No infringement under Trademarks Act, but licence breached

Australia

In Symbion Pharmacy Services Pty Ltd v Idameneo (No 789) Limited ([2011] FCA 389, April 20 2011), the Federal Court of Australia has dismissed an allegation of infringement of the applicant’s trademark under the Trademarks Act 1995, but has held that the respondent’s use of the mark in question nonetheless breached the terms of a licence governing the use of the mark.

Applicant Symbion Pharmacy Services Pty Ltd alleged that the respondent, Idameneo (No 789) Limited, had:

  • infringed its registered trademark; and
  • breached Clause 5.5 of a licence granted in October 2008 by which it agreed not to use the applicant’s mark or “any mark similar thereto or capable of being confused therewith”.

In relation to infringement, Section 120(1) of the Trademarks Act relevantly provides that a person infringes a registered trademark if the person uses as a trademark “a sign that is… deceptively similar to the trademark in relation to goods or services in respect of which the trademark is registered”. Furthermore, Section 10 of the act provides that “a trademark is taken to be deceptively similar to another trademark if it so nearly resembles that other trademark that it is likely to deceive or cause confusion”.

Importantly, on the facts of this case, the respondent used its mark in relation to radiology services that were supplied to a specialised market of medical and dental practitioners, rather than to the general public. Accordingly, the court applied the reasoning of Lord Diplock in General Electric Co Limited (USA) v General Electric Co Limited ([1972] 1 WLR 729, 737-738):

“… where goods are of a kind which are not normally sold to the general public … but are sold in a specialised market consisting of persons engaged in a particular trade, evidence of persons accustomed to dealing in that market as to the likelihood of deception or confusion is essential.”

The court observed that “the soundness of [the passage quoted above] is self-evident, particularly in markets which involve the delivery of scientific goods or services”.

The applicant called no specialised evidence as to the tendency of the respondent’s mark to deceive, or to cause confusion, with reference to radiology services. Therefore, the applicant’s claims under the Trademarks Act were dismissed.

The applicant’s second allegation was that the use of the respondent’s mark breached Clause 5.5 of the 2008 licence agreement because the respondent’s mark was “similar to or capable of being confused with” the applicant’s mark.

The respondent submitted that the words “similar to or capable of being confused with” in Clause 5.5 should be construed as to go no further than the expression “deceptively similar” in the Trademarks Act. This submission was grounded on the assertion that the parties could not have intended to impose a contractual prohibition that ran parallel with, but which was not the same as, that contained in the act itself.

However, this submission was rejected because the court thought that it was clear that Clause 5.5 established, and was intended to establish, a different test to that which applies under the act. In particular, the court noted that Clause 5.5 reflected the negotiation of a commercial bargain concluded between substantial organisations.

Applying the wording of Clause 5.5 (which the court described as establishing a “lower bar” than is put in place by the act), the court proceeded to assess the objective similarities and differences of the two marks and concluded that, as a matter of overall impression, the net result was that the respondent’s mark was similar to the applicant’s mark to an extent that was capable of causing confusion. The respondent had therefore breached Clause 5.5.

Trademark licences and co-existence agreements (and the like) often mirror the wording of the relevant legislation when they set out the parties’ respective rights and obligations. However, if there was any doubt, this case makes it clear that these contractual arrangements will be interpreted and applied in accordance with their own terms and not necessarily by reference to jurisprudence developed under provisions in the act, even though they may be similar or analogous. That said, the respondent in this case may feel somewhat aggrieved that the underlying logic of Lord Diplock’s reasoning appears not to have been considered to be relevant when it came to interpreting the meaning of Clause 5.5 of the 2008 licence. That is, it must be arguable that the application of Clause 5.5 should also have been tested by reference to the tendency of the respondent’s mark to cause confusion, not in a general or abstract sense, but in relation to the provision of radiology services to a specialised market. The fact that it was not highlights again the importance of drafting carefully the terms of all such contractual arrangements.

Julian Gyngell, Kepdowrie Chambers, Wahroonga

Unlock unlimited access to all WTR content