Descriptive use of registered trademark allowed

In Nature's Blend Pty Ltd v Nestlé Australia Ltd ([2010] FCA 198, March 10 2010), the Federal Court of Australia has ruled that the use of the phrase 'luscious lips' was purely descriptive of the relevant products in the context of its use and, therefore, did not infringe the registration of LUSCIOUS LIPS in respect of such products.
In March 2007 Nature's Blend Pty Ltd registered the mark LUSCIOUS LIPS for confectionery products. In May 2007 Nestlé Australia Ltd began distributing a range of confectionery, which it called the Retro Party Mix, under its well-known ALLEN’S mark. There were seven different lollies in the Retro Party Mix, and each lolly was given an individual, retro-themed, name, such as 'yummy honey-flavoured bears', 'totally freeeekie teeth' and (relevantly) 'luscious lips'. Nature’s Blend sued Nestlé for infringement of its registered trademark.
Clearly, the words ‘luscious lips’ are substantially identical to the LUSCIOUS LIPS mark. However, that in itself is not sufficient to infringe because the context is all-important. The key question, therefore, was whether the words ‘luscious lips’ were being used by Nestlé “as a trademark” - that is, whether the words were being used so as to indicate a connection in the course of trade between Nestlé and the lollies.
Nestlé argued that the natural and ordinary meaning of ‘luscious lips’ in the context of confectionery is that the confectionery is lip-shaped or sweet to taste. Accordingly (that being the case on the facts), the term was wholly descriptive and laudatory of the product.
Nature’s Blend submitted that ‘luscious lips’ is not a phrase that ordinarily and naturally describes confectionery, and is "in no sense laudatory of confectionery, whether in relation to the shape, appearance or taste". Quite the opposite, Nature’s Blend argued that the phrase was inherently distinctive and novel when used in relation to confectionery.
The approach to “trademark use” was encapsulated by the Federal Court in Anheuser-Busch Inc v Budejovický Budvar Národní Podnik ([2002] FCA 390):
The task is to examine the way the words are used in their context, including the totality of the packaging, to assess their nature and purpose in order to see whether they are used to distinguish the goods from goods of others... The assessment is made from the perspective of what a person looking at the label would see and take from it, as to the purpose and nature of its use.”
In this case, on the front of the packet, Nestlé’s well-known mark ALLEN’S (with the ® symbol) appeared prominently in yellow letters over a red background. Below the ALLEN’S mark, in slightly smaller font, was the product name Retro Party Mix. Splashed across the packet were pictures of the different types of lollies that could be found inside. The mark NESTLE (with the ® symbol) appeared on the back of the packaging. The words ‘luscious lips’ appeared only on the back of the packet as one of the names of the seven different lollies that made up the Retro Party Mix. 
In the context of these facts, the court held that the plain meaning of the words ‘luscious lips’ would be taken by consumers to be a laudatory and essentially humorous description of one of the lollies in the Retro Party Mix.
This case highlights the common, but difficult, question as to whether a trademark that includes a descriptive element may nonetheless function as a badge of origin. Many cases can be cited which turn on their own facts, and this can lead to difficulties for trademark owners and their advisors. The problem is compounded where the word in question is used in conjunction with a distinctive mark (perhaps a house brand), because such use does not of itself prevent the conclusion that the descriptive word is also being used for the purpose of distinguishing the product in question (perhaps as a sub-brand).
In general terms, it can be said that an invented word will usually be considered to have been used as a trademark. On the other hand, where the word has a clear meaning in ordinary use, the question may be more difficult because the word may have taken on a secondary meaning that indicates the origin of the goods, or may simply convey the ordinary meaning. In Aldi Stores Ltd Partnership v Frito-Lay Trading Co GmbH ([2001] FCA 1874), the words 'cheezy twists' were held on the facts to be merely descriptive of cheese-flavoured confectionery and not to infringe the well-known TWISTIES mark (see also Pepsico Australia Pty Ltd v Kettle Chip Co Pty Ltd ((1996) 135 ALR 192).
Ultimately, it is a question of fact, because it is well settled that there is no universal dichotomy between words capable of being used as a badge of trade origin and words that are inherently descriptive. Thus, even an invented word may convey a sufficient meaning such that its use may not be as a trademark (for example, the use of the invented word 'caplets' in the context of a pharmaceutical product, see Johnson & Johnson Australia Pty Ltd v Sterling Pharmaceuticals Pty Ltd ((1991) 30 FCR 326)).
Because the clear and consistent message of these earlier judgments is to focus attention on “all the circumstances of the case”, it is difficult to resist the observation that this particular case, having regard to the evidence, is very unlikely to be the subject of an appeal.
Julian Gyngell, Kepdowrie Chambers, Wahroonga

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