Test for leave to appeal under Section 195(2) reconsidered

Australia
In Food Channel Network Pty Ltd v Television Food Network GP ([2009] FCA 1445, December 4 2009), the Federal Court of Australia has reconsidered the test for determining whether leave to appeal the decision of a single judge should be granted.

Food Channel Pty Ltd applied to register a device mark incorporating the words 'food channel' for goods in Class 16 of the Nice Classification. The application was opposed by Television Food Network GP on multiple grounds, including an assertion that:
  • Food Channel was not the actual owner of the mark;
  • the mark was deceptively similar to the existing trademark TELEVISION FOOD NETWORK, owned by Television Food; and
  • there was no evidence of Food Channel’s intent to use the mark.
At trial, the primary judge agreed that there was no evidence of intent to use the mark and that Food Channel was not its owner at the time of application (itself a fatal defect). She also excluded from evidence an affidavit submitted by Food Channel at the last minute on this precise point. Finally, she held that the mark was deceptively similar to Television Food’s mark (for further details please see "Mark owner must be identifiable at time of application, says court"). Food Channel sought leave to appeal these and other findings.

Under Section 195(2) of the Trademarks Act 1995 (Cth), leave to appeal a decision to the full Federal Court is required where the judgment of a single judge of the Federal Court - such as the decision here - is in issue. In turn, such applications for leave to appeal are to be considered by a single judge under Order 52, Rule 2AA of the Federal Court Rules.

During hearings on the application for leave to appeal to the full Federal Court, counsel for both parties urged the court to adopt a “clear prima facie error test” in reviewing the earlier decision. It declined to do so, expressing discomfort in making such a pronouncement on another single judge’s decision, particularly in cases such as this where the applicant's case had not undergone review by multiple courts or on multiple occasions. Given these concerns, the court instead chose to follow a two-pronged approach similar to that adopted in Décor Corporation Pty Ltd v Dart Industries Inc ([1991] FCA 655), requiring a balancing of the following inquiries:
  • whether there is sufficient doubt to warrant reconsideration of the matter by the Full Court; and
  • whether denial of an opportunity to appeal would involve a substantial injustice supposing the decision of the primary judge to have been wrong.
In applying this test, the court found it particularly relevant that rejection of this application for leave to appeal would mean that Food Channel’s registration for the mark would be fully and substantively determined only after having been unsuccessfully reviewed a single time. In light of this, it held that the substantial injustice done by refusing leave to appeal compelled granting leave, even if there was only a very small amount of doubt about the primary judge’s decision.

The court next focused on whether any doubt existed in relation to:

  • the conclusion that the marks of the parties were deceptively similar; and
  • the fairness of the trial due to the primary judge’s exclusion of a key affidavit.
The court held that the proper principle to be applied in assessing deceptive similarity under Section 44 of the act is the two-stage test outlined in Cooper Engineering Co Pty Ltd v Sigmund Pumps Ltd ([1952] HCA 15) - namely:
  • whether the marks really look or sound alike; and
  • whether any resemblance is likely to deceive.
The primary judge had determined that the two marks were deceptively similar because:
  • the words used in the marks - 'channel', 'network' and 'food' - were interchangeable (rejecting the argument that the words did not sound the same);
  • both marks used the word 'food'; and
  • Food Channel's mark contained a television screen graphic, which was relevant as both marks were used in the context of television entertainment.
The court noted, however, that the primary judge had failed to consider the circumstances surrounding the use of the marks, particularly the circumstances in which goods or services related to the marks would be bought and sold, and the character of potential customers. As such, the judge had failed properly to determine whether any resemblance was “likely to deceive” as required under the second prong of the Cooper Engineering test.

The court then turned to the issue of the exclusion of late-filed or surprise evidence. The late-filed affidavit submitted by Food Channel, addressing critical ownership and use issues arising under Sections 58 and 59 of the Trademarks Act, had been rejected by the primary judge as inadmissible under Section 135 of the Evidence Act 1995 (Cth) in that the prejudicial effect on Television Food if it were admitted outweighed its probative value.

The court concluded that Section 135’s 'prejudicial effect versus probative value' test was irrelevant in determining whether evidence not disclosed earlier in the proceedings could be relied upon. Moreover, even if admissibility under Section 135 was at issue, the primary judge had failed properly to identify prejudice sufficient to warrant exclusion of this relevant - albeit eleventh-hour - evidence. Neither did she make allowances for the fact that Food Channel was self-represented until just before trial, and the difficult position in which this placed its new legal counsel. Finally, the 'surprise rule' relied upon by Television Food pertains to raising new claims or defences, not introduction of new evidence going to an existing issue. The court concluded that any prejudice arising from admission could have been overcome in “all circumstances” by an adjournment with costs, particularly as there was no reason why the matter had to be determined urgently.

Based on a failure to apply the full 'deceptive similarity' test of Cooper Engineering and a misapplication of evidentiary principles, the court held that there was sufficient doubt to justify granting leave to appeal to the Full Federal Court.
 
Daniel Plane and Fiona Lander, Corrs Chambers Westgarth, Melbourne

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