FEDERAL COURT OF AUSTRALIA

Modena Trading Pty Ltd v Cantarella Bros Pty Ltd [2013] FCAFC 110

THE COURT ORDERS THAT:

1.    Paragraphs 1 to 12 and 17 of the orders made by Emmett J on 25 February 2013 be set aside.

2.    The application dated 10 February 2011 be dismissed.

3.    Pursuant to s 88(1)(a) of the Trade Marks Act 1995 (Cth) the Register maintained under the Act be rectified by cancelling the registration of each of the Australian Trade Marks Nos 829098 and 878231.

4.    The amended cross-claim be otherwise dismissed.

5.    The respondent on the appeal repay any monies paid to it by the appellant pursuant to paragraph 10 of the order made by Emmett J on 25 February 2013 in Federal Court proceeding No NSD 113/2011, with interest.

6.    The respondent on the appeal pay the appellant’s costs of and incidental to the proceedings in this Court and in the Federal Court of Australia both at first instance and on appeal.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

THE COURT

1        The respondent, Cantarella Bros Pty Limited (Cantarella), is the owner of two Australian trade marks ORO (829098) (Oro) and CINQUE STELLE (878231) (Cinque Stelle) registered in class 30 in relation to coffee and related products, including ground coffee, roasted coffee beans and coffee-related goods. The two trade marks were applied for on 24 March 2000 (Oro) and on 6 June 2001 (Cinque Stelle). The Italian word “Oro” means “gold” and the Italian words “Cinque Stelle” mean “Five Stars”. Before the primary judge, Cantarella brought proceedings for infringement of each trade mark. The appellant, Modena Trading Pty Limited (Modena), denied trade mark use, and alternatively sought to cancel Cantarella’s registrations by way of cross-claim pursuant to ss 88(1) and 92 of the Trade Marks Act 1995 (Cth) (the Act). The primary judge found infringement and rejected Modena’s cross-claim.

2        The issue in this appeal is whether the trade mark registrations should be cancelled under s 88 of the Act or removed under s 92 of the Act. It involves particular consideration of the provisions of s 41(3), read with s 41(2) of the Act and their application in a case such as this. These provisions concern the issue of distinctiveness of a trade mark informed by whether the trade mark in question is or is not to any extent inherently adapted to distinguish goods or services from those of other traders.

3        The question of distinctiveness is one of fact for the trial judge: Advanced Hair Studio of America Pty Ltd v Registrar of Trade Marks (1988) 12 IPR 1 at 7. There is no challenge to the findings of fact other than his Honour’s finding that the marks were distinctive for the purposes of s 41(3) of the Act. We will now set out the relevant facts as found by the primary judge.

The facts

4        Modena imports into Australia coffee products supplied by an Italian company, CaffÈ Molinari SpA (Molinari). Molinari is incorporated in Italy and produces coffee products.

5        Since the 1980’s there has been a move towards a pure coffee culture in Australia with enormous growth in the pure coffee and cafÉ cultures. The burgeoning cafÉ industry in Australia is indicative of that growth. The Australian pure coffee market includes various imported coffee products that are roasted and packaged overseas and sold in Australia. Various imported coffee products originate in Italy such as those imported by Modena from Molinari.

6        Products of Molinari imported into Australia have had the words Cinque Stelle and the word Oro on their packaging. Modena has also used those words in connection with its marketing of coffee products in Australia.

Cantarella

7        In 1958, Cantarella began to import raw coffee beans from all over the world and then to roast, grind and package coffee products, under the trade mark Vittoria. Cantarella describes Vittoria as its “house trade mark”. The coffee business has expanded since 1958 and Cantarella now promotes and sells coffee using the following registered trade marks:

    Vittoria

    Aurora

    Delta

    Chicco D’Oro

    Cinque Stelle

    Oro

    Each of those trademarks is used by Cantarella in Australia and in other countries and they are registered in many of those countries. The first four of these trademarks are described by Cantarella as house marks, while Cinque Stelle and Oro are used on, and in relation to, specific blends of coffee.

8        Cantarella began using the Oro mark in approximately 1996. In about 2000, Cantarella repositioned Oro branded coffee as a new offering to its food service customers. The new offering was part of three products sold under the marks Oro, Cinque Stelle and Nero. Oro branded coffee is made entirely from arabica beans.

9        Cinque Stelle branded coffee was first marketed in 2000. Since that time, it has been promoted on Cantarella’s websites and through various forms of print advertising and sponsored articles, as well as through direct marketing campaigns to food service providers. It has been featured at various promotional events and on menus and product labels at such promotional events. Since Cinque Stelle branded coffee was launched, it has been sold to fine dining restaurants and esteemed food service establishments. In 2011, Cantarella gained the business of Qantas, and Cinque Stelle branded coffee is served on first class flights and in the Qantas Chairman’s Lounges in domestic and international airports.

10        From about March 2003 to about June 2007, Cinque Stelle branded coffee was supplied in a canister with a colour scheme of blue and silver. The canister acted as a coffee holding unit attached to the top of a coffee grinder. Since about December 2005, Cantarella has made available to its customers promotional Cinque Stelle canisters in the same colour scheme, for display purposes only.

11        In the financial year ended 30 June 2010, Cinque Stelle branded coffee was sold directly to approximately 298 food service customers, including cafÉs, restaurants, hotels and distributors who also on-sell the product to food service customers. Cinque Stelle branded coffee is also sold through Cantarella’s sales representatives, who are assisted by promotional material such as presentations, flyers and newsletters. From 2000, when Cinque Stelle branded products were first marketed, to March 2011, Cantarella sold approximately 403,618 kilograms of coffee in both canisters and bags. That equates to approximately 57.66 million cups of coffee.

12        In the year ended 30 June 2010, the food service channel was the largest purchaser of Oro branded coffee. Cantarella sold approximately 476,873 units. Oro branded coffee has been Cantarella’s most popular food service product since the year ended 30 June 2007. In the year ended 30 June 2010, Oro branded coffee was sold to approximately 1,654 food service customers.

13        In about May 2003, Cantarella began selling Oro branded coffee through supermarkets. The coffee was produced with a fine grind so as to be suitable for domestic espresso machines. Oro branded coffee is now available in both ground coffee and bean packs and can be purchased through various supermarket outlets. In the year ended 30 June 2010, Cantarella sold 237,391 units of Oro branded coffee to the supermarket channel. Oro branded coffee is available in over 3,000 supermarket stores throughout Australia. The largest retailers of Oro branded coffee are Woolworths, Coles and IGA.

14        From about March 2003 to about June 2007, Oro branded coffee was supplied in a canister with a gold and black colour scheme. The canister acted as a coffee holding unit attached on the top of a coffee grinder. From around December 2005, Cantarella made available to its customers promotional Oro canisters that have a similar colour scheme and are for display purposes only.

15        Cantarella promotes Oro branded coffee on its websites and through a wide variety of media, including print and television advertisements, sponsored articles and in-store promotions. From July 2010, Cantarella has run a television advertising campaign featuring the actor Al Pacino. One of the advertisements, shot in black and white, features Oro branded coffee packs in colour. Oro branded products are promoted using a variety of other mediums, such as food service brochures and other promotional materials, point of sale signage, windbreaks and catalogues. The Oro brand has also been featured at various promotional events. From 2000 to March 2011, Cantarella has sold approximately 3,578,867 kilograms of Oro branded coffee in both canisters and bags. That equates to 511.27 million cups of coffee.

16        Menus used in many restaurants in New South Wales, Victoria and Queensland identify the coffee served in those restaurants by reference to the Cinque Stelle mark, for example, “Cinque Stelle by Vittoria” or “Vittoria Cinque Stelle”. The Qantas first class in-flight menu shows Cinque Stelle coffee as the coffee provided by Qantas. Qantas first class lounge menus also show Cinque Stelle coffee as the coffee provided in the lounges. Coffee is supplied to Qantas first class and Qantas Chairman’s Lounges in one kilogram packs of Cinque Stelle branded coffee beans.

17        Since June 2002, the French tourism board has held events in Sydney for the purpose of promoting French cuisine and French cooking. Cantarella has been one of the sponsors of those events. At each of the events, Cinque Stelle branded coffee has been served. The menus at those events referred to Cinque Stelle coffee.

Molinari

18        Molinari is based in Modena, a province in central northern Italy with a population of about 185,000. Molinari produces coffee products, hot chocolate and vinegar. Molinari has produced its CaffÈ Molinari Oro blend continuously since 1965. It has also produced its CaffÈ Molinari Espresso and CaffÈ Molinari Classico blends continuously since that time.

19        In 1997, Molinari introduced a new blend of coffee made from 80 per cent arabica beans and 20 per cent robusta beans. Molinari called the coffee CaffÈ Molinari Cinque Stelle. Since its introduction, Molinari has promoted CaffÈ Molinari Cinque Stelle as its premium blend. The blend costs the most to produce and is the most expensive to buy. In 2004, Molinari introduced CaffÈ Molinari Cinque Stelle 100 per cent Arabica. The CaffÈ Molinari Cinque Stelle 100 per cent Arabica is made entirely from arabica beans.

20        Since 2008, Molinari has manufactured its coffee products from premises just outside Modena, where it has facilities for receiving and storing raw materials, roasting, grinding and storing roasted coffee, packing, receiving and storing packaging, administration and product dispatch. Molinari’s manufacturing processes for the development, roasting and packaging of coffee have been quality certified by Det Norske Veritas Italia SRL, a classification society.

21        Molinari’s blending process involves a tasting stage, during which individual lots of raw coffee are graded in terms of their aroma, body, acidity and bitterness. The blend, once developed, is also graded in terms of the same criteria.

22        Molinari employs 53 people and uses some 80 commission agents to sell its products in Italy. In 2010, Molinari produced 1,600,000 kilograms of coffee and generated approximately €18,000,000 in revenue. Within Italy, Molinari has three distribution lines. The first line is to hotels, restaurants and catering. The second is the retail or mass distribution line in grocery stores. The third line is vending machines. Molinari has traditionally focussed on coffee for the first line, namely, hotels, restaurants and catering. In 2010, 57 per cent of Molinari’s sales within Italy were in that line, 28 per cent in the retail line and 15 per cent in the vending machine line.

23        Molinari began exporting coffee products in 1994. It now exports products to more than 50 countries, including Russia, Greece, Sweden, England, Saudi Arabia, Albania, Serbia, Korea, Bulgaria and Australia. In 2010, its exports constituted 54 per cent of its sales.

24        Molinari began exporting products to Australia in about July 1996. In the period from July 1996 to March 2001, CNS Coffee Machines Services Pty Limited, formally known as Saeco Australia Pty Limited, distributed Molinari products in Australia. From December 1999 to April 2002, a business known as Coffee Supplies Australia, located in Western Australia, also distributed Molinari coffee products in Australia, including CaffÈ Molinari Oro. From May 2000 to July 2001, Russo Pty Limited also distributed Molinari products in Australia, including CaffÈ Molinari Oro and CaffÈ Molinari Cinque Stelle. In about January 2001, Espresso Group Pty Limited began distributing Molinari products in Australia, including CaffÈ Molinari Oro and CaffÈ Molinari Cinque Stelle blends. In about March 2003, Molinari entered into a distribution agreement with Espresso Group Pty Limited, by which Espresso Group Pty Limited agreed to distribute Molinari products in Australia, including CaffÈ Molinari Oro and CaffÈ Molinari Cinque Stelle. Espresso Group Pty Limited distributed Molinari products in Australia under that agreement until about November 2009.

25        Invoices tendered in evidence by Modena and not cross-examined upon disclose that Molinari began exporting CAFFÈ MOLINARI ORO to Australia in or about July 1996 and MOLINARI CINQUE STELLE since October 1998.

26        Molinari records, on the packaging it uses for CaffÈ Molinari Cinque Stelle, CaffÈ Molinari Cinque Stelle 100 per cent Arabica and CaffÈ Molinari Oro products, the date on which the coffee is packaged. Each package bears a code enabling the date to be determined from the code.

Modena

27        Modena is owned and operated by Mr Ian Pagent and his daughter, Ms Amanda Pagent. Mr Pagent is a director of Modena.

28        Another company, Stella Imports Pty Limited is owned by Mr Pagent, his wife and his daughter Jessica. Mr Pagent’s association with Molinari began in about April 2003, when Stella Imports Pty Limited commenced distributing CaffÈ Molinari products in the United Kingdom. CaffÈ Molinari products had not been distributed in the United Kingdom before that time. From April 2003 to December 2007, Stella Imports Pty Limited distributed CaffÈ Molinari products to restaurants, bars, cafÉs, hotels and businesses in the United Kingdom, in the form of blends that included CaffÈ Molinari Cinque Stelle, CaffÈ Molinari Espresso, CaffÈ Molinari Classico and CaffÈ Molinari Oro. It did not sell directly to the public. By the time Mr Pagent sold his interest in the company in December 2007, it had established a customer base of approximately 400 in the United Kingdom and Northern Ireland.

29        In about November 2009, Molinari entered into a distribution agreement with Modena, under which Molinari appointed Modena as its exclusive distributor in Australia for a period of 6 years. During the period December 2009 to May 2010, Molinari supplied various coffee products to Modena for distribution in Australia. The products included various products using the name CaffÈ Molinari Cinque Stelle and CaffÈ Molinari Oro, as well as other products.

30        From May 2010 to June 2011, Molinari supplied various coffee blends to Modena in packaging that contained the words CaffÈ Molinari Oro, CaffÈ Molinari Platino and CaffÈ Molinari Rosso, as well as CaffÈ Molinari Cinque Stelle. Since June 2011, Molinari has been supplying its CaffÈ Molinari QualitÀ Oro, CaffÈ Molinari QualitÀ Platino and CaffÈ Molinari QualitÀ Rosso blends to Modena.

31        Modena has seven employees. The sale of CaffÈ Molinari products generates a turnover of approximately $140,000 per month. Modena generally sells CaffÈ Molinari products to cafÉs, bars and restaurants in Australia. The products are available for sale directly to the public, but such sales consist of less than 1 per cent of the total sales.

32        Shortly after Modena’s appointment as exclusive distributor of Molinari’s products in Australia, Molinari made some changes to its product lines, including the CaffÈ Molinari Oro, CaffÈ Molinari Espresso and CaffÈ Molinari Classico blends. Modena began distributing those blends in the new packaging in August 2010.

33        In 2011, Molinari amended the packaging of its products again and Modena commenced distribution of those newly packaged products. It ceased distributing the CaffÈ Molinari blend in the original packaging. The first shipment of the newly packaged products arrived in July 2011. On the packaging for the CaffÈ Molinari Oro product, the word QualitÀ was added, such that it refers to qualitÀ oro, rather than merely oro.

Use of “Oro” and “Cinque Stelle” in Australia

34        All of the coffees described below, in respect of which oro is included in sales and distribution materials and on packaging, can be bought at various places in Australia. Sometimes, oro is accompanied by the word qualitÀ. Another usage of oro is as d’oro.

35        Lavazza QualitÀ Oro coffee is distributed in Australia by Valcorp Fine Foods. Lavazza QualitÀ Oro coffee is available at Woolworths and Coles supermarkets. The Coles and Woolworths online shopping sites depict bags of Lavazza QualitÀ Oro coffee beans and Lavazza QualitÀ Oro ground coffee. A website for Lavazza coffee describes QualitÀ Oro and Lavazza QualitÀ Oro as “the iconic product that made Lavazza famous worldwide”. It asserts that QualitÀ Oro was the first product to be imported to Australia by the founders of Valcorp Fine Foods in 1955.

36        CaffÈ Incas Oro coffee is available on the online store of Casa Italia Gourmet Food and Wines. Casa Italia Gourmet Food and Wines, according to its website, specialises in the wholesale of exclusively imported Italian products. The website asserts that its aim was to share with Australians the foods that the proprietors grew up with in Italy. It states that Casa Italia Gourmet Food and Wines primarily sells by wholesale to delicatessens, supermarkets, restaurants and cafÉs.

37        Coffee Mio Brazil Oro is distributed in Australia by Coffee Mio Pty Limited, whose website identifies distributors of its products in all States and Territories. Coffee Mio Pty Limited also supplies Coffee Mio D’Oro. Both of those products can be bought from Coffee Mio Pty Limited.

38        CaffÈ Trombetta Oro coffee is distributed in Australia by CaffÈ Trombetta Aust Pty Limited. CaffÈ Mauro Oro coffee is distributed in Australia by CaffÈ D’Italia Pty Limited. CafÉ El Mundo Oro is distributed in Australia by Crown Coffee International Pty Limited, which trades as Casa & Bottega. La Zamba Oro coffee is distributed in Australia by Global Coffee Solutions Pty Ltd. Costa D’oro coffee is distributed in Australia by a trading unit of the Boswell Trust. Crema D’oro is a brand of coffee, as well as a brand of tea, distributed in Australia by Thompson Management Consulting Pty Limited, which trades as Crema D’oro, and by St George Small Goods Pty Limited. Primo CaffÈ Tazza D’oro is produced in Australia by Primo Products Pty Limited and is distributed by Jaybedee Pty Limited, which trades as JB Distributors. CaffÈ Aurora Medaglia D’oro coffee is roasted, blended and packed in Australia by Cosmo Foods Pty Limited. A selection of blends of Medaglia D’oro coffee beans is available in Australia at bars and coffee shops. Medaglia D’oro coffee blends, in the form of ground coffee, coffee beans and instant coffee, are available at Woolworths and Coles supermarkets and on their online facilities.

39        Delta Chicco D’oro coffee is roasted, blended and packed in Australia by Cosmo Foods Pty Limited. It is available at Woolworths and Coles supermarkets and on their online facilities. Piazza D’oro coffee is roasted and packed in Australia by Douwe Egberts Coffee Systems - Australia, part of the Sara Lee Group. It is distributed at restaurants and cafÉs around Australia.

40        El Premio D’oro premium coffee beans are available in Australia online. Miscela D’oro coffee is distributed in Australia by Cadonite Pty Limited. Miscela D’oro is available in several blends, being Grand Aroma, Decaffeinato, Grand Crema, Gusto Classico, Gusto Ricco, Gusto Espresso and Espresso.

41        Mokador Oro coffee is available online. CaffÈ Carmado Espresso Oro is distributed in Australia by P & T Basile Pty Limited, trading as Basile Imports, which operates in New South Wales, South Australia, Western Australia and Queensland. CaffÉ Per Bar Goccia D’oro coffee is available in Australia through Arte Antica International Pty Limited, trading as Coffee n’ Coffee. CaffÈ Guglielmo Espresso Oro coffee is distributed in Australia by Gulli Food Distributors Pty Limited.

42        Molinari has exported its Molinari Cinque Stelle coffee to Australia since 1998. No other trader appears to have used the words Cinque Stelle on its coffee.

The primary judgment

43        Central to Modena’s case at trial on the issue under s 41(3) of the Act was that “Oro” and “Cinque Stelle” are words that other traders might, without improper motive, want to use as varietal indicators on their Italian-style coffee products. The word “oro” was used in relation to coffee by other traders. Modena had contended that the words were not distinctive at their respective filing dates. It had also contended that the evidence demonstrated that the words were commonplace words in marketing generally and certainly in the marketing of Italian-style coffee in Australia.

44        The primary judge considered that the words were distinctive. This conclusion was reached upon application of the test of inherent adaptation to distinguish by reference to the probability of ordinary persons understanding the words, in their application to the goods, as describing, indicating or calling to mind either their nature or some attribute they possess. There was no issue at trial as to whether the words were distinctive in fact.

45        This approach proceeded from what was said in Mark Foy’s Ltd v Davies Co-op & Co Ltd (1956) 95 CLR 190 which was a case concerning the first proscription found in s 16(1)(d) of the Trade Marks Act 1905 (Cth), which provided relevantly that:

. . . A registrable trade mark must contain or consist of at least one of the following essential particulars . . .

(d)    [a] word or words having no direct reference to the character or quality of the goods ...

The mark in that case consisted of two English words “Tub Happy” referrable to articles of clothing. Dixon CJ at 195 described the test under that provision as lying in the probability of ordinary persons understanding the words, in their application to the goods, as describing or indicating or calling to mind either their nature or some attribute they possess.

46        The primary judge’s approach was also founded upon what “distinctive” meant as found in Johnson & Johnson Australia Pty Limited v Sterling Pharmaceuticals Pty Limited (1991) 30 FCR 326 at 335-336 namely, “what is important is that a significant number of consumers in the relevant market identify the plaintiff’s goods as coming from one trade source: see S. Ricketson, par 25.8” (at 336 per Lockhart J). That case concerned whether the use made by the appellant of the word “caplets” on the packaging of certain of its pharmaceutical products was descriptive and not distinctive.

47        This approach led the primary judge to consider the extent of Italian speakers in Australia and whether the Italian words “Oro” and “Cinque Stelle” were sufficiently well understood in Australia. His Honour concluded at [117]-[118] that only a very small minority of ordinary English-speaking people in Australia would understand the allusions made by the words Cinque Stelle and Oro. His Honour was not persuaded that the Italian language is so widely spread that the conclusion should be drawn that the words would be generally understood as meaning “Five Stars” and “Gold” respectively.

48        Consequently his Honour concluded at [118] that both Cinque Stelle and Oro were sufficiently inherently adapted to distinguish goods of Cantarella from goods of other persons.

49        We have concluded that this approach adopted by the primary judge was not apt to the present case. This error in our opinion led the primary judge to an incorrect conclusion as to the statutory enquiry arising under s 41(3) of the Act.

Grounds of appeal

50        The grounds of appeal are as follows:

1.    The primary judge erred in finding that ORO and CINQUE STELLE are sufficiently inherently adapted to distinguish the designated goods from the goods of other persons to be capable, on that basis alone, of so distinguishing the designated goods, within the meaning of ss 41(2) and (3) of the Trade Marks Act 1995 (Cth).

2.    The primary judge erred in not finding that ORO and CINQUE STELLE are not capable of distinguishing the designated goods from the goods of other persons within the meaning of s 41(2) of the Trade Marks Act 1995 (Cth).

3.    The primary judge erred in finding that the respondent on the appeal has used, and is using, ORO and CINQUE STELLE as trade marks within the meaning of ss 17 and 92 of the Trade Marks Act 1995 (Cth).

Consideration

The statutory framework

51        As the primary judge correctly identified, the relevant statutory framework is as follows.

52        Under s 27 of the Act, a person may apply for the registration of a trade mark in respect of goods if the person claims to be the owner of the trade mark and the person is using, or intends to use, the trade mark in relation to the goods. Under s 31, the Registrar of Trade Marks (the Registrar) must examine and report on whether the application has been made in accordance with the Act and whether there are grounds for rejecting it. Under s 33, the Registrar must, after the examination, accept the application, unless satisfied that the application has not been made in accordance with the Act or that there are grounds for rejecting the application.

53        Under s 41(2), an application for the registration of a trade mark must be rejected if the trade mark is not capable of distinguishing the applicant’s goods in respect of which the trade mark is sought to be registered (designated goods) from the goods of other persons. Under s 41(3), in deciding that question, the Registrar must first take into account the extent to which the trade mark is inherently adapted to distinguish the designated goods from the goods of other persons. If the Registrar is unable to decide the question, s 41(4) requires the Registrar to follow one of two courses.

54        Under s 41(5), the first course is to be followed if the Registrar finds that the trade mark is to some extent inherently adapted to distinguish the designated goods from the goods of other persons, but is unable to decide, on that basis alone, that the trade mark is capable of so distinguishing the designated goods. In that case, the Registrar is to consider whether, because of the combined effect of the extent to which the trade mark is inherently adapted to distinguish the designated goods, the use or intended use of the trade mark by the applicant, and any other circumstances, the trade mark does or will distinguish the designated goods as being those of the applicant. If the Registrar is then satisfied that the trade mark does or will so distinguish the designated goods, the trade mark is taken to be capable of distinguishing the applicant’s goods from the goods of other persons. If the Registrar is not satisfied that the trade mark does or will so distinguish the designated goods, the trade mark is taken not to be capable of distinguishing the applicant’s goods from the goods of other persons.

55        Under s 41(6), the alternative course is to be followed if the Registrar finds that the trade mark is not, to any extent, inherently adapted to distinguish the designated goods from the goods of other persons. Under s 41(6)(a), if the applicant establishes that, because of the extent to which the applicant has used the trade mark before the filing date of its application, the trade mark does distinguish the designated goods as being those of the applicant, then the trade mark is taken to be capable of distinguishing the designated goods from the goods of other persons. Under s 41(6)(b), if the applicant does not establish that the trade mark distinguishes the designated goods as being those of the applicant, the trade mark is taken not to be capable of distinguishing the designated goods from the goods of other persons.

56        Sections 41(3)-(6) are, in effect, a code directed to how s 41(2) is applied: Blount Inc v Registrar of Trade Marks (1998) 83 FCR 50 at 56-7, affirmed in Time Warner Entertainment Co, LP v Stepsam Investments Pty Ltd (2004) 59 IPR 343 at [26].

Grounds 1 and 2: Section 41(3) of the Act – Inherently adapted to distinguish

57        Sections 41(2) and (3) provide:

Trade mark not distinguishing applicant's goods or services

(1)    . . .

(2)     A trade mark is taken not to be capable of distinguishing the designated goods or services from the goods or services of other persons only if either subsection (3) or (4) applies to the trade mark.

(3)    This subsection applies to a trade mark if:

(a)    the trade mark is not to any extent inherently adapted to distinguish the designated goods or services from the goods or services of other persons; and

(b)    the applicant has not used the trade mark before the filing date in respect of the application to such an extent that the trade mark does in fact distinguish the designated goods or services as being those of the applicant.

58        The predecessor provisions to s 41(3) of the Act, found in s 24(1) of the Trade Marks Act 1955 (Cth) and s 16 of the Trade Marks Act 1905 (Cth) identified particular kinds of trade marks which were satisfactory:

    personal names represented in a “special or particular manner”;

    signatures (of the applicant or a predecessor in his business);

    “invented words”;

    words “not having direct reference to the character or quality” of designated goods or services, and not in ordinary meaning geographical names or surnames; and

    other distinctive marks.

59        Although s 41(3) of the Act is not expressed with that kind of detail, nonetheless, the general principle for its application is well established. As James Lahore states at p 54,528 in Patents, Trade Marks and Related Rights (LexisNexis Butterworths, 2001), “the key to interpretation of s 41(3) of the 1995 Act is the case law under s 24(1)(a)-(d) of the 1955 Act”.

60        As the learned authors of Shanahan’s Australian Law of Trade Marks and Passing Off (5th ed, Thomson Reuters (Professional) Australia Limited, 2012), Mark Davison and Ian Horak stated at [20.10], correctly, in our opinion:

Trade marks which would have been eligible for registration in Part A of the Register under the Trade Marks Act 1955 (Cth) … that is, those which fell into the categories set out in s 24(1) of that Act, should be regarded as inherently adapted to distinguish under the 1995 Act.

61        Nonetheless, at the threshold in this appeal is the issue as to just what is the test for answering the statutory enquiry as to whether a trade mark is inherently adapted to distinguish the designated goods from those of other traders.

62        The following general principle was stated by Kitto J in Clark Equipment Company v Registrar of Trade Marks (1964) 111 CLR 511 at 514:

[T]he question whether a mark is adapted to distinguish [is to] be tested by reference to the likelihood that other persons, trading in goods of the relevant kind and being actuated only by proper motives - in the exercise, that is to say, of the common right of the public to make honest use of words forming part of the common heritage, for the sake of the signification which they ordinarily possess - will think of the word and want to use it in connexion with similar goods in any manner which would infringe a registered trade mark granted in respect of it.

(Emphasis added.)

63        However, senior counsel for Modena contended at the hearing of the appeal that what was articulated by Kitto J in Clark Equipment was refined by his Honour in the later case of F.H. Faulding & Co Limited v Imperial Chemical Industries of Australia and New Zealand Limited (1964) 112 CLR 537 such that the following words found in Clark Equipment at 514, were to be understood as parenthetical and surplusage and for that reason omitted from the statement of principle in Faulding at 555. The words found in Clark Equipment but omitted from Faulding are:

– in the exercise, that is to say, of the common right of the public to make honest use of words forming part of the common heritage, for the sake of the signification which they ordinarily possess – …

64        This was not a submission put to the primary judge nor is it to be found in Modena’s outline of written submissions on appeal. Nonetheless, the issue was fully ventilated before us.

65        The first observation to be made is that Modena’s submission is at odds with the weight of authority, including, when taken as a whole, the judgment of Kitto J in Faulding. True it is that, in that case, his Honour at 555, when stating the principle, does not include the parenthetical words, but Clark Equipment is cited without qualification as authority for what he did state. Moreover, at 556 in Faulding, after considering the evidence going to the issue of distinctiveness, his Honour couched his conclusion on that issue by reference to the meaning of the word “barrier”:

…. according to its ordinary signification for descriptive use … so that any trader … would be very likely indeed, in the ordinary course of business and without any improper motive, to desire to use the word in order to distinguish … .

    This demonstrates his Honour’s employment of the parenthetical part of the principle set out in Clark Equipment.

66        Kitto J in Faulding cited Eclipse Sleep Products Incorporated v Registrar of Trade Marks (1957) 99 CLR 300 at 310; and Registrar of Trade Marks v W & G Du Cros Ltd [1913] AC 624 at 634, 635. Both were decided before Clark Equipment. In Eclipse at 310, the High Court expressed the test in much the same way as it was put by Kitto J in Faulding at 555. This was an adoption of what had been said by Lord Parker in Du Cros at 634-635. This, contends Modena, makes good its submission.

67        Full Courts of this Court have consistently treated Clark Equipment as setting out the general principle informing the enquiry concerning “inherently adapted to distinguish” for the purposes of s 24(1) and (2) of the 1955 Act (definition) and in s 41(2) and (3) of the Act. These cases have uniformly adopted and applied the reasoning as to "words forming part of the common heritage for the sake of the signification which they ordinarily possess" found in Kitto J’s formulation in Clark Equipment. Such cases include Chancellor, Masters and Scholars of University of Oxford (Trading as Oxford University Press) v Registrar of Trade Marks (1990) 24 FCR 1 at 4-5 per Lockhart J; at 9 per Jenkinson J; Mid Sydney Pty Ltd v Australian Tourism Co Limited (1998) 90 FCR 236 at 249-250; TGI Friday's Australia Pty Ltd v TGI Friday's Inc (2000) 100 FCR 358 at [46]; Kenman Kandy Australia Pty Ltd v Registrar of Trade Marks (2002) 122 FCR 494 at [144]-[147] per Stone J (with whom French J agreed at [49]) and see per Lindgren J in dissent on the result but not on the principles at [80]-[85]; Philmac Pty Ltd v Registrar of Trade Marks (2003) 126 FCR 525 at [42]-[49]; Mantra IP v Spagnuolo (2012) 205 FCR 241 at [41]-[52].

68        At one level Modena’s submission is correct and the general principle may be stated as it was by Kitto J in Faulding at 555. The formulation there nonetheless contains the expression “without any improper motive”. This part of the general principle raises its own definitional questions. It is a synonymous phrase to that used by Kitto J in Clark Equipment namely, “actuated only by proper motives”. It is evident that it is this phrase which the parenthetical words employed by Kitto J in Clark Equipment explicate as being: –

– in the exercise, that is to say, of the common right of the public to make honest use of words forming part of the common heritage, for the sake of the signification which they ordinarily possess – …

69        That said, the explication is directed towards “words” forming part of the common heritage. Clark Equipment concerned the word “Michigan”. Self-evidently, trade marks often consist of more than just words and may now involve shapes and even colours. The application of the parenthetical explication is apt only to cases involving a mark consisting of a word or words. The fact that Clark Equipment and Faulding are often treated as interchangeable authorities is perhaps explained because many cases involve a word or words as the mark.

70        Stone J in Kenman Kandy in obiter at [146] expressed the view that whilst Kitto J in Clark Equipment was referring to word trade marks because that was the issue before him “there can be no doubt that his Honour’s test would equally apply to shapes or other signs forming ‘part of the common heritage’”.

71        We are not immediately persuaded as to the correctness of this observation. However, it is unnecessary to resolve this issue determinatively. This case involves the use of words and it cannot presently be doubted by this Court that Kitto J’s formulation in Clark Equipment sets out the principle generally applicable.

72        Importantly, the parenthetical explanation is not to be applied as though it were a statute. Phrases such as “common right of the public” and “words forming part of the common heritage” are of broad expression and will have a content and application in a variety of ways depending on the facts and circumstances of the case in question.

73        It should not be thought, for example, that the “public” necessarily means the general population, or even the general adult population of Australia.

74        Sections 41(2) and (3) are directed to the distinctiveness of an applicant’s goods or services from those of other persons. We shall, for convenience, describe them as “traders”. Accordingly, the enquiry is directed at least to traders with goods and services of the relevant kind and the likelihood, in a case such as this, of their thinking of and wanting to use the word(s) in question. The reference to “likelihood” by Kitto J in Clark Equipment was described by Gibbs J in Burger King Corporation v Registrar of Trade Marks (1973) 128 CLR 417 at 425 as a reference to the possibility that another trader “might”, without any improper motive, want to use the mark in relation to his or her goods. Depending on the goods and services involved, the class of traders may be very large or quite small. The enquiry may also have regard to the knowledge and practices of consumers as a relevant consideration informing the likely actions of the traders, but it will not necessarily be the focus of the inquiry.

75        French J (as his Honour was) in Kenman Kandy at [47] explained that the ultimate question in applying the test of “inherently adapted to distinguish” is whether the mark, considered apart from the effects of registration, is such that its use by the applicant is likely to attain its object of thereby distinguishing its goods from the goods of others. His Honour held, in effect, that the answer to this question posed in Clark Equipment was one that:

… does not involve adventures in the Aristotelian taxonomy of form and substance. It requires a practical evaluative judgment about the effects of the relevant mark in the real world.

76        The High Court in Eclipse at 309-310 in its consideration of the analogous s 16(2) of the Trade Marks Act 1905 (Cth) and the phrase “adapted to distinguish the goods of the proprietor of the trade mark from those of other persons” held that this meant “adapted to distinguish in Australia having regard to the practice and conditions of the trade here …”.

77        In Clark Equipment the mark was the name “Michigan”. The Court took into account that in the US State of Michigan there were important manufacturing centres and that it was well within the bounds of possibility that persons other than the appellant may in the future produce goods there similar to some or all of the goods comprised in the category for which the appellant sought trade mark registration. That inquiry was not in any way directed to the knowledge of consumers or potential consumers although it may have been so.

78        In Faulding the Court considered the understanding within the relevant trade of the words “Barrier Cream”. Reliance was placed on relevant trade journals and pharmacopoeia in order to arrive at a conclusion as to the “ordinary signification” of those words and in turn to determine what any trader in such creams would be likely to desire to do in using the words. Again there was no enquiry as to the knowledge of the general public whether as potential consumers of the product or otherwise.

79        Indeed, the majority of cases have involved an inquiry on this issue which is focussed on knowledge and practice within the relevant trade. As Reeves J put it in Mantra IP, correctly in our respectful opinion, at [55]:

… one trader is to be prevented from obtaining, by registration, a private monopoly over the use of [a word(s)] … because other traders have a “common right of the public to make honest use of” it …

(Emphasis added.)

80        This approach is hardly surprising given the relevant statutory provisions in the various iterations of Trade Mark legislation in this country. Sections 41(2) and (3) are in effect directed to the goods of different traders, in the sense we have employed that term. It seems to us that “the public” in Kitto J’s parenthetical phrase in Clark Equipment is primarily referring to members of the public who are or may become traders, and who in the future may want to use the word or words in question, although that evaluative judgment is required to be made at the time of filing the trade mark application. However, as we have explained, an appreciation of the words used, beyond the class of traders and extending to consumers of the relevant goods or services, may also inform the answer to the inquiry because it may also be relevant to consider what consumers in the particular market in which those goods or services are traded know of the mark, whether consisting of words or otherwise, bearing on whether other traders are likely to want to use them.

81        Where the words used are English language words then considerations of the “common heritage” being that of the general public from whom traders and consumers will be drawn may very well be apt. Such was the case in Mark Foy’s concerning the words “Tub Happy”. Williams J at 199, referring to the speech of Lord Herschell in Eastman Photographic Materials Company Ltd v Comptroller-General of Patents, Designs and Trademarks [1898] AC 571 said:

The vocabulary of the English language is common property: it belongs alike to all, and no one ought to be permitted to prevent the other members of the community from using for purposes of description a word which has reference to the character or quality of goods.

82        This was the approach taken by the primary judge. In determining whether CINQUE STELLE and ORO are sufficiently inherently adapted to distinguish Cantarella’s goods from goods of other persons, his Honour posited whether the Italian words were “commonly understood” or “generally understood” in Australia by “ordinary English speaking persons” as meaning five stars and gold respectively.

83        However, this approach was not appropriate in the present case where common Italian words descriptive of quality, are in issue. That this approach was taken by the primary judge, is demonstrable error. It will not necessarily be the correct approach even where the mark in question is an English word but where its meaning is not “commonly understood”. Such was the case in Eutectic Corporation v Registrar of Trade Marks (1980) 32 ALR 211. There, the word in suit was “Eutectic’ which means “of a nature to melt early”. It was not a commonly understood word but its meaning was known and used within the welding industry. It was held, accordingly, that it could not distinguish one trader’s welding goods and materials from those of another. The test for distinctiveness, which protects against monopolisation of words of common heritage, is focussed, as we have mentioned, on the likelihood of traders in the relevant goods or services thinking of and wanting to use, as here, the words in suit although not as a mark. This does not necessarily invite the question of whether such words, when they are foreign words, are commonly understood by the majority of English-speaking Australians although, depending on the particular mark in question, it may do so. It follows that we do not accept Cantarella’s submission that without such a common understanding, a foreign word is no different from any invented word.

84        The expressions “the common right of the public” and “common heritage” employed by Kitto J in Clark Equipment are fluid and their content will vary according to the particular case. It seems to us that they refer to the knowledge base, primarily, of the traders in the particular goods and services, for it is the question of their likely use of the mark which is to be considered, although as we have already observed, it may extend to potential consumers.

85        There is no necessity to approach the enquiry from an Anglocentric perspective in the Australian context which has rich cultural and ethnic diversities within its population. Adopting the language of Kitto J, to accommodate this reality in the marketplace, one may consider the relevant words against the collective diverse heritage. Viewed in that way, the “common heritage” here included that of traders in coffee products sourced from Italy. Such traders may well be Italian or local importers. They may be local distributors who have in mind the large Italian speaking population in Australia as well as other Australians who, when it comes to coffee, want something with an Italian look and feel. Much of this country’s coffee heritage in its language has its provenance in the Italian language e.g. caffÈ latte; cappuccino; affogato; caffÈ machiatto and espresso. It is evident that pure coffee in Australia is often associated with Italy and Italian coffee products.

86        Distinctiveness, being a question of fact, will involve contextual considerations. In Re Applications by Hongkong and Shanghai Banking Group Ltd (1990) 19 IPR 223. Delegate Hardie when considering marks comprising Chinese language characters for distinctiveness took into account, as relevant context, that it was reasonable to assume that a significant proportion of those availing themselves of the services of a Hong Kong bank operating in Australia would be literate in Chinese. The pool of people under consideration was minimal as a proportion of the general population of Australia. This is but an example of, in effect, the application of a common sense approach, the “practical evaluative judgment of the effects of the relevant mark in the real world”: Kenman Kandy at [47] per French J.

87        Distinctiveness is to be judged at the time of the application for registration and prospectively. However, in judging the likelihood of what traders may wish to do, it is relevant to know whether or not other traders have also used the words. Such was the case, for example, in Faulding concerning the use of the word “Barrier” in relation to the relevant class of creams. It is not necessary, contrary to the submissions of Cantarella, that other traders have used them as trade marks. The words in Italian are entirely descriptive of their quality as premium coffee products. Molinari, amongst others, has imported coffee products to Australia using the descriptive words Oro and additionally Molinari has done so using the descriptive words Cinque Stelle since well before Cantarella applied to register them as trade marks.

88        It is unnecessary, in our opinion, that consumers know what the words mean in English. However, given that Italian is the second most spoken language in Australia, self-evidently many people in this country would in fact know what the words meant. Moreover, as the primary judge noted (at [86]), Cantarella explains on its packaging that “Oro” means “gold”. Many Italian speakers would have understood the words Cinque Stelle and Oro as common Italian laudatory and therefore descriptive words.

89        Howard Auto-Cultivators Limited v Webb Industries Proprietary Limited (1946) 72 CLR 175 does not, in our view, aid the resolution of this matter. That case concerned whether a particular word which had been registered as a trademark was an “invented word” within the meaning of s 16(1)(c) of the Trade Marks Act 1905. But even if invented words provide some analogy, the question of how the word is to be understood must be tested from the understanding of the relevant section of the public: see Howard Auto-Cultivators at 183-184.

Application of the test

90        Whether a mark is distinctive is a question of fact for the trial judge. However, given our conclusion that the primary judge adopted an erroneous approach to that question, this Court is in as good a position as was his Honour to resolve that question upon unchallenged findings of fact.

91        There are a number of factual findings, taken together, which Modena submits, and we accept, support the conclusion that other traders are likely, in the ordinary course of their businesses and without any improper motive, to desire to use the ORO and CINQUE STELLE marks, or some mark nearly resembling them, upon or in connection with their own coffee-related goods.

92        First, Oro and Cinque Stelle are Italian words meaning "gold" and "five stars", respectively, which signify the highest quality.

93        Second, pure coffee in Australia is often associated with Italy, with the result that it is obvious to use Italian words to describe the quality of a coffee blend. Australians drink predominantly instant coffee, however, there has been enormous growth in the pure coffee and cafÉ culture. Increasing numbers of consumers order espresso or cafÉ-style coffee produced by espresso machines. The Australian pure coffee market includes various imported coffee products that are roasted and packaged overseas and sold in Australia. Various imported coffee products originate in Italy.

94        Third, there are many Italian speakers in Australia. The evidence showed that in 2001 Italian was the second most utilised language in Australia after English in terms of the number of people who speak Italian at home. This statistic does not take account of those people in Australia with some knowledge of Italian.

95        Fourth, Cantarella uses ORO and CINQUE STELLE to describe according to their known ordinary significance its highest quality coffee blends.

96        CINQUE STELLE is marketed, advertised, promoted and offered for sale as Cantarella’s premium coffee blend. Its ORO branded coffee is made entirely from arabica beans in circumstances where Australian coffee consumers consider that arabica beans are superior to robusta beans and coffee is regularly promoted in Australia as being made entirely from arabica beans.

97        Finally, and most importantly, other coffee traders have used the words ORO and CINQUE STELLE. The findings of the primary judge support a conclusion that these Italian words were known in the coffee trade according to their ordinary signification as words descriptive of the quality of the coffee products and have been used in that sense, although not as trade marks, for a significant period of time extending well before Cantarella’s registration of its marks and afterwards. This past fact is relevant to the enquiry as to whether other traders, prospectively, might wish to use the words in question.

98        As we mentioned before, since July 1996, Molinari has exported coffee products from Italy to Australia through various exclusive distribution agreements. Since 1965 Molinari has produced its CAFFÈ MOLINARI ORO, CAFFÈ MOLINARI ESPRESSO and CAFFÈ MOLINARI CLASSICO blends continuously. In 1997, Molinari introduced a new blend of coffee called CAFFÈ MOLINARI CINQUE STELLE as its premium blend.

99        ORO is frequently used in various places in Australia in relation to coffee products as an indication of coffee of the highest quality. In particular, a website for Lavazza coffee describes QUALITÀ ORO and LAVAZZA QUALITÀ ORO as “the iconic product that made Lavazza famous worldwide”. It asserts that QUALITÀ ORO was the first product to be imported to Australia by the founders of Valcorp Fine Foods in 1955.

100        Moreover, trade mark applications were filed for LAVAZZA QUALITÀ ORO and MEDAGLIA D’ORO in 1979 and 1996, respectively, well before Cantarella filed its trade mark applications.

101        Furthermore, the Trade Mark Office in its decisions has generally determined that if an objection exists to registration of a trade mark in English, a similar objection would exist to any foreign language equivalent of those words. The primary judge was of the opinion that “Oro” and “Cinque Stelle” in their English translations “Gold” and “Five Stars” would not be distinctive and implicitly, objectionable. A number of Trade Mark Office decisions illustrate this fact: Re Application by Adrian Barr (1990) 18 IPR 196 at 197; Re Applications by Maxam Food Products Pty Ltd (1991) 20 IPR 381 at 384-385; Re Opposition by Cantarella Bros Pty Ltd [2007] ATMO 3 at [21]. In Re Applications by Maxam Food Products it was held that the Italian word “deliziosa” in its reference to food and drink was the equivalent of the English word “delicious”. It was a laudatory expression in relation to goods which would be recognised as such by a large number of ordinary Australians. Accordingly the mark could not be regarded as adapted to distinguish the goods from others. See also Burger King Corporation v Registrar of Trade Marks at 425.

102        In a similar vein, in this Court, Heerey J in Wong v Du (2006) 68 IPR 553 at [9]-[11] held that there was not a serious question to be tried when the owner of a registered logo mark comprising six Chinese characters meaning “Professional Driving School” sought to enjoin another trader using another sign comprising nine Chinese characters meaning “Melbourne Professional Driving School”.

103        For these reasons, upon the application of the general principle described by Kitto J in Clark Equipment in a way which is apt to this particular case, we are satisfied that Cantarella’s ORO and CINQUE STELLE trade marks are not inherently adapted to distinguish the designated goods from those of other traders in the relevant goods, notwithstanding that they may well distinguish goods within Cantarella’s range from other goods in that range.

Ground 3 – Trade Mark use

104        The success of this ground depended upon the success of grounds 1 and 2 in the notice of appeal, namely, the asserted lack of distinctiveness.

105        The primary judge found (at [129]) that Cantarella’s use of the trade marks in suit together with other words was a “conjunctive use”. Such a finding was open to the primary judge given his primary conclusion that the words were distinctive. We have concluded that the primary judge was wrong to so find. It follows that the primary judge was in error in finding that Cantarella has used and is using “Oro” and “Cinque Stelle” as trade marks within the meaning of ss 17 and 92 of the Act.

Relief

106        For all these reasons the appeal should be allowed together with the following orders:

1.    Paragraphs 1 to 12 and 17 of the orders made by Emmett J on 25 February 2013 be set aside.

2.    The application dated 10 February 2011 be dismissed.

3.    Pursuant to s 88(1)(a) of the Trade Marks Act 1995 (Cth) the Register maintained under the Act be rectified by cancelling the registration of each of the Australian Trade Marks Nos 829098 and 878231.

4.    The amended cross-claim be otherwise dismissed.

5.    The respondent on the appeal repay any monies paid to it by the appellant pursuant to paragraph 10 of the order made by Emmett J on 25 February 2013 in Federal Court proceeding No NSD 113/2011, with interest.

6.    The respondent on the appeal pay the appellant’s costs of and incidental to the proceedings in this Court and in the Federal Court of Australia both at first instance and on appeal.

Associate:

Dated:    30 September 2013