FEDERAL COURT OF AUSTRALIA

Lift Shop Pty Ltd v Easy Living Home Elevators Pty Ltd [2014] FCAFC 75

Citation:

Lift Shop Pty Ltd v Easy Living Home Elevators Pty Ltd [2014] FCAFC 75

Appeal from:

Lift Shop Pty Ltd v Easy Living Home Elevators Pty Ltd [2013] FCA 900

Parties:

LIFT SHOP PTY LTD (ACN 109 724 647) v EASY LIVING HOME ELEVATORS PTY LTD (ACN 083 936 896)

File number(s):

NSD 2040 of 2013

Judge(s):

BESANKO, YATES AND MORTIMER JJ

Date of judgment:

20 June 2014

Catchwords:

TRADE MARKS whether use of words of composite mark in title of web page in search results is trade mark use – whether impugned sign is deceptively similar to registered mark

Legislation:

Trade Marks Act 1995 (Cth) s 120(2)

Trade Marks Act 1955 (Cth) s 6 Competition and Consumer Act (2010) (Cth) Sch 2

Cases cited:

The Shell Company of Australia Limited v Esso Standard Oil (Australia) Limited (1963) 109 CLR 407

Coca Cola Company v All-Fect Distributors Ltd (1999) 96 FCR 107

Nature’s Blend Pty Ltd v NestlÉ Australia Ltd (2010) 272 ALR 487

Australian Woollen Mills Limited v F. S. Walton and Company Limited (1937) 58 CLR 641

Johnson & Johnson Australia Pty Ltd v Sterling Pharmaceuticals Pty Ltd (1991) 30 FCR 326

Optical 88 Ltd v Optical 88 Pty Ltd (2010) 275 ALR 526

Crazy Ron’s Communications Pty Ltd v Mobileworld Communications Pty Ltd (2004) 209 ALR 1 Southern Cross Refrigerating v Toowoomba Foundry (1954) 91 CLR 592

Davison M and Horak I, Shanahan’s Australian Law of Trade Marks and Passing Off, (5th ed, Lawbook Co,. 2012)

Date of hearing:

12 February 2014

Place:

Sydney

Division:

GENERAL DIVISION

Category:

Catchwords

Number of paragraphs:

69

Counsel for the Appellant:

Mr R Webb SC with Mr R Rajalingam

Solicitor for the Appellant:

Giles Payne & Co.

Counsel for the Respondent:

Mr D B Studdy SC with Ms J M Beaumont

Solicitor for the Respondent:

Lander & Rogers Lawyers

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY

GENERAL DIVISION

NSD 2040 of 2013

ON APPEAL FROM THE FEDERAL COURT OF AUSTRALIA

BETWEEN:

LIFT SHOP PTY LTD (ACN 109 724 647)

Appellant

AND:

EASY LIVING HOME ELEVATORS PTY LTD (ACN 083 936 896)

Respondent

JUDGES:

BESANKO, YATES AND MORTIMER JJ

DATE OF ORDER:

20 JUNE 2014

WHERE MADE:

SYDNEY

THE COURT ORDERS THAT:

1.    The appeal be dismissed.

2.    The notice of contention be dismissed.

3.    The appellant pay the costs of and incidental to the appeal.

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

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY

GENERAL DIVISION

NSD 2040 of 2013

ON APPEAL FROM THE FEDERAL COURT OF AUSTRALIA

BETWEEN:

LIFT SHOP PTY LTD (ACN 109 724 647)

Appellant

AND:

EASY LIVING HOME ELEVATORS PTY LTD (ACN 083 936 896)

Respondent

JUDGES:

BESANKO, YATES AND MORTIMER JJ

DATE:

20 JUNE 2014

PLACE:

SYDNEY

REASONS FOR JUDGMENT

THE COURT:

1    This is an appeal from a judgment in which the appellant’s claims against the respondent for trade mark infringement, contravention of s 18 of the Competition and Consumer Act (2010) (Cth) Sch 2 (the Australian Consumer Law) and passing-off were dismissed. The appeal is limited to the dismissal of the appellant’s claim for trade mark infringement.

2    The mark in suit is registered trade mark no. 1198409. It is the composite mark shown in Schedule 1 to these reasons. The mark is registered in Class 7 for “Elevators (lifts)”.

The proceeding below

3    The appellant and the respondent are competitors in the supply of customised elevators/lifts and disability platform elevators. The appellant’s claim arises from steps taken by the respondent in about September 2012 to modify its web site to enhance its rankings in search results that appear when internet searches are conducted by prospective customers for products of the kind supplied by the parties.

4    The primary judge (at [12]-[15]) described the steps taken by the respondent:

In about March 2011, Mr Pizzie decided that the respondent’s website should be updated. This task was assigned in about August 2011 to Ms Milena Medeiros, who was acting as the National Marketing Manager at the time. Ms Medeiros obtained the assistance of a firm called TopRankings which advised specifically on “search engine optimisation”. The respondent was asked by TopRankings to nominate the website addresses of its top five competitors, select keywords to “target” and draft a title for its website including the top five keywords selected. TopRankings provided a list of suggested keywords, including “easy living” and “easy living home elevators”, terms clearly associated with the respondent. The list also included “residential lifts”, “home elevators”, “home lifts”, “domestic lifts”, “lifts for homes”, “lift shop” (ranked 8 of 173) and “liftshop” (ranked 27 of 173). The then National Marketing Manager chose “lift shop” (but not “liftshop”) as one keyword to be used.

In about mid-June 2012, Ms Dijana Vojvodic, who normally filled the position of National Marketing Manager, returned from maternity leave and resumed her normal duties, including finalising the website changes. Ms Vojvodic developed some content for the home page, including:

“Shopping for lifts?

OR looking for a lift shop?

OR Working on a project that requires an elevator?

Easy Living Home Elevators can help”

In changes made subsequently, the phrase “we’re a lift shop in our 14th year” was added to the home page.

The changes that were made, especially the addition of the term “Lift Shop” in the title of the website, the term “lift shop” in the content of the home page and nomination of “lift shop” as a keyword, had the result that for any search using or including the term “lift shop” the applicant and the respondent usually appeared on page one of the search results and their entries usually appeared in fairly close proximity.

5    At [22] of his reasons, the primary judge said:

I am satisfied that use of the term “Lift Shop” in the title of the respondent’s website, and the term “lift shop” in the content of the home page, together with the designation of the term “lift shop” as a keyword, was intended to ensure that details of, and access to, the respondent’s website were made available to anyone who might search for that term, as well as for “lift” or “lifts”.

6     It is important to note that, even though the primary judge referred to the respondent’s use of “lift shop” in the content of the home page of its web site and its nomination of “lift shop” as a keyword, the appellant’s case on trade mark infringement only concerns the use by the respondent of “Lift Shop” in the title of its web page as shown by search results.

7    Relatedly, it is important to appreciate that the use complained of is one directed to the display of “Lift Shop” in association with the respondent on a page of search results which displays the same words (or variations of them) in association with others, including (where appearing) in the titles of their respective web pages. This is the setting in which the respondent’s conduct falls to be considered.

8    Examples of search results responding to a search on the internet for “lift shop” were in evidence. The primary judge noted that, over time, there had been several changes to the title of the respondent’s web page, although not to its URL (www.easy-living.com.au) or the descriptions of its business appearing in the search results under its URL.

9    In a search conducted on 8 October 2012, the entry relating to the respondent on the results page was shown as:

Easy Living Lifts | Home Elevators | Lift Shop – Lift Shop

www.easy-living.com.au

At Easy Living home elevators website you will find details on all of our lifts and home elevators here, which will help you achieve the easy living you deserve.

10    In a search conducted in January 2013, the entry relating to the respondent on the results page was shown as:

Easy Living Lifts | Home Elevators | Lift ShopHome passenger Lifts

www.easy-living.com.au/

At Easy Living home elevators website you will find details on all of our lifts and home elevators here, which will help you achieve the easy living you deserve.

11    In a search conducted on 5 August 2013, the entry relating to the respondent on the results page was shown as:

Easy Living Lifts | Home Elevators | Lift ShopHome Elevators …

www.easy-living.com.au/

At Easy Living home elevators website you will find details on all of our lifts and home elevators here, which will help you achieve the easy living you deserve.

12    These searches showed “Lift Shop” in bold lettering because these words matched the search criterion “lift shop”. Indeed, the evidence indicates that wherever the words “lift” and “shop” or variations of these words (including “lifts”, “Lifts”, “Shopping”, “liftshop”, and so on) appear in the search results, they are shown in bold lettering.

13    At the time of the hearing, a comparable search revealed the following details in respect of the appellant:

Australia’s No 1 for Luxury Home Elevators | Lift Shop | Multi-Award …

www.liftshop.com.au/

Lift Shop is Australia’s No. 1 multiple award-winning leader in quality, luxury home elevators. Lift Shop is a national supplier of luxury home lifts, residential lifts …

14    The appellant and the respondent were not the only businesses that appeared when an internet search for “lift shop” was carried out. The primary judge noted the following three results that were obtained when the relevant search was undertaken:

Lift Shop

www.MonorailElevators.com.au

Stairlift & Homelift Specialist To Suit All Homes. Call Now. Sydney.

Lift Shop near Sydney, New South Wales

bing.com/local

1.    Southwall Lifts & Hoists – Website – 1800 244 787 Sydney

2.    Master Lifts – (02) 9907 4055 Sydney

3.    Lift Fix – Website – (02) 9822 2301 Sydney

Data from: Yellow Pages®

Lift Shop Equipment > > Home

www.liftshopequipment.com

Lift Shop Equipment is a equipment repairs service, that services forklifts, farm equipment, construction equipment and any other types of repair. Need a part for …

15    In relation to these results, the primary judge (at [26]) found:

It appears from these entries that the term “lift shop” is used descriptively by businesses not associated in any way with either the applicant or the respondent to draw attention to themselves.

16    This finding is not challenged. It is clear from the primary judge’s reasons that he did not regard these results as exemplifying the trade mark use of “Lift Shop”.

17    The primary judge made the following findings (at [29]-[31]) in relation to the respondent’s commercial objectives in carrying out the changes to its web site:

I am satisfied that one commercial objective of the respondent was to appear in search results which were likely to identify the applicant. That objective was part of a wider objective to compete with the applicant whenever possible by drawing the applicant’s potential customers’ attention to the respondent’s services. However, accepting that the term “Lift Shop” in the title of the web page and the term “lift shop” in the contents of the home page were chosen (together with nominating “lift shop” as a keyword) to bring the respondent’s business to the attention of potential customers of the applicant, that does not mean that the respondent thereby suggested, or intended to suggest, an association with the applicant.

To begin with, the material to which I earlier referred clearly suggests that, in this area of commercial endeavour, the term “lift shop” also has an understood generic connotation. The applicant ultimately has not established to the requisite standard that the respondent’s use would be understood by consumers in any other way.

Moreover, I am not satisfied that it was ever any part of the objective of the respondent to suggest any association between the respondent’s business and that of the applicant. On the contrary, in my view the objective was to differentiate the respondent’s business from that of the applicant and make it clear that doing business with the respondent was open as an alternative to doing business with the applicant. The respondent did not hope to take the applicant’s business as a result of some misunderstanding that the respondent and the applicant might be associated. The respondent sought to obtain business in open competition with the applicant.

18    These findings are not challenged.

19    The primary judge made the following findings (at [37]-[38]) in relation to the possibility of confusion when the search results relating to the appellant and the respondent are presented to consumers:

The objective of the business, when it sets out to optimise search results in relation to its website, is to get high rankings in the search and, if possible, a page one position in the results. Assuming that the merchant achieves a page one position, at this point the objective of each of the merchant and the potential consumer has not yet been achieved. The merchant has succeeded in drawing the means of access to its website to the attention of the consumer, and the consumer has been provided with a means of obtaining further information, but no form of commercial exchange can occur without further steps on the part of the consumer.

On the evidence in the present case, the information provided by the search includes the URL as well as the title of the website provided by the merchant and a short description. The evidence demonstrated that the information provided by the applicant and the respondent (and the means to go to their respective websites) is invariably displayed in close proximity, often one after the other. The applicant’s URL has a close association with its mark (www.liftshop.com.au). The respondent’s URL also has a close association with its own mark (www.easy-living.com.au). In my view, there is no respectable possibility of confusion, even at this point, about whether the respondent’s website is a surrogate for the applicant’s or that the respondent is suggesting that it is associated with the applicant. The two sets of information are presented as alternatives, consistent with the idea that the applicant and respondent are competitors rather than being associated.

20    These findings are not challenged.

21    The primary judge considered the allegation of trade mark infringement at two points in time. The first was in October 2012: see the search results quoted in respect of the respondent at [9] above. The second was in January 2013: see the search results quoted in respect of the respondent at [10] above. In written submissions, the appellant drew attention to the fact that the primary judge did not appear to give consideration to the search results quoted in respect of the respondent as at 5 August 2013. It is not clear why the primary judge appeared to confine his consideration to the two examples identified. Ultimately, that matter is without consequence because the third example stands in no different position to the two other examples.

22    The primary judge noted, in each case, that the title of the respondent’s web page contained three initial elements (Easy Living Lifts ǀ Home Elevators ǀ Lift Shop). The primary judge found (at [42]) that the first element, Easy Living Lifts, was a use of those words as a trade mark, and that the second element, Home Elevators, was a use that was “obviously merely descriptive”.

23    In relation to the contentious part of the title, the third element Lift Shop, the primary judge found (at [43]):

It is clear from the search results in evidence that other businesses have also used the term in their titles and that the Bing search engine used it to group three lift businesses together. I am also satisfied, for reasons given earlier, that the respondent did not wish to suggest any association with the applicant. I am not satisfied, therefore, that the respondent used the term “Lift Shop” as a mark, much less as its own mark. In my view, the term was used in a descriptive way to take advantage of the operation of the search engines.

24    The primary judge concluded (at [44]) that, as applicant, the appellant had failed to discharge its onus of showing that the respondent had used “Lift Shop” as a trade mark in the title of its web page. It followed that the respondent had not infringed the mark in suit.

25    The primary judge also found, however, that if, contrary to his conclusion, the respondent had used “Lift Shop” as a trade mark in the title of its web page, then infringement would have been established on the basis that, when so used by the respondent, “Lift Shop” was a sign that was deceptively similar to the mark in suit. The respondent has filed a notice of contention challenging the correctness of that finding.

The appellant’s submissions

26    The appellant submits that the primary judge erred in concluding that it had not discharged its onus of showing that the respondent had used the term “Lift Shop” as a trade mark in the title of its web page. It submits that the primary judge did not apply an objective test in determining whether “Lift Shop” had been used as a trade mark. It submits that the primary judge erred by determining that question on the basis of the respondent’s subjective intention.

27    The appellant submits that this error was “compounded by additional errors”. The appellant identified two additional errors.

28    The first relates to the primary judge’s finding that the first element in the title of the respondent’s home page on its website was the use of “Easy Living Lifts” as a trade mark. The appellant submits:

… His Honour appears to proceed on the basis that the first element of the respondent’s home page title is a sign used as a trademark which tells against a finding that “Lift Shop”, in the third element, also has trademark significance. An acceptance that it does have trademark significance, it does not prevent Lift Shop also functioning as a trademark. A sign may function as a trademark even though another mark is used in conjunction with it.

29    The second asserted “additional” error relates to the primary judge’s finding (also at [43]) that other businesses used the term “Lift Shop” in the titles of their web pages. The appellant submits that this is irrelevant. It developed its submission in the following way:

… The context within which the question of trademark use falls to be determined consists of the document of the home page of the respondent, to the extent that it is reproduced in search engine results. In other words, the relevant context is the material reproduced from the search results as set out in the judgment at [18]-[20] and [41]. The use by other traders of the same term cannot bear upon the question whether the use by the respondent is use as a trademark; s. 120 is concerned with the use of the sign by the respondent. Others may use the term descriptively or, as a trademark, or in both ways but that possibility is extraneous to the relevant enquiry …

30    The appellant submits that, when the use of “Lift Shop” in the title of the respondent’s web page is assessed objectively, it is clear that it does function as a trade mark. The appellant submits that the title of the web page is given “pre-eminence” in the search results and stands in contrast to the description that follows. It submits that the arrangement of the elements in the title, their content and their separation by “vertical dividers” have the effect of emphasising that trade mark function.

Consideration

31    This appeal concerns the application of s 120(2)(b) of the Trade Marks Act 1995 (Cth) (the Act), which 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 trade mark in relation to:

(b)    services that are closely related to registered goods; …

However, the person is not taken to have infringed the trade mark if the person establishes that using the sign as the person did is not likely to deceive or cause confusion.

32    There is no dispute between the parties that the respondent has used “Lift Shop” in respect of services that are closely related to registered goods (in this case, “Elevators (lifts)”). The immediate question is whether those words (a sign) have been used as a trade mark.

33    The test of whether a sign has been used as a trade mark within the meaning of120 of the Act is an objective one.

34    In The Shell Company of Australia Limited v Esso Standard Oil (Australia) Limited (1963) 109 CLR 407, it was necessary for the court to decide whether the appellant’s use of an animated “oil drop” figure in a television commercial in relation to the appellant’s petroleum product was use by the appellant of that figure as a trade mark for the purpose of the Trade Marks Act 1955 (Cth). In considering that issue, Kitto J (at 424-425), with whom Dixon CJ and Taylor and Owen JJ agreed, said:

The crucial question in the present case seems to me to arise at this point. Was the appellant’s use, that is to say its television presentation, of those particular pictures of the oil drop figure which were substantially identical with or deceptively similar to the respondent’s trade marks a use of them “as a trade mark”? With the aid of the definition of “trade mark” in s. 6 of the Act, the adverbial expression may be expanded so that the question becomes whether, in the setting in which the particular pictures referred to were presented, they would have appeared to the television viewer as possessing the character of devices, or brands, which the appellant was using or proposing to use in relation to petrol for the purpose of indicating, or so as to indicate, a connexion in the course of trade between the petrol and the appellant. Did they appear to be thrown on to the screen as being marks for distinguishing Shell petrol from other petrol in the course of trade?

35    It was held, by majority, that the animations of the “oil drop” figure did not constitute trade mark use. The observations of Kitto J in that case concerning the notion of trade mark use apply equally to a consideration of trade mark use arising under the present Act.

36    In Coca Cola Company v All-Fect Distributors Ltd (1999) 96 FCR 107, the Full Court, after referring to Shell, noted that s 120 of the Act (unlike the corresponding provisions of the 1955 Act) expressly incorporates the requirement that “use” is limited to “use as a trade mark”. The Full Court (at [19]) observed:

… Use “as a trade mark” is use of the mark as a “badge of origin” in the sense that it indicates a connection in the course of trade between goods and the person who applies the mark to the goods: see Johnson & Johnson Australia Pty Ltd v Sterling Pharmaceuticals Pty Ltd (1991) 30 FCR 326 at 341, 351. That is the concept embodied in the definition of “trade mark” in s 17 – a sign used to distinguish goods dealt with in the course of trade by a person from good so dealt with by someone else.

37    In Nature’s Blend Pty Ltd v NestlÉ Australia Ltd (2010) 272 ALR 487, the Full Court (at [19]) summarised the relevant principles in the following terms:

1.    Use as a trade mark is use of the mark as a “badge of origin”, a sign used to distinguish goods dealt with in the course of trade by a person from goods so dealt with by someone else: Coca-Cola Co v All-Fect Distributors Ltd (1999) 96 FCR 107 at [19]; E & J Gallo Winery v Lion Nathan Australia Pty Limited (2010) 265 ALR 645 at [43].

2.    A mark may contain descriptive elements but still be a “badge of origin”: Johnson & Johnson Australia Pty Ltd v Sterling Pharmaceuticals Pty Ltd (1991) 30 FCR 326 at 347- 348; Pepsico Australia Pty Ltd v Kettle Chip Co Pty Ltd (1996) 135 ALR 192; Aldi Stores Ltd Partnership v Frito-Lay Trading GmbH (2001) 54 IPR 344 at [60].

3.    The appropriate question to ask is whether the impugned words would appear to consumers as possessing the character of the brand: Shell Company of Australia Ltd v Esso Standard Oil (Australia) Ltd (1963) 109 CLR 407 at 422.

4.    The purpose and nature of the impugned use is the relevant inquiry in answering the question whether the use complained of is use “as a trade mark”: Johnson & Johnson at FCR 347 per Gummow J; Shell at CLR 422.

5.    Consideration of the totality of the packaging, including the way in which the words are displayed in relation to the goods and the existence of a label of a clear and dominant brand, are relevant in determining the purpose and nature (or “context”) of the impugned words: Johnson & Johnson at FCR 347; Anheuser-Busch Inc v BudejovickÝ Budvar (2002) 56 IPR 182.

6.    In determining the nature and purpose of the impugned words, the Court must ask what a person looking at the label would see and take from it: Anheuser-Busch at [186 ] and the authorities there cited.

38    It may be accepted that an alleged infringer’s intentions are not determinative of whether a sign has been used as a trade mark. Innocence is not a defence. This is not to say, however, that an alleged infringer’s intentions are irrelevant when considering, objectively, the purpose and nature of its use of a particular sign in particular circumstances. Indeed, at trial, the appellant submitted that the respondent had used the term “Lift Shop” in the title of its web page to obtain the benefit of the appellant’s trade reputation. It contended that this intention was relevant to the primary judge’s determination of whether the respondent had infringed the mark in suit. In so doing, the appellant relied on the following passage from the judgment of Dixon and McTiernan JJ in Australian Woollen Mills Limited v F. S. Walton and Company Limited (1937) 58 CLR 641 at 657:

The rule that if a mark or get-up for goods is adopted for the purpose of appropriating part of the trade or reputation of a rival, it should be presumed to be fitted for the purpose and therefore likely to deceive or confuse, no doubt, is as just in principle as it is wholesome in tendency.

39    It is instructive to also bear in mind the following passage in their Honours’ judgment immediately following that quoted above:

In a question how possible or prospective buyers will be impressed by a given picture, word or appearance, the instinct and judgment of traders is not to be lightly rejected, and when a dishonest trader fashions an implement or weapon for the purpose of misleading potential customers he at least provides a reliable and expert opinion on the question whether what he has done is in fact likely to deceive. …

40    The primary judge rejected the submission that the respondent’s commercial objective was to obtain the benefit of the appellant’s trade reputation: see at [17] above. It is not surprising therefore that, when addressing the question of trade mark infringement in light of the appellant’s submission on the relevance of intention, the primary judge reiterated that finding. Even so, the nub of the appellant’s submission is that, when considering whether the respondent had used the words “Lift Shop” as a trade mark, the primary judge focused on the respondent’s subjective intention to the exclusion of other considerations and effectively failed to apply an objective test of trade mark use.

41    It may also be accepted that use by others of a sign that is registered as a trade mark cannot be determinative of whether an alleged infringer has used the same sign as a trade mark. The focus must be on the alleged infringer’s particular use. However, this is not to say that use by others of the sign is irrelevant. Such use may well provide part of the context in which the alleged infringer has used the sign and inform the question of whether, in such use, the sign performs the function of a trade mark.

42    Such is the present case. It is to be remembered that the respondent’s use of “Lift Shop” in the title of its web page took place in the setting of a page of search results showing not only the titles of the appellant’s and the respondent’s respective web pages, but also those of others, which also included “Lift Shop”. Given the way in which the appellant has structured its case on infringement, it is clearly relevant that the search results (the setting for infringement) grouped separate businesses by reason of the fact that the search term “lift shop” (and its variations) had been used in their web pages. The search results displayed that fact by emphasising the search criterion “lift shop” and its variations in bold lettering. As Kitto J emphasised (at 422) in Shell, when considering trade mark use, “context is all-important”.

43    The fact that the primary judge gave express consideration and apparent primacy to the two matters just discussed, particularly the respondent’s subjective intention, perhaps suggests that due weight might not have been given to other considerations that would inform an assessment as to whether the respondent’s use of “Lift Shop” was trade mark use. On the other hand, the respondent argues that the primary judge’s finding that “Lift Shop” was used in a descriptive way to take advantage of the operation of the search engines was a separate and independent finding based on objective considerations. It is not necessary, however, to dwell on this debate because it is really the correctness of the primary judge’s conclusion on trade mark use that is the focal point of the appeal.

44    At face value, the words “Lift Shop”, as a compound expression, certainly have descriptive aspects. This does not necessarily mean, however, that those words could not, and in context did not, also function as a trade mark. The position is explained by the following observations of Gummow J (when in this Court) in Johnson & Johnson (1991) 30 FCR 326 (at 347-348):

When the issue is one of infringement, a pivotal question is whether the use complained of is use by the alleged infringer as a trade mark. The answer to that question requires an understanding of the “purpose and nature” of the impugned use: see Shell Company of Australia Ltd v Esso Standard Oil (Australia) Ltd (the Shell case) (1963) 109 CLR 407 at 426, per Kitto J. As his Honour there points out, with reference to Edward Young & Co Ltd v Grierson Oldham & Co Ltd (1924) 41 RPC 548, and as s 66 of the present Act also indicates, the nature of the allegedly infringing use may be considered in the light of a usage common in the relevant trade. The relevant context, where the mark is a word mark, includes a consideration of the way in which the word has been displayed in relation to the goods and advertisements of which complaint is made: see Mars GB Ltd v Cadbury Ltd [1987] RPC 387 at 402, per Whitford J.

Where the trade mark allegedly used by the defendant comprises ordinary English words (such as “Page Three”, considered by Slade J in News Group Newspapers Ltd v The Rocket Record Co Ltd [1981] FSR 89 at 102) then, as this decision illustrates, that circumstance may be taken into account by the court in the process of reasoning by which it accepts or rejects a submission that the use in question is not a trade mark use but a description of the goods in question. To say that is not to gainsay the point made by Dixon CJ in Mark Foys Ltd v Davies Coop and Co Ltd (the Tub Happy case) (1956) 95 CLR 190 at 194-195 that language is not always used to convey a single, clear idea; a mark may have a descriptive element but still serve as a badge of trade origin. However, where the issue is one of infringing use by use of a word mark (as in the present case), the fundamental question remains, to paraphrase what was said by Williams J in the same case (supra) (at 205), whether those to whom the user is directed are being invited to purchase the goods (or services) of the defendants which are to be distinguished from the goods of other traders “partly because” (emphasis supplied) they are described by the words in question.

45    In the present case, the relevant question is whether the words “Lift Shop”, as used by the respondent in the title of its web page, functioned to distinguish its goods or services from those of others? Objectively considered, the answer to that question is “no”.

46    Those searching the internet using the search term “lift shop” would have understood, on seeing the displayed results, and in particular the words “Lift Shop” in the title of the respondent’s web page, that the respondent was using those words to convey that its business was one of supplying “lifts” and “home elevators”. Although the use of the words “Lift Shop” was given some prominence because of their use in the title of the respondent’s web page, neither that fact, nor the positioning of those words within the title, imbued them with the character of a trade mark. The use of the words “Lift Shop” as shown in the entries quoted in paragraphs [9]-[11], makes clear that their only functional significance was to describe the character of that business. Their use by the respondent was not to distinguish its business from others. To the contrary, in the larger setting provided by the results pages, the use of those words was to designate, and would have been understood as designating, that the respondent’s business was of the same character as, or at least of a similar character to, other businesses grouped and operating as “lift shops”. Such use is the antithesis of trade mark use.

47    It follows that the appeal fails.

The notice of contention

48    In these circumstances, it unnecessary for us to deal with the respondent’s contention that, contrary to the primary judge’s finding, the words “Lift Shop” as used by the respondent in the title of its web page are not deceptively similar to the mark in suit. Nevertheless, we will state our conclusion on that matter. The assumption here is that the words “Lift Shop” were used by the respondent as a trade mark.

49     In Shell, in a passage not criticised on appeal, Windeyer J (at 415) said:

On the question of deceptive similarity a different comparison must be made from that which is necessary when substantial identity is in question. The marks are not now to be looked at side by side. The issue is not abstract similarity, but deceptive similarity. Therefore the comparison is the familiar one of trade mark law. It 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 that such persons would get from the defendant’s television exhibitions. To quote Lord Radcliffe again: “The likelihood of confusion or deception in such cases is not disproved by placing the two marks side by side and demonstrating how small is the chance of error in any customer who places his order for goods with both the marks clearly before him … It is more useful to observe that in most persons the eye is not an accurate recorder of visual detail, and that marks are remembered rather by general impressions or by some significant detail than by any photographic recollection of the whole”: de Cordova v. Vick Chemical Co …

50    Earlier, in Australian Woollen Mills Ltd v FS Walton & Co Ltd (1937) 58 CLR 641, Dixon and McTiernan JJ (at 658) said with respect to “deceptive similarity”:

In deciding this question, 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 for which the protection of an injunction is sought. The impression or recollection which is carried away and retained is necessarily the basis of any mistaken belief that the challenged mark or device is the same. 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 gives, it may be said, the setting, and the habits and observation of men considered in the mass affords the standard. …

51    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: s 10 of the Act. The word “likely” is this context has the meaning of “a real, tangible danger of it occurring”. A mere possibility of confusion is not enough: Southern Cross Refrigerating v Toowoomba Foundry (1954) 91 CLR 592 at 595.

52    As the text of s 10 makes clear, it is the resemblance between the competing marks that must be the source of the likely deception or confusion, not other considerations extraneous to the marks themselves. Thus, when considering the question of deceptive similarity, the essential task is one of trade mark comparison. This has particular significance in a case where the mark in suit is a composite mark.

53    In Optical 88 Ltd v Optical 88 Pty Ltd (2010) 275 ALR 526, Yates J observed (at [100]):

When considering the question of deceptive similarity, each mark must be compared as a whole. This is of particular significance in relation to composite marks and device marks which may consist of a number of elements: Angelides v James Stedman Hendersons Sweets Ltd (1927) 40 CLR 43 at 68. It is necessary to look at all these elements in their context. This will include the size, prominence and stylisation of words and device elements used in the mark and their relationship to each other: Crazy Ron's Communications Pty Ltd v Mobileworld Communications Pty Ltd (2004) 209 ALR 1; [2004] FCAFC 196 at [91]-[103]; Bavaria NV v Bayerischer Brauerbund eV (2009) 177 FCR 300 at [21]-[22] and [32]. The impression created by the mark, considered as a whole, can only be determined by doing this. However, in this connection, it is recognised that deceptive similarity may be established when an impugned mark uses an “essential” or “distinguishing” feature of the mark as registered

54    The proposition that deceptive similarity may be established when an impugned mark uses an “essential” or “distinguishing” feature of the registered mark is illustrated by cases such as Saville Perfumery Ltd v June Perfect Ltd (1941) 58 RPC 147 and De Cordova v Vick Chemical Co (1951) 68 RPC 103. But whether this is likely to be so in a given case depends to a large extent on the relative complexity of the allegedly infringed mark.

55    In Crazy Ron’s Communications Pty Ltd v Mobileworld Communications Pty Ltd (2004) 209 ALR 1 the mark in suit (referred to as the 1995 mark) was a complex composite mark that included a cartoon character of a man (presumably Crazy John) represented comically, holding a mobile phone. The mark included the words “CRAZY JOHN”. The words were separated on either side of the cartoon character and were represented in a stylised way. The cartoon character was seen to be interacting with other device elements. The Full Court allowed an appeal from a finding of infringement of that mark by the use, as a trade mark, of “Crazy Ron” and “Crazy Ron’s”.

56    At [93], the Full Court said:

As the earlier discussion of the authorities shows, the concept of an “essential feature” of a registered trade mark is well-established, notwithstanding that the statutory language does not explicitly incorporate such a concept. Neither party suggested that the case should be decided without reference to the “essential feature” of the 1995 Mark. It is, however, worth noting that the Court's duty is ultimately to the statutory language rather than to the complexities brought forth by many years of decisional authority: cf Aktiebolaget Hassle v Alphapharm Pty Ltd (2002) 212 CLR 411, at 446 [87], per McHugh J (dissenting); at 449 [99], per Kirby J (dissenting). While recognising that decisions in other cases cannot resolve the threshold factual question in this case, it is perhaps suggestive that decisions relying on an “essential feature” of a registered mark generally appear to involve much less elaborate marks than the 1995 Mark. At all events, they have tended to involve trade marks in which the words said to constitute an essential feature of the mark occupy a much more prominent place than the words “CRAZY JOHN” in the 1995 Mark. Saville and de Cordova provide examples.

57    Later, at [97], the Full Court held:

If attention is confined to the 1995 Mark itself, it is in our opinion very difficult to characterise the words “CRAZY JOHN” as an essential feature. The words form but part of a composite mark comprising a number of elements. The words themselves are not especially prominent and indeed are subsidiary to the fantasy character, which occupies the dominant position in the overall image. If anything, the words seem to identify the fantasy character, having regard to the deranged look on his face. The words also compete for attention with the letters “MW” which themselves occupy a central position on the stylised globe.

58    The Full Court made two additional comments (at [100]-[101]):

... First, although everything depends on the particular circumstances of the case, some caution needs to be exercised before characterising words in a complex composite registered trade mark as an “essential feature” of that mark in assessing the question of deceptive similarity. If such a characterisation is made too readily, it effectively converts a composite mark into something quite different. On the respondents' approach in the present case, for example, there was no need for them to have registered the 1999 Mark, since in practice it conferred no greater protection than one of the “essential elements” of the 1995 Mark.

Secondly, we recognise that the authorities have said that the question of deceptive similarity is in the end a matter of impression and that the occasion for interference with a factual finding on that question will arise only if there is a clear error: Murray Goulburn Co-operative Co Ltd v New South Wales Dairy Corp (1990) 24 FCR 370, at 377, per curiam. The legal rationale for this approach in the context of an analogous area (copyright) was discussed by Weinberg J in Eagle Homes Pty Ltd v Austec Homes Pty Ltd (1997) 87 FCR 415, at 440-443 ([113]-[125]). However, the resolution threshold question in relation to the 1995 Mark, as we have explained, largely depends on a question of characterisation of the “essential feature” of the 1995 Mark based on an examination of the 1995 Mark itself. In this respect, the appellate Court is not at a significant disadvantage compared with the primary Judge. Thus, while some deference should be paid to his Honour's finding, the appellate Court should be prepared to overturn it if convinced that the characterisation is erroneous. (We note that in Murray Goulburn itself, the matter of “impression” depended on the content of television advertisements, the pronunciation of words in those advertisements and evidence (albeit weak) of confusion among consumers.)

59    The mark in suit in the present case is not a complex composite mark. It consists of the stylised rendering of the conjoined words “LIFTSHOP” set against a darker rectangular background on which an arrowhead lift button device also appears to the right of the word element. The stylistic rendering of the mark will be apparent from the representation attached to these reasons.

60    The primary judge considered the question of deceptive similarity at [46] of the reasons:

If I had concluded that the respondent had employed the term “Lift Shop” as a mark in the title of its website, as shown in the search page results, I would have accepted the applicant’s contention that the mark used was deceptively similar to the applicant’s mark. That is because I do not accept the respondent’s contentions that only the term “liftshop” could be deceptively similar, or that the applicant’s word mark is not significant in its own right. Although the applicant’s mark does not have a space between the words LIFT and SHOP, the way the mark is presented makes it clear that the two words are used conventionally to convey a composite idea with two elements. The prominence given to the word(s) in the mark permits the applicant to rely on reproduction of those words as a possible infringement. The present is not a case where the words represent only a minor element in the work (cf Crazy Ron’s Communications Pty Ltd v Mobileworld Communications Pty Ltd (2004) 209 ALR 1). Furthermore, the registered mark makes it apparent from its appearance that each of the words LIFT and SHOP in the composite term LIFTSHOP are given individual emphasis. The accompanying features of the mark do not detract from the central significance of the word LIFTSHOP, nor from the fact that the term is naturally pronounced as two words, rather than one.

61    This finding is challenged by the respondent on the basis that it is the graphic elements of the mark in suit that constitute its distinctive features. It submits that the word element “LIFTSHOP” is highly descriptive of the goods in respect of which the mark is registered. It advances the proposition that, where an element which is common to trade marks under comparison is descriptive, its presence must be discounted to some extent when considering whether the compared marks are deceptively similar: Davison M and Horak I, Shanahan’s Australian Law of Trade Marks and Passing Off, (5th ed, Lawbook Co,. 2012) at [30.1545].

62    The respondent also relies on the findings made by the primary judge, albeit in the context of considering the appellant’s case based on contravention of the Australian Consumer Law, that the term “lift shop” also has an understood generic connotation (at [30]) and that there was no respectable possibility of confusion, at the point at which the search results are displayed, that the respondent is suggesting that it is associated with the applicant (at [38]). The respondent also relies on a finding by the primary judge (at [35]) that “(t)here was nothing on the search page itself to suggest any association between the two businesses”. That finding should be understood, however, as referring to nothing on the search page in addition to the use of ‘Lift Shop” that suggest an association between the two businesses.

63    The appellant supports the primary judge’s finding, largely for the reasons articulated by his Honour. It submits that members of the public would be likely to retain the words “lift shop” as the significant attribute of the mark and would consequently be “caused to wonder” whether the business at www.easy-living.com.au was the business of the owner of the mark. In Southern Cross Refrigerating at 595, Kitto J spoke of the relevant confusion, in the case of a mark registered in respect of goods, as being whether two products come from the same source based on trade mark comparison alone.

64    We would not interfere with the primary judge’s conclusion on the question of deceptive similarity. We are not persuaded that his Honour’s characterisation was erroneous. It was a conclusion that was open on the evidence. In coming to this view, we do not disregard his Honour’s findings on the absence of confusion that were made in the context of considering the appellant’s case based on contravention of the Australian Consumer Law. Those findings, however, appear to be based on considerations extending beyond a comparison of “Lift Shop” and the mark in suit, and seem to take into account other indicia distinguishing the parties’ two businesses as described in the search results. The primary judge’s finding that “lift shop” also has an understood generic connotation is certainly a relevant consideration on the question of deceptive similarity, but that finding does not destroy the foundation for the primary judge’s conclusion that “Lift Shop” and the mark in suit are deceptively similar.

65    The notice of contention should be dismissed.

66    There is, however, an additional matter to mention. It is clear that the respondent raised at trial the applicability of the exception in s 120(2), namely that a person is not taken to have infringed a trade mark if that person establishes that using the sign, as the person did, is not likely to deceive or cause confusion.

67    This exception was not dealt with by the primary judge. It was not raised in the respondent’s notice of contention, although the respondent sought to suggest otherwise. We are satisfied that the notice of contention is directed to the quite separate matter of deceptive similarity. In this connection, it is plain that the exception to s 120(2) presupposes a finding of deceptive similarity and, indeed, the existence of all other matters necessary to establish infringement. Otherwise, there is no state of affairs (infringement) on which the exception can operate.

68    The respondent’s submissions in this appeal raise the applicability of the exception based on the primary judge’s findings which we have noted at [62] above. This aspect of the respondent’s submissions has not been answered by the appellant, perhaps because that matter was not raised by the notice of contention. Nevertheless, the respondent’s reliance on the s 120(2) exception appears to be soundly-based and would stand as a separate reason for finding that trade mark infringement has not been established in the present case. However, in light of our finding that trade mark use of “Lift Shop” was not established in any event, it is not necessary to pursue that matter.

Disposition

69    The notice of appeal and the notice of contention should be dismissed. The appellant should pay the costs of and incidental to the appeal.

I certify that the preceding sixty-nine (69) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justices Besanko, Yates and Mortimer.

Associate:

Dated:    20 June 2014

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