Watermark Restaurant Pty Ltd v the Watermark Hotel Group Pty Ltd

[2002] ATMO 43

TRADE MARKS ACT 1995

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

Re:Opposition by Watermark Restaurant Pty Ltd (formerly Peter Miric) to registration of trade mark application 762090 (16, 25, 42) - WatermarK - filed in the name of The Watermark Hotel Group Pty Ltd.

Background

On 14 May 1998, The Watermark Hotel Group Pty Ltd ("Watermark Hotel") applied to the Australian Trade Marks Office ("the Office"), under the provisions of the Trade Marks Act 1995 ("the Act"), for the registration of the trade mark shown below:

Watermark Hotel seeks statutory protection of its trade mark in respect of the following goods and services:

International Class 16 

Printed promotional matter (excluding cards and documentation relating to security and identification), stationery, instructional and teaching material related to the running, marketing and management of hotels and associated tourism services; all of the foregoing excluding goods containing a watermark

International Class 25 

Promotional clothing, footwear and headgear

International Class 42 

Providing of temporary accommodation and related hotel services not including the provision of food and drink [Emphasis added.]

The Office assigned number 762090 to the application.  An examiner of trade marks duly considered it.  It proceeded to acceptance.  The Australian Official Journal of Trade Marks published the advertisement of acceptance on 17 September 1998.

A notice of opposition to registration of 762090 was filed with the Office, on the due date of 17 December 1998.  Peter Miric was nominated as the opponent.

Evidence in support of the opposition was served by 17 February 2000; evidence in answer was served on 17 November 2000; evidence in reply was served on 17 November 2001.  In due course, after letters of request from both parties, the matter was set down for hearing and a mutually convenient date and time negotiated.

By letter dated 4 September 2001, the attorney acting for the opponent advised the Office that the rights in registered trade mark 621308, on which the opposition was partially based, were in the process of assignment, and foreshadowed a request for the opposition to proceed in the name of the subsequent owner, as allowed by s 53 of the Act. The letter also foreshadowed a change to the address for service of the opponent to Harris & Co, solicitors, of Sydney. Harris & Co wrote to the Office on behalf of the subsequent owner, Watermark Restaurant Pty Limited, on 24 September 2001. However, at the time of the hearing, the opposition remained in the name of Peter Miric. Nonetheless, for reasons of convenience, I will refer to the opponent as "Watermark Restaurant" in the remainder of this decision.

The hearing took place in Canberra on 27 September 2001 before me, as the delegate of the Registrar assigned to hear and decide the opposition.  Submissions by both parties were made via teleconference.  Mr Richard Cobden, of Counsel, instructed by Harris and Company, solicitors, of Sydney, represented Watermark Restaurant, the opponent.  Mr Andrew Musgrave, also of Counsel, instructed by Hynes Lawyers, of the Gold Coast, represented Watermark Hotel, the trade mark applicant.

Grounds of Opposition

The Notice of opposition listed nine grounds of opposition. At the hearing, Watermark Restaurant relied particularly on those relating to sections 44 and 60 of the Act, listed respectively as grounds 4, 5 and 8. It did not press grounds 6 (s 58 - ownership), 7 (s 59 - intention to use) or 9 (s 62 - application defective etc.) However, it also made brief submissions in relation to s 41 (ground 1), s 42 (ground 2), and s 43 (ground 3).

Grounds 7 and 9 are not supported in any way by the evidence, and I see no reason to consider them further.  I dismiss the opposition in so far as it relates to grounds 7 and 9.  I will give some consideration to ground 6, although it was not pressed.

Evidence

The tables below provide basic details of the declarations which constitute the evidence.

Evidence in support

Declarant	Status	Abbreviation	Date Made	Exhibits
Mark Wilson	Director, Starking Pty Ltd	"Wilson"	15 Oct 1999	MW1-15
Peter Rose	Director, Jabir Holdings Pty Ltd	"Rose"	16 Feb 2000

Evidence in answer

Declarant	Status	Abbreviation	Date Made	Annexures
Peter Nair	General Manager, The Watermark Hotel Group Pty Ltd	"Nair"	15 Nov 2000	PN1-4

Evidence in reply

Declarant	Status	Abbreviation	Date Made
Gregory Michael Doyle	Director, Pier Restaurant Pty Limited	"Doyle"	19 April 2001
Mark Armstrong	Proprietor, Armstrong's Brasserie	"Armstrong"	17 May 2001

The Restaurant's evidence

This shows that the Watermark Restaurant is situated on Sydney Harbour, in a building that originally housed the Balmoral Swimming Club.  Starking Pty Limited (Starking) successfully tendered to Mosman Council in 1990 to renovate the swimming facilities and to refurbish the building as a restaurant.  Starking's directors are or include Mark Wilson and Kenneth Leung.  Starking operates the restaurant and holds a long-term sub-lease of the building from Hunters Beach Investments Pty Limited, of which Peter Miric is a director.  The sub-lease (MW2) has quite strict conditions, including a prohibition on the provision of accommodation on the premises (clause 4.1). 

The business name "Watermark Restaurant" has been registered since 10 August 1992.  The name was selected by using a dictionary and referring to words with the prefix "water".  It was chosen because it alluded both to the restaurant's waterside position and to one of the principals of the business, Mark Wilson.  Having chosen the name, Mr Wilson engaged Adam Hill, of Adam Hill Designs, to create a logo comprising the words Watermark Restaurant superimposed on the "watermarked" or "shadow" letters WM. 

(I note that this logo was filed on 28 January 1994 as trade mark application 621308 in the name of Christine Maree Piper.  It was registered and has since been assigned first to Peter Miric, and then to Watermark Restaurant.  The relationship between the successive trade mark owners and the restaurant operators is not entirely clear, but that is not material to this opposition.) 

The restaurant began trading on 17 June 1993.  Kenneth Leung is the chef and is apparently quite well-known.  I gather that Mr Leung and Mr Wilson established their credentials in Sydney running a restaurant on Manly's Marine Parade, called "Faulty Bowers".

From the exhibits, I understand the restaurant to be licensed, open 7 days a week for lunch and dinner, and for breakfast at weekends.  It has a menu described as "Contemporary Australian Cuisine" (which I understand to mean that it embraces influences from both Asia and Europe and features a variety of "bush tucker" ingredients), and a list of carefully selected wines.  The drinks and dishes are on the expensive side, but presumably represent value for money.  It appears from the exhibited reviews to be a high-quality eating establishment with an emphasis on fish and seafood.  It has space outside for children to play safely in the sand and a reasonably priced children's menu.  I note that it appears to place great emphasis on the training of its staff and to have a high standard of service (MW9).  It also appears to be a successful and quite well-known Sydney business.  I note that its opposition is supported by declarations from persons with good standing in the trade (Rose, Doyle and Armstrong declarations).  It has also received a string of trade and business awards (MW7).  Although not specifically referred to in the declaration, exhibit MW14 includes an attractively produced recipe book, Fusion - the Watermark Restaurant Cookbook, by Kenneth Leung, Mark Wilson and Carole Ruta (MW14), published by Angus & Robertson.

Means of advertising the trade mark include a brochure, postcards and pens (MW10).  The restaurant has also been listed in the Australian Gourmet Traveller National Restaurant Guide (MW11) and De Groot's Guide to Australia's best restaurants.  It has a web-site and can be located via a web-search for "best restaurants" in Australia (MW12).  The restaurant's services are said to be advertised in a range of media, although MW14 does not demonstrate this.  It also undertakes promotion via sponsorship of Camp Quality and various local events and community sporting clubs.  Watermark Restaurant also distributes promotional T-shirts bearing its logo trade mark to suppliers and customers of the restaurant (MW14), and provides uniforms bearing the trade mark to its staff.  Although publication details are absent from the clippings at MW5, it appears that the restaurant was heavily promoted in the eating and entertainment sections of newspapers and magazines, including the Financial Review, at the time of its launch.

I consider the evidence establishes that Watermark Restaurant has developed a reputation for its services, and that the reputation is not just in the logo trade mark but in the words "Watermark Restaurant" per se, and indeed in the words "The Watermark".  I also note that its reputation appears to extend beyond Sydney.  This is partly because its clientele includes a clutch of celebrities, many of whom are household names in Australia (MW13).  Its database of "significant or regular customers" (also MW13) contains, in my estimate, about 800 records.  Every page of the printout contains at least one interstate or country address.  This evidence suggests that the local clientele is not restricted to the suburbs in the immediate vicinity of the restaurant: Engadine and Parramatta feature amongst the list of addresses, for example.  Casual customers come predominantly from the Sydney metropolitan area, but the proportion of its customers coming from overseas or interstate is estimated at 20% (Wilson declaration, para 20).  Enquiries from concierges at national hotels are stated to run at a rate of about 5 to 15 per week (Wilson declaration, para 21).  Its figures for the value of the services provided under the trade mark, which are confidential, appear impressive to me and show solid performance over the years of its operation. 

All four declarations served by Watermark Restaurant attest to the conditions of trade as concerns the provision of accommodation services by restaurants and the provision of food and drink and restaurant services by hotels.  The declarants in the Rose, Doyle and Armstrong declarations are people of standing and long experience in the hospitality industry.  They all state that there are many establishments which offer accommodation coupled with a higher standard of dining to a niche market or class of customers, and that the same class of people would use fine dining restaurants which do not offer accommodation.  They state that many hotels incorporate restaurants, and give examples of some of those.  In their view and experience, a quality restaurant in a hotel enhances the reputation of the hotel.  They state that guests in hotels - especially 5-star hotels - expect to have meals in the hotel.  They also give examples of restaurants which offer accommodation services.

The Hotel's evidence

This consists of a single declaration by Mr Nair, the General Manager of The Watermark Hotel Group Pty Ltd.  No information is provided as to how long he has held that position.  Prior to assuming it, Mr Nair was employed by another company, Radisson Australia ("Radisson").  Radisson's business is not described, but it appears to be hospitality (some of the advertisements for the hotel provided in evidence state it is "A Radisson Licensed Hotel".) 

In 1995 sometime (there is little precision as to dates, although the events are quite recent), the Gold Coast City Council approved construction of a 20 story "resort-style" hotel in Surfers Paradise.  It is not clear who made the planning application, or when, but I think I can infer that it may have been a company identified as H.I.S. Australia Holdings Pty Ltd ("H.I.S.").  It appears that H.I.S also retained Ridges Advertising (which may or may not be the same entity as the "Rydge Advertising" which appears in some of the exhibits) as advisers on some aspects of the project, including the naming of the hotel.  Of some 50 names provided, Watermark was eventually selected.  I infer this decision was taken very early in September 1995, as The Watermark Hotel Group Pty Ltd was incorporated on 5 September 1995 (PN1).  The business name "Watermark Hotel, Gold Coast", was registered on 17 October 1995.

Mr Nair states that he became aware of the decision in respect of the name "..in late 1995 when the business cards were printed and distributed."  It was also in late 1995, he states, that

..it was drawn to my attention by a colleague that [there] existed a restaurant in Sydney know[n] as "Watermark Restaurant".  As it was a restaurant as opposed to an Accommodation Hotel/Resort, I was not overly concerned despite the similarity between the names.

In March 1996, the newly-formed company embarked on an extensive domestic and international marketing strategy to prepare for its opening, which took place on 18 October 1996.  From the exhibits, I gather a Grand Opening Ceremony took place on 29 November 1996.  The trade mark was heavily promoted in print, television and radio, particularly on the east coast of mainland Australia.  It has continued to advertise extensively ever since, receiving hospitality industry and tourism awards from various Queensland bodies for its efforts. 

Since opening, Watermark Hotel has had in excess of 778,000 guests (para 20).  A scanning of the material at PN3 and PN4 shows it has 410 rooms with ocean and hinterland views.  Its customers include, but are not limited to, visitors from Asia, and it has entertained guests from all states.  It seems to cater particularly to the sun-seeking package-tour market segment.  Its brochures are published in both Japanese and English, and it has some bi-lingual staff.  There are advertisements which show that it has been promoted as a "5-star hotel", with facilities including "3 restaurants" and "2 bars" and "24 hour in-room dining", and as "the leader in hotel dining on the [Gold] Coast".  Other advertisements refer to champagne and canapes on arrival and full buffet breakfast.  The eating facilities situated within the hotel/resort have their own names ("Waves Restaurant", "L'Aqua Italian Bar/Cafe", and "Sazanami Japanese Restaurant" and "H₂O Retro Bar").  These services are advertised individually, with Watermark Hotel sometimes more prominent than the name of the eating place or bar, sometimes equally prominent, and sometimes less prominent.  My reading of the material provided suggests that the fare provided in these eating establishments would have general appeal, and that this is also the market segment to which the hotel caters.

The company has entered into an agreement with another developer to construct "another Watermark Hotel" - no location is nominated (para 21).  It apparently also intends to expand throughout Australia and Asia (para 21). 

Mr Nair concludes his declaration by stating that he is unaware of any guest of the hotel having mistakenly formed the view that Watermark Hotel and Watermark Restaurant were in some way associated (para 23).

Submissions

Both Mr Cobden, on behalf of Watermark Restaurant, and Mr Musgrave, on behalf of Watermark Hotel, made comprehensive submissions. I will refer to their submissions in respect of ss 44 and 60, and to the relevant case law to which they referred me, in the course of my Reasons, below.

As mentioned previously, grounds under ss 41, 42 and 43 were only touched on. Mr Cobden submitted that if I found the opposition established in respect of s 44 or s 60, the consequence would be that the trade mark could not distinguish (in terms of s 41); that it would be in breach of the Trade Practices Act and so contrary to law (in terms of s 42); and that it would have a connotation likely to deceive or confuse (in terms of s 43).  On this last point, he conceded that his argument could not be pursued at the hearing, because the construction put on s 43 by the Full Federal Court in TGI Friday's Australia Pty Ltd v TGI Friday's Inc (2000) 48 IPR 513 was against this approach.

With respect to all three sections, I decline to take the "consequential" approach he suggested.  The onus is on an opponent to establish a prima facie case in respect of any ground of opposition on which it relies.  It has not done so in respect of ss 41, 42 or 43.  I see no reason to consider these matters further.  The opposition fails in so far as it rests on these three grounds.

Reasons

So far as it is relevant to this matter, s 44 provides:

Identical etc. trade marks

44.(1) ..... an application for the registration of a trade mark (applicant's trade mark) in respect of goods (applicant's goods) must be rejected if:

(a) the applicant's trade mark is substantially identical with, or deceptively similar to:

(i) a trade mark registered by another person in respect of similar goods[1] or closely related services;
... and

(b) the priority date for the registration of the applicant's trade mark in respect of the applicant's goods is not earlier than the priority date for the registration of the other trade mark in respect of the similar goods or closely related services.

(2) ..... an application for the registration of a trade mark (applicant's trade mark) in respect of services (applicant's services) must be rejected if:

(a) it is substantially identical with, or deceptively similar to:

(i) a trade mark registered by another person in respect of similar services or closely related goods;
....and

(b) the priority date for the registration of the applicant's trade mark in respect of the applicant's services is not earlier than the priority date for the registration of the other trade mark in respect of the similar services or closely related goods.

S 44 thus provides that a trade mark registered in respect of services may block the registration of an application in respect of goods and services if four conditions exist. The trade mark relied upon must have a priority date earlier than the contested trade mark.  It must be in the name of another person.  The trade mark applied for must be either substantially identical with, or deceptively similar to the registered trade mark.  Finally, the registration must encompass similar services to the services specified in the application, and/or services closely related to the goods specified in the application.

Section 12 of the Act defines Priority date as being the date of registration in the case of a registered trade mark, or the date that would be the date of registration in the case of an application.  As trade mark registration 621308 has a priority date of 28 January 1994, well before that of the application, which is 14 May 1998, the first condition exists.

Registration 621308 is in the name of another person.  (I will observe in passing that there is no requirement for it to be in the name of the opponent to be relied upon by the opponent.)  The second condition is met.

In deciding whether the trade marks are either substantially identical or deceptively similar, the trade marks are first to be considered side by side (The Shell Company of Australia Limited v Esso Standard Oil (Australia) Limited[2], "Shell"). 

[2] (1963) 109 CLR 407 at 414.

For convenience, I reproduce the trade marks side by side below.

Registration 621308  Application 762090

The predominant feature of the registered trade mark is the word "Watermark", which also comprises the whole of the trade mark applied for.  I am in no doubt that "Watermark" is the essential feature by which both trade marks will be known, spoken of, and remembered.  The visual resemblance is increased by the similarity in the scripts used for that word.  (cf Shell, supra at 415.) I think I may discount the presence of the word "restaurant" in the registered trade mark, as it is purely descriptive. However, I think that the presence of the letters WM in cursive script in registered trade mark 621308 constitutes a difference which precludes a finding of substantial identity.

The test for deceptive similarity is not a side by side comparison.  Instead, it considers the effect of memory (Shell, supra, at 415). When used in respect of goods closely related to the services encompassed by the registered mark, or in respect of similar services to those of the registered trade mark, is there likely to be deception or confusion? Given the strong similarities between the trade marks, I find them deceptively similar. This is sufficient to establish the third condition.

I must next consider whether the goods and services of the application conflict with the services encompassed by the registration.  As per Registrar of Trade Marks v Woolworths Limited[3], the enquiry postulates notional use, having regard to the nature of the goods and services involved, to the ordinary behaviour of ordinary customers and to usages of the trade.

[3] (1999) 45 IPR 411

Registration 621308 encompasses Restaurant and kiosk services in [class 42] relating to the provision of food and drink.  Application 762090 specifies Providing of temporary accommodation and related hotel services not including the provision of food and drink.  The first question is therefore whether the two sets of services are similar, in terms of the Act.

Section 14 of the Act states that services are similar to other services if they are the same as other services, or of the same description.

In MID Sydney Pty Ltd v Australian Tourism Co Ltd & Ors [1998] 1616 FCA (18 December 1998) ("MID Sydney”), hotel management services were found not to be similar services to property management services.  Burchett, Sackville and Lehane JJ said:

For reasons that have already been given, the services involved in managing an hotel have different characteristics than property management services. If, as we have held, particular incidental services take their character from the whole, the position is not altered by the fact that managing an hotel may involve the performance of incidental services akin to those carried out by property managers.

This guides me in comparing the two sets of services here. 

I do not think that Providing of temporary accommodation and related hotel services not including the provision of food and drink, can be considered to be similar services in terms of s 14 to restaurant and kiosk services, which do include the provision of food and drink. Kiosks, in my view, are clearly quite different from hotels providing accommodation, being more in the nature of small scale retailers. However, unlike kiosks, both restaurant and accommodation services fall within the general category of "hospitality". Of course, that in itself does not make them similar. Although restaurants occasionally have associated accommodation, I do not think the ordinary customer expects to sleep at a restaurant. And although I am sure that anyone who stays at a hotel expects that it will provide food and beverages either in a dining room, a lounge, a saloon, a bar, or by room service, the exclusion of such services from the application means, I think, that the services specified by the applicant are not similar to those of the registration.

I now turn to a consideration of whether the goods of the application are closely related to the services of the registered trade mark.  Printed promotional matter, stationery and instructional and teaching material related to the running and management of hotels and associated tourism services, are not goods that are normally bought from a restaurant.  Neither are promotional clothing, footwear and headgear.  Kiosks quite often sell some stationery items, particularly newspapers and magazines, tourist maps and the like.  However, they are not likely to sell printed matter "related to the running and management of hotels".  They are, I think, quite likely to sell souvenir clothing promoting tourist destinations and points of interest.  However, as both the restaurant services and the kiosk services encompassed by registration 621308 have been limited to those relating to the provision of food and drink, I must conclude that the goods of the application are not closely related to the services of the registration.

Mr Cobden, in his submissions, referred to the fact that the goods of the application in both classes 16 and 25 are specified as "promotional".  It is the case, of course, that many businesses have promotional clothing, brochures and printed material which they use to advertise and inform potential and regular clients about their products.  The Restaurant itself does so, as is shown by its evidence.  However, such goods are often distributed free and are incidental to the trade in the product or service itself.  Use of a trade mark in this manner has been generally viewed under the law as being use in relation to the product or service being promoted, rather than use in relation to the goods which carry the advertisement (cf D.R. Shanahan, Australian Law of Trade Marks and Passing Off, The Law book Company 1990, p 21 ff.) However, whilst a failure to use a trade mark in the course of trade may be a cause for eventual removal, the inclusion of the word "promotional" in the specifications is immaterial to considerations under s 44.

As the fourth condition necessary for the opposition to succeed under s 44 has not been established, this ground of opposition fails. The Hotel's trade mark application does not encompass either goods closely related, or services similar, to the Restaurant's services registered under trade mark 621308.

I conclude that the opposition, so far as it rests upon s 44, is not established.

Applicant not owner of trade mark

58. The registration of a trade mark may be opposed on the ground that the applicant is not the owner of the trade mark.

Ownership of a trade mark stems either from first public use of a trade mark or from the filing of the application for registration of a trade mark, whichever is the earlier[4].  However, the two trade marks must be either identical or substantially identical[5] and the use must be in respect of "the same kind of thing"[6].

[4] Aston v Harlee Manufacturing Co (1960) 103 CLR 391

[5] Carnival Cruise Lines Inc v Sitmar Cruises Limited (1994) AIPC 91-049; (1994) ALR 495

[6] Re Hicks' Trade Mark (1897) 22 VLR 636

As I have found that the Restaurant's registered trade mark is not substantially identical to the trade mark it opposes, it follows that the registered trade mark could not qualify to block the application under this provision.  However, that is not the end of the matter.  The evidence shows that the trade mark "Watermark Restaurant" has been publicly used to identify the source of the services, particularly in advertising, promotion and reportage, without the letters WM.  There has also been aural use of the trade mark "Watermark Restaurant" and colloquial use of "the Watermark" in relation to the services since before the date of first use by the Hotel. 

Section 7 of the Act relevantly defines use:

Use of trade mark

7.(1) If the Registrar or a prescribed court, having regard to the circumstances of a particular case, thinks fit, the Registrar or the court may decide that a person has used a trade mark if it is established that the person has used the trade mark with additions or alterations that do not substantially affect the identity of the trade mark.

....

(2) To avoid any doubt, it is stated that, if a trade mark consists of the following, or any combination of the following, namely, any letter, word, name or numeral, any aural representation of the trade mark is, for the purposes of this Act, a use of the trade mark.

...........

(5) In this Act:

use of a trade mark in relation to services means use of the trade mark in physical or other relation to the services.

I am satisfied that Watermark is substantially identical with the Restaurant's unregistered trade marks.  "Watermark Restaurant" simpliciter differs only in respect of the descriptive word "Restaurant" and very minor differences in lettering.  "The Watermark" differs only in respect of the definite article and the lettering (cf PB Foods Ltd v Malanda Dairy Foods Ltd (1999) 47 IPR 47). These are trivial differences only.

However, restaurant services are clearly not "the same kind of thing" as the services specified in this application, namely Providing of temporary accommodation and related hotel services not including the provision of food and drink.  By excluding the provision of food and drink, and seeking only the protection of registration in respect of the accommodation side of its hotel business, the application is not caught by this provision.

I find the opposition in terms of s 58 has not been established.

Trade mark similar to trade mark that has acquired a reputation in Australia

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 provisions of s 60 were judicially considered in McCormick & Co Inc v McCormick [2000] AIPC ¶91-637 ("McCormick"). Her Honour said, at 38,217:

Section 60 ... requires a comparison ... between the accepted mark and a mark that, before the relevant date, had acquired a reputation in Australia. If the marks are deceptively similar, then the question is whether the use of the mark, which has been accepted, would be likely to deceive or cause confusion, because of that reputation. Under s 60, the ... inquiry centres on the reputation of the earlier mark. That reputation is critical to the opposition under s 60...

Concerning the meaning of "reputation", her Honour observed, at 38,213:

81 ....The word is defined in The Macquarie Dictionary as follows:

reputation ... 1. the estimation in which a person or thing is held, esp. by the community or the public generally; repute ... 2. favourable repute; good name ... 3. A favourable and publicly recognised name or standing for merit, achievement, etc. ... 4. The estimation or name of being, having done, etc, something specified.

Cf. The Oxford English Dictionary. In s 60, the word is, I think, apt to refer to "the recognition of the McCormick & Co marks by the public generally". (Emphasis added)

In applying McCormick in a recent decision, Torrag Pty Ltd v Lydboots Pty Ltd and Petcure Pty Ltd[7] ("Torrag"), Hearing Officer Thompson said:

[7] ATMO [2002] 06

The decision in McCormick.....concerned reputation of a trade mark used for goods sold in supermarkets throughout Australia.  Here, however, the trade marks at issue are both used in respect of veterinarian services which are provided locally in Sydney’s West.  In the instance of such a service trade mark, which is used locally, it is unlikely that the Australian public generally will recognise the trade mark although it might be well-recognised locally.  In assessing the reputation of service trade marks which are used locally, I therefore believe it appropriate to consider and assess that reputation within the area in which it is used.  [Emphasis added.]

The difference in the yardstick to be applied to "reputation" is, I think, a necessary consequence of the different nature of trade marks for goods and services.  As remarked by French J in Woolworths, supra, at 425-426:

There is a somewhat different kind of conflict between a trade mark on goods and a trade mark on services. They are really quite different things. It was said in Kerly’s Law of Trade Marks and Trade Names, 12th ed, Sweet & Maxwell, at 2.08:

… in reality service marks are quite different from trade marks. Goods tend to be more or less durable, and the mark to stay with the goods; the service mark is there to advertise the service beforehand. Thus the service mark is closer in function to a business name, identifying the business as [s]uch as distinct from its products.

The facts under consideration here somewhat resemble those considered in Torrag, and I think it is appropriate to follow Mr Thompson's reasoning.  As in that case, the services are provided locally.  Unlike that case, the services are provided to a clientele which extends beyond the immediate locality. 

In McCormick, supra, her Honour also considered what kind of evidence was sufficient to establish the existence of a reputation. She noted (at 38,215) that it was

...commonplace to infer reputation from a high volume of sales, together with substantial advertising expenditures and other promotions, without any direct evidence of consumer appreciation of the mark, as opposed to the product....

She also noted that, in the particular circumstances before her,

.....the evidence does not establish what proportion of sales was made under or by reference to any particular mark.  ...apart from the evidence as to sales and advertising expenditure, there is little or no evidence about the effect of advertising upon consumers.  There were no consumer surveys in evidence, nor was there evidence about the marketing of McCormick & Co's products.  ...

I accept that those were important omissions and, in another case, might have proved fatal.

The length of use of the McCormick trade marks was a significant factor in her Honour's willingness to infer reputation from the evidence, despite the absence of consumer surveys.

In assessing the evidence, I have also had regard to the following passage from Hugo Boss AG v Jackson International Trading Co Kurt D Bruel GmbH  & Co KG [8]:

[8] (1999) 47 IPR 423 at 436

[I]t is true that the assessment of the reputation of a trade mark goes far beyond mere examination of sales or turnover of goods sold under that trade mark and contemplation of the advertising and promotional figures.

As regards a trade mark, its reputation derives both from the quantum of sales under that mark and also the esteem, or image, projected by that trade mark.  The quantum of sales, advertising and promotion contributes to the 'recognition' component of the trade mark's reputation.  The credit, image and values projected by a trade mark attaches to the 'esteem' component of the reputation as do the public events and other trader's marks with which [the] owner of the trade marks in question chooses to associate the trade marks via sponsorships, cross-promotions, 'contra deals' and so forth.

It follows that a trade mark used in relation to goods with comparatively low sales may have a high and strong reputation by virtue of the high credit or esteem in which it is held or, conversely, that a trade mark which has very high sales may have a strong reputation notwithstanding the lack of esteem that attaches to it.  The particular popular images, or sets of values, that attach to the trade mark are also, therefore, important parts of the reputation of the trade mark and may be as strong an associative force in the minds of the public as the association of the trade marks with the goods or services themselves.

I have found that the Watermark Hotel trade mark is substantially identical to Watermark Restaurant's unregistered trade marks, and deceptively similar to its registered trade mark. I am therefore satisfied that the first requirement of s 60 is established. I am also satisfied that the length and extent of use of the trade marks shown by Watermark Restaurant establishes that it had acquired a reputation in respect of the services it provides at its location in Sydney, at least in a niche market centred in Sydney, prior to the relevant date of 14 May 1998. However, I do not think that the acquired reputation would create any expectation in the marketplace in respect of other establishments in states of Australia other than New South Wales, or indeed outside of the Sydney metropolitan area..

The question then is whether, because of the reputation acquired by the opponent's trade mark in Sydney and elsewhere, through its use in connection with restaurant services provided in Balmain, there is likely to be deception or confusion if the Watermark Hotel trade mark is used in geographical proximity to it in respect of Providing of temporary accommodation and related hotel services not including the provision of food and drink. 

The test here is a broader one than those under ss 58 and 44. S 58 requires that the proposed use must be in relation to "the same kind of thing". S 44 requires that it must be in relation to "similar services" or "services closely related to the goods". Under s 60, the requirement is only that the goods and services of the contested application be of such a nature that the reputation of the earlier trade mark would create a likelihood of deception or confusion in the marketplace.

Looked at from this perspective, I think the exclusion of the provision of food and drink from the specification does not avoid the likelihood of deception or confusion.

I think I may distinguish the present circumstances from those before the Court in MID Sydney, supra, as I think the services of the parties in this instance are more similar than was the case there.  The public expectation is that an establishment which offers temporary accommodation and related hotel services will also provide refreshments.  I note, in this regard, the following definitions from the Macquarie dictionary (3^rd Ed):

"accommodation" :"lodging, or food and lodging"

"hotel" :"a building in which accommodation and food, and alcoholic drinks are available"

It matters not, I think, whether the hotel provides refreshments in a bar or a restaurant or a function room which may be identified by a name different from that of the hotel.  Collectively, they are the hotel's bars, eateries and function rooms, identified by the hotel's name and thereby associated with the hotel itself.  I do not accept the argument put by Counsel for Watermark Hotel, that the name of the hotel only serves to indicate the location of its eateries, and is not being used as a trade mark when it is used in that way.  The provision of food and drink is so closely associated with the provision of hotel accommodation that I think there is likely to be deception or confusion if the application is registered for the services specified.  Moreover, on the facts before me, the hotel does provide food and drink under the trade mark Watermark, even if it is not seeking the protection of registration for those services.  There has been no suggestion that the services to be offered in other locations than the Gold Coast would differ markedly from those already in evidence.  Thus, to allow registration in respect of its accommodation services in the same location as the restaurant would create a circumstance in which the same services were being provided to the same persons under trade marks which are either substantially identical or deceptively similar.  The reputation of the restaurant might well lead those persons to wonder whether the chef had moved to the hotel, and cause frequent confusion as to meeting places, delivery addresses and dining destinations.

I find that this ground of opposition has been established to some extent, in regard to the application for services in class 42.

Decision

55. Unless the proceedings are discontinued or dismissed, 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.

The evidence shows that Watermark Hotel has used its trade mark so far only in Queensland.  There is no evidence of deception or confusion arising through that use.  However, should it pursue its expansion plans interstate, and especially if it were to build a similar establishment in the Sydney area, I think that would be likely to lead to deception and confusion.

On the other hand, there is no evidence that Watermark Restaurant intends to extend its services beyond its present location. 

Having reached the conclusion that a geographical limitation of the applicant's class 42 registration would be the most appropriate outcome, I wrote to both parties on 11 March 2002, to invite their written submissions as to an appropriate limitation.  Both parties subsequently provided submissions.  By facsimile letter dated 9 May 2002, Counsel for Watermark Hotel suggested that, if such a limitation was indeed appropriate, the condition of registration should exclude only the geographic area bounded by the locations of Balmoral Beach, Rose Bay and North Sydney, New South Wales.  By facsimile letter dated 13 May, Counsel for Watermark Restaurant suggested that the class 42 registration be restricted to the States and Territories of Australia other than New South Wales and Victoria.

I have again reviewed the evidence in the light of these submissions.  My conclusion is that neither of the suggested restrictions is appropriate. 

In view of this, I will allow Watermark Hotel one month in which to request entry of the following condition of registration:

Registration of this trade mark in class 42 does not extend to that area of New South Wales falling within a radius of 30 kilometres from the General Post Office in Sydney.

If this condition of registration is not requested within that time, and no appeal against this decision has been filed, the application in respect of services in class 42 will be refused.  The application will be allowed to proceed only in respect of the goods for which registration is sought.

Costs

Both parties sought costs in this matter.  As neither has been wholly successful, I decline to make an order as to costs.

Arminel Ryan

Hearings Officer

Trade Marks Hearings

21 May 2002