MONSTER Case highlights importance of trademark registration
In Hansen Beverage Company v Bickfords (Australia) Pty Ltd ( FCA 406, March 31 2008), Hansen Beverage Company has failed in its attempt to stop Bickfords (Australia) Pty Ltd from selling its Monster Energy drink, a product that Bickfords had based largely on Hansen's Monster Energy product.
Hansen's Monster Energy drink was the second biggest-selling energy drink in the world. However, Hansen had not formally launched the product or applied to register the trademark MONSTER ENERGY in Australia. After a trip to the United States, the managing director of Bickfords became aware of Hansen's Monster Energy product. Bickford's then set about developing a new energy drink and approached Hansen to discuss a possible licensing agreement for the MONSTER trademark. No agreement was concluded between the parties and Bickfords proceeded to launch its Monster Energy drink in the Australian market.
Hansen commenced an action for misleading and deceptive conduct under the Trade Practices Act 1974 and the common law tort of passing off. The Federal Court of Australia stated as follows:
"The principal issue in this proceeding is whether the applicant (Hansen) has shown a sufficient reputation in Australia in the mark MONSTER ENERGY at the relevant date in relation to energy drinks, such that the adoption of that mark, or its contraction MONSTER, for energy drinks by the respondent (Bickfords) conveys a misrepresentation that the Bickfords product is the product of Hansen or is associated with Hansen."
Bickfords filed a cross-claim arguing that Hansen's product would be confused with its own product due to its use and reputation in Australia.
The parties had agreed that the similarities between the products could mislead and deceive for the purposes of the act and the tort of passing off. Therefore, the issue was whether either party had developed a sufficient reputation in Australia to enforce rights in the mark. To be successful, it would be necessary to establish that "a significant or substantial proportion" of young adult males (the potential consumers) would be likely to be misled.
Hansen acknowledged that it had not sold Monster Energy drinks directly in Australia; some products had been given away and some had been obtained on eBay. Therefore, in order to assess whether Hansen had established the requisite reputation in Australia, the court considered Hansen's 'lay a foundation' marketing strategy, which was designed to make the target demographic in a country familiar with its Monster Energy product before it actually launched in the country. This strategy included:
- sponsoring international 'extreme' sporting events;
- sponsoring athletes involved in these events (including Australian athletes); and
- the sale and distribution of merchandizing (eg, helmets, hats, t-shirts and stickers).
These activities received coverage in Australia through television, magazines, newspapers and DVDs. Hansen also operated a website that was accessed by users in Australia.
The court stated that the required reputation cannot be assumed "in a market where the product has not been sold or directly advertised". Although the court acknowledged that extreme sports enthusiasts may have been exposed to the Monster Energy product, it stated that this did not extend more broadly to the young male adult potential customer base. Therefore, the requisite reputation had not been established. Hansen's claim was dismissed, notwithstanding the fact that Bickfords had "deliberately copied" Hansen's brand.
The court also dismissed Bickfords's cross-claim. It stated that although Bickfords was in the process of commencing its direct retail sales and promotional activities, most of these activities had been confined to one state of Australia. According to the court, these were not of sufficient quality or quantity to establish the reputation required for the purposes of establishing passing off or a cause of action under the act. No restraining orders were made.
The decision highlights the importance of registering trademarks in Australia in order to protect rights in a name, as extensive use of a trademark overseas (without direct sales or marketing in Australia) is unlikely to be sufficient to protect the name in Australia.
Lisa Ritson and Melissa Preston, Blake Dawson, Sydney
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