Malt balls case comes to bitter end for Mars

Australia

In Mars Australia Pty Ltd v Sweet Rewards Pty Ltd ([2009] FCAFC 174, December 11 2009), the Full Court of the Federal Court of Australia has affirmed a decision of the primary judge in which the latter had found that Sweet Rewards Pty Ltd did not infringe Mars Australia Pty Ltd's trademarks.

Mars manufactures and distributes the well-known Maltesers chocolate confectionary. It is the owner of two registered trademarks which comprise depictions of the Maltesers packaging.

This appeal concerned the alleged infringement of Mars’s trademarks, passing off and misleading and deceptive conduct arising from Sweet Rewards’s sale of a chocolate-covered confectionary similar to the Maltesers product. In essence, Mars alleged that Sweet Rewards’s packaging for its confectionary was deceptively similar to the Maltesers packaging. Sweet Rewards’s packaging incorporated the following elements:

  • a red background;
  • the word 'Delfi' with the picture of a skier;
  • images of floating brown malt balls (some in cross-section showing a yellow filling); and
  • the words 'malt balls' written in bold script.

It was not disputed that:

  • Maltesers is a famous product;
  • Mars’s registered trademarks are famous; and
  • Mars had acquired a significant reputation in the get-up of its packaging.

However, only the first and third elements in Sweet Rewards’s packaging (the red background and floating malt balls) were in common with Mars’s packaging, and the court concurred with the primary judge’s opinion that:

  • the principal component of Mars’s packaging was the word 'Maltesers' written in a stylized script;
  • the other features relied on by Mars (ie, the red colour and the images of the malt balls in whole and in cross-section) were not distinguishing features of Mars’s packaging;
  • the distinguishing feature of Sweet Rewards’s packaging was the DELFI (and skier logo) mark; and
  • in any event, neither the words 'malt balls', the red colour nor the depiction of the malt balls in whole and in cross-section were being used “as a trademark” by Sweet Rewards.

This was because, on the evidence:

  • the words 'malt balls' were accepted as an accurate description of Sweet Rewards’s product; and
  • the colour red and the depiction of the product, both whole and in cross-section, were considered commonplace in confectionary packaging.

Therefore, these elements were not being used to distinguish the malt balls as the goods of Sweet Rewards.

Accordingly, it was held highly unlikely that any ordinary consumer of chocolate confectionary could mistake something which was not called a Malteser for a Malteser. The primary judge had commented: "In that sense, Mars is a victim of its own success" - the fact that Sweet Rewards’s packaging used the DELFI (and skier logo) mark and the descriptive words 'malt balls' was sufficient to distinguish it from Mars’s well-known Maltesers packaging. The primary judge also observed that:

"in assessing the notion of a consumer’s imperfect recollection of a mark, the fact that a mark is notoriously so ubiquitous and of such long standing that consumers generally must be taken to be familiar with it and its use in relation to particular goods or services is a relevant consideration."

These comments were the main basis for Mars’s appeal (they also raised the eyebrows of other owners of well-known marks). Mars argued that the primary judge was wrong to use the strength of the Maltesers brand to Mars’s disadvantage in determining that there was no deceptive similarity between the parties’ respective packaging. However, Mars accepted that the issue of whether there had been passing off and trademark infringement involved an assessment of the overall impression of the packaging (and not just a narrow focus on the similarities). On the facts of this case, Sweet Rewards had not used a trademark that was remotely similar to the word 'Maltesers', and the other differences in the packaging outweighed the limited similarities.

Arguably, Mars’s claim that the Sweet Rewards label (as a whole) was in fact being used “as a trademark” is not without compelling merit and is consistent with the realities of the marketplace. The fact that individual elements of the label are commonplace and/or descriptive did not mean that the label, as a whole, was not being used by Sweet Rewards as a composite trademark. The principal distinguishing element was the DELFI (and skier logo) mark (which is relevant to the question of deceptive similarity), but the other elements were not merely lists of ingredients or material to comply with labelling laws. According to the evidence before the primary judge, the design of the label had involved very significant design work and refinement.

Having regard to the realities of the marketplace, it is difficult to resist the conclusion that the label was being used as a 'sign' that, as a whole, was appealing, distinctive, memorable and would draw customers to Sweet Rewards’s product and away from competing products – that is, as a trademark (importantly, this falls within the relevant definition of a 'trademark' in Section 17 of the Trademarks Act 1995). Certainly, the registrar of trademarks accepted that the Maltesers packaging as a whole was registrable as a trademark, notwithstanding that it included individual elements that are commonplace and/or descriptive. That did not affect the outcome of the case because, even if Sweet Rewards’s label as a whole was being used as a trademark, Mars also failed on the key question of deceptive similarity.

However, it would be wrong to interpret this decision as authority for the proposition that well-known marks are more difficult to protect because of a 'catch-22' scenario whereby the fame of such marks may reduce the likelihood of deception and confusion. Instead, it is good authority for the proposition that Mars’s investment in building the reputation of its Maltesers brand and packaging would have been protectable had Sweet Rewards used packaging that included:

  • a word that was at least similar to the word 'Maltesers'; and /or
  • other elements of the Maltesers packaging that had acquired a demonstrable (proven) secondary meaning, rather than being commonplace and/or descriptive of the product.

Cynics may be right when they say that Sweet Rewards was “sailing close to the wind”, but that is not, in itself, actionable.

Julian Gyngell, Julian Gyngell, Wahroonga

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