What is a trademark?

A trade mark is defined in S17 of the Trade Marks Act 1995 (Cth)  as ‘a sign,  used, or intended to be used, to distinguish goods or services dealt with or provided in the course of trade by a person from goods or services so dealt with or provided by another person‘.

To satisfy the definition of a trademark legally each of the elements in the definition can be dissected and must be established in order for a particular mark to qualify as a trade mark.

A ‘sign‘ under  S6 Trademarks Act 1995 (Cth)  is defined very broadly and inclusively rather than exhaustively. It includes the following or any combination of the following:  a word,  name, signature, numeral, device, brand, heading, label, ticket, aspect of packaging, shape, colour, sound or scent.

There is a trademark in the United Kingdom for ‘beer smelling darts, the colour lilac has been registered for chocolate for Milka by Lindt, and Philmac was able to obtain a trademark for the single colour terracotta as applied to the connecting inserts of  polypipe fittings.  Red Bull’s colour trademark  is under attack despite being granted after the European Court of Justice’s decision in the Heidelberger Bauchemie Gmbh case which cast doubt upon the registrability of colour marks which fail to delinate the contours of the colours  within the graphical representation of the mark.

In Australia BP was unsuccessful in claiming a trade mark over the colour green, BP Plc v Woolworths Ltd, and in its subsequent infringement proceedings against Woolworths, whilst Cadbury Schweppes were unable to stake out their claim over the colour dark purple in relation to chocolate.

A trade mark can become a valuable intangible commercial asset particularly given the increasingly important role trademarks have assumed in advertising and marketing.   Traditionally trade marks served to identify the source or origin of goods,  but in today’s world of mass advertising,  they play a role beyond this,  evoking compelling imagery as a means of eliciting consumer preference  for selecting one brand over another.

Through advertising consumers are educated  to associate a certain image, quality or reputation with goods or services bearing a particular trademark.   In today’s market the shape of a manufacturers’ goods or packaging,  the use of colour, pheromones, and other advanced marketing techniques are being used ubiquitously to capture the senses of consumers and become an integral part of a brand.  Whilst three dimensional shape marks have been permitted in some countries,  eg for the shape of a Coca Cola bottle,  these non-conventional trade marks are more difficult to attain in practice.

Shape marks and other non-conventional trademarks have been expressly provided for since 1995 in the Trademarks Act 1995 (Clth).    Even prior to the amendments allowing the registration of shape marks, three dimensional trade marks were granted, eg over the colour bands occupying the external surface of multicoloured party pharmaceutical pellets – Smith Kline and French Laboratories Ltd. v Sterling Winthrop.

Although a shape mark can be registered,  it can’t be the product itself, and must be embodied in or applied to an article or part of an article.  Otherwise registration of a mark might confer a permanent monopoly on the use of goods of a particular type of character.  A shape used to achieve a purely functional result cannot operate as a trade mark according to Australian case law see Koninklijke Philips Electronics NV v Remington Products Australia (shape of a shavers) & Kenman Kandy Australia Pty Ltd v Registrar of Trade Marks (shape of ‘insect like’ candy)

One of the elements of the definition of a trade mark in S17 is the requirement that a trade mark be used or proposed to be used in good faith.  This means genuine commercial use (see Imperial Group Ltd v Philip Morris & Co).  In the Philip Morris case upon being alerted to the fact that the name ‘Merit’ was unregistrable for cigarettes, the word ‘Nerit’ was registered with no commercial intention to use the mark.  This practice, called ‘ghostmarking’, is impermissible and led to mark being declared invalid.

Filing trade mark applications to prevent a competitor or business using them or  warehousing trade marks to sell them back to legitimate owners would also fall into the category of a lack of good faith.

As stated in the above definition in S17, trade marks must be distinctive.  A trade mark, by definition, must also be dealt with or provided in the course of trade.    This is part of the essential nature of a trade mark;  a connection in the course of trade, meaning a connection between the goods and the person with the entitlement to use the mark.   A trade mark can be owned by a retailer, distributor, importer or designer of a product, however in each case, the ‘owner’ must  exercise some control over the product,  otherwise the trade connection or origin may not be proven. (See Montana Tyres Rims & Tubes Pty Ltd v Transport Tyre Sales).

In Intellectual Property law there is invariably a degree of overlap between the statutory regimes which protect intangible property. Therefore it is prudent to consider any potential interaction of a trade mark with other forms of protection such as copyright and design protection, bearing in mind the different types of rights the respective regimes are intended to protect, and any benefits or restrictions attached to a particular form of protection. Where logos have been registered it is likely that copyright might also subsist in a registered trademark.

The difference between trade marks, business, company and domain names

Trade marks must be distinguished from business names, company names and domain names which serve a different function and, most importantly, do not confer a proprietary interest upon the owner. The Corporations Act 2001 (Cth) mandates that company names be registered with the Australian Securities and Investments Commission, whilst the purpose of business names legislation in each state, eg Business Names Act 1962 (Vic), is to ensure that consumers are able to identify the owners of a business name.

It is a popular misconception that registration of a business name or company name will confer upon the owner a right to prevent other persons using that name as a trade mark.  However this is not the case unless the owner of the name can prove they have acquired a sufficient reputation in the relevant name such that it has acquired the status of a trademark.  Domain names are merely user friendly alphanumeric internet addresses.

Typically, words selected for use in a domain name will consist of the trading name of a business, or a trademark a business uses in relation to their goods or services. Whilst domain names perform a similar identifying function, they differ markedly in their legal character from trade marks.  Like business and company names they are merely a form of contractual licence, not registered property.

Where a domain name which is identical or confusingly similar to a trade mark has been registered in bad faith, the trademark owner may bring a complaint seeking the transfer or cancellation of the domain name under administrative dispute resolution procedures which have been set down by the International Corporation for Assigned Names and Numbers (ICANN).   The Uniform Dispute Resolution Policy (UDRP)  applies to disputes over domain names in the top level .com domain name space,  whilst disputes arising in the Australian country code top level domain are resolved under the auDRP rules.

Common Law  or unregistered trademarks

It isn’t mandatory to register a trademark to acquire trademark rights in Australia and other countries that recognise ‘common law’ trade marks.  However,  there are considerable benefits to be enjoyed from acquiring a registered trademark. Protection for some unregistered trade marks can be achieved through bringing an action for the  tort of passing off and/or under the Trade Practices Act 1974 (Cth) for misleading and deceptive conduct and corresponding State legislation eg Fair Trading Act 1999 (Vic).

However it is both time consuming and expensive to bring an action for passing off and/or misleading and deceptive conduct in the traditional courts.  It is much easier to enforce a registered trademark which, if maintained, confers perpetual protection upon the owner.  Trade marks are personal property,  which means they can be transferred, assigned, licensed, mortgaged or bequeathed (S21).   Having a registered trade mark enables a business to sell the goodwill of the business separately without having to sell their entire business.   A trademark can be valued,  and included on the balance sheet of a business to reflect it’s value.

Any assignments of a trademark are recorded on the official Trademark register.  Registration gives the trademark owner the exclusive right to use the trademark in relation to the goods and/or services upon which it is registered S20(1)(a), the authority to authorise others to use it and obtain relief in respect of infringement.

What kinds of trade marks can be registered?

A trade mark which is too generic or descriptive of your goods and services will prove difficult to register as the law is loathe to allow trade marks to be registered which other traders are likely to want to use to promote and advertise their goods and/or services.

A trademark will only be able to be registered if it is distinctive, namely if it is capable of distinguishing the goods or services upon which it is used from the goods or services of others. S41(2).   Trademarks usually fall into a range of categories along a spectrum of distinctiveness, f rom most distinctive to least distinctive, namely arbitrary, fanciful, suggestive, descriptive and generic.

An arbitrary trademark is one whose meaning bears no relation to the goods and/or services being sold eg Apple for Computers.  Trademarks which fall into the first three categories will generally be regarded as inherently distinctive, whereas those which fall into the last two categories will generally be characterised as lacking the requisite distinctiveness to function as a trademark (unless they have acquired a sufficient degree of secondary meaning in the eyes of consumers).  The question is whether the mark has the capacity to distinguish the applicant’s goods or services, or has acquired a distinctive character through use.

To qualify for registration a trade mark must be capable of being represented graphically. S40.  Regulation 4.3 of the  Trademark Regulations 1995 Cth sets out the rules regarding the representation of trademarks.  See also the Trade Marks Manual Of Practice and Procedure (Part 21, [2] – [4]), the official guide to practice in relation to the examination of trade marks published by IP Australia.

S39(1) of the Act proscribes the registration of certain signs made, see r4.15(f) (see also S18).  For example the use of the word ‘patent’, ‘copyright’, ‘Olympia, containing certain symbols such as the copyright symbol, or  representations of a flag, arms, emblems or seal of the Commonwealth, State, or Territory are prohibited. An application for a trademark may be rejected if it is deemed to be scandalous S42(a) or otherwise contrary to law S42(b), eg a breach of copyright or in contravention of S52 or S53 of the Trade Practices Act 1974 (Cth).

Apart from marks which affront religious sensibilities,  in practice it is rare for a mark to be refused or contested on the grounds that it is scandalous and transgresses S42(b). Marks considered crude, rude or in bad taste such as Look Good + Feel Good = Root Good,  are considered in the context of the marketplace, in this instance deemed to fall short of scandalous, being “a summary of the product’s operation…..evocative of either mathematical precision or, perhaps, of some possible language of our cave dwelling ancestors“).  Whilst FCUK and CNUT have been accepted for registration, obvious phonetic equivalents of english words such as kunt (“kuntclothing.com”) will fall afoul of S42, being “against the universe of discourse in Australia”.  In the latter decision the Trademarks Examiner rejected the applicants’  submissions the word kunt was a well known trademark used by a European electrical manufacturer,  a Dutch surname, which also meant “can do”, and  an acronym for ‘Kakadu Unspoilt Northern Territory’.

A trademark is also capable of being rejected if it is substantially identical or deceptively similar to a registered or pending trademark in respect of similar goods or closely related services. S44(1)&(2) around which there is a lot of case law.  The Examiner may also reject an application for a trademark if because of some connotation within the trademark it would be likely to deceive or cause confusion S43.

There are also other trade marks which may be difficult to register such as geographic names or indicators and common surnames. This is partly because they are deemed to be lacking the necessary degree of distinctiveness, and are also opposed under S61 dealing with false geographical indicators, as defined in S6.

However, these should always be checked on a case by case basis. A geographic indicator consists of the name of the place of the origin of goods and has particular application to agricultural products such as meat, wine or cheese. This is based on the rationale that they are said to have distinctive qualities referable to the place of production, which may range from local influences or conditions such as climate and soil, or may relate to specifc cultural production techniques employed by producers  in a particular location.  Champagne and Roquefort are two well known examples see also the Australian Wine and Brandy Corporation Act 1980 (Cth) and S15 of the Act which defines ‘originate’ in relation to wine as the wine having been manufactured within a territory or country or alternatively made from grapes grown in that region or locality. Even small obscure places such as Strathspey, famous for a particular industry, in this case the whisky industry, have been removed from the Register.

We can work with you to navigate the trademark selection process and can conduct and analyse trademark searches to establish the availability of any name, logo, design or color that you choose as your trademark.

Trademark Portfolios

An IP Auditor evaluating the trademarks owned by an enterprise won’t focus narrowly upon registration certificates for trademarks and pending applications, recognising that this is merely a starting point. An enterprise often uses a wide range of names, phrases, slogans and logos as part of their business which have acquired trademark status and represent valuable IP. Most famous brands have a family of trademarks associated with their products.  The critical task in IP valuation is to ascertain which marks are used to build the goodwill of the enterprise. The personnel responsible for marketing an enterprise in the product/service cycle such as those in sales and advertising are often in a position to provide valuable insights into the language and trademark usage procedures employed by an organisation.

Any inconsistencies revealed in the use of trademarks can compromise the protection of a trademark, so it is good practice to conduct periodic reviews to determine how names, phrases and logos are being used by an enterprise.

Trademark monitoring and brand management

In today’s technological world almost anything can be duplicated and widely disseminated with the touch of a mouse click.  Many businesses decide to use special trademark watch services to monitor and prevent the misuse of their brand by unauthorised third parties which can damage or erode their brand equity.  You should decide on the appropriate type of trademark watch service best adapted to your needs to notify you  of any unauthorised uses of your mark.  Once discovered, you then need to  formulate the most appropriate strategy to protect your rights and preventing damaging uses before they affect your market share.

Opposition proceedings

Even where a trademark proceeds to registration a person who wishes to oppose it once it has been advertised in the Official Journal of Trademarks may file a notice of opposition on several grounds.  Some of these grounds are that the owner is not the true owner of the trademark (S58), that the applicant has no good faith intention to use the trademark (S59), or that use of the mark would be likely to cause confusion or deception because of the existence of another trademark with an earlier priority date which has acquired a reputation in respect of the goods and/or services (S60).

Infringement

A registered trademark is infringed if a person uses ‘as a trademark’ (ie indicating a connection in the course of trade between goods and the person who applies a mark to the goods) a sign which is substantially identical or deceptively similar in relation to the trademark for the goods or services in respect of which the trademark is registered S120(1).

The plaintiff needs to show use of the trademark upon or in physical relation to the goods or services S7(4), (5). Infringement can occur when a trademark is used as a trademark in respect of (i) goods of the same description as that of registered goods, (ii) closely related services to registered goods, services of that same description as registered services or goods closely related to registered services.

Whether goods or services can be characterised legally as ‘of the same description’ as the goods of services in respect of the which the trade mark is registered is a question of fact and impression to be determined by a court. A court looks beyond the inherent nature of the goods or their uses and function, considering the trade channels through which commodities are traded. In the final analysis, infringing use must be use which is likely to cause deception or confusion in the minds of the ordinary consumer in the target market for the relevant goods and/or services. There are also several specific uses which will be excluded from trademark infringement set out in S122(1)(a)-(g) & under S124 of the Act.

Well known/famous trademarks

Special protection is extended to well known trademarks pursuant to S120(3). If a mark has become so famous or well known that it serves a function beyond the traditional function of trademark in identifying the source or origin of goods it will be afforded additional protection. In this situation, where a trademark is substantially identical or deceptively similar to a well known trademark, even if used in respect of unrelated goods and/or services it still may constitute infringement under S120(3).

This form of infringement (known in the US as dilution) is likely to be found if use of the trademark is likely to be interpreted as indicating some connection between the unrelated goods or services and the registered owner of the well known trademark and for that reason the trademark owner’s interests would be adversely affected. There is no need to prove any risk or likelihood of confusion or deception, and the law is effectively protecting the commercial value of the mark by precluding uses which are thought to tarnish it.

Remedies for Infringement

In addition to the traditional remedies for intellectual property infringement, a trademark owner may also request the Australians Customs Service to seize imported goods if they infringe a registered trademark. S131-144. A special procedure is set out in the Act to deal with the rights of objectors.

Criminal liability

The Act renders it an offence to intentionally or recklessly falsify or unlawfully remove a registered trademark from goods and/or services. S145(1).  Falsifying a trademark includes defacing it, erasing it, altering it or obliterating it S145(2).  Making a device either with knowledge or reckless as to the fact that it will contravene S145 or S146 of the Act is likewise an offence, as is either drawing a registered trademark or programming a computer to produce it – S147.

Dealing in goods with knowledge or reckless as to whether they have falsified marks applied to or removed from them is also an offence under S148. You can be exposed to criminal liability if you represent that a trademark is registered in respect of goods and/or services unless you know or have reasonable grounds to believe otherwise. S151

Trademarks – Internet Implications

Internet trademark cases have had a significant impact on the way in which businesses operate online. There have been a wide range of trademark internet disputes involving domain name disputes, use of adword purchased trademark keywords, metatag stuffing, banner ads, inline framing, infringing hyperlinks, deeplinking and trademark related torts.

Search Engines, Online Advertising and Trademarks

Google provides various services and their principal source of revenue is derived from advertising by means of their Google adwords program. When the Google search engine performs a search, it shows the user two types of links to third party webpages in the search results. The first type are known as “natural” or “organic links” consisting of links to websites, which are assessed as relevant to the search query by Google’s algorithm and sorted in order of relevance.  The second type of link, “sponsored links”, are a form of advertising, which are displayed because a website operator has paid for them to appear. They appear either at the top and/or on the right hand side of the search results page.

A sponsored link is displayed when a user interrogates the search engine by typing in one or more keywords which have been selected and purchased by the advertiser in return for the payment of a fee. A sponsored link has three elements, the first being the underlined heading which functions as a hyperlink, so when a user clicks on it their browser transports them to the advertiser’s website.

The heading may or may not consist of or include a trademarked keyword. The second element comprises promotional text which may or may not utilise the keyword, whilst the third component is the advertiser’s website address. The advertiser pays money each time a user clicks on the hyperlink in its sponsored link and is directed to their website, the total amount paid being on a “cost per click” basis for each keyword purchased, subject to a maximum daily limit stipulated by the advertiser.

Because more than one person can purchase a particular keyword, there is a bidding process where the advertiser who bids the highest cost per click will earn the right to have its sponsored link displayed in the highest position. An advertiser can select keywords unaided, but  Google’s Keywords Suggestion Tool can also be used to obtain suggestions for appropriate keywords to select. Google’s present trademark policy and complaint procedure for AdWords and AdSense can be found here

Google has a “region” policy and within certain regions both text and ads are monitored. Google’s present trade mark policy is divided into two groups, one for trademark owners in the US, UK, Ireland and Canada. The policy can be found here.  In respect of countries falling outside these countries, which includes Australia a different policy will apply.

In respect of the first group of countries Google is only prepared to investigate and remove trademarks used by third parties which appear in their ad text, not their keywords. On the other hand, Google is prepared to extend its powers to investigate and remove registered trade marks used by a third party in both its ‘ad text’ and ‘keywords’ in countries falling outside this group.  The fact that it is triggered by the trademark provides sufficient grounds for its removal.

This means therefore that Australian trademark owners whose competitors purchase their trademark for use either as a keyword or within ad text, are able to pursue a complaint with Google who are prepared to undertake an investigation as to the use of the trademark and make a determination whether they will remove the trademark as ‘ad text’ or a ‘keyword’.

If a complaint to Google is unsuccessful it is still open to Australian trade mark owners to enforce their trademark rights against either Google and/or their competitors in a court of law. As mentioned in previous posts there have been many lawsuits filed in the United States and Europe against Google over whether it should be permitted to sell keywords consisting of words comprising a trademark to its competitors.  There has been no litigation in Australia against Google for trademark infringement for its sale of keywords to advertisers.

The results yielded by a particular search depend upon the geographical location where it is executed, as Google serves its results and advertisements based upon the user’s physical IP address.  Therefore a user based in the US  using Google.com and Google.fr will obtain different results than a French based user. There are  programs in existence which will show Google search results from various countries around the world.

Using the Google AdWords service, any third party is able to bid for keywords registered as trademarks, even if they operate in relation to the same or similar goods or services as the trademark owner of the keyword. There have been many cases litigated over the use of trademarked keywords and more broadly use of trademarks online. Whilst trademark law is territorial in nature, the internet doesn’t respect geographical boundaries, and the law is still adapting in addressing the unique issues in this unchartered wilderness.

Use of Trademarks on the Internet

In the case of Playboy Enterprises v Terri Welles, Playboy Enterprises filed a trademark complaint against  Welles,  former playmate of the year 1981, and self-employed model, for using on her webpage www.terrywelles.com, trademarks belonging to the Plaintiff, namely ‘Playboy’, ‘Playmate of the Year’, and ‘Playboy of the Month’ within the title of her page, the link page, in metatags of her website, and for using a repeating watermark “PMOY81″ on each of her webpages.

Playboy argued that the use of the trademarked terms were likely to cause confusion amongst websurfing customers who were likely to be misled into believing there was some association, affiliation or endorsement between Playboy and Welles. Welles had posted prominent disclaimers at the bottom of each of her webpages to the effect that her site was not in any way associated with PEI.  Welles successfully argued that her use of these terms was “fair use” and that she was using the trademarked terms in a descriptive sense to both describe and identify herself (as the former 1981 Playboy Playmate) rather than in a trademark sense to denote trade origin.

In the Australian case of Ward Group Pty Ltd v Brodie Stone PLC, the Federal Court of Australia had to consider for the first time the issue of trademark infringement on the internet in respect of sales from a website which originated out of Australia.  The companies involved in the litigation had previously been related companies, but that relationship had ended and the companies went their separate ways, on the basis that both companies would confine their activities to within their respective geographical territories.

The Australian company discovered that the UK company was selling their Restoria hair colouring products through a number of third party websites, along with a range of other unrelated products which appeared on their site.  The website was clearly not ‘targeting’ Australia or Australian customers however the dropdown order box on the website consisted of an option to have products shipped to Australia as a destination. One of the webpages also had a currency exchange converter which allowed the price of the goods to be quoted in Australian dollars.

The case was unusual in that there wasn’t any evidence that the websites had ever sold any Restoria product to Australian consumers. The Australian company’s lawyers placed orders for the product through the website and, having received the orders, then commenced legal action against the UK company for trademark infringement.  These types of purchases are known as ‘trap purchases’. To infringe a trademark in Australia the Plaintiff had to establish use of the trademark in Australia. The question for the court was twofold. Firstly had there been use of the  Restoria trademark by virtue of the use of the dropdown box and currency converter appearing on the website?  Secondly, had there been use of the trademark Restoria in Australia by virtue of the  shipping of the product to an Australian?

The Court had to evaluate whether the use of the Restoria mark on the website constituted use of the trademark in Australia in the sense of use of the trademark in the course of trade in Australia. The Judge held that the   features of the website mentioned above were not, in and of themselves, enough to constitute use of the trademark in Australia in the course of trade.

There is a consensus that the decision was perhaps driven in large part by policy reasons,  as if all courts adopted the reasoning that every time a trader puts a trademarked product on the internet to engage in ecommerce, they would run the risk of infringing third party trademarks in countries which they hadn’t even heard of.  Online traders would be in a position where they had to search for trademarks in every country to ensure they weren’t   infringing any trademark rights in that country. This would have a chilling effect on ecommerce.  The Judge held there was ‘not enough‘ to demonstrate an  intention to market to Australian consumers specifically, as oppposed to the world at large.  This raises the question for all online traders as to ‘what would be enough‘  under Australian law to indicate an intention to ‘target’ consumers in a particular jurisdiction and thus be held liable for trademark infringement.  This question has arisen in a number of overseas cases where  foreign courts have asserted jurisdiction over businesses trading online in another country.

In V&S Vin & Spirit Aktiebolag, AB v Absolut Beach Pty Limited, a dynamic and successful small business based in Sydney sold their clothing products through their website which was capable of accepting orders from other countries.  After three years of operation the business was forced to cease trading when it received correspondence from companies with an interest in the ABSOLUT Vodka trademark in five different countries threatening to sue them for trademark infringement.

The company had formerly received letters at the time of registering their trademark application for the name Absolut Beach from the Swedish company Vin and Spirit who held a trade mark for the alcoholic spirit, however the Swedish company who initially opposed their registration, chose to abandon their challenge at that point in time.

Absolut Beach had been primarily serving a local clientele and hadn’t done any business in the United Kingdom, with only a small mail order service in the US. The owner of the trademark was still in a position to launch proceedings for trademark infringement and passing off in several overseas jurisdictions to effectively shut the company down, after placing and receiving orders from Absolut Beachwear in the UK accompanied by a brochure.

Absolut applied for a stay of the hearing in the UK court until the Australian proceedings had been heard “where the true battle was”. Absolut’s application was unsuccessful as the Judge held there was a possibility, however “trivial”, the trademark owners may succeed. Whilst the internet may have lowered the barrier for entry for many small businesses it has also expanded the scope of international trademark disputes due to the collision between national law and international physical presence.  Whilst trademark law is inherently territorial, the internet is indifferent to geographical boundaries, and conceptually defined spaces do not exist in the virtual world.

It is therefore important to remember that material on a website can be accessed from anywhere in the world. The prospect of defending trademark infringement in Australia alone is daunting enough for most businesses let alone being exposed to aggressive global litigation by well resourced powerful companies.

It is important to be mindful of the implications of how you choose to structure your website, given the increase in trademark disputes over the internet as ecommerce develops and business names, jurisdictions and local and international trademarks which previously co-existed harmoniously collide.  Case law indicates that even one sale of an item into another jurisdiction may be viewed as sufficient to evince an intention to ‘target’ a jurisdiction.