Case: Austereo Pty Ltd v DMG Radio (Australia) Pty Ltd [2004] FCA 968 ; (2004) 61 IPR 257
Outcome: followed
Blount 83 FCR at 58C, Branson J took the view that the question under s 41(2) whether a mark is capable of distinguishing is "governed entirely" by subss 41(3) (6). Accordingly, her Honour considered that it is not the case, as might be expected from the terms of s 33, that the Registrar must accept an application if he or she is uncertain whether the mark is capable of distinguishing an applicant's goods. Her Honour's analysis of s 41 has been followed in a number of cases, including Ocean Spray Cranberries Inc v Registrar of Trade Marks [2000] FCA 177 ; (2000) 47 IPR 579 ( Ocean Spray ) and Austereo Pty Ltd v DMG Radio (Australia) Pty Ltd [2004] FCA 968 ; (2004) 61 IPR 257 ( Austereo ). Reconciling s 41(4) and Branson J's decision in Blount , with the presumption and French J's decision in Kenman Kandy , is not entirely free from difficulty. The matter is further complicated by the fact that the onus is reversed under s 41(5) (the Registrar must be "satisfied" that the mark does or will distinguish) and s 41(6) (the applicant must "establish" that the mark does distinguish). In its submissions, the Registrar accepts that the presumption applies in relation to s 41(3), but says that the use of the term "satisfied" in s 41(5) suggests that the presumption no longer applies once the inquiry moves to s 41(5). I agree. Sections 41(3)-(6) contemplate that there are degrees to which a mark might be inherently adapted to distinguish: see Kenman Kandy [2002] FCAFC 273 ; 122 FCR 494 at [82] (Lindgren J); Austereo [2004] FCA 968 ; 61 IPR 257 at [35] (Finn J). The ultimate question under s 41(3) is whether the mark is inherently adapted to a sufficient degree to conclude that it is "capable of distinguishing". In my view, the effect of the presumption of registrability on s 41(3) is that, in considering whether a mark is capable of distinguishing by reason of the "inherently adapted" criteria, it should be presumed that the mark is sufficiently adapted unless the Registrar is satisfied otherwise on the balance of probabilities. If the Registrar is otherwise satisfied, then he or she will be "unable to decide the question" (see s 41(4)) whether the mark is capable of distinguishing on the basis of any inherent adaptation alone, and must then proceed to consider s 41(5) or (6). Under those provisions, the presumption no longer has any operation, as the applicant is then required to either "satisfy" the Registrar (s 41(5)), or "establish" (s 41(6)), that the relevant criteria set out therein is met. As Branson J said in Blount 83 FCR at 56, referring to Rejfek v McElroy [1965] HCA 46 ; (1965) 112 CLR 517 at 521, a test of satisfaction requires the Registrar to "be persuaded of the matter according to the balance of probabilities". These observations have been followed in several first instance decisions, albeit with varying degrees of caution: see Bennett J in Torpedoes Sportswear Pty Ltd v Thorpedo Enterprises Pty Ltd [2003] FCA 901 ; (2003) 59 IPR 318 ( Torpedoes ) at [16]-[22], Finn J in Austereo [2004] FCA 968 ; 61 IPR 257 at [4] - [5] and Lander J in Kowa Company Ltd v NV Organon [2005] FCA 1282 ; (2005) 66 IPR 131 at [123] - [141] . In Austereo , Finn J considered that he ought "as a matter of comity" apply the Lomas standard as adopted by Bennett J in Torpedoes . In Kowa , Lander J expressed some doubt about the point but considered he was bound by Lomas and the Full Court decision in Woolworths [1999] FCAFC 1020 ; 93 FCR 365. Each of these chocolate boxes was purchased in May or June 2008, well after the priority date (16 April 2002). This raises a question about the acceptable use of this evidence. It is clear that the relevant date for assessing whether a trade mark is capable of distinguishing the goods for which it is used is the priority date: Austereo [2004] FCA 968 ; 61 IPR 257 at [30] . The parties both accepted that evidence of use by Guylian of the seahorse shape after the priority date is relevant for the purposes of s 41(5) of the Act, because it is open to draw rational inferences from such evidence as to whether the shape in fact had the required capacity to distinguish as at the priority date. That proposition was accepted by Finn J in Austereo , where his Honour referred to Conde Nast Publications Pty Ltd v Taylor (1998) 41 IPR 505 and Burchett J's reference to actual events as being "capable of illuminating the probabilities already inherent in [a prior] situation". Although differing as to the weight such evidence should be given, the parties also appeared to accept more generally that evidence of events taking place after the priority date, whether that be the applicant's use of the mark itself or use of other similar or otherwise relevant shapes by rival traders, may be relevant to whether the seahorse shape is capable of distinguishing Guylian's goods. This was an appropriate course to take. In my view, evidence of what other traders were selling prior to, at or subsequent to the priority date has the ability to rationally affect, albeit with varying degrees of weight, the conclusion one might reach about the extent to which a mark is inherently adapted to distinguish under s 41(3) of the Act. As Kitto J said in Clark Equipment Co v Registrar of Trade Marks [1964] HCA 55 ; (1964) 111 CLR 511 ( Clark ) at 514: [T]he question whether a mark is adapted to distinguish [is to] be 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. In assessing as at the priority date the "likelihood" that other traders will behave in a certain way in the future, evidence of how they have in fact come to behave will be relevant, although close attention should be paid to whether such rival behaviour has been "actuated only by proper motives". In the absence of evidence of improper motive, however, it seems to me logical and appropriate that post priority date events should, where appropriate, be taken into account by decision makers in exercise of the "evaluative judgment" (see French J in Kenman Kandy [2002] FCAFC 273 ; 122 FCR 494 at [47] ) required under s 41(3). The parties were not in dispute about the applicable principles, only the application of those principles to the facts. The question whether a trade mark is inherently adapted to distinguish is directed at the nature of the trade mark itself and is not concerned with the mark's capability to distinguish arising from its actual or intended use: Burger King Corporation v Registrar of Trade Marks (The Whopper case) [1973] HCA 15 ; (1973) 128 CLR 417 ( Burger King ) at 424; Kenman Kandy [2002] FCAFC 273 ; 122 FCR 494 at [83] (Lindgren J). A trade mark that is inherently adapted to distinguish goods is one that can "do the job of distinguishing without first educating the public that it is a trade mark": British Sugar plc v James Robertson &amp; Sons Ltd [1996] RPC 281 ( British Sugar ) at 306 (Jacob J); see also Austereo [2004] FCA 968 ; 61 IPR 257 at [48] (Finn J). Although in dissent on the ultimate outcome, Lindgren J observed in Kenman Kandy [2002] FCAFC 273 ; 122 FCR 494 at [84] that: While inherent adaptation to distinguish requires attention to be focused on the mark itself, and is intended to stand in sharp contrast to a mark's capacity to distinguish arising from use, the notion of "the mark itself" does not exclude from consideration the nature of the range of goods within the class or classes in respect of which registration is sought, or the various ways in which the mark might, within the terms of the registration, be used in relation to those goods. Indeed, those matters must be taken into account. Section 41(5) permits the registration of trade marks that are not, by their inherent qualities, sufficiently adapted to distinguish, but which have as at the priority date in fact acquired a capability to distinguish the relevant goods: see Austereo [2004] FCA 968 ; 61 IPR 257 ; see also Clark 111 CLR at 515; British Sugar [1996] RPC 281 at 306; Nestle [2006] FCA 782 ; 154 FCR 165 at [29] . In other words, s 41(5) recognises that marks which are insufficiently inherently adapted to distinguish may nevertheless by their use have become distinctive in the minds of consumers so that they will be able to "do the job of distinguishing" the applicant's goods, that is, they will in fact serve as a badge or an indicator of origin. Accordingly, under s 41(5) an applicant relying on use prior to the priority date will need to point to evidence that the mark has been used as a trade mark , so as to have acquired the requisite capability to distinguish the applicant's goods: see, in the context of s 41(6), Woolworths Ltd v BP Plc (No 2) [2006] FCAFC 132 ; (2006) 154 FCR 97 at [72] and [77] ( BP (No 2) ); Ocean Spray [2000] FCA 177 ; 47 IPR 579 at [38] - [41] , in particular [40]. Guylian's submissions With reference to Austereo [2004] FCA 968 ; 61 IPR 257 at [53] , the Registrar says that one should take into account the extent to which the mark applied for has been used in conjunction with any other distinctive marks. Here, there are two: (1) the "Guylian" trade mark (see [34]), and (2) the letter "G", which Guylian uses as a logo on each of its chocolate pieces. The image of the seahorse shape on Guylian's packaging, it said, is overwhelmed by the use of the highly distinctive "Guylian" trademark, which serves as the true indicator of origin. Similarly, the "G" logo, appearing on each chocolate piece and the pictures of the chocolates on the boxes, plays a dominant role in indicating the origin of the goods, particularly when they are out of the box.