INSIGHT

Use of your own name must be in good faith

By Alison Beaumer, Elliott Burton
Food & Beverage Intellectual Property Patents & Trade Marks

In brief 8 min read

Even where a family business is making use of its own surname, trade mark infringement and passing off are likely to be found where the conduct is not in good faith and has caused actual confusion. Managing Associate Alison Beaumer and Associate Elliott Burton review the Federal Court's decision in a dispute between Mitolo Wines and Vito Mitolo & Son.

How does it affect you?

  • The decision in Mitolo Wines Aust Pty Ltd v Vito Mitolo & Son Pty Ltd [2019] FCA 902 demonstrates the power of evidence of actual consumer confusion when pursuing a claim for trade mark infringement or misleading or deceptive conduct. It is a good idea to create contemporaneous records of instances where customers or potential customers express confusion between your business and another business.
  • While the Trade Marks Act provides an exception from trade mark infringement where you use your own name in good faith, the court will read this exception narrowly. You must be trading as your actual and known name – the exception will not extend to contractions such as use of initials or nicknames unless you are known by that contracted name or nickname. In order to negate good faith, it is sufficient that the person knew or understood (or was wilfully blind to the fact) that the use of their own name may well cause confusion.
  • It is always prudent, when seeking to rely on a representation, to clarify the scope and nature of what is being represented (and to document any agreement or understanding, particularly in circumstances which may give rise to a subsequent dispute).

Background: what's in a (family) name?

Mr Francesco Mitolo (Frank), through his businesses Mitolo Wines Australia Pty Ltd and Mitolo Wines Pty Ltd (together Mitolo Wines), has been producing and selling wine from McLaren Vale, South Australia, since 1999 under the registered trade mark 'MITOLO' in class 33 (Wines) (the Mitolo Mark). Mitolo Wines has used the Mitolo Mark extensively, including on labels across its range of premium wines which have been sold and exported domestically and internationally, as well as on packaging and marketing materials, in promoting the business online and through its cellar door in McLaren Vale.

In 2014 Frank became aware of a post on Facebook suggesting his New York-based cousin, Mr Anthony Mitolo (Tony), was planning to sell a wine under the name ‘Waveform’. The proposed label prominently displayed the words 'V. MITOLO and SON' above the word 'Waveform'. Frank and Tony entered into a Facebook conversation where Frank expressed his concern that the use of the word 'Mitolo' might cause confusion amongst his customers. Tony and his father and business partner, Vito Mitolo (Vito), asserted they had the right to use their surname in relation to their wine products, however, as a compromise, they agreed they would reduce the size of the words 'V. MITOLO and SON' on the label. On this condition Frank gave Tony permission to proceed with selling the Waveform series. Later, during the trial, Frank gave evidence that he did not consider this to be a general permission to use the Mitolo name in relation to the sale of wine going forward. Rather, it was limited to a small number of sales of the Waveform series in the USA. Frank also gave evidence that, had he known Tony and Vito intended to sell wine commercially in Australia and overseas and to open premises in McLaren Vale down the road from the Mitolo Wines cellar door, he would not have given them permission to use the word 'Mitolo'.

At the time of the Facebook conversation, Vito and Tony were equal shareholders in the company Vito Mitolo & Son Pty Ltd, which had been incorporated in 2013. In 2014, after the Facebook exchange, Vito Mitolo & Son purchased a vineyard in McLaren Vale and, in 2016, it opened a cellar door and restaurant called Pizzateca at a property in McLaren Vale. After purchasing the vineyard, Vito Mitolo & Son began producing and exporting wine under the name V. Mitolo and Son.

Mitolo Wines commenced proceedings in the Federal Court alleging Vito Mitolo & Son had infringed the Mitolo Mark and engaged in misleading or deceptive conduct and passing off.

Actual confusion evidence

Evidence of actual confusion was drawn from various employees of Mitolo Wines, who recorded incidents where customers or potential customers had expressed the belief that V. Mitolo and Son was either the same entity as, or in some other way connected to, Mitolo Wines.

A number of objections were raised to the actual confusion evidence, including that the evidence was not obtained by the use of a well-structured survey, was by its nature subjective and did not necessarily capture the full context of the statements or observations given by customers and potential customers. While Besanko J considered that some of the recorded instances of confusion rose no higher than wonderment, there were a number of instances of actual error. His Honour found the relevant witnesses reliable and did not consider that they had an association with Mitolo Wines that affected the reliability of their evidence. Overall, his Honour considered the collection of instances of confusion to be a powerful body of evidence of actual confusion in the marketplace caused by the common use of the word 'Mitolo'.

Expert evidence

Each party put on expert evidence. Mitolo Wines' expert was Professor Lawrence Lockshin, while Vito Mitolo & Son’s expert was Dr Stephen Downes.

Dr Downes placed a large degree of weight on the use of 'V' in V. Mitolo and Son as differentiating it from the Mitolo Mark. Professor Lockshin gave evidence that, in the mind of consumers with an imperfect recollection, the memorable word would be ‘Mitolo’ and the inclusion of an initial would not be enough to remove this association.

Justice Besanko did not consider that the letter 'V' followed by a full stop performed a significant function to reduce or remove the likelihood of confusion. It is not an initial letter followed by a descriptive word, such as G-Star, J Crew, Xbox, iPhone or iPad, which would help differentiate the marks. His Honour found that the initial letter was plainly the first letter of a Christian name and Mitolo is plainly a surname, which diminished the degree to which the addition of the first letter could differentiate V. Mitolo and Son from the Mitolo Mark.

Dr Downes also gave evidence about the existence of different wine markets (supported by different price points) and different sets of consumers for those markets. Dr Downes stated that Mitolo Wines could be placed in a premium market and V. Mitolo and Son in a mid-range market.

Justice Besanko did not accept there was a significant difference between different sectors of the wine market and, in particular, a difference between the 'premium' wine market and other wine markets. His Honour preferred the evidence of Professor Lockshin that consumers move up and down different tiers of the wine market.

 

Trade mark infringement

Mitolo Wines claimed 'V. Mitolo and Son' was deceptively similar to the Mitolo Mark and constituted trade mark infringement pursuant to section 120(1) of the Trade Marks Act 1995 (Cth). Justice Besanko found that if one considers (visually or aurally) only the words 'Mitolo' and 'V. Mitolo and Son' themselves, there would be no doubt that a consumer would be caused to wonder whether it might not be the case that the two products came from the same source. In his Honour's opinion, the use of a common surname to indicate the source leads inevitably to that conclusion.

Vito Mitolo & Son argued its use of its own name meant there had been no infringement by reason of s 122(1)(a)(i) of the Trade Marks Act. Justice Besanko rejected this argument. His Honour accepted that neither the absence of the words 'Pty Ltd' from the mark, nor the use of the word 'and' instead of an ampersand, meant Vito Mitolo & Son Pty Ltd was not using its own name. His Honour did consider, however, that the contraction of Vito to the letter 'V.' meant the respondent was not using its name. The statutory exception is a narrow one and does not apply where two names are effectively the same, or nearly the same. His Honour stated that if there was room for an approach involving a contraction of the name, that would only be in a case where the person is well known by the contracted name.

While it was not necessary to the outcome, Justice Besanko further found Vito Mitolo & Son was not using its own name in good faith as far as the supply or sale of wine in Australia was concerned. Vito must have realised there would be, or may well be, confusion if Vito Mitolo & Son used as a mark words including the word 'Mitolo'. Alternatively, if he did not think about it, he was wilfully blind to that circumstance. It was clear from the Facebook exchange that Frank had not told the respondents they had an unlimited right to use their own name.

Outcome

His Honour found that Vito Mitolo & Son had infringed the Mitolo Mark under section 120(1) of the Trade Mark Act. Further, Vito Mitolo & Son had engaged in misleading or deceptive conduct in contravention of ss 18 and 29(1)(h) of the ACL and had engaged in passing off.