Focus: Brand reputation – Hansen Beverage Company v Bickfords
28 January 2009
In brief: The Full Federal Court of Australia recently allowed an appeal by a US-based beverage company against an Australian competitor in a case that looked at the test that is to be applied when determining whether sufficient product recognition has been established in a relevant jurisdiction through indirect marketing. Partner Jim Dwyer (view CV) and Law Graduate Joanne Been look at this important decision on brand reputation in Australia.
How does it affect you?
- The court's recognition of the value and impact of indirect advertising techniques makes it easier for owners of well-known brands overseas, that are not sold or directly marketed in Australia, to establish brand reputation in this country.
- This recognition will make it increasingly difficult for Australians to copy profitable overseas products and to defend such imitations successfully on the basis that the product was not yet officially launched in Australia, and therefore that the reputation was not yet established in this jurisdiction.
Since 2002, Hansen (a US-based beverage company) has marketed and sold the Monster Energy drink in a number of countries across the globe. The target market for this product is the 18 to 30-year-old male demographic. The Hansen Monster Energy drink has not yet been sold in Australia. Rather, Hansen has relied in Australia upon a strategy of indirect marketing, such as, the sponsorship of athletes and athletic competitions and the sale of clothing and merchandise bearing the Monster Energy marks. This strategy was designed to familiarise the target demographic in a country like Australia with the product before it is officially launched.
In 2004-05, Bickfords, a manufacturer and distributor of beverages in Australia, was considering expanding into energy drinks. After noting that Hansen was not yet selling Monster Energy in Australia, nor registered its trade mark in this jurisdiction, Bickfords lodged an application to register the trade mark 'Monster Energy' and in April 2006 launched their own Australian version of the Monster Energy drink. The two drinks had the same name, contained the same ingredients, and came in a can of the same size marked with the same colours.
In response to these actions, Hansen brought proceedings seeking an injunction and damages, on the grounds that by selling their Monster Energy drink in Australia, Bickfords had engaged in passing off and/or misleading and deceptive conduct in contravention of section 52 of the Trade Practices Act 1974 (Cth) (the TPA). Not surprisingly, there was no dispute that the similarities between the Bickfords and Hansen products could deceive and mislead for the purposes of the TPA and the tort of passing off. Consequently, the main issue in the proceeding was whether Hansen had a sufficient reputation in Australia in the MONSTER ENERGY mark, at the relevant date, in relation to energy drinks.
In his consideration of the reputation of Monster Energy drink in Australia and their association with Hansen, the primary judge concluded that in order for the application to succeed, Hansen must demonstrate that it had established the requisite reputation among the target market. His honour contended that the quality of the exposure that the product had achieved in Australia, through incidental or indirect marketing, was not, on its own, sufficient to give rise to the level of awareness necessary to generate the requisite reputation.
Hansen appealed this decision on the basis that the primary judge wrongly selected the class of persons in respect of which the reputation of the product should be assessed.1 It was submitted, that the selection of a class of persons by reference to advertising goals was unwarranted and unduly restrictive.
The Full Federal Court allowed the appeal and ordered that the case be sent back to the primary judge for reconsideration.
Justices Tamberlin and Siopsis based this decision on the premise that there was no foundation in the language of s52 of the TPA to require that a reputation exist among any particular class/group of persons, before a breach of that provision can be made out. They held that when making an assessment as to whether this provision has been breached, the appropriate inquiry is whether a 'not insignificant number of persons in the Australian community, in fact or by inference, have been misled or are likely to be misled'.2
Justice Finkelstein agreed in principle with this judgment but went on to state that in a passing-off claim, it is necessary to demonstrate that a significant or substantial proportion of persons within a relevant market, as opposed to the target market, were misled. He emphasised that this was the case, even if the relevant market was smaller than the target market.
Justice Finkelstein was the most vocal on the issue of indirect advertising. On this subject he noted, that on the facts it was open to the primary judge to infer that the indirect advertising employed by Hansen could establish reputation as well as, if not better than, direct advertising and that consequently, when the case is reheard, greater weight should be given to the indirect marketing campaign undertaken by Hansen to establish its reputation.
This case is important because it enunciated the appropriate inquiry which is to be made, and the test which is to be applied, when determining whether sufficient brand or product reputation has been established in a relevant jurisdiction, in the context of claims regarding passing off and contravention of section 52 of the TPA; and observed the efficacy of indirect marketing techniques in establishing the reputation of a brand or product across jurisdictions.
If you have any queries about this or any other trade marks matter, please contact one of the people listed below.
- Jim Dwyer AMConsultant,
Ph: +61 2 9230 4873
- Tim GolderPartner,
Ph: +61 3 9613 8925
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