Evidence from persons accustomed to dealing in specialised market was required

Australia

In Idameneo (No 789) Ltd v Symbion Pharmacy Services Pty Ltd ([2011] FCAFC 164, December 15 2011), the Full Court of the Federal Court of Australia has held that, in considering whether a trademark is “capable of being confused with” another mark, the trial judge had erred by deciding this question in the absence of evidence from persons who are accustomed to dealing in the relevant specialised market in which the parties competed.

The trial judge had earlier dismissed Symbion’s allegation of trademark infringement under Section 120(1) of the Trademarks Act 1995. The trial judge had applied correctly the reasoning of Lord Diplock in General Electric Co (of USA) v General Electric Co Ltd ([1972] 2 All ER 507) and held that, in a claim based on infringement of a trademark, where goods or services were not normally sold to the public for consumption or use, but were sold to a specialised market consisting of persons engaged in a particular trade, it was “essential” that such persons in that market should give evidence as to the likelihood of deception or confusion. This finding was not challenged by Symbion Pharmacy Services Pty Ltd in the appeal to the Full Court.

However, Symbion had also argued (successfully at the trial) that Idameneo (No 789) Ltd’s use of its trademark breached the terms of a licence agreement between the two companies that expressly prohibited Idameneo from using any trademark that was “… capable of being confused with…” Symbion’s trademarks. It was this aspect of the trial judge’s decision that was the subject of the appeal to the Full Court.

The essential element of Idameneo’s appeal, which was accepted by the Full Court, was that the underlying logic of Lord Diplock’s reasoning in the General Electric case is equally applicable when it comes to considering the meaning and scope of the prohibition set out in the licence agreement - that is, the application of the contractual prohibition should also have been tested not in a general or abstract sense, but in the specific context of Idameneo providing its radiology services to a specialised market.

The court noted that the contractual prohibition in the licence (ie, “capable of being confused with”) had been expressed differently to the statutory concept of a mark being “deceptively similar to” a registered trademark. Nonetheless, the court was of the unanimous opinion that this contractual restraint involved a mark that had the ability to lead a person into mistaking Idameneo’s mark for one of Symbion's marks. Logically, this necessarily required the person concerned to have an awareness of one or both of Symbion’s marks so that, when he or she saw Idameneo's mark, it could cause the person to mistake it for Symbion’s. It followed that, because none of the marks in issue was used outside specialised markets, the capacity of Idameneo's mark to confuse persons in those markets had to be established by evidence.

The Full Court explained that this was because the reputation and goodwill attaching to a trademark clearly is valuable to the owner because of “its capacity to create an association with, or to represent a badge of origin of, its goods or services in the minds of those in the specialised market who know, or know of, the trademark”.

Accordingly, if the reputation or goodwill associated with the trademark exists only in a specialised market, then “evidence of those in that market who know it, or of it, is relevant and necessary to establish what, if any, injury the owner of the mark may suffer by another person using a mark that is alleged to infringe the owner’s right.”

Symbion called no specialised evidence to support its allegation that Idameneo’s mark was “capable of being confused with” Symbion’s trademarks and, therefore, the appeal was allowed.

Julian Gyngell, Kepdowrie Chambers, Wahroonga

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