Friday, July 18, 2014

Quixotic Tilts: Enforcing Descriptive Trade Marks

Trade mark owners who acquire highly descriptive marks through evidence of use should take care not to think that this entitles them to enforce their rights against third parties which use marks which are substantially identical. The following note is the substance of a presentation I gave to the Asian Patent Attorneys Association (Australia branch) on Friday three weeks ago, in Perth.

What are descriptive marks?

The essence of what is a descriptive mark was well-defined in an American case: Abercrombie & Fitch Company v Hunting World, Incorporated [1976] USCA2 141; 537 F 2d 4, 9-11 (2nd Cir 1976). The categories are:

(1) generic;
(2) descriptive;
(3) suggestive; and
(4) arbitrary or fanciful.

The court went on to say that generic terms can never be trade marks. Descriptive terms can, but only if they have acquired a secondary meaning. On the other hand, suggestive arbitrary or fanciful terms are inherently distinctive: Two Pesos, Inc. v Taco Cabana, Inc [1992] USSC 108; 505 US 763, 768-769. See also Gruner + Jahr USA Publishing v Meredith Corporation 991 F 2d 1072 (2nd Cir 1993).

Another US case, Big O Tire Dealers Inc v The Goodyear Tire & Rubber Company, an Ohio Corporation 408 F Supp 1219, 1243 (DC Cir 1976); affirmed [1977] USCA10 180; 561 F 2d 1365 (10th Cir 1977), elaborated upon this:

In trademark usage, words can be classified according to the degree of their distinctiveness. A ‘coined’ word is an artificial word which has no language meaning except as a trade mark. EXXON is a coined word used by an oil company.

A ‘fanciful’ word is like a coined word in that it is invented for the sole purpose of functioning as a trade mark and it differs from the coined word only in that it may bear a relationship to another word or it may be an obsolete word. FAB is a shortened version for fabulous and is a fanciful word used for detergent.

An ‘arbitrary’ word is one which is in common linguistic use but when used with the goods in issue it neither suggests nor describes any ingredient, quality or characteristic of those goods. OLD CROW for whiskey is an example of an arbitrary word.

A ‘suggestive’ word is one which suggests what the product is without actually being descriptive of it. STRONG-HOLD for threaded nails is suggestive of this superior holding power.

A merely ‘descriptive’ word is one which draws attention to the ingredients, quality or nature of the product. TENDER VITTLES as applied to cat food is descriptive.

A ‘generic’ word is one which is the language name for the product. BUTTER is the language word for butter. There can be no trademark rights in a generic term. They remain in the public domain as part of our language. The right to protection of a trademark comes from its use to identify the product."

The Court went on to say:

"We speak of strong and weak marks in terms of the amount of use necessary to create protective rights. Words which are coined, fanciful or arbitrary are distinctive almost from their first use. Suggestive words are also protected as trade marks when used distinctively for particular products. Words which are merely descriptive do not obtain protection solely from the use as a trade mark. Such words must first acquire distinctiveness from the effect of the owner’s efforts in the marketplace. This is what is called the development of secondary meaning; that is a merely descriptive term used as a trademark must have been so used that its primary significance in the minds of the consuming public is not the product itself but the identification of it with a single source."

In yet another, more recent US case, U.S. Search, LLC v US Inc [2002] USCA4 166; 300 F 3d 517, 524 (4th Cir 2002) the court explained that: "Coppertone®, Orange Crush® and Playboy® are good examples of suggestive marks because they conjure images of the associated products without directly describing [them]. ... Examples of merely descriptive marks include After Tan post-tanning lotion, 5 Minute Glue and Yellow Pages phone directory."

The Australian position

Although these are US cases, they were cited with approval in BP p.l.c. v Woolworths Limited [2004] FCA 1362 (25 October 2004). Finkelstein J elaborates with two observations:

The first is that they are not intended to create hard and fast divisions, as Friendly J himself pointed out. Indeed, some judges have suggested that correctly categorising marks on this scale is a "slippery business": Western Publishing Company Inc v Rose Art Industries, Inc [1990] USCA2 709; 910 F 2d 57, 60 (2nd Cir 1990). The second observation is that while the classifications in Abercrombie & Fitch Company v Hunting World, Incorporated were developed in relation to word marks, they are capable of application, with some adjustment, and are in fact applied, to all marks (word or device) as the basic test of distinctiveness: Two Pesos, Inc. v Taco Cabana Inc. [1992] USSC 108; 505 US 763(1992); J McCarthy, McCarthy on Trade Marks and Unfair Competition, Vol. 2 at SS11.2; Restatement Third, Unfair Competition SS 13.

The issue is going to come before the High Court of Australia as it granted special leave to appeal the Full Court of the Federal Court's decision in Cantarella Bros Pty Limited v Modena Trading Pty Limited [2013] FCA 8 (13 February 2013). This is an argument around the rights to use two marks: one being the Italian words "cinque stelle" (meaning "five star" in English) and the Italian word "oro" (meaning gold in English) in relation to coffee. The Court at first instance found there there was trade mark infringement: the court on appeal found there was not because of the descriptive nature of the marks notwithstanding their use in Italian. Here is what the court at first instance had to say about descriptive marks:

"A newly coined word may be registered as a trade mark, notwithstanding that it may be traced to a foreign source or that it may contain a covert and skilful allusion to the character or quality of the goods (Howard Auto-Cultivators Limited v Webb Industries Pty Limited (1946) 72 CLR 175 at 181) (Howard Auto-Cultivators). A combination of two English words is not an invented word, even though that combination has not been in use before. A mere variation in orthography or termination of a word would not be sufficient to constitute an invented word if, to the eye or ear, the same idea would be conveyed by the word in its ordinary form (Howard Auto-Cultivators at 182). A word cannot fairly be called an invented word if it is so nearly like a known word in spelling or sound as to be an obvious imitation of it and is in substance that word, although spelt or sounded a little differently (Howard Auto-Cultivators at 182).

To be an invented word, a word must not only be newly coined, in the sense of not being already current in the English language, but must be such as not to convey any meaning to ordinary educated English speakers. It must be a word that has no meaning or no obvious meaning, until one has been assigned to it. A word will not be an invented word if, although not a word current in the English language, it is a word that would convey an obvious meaning, as might happen if the word is, due to a jingle or the presence of some element in it, one that suggests an obvious meaning to a hearer who is an English speaker (Howard Autocultivators at 183)....Many uses of words are purely emotive and a word may be employed for no purpose but to evoke in the reader or hearer some feeling, mood or mental attitude. Advertising is often full of meaningless but emotive expressions supposedly capable of inducing a generally favourable inclination in the almost subconscious thought of the passing hearer or hasty reader."

Weak Trade Mark Material in Australia

In my view, descriptive marks are "weak trade mark material". In the decision of the Australian Trade Mark Registrar, Deckers Outdoor Corporation v B&B McDougal [2006] ATMO 5 (16 January 2006), the hearing officer said:

"Minor orthographical changes may make major changes to the identity of a trade mark. This is especially so when the registered trade mark is weak trade mark material.....Terms which are required by other traders without any improper motive to describe those boots are self-evidently very problematic to enforce: SCHOOLIES - Sports Break Travel Pty Ltd v P & O Holidays Ltd, [2000] FCA 924; (2000) 50 IPR 51 and CAPS THE GAME - Powell v Glow Zone Products Pty Ltd (1997) 39 IPR 506.

Another example of "weak trade mark material" in my view was seen in Australian Postal Corporation v Digital Post Australia Pty Ltd (No 2) [2012] FCA 862

The primary issue for determination on the trade mark infringement aspect of this proceeding is whether the trade mark DIGITAL POST AUSTRALIA is “deceptively similar” to the trade mark AUSTRALIA POST. As guided by s 10 of the TM Act, the Court will consider that deceptive similarity exists if DIGITAL POST AUSTRALIA so nearly resembles AUSTRALIA POST.... Australia Post contends that consumers may be “perplexed” or “mixed up” about the relationship between Australia Post and the digital postal service offered by DPA under the name DIGITAL POST AUSTRALIA. For example, it suggests that consumers might wonder if DPA is Australia Post or is a sub-brand or brand extension of Australia Post.

...the essential element of DPA’s mark is the composite phrase “Digital Post” which conveys the idea of mail delivered in a digital form. The phrase “POST AUSTRALIA” which reverses “AUSTRALIA POST” in DPA’s mark would convey little meaning to the ordinary consumer in the absence of the preceding word.

Although the name AUSTRALIA POST is entirely descriptive of its mail delivery services, it has become distinctive and iconic though extensive and prolonged use. In such circumstances, potential consumers of digital post services will perceive and pay attention to even slight changes to the mark."

There are two other recent cases which deal with descriptive trade marks: one in the Western Australian Supreme Court and one in New Zealand.

In Agapitos v Habibi [2014] WASC 47 a dentist operating a business named “Dental Excellence” in Mount Hawthorn sued another dentist practicing in South Perth under the business name “South Perth Dental Excellence.” The plaintiff claimed that the defendant infringed his trade mark for “Dental Excellence,” which he had been operating under since 2002 and has registered as a trade mark in October 2010. The defendant’s dental practice, on the other hand, was purchased in 2007, and has only changed its registered name to “South Perth Dental Excellence” in June 2010.

The defendant filed evidence that at least 10 other dental practices in Australia are using “Dental Excellence” in their business name. The court accepted that members of the public do not readily identify the plaintiff’s business with the words “dental excellence” exclusively, thereby negating the claim for passing off.

The court also found that the phrase had not acquired secondary meaning or distinctiveness in the minds of the public, which in turn negates the claim for misleading and deceptive conduct. The Court ordered the cancellation of the plaintiff’s trade mark, using s 88 of the Trade Marks Act 1995 - essentially, intervening on the behalf of the defendant to remove a trade mark which the court thought should never have been permitted to proceed to registration.

In New Zealand, the decision in Cadbury UK Limited v J H Whittaker & Sons Limited [2014] NZHC 816 was handed down on 16 April 2014.

The essential question was: Is the trade mark BERRY FOREST sufficiently similar to Cadbury’s trade mark BLACK FOREST that consumers would likely be confused or deceived as to the source of the goods bearing the BERRY FOREST trade mark?

In 1992, Cadbury launched its BLACK FOREST chocolate product. Cadbury's BLACK FOREST chocolate is manufactured and marketed in moulded block form. It consists of Cadbury Dairy Milk chocolate with small cherry flavoured jelly and chocolate biscuit pieces throughout. When it launched its BLACK FOREST chocolate product, it also registered BLACK FOREST as a trade mark in relation to the following goods:

Farinaceous products; biscuits; confectionery including frozen confectionery excluding gateau.

Evidence from Mr de Raadt, the managing director for Cadbury in New Zealand, explained that the Cadbury’s BLACK FOREST moulded chocolate block has remained one of Cadbury’s core products and has been “in the top 10 best sellers out of all chocolate products, of all brands in New Zealand, at least since 2006. It is one of the most popular chocolate products for Cadbury and continues to maintain a high level of sales despite the product not being separately advertised in any significant way for a number of years”.

The Court was not convinced of the scope of reputation in the BLACK FOREST mark, and said, "In my assessment, there are undeniable similarities between the individual words used in the mark. However, the word mark is to be read as a whole and I accept the evidence for Whittakers that the trade mark BLACK FOREST instantly calls to mind a flavour combination which finds its origin in the ingredients of a black forest gateau. In contrast, BERRY FOREST, although it has a degree of visual and aural similarity, when read as a whole, invokes the concept of a combination of berries. This is because a key idea the trade mark brings to mind is the phrase “fruits of the forest”, a common term for a mixture of berries."

It seems to me that these cases point to a pattern of trade mark examiners allowing applications to proceed to registration, only to find that courts are not convinced of the strength of the registered mark and the ability of the trade mark owners to enforce them.

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