Small amount of promotional conduct may constitute trademark use

Australia
Optical 88 Limited v Optical 88 Pty Limited (No 2) ([2010] FCA 1380, December 10 2010) concerned the use in Australia of the mark OPTICAL 88 and related trade indicia with respect to the retail supply of optical goods and services. The case is lengthy and covers a number of matters, including trademark infringement and defences, removal for non-use and lack of intention to use, breach of copyright, passing off and misleading and deceptive conduct, as well as use of surveys and demographic data as evidence of infringement and misleading and deceptive conduct. This article focuses on two of the key issues of the case:
  • infringement by taking an essential element; and
  • evidence to defend an allegation of non-use.
The applicant operates a number of retail stores overseas selling optical products and services. The applicant's business is conducted under the mark OPTICAL 88, the same mark in Chinese characters and a logo. The applicant is the registered owner of a number of Australian trademarks incorporating variations of these marks, including Registrations 520707 and 1083966:

 
The first respondent operates three optometry practices in Sydney under the mark OPTICAL 88, the same mark in Chinese characters and its logo, on their own or together, on store signage, business cards, stationery, promotional items and loyalty cards. 
 
The Federal Court of Australia held that, while each mark must be compared as a whole, deceptive similarity may be established when an impugned mark uses an 'essential' or 'distinguishing' feature of the trademark (citing Saville Perfumery Ltd v June Perfect Ltd ((1941) 58 RPC 147) and de Cordova v Vick Chemical Company ((1951) 68 RPC 103) as examples). In relation to Registrations 520707 and 1083966, the name Optical 88 was the dominating element to which the other elements were secondary, given its relative size, central position and the likely way each mark was spoken. The court acknowledged that the use of the applicant's logo within the marks was not insignificant, but that it was illustrative of the words 'Optical 88', as it depicted spectacle frames and was reminiscent of '88'.  

The court noted that words in a complex composite mark should not be too readily characterised as an 'essential feature' when assessing the question of deceptive similarity, as it may effectively convert a composite mark into something quite different (Crazy Ron’s Communications Pty Ltd v Mobileworld Communications Pty Ltd ((2004) 209 ALR 1)). However, the court distinguished the marks in this case from the mark in Crazy Rons, on the basis that the marks in the present case were not as complex as that in Crazy Rons, which had a dominant cartoon character and less prominent words which served to identify the cartoon character (and therefore was not infringed by the mark CRAZY RON'S). 

Thus, the respondents' use of the mark OPTICAL 88, on its own and in combination with the mark OPTICAL 88 in Chinese characters, was use of a sign as a trademark that was deceptively similar to Registrations 520707 and 1083966, as the essential characteristic had been taken.  

This effective dismissal of the significance of a descriptive logo calls to mind the decision of the High Court in E & J Gallo Winery v Lion Nathan Australia Pty Limited ([2010] HCA 15), where it was held that the addition of a device to a registered word mark was not a feature that substantially affected the identify of the mark as the device was a mere illustration of the words in the trademark (for further details please see "Highest court supports international brand owners").

In the present case, although all of the respondents' marks were held to be deceptively similar to the applicant's trademarks, the respondents were able to establish defences to all uses. The respondents sought removal of Registration 520707 under Section 92(4)(b) of the Trademarks Act. At issue was whether the applicant had used the trademark 'in the course of trade'. The applicant had no stores in Australia; however, three of its stores sent goods bearing the marks of third-party brands to customers overseas (including Australia) with coupons (bearing Registration 520707) enclosed. 

The court held that sending the coupons with the goods to a customer in Australia was use in the course of trade in Australia. The coupons were part of the applicant's promotional activities, designed to encourage customers to continue to deal with it, and the mark was used on the coupons to distinguish the applicant from other retailers. It is noteworthy that only a relatively small number of transactions (eight) was sufficient to constitute such use. 

The problem for the applicant was that the mark was registered only in relation to optical goods, but that the relevant use was in relation to the provision of the applicant's retail services. Further, the goods sold into Australia were third-party brands. Therefore, the applicant's mark was not being used in relation to those goods. The court held that use of a mark in relation to the services or supplying third-party branded goods is not use in relation to the goods themselves. Therefore the action for removal succeeded. This supports the proposition that a retailer's marks are used only for its retail supply services, not the third-party branded goods it sells.

The following lessons can be drawn from the decision:

  • A trademark may be infringed by taking an essential element of the mark, even if the whole of the mark is not taken.
  • Use of a trademark may occur via a small amount of promotional conduct in Australia. However, use must be in relation to the actual goods or services in relation to which the mark is registered.
  • Supply of goods into Australia can constitute use of a trademark in Australia. However, the court did not analyse the implications of the location of offer and acceptance (an issue relevant to the decisions in Ward Group Pty Ltd v Brodie & Stone Plc ((2005) 143 FCR 479) and WD & HO Wills (Australia) Ltd v Rothmans Ltd ((1956) 94 CLR 182)).
Tim Golder and Nadia Guadagno, Allens Arthur Robinson, Melbourne

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