the specified period, and therefore acceptance of the mark under those provisions appears to have been made in error.  However,  I do not believe that, on the basis of these statements, the applicant could have anticipated the opponent's reliance on the ground that the application was accepted on evidence or representations that were false in material particulars.  Nor, in my opinion, could the applicant be expected to interpret the existing last ground in the notice of opposition as containing the nature of the allegations.  I have concluded that the circumstances surrounding the section 62 amendment to the notice of opposition is not justified.      

Had the amendment been allowable, I believe the opponent's chances of success in respect of the section 62 ground would not have been promising.  In view of the extensive submissions on the matter made by both parties, my statement warrants a brief explanation. 

With reference to sub-regulation 21.15(8), whereby

[t]he Registrar is not bound by the rules of evidence but may inform himself or herself on any matter that is before him or her in any way that the Registrar reasonably believes to be appropriate,

I have perused the evidence which satisfied the examiner and the acceptance officer that the applicant had filed adequate evidence in terms of subsection 44(4) of the Act.  This was done to overcome a citation objection based on a registered mark in the name of a person other than the opponent.  The statutory declarations in support of subsection 44(4), except Ms Bohun's declaration, refer to application 441721, inserted on top of the first page of each of the declarations.  The mark of that application, filed by the applicant's predecessor, was refused registration following opposition, the predecessor of the current opponent having successfully established deceptive similarity between the marks, having regard to their particular rendering - Greta Lingerie (Aust) Pty Ltd [the applicant's predecessor] v Esprit de Corp [the opponent's predecessor] (1992) AIPC 90-923. It was the applicant's alleged reliance on use of the refused mark of application 441721 for the purpose of subsection 44(4) that formed the substance of Mr Stevens' argument in relation to section 62 ground, i.e. that the application had been accepted on the basis of evidence or representations that were false in material particulars. However, notwithstanding the reference to application 441721 on the declarations, nowhere in the declarations or exhibits is the mark shown as the representation of the mark the applicant's predecessor failed to register. Exhibits to Mr Magid's declaration, RGM1 to RGM3, clearly depict the second or "stylized" version of the series marks the subject of the present application. Elsewhere in the applicant's evidence the mark is identified by its general description "ESLEEP". It seems to me therefore that the examiner had no reason to doubt the declarants' veracity as to their claims on use of the marks under consideration. Even though the declarations suffer from inconsistency in identifying the number of the application and the failure to specifically refer to "the series of trade marks", instead of simply to the "ESLEEP" trade mark, on the material before the examiner, it could not be seriously asserted that the applicant and its predecessor had not continuously used its series of marks before the date of registration of the cited mark. Part of the evidence filed in support of the subsection 44 claim, to which I have referred, formed the applicant's evidence in the present proceedings. Conspicuously missing from that evidence, however, are the exhibits which actually showed the "stylized" mark in use. It is the omission of this crucial evidence, coupled with the misleading identification of the application number, that has left the evidence in answer open to confusion and criticism.

It was pointed out by Mr Macken that the cited mark has been removed from the Register and therefore the subsection 44(4) issue is no longer relevant.  That factor, contrary to the opponent's argument, would also play a significant role in tipping the balance against allowing the amendment as, in such circumstances, the Registrar would not be concerned with the interests of an owner whose mark is not on the Register. 

As to the other ground proposed for inclusion in the notice of opposition, Mr Stevens said that the opponent's evidence had specifically addressed the likelihood of deception or confusion between the applicant's marks and the marks of the prior registrations owned by the opponent, and that the evidence in answer likewise concentrated on that question.    

While at the hearing there was no dispute on that point, it seems to me that the issues surrounding section 44 would have been apparent at the time of raising the opposition.  Certainly, the opponent would have been in possession of records as to its trade marks registered in Australia or awaiting registration.  By applying for the amendment at this late juncture of the opposition proceedings, the applicant has been placed in a situation where it would need to respond to the opponent's submissions without any prior notice, thus denying the applicant adequate time to comprehensively cover the pertinent points.  It could also prolong the proceedings by having to reconvene another hearing in the event of the applicant desiring to make further submissions, or requiring to serve further evidence on the matter.  Consequently, I consider that the insertion in the notice of opposition of a ground based on section 44 of the Act would not be "fair and reasonable". 

Section 60 - trade mark similar to trade mark that has acquired a reputation in Australia

This section reads:

60.  The registration of a trade mark in respect of particular goods or services may be opposed on the ground that:

(a)it is substantially identical with, or deceptively similar to, a trade mark that, before the priority date for the registration of the first-mentioned trade mark in respect of those goods or services, had acquired a reputation in Australia; and

(b)because of the reputation of that other trade mark, the use of the first-mentioned trade mark would be likely to deceive or cause confusion.

The validity of this ground of opposition will depend on whether the opponent's and the applicant's marks are either substantially identical or deceptively similar and whether the reputation acquired by the opponent's marks in Australia before filing of the present application is such that use of the allegedly conflicting series of marks would be likely to deceive or confuse the potential customers.  The criteria on the likelihood of deception or confusion were set out long ago by Evershed J in Smith Hayden & Co Ltd's Application (1946) 63 RPC 97. In comparing the tests in terms of sections 11 and 12 of the Trade Marks Act 1938 (UK), which corresponded to sections 28 and 33 of the Trade Marks Act 1955, his Honour said of section 11:

(a) Having regard to the reputation acquired by the name HOVIS [ESPRIT in the present proceedings], is the court satisfied that the mark applied for, if used in a normal or fair manner in connection with any goods covered by the registration proposed, will not be reasonably likely to cause deception and confusion amongst a substantial number of persons?

In this regard, it is noted that the test concerning section 28 of the repealed Act also applies to section 60, except for the requirement in relation to blameworthy conduct on the part of the applicant.   

In arguing on deceptive similarity between the opponent's marks with the reputation, particularly three identified marks and the marks of this application, Mr Stevens relied on his submissions in relation to section 44.  The details of the opponent's three mentioned marks are:

Number   Class  Goods  Trade Mark

1. 25       All goods in this class including                   ESPRIT  women's and men's wearing apparel

1. 25       All goods in this class, including                   ESPRIT  clothing and clothing accessories
     in class 25

 

1. 25       All goods in this class including
     clothing and clothing accessories

Obviously, the goods specified in these registrations encompass the applicant's nominated goods - ladies' and girls' sleepwear.  No question arose at the hearing as to the opponent's and applicant's marks being substantially identical and, applying the side by side comparison, as enunciated in Shell Co (Aust) Ltd v Esso Standard Oil (Aust) Ltd (1961) 109 CLR 407, at 414, I agree those marks are not substantially identical.

In relation to deceptively similarity between the marks, Mr Stevens, with reference to the relevant case law, discussed the construction or appearance of the marks, as well as their sound, and the environment where the marks were likely to be found.  In comparing the marks, he emphasized the same number of letters and syllables in each of the marks, the fact that persons tended to accentuate the first syllable in pronouncing words in the English language, and the common sales outlets of clothing where labels might be obscured or tags hidden.  He pointed to the similarities between what he described as the disjointed lettering and the same bold type face in the opponent's mark of registration 367911 and the second of the applicant's series of marks.  In addition, he suggested that customers were likely to see an association between the word ESLEEP and the opponent's well-known registered trade marks in the belief that the applicant's marks were a clever reproduction of a trade mark for identifying products related to sleepwear.  He also referred to the principle of "imperfect recollection".  

In arriving at his conclusions as to deceptive similarity between the marks, I believe Mr Stevens might have overlooked the fact that, whilst the opponent's allegedly conflicting marks of registrations 339130 and 336269, which comprise plain letters, may be similar in construction to the applicant's first mark, particularly regarding the same number of letters and syllables, visually the overall impact of those marks, ESPRIT and ESLEEP, is quite different.  In pronouncing those particular words, the accent normally falls on the second syllable and, indisputably, the latter parts in the marks, "-prit" and "-leep", do not sound alike.  Besides, as noted by the hearing officer in Greta v Esprit, supra, the former is a well-known French word meaning "spirit", which would be recognized by a considerable group of consumers, while "esleep" forms a common English word with the obvious addition of the letter "e".  This is another significant factor that needs to be taken into account in distinguishing word marks - see, for example, "Lancer" Trade Mark [1987] RPC 303.   

However, I see closer resemblance between the opponent's mark of registration 367911 and the second applicant's mark in the series - the "stylized" version.  While Mr Macken submitted that the applicant had substantially amended the representation of its mark subsequent to the refusal of application 441721, in my view, it still retains some similar visual features which may well create the impression of a connection with the opponent's products.  Both are label marks consisting of words in bold upper case letters against a contrasting dark background and, although the words as a whole are different in the marks, the similar style of lettering, each of which features disconnected portions, tends to blur any significant distinction between the marks they might otherwise possess.  It was submitted by Mr Macken that the squares on top of the disconnected vertical blocks forming the letters "E", "L", "E" and "P" in the applicant's mark add prominent elements to the total mark.  He also directed my attention to the unusual rendering of the letter "E" in the opponent's mark.  In my view, however, these slight variations, being integral parts of the letters, are insufficient to be regarded as real distinguishing features and, in any event, are likely to merge with other parts, or even be obliterated on a clothing label or a swing tag.    In this regard, as submitted by Mr Stevens, I need to take into account the fact that the visual impact is more important than any aural similarity between trade marks applied to the articles of clothing, as noted by the hearing officer in Taiwan Yamani Inc v Giorgio Armani SpA (1990) AIPC 90-644. Furthermore, given the similar "get up" of those marks, a strong possibility exists that it would impress the consumers' memory to such an extent that the particular rendering of the letters, rather than any other characteristics, would become the decisive factor in selecting the products in the mistaken belief that the marks were the same. Here, for the principles on deceptively similar marks, I find support in Australian Woollen Mills Ltd v F.S Walton & Co Ltd (1937) 58 CLR 641, at 658. Thus, the visual resemblance of the applicant's second mark of the series and the mark of registration 367911 is likely to lead to a perception amongst the potential purchasers of a connection between the opponent and the applicant.

Turning to the opponent's evidence concerning use of its ESPRIT marks in Australia, which commenced in 1981, there can be no question that Mr Lehrman's declaration and exhibits demonstrate high retail sales and advertising amounts, both of which are confidential, in relation to clothing before the date of the present application.  Although Mr Lehrman has provided the amounts only since 1990, the respective figures for the relevant period, i.e. before 15 March 1993, are substantial.  It appears that, by 1993, the opponent was operating retail outlets in each mainland state of Australia. 

The opponent's claim of an extensive international reputation of its ESPRIT marks is adequately supported by worldwide sales figures from 1970 to 1993 and advertising expenses for a similar period, registration of the marks in many jurisdictions, and advertising in publications with extensive international circulation as well through other advertising media. 

For details surrounding the subject marks prior to applying for their registration, the applicant relies on the declarations by Mr Magid, Ms Bohun and the ten supporting declarations from persons involved in the clothing industry.  All the references contained in the applicant's declarations mention only the first of the applicant's series of marks.  In the absence of any evidence in these opposition proceedings concerning use of the second mark, it must be assumed that the evidence related only to the plain letter form of the applicant's mark.  According to Mr Magid, first use of the mark ESLEEP in respect of ladies' sleepwear occurred in 1986, which is supported by Ms Bohun.  The financial turnover of the goods bearing the mark ESLEEP between 1986 and 1990, the only figures made available before the application date, is reasonable and shows progressive increase.  Those goods, as declared by Mr Magid, have been sold in Australia through the major chain retailers, such as K-Mart Ltd, Target Ltd, Best & Less (NSW), The Bra Shop, Myer Ltd, Coles, Bras N Things, Grace Bros Pty Ltd (NSW) and Rockmans (NSW and Q'land).  This statement by Mr Magid conflicts with Ms Busby's declaration where she reports that, on contacting by telephone persons at a number of the indicated retail stores, she had been informed that none had ever sold ESLEEP sleepwear, or had ever even heard of the products.  As her declaration is dated April 1998, the enquiries appear to relate to the period well after the priority date of the application in question.  The majority of the ten independent supporting declarants, however, whose declarations were made during the relevant period, have attested as to his or her knowledge of the marks ESLEEP and ESPRIT in all the states of Australia, and those declarants associate the marks with the respective company.  Most of them have been engaged in the retailing of sleepwear clothing for considerable period of time.  To the question as to whether they consider the marks to be deceptively or confusingly similar, all the declarants respond in the negative. 

Neither in the opponent's nor in the applicant's evidence is there any indication of actual instances of deception or confusion of the marks.  It appears then that the opponent's ESPRIT marks and the applicant's word mark ESLEEP have co-existed without confusion in the Australian clothing market since 1986, each mark having independently achieved varying degrees of reputation.  For those reasons, I consider that the opponent's allegations in terms of section 60 must fail in relation to the mark represented in the ordinary upper case letters of the present application.  Concerning the other mark rendered in a stylized manner, having regard to my earlier conclusions as to the deceptive similarity between this mark and the opponent's mark of registration 367911 and, in the absence of demonstrated concurrent use of those marks, I find there is basis for a concern that the result of use of the applicant's mark "will be that a number of persons will be caused to wonder whether it might not be the case that the two products come from the same source", to borrow the words of Kitto J in Southern Cross Refrigeration Co v Toowoomba Foundry Pty Ltd (1954) 91 CLR 592, at 608, where his Honour set down the frequently applied principle for determining the type of marks that offend against paragraph 28(a), under the Trade Marks Act 1955. This criterion equally applies to section 60 of the current Act. 

Conclusion
I have found the opponent to be successful in relation to the ground based on section 60 of the Act as it relates to the second mark appearing in the applicant's series of marks of this application.  During the hearing, Mr Macken offered a settlement option by deleting that mark from the application, should I find it contravenes section 60.  Consequently, I now allow the applicant one month from the date of this decision to have the second mark removed from the series of trade marks, as well as any references to the series, so that the application could proceed to registration bearing only the mark ESLEEP in plain type.  Should the applicant fail to do so, then I will have not option but to refuse the application.

The opponent submitted that, even if the application is allowed to proceed by way of an amendment of the mark, it should be entitled to costs, given that the applicant's case was structured on a trade mark as a series.  In view of my findings, I do not think such a course would be just.  The opponent having been partially successful in the present opposition proceedings, I therefore order that each party should bear its own costs. 

Vija Zars
Hearing Officer
30 November 1998