Judge erred in relying on applicant's subjective intention in assessing similarity

In Vivo International Corporation Pty Ltd v Tivo Inc ([2012] FCAFC 159, November 14 2012), the Full Federal Court of Australia has dismissed Vivo International’s appeal against the cancellation of the registration of its trademark, notwithstanding that the court found that the primary judge had erred by relying on an argument that was not pressed by TiVo Inc at the trial.

Since July 18 2000 TiVo has been the owner in Australia of the trademark TIVO, which is registered in respect of, among other things, “computer hardware, software and peripherals for personalised, interactive television programming”.

On February 18 2008 the second appellant, Mr Grassia, lodged an application to register the word mark VIVO on behalf of Vivo International in respect of goods that included: “apparatus for use in audio visual communication”. The application was accepted and TiVo brought an action against Vivo seeking the cancellation of the VIVO mark, and to restrain Vivo from using VIVO, on the basis that it was deceptively similar to its earlier TIVO mark.

The underlying issue in this case was whether VIVO is deceptively similar to TIVO. In this broad regard, the case is not remarkable and their Honours (at first instance and on appeal) applied the well-known principles of comparison. However, the interesting aspect of this decision relates to the relevance of an applicant’s subjective intention to adopt a trademark that would be likely to benefit from the reputation or goodwill of a competitor’s earlier mark. At first instance, her Honour Dodds-Streeton J found that Mr Grassia had such a subjective intention and took this into account in her assessment that VIVO was in fact deceptively similar to TIVO. The narrower issue was whether her Honour was entitled to do so after TiVo’s counsel had stated that TiVo was not relying on such an argument.

On appeal, his Honour Keane CJ noted that her Honour had found as a matter of fact that Mr Grassia was aware of, and adopted, the VIVO mark intending to benefit from an association with TiVo. This finding was decisive against Vivo’s contention that, for the purposes of Section 44(3)(a) of the Trademarks Act 1995, its use of VIVO concurrently with the TIVO mark had been honest. 

However, her Honour also relied (in part) upon her finding that Mr Grassia had deliberately adopted the VIVO mark to benefit from TiVo’s reputation to resolve the issue of deceptive similarity against Vivo. Her Honour was of the opinion that:

“a finding that a mark was adopted in order to appropriate the reputation of another gives rise to a species of evidentiary presumption, and the appropriator’s assessment of the likelihood of confusion is in the nature of expert evidence on the subject.”

Citing this passage, Keane CJ commented politely that “it would seem that her Honour may have overlooked a concession made by senior counsel for TiVo that it was not advancing that contention”.

With respect, her Honour’s view of the law is well supported by authority. In Australian Woollen Mills Ltd v FS Walton & Co Ltd ((1937) 58 CLR 641), their Honours Dixon and McTiernan JJ stated as follows:

“The rule that if a mark or get-up for goods is adopted for the purpose of appropriating part of the trade or reputation of a rival, it should be presumed to be fitted for the purpose and therefore likely to deceive or confuse, no doubt, is as just in principle as it is wholesome in tendency. … when a dishonest trader fashions an implement or weapon for the purpose of misleading potential customers he at least provides a reliable and expert opinion on the question whether what he had done is in fact likely to deceive.”

His Honour Nicholas J, citing the above case, observed as follows:

“A finding that a trader has adopted a trademark with the intention of taking advantage of the reputation attaching to another trader’s trade mark is usually of considerable significance in an infringement proceeding.”

Be that as it may, in the course of the trial, senior counsel for TiVo accepted that it disclaimed any positive case that it was Mr Grassia’s intention to take advantage of any reputation attaching to the TIVO mark. Accordingly, TiVo was bound (at the trial and on appeal) by the way in which its case was conducted (University of Wollongong v Metwally (No 2) ((1985) 60 ALR 68)), and it was therefore not open to her Honour to apply the presumption to support her finding as to the likelihood of confusion (and, hence, as to deceptive similarity). Having concluded that her Honour had erred in applying that presumption, their Honours (on appeal) proceeded to form their own conclusions on the likelihood of confusion without regard to Mr Grassia’s subjective intentions.

It is perhaps not too surprising that their Honours went on to decide that VIVO is deceptively similar to TIVO (based upon its phonetic, but not visual, similarity), even when one disregards the intentions of Mr Grassia. More relevantly, the case confirms the importance of analysing carefully the evidence of the background history and circumstances of the use and adoption of an impugned mark, in particular to identify (where it is the case) evidence of an intention to “fly (too) close to the wind”.

Julian Gyngell, Kepdowrie Chambers, Wahroonga