No sweet reward for Mars in malt balls case

In Mars Australia Pty Ltd v Sweet Rewards Pty Ltd ([2009] FCA 606, June 5 2009), the Federal Court of Australia has dismissed Mars Australia Pty Ltd's claims of passing off, misleading conduct and trademark infringement against Sweet Rewards Pty Ltd.
Since mid-2005 Sweet Rewards has distributed chocolate-covered malt balls under the name Malt Balls. These goods were sold in large circular plastic containers with a label featuring:
  • a red (or orange) background;
  • the words 'Malt Balls';
  • the word 'Delfi' (in smaller script than 'Malt Balls');
  • the picture of a skier in a circle; and
  • pictorial representations of the confectionery as floating brown balls, with some in cross-section showing a yellow filling. 
Mars has, for many years, sold confectionery under the trademark MALTESERS in get-up including:
  • a red background;
  • the word 'Maltesers'; and
  • pictorial representations of the confectionery as floating brown balls, with one in cross-section showing a yellow filling. 
Mars provided evidence of the Maltesers get-up and contended that it had reputation in get-up so similar to that used by Sweet Rewards that distribution of the Malt Balls wrongly suggested some connection to Maltesers. Mars also claimed trademark infringement based on two registered trademarks that depicted the packaging of the Maltesers product. 
The court found that the get-up of the Maltesers packaging in which the reputation inhered was found principally in the use of the trademark MALTESERS in a stylized script moving from bottom left to top right, but also resided in aspects of the get-up accepted by both parties - namely, the red background and the floating chocolate balls.
The court held as follows:

Because the principal component in the Maltesers get-up is the word 'Maltesers', it is highly unlikely that any ordinary consumer of chocolate confectionery could mistake something which is not called a Malteser for a Malteser. In that sense, Mars is a victim of its own success.
While the court accepted that there was a limited similarity between the products, it took the view that the words 'Malt Balls' were descriptive and that the strength of the MALTESERS mark was of major importance. Consequently, the absence of any similar word on Sweet Rewards' product militated against other similarities in the packaging leading to a likelihood of confusion, particularly as Sweet Rewards' product also bore the DELFI (and skier design) mark. As a result, the court rejected Mars's passing off and misleading conduct allegations.
The court also dismissed Mars's claims of trademark infringement, finding that there was no use of 'Malt Balls' as a trademark and no deceptive similarity. 
It also considered the issue in absence of that finding and commented that while the court has historically dismissed arguments directed towards the reputation of a mark when applying the test for trademark infringement (ie, by comparing the marks in isolation), there is a basis for considering reputation when determining the extent of a consumer’s 'imperfect recollection'. In this regard, the court found that:
a corollary appears to be 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. [...] So viewed, a comparison between the impression held in the consumer’s mind and the direct impression of Sweet Rewards’ mark is one which, in this case at least, occurs in a context in which the chances of the average consumer having forgotten the MALTESERS mark are vanishingly small.”
This decision suggests that owners of well-known marks contemplating infringement action against alleged infringers must consider the effect of their own reputation as part of the 'imperfect recollection' assessment. The decision suggests that where a trademark has become very well known among consumers, the likelihood of deception or confusion among the public will be reduced.
Nathan Sinclair and Sean McManis, Shelston IP, Sydney 

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