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  • Ben Gardiner 4:43 pm on 6 August 2014 Permalink | Reply  

    Phone book wars – Round 12 to PDC 

    The seemingly never-ending battle between Telstra and PDC over phone directories has been the subject of four published decisions of the Trade Marks Office, seven of the Federal Court (including one appeal to the Full Court) and one unsuccessful application for special leave to the High Court.  If only all litigants were this persistent!

    Earlier fights have concerned whether copyright subsists in phone directories (it doesn’t) and whether certain trade marks of the parties were registrable in relation to directories including YELLOW and YOU’RE LOCAL, WE’RE LOCAL (they’re not).

    The latest round concerned the use by PDC of certain trade indicia (in particular the colour yellow) on its print directories, its website and a mobile phone app which Telstra claimed amounted to passing off and breaches of the relevant trade practice legislation.

    PDC, by cross-claim, alleged that Telstra had itself engaged in misleading or deceptive conduct in some comparative advertising in which it (Telstra) claimed that only 2% of consumers used the relevant PDC directory while 57% used the Yellow Pages.  That cross-claim was successful but is not discussed any further in this post.

    Telstra’s claims were dismissed

    Murphy J was not satisfied that the use of the relevant indicia gave rise to the impression that PDC was, or was associated with (etc – you know the usual claims), Telstra.

    His Honour considered that while Telstra had some reputation in the colour yellow, the association in the minds of consumers was not strong.  He listed four primary reasons for this finding (at [15]):

    “(a) yellow is not distinctive in itself, being a colour widely used on products and services;

    (b)     yellow is internationally recognised as a standard colour of classified directories and to some extent was so recognised by Australian consumers;

    (c)     Telstra only ever used the colour yellow coupled with its well-recognised Yellow Pages Trade Marks including the Walking Fingers, and never independently; and

    (d)     Telstra’s use of yellow on its directory covers after 1996 was inconsistent and declined over time.”

    His Honour did not accept that the adoption of a yellow cover for the PDC directories was a deliberate attempt to deceive consumers.  He considered PDC did “enough” to distinguish its directories from those of Telstra.

    The initial judgment  omitted full consideration of the Telstra’s claims insofar as they related to the PDC website and mobile app.  This was addressed in a supplementary set of reasons at [2014] FCA 741.  Those claims were dismissed for essentially the same reasons.

    A couple of interesting points arise from the judgment:

    A significant proportion of the relevant class must be misled

    In making these findings, Murphy J noted a difference in the authorities as to whether there was a requirement that “a significant number of the members of the target class were misled or deceived.”  He referred to Finkelstein J’s decision in .au Domain Administration Ltd v Domain Names Australia Pty Ltd (2004) ALR 521 where his Honour said, at [21]-[26], that this requirement had been wrongly imported from the law of passing off and is not relevant to s 52 of the TPA.  Murphy J, while attracted to Finkelstein J’s view, noted that there had been several Full Court decisions since then which “maintained the approach that it is necessary to establish that a ‘not insignificant’ proportion of the class are likely to have been misled or deceived.”  He considered this is consistent with the High Court’s decision in Campomar Sociedad, Limitada v Nike International Ltd (2000) 202 CLR 45.

    Intention is relevant

    It is now uncontroversial that the intention of respondents is relevant to the question of whether impugned conduct amounted to passing off or was likely to mislead or deceive.  Its relevance, however, is confined to an evidentiary role.  That is, the fact of an intention to deceive is evidence pointing to the fact (or likelihood) of deception – but its only the latter that matters.  Deception (or the likelihood of it) is enough, even without intention: see, for example, Google Inc v ACCC (2013) 294 ALR 404 at [9] per French CJ, Crennan and Kiefel JJ.

    The respondents “took yellow from the get-up of Telstra’s directories” in an effort to attract legitimacy

    In what is likely to be considered a controversial aspect of his decision, Murphy J found that PDC:

    a. understood that using yellow covers on its directories would make them look more similar to Telstra’s directories;

    b. considered that yellow was an essential part of Telstra’s get up and understood that Telstra had a substantial reputation in yellow (c.f. the judge’s own findings regarding that reputation set out above); and

    c. after struggling to achieve credibility in the market for two years, decided to adopt to colour yellow to make their directories appear more orthodox and official.

    His Honour considered that the evidence of PDC’s directors that they had no regard to Telstra’s use of yellow covers when they adopted yellow for their own directories was “implausible.”

    He considered that the evidence supported three reasons for PDC’s adoption of yellow.  First, yellow was widely used by similar directories in the United States and in Australia and they considered yellow to be a “natural choice” for directories.  Secondly, PDC wanted to have a “more consistent and cleaner look” on their directory covers (though it is unclear from the judgment why this led to the adoption of yellow.  Thirdly, PDC wanted “to attract some of the legitimacy of yellow as an element of Telstra’s get up.”  He said: “In part the respondents took yellow from the get up of Telstra’s directories in an effort to attract the legitimacy that might bring to its directories.”

    Adopting yellow covers for its directories in these circumstances did not, however, amount to an intention to deceive.  His Honour pointed out that the “authorities are replete with examples where traders ‘sail close to the wind’ by copying elements of a competitor’s get up, but maintain sufficient differences such that misleading or deceptive conduct or passing off cannot be made out.”

    Indeed they are.  Telstra joins a long list of applicants who have failed in passing off/trade practices claims against respondents who have (sometimes deliberately) appropriated some elements of their trade indicia but have done enough to avoid confusion.  See, for example,  Nutrientwater Pty Ltd v Baco Pty Ltd (No 2) [2010] FCA 304; Yarra Valley Dairy Pty Ltd v Lemnos Foods Pty Ltd (2010) 191 FCR 297; Mars Australia Pty Ltd v Sweet Rewards Pty Ltd (2009) 81 IPR 354, and on appeal [2009] 84 IPR 12.

    This case highlights, yet again, the significant hurdles faced by applicants in passing off / breach of ACL cases based on similar trade indicia.

     

     

     

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  • Ben Gardiner 1:31 pm on 18 February 2014 Permalink | Reply  

    Trade Mark owner restrained from use of its own mark: registration no defence to action in passing off / breach of ACL 

    Case Note: CI JI Family Pty Limited v National Australian Nappies (NAN) Pty Limited [2014] FCA 79

    This dispute concerned the use of the name NAPPY LAND, and variants of that name, in New South Wales.  The Applicants alleged passing off, breach of the Australian Consumer Law (ACL) and breach of an agreement by the Respondent not to use the name in New South Wales.  The claim based on the alleged agreement was rejected on the evidence and is not further discussed in this note.

    The case was unusual because the Respondent was the owner of a composite trade mark incorporating the words “Nappy Land”.  It also owned the registered business name “Nappy Land” and the domain name “http://www.nappyland.com.au”.  The Respondent, however, did not allege infringement of its registered trade mark.  The Respondent’s registered mark is depicted below (on the left) and the mark used by he Applicants in New South Wales is shown below right:

    Nappy Land 1  Nappy Land 2

    Interlocutory relief was initially sought on 18 and 21 November 2013.  Rather than resolving the matter on an interlocutory basis, the matter was brought on quickly for final hearing commencing on 3 December 2013.  Perhaps due to the limited time available, Flick J described the evidence relied upon by the parties as “vague“.

    Trade mark registration no defence to passing off / breach of ACL

    The Court dealt first with the Respondent’s submission that its trade mark registration was a complete answer to the Applicant’s claims in passing off and under the ACL.  The Court unequivocally rejected this submission saying:

    “Possession of a registered trade mark is … no defence to an action for passing off where the elements of that tort are present”

    Similarly, it said that “the registration of a trade mark does not affect the operation and reach of s 18 of the Australian Consumer Law.

    This is uncontroversial.  As Gummow J said in New South Wales Dairy Corporation v Murray Goulburn Co-Operative Co Ltd (No 1) (1989) 86 ALR 549 at 570, and cited by the Court in the present case:

    Nor does the existence of a registration protect the registered proprietor from a passing off suit brought by one who maintains the use by the registered proprietor to be an invasion of his common law rights…

    Breach of the Australian Consumer Law

    It was accepted that the Applicants “presently carry on business in New South Wales using the business name “Nappyland””. There is no discussion in the judgment, however, of any reputation generated by the Applicants with respect to that name.  It appears there was no evidence of any sales or advertising, for example.  Nevertheless, the Court must have accepted that the Applicants had some reputation vesting in the name NAPPYLAND in New South Wales in relation to the sale of nappies and other baby related products, primarily to childcare centres.

    There was some evidence of actual confusion of the Applicant’s customers (presumably as a result of the Respondent’s use of the words NAPPY LAND though this is not clear) but this was described by the Court as “less than satisfactory“.

    The Court pointed out that to prove a breach of s 18 of the ACL “there is a need to establish goodwill or reputation attaching to the relevant goods in the mind of the purchasing public, misrepresentation and damage or a likelihood of damage.”  It was expressed that the onus of establishing these elements lay on the Applicant’s.  Despite the “vague” nature of the “factual framework within which the Applicant’s sought relief“, the Court nevertheless expressed “[l]ittle hesitation” in concluding that the necessary elements had been made out.

    This conclusion was based on five findings of fact:

    1. The words NAPPY LAND (as used by the Applicants) and NAPPYLAND are sufficiently similar to cause confusion;
    2. There was some (limited) evidence of actual confusion;
    3. The potential for customers to be misled was increased when the words were used in oral communications;
    4. The manner in which the Respondents responded to telephone enquiries did not serve to reduce confusion; and
    5. The nature of the products and the potential for customer overlap also increased the risk of confusion.

    Passing off

    The Court considered that, given its finding on the ACL, it was unnecessary to consider the question of passing off.  It expressed the view however that “reliance on that cause of action would also have been successful” for essentially the same reasons.

    Damages

    While pointing out that a claimant must “do the best it can to place the relevant facts before the Court so that the process of quantifying damage remains an exercise of judicial – rather than arbitrary – power“, it also acknowledged that the Court must do the best estimate it can based on the evidence and that sometimes this might require a degree of “guesswork“.

    The Court considered that the evidence of the loss and damage suffered by the Applicants was “less than satisfactory“.  It said that the Applicants had “failed to place before the Court any reliable factual information upon which any certain – or relatively certain – process of quantification can proceed.”  Notwithstanding all of the difficulties with the Applicants’ evidence, the Court considered $25,000 in damages to be “appropriate“.  No basis for this figure is included in the judgment.

    Comment

    The decision is problematic for the following reasons:

    (a) the conclusion that the Respondent’s conduct was in breach of the Australian Consumer Law (and amounted to passing off) is not supported by any findings as to the reputation of the Applicant in relation to the words NAPPY LAND.  Proof of reputation is an element of the tort of passing off and it is well established that to show misleading or deceptive conduct via the use of a trading name which is similar to that of the claimant, the claimant must show that he has some reputation vesting in that name;

    (b) the parties’ failure to address the problem of the Respondent’s trade mark registration appears to leave them in a position where the Respondent can immediately bring an action for trade mark infringement and, unless a cross-claim for invalidity is successful, such an action seems likely to succeed; and

    (c) while the Courts must do their best to quantify damage even when the evidence is sparse,  this seems to be a case where the Applicant failed to produce any credible evidence despite it being open for them to do so.

     
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