Trademarks and the Price of Fame

Traders must regularly review their branding strategies and should now consider the apparent popularity or reputation of their brand in assessing whether their rights have been infringed.

In an appeal decision of the Full Court of the Federal Court which was handed down in December, it was accepted that Mars' reputation in its "Maltesers" product, had not been infringed. To some extent, the Full Court watered down the reasoning of the primary judge who held that "it is highly unlikely that any ordinary consumer of chocolate confectionary could mistake something which is not a Malteser for a Malteser" … In that sense, Mars is a victim of its own success". That line of reasoning was developed from a number of earlier cases in which various Courts considered the relevance of the 'reputation' of the brand or mark in assessing whether there was any infringement.

In the Maltesers case, Mars alleged that a competing product had infringed its trademarks and/or sought to benefit from its reputation by passing off its product as having some connection with Maltesers. The competing product was marketed under the name "Delfi" and packaged in plastic jars which had a red background, the word Delfi, a logo containing a picture of a skier, images of malt balls (some shown in cross-section) and the words "Malt Balls". It was accepted that the label was not an identical copy of Maltesers' trademark. Accordingly, to succeed in its claim for trademark infringement, Mars needed to show that the marks were deceptively similar – which is generally established by considering whether there may be confusion amongst consumers between the two products.

The Court considered the principles identified in Crazy Ron's Communications Pty Ltd v Mobileworld Communications Pty Ltd [2004] FCAFC 196, in relation to the assessment of marks which are deceptively similar. In summary those are:

  1. The question of deceptive similarity (unlike substantially identical marks) is not to be judged by a side-by-side comparison. In assessing the impression created by the mark, it is important to consider 'the idea of the mark' which is retained by a person who has a brief opportunity to review it.

    The test set out by the High Court is: "The comparison is between the impression based on recollection of the plaintiff's mark that persons of ordinary intelligence and memory would have and the impression that such persons would have (from the other product)". (Shell v Esso (1963) 109 CLR 407).

  2. Similarities of sound (or aural similarity of the mark when pronounced) may be important.

    "The effect of spoken description must be considered ... similarities both of sound and of meaning may play an important part". (Australian Wollen Mills Ltd v Walton (1937) 58 CLR 641).

    "A trademark is undoubtedly a visual device but … since words form part, or indeed the whole of a mark, it is impossible to exclude consideration of the sound or significance of those words". (Lord Radcliffe, Privy Council in de Cordova v Vick Chemical Co (1951) 68 RPC 103).

  3. It is necessary to show a tangible danger of deception or confusion, although it is enough if an ordinary person maintains a reasonable doubt.

  4. The Court must make allowance for the 'imperfect recollection' a person may have of a registered mark in determining whether another mark is likely to deceive or cause confusion.
  5. The concept of imperfect recollection applies not only to trademarks consisting of invented words but also to marks including words (or part words) which are an essential feature of the mark.

    If the mark "includes words or a 'fancy word' composed of them, when pronounced, sounding virtually the same (as the registered mark) then use by another trader of those words … will infringe because, necessarily … use of the words … is likely to cause confusion" (de Cordova).

It was suggested by the primary judge that "consumers are so familiar with Maltesers that they could not possibly be confused by the label". However, on appeal the Full Court focussed more on the distinguishing features of the two products. The Court found that the overall impression of Mars' product is the word "Maltesers", whereas the main (distinguishing) feature of the other product was the word "Delfi". Accordingly, the Full Court agreed that there had not been any infringement.

The Court also took into account other elements of the packaging. It is accepted that Courts can consider the "gestalt" or overall look and feel of a product in considering whether there has been any infringement (Sydneywide Distributors Pty Ltd v Red Bull Australia Pty Ltd [2002] FCAFC 157).

In this case, there were a number of features of the packaging of both products which were similar and which are commonly used in confectionary packaging. Those included the primary colours used in the background (red), the representation of the product, including cross-section and stylised writing from the bottom left corner to the top right. As both products followed that "standard formulae" it was more difficult for Mars to establish that there had been any obvious infringement.

Of course, trademarks can become so well known that they become part of the product description or are otherwise considered to be generic terms (such as the recent conjecture over ugg boots). However, that is a difficult area and there are many shades of grey.

Summary and Recommendations

Market advantage and reputation must be monitored. Traders must be vigilant about their branding, consider the position of their product in the market, the currency of their trademarks and those seeking to infringe the rights which they have established by benefiting from leveraging off their reputation.

It is essential for traders to review their branding strategy regularly to ensure that it is up to date and competitive in the market.

The trade-off between creativity and following tried and tested marketing patterns must be considered. The more unusual the mark, (including industry "norms") and the greater the distinguishing features which are incorporated in the mark the greater the prospect of registration and protection in the case of infringement.


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