Case: Kenman Kandy Australia Pty Ltd v Registrar of Trade Marks [2002] FCAFC 273 ; (2002) 122 FCR 494
Outcome: applied
applying the provisions of the Act, and in particular the various grounds for rejecting an application (for example, s 41), the task of construction should be approached so as to give effect to the clear legislative intention that a wide variety of trade marks, including shapes, ought be capable of registration: see Kenman Kandy Australia Pty Ltd v Registrar of Trade Marks [2002] FCAFC 273 ; (2002) 122 FCR 494 ( Kenman Kandy ) at [46] (French J). Nature of appeal Section 35 of the Act provides: The applicant may appeal to the Federal Court against a decision of the Registrar: (a) to accept the application subject to conditions or limitations; or (b) to reject the application. The nature of an "appeal" to the Federal Court under s 35 (and in respect of a decision in an opposition proceeding under s 56) has been discussed at length in several cases: see Blount 83 FCR at 58D-59A (Branson J); Kenman Kandy [2002] FCAFC 273 ; 122 FCR 494 at [21] - [22] (French J); Registrar of Trade Marks v Woolworths Ltd [1999] FCAFC 1020 ; (1999) 93 FCR 365 ( Woolworths ) at [32]-[34] (French J). In hearing an appeal pursuant to s 35, the Court exercises its original jurisdiction and conducts a hearing de novo. It is to determine on the merits the same question that was before the Registrar namely, whether or not the trade mark should be accepted and in doing so, it is to apply the same legal criteria that the Registrar is required to adopt under the Act. The Registrar's decision is not to be presumed correct but the Court is entitled to have regard to the Registrar's opinion as that of a skilled and experienced person in the field of trade mark registrations: Woolworths [1999] FCAFC 1020 ; 93 FCR 365 at [33] (French J). Presumption of registrability and standard of proof In Kenman Kandy [2002] FCAFC 273 ; 122 FCR 494 , the Full Court considered an application for registration of a shape mark where the only ground of possible rejection was s 41(2). The applicant adduced no evidence of use of the mark and did not rely on either s 41(5) or (6). As a result the case turned on the sole question whether the mark was inherently adapted to distinguish the applicant's goods under s 41(3). In discussing the nature of appeals against decisions of the Registrar, French J stated at [22]: Since the enactment of the 1995 Act the onus is no longer on the applicant to establish registrability as it was under the 1955 Act: Registrar of Trade Marks v Woolworths Ltd [1999] FCAFC 1020 ; (1999) 93 FCR 365 at 372 3 ... The application must be accepted unless the court is satisfied that it has not been made in accordance with the Act or that there are grounds for rejecting it. If the matter is in doubt then the application should be accepted. The possibility of refusal after a contested opposition with evidence and closer scrutiny remains open. The acceptance stage is not the time for detailed adversarial examination of the application that might be involved in an opposition: Registrar of Trade Marks v Woolworths at FCR 377 .... Acceptance for registration involves an initial screening process albeit it requires the application of statutory criteria and evaluative judgments by the Registrar and the Registrar's delegates. (Emphasis added.) 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". Guylian did not seek to justify in a substantive way the approach of the Full Court in Lomas . It sought to rely on the decision, and those that have followed it, but it acknowledged that other decisions run counter to it. In my view, there is nothing in the relevant provisions that supports the imposition of a higher standard, even at the acceptance stage. The "presumption of registrability" arises from s 33 of the Act: Woolworths [1999] FCAFC 1020 ; 93 FCR 365 at [24] ; Kenman Kandy [2002] FCAFC 273 ; 122 FCR 494 at [50] . Section 33 does not speak of being "clearly satisfied"; it mandates acceptance of an application unless the Registrar " is satisfied that ... there are grounds for rejecting it". On this point, I prefer the views expressed by Gyles J and in particular his Honour's observations that an acceptance that there is a presumption of registrability "says nothing as to the standard of proof" and does not import a higher threshold than the conventional balance of probabilities: see Pfizer [2006] FCA 1663 ; (2006) 70 IPR 599 at [18] . The presumption as it is gives effect to the general position under the Act that an applicant is not required to establish an absence of grounds to refuse or object to registration. It should also be noted that in both Woolworths [1999] FCAFC 1020 ; 93 FCR 365 and Kenman Kandy [2002] FCAFC 273 ; 122 FCR 494 (both acceptance stage cases) there is no suggestion that any special higher standard was applicable. 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. In Kenman Kandy , the Full Court in the context of a shape mark recently endorsed the test articulated by Kitto J in Clark 111 CLR at 514, which is set out at [54]: see Kenman Kandy [2002] FCAFC 273 ; 122 FCR 494 at [47] (French J), [146] and [161] (Stone J), and [85] (Lindgren J), but note [87]-[89] (Lindgren J). In Kenman Kandy , the appellant had sought registration of its "bug" shaped confectionary as a three dimensional shape mark. Although capable of description as a "bug" (and indeed described that way in the appellant's application for registration), the Full Court accepted that the trade mark was a concocted, imaginary shape, constituted quite simply by a circular centre with two recesses (possibly eyes) and three projections on each of the two sides of the centre (possibly legs). In concluding that the shape was inherently adapted to distinguish the appellant's confectionary, Stone J stated at [163]: Although the bug shape is suggestive of insect life it is not the shape of any specific insect or bug. Indeed, were it not for the description given by the appellants, it might as easily be seen as some extra-terrestrial object or space equipment such as a modified lunar landing module. Registration of the bug shape as a trade mark would not give the appellant a monopoly over all bug or insect shapes only this particular shape and any substantially identical or deceptively similar shape. In agreement with Stone J, French J concluded at [50]: Theoretically it may be the case that the number of possible symmetrical arrangements of projections and recesses is not infinite. Assuming that to be so, it is speculative, absent evidence, to draw conclusions about that number and whether the particular arrangement has any significant impact upon the access of other traders to the use of insect like shapes as trade marks. In that connection it is necessary to bear in mind that this trade mark is still at the registration stage. It enjoys the benefit of the presumption of registrability mandated by s 33. To the extent that critical criteria upon which registration might be rejected are in doubt, the application should be accepted. There was no evidence of use or intended use by the applicant of the shape mark (save for an empty packet) and neither subs 41(5) nor subs 41(6) was relied upon to justify registration. Registrar's submissions The Registrar contends that, unlike the "bug" shape in Kenman Kandy , the seahorse shape is not a concocted or invented shape, but is clearly a representation of a seahorse. It is referred to by Guylian as a seahorse and would not be mistaken for any other animal. Although it has some level of "stylisation or abstraction" (the stockier torso and the backwards curling tail), these relatively minor differences, it said, do not have any significant impact on the ordinary association or signification that the shape establishes in the mind of the observer. The Registrar relied on the observations of Stone J in Kenman Kandy [2002] FCAFC 273 ; 122 FCR 494 who, after referring to Kitto J's statement of the test in Clark , said at [147]: In my opinion it is the absence of these [ordinary] associations and significations that makes a sign inherently adapted to distinguish one trader's goods from those of another. In other words the concept is negative not positive. Guylian submits that the seahorse shape should be considered a "fanciful" shape, with its backward curling tail and stocky build, which are features, it said, absent in an ordinary seahorse found in nature. Relying in particular on French J's judgment in Kenman Kandy [2002] FCAFC 273 ; 122 FCR 494 , Guylian contends that the mere fact the seahorse shape is based on an existing creature and cannot be said to be wholly concocted (as compared to the "bug" shape in Kenman Kandy ), should not automatically lead to a conclusion that the shape is inherently unadapted to distinguish. At [46], French J said: [T]he established test must be construed so as to be applicable to shapes. To say that a shape cannot ever pass the test of being "inherently adapted to distinguish" would be to read into the statute a limitation not warranted by its terms. In considering pre-1995 cases, generalisations must not be drawn based on the narrower range of signs to which those cases related. Such generalisations might not give effect to the legislative intent that from 1995 "shapes" were to be capable of registration as trade marks. Accordingly, Guylian contends that the question whether a shape, which is reminiscent of an existing animal, is sufficiently adapted to distinguish, must be determined by reference to any existing or likely renditions of such an animal in the marketplace and the extent of any relevant differences between those renditions and the shape in suit. In this case, while the seahorse shape is based on a well known marine creature, the creature is capable of depiction in a variety of ways, only one of which is the particular seahorse shape Guylian has chosen to adopt. Other traders, it said, are free to depict a seahorse in a way that is different to the particular shape Guylian uses and there is no reason why another trader might legitimately wish to use the same shape as Guylian's or one closely resembling it. As examples, Guylian said that other traders would remain free to adopt shapes recognisable as or reminiscent of a seahorse which, however, might not sit in profile (as does Guylian's) or which do not employ the same proportions as Guylian's. In any event, Guylian emphasised that no other traders had in fact sought to use a seahorse shape for chocolates, prior to Guylian's promotion of the shape over the last 20 years. Further, the seahorse shape, Guylian said, is not like a laudatory or descriptive word, which other traders might legitimately wish to use to describe the character or quality of their goods. Nor is it like a colour that might be used to denote a particular meaning (eg danger) or serve a particular function (eg heat absorbing black). Weight of the evidence As I referred to earlier (see [54]), the parties disagreed as to the weight that should be given to the evidence of other similar marine chocolate shapes in the market, and in particular seahorse shapes. Guylian contends that there is no evidence that seahorse shapes were being used as at the priority date and the evidence of use of the shape or similar shapes in 2008 (see [53]) should be given no weight at all, because the six years between the priority date and 2008 was too great that the inferences sought by the Registrar namely, that other traders as at April 2002 were using, or might wish to use, the shape or a similar shape could not reliably be drawn. To the contrary, Guylian contends that the safer inference is that the seahorse shapes on the market in Australia in 2008 (aside from the two with forward curling tails) are simply examples of traders copying Guylian's product, rather than using the shape in the ordinary course of their business, being "actuated only by proper motives", for the signification which it ordinarily possesses. Further, Guylian said, the better evidence for assessing the likelihood that other traders were using or might wish to use a similar shape to Guylian's are the Google searches performed by the Registrar in December 2002 and April 2004, purporting to show the types of shapes on the market as at those dates and, by extension, the priority date. These searches did not reveal any evidence of the use of a chocolate seahorse shape in Australia as at the priority date, other than by Guylian. I accept Guylian's submission that a shape, which is reminiscent of a real animal or creature, should not for that reason alone be considered inherently unadapted to distinguish. The Act permits the registration of shapes as trade marks and, just as with words, there are likely to be many shapes that invoke ordinary connotations, which nevertheless are capable of distinguishing when regard is had to the class of goods for which the shape mark is to be registered and the extent to which the shape is otherwise distinctive in appearance. Both parties proceeded in this case on the basis that a trade mark may be the whole of the shape of the goods which the mark is intended to distinguish (cf the discussion by Lindgren J in Kenman Kandy [2002] FCAFC 273 ; 122 FCR 494). It was not contended that the seahorse shape, being the entire shape of one of Guylian's chocolate pieces, is incapable thereby of constituting a "trade mark" for the purposes of s 17. The ultimate question on the issue of inherent adaptation is whether a sign in this case, a shape possesses any ordinary significations and, if it does, whether or not other traders might think of the shape and want to use it for those ordinary significations in a manner which would infringe a registered mark in respect of the sign. In cases where a shape depicts a known object or concept (cf. wholly concocted or ambiguous shapes), and is therefore likely to signify the same to most if not all consumers, then a subsidiary question is whether the shape is nevertheless sufficiently distinctive or unique so that other traders wishing to represent the same or a similar concept will remain free to do so without infringing the mark, that is, without requiring use of the same shape or one substantially identical or deceptively similar. An important consideration in all of this is the nature of the goods for which the shape mark is to be used. As I said, both parties understood the relevant questions to be as I have stated them. However, Guylian, in reference to Stone J in Kenman Kandy [2002] FCAFC 273 ; 122 FCR 494 at [145] , invited the Court to accept that the seahorse shape "does not have any significations or associations that invite confusion in the eyes of consumers, or would preclude use by others whose goods have similar characteristics or qualities or connections with relevant areas". I do not agree. The shape is clearly a seahorse. It is dissimilar to the shape confronted by the Court in Kenman Kandy , as it conveys a particular meaning and is not entirely imaginary. Though the evidence about the appearance of real seahorses was minimal, I accept that the seahorse shape has some features that distinguish it from a seahorse existing in nature. It is relatively stocky and the tail is curled up all the way backwards, giving it an overall "S" shape. The evidence, minimal as it was, is that seahorses are fairly elongate and their tails extend out downwards and forwards, rather than curled up behind. I note however that Webster's describes the tail as prehensile and so it is to be expected that they have the ability to curl up generally, although I am prepared to accept for the purposes of Guylian's application that it would be unusual for the curling to occur behind the spine. Guylian has also chosen to depict the seahorse in profile with a relatively thick middle section, so that the overall shape appears as two opposite side profiles joined together. Putting the tail to one side, I agree that there will be ways to depict a seahorse other than that chosen by Guylian. However, the ultimate question I must consider is whether there is a likelihood that other traders, acting with proper motives, will think of the shape and wish to use the same shape or one substantially identical or deceptively similar. In my view, it is quite possible that as at the priority date other traders might want to depict a seahorse, along with starfish, crabs, prawns for example, in a way that is similar enough to cause potential confusion in the minds of consumers. The evidence is that sea shell shaped chocolates were being sold by others from at least the mid 1990s. With other traders already selling sea shell chocolates, it seems to me reasonable to expect that, as at the priority date, other traders might wish to make chocolates in the shape of a seahorse, as well as other marine creatures. In any event, I think I can take judicial notice of the fact that confectionary manufacturers, here chocolate manufacturers, tend to make chocolates in a variety of novelty shapes, in particular shapes representing animals (cf. the similar approach taken by Lindgren J in Kenman Kandy [2002] FCAFC 273 ; 122 FCR 494 at [86] ). I give some weight to the fact that in 2004, two years after the priority date, there were various American traders selling chocolate moulds for a large range of marine animals (lobsters, starfish, prawns), including a seahorse. On the other hand, I note the lack of evidence of any seahorse shapes being sold in Australia as at the priority date, except by Guylian. The examiner's Google searches (performed in 2002 and 2004) did not reveal any examples of seahorse shapes being sold in Australia at that time. It might be thought that that fact, together with the fact that Guylian had been selling its seahorse shape in Australia for a long time (since the 1980s), would diminish the likelihood that, as at 2002, other legitimately motivated traders might in the ordinary course of their business wish to sell seahorse chocolate shapes. However, the absence of other seahorses on the market does not in my view mean it was unlikely that others may in the future wish to depict that particular sea creature. Third, this is not a case where the shape in suit is "entirely concocted" and thereby lacks "the associations that would lead to confusion": see Stone J in Kenman Kandy [2002] FCAFC 273 ; 122 FCR 494 at [162] . The shape does have an ordinary association and the association is one that other traders might wish to draw upon. Given the mark sought to be registered is simply the three dimensional shape itself, without any other stipulation as to its use, the application for registration must be assessed on the basis that it would give Guylian a monopoly over that shape as the entire shape of one of its chocolate pieces. There is therefore a higher potential for other traders who wish to use a similar shape to do so in a manner that would infringe that monopoly. In other words, infringement might occur simply by the selling of a similar shaped chocolate, even where the shape does not feature significantly on, for example, the packaging of the product. Related to this is a submission the Registrar made regarding the type of "use" contemplated by the test in Clark . It would be wrong, said the Registrar, to construe the test as being whether or not other traders might wish to use the mark or a similar mark "in an infringing way", in other words as a trade mark for themselves. Instead, the test should be understood as whether other traders might wish to use the mark or one resembling it for the sake of the signification of the mark itself and not necessarily to denote trade origin. However, in Clark Kitto J quite clearly referred to use "in any manner which would infringe a registered trade mark granted in respect of [the relevant word or shape]." I agree with Lindgren J in Kenman Kandy [2002] FCAFC 273 ; 122 FCR 494 at [95] that the Clark test does not go so far that any kind of innocent use at all, including innocent non-trademark use, would necessarily deprive a shape of being inherently adapted to distinguish. However, in a case where the mark is simply the three dimensional shape of the good itself, it is more difficult to see how the distinction made by the Registrar is a relevant one. Both parties proceeded on the basis that simply selling the same or a deceptively similar shaped chocolate would be an infringing use of the mark. It certainly was not suggested that the same shape might be sold by another trader but in some manner that would avoid infringement. Given the scope of the application for registration, the monopoly granted would be over the shape generally and use of the shape as a chocolate would be a manner of use that would be likely to infringe for the purpose of the Clark test.