FEDERAL COURT OF AUSTRALIA

Australian Postal Corporation v Digital Post Australia [2013] FCAFC 153

THE COURT ORDERS THAT:

1.    The parties, within seven days, confer and provide to the Court a minute of order reflecting these reasons and dealing with costs, or, in the event of any disagreement, each party file and serve a short written submission as to the appropriate orders.

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

REASONS FOR JUDGMENT

INTRODUCTION

1    This is an appeal from the decision of the primary judge in Australian Postal Corporation v Digital Post Australia Pty Ltd (No 2) [2012] FCA 862.

2    The primary judge decided that ‘DIGITAL POST AUSTRALIA’ was not deceptively similar to ‘AUSTRALIA POST’ within the meaning of s 120(1) of the Trade Marks Act 1995 (Cth) (‘the TM Act’), that the domain names adopted by Digital Post Australia Pty Ltd (‘DPA’) did not infringe the ‘AUSTRALIA POST’ trade marks, and the adoption of the name ‘DIGITAL POST AUSTRALIA’ did not constitute misleading or deceptive conduct in contravention of Sch 2 of the Competition and Consumer Act 2010 (Cth). Furthermore, the primary judge held that DPA used its name in good faith, and as such, in the event that he had found ‘DIGITAL POST AUSTRALIA’ and ‘AUSTRALIA POST’ to be deceptively similar, DPA would have had a defence to the infringement claim under s 122(1) of the TM Act.

3    The Appellant (‘Australia Post’) is now only challenging the primary judge’s findings in respect of the TM Act. We confine our attention to that contest.

background

4    Since 30 August 1995, Australia Post has been the registered owner of trade mark No 759014 for ‘AUSTRALIA POST’ for mail delivery services, electronic mail delivery services and electronic mail communications services including e-mail, facsimile services and telegraph services.

5    Since 11 August 2009, Australia Post has been the registered owner of trade mark No 1314374 for ‘AUSTRALIA POST’ in respect of financial services including banking agency services, funds transfer services, credit services, billing services and bill payment services including by telephone and internet.

6    Since 25 August 2009, Australia Post has been the registered trade mark owner of trade mark 1317044 for ‘AUSTRALIA POST’ in respect of telecommunications services, electronic mail and electronic communication services, computer-based and computer-aided communications and the transmission of information, data, documents, text, messages, images and sound, including electronic transmission of publications and online forms.

7    On 14 March 2012 DPA announced that it would be launching a digital mail box service under the name ‘Digital Post Australia’ using the domain name ‘www.digitalpostaustralia.com.au’.

8    A` ‘digital mail box’ allows for customers to receive ‘digital mail’. Digital mail differs from email, most significantly in that a sender cannot post to a digital mail box without first being authorised by the owner of the mail box. This service has been primarily pitched as a means of financial institutions and utility providers communicating with their customers and allowing for bill payments and the like.

9    On 26 March 2012 under the name ‘AUSTRALIA POST DIGITAL MAILBOX’, Australia Post launched its digital mail box service. The marketing of this service, upon the evidence presented by DPA, was to provide a digital mail service for every Australian, and to all consumers across Australia.

10    On 27 March 2012, Australia Post commenced proceedings against DPA alleging that ‘Digital Post Australia’ and ‘www.digitalpostaustralia.com.au’ were deceptively similar to their trade marks.

THE PRIMARY JUDGE’S REASONS

11    The primary judge held at [14] that ‘digital postal mail’, ‘digital post’, ‘digital mail’, and ‘digital post service’ were generically used to refer to the digital mailbox service described above.

12    In relation to whether or not ‘DIGITAL POST AUSTRALIA’ was deceptively similar to Australia Post’s trade marks the primary judge came to the following conclusions:

[56] Having compared the two marks visually and aurally and considered the relevant surrounding circumstances, I do not consider that there is a real, tangible danger of deception or confusion occurring as a consequence of DPA adopting the mark DIGITAL POST AUSTRALIA. I do not believe that the ordinary consumer might be caused to wonder whether the digital mail services proposed to be operated by DPA come from the same source as the digital mail services proposed to be offered by Australia Post. The ordinary consumer would not entertain a reasonable doubt about the matter.

[57] The addition of the prefix “DIGITAL” and the different order of the words “POST” and “AUSTRALIA” in DPA’s mark are sufficient to avoid deception or confusion. The marks are visually and aurally distinct. They also convey different ideas to the consumer. The case of Health World Ltd v Shin-Sun Australia Pty Ltd [2005] FCA 5; (2005) 64 IPR 495 is instructive in this context. In that matter, Cooper J considered whether the marks HEALTHPLUS and INNER HEALTH PLUS were deceptively similar. As in this case, a descriptive word (“INNER”) had been added to prefix another existing two word mark (“HEALTH PLUS”). His Honour considered that the addition of the first word resulted in a substantial difference in meaning between the two marks. His Honour held there was no deceptive similarity even though the order of the second two words was not reversed. Jacobson J compared the marks again in Health World Ltd v Shin Sun Australia Pty Ltd [2008] FCA 100; (2008) 75 IPR 478 at [138] and found that:

the impression that the person of ordinary intelligence and memory would have of the Inner Health Plus mark is that of the dominant name and phrase, Inner Health...No such impression is created by the look or appearance of the trade mark HealthPlus...[which] is concerned with general health and well-being.

Similarly in this case, the essential element of DPA’s mark is the composite phrase “Digital Post” which conveys the idea of mail delivered in a digital form. The phrase “POST AUSTRALIA” which reverses “AUSTRALIA POST” in DPA’s mark would convey little meaning to the ordinary consumer in the absence of the preceding word.

[58] The lack of deceptive similarity in the present case is even more apparent when one considers the surrounding circumstances which the Court must take into account. As Windeyer J said in Shell at 416:

the deceptiveness that is contemplated must result from similarity; but the likelihood of deception must be judged not by the degree of similarity alone, but by the effect of that similarity in all the circumstances.

[59] The trade marks will be used in connection with digital mail services. Australia Post has a statutory monopoly over the delivery of letters and parcels. It is not yet associated in the minds of potential customers with the provision of digital mail. The potential audience for digital mail services is likely to be technologically competent and internet savvy. Members of that class will almost certainly be careful and astute in their selection of a digital mail service. Even in the context of a trade mark dispute concerning gourmet cheese, Middleton J in Yarra Valley Dairy Pty Ltd v Lemnos Foods Pty Ltd & Another [2010] FCA 1367; (2010) 191 FCR 297 considered at [278] that consumers were likely to:

at least take some care in choosing the product they intend to purchase. The consumer of this type of product is likely to be astute as to the characteristics of the product, and discerning in his or her purchasing habits.

It is difficult to imagine that anyone who is competent with computer technology will have any doubt that Digital Post Australia is separate and distinct from Australia Post. Although the name AUSTRALIA POST is entirely descriptive of its mail delivery services, it has become distinctive and iconic though extensive and prolonged use. In such circumstances, potential consumers of digital post services will perceive and pay attention to even slight changes to the mark. I find that the mark DIGITAL POST AUSTRALIA is not deceptively similar to the mark AUSTRALIA POST.

13    The primary judge considered expert evidence from Dr Downes on how consumers would perceive the marks (at [60] - [61]), and survey evidence where respondents were asked various questions about their impressions of ‘Digital Post Australia’ (at [62] - [64]), led by Australia Post. Dr Downes’ evidence was that consumers would regard the word ‘POST’ as the dominant feature of ‘DIGITAL POST AUSTRALIA’ and that consumers might consider that Australia Post had entered into a business using a new name as it had with other products like Express Post and POSTbillpay. The survey evidence was provided to show actual confusion when consumers were first confronted with Digital Post Australia.

14    The primary judge discounted both the expert and survey evidence primarily on the basis that neither was focussed on the intended customers for a digital mail service, but rather, consumers at large (at [61] and [64]).

15    For the same reasons his Honour found no deceptive similarity between ‘AUSTRALIA POST’ and ‘DIGITAL POST AUSTRALIA’, the primary judge did not consider the domain name ‘www.digitalpostaustralia.com.au’ to be deceptively similar to ‘AUSTRALIA POST’ (at [65]).

16    Despite finding no infringement of Australia Post’s marks, the primary judge briefly examined whether DPA could make out the good faith defences in ss 122(1)(a)(i) and (1)(b)(i) of the TM Act.

17    The primary judge primarily relied on the evidence of DPA’s Chairman, Mr Hynes, to find that DPA used its own name in good faith to indicate the intended purpose of its digital mail, not seeking to benefit from Australia Post’s iconic reputation.

australia post’s grounds of appeal

18    Australia Post submitted that the primary judge erred in his findings in relation to both deceptive similarity and whether a good faith defence was made out.

19    Specifically, Australia Post contended that:

    DPA’s digital mailbox had nothing to do with the ordinary meaning of the word ‘digital’ and the primary judge’s finding that that ‘digital postal mail’, ‘digital post’, ‘digital mail’, and ‘digital post service’ were generically used to refer to digital mailbox service facilitated the erroneous subsequent conclusion that consumers would not have been confused as to the origin of DPA’s product;

    The primary judge’s classification of potential consumers as technologically competent and internet savvy was too narrow and not supported by the evidence, and the relevant class of potential consumers was the population at large;

    The primary judge applied incorrect considerations when assessing deceptive similarity namely whether ‘AUSTRALIA POST’ was associated with the provision of digital mail box services;

    The primary judge incorrectly discounted the survey evidence and it showed actual customer confusion;

    Dr Downes’ expert evidence was also incorrectly discounted, which was uncontradicted evidence indicating that there was a reasonable probability of confusion;

    The primary judge made errors in law and fact in concluding the good faith defences were made out.

The evidence before the primary judge

20    We turn to the evidence before the primary judge.

Dr Downes’ expert evidence

21    Dr Downes was an expert on branding with extensive academic and professional experience in branding. He was instructed by the Australia Post to provide an expert report on whether, in his opinion, consumers would be confused as to the origin of DPA’s service.

22    DPA objected to the report being admitted at trial on the basis that the issue of confusion is a question for the Court and the report had very little probative value. The primary judge admitted the report but said he would give it weight commensurate with its relevance. As noted above, the primary judge discounted the report on the basis that it was focussed on consumers at large rather than the relevant consumers for the purposes of confusion.

23    It is necessary to refer to Dr Downes’ analysis in some detail to understand the context in which it was given and its intended focus.

24    Dr Downes’ analysed Australia Post’s marks as follows:

QUESTION 6: WHAT ARE THE ELEMENTS OF THE APPLICANT’S BRAND? TO WHAT EXTENT (IF AT ALL) ARE THOSE ELEMENTS ASSOCIATED WITH THE APPLICANT?

78    Based on my review of the materials provided to me by King & Wood Mallesons and my own observations as a marketer and brand strategist, the following are used by the Applicant as brand elements and are likely to be perceived by Australian consumers as elements of the Applicant’s brand:

78.1    The name “Australia Post”;

78.2    The word “Post”;

78.3    The Applicant’s “master brand” logo; and

78.4    The colour red and the colour scheme or combination of red and white.

79    The first brand element is the name “Australia Post”, which the Applicant has used since 1975. Given the ubiquity of the brand, the length of time over which the name has been used, and the frequency of contact that Australian consumers are likely to have had with the Applicant’s services, this name – as spoken and as a plain word mark, as well as in graphic form – is likely to be one of the most recognised brand names in Australia.

80    The second brand element is the word “Post”, independent of the word “Australia” and of any particular graphic or typographic style. The strength of the word “Post” as a brand element, and the presence of independent brand equity in the word “Post”, are clearly apparent from the way in which “Post” has been used by the Applicant as the basis for successful extensions or sub-brands including “Post Shop”, “Express Post”, “Print Post” and “PostBillPay” over many years. Further, the dominant visual feature of the Applicant’s “master brand” logo (as to which, see below) is the word “Post” in a bold, heavy typeface; the word “Australia” is presented in a much smaller, lighter and more condensed font than “Post”. Therefore, I consider it likely that Australian consumers have a common understanding of the word “Post” as referring to a single, specific and official government or semi-government service. In addition, I note that:

80.1    The word “Post” has been used continuously and consistently by the Applicant as a brand element in respect of a broad range of goods and services since 1975;

80.2    The word “Post” has been used as a brand element in a large number of brand extensions launched by the Applicant in respect of a broad range of services since that time; and

80.3    The idea of the word “Post” as denoting goods and services from a particular origin is also encapsulated in familiar phrases and concepts such as “in the post”, the “postman” or “postie”, and “post box”, each of which is likely to be clearly understood by the majority of Australians as referring to the Applicant and its services.

81    It is also significant in my opinion that Australian consumers do not use the word “Post” in relation to other forms of direct personal communication and the sending of packages, parcels and documents. For Example:

81.1    I am not aware of any consumers who say they “post” an email. This again, in my opinion, reinforces the distinctive nature of the association between the word “Post” and the Applicant and its “Australia Post” brand.

81.2    Consumers in my experience clearly differentiate “post” and “postal services” from other carriers of parcels and services through the use of terms such as “courier” services and “shipping”. I cannot recall having heard a consumer refer to a parcel shipped via Federal Express or a package delivered by a courier as having come “in the post”. Once again, in my opinion, this reinforces the strong and distinctive nature of the perceived association between the word “Post” and the Applicant and its “Australia Post” brand.

25    And concluded that:

QUESTION 9: WHAT IMPACT (IF ANY) IS THE USE BY DPA OF THE NAME “DIGITAL POST AUSTRALIA” LIKELY TO HAVE ON CONSUMERS WHO ARE AWARE OF THE APPLICANT’S BRAND?

88    In my opinion, use of the name “Digital Post Australia” is likely to lead a significant proportion of Australian consumers to associate the services offered by DPA with the Applicant. I hold this view for the following reasons.

89    The word “Post” is likely to be perceived by consumers as the most prominent and impactful feature of the name “Digital Post Australia” because:

89.1    The word “digital” is merely descriptive of a broad range of products and services (as I will explain in further detail below); and

89.2    The word “Australia”, considered in isolation, is familiar to Australian consumers as a component of many business names and brands and so less likely to attract consumer attention.

90    In these circumstances, and because the word “Post” is followed by the word “Australia”, many consumers, through the effects of selective attention and/or the Gestalt effect as I have described earlier in this report, are likely to mistakenly perceive “Digital Post Australia” as “Digital Australia Post” or “(Something) Australia Post” or simply “(Something) Post”.

91    Further, the effect of perceiving the word “Post” as the most prominent element in the name “Digital Post Australia” is likely to lead many consumers, through the process of spreading activation as I have described earlier in this report, to automatically recall and retrieve facts, concepts and attitudes already linked in their minds to the “Australia Post” brand, having been established through years of consistent use of the word “Post” as a brand element by the Applicant. In addition, through stimulus generalisation, consumers are likely to attribute qualities and judgments to the goods and services offered under the name “Digital Post Australia” based purely on its similarity to “Australia Post” and “Post”.

92    Even if some consumers do clearly perceive “Digital Post Australia” as distinct from either “Digital Australia Post” or “Australia Post”, in the absence of specific information and clarification, many such consumers will seek to draw inferences from the information available to them. Such inferences are likely to include:

92.1    That “Digital Post Australia” is a brand extension from the Applicant. In my opinion, this is especially likely to be the case, as the name adopts a syntax that has been very commonly used by the Applicant in other brand extensions, namely that the word “Post” is preceded by a descriptive word (eg “Express Post”, “Parcel Post”, “Print Post”).

92.2    That the Applicant has “outsourced” and/or “offshored” the provision of a digital mailbox service to another provider or contractor. This is because consumers have been exposed to the outsourcing by Australian firms of aspects of their operations, especially customer service, in the form of call centres, IT help desks and data management.

QUESTION 10: TO WHAT EXTENT (IF AT ALL) DO THE FOLLOWING MATTERS AFFECT YOUR ANSWER TO QUESTION 9:

10(a) the arrangement of the words “Australia” and “Post” in DPA’s name

93    The arrangement of words in the name “Digital Post Australia” is, in my opinion, unlikely to be important or significant in modifying consumer response to the combination and juxtaposition of the words “Post” and “Australia”. As I have noted above, the word “Post” is likely to be perceived by consumers as the most prominent and distinguishing feature of the name “Digital Post Australia” regardless of word order.

94    Australian consumers have been exposed to the names of Government departments and semi-Government organisations changing from time to time. In particular, there appears to have been a syntactical vogue in recent years in relation to the naming of such organisations for placing geographic indicators after the description of the category of interest. These changes have involved changes of word order and I am not aware of any reports of consumers being confused by these changes. Indeed, in my opinion, it is unlikely that many consumers have even noticed these changes in word order, because Government departments and semi-Government organisations have retained brand elements that are linked to existing associative networks in the minds of consumers. For this reason, I have no doubt that consumers continue to recognise such Government departments and semi-Government organisations as those with which they are familiar. For example:

94.1    The arm of the Victorian state government known as “Health Department, Victoria” during the 1980s and 1990s is now officially the “Department of Health, Victorian State Government”;

94.2    The Victorian government authority responsible for managing tourism promotion in that state was known as the “Victorian Tourism Commission” and “Victour” in the 1960s and 1970s but is now known as “Tourism Victoria”;

94.3    The Commonwealth government service known in 2012 as the “Australian Passport Office” was for many years known as “Passports Australia”; and

94.4    The Australian Dairy Corporation, to which I consulted in relation to brand strategy and identity, as I have noted earlier in this report, has since re-branded as “Dairy Australia”.

95    Similarly, many sporting organisations have changed their names in a way that changes word order. For example, the former Victorian Baseball Association is now known as “Baseball Victoria” and the former Australian Cricket Board is now known as “Cricket Australia”.

96    A change of word order has also been shown not to hamper the success of brand extensions in a number of commercial consumer categories from soft drinks and fast food to hotels, as the following examples illustrate:

96.1    The prefix “Mc” has become well established as a brand element of the McDonald’s quick-serve restaurant chain through its use in brand extensions including “McCafÉ” and “McMuffin”, where it is used as a prefix, but McDonald’s reverses the word order in respect of the product name “Big Mac”.

96.2    Coca-Cola has launched a number of line extensions such as “Diet Coke”, “Vanilla Coke” but in more recent years has very successfully launched its “Coke Zero” brand extension, in which the word order is reversed.

96.3    The worldwide Marriott hotel and resort brand has been extended in many ways, including its “JW Marriott” premium luxury brand, its family holiday offer “Marriott Vacation Club” and its budget business offering “Courtyard by Marriott”.

10(b) the presence of the word “Digital” in DPA’s name

97    The adjective “digital” is in very common use to describe many different types of products and services which a very large proportion of Australian consumers purchase or use, including “digital camera” or “digital television”. Accordingly, the word “digital” is likely to attract far less attention than the word “Post” as a brand element, and is thus less likely to be perceived by consumers.

98    Furthermore, consumers have been exposed to the fact that a number of Australian brands have launched brand extensions using the word “digital” to signify their adoption of digital technology and/or their entry into the online or other digital environment. For example, the subscription television provider FOXTEL has launched “Foxtel Digital” and “Fox Sports Digital”, the newspaper publisher Fairfax has launched “Fairfax Digital”, the telecommunications company Telstra has launched “Telstra Digital Business” and the television broadcaster the Nine Network has launched “9 Digital”.

99    Consequently, consumers are unlikely to perceive the word “digital” as being of assistance or relevance in differentiating DPA’s brand from the “Australia Post” brand. Rather, through the effects of selective attention and/or the Gestalt effect as I have described earlier in this report, consumers may well perceive the “Digital Post Australia” brand as a digital brand extension of the Applicant.

10(c) the absence of other elements of the Applicant’s brand

100    Absence of the concurrent use of other elements of the Applicant’s brand is unlikely to prevent most consumers from making some connection in their minds between the term “Digital Post Australia” and the Applicant. The word “Post”, especially when used in combination with the word “Australia” and regardless of word order, is likely – through the process of spreading activation as described above – to prompt activation and retrieval of the network of associations for the “Australia Post” brand, independent of the presence or absence of other brand elements linked to the Applicant’s brand.

101    Indeed, as I have noted above, the Applicant has made use of the high levels of association and the strength of this link to “Post” in extending its brand in many ways over the years in the form of such products and services as “Express Post”, “Fax Post” and “Post Shop”. Consumers are likely to perceive these brand extensions as related to the “Australia Post” brand, whether or not they are presented together with other elements of the Applicant’s brand.

10(d) the services in relation to which DPA’s name is used

102    The nature of services in relation to which “Digital Post Australia” is used is unlikely to alter the effects on consumers I have described above. Categorisation of DPA’s services using terms such as “digital postal mail”, “digital post”, “postal services”, “online postal services” or “postal system” is not likely to allow consumers to distinguish such services from those already offered by the Applicant. As I have explained elsewhere, the word “Post” and expressions such as “postal services” are likely to be strongly associated with the Applicant.

26    We will deal further with the report of Dr Downes and the issue of the relevant consumers below, however, we make some immediate observations.

27    Undoubtedly, the issue of confusion is a question of fact to be decided by the Court according to the law: see eg Australia Woollen Mills at 658-659 per Dixon and McTiernan JJ. If no expert evidence is led, or no evidence of actual confusion or wonderment is led, a court may still proceed to consider the issue of deceptive similarity based upon all the relevant circumstances. The analysis is one of impression. However, if expert evidence is led, and accepted into evidence, it may impact upon that impressionistic analysis.

28    In this proceeding, Dr Downes’ opinion that a significant proportion of consumers would associate the services offered by DPA with Australia Post was not based on a survey he had conducted, but rather on his experience and expert knowledge on branding. This was a proper basis upon which his expert evidence could be and was admitted into evidence. If his evidence was not wholly discounted, on the grounds found by the primary judge or otherwise, it would provide a basis for the Court to make a determination on deceptive similarity.

29    The main focus of Dr Downes’ evidence was irrelevant with respect to trade marks infringement. Fundamentally, the law requires that the marks must be compared. Australia Post’s relevant marks are ‘AUSTRALIA POST’ for the services so registered. However, Dr Downes considered ‘POST’, Australia Post’s ‘master brand’ logo, and the colour red and the colour scheme or combination of red and white, which are either a constituent element of the marks, or marks not the subject of the claim.

30    This is not a criticism of Dr Downes’ report or his expertise, but rather a reflection of the fact at first instance there was also a claim of misleading and deceptive conduct pursuant to Sch 2 of the Competition and Consumer Act 2010 (Cth), on which his evidence may have been relevant.

31    It would be dangerous to rely upon Dr Downes’ report in the context of considering the trade mark issues. Admittedly, there are some isolated comments which relate to the arrangement of the words “Australia” and “Post” and the use of the word “Digital”. However, these are matters the Court can consider itself in the context of answering the correct legal issue now for determination, not by reference to a general misleading conduct claim no longer in contention.

32    In our view, Dr Downes’ evidence should be given no prominence or weight in determining deceptive similarity.

Consumer surveys

33    We turn to the consumer surveys.

34    Australia Post led evidence from two online consumer surveys, the first with 1,180 respondents, and the second with 1,171 respondents, purportedly showing evidence of actual consumer confusion.

35    The questions in the two surveys were the same, but they differed in composition of respondents. The first survey was administered by a firm called ‘Quality Online Research’. The respondents to the first survey were chosen from a pool of 65,000 respondents who were part of the ‘Quality Online Research’ panel (‘the QOR Panel’), with certain demographic quotas to ensure a representative sample. Members of the QOR panel were recruited from respondents to the ‘Australia Lifestyle Survey’ which was sponsored by Australia Post. The Australian Lifestyle Survey was provided to three million households in electronic or hardcopy form. The respondents to the first survey received $1 and were entered into a competition to win $5,000 as a result of completing the survey.

36    In recognition that the responses to the questions in the first survey may have been impacted upon by the fact that the respondents would have responded to the Australian Lifestyle Survey previously, the respondents to the second survey were taken from a separate pool of respondents. The second survey was administered by a separate firm to the first survey, namely Research Now. The second survey had the same demographic quotas. The method of recruitment ‘Research Now’ used for the second survey was not disclosed.

37    Looking then to the questions (relevantly the same in both surveys), questions 1-9 concerned the demographics of the respondents.

38    The relevant questions were questions 10-12.

39    Question 10 was: ‘Are you responsible for any of the following in your home: Phone bills, Checking the mail, Going through the bills and statements?’

40    Question 11 was: ‘If you saw or heard of ‘Digital Post Australia’, what if anything would come to mind?’

41    Question 12 was: ‘If you saw or heard of a new service providing a secure online letterbox which lets a person receive and pay their bills, and store their important documents, and called ‘Digital Post Australia’, who would you think provides this service?’

42    In the first survey, in response to question 10, 92 per cent of respondents had either sole or shared responsibility for checking the mail, going through the bills and statements and paying bills. In response to question 11, Australia Post was mentioned 12 per cent of the time. In response to question 12, 70 per cent of respondents thought that Australia Post provided the service described.

43    Question 12 is the key question in relation to whether or not consumers would be confused as to the origin of the mark.

44    The responses to question 12 to the second survey, 65 per cent of respondents thought that the service was provided by Australia Post.

45    The primary judge discounted the results of the consumer survey on the basis that they were not targeted to the relevant consumers. We will say more about this below, but a number of other comments can be made.

46    First, DPA submitted that questions 10 and 11 set-up the respondents to answer ‘Australia Post’ in Question 12. Secondly, Questions 10-12 were not framed by Quality Online Research but by Australia Post. Thirdly, Question 12 does appear to be the product of questions 10 and 11. It may be said that consumers, while not countenancing ‘Australia Post’ as a response to question 11, if they were to consider questions 10 and 11 when answering question 12, may be more likely to respond Australia Post. That said, only 12 per cent of respondents to question 11 answered ‘Australia Post’, so at that stage in the survey, the vast majority of respondents had not considered Australia Post.

47    However, there was a significant problem concerning the recruitment of the first survey. As respondents of the first survey were taken from respondents to the Australian Lifestyle Survey, it is likely they were exposed to Australia Post branding. The Court cannot discount the likelihood that respondents may have Australia Post in their minds, at least sub-consciously, when completing the first survey.

48    In relation to the second survey, DPA took issue with the fact that there was no information about the method of recruitment. We consider that it is difficult to place too much emphasis on this survey for this reason, particularly having regard to our comments on the first survey. Furthermore, Australia Post in the course of written and oral submissions did not seem to place much emphasis on this second survey.

49    The weight to be given to the results in the consumer surveys must be considered in light of our comments. We accept that, at least in terms as a representation of the general public, the results to question 12 (found in both surveys) are indicative of an approach. However, if the surveys are inherently unreliable (as we think they are), then it would be impermissible to place any reliance upon them as contended for by Australia Post. We do not do so in considering deceptive similarity.

Evidence of good faith

50    The DPA board considered eight potential names of their digital mailbox product of which ‘Digital Post Australia’ was one.

51    DPA engaged Middletons solicitors to provide advice on their proposed marks (they provided four - ‘Digital Post Australia’, ‘Digital Postal Service (Australia)’, ‘National Digital Post’, and ‘Smart Post Australia’).

52    Middletons advised that there were no prior or pending registered trade marks which are substantially identical with or deceptively similar to the proposed marks which would cover the same or similar goods or services. They further advised that the trademarks ‘AUSTRALIA POST’ or ‘AUSPOST’ would not prevent registration of any of the proposed marks. They advised caution that Australia Post could make allegations of infringement or seek to prevent registration of the proposed mark. It can be accepted that DPA did not go further to instruct Middletons to advise on the issue of deceptive similarity.

53    Members of the DPA board were cross-examined on their deliberations about the selection of a name for their service. Mr Hughes who was the head of Operations and Finance, and Mr Hynes, the Chairman of the Board of DPA, gave relevant evidence concerning the issue of good faith.

54    Mr Hughes’ evidence was that he was concerned that there may be a statutory restriction around using the name ‘Post’ in the same way that there was in using the name ‘Bank’ in financial legislation. We do not believe that Mr Hughes was concerned that consumers may be confused as to the origin of ‘Digital Post Australia’; rather he was concerned that there may be an across the board restriction on the use of the word ‘Post’.

55    Mr Hyne’s evidence was, as summarised by the primary judge at [69]-[70], that he was focused on finding a name for the service that was functional and descriptive, and further that it was he, as Chairman, who chose the name ‘Digital Post Australia’. In cross-examination it was put to him that there may be confusion between Australia Post’s marks and DPA’s, and this was unequivocally denied.

56    There are a number of other matters which may cast doubt upon the evidence of Mr Hynes, each relied upon by Australia Post. For instance, DPA was well aware of Australia Post’s reputation, was aware of the potential for confusion, and was wishing to adopt and use a name that conveyed the impression of a service being provided by a utility. In addition, DPA had available to it other descriptions to indicate the kind and intended purposes of its services, which it did not use.

57    It can be accepted that the primary judge made no finding in terms that DPA had an honest belief no confusion would arise from its adoption of ‘DIGITAL POST AUSTRALIA’. Nevertheless, the primary judge clearly accepted the evidence of Mr Hynes that DPA chose the name ‘DIGITAL POST AUSTRALIA’ “without any desire to be associated with Australia Post or to ‘leverage’ any of its brands” and because “it was descriptive of the service proposed to be offered [69]. Contrary to the submissions of Australia Post, the primary judge’s approach shows he accepted the onus of proof borne by DPA on this issue. Further, the finding of the primary judge would adequately cover a finding of good faith, involving as it does, honest use without ulterior motive, no intention to deceive, or to make use of the goodwill acquired by another trader.

58    Mr Hynes’ evidence was not glaringly improbable or at odds with incontrovertible facts. This evidence was not challenged directly in cross-examination. The various matters raised by Australia Post, which may put doubt on the evidence of Mr Hynes, do not reach the level where an appeal court should intervene in the primary judge’s findings based on his observation and acceptance of the most important witness on the issue of good faith.

The law on deceptive similarity

59    The principles of law to apply on deceptive similarity are largely uncontroversial.

60    Section 120 of the TM Act provides:

A person infringes a registered trade mark if the person uses as a trade mark a sign that is substantially identical with, or deceptively similar to, the trademark in relation to the goods or services in respect of which the trade mark is registered.

61    Section 10 of the TM act further provides that:

For the purposes of this act, a trade mark is taken to be deceptively similar to another trade mark if it so nearly resembles that other trade mark that it is likely to deceive or cause confusion.

62    The task to undertake in determining deceptive similarity has been variously described.

63    In a passage approved by the High Court in Cooper Engineering Co Pty Ltd v Sigmund Pumps Ltd (1952) 86 CLR 536 at 538, Lord Parker in the English High Court in Re an Application by the Pianoist for the Registration of a Trade Mark (1906) 1A IPR 379 at 380; 23 RPC 774 at 777 stated:

You must take the two words. You must judge of them, both by their look and by their sound. You must consider the goods to which they are applied. You must consider the nature and kind of customer who would be likely to buy those goods. In fact, you must consider all the surrounding circumstances; and you must further consider what is likely to happen if each of those trade marks is used in a normal way as a trade mark for the goods of the respective owners of the marks. If considering all those circumstances, you come to the conclusion that there will be a confusion...in the mind of the public...you must refuse the registration in that case.

64    Justices Dixon and McTiernan in Australian Woollen Mills Lts v FS Walton Stores & Co Ltd (1937) 58 CLR 641 (Australian Woollen Mills) at 658 added further context:

In deciding this question [whether there is a reasonable probability of deception or confusion], the marks ought not, of course, to be compared side by side. An attempt should be made to estimate the effect or impression produced on the mind of potential customers by the mark or device...The effect of spoken description must be considered. If a mark is in fact or from its nature likely to be the source of some name or verbal description by which buyers will express their desire to have the goods, then similarities both of sound and of meaning may play an important part. The usual manner in which ordinary people behave must be the test of what confusion or deception may be expected. Potential buyers of goods are not to be credited with any high perception or habitual caution. On the other hand, exceptional carelessness or stupidity may be disregarded. The course of business and the way in which the particular class of goods are sold...the setting, and the habits and observation of men considered in the mass affords the standard...

…The main issue in the present case is a question never susceptible of much discussion. It depends on a combination of visual impression and judicial estimation of the effect likely to be produced in the course of the ordinary conduct of affairs. (at 659)

65    Furthermore, in Southern Cross Refrigerating Co v Toowoomba Foundry Pty Ltd (1954) 91 CLR 592 at 595 Kitto J elaborated:

It is enough if the ordinary person entertains a reasonable doubt... In considering the probability of deception, all the surrounding circumstances have to be taken into consideration. (This includes the circumstances in which the marks will be used, the circumstances in which the goods will be bought and sold, and the character of the probable purchasers of the goods).

66    The impressionistic nature of the analysis is borne out in the following passage from Windeyer J in Shell Co of Australia Ltd v Esso Standard Oil (Aust) Ltd (1961) 109 CLR 407 at 415:

[The comparison is] between, on the one hand, the impression based on recollection of the plaintiff’s mark that persons of ordinary intelligence and memory would have; and, on the other hand, the impressions such persons would get from the defendant’s [use of its marks].

67    More contemporary authorities from this Court have restated these principles.

68    In Registrar of Trade Marks v Woolworths Ltd (1999) 93 FCR 365 at [50], French J (as his Honour then was), with whom Tamberlin J agreed, set out a number of propositions relevant to the question of deceptive similarity. His Honour restated the principles as follows:

(i)    To show that a trade mark is deceptively similar to another it is necessary to show a real tangible danger of deception or confusion occurring. A mere possibility is not sufficient.

(ii)    A trade mark is likely to cause confusion if the result of its use will be that a number of persons are caused to wonder whether it might not be the case that the two products or closely related products and services come from the same source. It is enough if the ordinary person entertains a reasonable doubt.

It may be interpolated that this is another way of expressing the proposition that the trade mark is likely to cause confusion if there is a real likelihood that some people will wonder or be left in doubt about whether the two sets of products or the products and services in question come from the same source.

(iii)    In considering whether there is a likelihood of deception or confusion all surrounding circumstances have to be taken into consideration. These include the circumstances in which the marks will be used, the circumstances in which the goods or services will be bought and sold and the character of the probable acquirers of the goods and services.

69    Recently, Bromberg J, in REA Group Ltd v Real Estate 1 Ltd [2013] FCA 559 summarised the position as follows:

226    A mark will be deceptively similar to another mark if there is “a real, tangible danger” of confusion occurring. A mark may be deceptively similar to another mark if its use causes people to wonder whether it might not be the case that the products to which the marks are applied come from the same source. Allowance must be made for the imperfect recollection of a trade mark by people of ordinary memory and intelligence especially those who know one mark but do not know the other: Vivo International Corporation Pty Ltd v Tivo Inc (2012) 294 ALR 661 at [115] (Nicholas J, with whom Dowsett J agreed); and see [77] and [80] (Keane CJ).

227    The threshold for trade mark infringement is lower than that required to establish misleading or deceptive conduct: Puxu at 198 (Gibbs CJ). The wider inquiry of the kind which might be undertaken in a passing off case or where misleading or deceptive conduct is alleged is not appropriate, because the court is not looking at the totality of the conduct: Crazy Ron’s at [86]-[87]. The court needs to consider the use of the respondent’s mark alone. The fact that a respondent makes it clear by means external to the mark that there is no connection between its product or services and that of the applicant is not relevant: Mark Foy Limited v Davies Coop & Co Ltd (1956) 95 CLR 190 at 205 (Williams J).

70    It is clear from the above passages that the threshold for confusion is not high. Courts must compare the marks visually and aurally in the context of how the marks are used, and decide if there is a reasonable probability that the ordinary person to whom the marks are targeted, entertains a reasonable doubt as to the relationship between the marks. But there must be a realistic assessment, and a mere possibility of confusion is not enough.

the good faith defences

71    Sections 122(1)(a)(i) and (1)(b)(i) of the TM Act provide a ‘good faith’ defence to infringing conduct in the following terms:

Section 122:

(1)    In spite of section 120, a person does not infringe a registered trade mark when:

(a)    the person uses in good faith:

(i)    the person’s name or the name of the person’s place of business…

(b)    the person uses a sign in good faith to indicate:

(ii)    the kind, quality, quantity, intended purpose, value, geographical origin, or some other characteristic, of goods or services…

72    Central to both defences is the notion of ‘good faith’. This was the real issue raised in this appeal on the application of s 122(1) of the TM Act.

73    In Johnson & Johnson Aust Pty Ltd v Sterling Pharmaceuticals Pty Ltd (1991) 30 FCR 326 at 353-4 Gummow J held that the respondent must show that it acted honestly and without ulterior motive. Earlier, in Baume & Company Ltd v AH Moore Ltd [1958] Ch 907 at 921, Romer LJ held that the respondent must honestly have believed that no confusion would arise and that there was no intention to wrongly divert business.

74    There have been many cases where the good faith defences have been permitted, but what is obvious is that the defence is clearly not available in cases where the respondent is engaging in sharp conduct with an eye on wrongly diverting business.

75    For example, and in the context of s 122(1)(a)(i), Allsop J (as his Honour then was) in Anheuser-Busch Inc v Budejovicky Budvar (2002) 56 IPR 182 (Anheuser-Busch) at [216] – [218] held that while there was no fraud or conscious dishonesty, the fact the respondent knew about its competitor’s registered trade marks and reputation in Australia, the respondent could not hold the view that no confusion would arise, and use of the relevant marks was not in good faith. This was, of course, a finding made in the particular circumstances of that proceeding.

FURTHER discussion

76    We turn to one threshold issue which was addressed by the parties and the primary judge.

77    The primary judge seemed to proceed on the basis that the relevant class of consumers for digital mail services were likely to be technologically competent and internet savvy, and were consumers interested in receiving banking mail and bills online.

78    Australia Post contended this was too narrow and the relevant class of consumers was the Australian public at large. DPA contended that the primary judge’s formulation was correct, or in the alternative, that the relevant class of consumers were those who had an interest in having mail from banks and other large trusted organisations delivered to a digital post box.

79    In our opinion, the primary judge’s classification was too narrow. The evidence before the Court, led by DPA itself, was that all persons in Australia (who relevantly pay bills) would be targeted for the digital service. The service was intended to be and was marketed to the general public, admittedly primarily to those who had (or would have) access to a digital mailbox. The relevant class of consumer is at the very least a member of the general public who has access to or could have access to a digital mailbox.

80    However, we do not think this debate has any real significance for the purposes of the disposition of the appeal. By this we mean that whether one applies the legal test in relation to consumers generally or to any of the classes as identified above, the result would be the same.

81    The correct approach is to consider whether a substantial or significant number of the general public potentially interested in a digital mailbox service would have cause to wonder if DPA’s service was associated with Australia Post. We would not credit these consumers necessarily with habitual high perception or caution, or even treat them as “internet savvy”. Nor would we look to see whether Australia Post was associated in the minds of the general public with digital mail. To the extent these matters were relied upon by the primary judge and supported his conclusion, they were extraneous to the main enquiry.

82    However, in our view, the primary judge did come to the correct conclusion in finding no deceptive similarity.

83    In the reasons we have identified above, the primary judge looked to the visual and aural composition of the marks, and concluded they were distinct, and conveyed different ideas to the consumer. He compared the whole mark ‘DIGITAL POST AUSTRALIA’ with ‘AUSTRALIA POST’. At [57] the primary judge concluded (correctly in our view) that the essential element of DPA’s mark was the composite phrase ‘DIGITAL POST’, conveying the idea of mail delivered in a digital form. To that extent the term ‘DIGITAL POST AUSTRALIA’ was descriptive.

84    The trial judge correctly observed, albeit by reference to a limited class of consumers, that members of the consumer group would be careful and astute in their selection of digital mail services. This is not to observe anything other than what would be obvious. We do not read the primary judge’s comment in this regard as inconsistent with the impressionistic approach that needs to be undertaken by reference to the likely consumers with ordinary intelligence and memory.

85    We have already indicated that the evidence of Dr Downes, and the survey evidence is to be discounted and treated as unreliable. This is for the reasons given above and not for the reasons expounded by the primary judge.

86    Once that evidence was disregarded (on whatever basis) the primary judge was able to and did conclude that there was no deceptive similarity along the analysis we have set out above. Whatever other circumstances or matters he may have then taken into account do not detract from this analysis and subsequent conclusion.

87    Consequently, ‘DIGITAL POST AUSTRALIA’ and ‘www.digitalpostaustralia.com.au’ were correctly held to be not deceptively similar to Australia Post’s registered trade marks numbers 1314374 , 1317044 and 759014 .

Good faith defences

88    Although unnecessary to do so, we turn to consider whether DPA can rely on the defences available in ss 122(1)(a)(i) and (1)(b)(i).

89    The onus is on DPA to establish that they were using their name or the name of the person’s place of business in good faith, or that they were using their marks in good faith to indicate the kind, quality, quantity, intended purpose, value, geographical origin, or some other characteristic, of goods or services.

90    Clearly, DPA was aware of Australia Post’s reputation in Australia. There were discussions at the Board level as to issues concerning confusion and DPA obtained legal advice on the registrability of their marks.

91    We have already discussed the evidence of Mr Hughes and Mr Hynes.

92    The concerns of Mr Hughes were not indicative of an awareness that DPA’s marks were deceptively similar to Australia Post’s; rather (as we have indicated) there was a misplaced concern about the use of the word ‘Post’. Mr Hynes gave evidence that he was not concerned that consumers would be confused. He specifically denied in cross-examination that he appreciated that there may be some confusion amongst consumers.

93    The evidence of Mr Hughes and Mr Hynes, upon its acceptance, was sufficient for DPA to discharge its onus.

94    This is not a situation like Anheuser –Busch where there was wilful blindness to the potential for confusion. The primary judge considered the deliberations of the DPA Board, and accepted the version of events given by its Chairman, Mr Hynes.

95    The findings of the primary judge at [66]-[71] dealing with good faith were open to him. As we have said above in discussing the evidence of Mr Hynes, his evidence was accepted and was a proper basis for the primary judge’s conclusions on good faith.

CONCLUSION

96    For the above reasons, we will dismiss the appeal.

97     As there may be an issue as to costs, we will direct that the parties within seven days confer and provide to the Court a minute of order reflecting these reasons and dealing with costs, or in the event of any disagreement, each party file and serve a short written submission as to the appropriate orders.

Associate:

Dated:    6 December 2013