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Focus: Trade Marks – The Colorado appeal

5 February 2008

In brief: This case concerned two retailing interests using the same word mark in respect of overlapping goods and where one of the two retailing interests, which had obtained registration of the mark, commenced proceedings against the other for trade mark infringement. Partner Tim Golder (view CV) and Articled Clerk Laijing Lee report on issues of significance arising from the recent appeal and cross-appeal of this case to the Full Court of the Federal Court, and the relevance of those issues to trade mark owners.

How does it affect you?

Registered trade mark owners should be aware that:

  • their first use of a registered mark in respect of some goods will not necessarily prevent others from successfully claiming first use, and hence ownership, of the mark in respect of other goods covered by the registration;
  • 'goods of the same kind' may be construed very narrowly for the purposes of ownership – hence their first use of a mark for some goods may not confer ownership of the mark for other similar goods;
  • if a word is used in combination with a device (eg a logo), that use may not amount to use of the word mark alone as a trade mark – hence if their registration is for the word mark by itself, they should take care to use that work mark alone, otherwise that registration may be open to challenge;
  • if they are using a mark that is not inherently distinctive, even first use of the mark may not confer ownership for the purposes of registration unless there is proof that the mark actually distinguishes their goods or services from those of other traders;
  • if, prior to their trade mark registration, another trader has also used the mark in the same field of goods over some years, such that both had reputations in the 'brand' as at the registration of the mark, that registration may be susceptible to challenge on the basis that the mark did not, as at the date of registration, distinguish their goods or services from those of others (including the other trader);
  • goods that are not 'goods of the same kind' may nonetheless be deemed to be 'goods of the same description' for the purposes of infringement and registration; and
  • if an alleged infringer has been using the mark before the registered trade mark owner on goods that are not the same as, but which are 'of the same description' as, those goods for which registration is obtained, the defence under section 124(1) of the Trade Marks Act 1995 (Cth) may be available to the alleged infringer.

The facts

Colorado Group Limited (CGL) was the owner of the registered word mark 'Colorado' in respect of, among other things, backpacks, bags, wallets and purses. The registration was effective from 16 February 2001. CGL commenced proceedings against Strandbags Group Pty Ltd (Strandbags) asserting, among other things, that Strandbags had infringed the registered trade mark 'Colorado'. The proceedings spawned a cross-claim by Strandbags for revocation of the trade mark based on Strandbag's use of the same mark.

The controversy in the proceedings stemmed, in large part, from the fact that both parties had used the word 'Colorado' on overlapping items (ie backpacks, handbags, wallets and purses) well prior to 2001, such that by 2001, both CGL and Strandbags claimed reputations for the 'Colorado' mark.

The case before the Full Court of the Federal Court (which delivered its judgment on 28 November 2007) was an appeal and cross-appeal against orders made by the primary judge in the Federal Court in 2006. Below we look at those issues arising from the Full Court proceeding, which, in our view, are of particular significance to trade mark owners.

'Goods of the same kind'

Proprietorship can be claimed not only in the specific goods for which a mark is used but also 'goods of the same kind'.

Justice Allsop, of the Full Court, took a very narrow view of 'goods of the same kind' for the purposes of proprietorship. While the Full Court agreed with the primary judge's conclusion that backpacks were not 'goods of the same kind' as bags, wallets and purses, Justice Allsop went further and considered that bags and handbags were not 'goods of the same kind' as wallets and purses.

Justice Allsop's reasoning was that wallets and purses tend to be the same object used for the same purpose – to carry money, cards (mainly credit cards), receipts and the like, while handbags often fulfill a wider purpose. The narrow approach of Justice Allsop can be said to be unfavourable to trade mark owners asserting that their first use, and hence ownership, of a mark in respect of certain goods extends to other goods that appear to be essentially the same goods.

However, Justice Kenny of the Full Court disagreed with Justice Allsop and Justice Gyles was silent on this issue. As can be seen from the discussion below on 'combination marks', the Full Court did not have to express a majority view on this point, as ultimately the court was in agreement as to the result:

  • CGL's predecessor, Williams the Shoemen Pty Ltd, made the first use of the word 'Colorado' on backpacks in about 1982;
  • that use did not give Williams the Shoemen ownership of the word beyond backpacks to handbags, wallets and purses; and
  • Strandbag's predecessor, Edgarlodge Pty Ltd, made the first use of the word 'Colorado' on handbags, wallets and purses.

On this basis, the Full Court ordered that the Register be rectified by deleting all references to bags, wallets and purses from CGL's registration.

Combination marks

As Justice Allsop did not consider bags and handbags to be 'goods of the same kind' as wallets and purses, it was imperative to determine which party had first use of the word 'Colorado' in respect of wallets and purses.

The evidence was that, from mid-1993, CGL used the word 'Colorado' with a multi-peak device on wallets (the parties accepted that use of the mark on wallets would extend to purses). CGL contended that this use was substantially identical to the mark applied for, being the word 'Colorado' alone. However, Justice Allsop agreed with the primary judge's view that one could not disentangle the word 'Colorado' from the use in combination with the device, and hence one could not conclude that there had been use of the word alone as a trade mark. Further, Justice Allsop observed that the multi-peak device had the capacity to distinguish and was part of the trade mark use, in part reinforcing the word 'Colorado'. Additionally, as stated by Justice Kenny, the general rule is that an owner of a combination mark is not the owner for trade mark purposes of the marks comprising each separate component of it.

CGL conceded that Edgarlodge was the first to use the word 'Colorado' alone on wallets (and hence purses) some time after 1995. Therefore, consistent with result stated above, ultimately CGL's predecessor, Williams the Shoemen, had first use of the mark in respect of only backpacks.

First user not necessarily proprietor

The primary judge's view was that first use of a mark is not sufficient to establish proprietorship if the mark is not inherently distinctive. That is, to make out proprietorship, it is also necessary to show that the mark does in fact distinguish the applicant's goods from the goods of others (ie the mark must have acquired distinctiveness in fact). Justice Kenny of the Full Court quoted the primary judge's views on proprietorship but went no further. Justices Gyles and Allsop of the Full Court did not mention or consider the primary judge's views on proprietorship.

Nevertheless, if you are using, or even intending to use, a mark irrespective of whether it is inherently distinctive, it is advisable to apply for registration of the mark in order to 'stake your claim' and place you in the best possible position to prevent others from securing proprietorship of the mark.

Distinctiveness

On appeal, the Full Court overruled the primary judge's finding that the mark 'Colorado' was inherently distinctive under section 41(3) of the Trade Marks Act 1995 (Cth) (the 1995 Act ). The Full Court then proceeded to consider if the mark was sufficiently distinctive for the purposes of s41(5) of the 1995 Act.

Importantly, the Full Court considered that the use by Strandbags of the word 'Colorado' was relevant to an inquiry under s41(5) of the 1995 Act. Hence, the clear use of the same mark by both CGL and Strandbags in the same field of goods over some years led the Full Court to conclude that the trade mark did not, as at 2001, distinguish the goods or services of CGL from the goods or services of others (including Strandbags).

As mentioned above, the Full Court had ordered the deletion, from CGL's registration, of bags, wallets and purses, on the basis that Edgarlodge had first use of the mark for those goods. Further, on the basis of insufficient distinctiveness, the Full Court ordered the cancellation of CGL's registration in respect of backpacks.

'Goods of the same description'

The primary judge, having found the 'Colorado' mark to be inherently distinctive, had proceeded to consider infringement. His Honour had found infringement in respect of use of the mark on backpacks under s120(1) of the 1995 Act on the basis that backpacks were goods in respect of which CGL's mark was registered. However, his Honour rejected the proposition that handbags, wallets and purses were 'goods of the same description' as backpacks for the purposes of finding infringement under s120(2) of the 1995 Act.

Given the Full Court's finding that the 'Colorado' mark was not sufficiently distinctive under s41 of the 1995 Act, Justices Kenny and Gyles did not consider the question of infringement. However, Justice Allsop went further and considered infringement in obiter. Unlike the primary judge, Justice Allsop found that handbags (not wallets and purses) were 'goods of the same description' as backpacks for the purposes of finding infringement under s120(2) of the 1995 Act. His Honour's reasoning was that a backpack was a species of general bag and that the general purpose of bags and handbags was for carrying things as a backpack.

Justice Allsop's finding has implications for a person seeking to sue for infringement. As mentioned earlier, the Full Court had found backpacks not to be 'goods of the same kind' as bags and handbags for the purposes of proprietorship - this means that a person who owns a registered mark in respect of backpacks does not necessarily own the mark in respect of bags and handbags. However, given Justice Allsop's view that backpacks are 'goods of the same description' as bags and handbags for the purposes of infringement, this means that a person who owns a registered mark in respect of backpacks but not in respect of bags and handbags may still succeed in an infringement action for use by another person of a substantially identical or deceptively similar mark on bags and handbags. This is so even if the alleged infringer is the first user, and hence owner, of the mark in respect of bags and handbags.

Justice Allsop's finding has similar implications in relation to trade mark registration. For example, under s44 of the 1995 Act, a person seeking to register a mark in respect of bags and handbags would not be able to do so if there is an existing registration for backpacks using a substantially identical or deceptively similar mark. This is despite the owner of the registered trade mark in respect of backpacks not necessarily also owning the mark in respect of bags and handbags. The cumulative effect is that an owner of a trade mark in respect of backpacks may not own the mark in respect of bags or handbags but may still block the registration of another person in respect of bags and handbags. This is so even if the person whose registration is blocked is the first user, and hence owner, of the mark in respect of bags and handbags.

Defence – s124(1)

As mentioned above, Justice Allsop considered, in obiter, that handbags were 'goods of the same description' as backpacks for the purposes of finding infringement under s120(2) of the 1995 Act. Hence, his Honour proceeded to consider whether the s124(1) defence would have been available in respect of bags and handbags.

Section 124(1) provides a defence to a person for prior continuous use of a mark that is substantially identical or deceptively similar to the registered trade mark and in relation to goods of the same description as goods covered by the registration. To attract the defence, the person must have continuously used such a mark on goods of the same description prior to the 'first use' of the mark by the registered trade mark owner (or its predecessor). (However, if the date of registration of the registered mark precedes the date of first use by the registered owner, the defence is available only if the alleged infringer had continuously used the mark before the date of registration of the registered mark).

It was accepted by the parties that Edgarlodge was the first to use the word 'Colorado' alone on bags and handbags. Justice Allsop concluded that the first use of the mark by Williams the Shoemen on backpacks did not prevent the s124(1) defence being available to Edgarlodge in relation to 'goods of the same description', being bags and handbags, as Edgarlodge (not Williams the Shoemen) had first used the word 'Colorado' alone on bags and handbags. As Edgarlodge was Strandbag's predecessor, Justice Allsop found that the s124(1) defence would have been available to Strandbags had the question of infringement arisen.

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