Capacity to distinguish an applicant’s goods or services from those of other traders is a prerequisite to registration of a trade mark. Section 41 of the Trade Marks Act (1995) (Cth) (TMA) provides the legislative framework for determining whether this criterion is met. This provision was amended by the Intellectual Property Laws Amendment (Raising the Bar) Act (2012) (Cth) which took effect on 15 April 2013.
The amendments, however, did not substantially affect the steps that need to be taken in determining capacity to distinguish. The High Court’s decision in Cantarella Bros Pty Ltd v Modena Trading Pty Ltd (2014) 315 ALR 4 (Cantarella), although decided under the previous s 41 TMA, is therefore applicable under the new version.
Section 41 (old and new) provides the following structure for determining capacity to distinguish.
First, the extent to which the mark is “inherently adapted” to distinguish must be considered. If a mark is sufficiently inherently capable of distinguishing the applicant’s goods or services from those of other traders, it may proceed to registration (unless other grounds of opposition are made out).
If the mark is “to some extent, but not sufficiently” inherently adapted to distinguish, the Registrar must consider (a) the extent to which it is so adapted; (b) the use, or intended use, of the mark; and (c) “any other circumstances” before deciding whether the mark can or will distinguish the designated goods or services.
If the mark is “not to any extent inherently adapted to distinguish”, the Registrar must consider whether the mark, as a result of use before the filing date, did at that time in fact distinguish the applicant’s goods or services.
Cantarella appears to provide a new methodology for determining whether a mark is inherently adapted to distinguish – at least for word marks.
The old test
In Clark Equipment Co v Registrar of Trade Marks (1964) 111 CLR 511 (Clark Equipment), Kitto J explained that whether a trade mark is “inherently adapted to distinguish” is tested by reference to:
“…the likelihood that other persons, trading in goods of the relevant kind and being actuated only by proper motives – in the exercise, that is to say, of the common right of the public to make honest use of words forming part of the common heritage, for the sake of the signification which they ordinarily possess – will think of the word and want to use it in connexion with similar goods in any manner which would infringe a registered trade mark granted in respect of it.” (at 514).
In setting out this test, Kitto J directly applied (and quoted in full) the following passage from Lord Parker of Waddington’s speech in Registrar of Trade Marks v W & G Du Cros Ltd  AC 624 (Du Cros):
“The applicant’s chance of success in this respect (i.e. in distinguishing his goods by means of the mark, apart from the effects of registration) must, I think, largely depend upon whether other traders are likely, in the ordinary course of their businesses and without any improper motive, to desire to use the same mark, or some mark nearly resembling it, upon or in connexion with their own goods. It is apparent from the history of trade marks in this country that both the Legislature and the Courts have always shown a natural disinclination to allow any person to obtain by registration under the Trade Marks Acts a monopoly in what others may legitimately desire to use.” (at 634-635)
Kitto J’s test from Clark Equipment has long been settled law in Australia on the issue of inherent adaptation to distinguish.
The question in Cantarella
At issue in Cantarella was whether the marks ORO and CINQUE STELLE were inherently adapted to distinguish goods and services in relation to coffee. The words mean GOLD and FIVE STARS, respectively, in Italian.
There was some evidence of the use of ORO (and variants) by other traders but not of CINQUE STELLE (although there was evidence of use of FIVE STAR and 5 STELLE) in relation to coffee. It was uncontroversial that Italian is the second most widely spoken language in Australia (after English) and that more than 350,000 Australians speak Italian at home.
The new (?) test
The majority of the High Court held that, in determining whether a mark is inherently adapted to distinguish, consideration of the ordinary meaning of any words comprising the mark is “crucial” (compare Dixon CJ’s view, expressed in the TUB HAPPY case that searching for a meaning as a first step is a “mistake”: Mark Foy’s Ltd v Davies Coop (1956) 95 CLR 190). This is regardless of whether the mark consists of English or foreign words. Only after the “ordinary signification” is established can an enquiry can be made as to whether other traders “might legitimately need to use the word in respect of their goods”. (Note the inclusion of the word “need” here – compare Kitto J’s use of “want” and Lord Parker’s use of “desire”).
In relation to a foreign word, the majority said that if “it is understood by the target audience as having a directly descriptive meaning in relation to the relevant goods” (emphasis added) then it is prima facie not registrable. If the foreign word contains only an “allusive reference” to the relevant goods, then it is prima facie registrable. It is not absolutely clear that the Court intended this rule also to apply to English words but it seems that it did. There is no indication that it intended to create a new special rule for foreign words.
The High Court explained that, in Du Cros, Lord Parker was “not referring to the desire of traders to use words, English or foreign, which convey an allusive or metaphorical meaning.” His Lordship was only referring to words having a direct descriptive meaning. This is why English words carrying directly descriptive meanings such as ROHOE, BARRIER and WHOPPER were not registrable whereas words carrying only allusive references, such as TUB HAPPY, were.
Once the “ordinary signification” is established, consideration may then be given to whether other traders might want (or need) to use the words for that ordinary signification.
Thus, the High Court has set out a new two-part test for whether a mark is inherently adapted to distinguish – at least for word marks. First, the ordinary meaning of the words to the target audience must be considered. Then, if the word or words has an ordinary meaning, consideration must be given to the question of whether other traders might legitimately need to use the word, or words, in respect of their goods or services, for that ordinary meaning.
Not so fast
But perhaps this is reading too much into Cantarella.
Justice Middleton recently delivered judgment in Verrocchi v Discount Chemist Outlet Pty Ltd  FCA 234. His Honour said at , in relation the respondent’s cross-claim seeking to have the applicant’s trade mark removed from the register pursuant to s 41 TMA:
“The proper test for assessing the inherent capacity of the registered trade mark to distinguish the designated services for the purposes of s 41(3) still remains that articulated by Kitto J in Clark Equipment…”
He said the “High Court in Cantarella… recently endorsed this test.”