Tuesday, October 29, 2013

Testing Distinctiveness for Trade Marks in Modena v Cantarella

Coffe time
The coffee-drinking public is familiar with various Italian words that are related to their favorite beverage, such as cappuccino, espresso, latte, and probably even the less popular terms like cinque stelle and oro. In Modena Trading Pty Ltd v Cantarella Bros Pty Ltd [2013] FCAFC 110, the Full Court considered whether such terms are capable of being registered as trade marks, and if the average coffee consumer's knowledge of what the words mean matter.

In Modena v Cantarella had "Cinque Stelle" and "Oro" both registered as trade marks in class 30 for coffee and related items (with both marks being registered since 2000 and 2001, respectively.) Cantarella sued Modena for infringement of the trade marks, misleading and deceptive conduct, misrepresentation, and passing off.

Modena's Defence: section 122(1)(b)(i) of the Trade Marks Act

In its defence, Modena claimed that use of the words "Oro" and "Cinque Stelle" all fell within the scope of protection under section 122(1)(b)(i) of the Trade Marks Act because the words were not being used as trade marks, but as indicators of the characteristics of their goods ("Oro" and "Cinque Stelle" translate into English as "Gold" and "5-Star", respectively).

Modena cross-claimed and sought cancellation of Canterella's registered trade marks, on the basis that both trade marks are unregisterable as trade marks because they are descriptive words, and that the words cannot distinguish Cantarella's products from competitors' because both terms are well-known and widely used in the industry.

The court initially ruled that Cantarella's trade marks were valid because only a "very small minority" of English-speaking Australians know the English translation of the words in question, and that they are capable of distinguishing Cantarella's goods from competitors' goods. Modena's request for cancellation was rejected.

One of the key defences of Modena is that it was using the words in a descriptive sense, for the quality or characteristics of their goods. Cantarella indeed accepted some of this, such as Modena's use of the word "Oro" alongside the word "Qualita" in June 2011.

Trade channels were an important consideration. Cantarella's products were not sold directly to the public, and so may have been unfamiliar to the average consumer. Cantarella argued that consumers of Modena's products bearing the Cinque Stelle or Oro marks would be confused and led to believe that products are sourced from Cantarella. But the court rejected this, because, essentially, Modena's use of the words are always used in conjunction with their own premium house brand, Caffe Molinari, which served to dispel any such confusion. The court also rejected evidence led by Cantarella suggesting that their own Vittoria-brand coffee products are superior in quality compared to Modena's Caffe Molinari-branded products. Additionally, the claim for passing off was also rejected because Cantarella's use of the trade marks were found not to have any goodwill independent of the registrations.

However, the court upheld the claim that Modena was using both the Cinque Stelle and Oro words as trade marks instead of mere indicators of the quality of the products, rejecting the defence under s122(1)(b)(i).

Modena's Appeal and The Full Court's Decision

Modena appealed. The Full Court decided that the two marks were not inherently adapted to distinguish Cantarella's goods from those it's competitors' goods, noting that Cantarella had used the trade marks to signify quality, rather than as a "badge of origin". Other traders had also used the words Oro and Cinque Stelle to describe their products, owing to the fact that the words are commonly used in the industry as descriptors of the quality of their products. Also there are many Italian speakers in Australia who understand the meaning of the words and their descriptive English equivalent. As a consequence, Cantarella's trade mark registrations for the two words were cancelled.

Foreign language marks can be problematic. There is a real risk to adopting a mark which may sound attractively exotic to consumers. But, the mark should not use the foreign language to mask indistinctive words which do not serve as trade marks once translated.

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