YELLOW case provides important takeaways for mark owners and practitioners

A recent decision of the Federal Court of Australia highlights the Federal Court’s current approach to the question of inherent distinctiveness and the difficulty faced by trademark owners trying to obtain registration in Australia of non-distinctive elements of already well-known composite trademarks. The decision also emphasises that well-known trademarks will not necessarily be treated differently to any other trademarks on the question of deceptive similarity.

In Phone Directories Company Australia Pty Ltd v Telstra Corporation Limited ([2014] FCA 373, April 11 2014), Murphy J of the Federal Court was asked to consider whether the marks YELLOW (applied for by Telstra Corporation Limited) and YELLOWBOOK.COM.AU (applied for by Yellowbook.com.au Pty Ltd) were registrable as trademarks. 

In previous proceedings before the Australian Trademarks Office, two delegates of the registrar of trademarks had held that, as the word 'yellow' was not descriptive of telephone directory related goods and services, the mark YELLOW was not completely devoid of distinctiveness and was registrable on the basis that the mark could distinguish the relevant goods and services (as shown by Telstra’s extensive use of the mark before the priority date of the application, including as part of its well known YELLOW PAGES family of trademarks).

In respect of the YELLOWBOOK.COM.AU trademark, the delegate had held that the mark was not registrable as it was deceptively similar to the YELLOW PAGES trademarks.

On appeal to the Federal Court, Murphy J held that both the marks YELLOW and YELLOWBOOK.COM.AU were not registrable as trademarks.

First, Justice Murphy held that the mark YELLOW did not have any inherent capacity to distinguish Telstra’s telephone directory-related goods and services, as it was descriptive of a primary colour that was not used in an arbitrary fashion in respect of telephone directory-related goods and services.

His Honour emphasised that the question of inherent distinctiveness was “essentially hypothetical” as it required an analysis of whether the mark itself was “capable” of distinguishing Telstra’s goods and services and not an analysis of Telstra’s alleged existing use of the mark. The question was therefore whether other traders would want to legitimately use the word 'yellow' in connection with their own telephone directory-related goods and services, and not whether they could practically do so. 

In assessing whether the mark YELLOW was “capable” of distinguishing Telstra’s goods and services, Murphy J considered that, as the word 'yellow' described a primary colour, the considerations set out in the authorities on the registration of colour marks were relevant to his Honour’s analysis. His Honour stated that the actual use of the colour yellow by traders in telephone directory-related goods and services overseas was a relevant consideration, as “it goes to what hypothetical other traders in Australia are likely to do”. There was evidence of widespread use of 'yellow' (both the colour and the word) overseas in respect of telephone directory-related goods and services as well as some use of 'yellow' in respect of these goods and services in Australia. 

Additionally, Telstra admitted that, in using 'yellow', it was copying an existing overseas trend. The internationally common usage of 'yellow' would have, in Murphy J’s view, “[been] seen by traders to create a commercial imperative for them to signify their products by the word yellow” and that, as a result, traders, “acting innocently, will want to use the word yellow or a similar mark in a way that would infringe the YELLOW trademark”. 

On the question of whether the mark YELLOW was in fact distinctive of Telstra’s telephone directory-related goods and services (which would have allowed Telstra to obtain registration under the provisions of Section 41(3) of the Trademarks Act 1995 (Cth)), Murphy J held that Telstra had not proven use of the mark as a trademark. In particular, while his Honour accepted that “a word may be used as [a] mark even where it is a component of a larger composite mark”, he held that the majority of Telstra’s use of the mark YELLOW was as part of the well-known YELLOW PAGES marks (and therefore went to establishing YELLOW PAGES as the badge of origin) or in circumstances where it was a “shorthand reference back to the well-recognised YELLOW PAGES trademark”. The limited use of the mark YELLOW by itself had, according to his Honour, effectively been dwarfed by the overwhelming brand recognition of the composite YELLOW PAGES mark.

Even if the mark YELLOW was distinctive of Telstra’s telephone directory-related goods and services, his Honour said that he would have refused to allow registration of the mark on the basis that it was deceptively similar to the registered trademarks THE YELLOW ENVELOPE, YELLOW DUCK, YELLOW ZONE and YELLOW DOOR (the cited marks). His Honour considered that consumers would be confused between the marks, as the word 'yellow' is the impression that both the YELLOW mark and the cited marks would leave the consumer (particularly considering that the word 'yellow' is the only feature of the YELLOW mark and both the “defining or central component” and located at the beginning of the cited marks). 

In the second matter, Murphy J held that the mark YELLOWBOOK.COM.AU was deceptively similar to the prior YELLOW PAGES marks and therefore not registrable as a trademark. 

In assessing the marks, his Honour considered that the suffix '.com.au' was not a relevant consideration, as it “simply signifies that the relevant website is that of a business in Australia”. The comparison was therefore to be made between the distinctive element 'yellowbook' and the YELLOW PAGES marks.

Although courts have held that, where marks are so well known, that diminishes the possibility of confusion (see Registrar of Trademarks v Woolworths Ltd ([1999] FCA 1020); Australian Postal Corporation v Digital Post Australia Pty Ltd (No 2) ([2012] FCA 862)), his Honour considered that this principle did not apply in the circumstances of the present case. In particular, as both YELLOWBOOK and the YELLOW PAGES marks are associated with the same idea (namely, a yellow directory), start with the same word and were likely to be accessed in circumstances (namely, in a hurry) where consumers are likely to “give scant consideration to small differences in branding”, his Honour held there was a real risk that consumers will be misled or confused if YELLOWBOOK.COM.AU was to proceed to registration.

There are a number of key takeaways for brand owners and practitioners from the decision of Murphy J:

1. In considering whether a trademark is distinctive for the purposes of the Trademarks Act, the situation in relevant overseas markets is a relevant factor in determining whether the hypothetical trader in Australia would legitimately wish to use an applied for trademark in respect of their own goods and services. This continued expansion of the factors to be considered when determining whether a hypothetical trader would “legitimately wish to use” an applied for trademark is consistent with the approach taken by the Full Federal Court in Modena Trading Pty Ltd v Cantarella Bros Pty Ltd ([2013] FCAFC 110) (where the fact that Australians associated coffee with Italy was a relevant consideration as to whether a trader would wish to use descriptive Italian words in respect of its coffee products).
2. It is fundamental that brand owners, when seeking registration of non-distinctive trademarks in Australia, apply for the mark that they are actually using in the trade in respect of their goods and services. Key to the decision of Murphy J was his finding that, as Telstra had predominately used 'yellow' as part of its YELLOW PAGES marks, it had not demonstrated use of the word 'yellow' alone as a trademark. The finding that the use of a composite trademark was not sufficient to prove use of part of that composite trademark as a trademark is consistent with the decision of the Full Federal Court in BP v Woolworths ([2006] FCAFC 132) (where BP was prevented from registering the colour green in respect of its service stations in circumstances where it had in fact used both green and yellow in the get-up of those stations).
3. The fact that a trademark is “well-known” or “well recognised” in Australia does not automatically preclude the conclusion that consumers could be confused by the use of a similar mark by another trader. Whether consumers will be confused by the use of an applied for mark that is similar to a “well-known” mark is a question of fact based on the circumstances in which the applied for mark is likely to be used.

Stephen Stern and Nicholas Butera, Corrs Chambers Westgarth, Melbourne