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Focus: Tag a drag for imitators

13 February 2012

In brief: A recent Federal Court decision expands copyright and trade mark owners' opportunities to argue that imitators' labels constitute infringements. Partner Tim Golder (view CV) and Lawyer Andrew Wilcock report.

How does it affect you?

  • Facton Ltd v Mish Mash Clothing1 reinforces that layout is highly relevant to any analysis of whether an allegedly infringing image is 'deceptively similar' to a trade mark.
  • In addition, it establishes that a label image comprising a visual element and a textual element can constitute a drawing, and, in turn, an artistic work for the purposes of the Copyright Act 1968 (Cth), even when the textual element conveys a meaning. In this sense, the case extends the definition of 'drawing'.
  • As a consequence, Facton expands copyright and trade mark owners' opportunities to argue that imitators' labels constitute infringements.
  • It also underlines the importance of providing sufficient evidence when seeking damages for copyright and/or trade mark infringements.

The facts

There were several applicants in this case. The first was the owner and the second was the exclusive licensee of the trade marks reproduced below. The second applicant also owned the copyright in the artistic works embodied in the marks. The third applicant was the Australian wholesaler and distributor of clothing and accessories bearing the marks.

G-Star Raw Denim

Trade mark no 883618

Trade mark no 980112 

Trade mark no 1028535

Trade mark no 999350

In September 2009, the second respondent, the sole director of the first respondent, travelled to Turkey to purchase garments wholesale. He viewed several sample pairs of jeans and T-shirts at two associated warehouse. Ultimately, he ordered 444 pairs of jeans, each of which bore one or more of the jeans labels reproduced below, and 217 T-shirts bearing the T-shirt label reproduced below. He had the labels of all the garments slightly customised, so that they bore the word 'M-MASH', instead of 'R-OBIN', which appeared on the sample pairs.

First jeans label

Second jeans label

Third jeans label

T-shirt label

After the second respondent received and began to sell the garments, the solicitors for the appellants sent a letter of demand. The second respondent delivered up all unsold goods, and the applicants commenced an action for trade mark and copyright infringement.

The trade mark claim

The primary issue in the trade mark claim was whether any of the labels on the garments that the second respondent sold were deceptively similar to any of the first applicant's trade marks. Section 10 of the Trade Marks Act 1995 (Cth) establishes that a trade mark is deceptively similar 'if it so nearly resembles that other trade mark that it is likely to deceive or cause confusion'. In applying this test, a court compares 'the impression based on the recollection of the applicant's mark that "persons of ordinary intelligence and memory would have" and the impression that such a person would have from the defendant's alleged use'.

Justice Jessup found that the first and second jeans labels were deceptively similar to trade mark number 883618. For the first jeans label, his Honour found that the layout, orientation and style of the two marks were so similar that the reverse colour scheme and the verbal differences between 'G-Star' and 'M-Mash' were insignificant. For the second jeans label, he found that, despite the use of a 'strikingly different font' and the replacement of the letters 'RAW' with 'MSH', 'someone viewing the respondent's label would be caused to wonder whether it was the registered mark with which he or she had some previous acquaintance'. The following quotation conveys the centrality of the arrangement of the labels to Justice Jessup's conclusions:

The rugged brutality conveyed by the simple lines, rectangular shapes, the bold writing and the hyphen itself are, in my view, elements of the mark that find sufficient reflection in the label to justify a conclusion of deceptive similarity.

His Honour found that the T-shirt label was not deceptively similar to trade mark number 883618. He stated that, though someone viewing the label may find 'the general feel and style ... to be consistent with things seen elsewhere', the prominent position of the words 'MISH MASH' rendered it unlikely that the label would cause any confusion.

Finally, Justice Jessup found that the third jeans label was not deceptively similar to trade mark numbers 980112, 1028535 or 999350. His Honour observed that, in each case, the common element was either the word 'RAW' or the words 'RAW DENIM'. He then reasoned that, as those words described the product, there was no realistic prospect of confusion.

The copyright claim

The primary issues in the copyright claim were, first, whether the image that corresponded to trade mark number 883618 was an artistic work, and, second, whether the first respondent infringed s37 of the Copyright Act by importing garments bearing the first and second jeans labels into Australia.

Justice Jessup found that the image that corresponded to trade mark number 883618 was a drawing and, in turn, an artistic work. His Honour referred to the recent case of Elwood Clothing Pty Ltd v Cotton On Clothing Pty Ltd,2 in which the Full Federal Court held that a T-shirt design comprising text and images was an artistic work, as opposed to a literary work, because its function was visual rather than semiotic. His Honour held that, though the textual component of the image 'was developed with a view to emphasising the message to be conveyed by the words used' and, therefore, had a semiotic function, it remained, in essence, 'a rectangle which contains internal divisions and drawn elements, into which the verbal elements have been fitted', and so was a drawing.

His Honour also found that the first respondent infringed s37 of the Copyright Act, by importing jeans bearing the first and second jeans labels into Australia. He reasoned that s37 required him to assess whether, if the Turkish manufacturers had made the garments in Australia, there would have been copyright infringement. He considered that, given the similarities between trade mark number 883618 and the first and second jeans labels, there obviously would have been an infringement. Interestingly, although neither party submitted evidence proving or disproving copying, his Honour was willing to infer direct or indirect copying from the similarity between the image and the labels.

Damages

Notably, Justice Jessup did not award the applicants damages, despite the fact that they proved trade mark and copyright infringements. The applicants did not seek an account of profits.

His Honour refused to award damages for lost sales. He stated that the applicants did not provide him with enough evidence to infer how many sales they lost as a consequence of the presence of the respondents' goods in the market. Additionally, his Honour stated that, even if they had, they did not provide evidence of their wholesale margins, which would have been crucial to any damages calculation.

Justice Jessup also refused to award damages for loss of reputation. His Honour stated that the trade marks were not associated with a reputation for originality, and, in any case, the infringing labels were used inconspicuously. He added that the respondents did not adduce evidence that the quality of the first respondent's garments was inferior to that of the appellants'.

Finally, Justice Jessup refused to award additional damages, a form of damages available where other factors render an award appropriate. Of particular note, his Honour rejected the suggestion that an award was necessary to deter similar conduct by other parties. He reasoned that a person in the respondent's position, purchasing goods for a third party, is not required to approach this task with an 'in-built suspicion' that the goods infringe copyright.

In passing, Justice Jessup stated that he did not condone the respondents' conduct – rather, his refusal to award damages was a consequence of the way the applicants had presented their case.

Implications

Facton assists copyright and trade mark holders, particularly in the fashion industry, pursuing entities that imitate their designs. It reinforces that, in relation to trade mark claims, layout is highly relevant to any analysis of whether an allegedly infringing image is 'deceptively similar' to a trade mark. In addition, it establishes that a design that conveys a message may be a drawing for the purposes of the Copyright Act. In this sense, it expands the position the Full Federal Court outlined in Elwood Clothing.

As Facton is the decision of a single Federal Court judge, it will be interesting and instructive to see whether, and how, it is applied in the future.

Footnotes
  1. [2012] FCA 22.
  2. [2008] FCAFC 197. Allens has previously published on this case. 

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