Federal Court allows registration of name of building from which services are supplied

In Mantra IP Pty Ltd v Spagnuolo ([2012] FCA 769, July 19 2012), the Federal Court of Australia has allowed an appeal from a decision of the registrar of trademarks and, subject to the outcome of any other proceedings, allowed the registration of the mark Q1, notwithstanding that 'Q1' is also the name of the 'iconic' building from which the relevant services are provided.

The central question posed in these proceedings was whether a person can register a trademark for services where the mark concerned is also the name of the building from which the services are supplied. Although other issues arose in these proceedings, this report focuses on this central issue.

The Q1 building was developed and constructed between June 2002 and October 2005. Prior to the commencement of construction, the developer adopted the name Q1 and, following a corporate re-structure, Mantra IP subsequently filed three trademark applications for Q1.

In the registry, Mr Spagnuolo, the opponent, was successful in his opposition to Mantra’s applications. The registrar’s delegate refused to register Q1 because it had a geographical connotation (to the Q1 building), rather than being a badge of origin for Mantra’s services.

On appeal, the court approached the issue by posing the following question:

“Is the word mark Q1, alone, capable of distinguishing [Mantra’s] services… (the designated services) from the services of other persons in that it is inherently adapted to distinguish those designated services?”

After reviewing the authorities, the court summarised the relevant principles as follows:

• Spagnuolo bore the onus of persuading the court on the balance of probabilities that the mark Q1 should not be registered.
• In discharging that onus, regard must be had to the presumption of registrability in Section 33 of the Trademarks Act 1955.
• The relevant assessment looks to the mark itself and its inherent nature; it does not take into account the effect of use; it considers how the mark would be understood by ordinary Australians seeing it for the first time.
• The question can be tested by asking whether other traders trading in services of the same or a similar kind and only actuated by proper motives are likely to want to use the mark in connection with the same or similar services.
• A proper motive is one founded on the “common right of the public to make honest use of words forming part of the common heritage”.
• Signs that are descriptive in nature, or use a geographical name, form part of the “common heritage” and, therefore, cannot usually be inherently distinctive.
• This test is to be applied negatively, not positively and the assessment is to involve a “practical evaluative judgment… in the real world”.

On the facts of this case, the court accepted that Q1 is a sign that was chosen by the developer in 2001; it did not at that time convey any obvious meaning to ordinary Australians, and it was not used by the public in 2001 as a common term in relation to the relevant services.

However, this did not dispose of the issue as to whether Q1 infringed upon the “common heritage” of geographical names (ie, the name of the Q1 building). This issue involved an analysis of the Full Federal Court’s decision in MID Sydney Pty Ltd v Australian Tourism Co Ltd ((1998) 90 FCR 236). The registrar’s delegate had relied on this decision in her reasons for refusing to register Q1. On appeal, the court considered that the delegate had “misconstrued” what the Full Court said in MID Sydney. The court stated:

"[I]t is apparent from what the Full Court said in MID Sydney that a sign concurrently applied as the name of a privately owned building and to distinguish certain services to be provided from, or in relation to, that building, does not lose its inherent adaptability to distinguish the services concerned... [T]he name of a privately owned building cannot be regarded as being the equivalent of a geographical place name such that it is to be considered as part of the 'common heritage'."

Importantly, however, the court immediately added the following proviso:

"This does not, of course, prevent a trader operating within the building concerned from using the name of the building to indicate the location of its place of business."

That aside, the court’s decision now makes it very clear that if a mark was, at the date of its adoption, inherently distinctive of the applicant’s goods/services, then it necessarily remains so and is not something that can be changed by use. Thus, for example, its concurrent and subsequent use as the name of a building is no more relevant in considering its inherent adaptability to distinguish under Section 41(3), than would be evidence of its acquired distinctiveness by use since first adoption.

Julian Gyngell, Kepdowrie Chambers, Wahroonga