CATCHWORDS
TRADE MARKS AND TRADE NAMES - registered trade mark "KETTLE" in relation to potato chips - use by respondent in expression "KETTLE COOKED POTATO CHIPS" on front of packets of potato chips manufactured by it - whether trade mark use or descriptive use - use of word to suggest qualities of texture and taste distinctive of goods manufactured by registered proprietor of trade mark.
Trade Marks Act 1955, ss 6, 58, 62, 64.
Mark Foy's Ltd v Davies Coop & Company Ltd (1950) 95 CLR 190
Johnson & Johnson Australia Pty Ltd v Sterling Pharmaceuticals Pty Ltd (1991) 30 FCR 326
The Shell Company of Australia Ltd v Esso Standard Oil (Australia) Ltd (1963) 109 CLR 407
Polaroid Corporation v Sole N Pty Ltd [1981] 1 NSWLR 491
James Watt Constructions Pty Ltd v Circle-E Pty Ltd [1970] 3 NSWR 481
Berzins Specialty Bakeries Pty Ltd v Monty's Continental Bakery (Vic) Pty Ltd (1987) 15 FCR 402
Bass, Ratcliff & Gretton Ltd v Nicholson & Sons Ltd (1931) 49 RPC 88
J B Stone & Co Ltd v Steelace Manufacturing Co Ltd (1929) 46 RPC 406
Wingate Marketing Pty Ltd v Levi Strauss & Co (1994) 49 FCR 89
THE KETTLE CHIP COMPANY PTY LIMITED v PEPSICO AUSTRALIA PTY LTD & ANOR
No NG 194 of 1995
Lindgren J
Sydney
24 October 1995
IN THE FEDERAL COURT OF AUSTRALIA)
NEW SOUTH WALES DISTRICT REGISTRY) No NG 194 of 1995
GENERAL DIVISION )
BETWEEN:
THE KETTLE CHIP COMPANY PTY LIMITED (ACN 003 655 132)
Applicant
AND:
PEPSICO AUSTRALIA PTY LTD (ACN 000 674 993)
First Respondent
PFI AUSTRALIA PTY LIMITED (ACN 054 045 662)
Second Respondent
(First and Second Respondents trading as
FRITO-LAY AUSTRALIA)
CORAM: Lindgren J
PLACE: Sydney
DATE: 24 October 1995
MINUTE OF ORDERS
THE COURT ORDERS THAT:
1. The proceedings be stood over to Tuesday 31 October 1995 at 9.30 am for the purpose of the making of orders (including orders as to costs) in conformity with the Reasons of Lindgren J published on 24 October 1995.
2. By 5.00 pm on Monday 30 October 1995 the
parties furnish to the Associate to Lindgren J a copy of an agreed form of
short minutes of the orders to be made (including orders as to costs) and if
agreement shall not have been
reached by then, the forms of short minutes of orders for which they
respectively contend.
NOTE: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
IN THE FEDERAL COURT OF AUSTRALIA)
NEW SOUTH WALES DISTRICT REGISTRY) No NG 194 of 1995
GENERAL DIVISION )
BETWEEN:
THE KETTLE CHIP COMPANY PTY LIMITED (ACN 003 655 132)
Applicant
AND:
PEPSICO AUSTRALIA PTY LTD (ACN 000 674 993)
First Respondent
PFI AUSTRALIA PTY LIMITED (ACN 054 045 662)
Second Respondent
(First and Second Respondents trading as FRITO-LAY AUSTRALIA)
CORAM: Lindgren J
PLACE: Sydney
DATE: 24 October 1995
REASONS FOR JUDGMENT
NATURE OF PROCEEDINGS
The applicant ("Kettle") seeks relief in respect of alleged infringement and a threat of continued infringement by the respondents (I will refer to them in the singular as "Frito-Lay") of its registered trade mark. As well, and arising out of the same conduct, Kettle seeks relief in respect of alleged passing off and contravention of the Trade Practices Act 1974 (Cth) ("the TP Act"). Kettle seeks an injunction, damages (or in the alternative, at Kettle's option, an account of profits) and an order for delivery up.
FACTS
The Trade Mark
The trade mark in question is the word "KETTLE". It is trade mark number A541078 registered in Part A of the Register of Trade Marks in respect of "all goods in Class 29, including potato based goods which include or are comprised of potato" ("the Trade Mark"). In fact the case concerns "potato chips".
Two methods of cooking potato chips
The evidence distinguished between two methods of cooking potato chips for commercial production: the "conventional method" and the "batch cooking method". The conventional or "continuous fry cooking" method involves a continuous flow of peeled potato slices carried on a conveyor mechanism through an oil filled cooker, the use of automated paddles to turn the chips, and the maintenance of a constant temperature of the oil.
The batch cooking method involves the dropping of peeled potato slices in a batch into vegetable oil or sunflower oil contained in large rectangular stainless steel gas-fired vessels in which the potato slices are stirred. In the case of Kettle, the stirring is done by hand by cooks who stand behind the vessels. Importantly, the temperature of the oil falls substantially and suddenly when the potato slices are dropped into it, then rises gradually as the cooking progresses. Accordingly, the cooking takes longer than under the conventional method. This method of cooking appropriately gives rise to the descriptions "slow cooked", "batch cooked", and "slow batch cooked".
Potato chips produced by the batch cooking method have distinctive features. First, they are of a "hard" or "brittle" texture and so are "crunchy". The expression "hard bite" is often used to refer to this feature. Secondly, they have strong or "aggressive" flavours. In the production process, the flavour is added after the chips have been cooked.
In or about November 1989, Kettle commenced manufacturing potato chips in Australia using the batch cooking method. Previously, only the conventional method had been used in this country. Kettle was assisted in introducing the new method of cooking by a United States corporation named Martins Potato Chip Company ("Martins"). Martins produced in the United States what it described as a "kettle-cook'd potato chip" which it sold in a bag depicting a red cauldron with a spoon projecting from it, over the words "HAND COOKED". Kettle obtained equipment and advice from Martins in connection with the batch cooking of potato chips.
Kettle's selling and marketing
Kettle has sold its new style of potato chips successively under the names or labels, "The Kettle Chip", "The Kettle Chip Co", and, since December 1993, simply "Kettle". In each case the packets have been marked by a device the most striking element of which is a cauldron (see later). Since July 1993 Kettle has used sunflower oil rather than vegetable oil. The original flavours of Kettle's chips were "Lightly Salted" and "Chilli Flavour". Kettle introduced a "Thai Spice" flavour in December 1991, a "Herb and Spice" flavour in July 1992 and a "Honey Baked Ham" flavour in December 1993.
Kettle has enjoyed considerable success. The total volume of its sales from December 1989 to 10 March 1995 was 3,699,199 kilograms, or approximately 44,400,000 packets, of potato chips. Mr Brian Preston, Kettle's Chief Executive, gave evidence as to the marketing and packaging of its product. He said that the packaging of the product had various "key features", namely:
"(a)the words, 'The Kettle Chip', and since December 1993 the word 'Kettle';
(b)a logo being a cauldron with licks of steam and whole potatoes surrounding the cauldron;
(c)a circular ring surrounding the cauldron with the words, 'Hand Cooked Potato Chips';
(d)a rectangular foil packet with depictions of loose potato chips comprising the background of the packaging;
(e)the words, 'Cholesterol-Free';
(f)since July 1993, the words, 'Cooked in Sunflower Oil' and the words 'Low in Saturated Fat';
(g)a description on the back of the packaging describing the method of cooking the chips."
Mr Preston gave detailed affidavit evidence as to the outlets where Kettle's packets of chips are sold and as to Kettle's advertising and marketing activity directed to promoting its image and its sales. Mr Preston's evidence as to the outlets where Kettle's product is sold was not challenged and was expressed in his affidavit as follows:
"The 'Kettle' product has been distributed principally to the 'route' trade which includes service stations, fruit markets, take-away shops, video shops, health food stores, bottle shops, hotels, corner stores, newsagencies, cinemas, delicatessens, and chemists. Since January 1994 the 'Kettle' product has also been supplied to a number of supermarket chains. Currently, the 'Kettle' product is supplied to Franklins, Coles, Woolworths and Jewel Food Stores. My estimate, which I consider to be conservative, is that the 'Kettle' product is currently sold in approximately 10,000 outlets."
In relation to marketing, Mr Preston's evidence shows that advertising
and promotion have been engaged in on a considerable scale and that the word
"KETTLE", the cauldron device, and, to a lesser extent, the
expression "HAND COOKED", have featured prominently. The word "KETTLE", in one form or
another, has featured on boxes, delivery vehicles, point of sale displays,
counter stands, and "mobiles"; caps, T-shirts and polo shirts worn by
Kettle's staff; and "give-away" key rings, calendars and clocks. As well, Kettle has advertised
extensively on the radio and has engaged in "sampling" campaigns in
stores on an extensive scale. A good
illustration of Kettle's promotion of the word "KETTLE" is found in
the following script for a radio advertisement:
"SFX: Bells jangle as shop door is opened.
BRIAN: G'day...A pack of Kettle Chips please...
OWNER: Er...did you say 'koppie' chips?
BRIAN: Kettle - you had them here yesterday ... the ones with the sunflower on the pack...
OWNER: What about these other chips?
BRIAN: No thanks - I want Kettle Chips, not kepple chips, nupple chips, crinkle cut or bottle chips, not clean cut, corn fed, sun dried, crispy cow-pat chips. I want Kettle - look there they are - behind you!
OWNER: Oh Kettle chips. Why didn't you say?
ANNCR: Don't let anyone hide them from you. Hand cooked Kettle Chips are the best tasting, real potato crunch around."
Apart from manufacturing and packaging its new kind of potato chips for sale in its own packets, Kettle has manufactured and packaged them for sale by third parties. Between September 1990 and March 1994, Kettle manufactured 1,700,000 packets of potato chips for sale by Howitt and Spencer Pty Limited trading as "Hawker Quality Products", and later by Hawker Products Pty Ltd (collectively called "Hawker"). Those chips were marketed under the "Hawker" brand name and were called "KETTLE CHIPS". The words "Hawker KETTLE CHIPS" appeared on the packets, less prominence being given to "Hawker" than to "KETTLE CHIPS".
Kettle also manufactured potato chips for Frito-Lay. Between August 1991 and December 1994 Kettle manufactured and packaged approximately 4,800,000 packets of chips for Frito-Lay. These chips were marketed under the name "KETTLE CRISPS" ("Kettle Crisps" was apparently a registered business name of Kettle's). There appeared on the packets the words "Lay's KETTLE CRISPS". The period of the licensing agreement between Kettle and Frito-Lay came to an end on 31 May 1995.
On all three of Kettle's own packets, the Hawker "KETTLE CHIPS" packets and the Frito-Lay "KETTLE CRISPS" packets, have also appeared the words "HAND COOKED POTATO CHIPS" in large bold letters and a representation of a cauldron with licks of steam and some whole potatoes nearby.
There can be no doubt that since November 1989 the word "KETTLE" must have become familiar to a substantial number of people as signifying the new distinctive kind of potato chip which has to date been produced only by Kettle. As will be seen later, evidence led by Frito-Lay in this case virtually accepts this to be so.
I should state certain further facts revealed by the evidence as to Kettle's own use of the word "KETTLE" over the years. In the first place, from 21 July 1989 to 3 August 1992, on which date Kettle adopted its present corporate name, Kettle was called "The Kettle Cooked Chip Company Pty Limited". From November 1989 to March 1992, the most striking features on the face of Kettle's packets were the words "THE KETTLE CHIP" and the cauldron device. Each letter in the words "THE KETTLE CHIP" was in large and striking blue script with a silver outline. However, on the reverse side in small print appeared, inter alia, the following words:
"Here at the Kettle Cooked Chip Company we hand cook our chips in large kettles in the old fashioned manner.
....................................................
Kettle cooking is an exacting slow process which gives our chips a unique crunchier texture with a more distinctive potato taste."
From March 1992 to July 1993, Kettle used a different form of packet, the dominant features of which were the words "The Kettle Chip Co." and the cauldron device. Again, the words "The Kettle Chip Co" appeared in eye-catching blue letters, each of which was outlined in silver. Again, in much smaller print on the reverse side, appeared the text quoted above.
From July 1993 to December 1993, Kettle used a different form of packet, the dominant features of which were the words "The KETTLE Chip", the cauldron device, and a depiction of a sunflower which was accompanied by the words "cooked in sunflower oil". The word "KETTLE" appeared in letters much larger than the words "The" and "Chip". Again the letters were in a striking blue colour and were outlined in silver. In small print on the reverse side appeared the following:
"The Kettle Chip Company now cook in a revolutionary new Sunflower Oil
....................................................
Our chips are now better, tastier, but still cooked by hand in the same old fashioned manner, one batch at a time, ensuring the great natural taste of the original Kettle Chip."
It will be noted that the references to cooking "in large kettles" and "kettle cooking" were omitted. Moreover, the name of Kettle which appeared on the packet was, of course, "The Kettle Chip Company Pty Ltd" rather than "The Kettle Cooked Chip Company Pty Ltd" as previously.
Finally, from December 1993 to date, the dominant features of Kettle's packet are simply the word "KETTLE", the cauldron device and the sunflower image. The words in small print last quoted above remain on the back of the packets.
It seems clear that the change in Kettle's name, the elimination of the references to cooking "in large kettles" and to "kettle cooking", and finally the elimination of any word other than "KETTLE" as a dominant word on the packet, all indicate a concern on Kettle's part to emphasise the use of that word as a name and to eliminate any suggestion that it was being used in a descriptive or generic sense.
Frito-Lay's selling and marketing
Frito-Lay also manufactures and markets potato chips. Christopher Roger Riley, the chief financial officer of Frito-Lay, gave affidavit and oral evidence. He said that Frito Lay's premier brand, and the leading selling potato chip product in Australia, is that sold under the name "THINS". Frito-Lay has used the brand "THINS" continuously since 1982. The evidence shows that "THINS" has a strong presence in that part of the snack food market occupied by supermarket and large grocery retailers and that Frito-Lay has expended very substantial moneys on advertising and promoting the "THINS" brand. Its marketing support budget and sales support budget for 1995 are substantial.
The "THINS" brand has undergone a number of "transformations". As part of its marketing strategy for 1995, Frito-Lay planned a total logo redesign, a new advertising campaign and the introduction of what Mr Riley called "line extensions", by which he said he meant a new range of products added to the total brand range. It is Frito-Lay's introduction of one of these "line extensions" that has prompted Kettle to launch the current proceedings.
The particular format of the promotional material which Frito-Lay had just commenced to use when Kettle filed its present application on 20 March 1995 is shown on the form of packet a copy of which is annexed to these Reasons for Judgment. As can be seen, it includes on the front of the packet the following words in the following descending order of prominence (see the annexure to these Reasons for the precise format and print style and size):
THINS
DOUBLE CRUNCH
KETTLE COOKED POTATO CHIPS
The letters of the words "KETTLE COOKED" and "POTATO CHIPS" are of the same size and colour. All four words occur within the boundaries of a yellow "flash".
Frito-Lay's choice of these words and the layout of them on the packets was the result of careful consideration and legal advice. Frito-Lay understood that if it used the word "KETTLE" at all, Kettle would be likely to litigate. It was aware that Kettle had already successfully defended its marketing image and position in court: see Kettle Chip Company Pty Ltd v Apand Pty Ltd (1993) 46 FCR 152 (Burchett J) ("Apand") - on appeal at (1994) 52 FCR 474). The marketing department within Frito-Lay would have preferred a packet format which gave greater prominence to the word "KETTLE" and which, in particular, omitted the intervention of any "brand", "sub-brand" or "line extension title" such as "DOUBLE CRUNCH" between "THINS" and "KETTLE COOKED POTATO CHIPS". However, legal advice prevailed, and the view was taken that, as used in the annexure to these Reasons, "KETTLE COOKED" was purely descriptive of the potato chips in the packets and did not involve the use of "KETTLE" as a trade mark.
Kettle did not share that view. It pleads that since 24 March 1995, Frito-Lay has produced and sold a potato chip product under the brand name "THINS DOUBLE CRUNCH KETTLE COOKED POTATO CHIPS" in a variety of flavours, or in the alternative, has sold a potato chip product which features the word "KETTLE" prominently on its packaging, and that by doing so, Frito-Lay has, in the course of trade, used (i) the Trade Mark, or (ii) a trade mark which incorporates the Trade Mark, or (iii) a trade mark substantially identical with or deceptively similar to the Trade Mark, in relation to goods in respect of which the Trade Mark is registered. This is Kettle's case of trade mark infringement.
Nothing was made in the case of the words printed on the rear of Frito-Lay's packet. As the annexure to these Reasons shows, the material which appeared there was in relatively small print and included the words "Now your favourite ThinsTM are kettle cooked".
STATUTORY PROVISIONS AND ISSUES:
Relevant provisions of the Trade Marks Act 1955 (Cth) ("TM Act") and the TP Act
As noted at the outset, Kettle alleges infringement of the Trade Mark, passing off and contravention of the TP Act.
Sub-sections 58 (1) and 62 (1) of the TM Act are as follows:
"58 (1) Subject to this Act, the registration of a trade mark in Part A or Part B of the Register, if valid, gives to the registered proprietor of the trade mark the right to the exclusive use of the trade mark in relation to the goods or services in respect of which the trade mark is registered and to obtain relief in respect of infringement of the trade mark in the manner provided by this Act.
62 (1) A registered trade mark is infringed by a person who, not being the registered proprietor of the trade mark or a registered user of the trade mark using by way of permitted use, uses a mark which is substantially identical with, or deceptively similar to, the trade mark, in the course of trade, in relation to goods or services in respect of which the trade mark is registered."
The word "mark" is defined in sub-s 6 (1) of the TM Act to include "a device, brand, heading, label, ticket, name, signature, word, letter or numeral, or any combination thereof". Clearly, "KETTLE", and "KETTLE COOKED" are marks (see later).
Sub-section 64 (1) of the TM Act provides for "exclusions" from sub-s 62 (1). Paragraph 64 (1) (b) is relied on by Frito-Lay. It is as follows:
"64 (1) Notwithstanding anything contained in this Act, the following acts do not constitute an infringement of a trade mark:
(a) ...........................
(b) the use in good faith by a person of a description of the character or quality of his goods or services; ..."
The provisions of the TP Act to which Kettle refers in its statement of claim are ss 52, 53 (c), 53 (d) and 55. I need not set them out.
Issues
The parties identified the primary issue arising under the TM Act differently. Kettle's primary submission is that since Frito-Lay has used the very word "KETTLE", no issue as to substantial identity or deceptive similarity arises, the only issue being whether Frito-Lay's use of the word "KETTLE" is a use of it as a trade mark. Frito-Lay, on the other hand, contends that potentially two issues arise: whether Frito-Lay's use of the words "KETTLE COOKED" constitutes a use of those words as a trade mark, and if so, whether those words are substantially identical with or deceptively similar to the Trade Mark.
The difference between the two approaches is not significant, at least on the facts of this case. It is common ground that the use referred to in both sub-ss 58 (1) and 62 (1) of the TM Act is use as a trade mark (Mark Foy's Ltd v Davies Coop & Company Ltd (1950) 95 CLR 190 ("Mark Foy's") at 202, 204 (Williams J with whom Dixon CJ agreed); The Shell Company of Australia Ltd v Esso Standard Oil (Australia) Ltd (1963) 109 CLR 407 ("Shell") at 422 ff (Kitto J with whom Dixon CJ, Taylor and Owen JJ agreed)) and that the primary issue in the case is whether there has been a use of that kind or merely a descriptive use. Consistently with Kettle's own contention, the fact that "KETTLE" is used as part of the compound adjective "KETTLE COOKED" must be taken into account in the determination of this question.
The terms of sub-s 62 (1) begin by requiring identification of a "mark" which is being used by the alleged infringer. The definition of "mark" in the TM Act noted earlier is so wide that it does not serve to distinguish between the various words that appear on the face of Frito-Lay's packets. According to the literal terms of the definition, all the words and each word constitute a "mark" and it is the notion of "trade mark use" which provides a basis for drawing distinctions. Both "KETTLE" and "KETTLE COOKED" and, for that matter, "KETTLE COOKED POTATO CHIPS" are marks according to the definition.
Although the difference between Kettle's and Frito-Lay's approaches will be found to be inconsequential, I think that since "KETTLE", being a word, is literally a "mark", Kettle is entitled to have the case considered on the basis that Frito-Lay has used the Trade Mark and that the question for decision is whether the conjunction with "COOKED" and all the other circumstances of the case show that "KETTLE" is or is not being used as a trade mark: cf Polo Textile Industries Pty Ltd v Domestic Textile Corp Pty Ltd (1993) 42 FCR 226 (Burchett J) at 232 and Angoves Pty Ltd v Johnson (1982) 66 FLR 216 (FCA/FC). However, I will state and deal with the issues on both bases. Accordingly, the issues which arise for determination are as follows:
1. Trade mark issues
1.1 (According to Kettle) Does Frito-Lay's use of the word "KETTLE" on its packaging in the context in which that word occurs amount to a use of it as a trade mark for the purposes of sub-s 62 (1) of the TM Act?
or
1.1 (According to Frito-Lay)
(a) Does Frito-Lay's use of the words "KETTLE COOKED" on its packaging in the context in which those words occur amount to a use of them as a trade mark for the purposes of sub-s 62 (1) of the TM Act?
(b) If yes, to (a), is Frito-Lay's use of those words as a trade mark such that they are substantially identical with, or deceptively similar to, the Trade Mark?
1.2 If the answer to 1.1, or to each part of 1.1 (as the case may be), is yes, does Frito-Lay's use of the word "KETTLE" or the words "KETTLE COOKED" (as the case may be) on its packaging in the context in which it or they occur, constitute a use in good faith of a description of a character or quality of Frito-Lay's goods within the meaning of para 64 (1) (b) of the TM Act?
2. Trade Practices Act issues
2.1 Does Frito-Lay's use of the words "KETTLE COOKED" on its packaging in the context in which those words occur, constitute misleading and deceptive conduct within the meaning of s 52 of the TP Act?
The parties did not suggest that any additional issue deserving of attention arose under ss 53 (c), 53 (d) or 55 of the TP Act.
3. Passing Off
3.1 Does Frito-Lay's use of the words "KETTLE COOKED" on its packaging in the context in which those words occur amount to a passing off by Frito-Lay
(a) of its product as Kettle's product or as licensed, sponsored or approved by Kettle, or
(b) of itself as the manufacturer of the Kettle product or as affiliated or associated with, or sponsored or licensed by, Kettle or by a company related to or associated with Kettle?
APAND
In Apand, the applicants were Kettle and its licensees, Hawker and Frito-Lay. The respondent ("Smiths") marketed its products under the long established name of "SMITHS" in association with a diamond logo and was the largest manufacturer of potato chips in Australia. Smiths commenced selling potato chips under the name "COUNTRY KETTLE". Kettle claimed that this was misleading and deceptive conduct in contravention of the TP Act and also involved passing off, by reason of Kettle's reputation in respect of potato chips sold in packets endorsed "The Kettle Chip" or "The Kettle Chip Co" (the Trade Mark had not been registered at that time - it was not registered until 1 December 1994).
When Kettle began, in late 1989, to manufacture potato chips by "the batch cooking method", Smiths dominated the potato chip market in Australia and produced its potato chips by the "conventional" or "continuous fryer" method. In April and May 1992, Smiths brought onto the market its COUNTRY KETTLE chips. These were a new line of potato chips which closely resembled Kettle's. But unlike Kettle's, they were not produced by batch cooking or hand cooking. They were produced by a multi-zone fryer which was designed to "mimic" Kettle's batch cooking process. Smiths' packaging showed the words "COUNTRY KETTLE" in lettering five times larger than the brand name "SMITHS". As well, it depicted the upper part of a cauldron and potatoes evocative of the image on Kettle's, Hawker's and Frito-Lay's packets. Subsequently Smiths modified its form of packet by eliminating the cauldron image but it continued to use the name "COUNTRY KETTLE".
At first instance Burchett J held that the get-up of the two products was so similar that there was a likelihood of deception. His Honour held that this was confirmed by evidence that Smiths' executives had considered that there was much to be gained from the use of so close an imitation of the name, symbol and get-up of Kettle's product (those executives did not give evidence).
His Honour thought that at the time of the launch of Smiths' "COUNTRY KETTLE" line, "a significant section of the relevant public perceived 'KETTLE' as referring to the brand of [Kettle's] potato chips" (Apand at 174). He noted that far from taking care to distinguish their product from Kettle's, Smiths had minimised the impact of their own brand and logo on their packets. His Honour held that Kettle succeeded in respect of both passing off and contravention of s 52 of the TP Act.
Burchett J observed, citing de Cordova v Vick Chemical Co (1951) 68 RPC 103 ("de Cordova") and Mark Foy's, that the fact that a word has a descriptive function does not signify that it cannot have acquired a secondary meaning. His Honour found that the word "KETTLE" had acquired such a meaning by virtue of Kettle's use of it in the market and that that meaning was evoked by Smiths' use of the word on its packets.
His Honour further said that even if the word "KETTLE" had not acquired a secondary meaning, he would still have found that Smiths' packets deceptively resembled Kettle's.
On 30 September 1994 an appeal to a Full Court (Lockhart, Gummow, Lee JJ) was dismissed ((1994) 52 FCR 474).
OUTLINE OF PARTIES' SUBMISSIONS
Outline of Kettle's submissions
Kettle submits that the case resembles Mark Foy's. Mark Foy's Ltd was the registered proprietor of a trade mark registered in class 38 of the register in respect of articles of clothing and consisting of the words "TUB HAPPY". The defendant ("Davies") proposed to promote the sale of garments manufactured by it by the use of the words "EXACTO COTTON GARMENTS - TUB HAPPY COTTON FRESH BUDGET WISE". The word "EXACTO" was a brand identified with Davies. The High Court held by majority (Dixon CJ and Williams J, Kitto J dissenting) that the words "TUB HAPPY" were not being used by Davies as a mere "descriptor" and were being used as a trade mark in infringement of Mark Foy's rights.
Kettle submits that the word "KETTLE" and the expression "KETTLE COOKED" were not being used by Frito-Lay as a mere descriptor and conveyed meaning to consumers in Australia only by reason of their knowledge of Kettle's own product.
Kettle submits that Frito-Lay's defence under para 64 (1) (b) of the TM Act is not made out because (i) the words "KETTLE COOKED" as used by Frito-Lay are not a description of the "character or quality" of Frito-Lay's goods and rather purport to refer to the method of manufacture by which those goods are produced, and (ii) the words were not used in good faith, in that when Frito-Lay decided to use them it knew of the existence of the Trade Mark and chose to run the risk of infringement.
In relation to passing off and s 52 of the TP Act, Kettle repeats its submissions in respect of trade mark infringement and says, citing Apand, that the case is a paradigm case of misleading conduct by the use of a word which has achieved secondary meaning signifying another trader's product.
Outline of Frito-Lay's Submissions
Frito-Lay submits that the expression "KETTLE COOKED" is purely descriptive of a method of cooking and does not involve a trade mark use of the word "KETTLE" at all. Frito-Lay says that the Mark Foy's is distinguishable because "TUB HAPPY" was in the nature of a coined phrase having but the remotest reference to the character or quality of the articles of clothing the subject of the proceedings. Frito-Lay submits that Apand did not concern a compound adjectival expression such as "KETTLE COOKED" and that the holding in that case that the word "KETTLE" in relation to potato chips had acquired a secondary meaning does not dictate a conclusion that it carries that secondary meaning in all contexts in which the word might occur in relation to potato chips.
In relation to para 64 (1) (b) of the TM Act, Frito-Lay submits (i) that "the character or quality" of goods invokes a notion broad enough to encompass a method of cooking and characteristics of texture and taste resulting from that method, and (ii) that the expression "bona fide" signifies "honestly and without ulterior motive", and that this is an appropriate characterisation of its decision which was taken in accordance with top level legal advice.
In relation to s 52 of the TP Act, Frito-Lay submits that Burchett J's finding of misleading and deceptive conduct in Apand depended upon the various points of similarity between Kettle's and Smiths' packaging and the prominent way in which "COUNTRY KETTLE" was used by Smiths. Frito-Lay further submits that in the present case no evidence was led from members of the public which would justify factual findings similar to those made by Burchett J in Apand.
REASONING
Some general matters
It is convenient to deal with certain general matters first.
(1) No challenge is made to the registration of the Trade Mark. Its registration gives Kettle a statutory monopoly over the use of the word "KETTLE" in relation to the goods in respect of which it is registered: TM Act, sub-s 58 (1). As noted earlier, however, it is common ground that this statutory monopoly and sub-s 62 (1) which states circumstances constituting infringement, both contemplate only "trade mark use". Sub-section 6 (1) defines "trade mark" relevantly to mean,
" ... a mark used ... in relation to goods ... for the purpose of indicating, or so as to indicate, a connection in the course of trade between the goods ... and a person who has the right, either as proprietor or as registered user, to use the mark, whether with or without an indication of the identity of that person; ..."
A trade mark has been described, relevantly, as distinguishing goods of the user of the mark and as a "badge of origin" of goods; see, for example, Attorney-General (NSW) v Brewery Employees Union of New South Wales (1908) 6 CLR 469 esp at 512-513 (Griffith CJ), 525 (Barton J), 540-541 (O'Connor J); Aristoc Ltd v Rystra Ltd [1945] 1 All ER 34 (HL) at 40-41 (Viscount Maugham); Mark Foy's at 203-204 (Williams J); Shell at 421 (Kitto J with whom Dixon CJ, Taylor and Owen JJ agreed). I discuss the concept of "use as a trade mark" in more detail later.
(2) Paragraph 24 (1) (d) of the TM Act provides that a trade mark is registrable in Part A of the register if it contains or consists of,
"(d) a word not having a direct reference to the character or quality of the goods or services in respect of which registration is sought ..."
The word "KETTLE" does not have a direct reference to the character or quality of the goods in Class 29. But this leaves open the question of whether the word "KETTLE" as used on Frito-Lay's packets forms part of a description of the character or quality of the potato chips in the packet for the purpose of the "exclusion" provided for in para 64 (1) (b) of the TM Act.
(3) It is common ground that a descriptive word such as "KETTLE" may acquire a secondary meaning and that it is such a meaning that must be invoked by the use of the word in the present case if that use is to be an infringement of the Trade Mark: Mark Foy's at 204 (Williams J with whom Dixon CJ agreed); de Cordova at 106 (Lord Radcliffe); Mothercare UK Ltd v Penguin Books Ltd [1988] RPC 113 (CA) at 118 (Dillon LJ), 123 (Bingham LJ); Johnson & Johnson Australia Pty Ltd v Sterling Pharmaceuticals Pty Ltd (1991) 30 FCR 326 (FC) ("Johnson & Johnson") at 347 (Gummow J); Shell at 422-425 (Kitto J).
(4) Whether the use made of a word is a trade mark use must be determined upon an estimation of its effect on the minds of potential buyers who see the word in the context in which it appears and in the circumstances in which they see it; Australian Woollen Mills Ltd v F S Walton & Co Ltd (1937) 58 CLR 641 at 658 (Dixon and McTiernan JJ); Mark Foy's at 194-5 (Dixon CJ), 200 (Williams J), 207 (Kitto J); Registrar of Trade Marks v Muller (1980) 54 ALJR 513.
(5) The facts of Apand differ from those of the present case in significant respects. The claim made in Apand was of passing off and contravention of s 52 of the TP Act, not infringement of a registered trade mark. Initially the get-up of Smiths' and Kettle's packets was similar because, for example, of the presence of the cauldron device on both. Even after Smiths abandoned the cauldron device and altered the get-up on its packets, the words "COUNTRY KETTLE" remained the only name displayed on the packets in the place and with the prominence usually associated with a trade mark, the name "SMITHS" was suppressed and in any event there was a "carry over" effect of the earlier get-up. Finally, the descriptive element in "KETTLE COOKED" is stronger than that, if any, in "COUNTRY KETTLE".
(5) The facts of Mark Foy's differed from those of the present case in that "TUB HAPPY" was a coined phrase, any descriptive element of which was remote (Dixon CJ said that the expression went no further than to suggest "in a vague and indefinable way a gladsome carelessness a propos of the tub": 95 CLR at 195). By contrast, grammatically, at least, "KETTLE COOKED" says that the potato chips in the packet have been cooked by means of a kettle. Moreover, so far as the report reveals, the expression "EXACTO COTTON GARMENTS - TUB HAPPY COTTON FRESH BUDGET WISE" did not, in terms of print size, layout or colour, distinguish between its various parts, whereas, in the present case, "THINS" and "DOUBLE CRUNCH" are emphasised while "KETTLE COOKED" is relegated to the same (and less prominent) status of the words "POTATO CHIPS".
Marks Foy's is of relevance, however, in establishing that there can be trade mark use not only where a manufacturer of goods applies another's mark to his goods so as to suggest (falsely) a connection in the course of trade between those goods and that other, but also where a manufacturer applies another's mark to his goods, while suggesting (truly) a connection in the course of trade between those goods and himself (see esp Williams J, with whom Dixon CJ agreed, at 95 CLR 204-205). After referring to Mark Foy's and other authorities, Gummow J expressed the point in these terms in Wingate Marketing Pty Ltd v Levi Strauss & Co (1994) 49 FCR 89 (FC) at 122: " ... it is too wide a proposition that a use of a trade mark which simply tells the truth cannot be restrained or that a user will only be restrained if it does not tell the truth".
Infringement - "use as a trade mark"
There is uncontradicted evidence that within the trade, the vessels in which the new "batch cooking" or "slow cooking" of potato chips takes place, whether by Kettle or by Frito-Lay, have been variously called "kettle cookers", "kettle fryers", "kettle batch cookers", "batch fryers", "cookers", "fryers" and "kettles". There is evidence that the vessels have been bought and sold as "kettles". In two applications which Kettle made for the registration of device marks under the TM Act, it described the goods in question as "hand fried potato chips cooked in a kettle". In view of this, of its own original corporate name and of the "small print" on the reverse side of earlier forms of its packets noted above, Kettle could scarcely suggest that the expression "KETTLE COOKED" does not provide one description of the method of cooking which has been used to produce its distinctive hard bite, aggressively flavoured potato chip.
From the fact that "KETTLE" is sometimes used in the trade to refer to the large stainless steel cooking vessel in question, it seems to follow that the expression "KETTLE COOKED" would be readily understood within the trade. But of present concern is a use on the front of packets directed to potential customers in the "route trade" and in supermarkets. I ask myself what the words "KETTLE COOKED" convey in those circumstances to those persons. In addressing this question I accept
(a) that, by and large, potential buyers will wish to decide instantly whether to buy such low price snack foods and will not have the time or inclination to study or ponder the significance of words used on the packets;
(b) that a substantial number, but not all, of the potential buyers will be aware of the "KETTLE" potato chip;
(c) that it may be an error to assume that a word always conveys "meaning", because language may operate in a far more subtle way.
In relation to this last proposition, I can do no better than quote from Dixon CJ's judgment in Mark Foy's:
"The fallacy of asking what is the
meaning of the phrase ['TUB HAPPY'] lies in the basal assumption that the words
are intended to convey some definite meaning and perhaps the further assumption
that the meaning has reference to the garments or the
cottons. The assumption is fallacious
because it overlooks the fact that language is not always used to convey an
idea. Many uses of words are purely
emotive. A word or words are often
employed for no purpose but to evoke in the reader or hearer some feeling, some
mood, some mental attitude. This is true
of much advertising, which common experience shows to be full of meaningless
but emotive expressions supposedly capable of inducing a generally favourable
inclination in the almost subconscious thought of the passing auditor or hasty
reader. Words put forward as trade marks
are very likely indeed to be chosen in the same way." (at 194)
These observations were directly applicable to such an emotive expression as "TUB-HAPPY" and are not directly applicable to the more descriptive expression "KETTLE COOKED". Yet they serve as a reminder that references to "trade mark use" and "description" in relation to such goods as packets of potato chips bought in the circumstances referred to above are apt to mislead by suggesting a process of deliberation. For this reason it may be more appropriate in such cases to inquire whether there is a trade mark use in the sense of "trade mark effect" or "trade mark impact" rather than "trade mark meaning.
The words "KETTLE COOKED" are directed to two classes of members of the public: those who are not aware of the KETTLE potato chips ("class 1 potential buyers") and those who are aware of them ("class 2 potential buyers").
Class 1 potential buyers would be puzzled on reading the words "KETTLE COOKED POTATO CHIPS". The word "kettle" is an ordinary English word. One might have been excused for thinking that only to a minority of Australians would the word convey anything other than what is conveyed by it in such expressions as "boil some water in the kettle on the stove for a cup of tea." This meaning of the word is conveyed by the following definition of it given in The New Shorter Oxford English Dictionary:
"(a) a covered vessel with a spout and handle, used to boil water for domestic purposes (also tea-kettle)".
In the cooking context, the full definition in The New Shorter Oxford English Dictionary is as follows:
"1 A vessel, usu., of metal, for boiling water or other liquids; spec. (a) a covered vessel with a spout and handle, used to boil water for domestic purposes (also tea-kettle); (b) (in full fish-kettle) a long usu. oval pan for cooking fish in liquid. Also, a kettle and its contents; the contents of a kettle; as much as a kettle will hold, a kettleful."
The Oxford English Dictionary (second ed, Vol VIII, 1989) includes a reference to a pot or cauldron in its definition in the cooking context which is as follows:
"1. a. A vessel, commonly of metal, for boiling water or other liquids over a fire; a pot or caldron (cf. camp-, fish-, gipsy-kettle); now esp. a covered metal vessel with a spout, used to boil water for domestic purposes, a TEA-KETTLE.
The Macquarie Dictionary (2nd revised edition) gives the
following definition in the context of cooking:
"1. a portable container with a cover, a spout, and a handle, in which to boil water for making tea and other uses; teakettle. 2. any of various containers for cooking foods, melting glue, etc. 3. a fish kettle."
In my view, I should proceed on the basis that most members of the public would understand the word "kettle" to refer only to a portable covered metal vessel, with a spout and handle, used to boil water for domestic purposes, and that they would not be familiar with the other meanings given in the dictionary definitions.
The expression "kettle cooked" is a compound adjective. In the way in which Frito-Lay has used it on its packaging, it fulfils the grammatical function of signifying "cooked by the use of a kettle". Probably most class 1 potential buyers who read the words "KETTLE COOKED POTATO CHIPS" would go on to conclude that the expression was being used to mean "cooked in a kettle" and that the word "kettle" must therefore be capable of referring to a large cooking vessel of some kind. Such readers would probably conclude that the manufacturer wished to convey that it was a positive feature of the chips in the packet that they had been cooked in a kettle. But they would be puzzled as to why the manufacturer would expect this piece of information to dispose people to buy, since they would understand that most other potential buyers, like themselves, would know only the familiar meaning of the word "kettle". These class 1 potential buyers might conclude that the manufacturer wished to convey that there was some advantage which readers could not be expected to understand arising from the fact that the particular potato chips had been cooked in a cooking vessel called a "kettle" rather than by some other method. For the somewhat bemused class 1 potential buyers, one of the two classes supposedly contemplated by Frito-Lay, the use of "KETTLE COOKED" is purely descriptive.
Class 2 potential buyers, those familiar with the KETTLE chip, are in a different position. Kettle has attracted to the word "KETTLE" when used in relation to potato chips, a secondary meaning, namely, a relatively recently introduced hard bite strongly flavoured potato chip of the kind sold under the name "KETTLE" (see below). The effect of a reading of the word "KETTLE" in the expression "KETTLE COOKED POTATO CHIPS" by a class 2 potential buyer is determined by that person's existing schema. The dominant relevant element of this is his acquaintance with the secondary meaning of "KETTLE" referred to. Such a reader is not troubled by the unfamiliarity with the unusual and perhaps technical use of the word which troubles class 1 potential buyers. The most distinctive word in the expression "KETTLE COOKED POTATO CHIPS" is the word "KETTLE". The words "potato chips" tell him virtually nothing that he does not already know from the nature and location of the packets. The word "cooked" is not particularly informative either. It is the word "KETTLE" which is calculated to impress and which takes his attention. The secondary meaning of the word is immediately suggested. He is not distracted by the possibility that "KETTLE COOKED" may have a specific denotation of "cooked in a cooking vessel called a 'kettle'".
Unlike such words as "roasted", "baked", "home baked", "fried" and "pan fried", the expression "kettle cooked" is not an expression in common use. The expression has been composed by Frito-Lay by the use of the familiar linguistic device of forming a compound adjective by the linking of a noun and a past participle. The grammatical meaning of the resultant compound adjective is not difficult to divine: "cooked by the use of a kettle". But obviously it is not this bland and purposeless description of a production process which Frito-Lay intends to convey or which is in fact conveyed. Rather, the expression is directed to those who have bought and tasted chips manufactured (cooked) by Kettle - "Kettle manufactured chips" ("Kettle cooked chips"). For them, the word "KETTLE" immediately suggests the hard bite aggressively flavoured kind of chip associated with the word "KETTLE". For them, "KETTLE COOKED" means "KETTLE STYLE", or simply "KETTLE" (used as an adjective of taste and texture).
It will be necessary in due course to consider whether this is a trade mark use. But first, two areas of the evidence before me relevant to the this question must be noted: the evidence of Frito-Lay's development of its marketing strategy; and the evidence of the understanding of Mr Riley, the Chief Financial Officer of Frito-Lay, as to the likely impact of the words "KETTLE COOKED" on prospective customers.
A company engaged in marketing research, Chris Adams Research Pty Ltd, pursuant to an engagement by Frito-Lay, carried out market research by exposing consumers to three line extension concepts: "THINS KETTLE COOKED POTATO CHIPS", "THINS DOUBLE CRUNCH KETTLE COOKED POTATO CHIPS" and "THINS FINE CUT CRINKLES". Of these three, the report to Frito-Lay favoured the first, although some respondents to the survey perceived the name as a "copycat" move - a reference to Kettle's product. Mr Riley described the function of the words "KETTLE COOKED" in that immediate conjunction with "THINS" as potentially a "sub-brand" (tr 54.18-54.20, 54.28-54.35).
Legal advice to Frito-Lay was against the "THINS KETTLE COOKED" idea. There followed a process in which Frito-Lay's marketing department sought to retain "KETTLE COOKED" in a prominent position while legal advice from Frito-Lay's solicitors, Allen, Allen and Hemsley ("Allens"), was that it not be used at all or that it be relegated to a minor role not involving any "brand or trade mark" element. The question was how "KETTLE COOKED" might be used safely yet so as to make an impact on the market. Allens suggested that the insertion of such words as "DOUBLE CRUNCH" with some prominence between "THINS" and the reference to "KETTLE COOKED" would assist to give the latter a descriptive function. Mr Riley said that in the form of packet finally decided upon, the brand "THINS" draws consumers to the packet; the words "DOUBLE CRUNCH" are a subsidiary brand which tell consumers that the contents differ from the standard "THINS" potato chips; and the expression "KETTLE COOKED POTATO CHIPS" tells them that the chips have been produced in a "kettle cooked potato chip manner" (tr 57.33) and have the "crunchy" quality and the aggressive flavour which result from that manner of production (tr 57.37-57.39).
The steps taken clearly avoided some obvious pitfalls, such as a location and prominence on the packet which might alone strongly suggest a brand or sub-brand use and an isolation of "KETTLE" or "KETTLE COOKED" from other words on the packet. On the other hand, the retention of the words on the front of the packet at all rather than, say, merely on the reverse side in small print, the strong preference of Frito-Lay's marketing department for "KETTLE COOKED" to any of the other available descriptions such as "slow cooked" or "batch cooked", and the not insignificant size of the words and their placement in the yellow "flash", all combine at least to suggest that the words were thought to have a selling power not to be accounted for by a purely descriptive role.
The second and related area of evidence referred to earlier is the cross examination of Mr Riley. He conceded that with one or two minor exceptions, it is only Kettle and its licensees, Hawker and Frito-Lay which have, to date, marketed potato chips that have been batch cooked in kettles (tr 49.27-49.33) and that of them Kettle certainly has the largest share of the market for hard bite aggressively flavoured potato chips (tr 50.15-50.16). It was put to Mr Riley several times that in using the expression "KETTLE COOKED", Frito-Lay had intended to draw on the potential customer's familiarity with Kettle's product. He said that Frito-Lay's intention was to draw on the reader's familiarity with the style of chip as one which is cooked in a kettle and has the hard bite and aggressive flavour qualities. For example, he said that Frito-Lay intended the expression to convey that the chips were "a hard bite potato chip similar to the Kettle Chip Company, similar to other product offerings on the market place" (tr 49.07-49.09), that "the kettle cooked potato chip is in the market place a crunchy, usually fairly aggressive flavoured product" (tr 50.10-50.11), that the word "KETTLE" was intended to convey, and did convey, "a category within the potato chip market, hard bite flavoured and Kettle is the denomination to describe that process, and that's what the consumer understands by that" (tr 50.20-50.21), that he was relying on "an impression in consumers' minds that Kettle means a particular type of hard bite, strong flavoured chip" (tr 50.24-50.26) and that he expected that the use of the word would "evoke that process part of which is kettle processing; small old-time type processing" (tr 51.35-50.36).
At tr 52.31-53.07 Mr Riley agreed that the hard bite heavily flavoured potato chip was known largely through the success of Kettle and of Frito-Lay's KETTLE CRISP which Kettle had produced. At tr 57.34-57.39 appears the following exchange:
"[Q]It is also possible, and I suggest you contemplated, that they will see the word 'kettle' and think of the products of the Kettle Chip company?
[A]It could happen, I can't stand here and say it won't, or it will and I am not prepared to do that, but what our belief is that the kettle cooked potato chip will evoke the product, crunchy aggressive flavour that is produced by the process under which these products are produced.
And at tr 69.26-69.32 appears the following:
"[Q]Is it your perception that consumers will know what the Kettle cooking process is?
[A]As I stated earlier the consumer understands the fact that it is authentic, it's Kettle style, it's original if you wish and that that produces the hard, crunchy, usually strongly flavoured potato chip product that they wish to purchase.
[Q]Of the type made by the Kettle Chip Company for itself and for you and Hawker?
[A]Correct.
Mr Riley's evidence confirms my conclusion expressed earlier that in view of the unfamiliar usage of the word "KETTLE", and the strong association in the market place of the word "KETTLE" with Kettle's own chips, Hawker's "KETTLE CHIP" and Frito-Lay's "KETTLE CRISPS", all or a substantial number of class 2 potential buyers would, immediately upon seeing the words "KETTLE COOKED POTATO CHIPS", think of the distinctive hard bite strongly flavoured potato chip introduced and made popular in recent years by Kettle or its licensees in each case in strong association with the name "KETTLE". In this respect, the evidence of Mr Riley at tr 70.34-70.40 is also significant:
"[Q]Why did you not use the phrase slow cooked or batch cooked?
[A]They are certainly similar descriptors of the process. But once again, the consumer was not aware of those terminologies. The term, kettle cooked, had been placed in the market place primarily on the back of The Kettle Chip Company's product itself in the earlier years by the use of these products are cooked in a kettle in the old fashioned way. To introduce a secondary term would have just fairly confused the consumer."
Contrary to what Mr Riley said, Kettle's references to its cooking having taken place in large kettles in an old fashioned manner in small print on the packages which it had used from November 1989 to July 1993 did not, in my view, make consumers generally aware of the expression "KETTLE COOKED" or of its significance. (Neither party suggested that the cauldron device would have been understood by consumers to indicate that the potato chips were in fact hand cooked in a simple cauldron on an open fire.) Rather, it has been the use of "KETTLE" prominently as a name on the front of the packets that has made an impression and given the word its secondary meaning.
Having regard to the purpose and effect of Frito-Lay's use of the word "KETTLE" on the front of its packets as described above, I ask myself whether that use was a trade mark use. Sub-section 6 (1) of the TM Act defines "trade mark" in terms of lawful use of a registered mark. The question before me is whether Frito-Lay has been unlawfully using "KETTLE" for the purpose of indicating, or so as to indicate, a connection in the course of trade between its own potato chips and itself, that is to say, for the purpose for which or in the manner in which registered trade marks may be used only by their proprietors or registered users; cf Johnson & Johnson at 347-348 (Gummow J). It is only Kettle that is entitled to do this. For Frito-Lay to do so would be to trespass upon Kettle's monopoly given by sub-s 58 (1) of the TM Act. Frito-Lay has sought, by taking the steps referred to earlier, to immunise the word "KETTLE" against trade mark use. But in my view the attempt has not succeeded. The unfamiliar and idiosyncratic use of the word, its strong secondary meaning and the likely circumstances surrounding display and sale, combine to give it, to a substantial extent, the purpose and effect of distinguishing between Frito-Lay's potato chips and those of other manufacturers (cf Mark Foy's at 205 (Williams J with whom Dixon CJ agreed); Johnson & Johnson at 347-348 (Gummow J)). This is a form of trade mark use.
Treating "the mark" used by Frito-Lay as "KETTLE COOKED" and not "KETTLE", I would have had to consider the issue of substantial identity or deceptive similarity. These tests were considered in Shell at 414-415 by Windeyer J and in Polaroid Corporation v Sole N Pty Ltd [1981] 1 NSWLR 491 by Kearney J. The "side by side comparison" of "KETTLE" and "KETTLE COOKED" shows that the two are not substantially identical. The issue of deceptive similarity (resemblance so as to be likely to deceive or cause confusion - cf sub-s 6 (3) of the TM Act) is to be determined not upon a side by side comparison but by reference to the impression likely to be left with potential buyers. This question involves considerations referred to above.
The goods in question are inexpensive snack foods bought casually and without deliberation at such outlets as supermarkets and service stations. For all or a substantial number of class 2 potential buyers, having regard to the familiar meaning of the word "kettle" in the language, the strong association to date of the word "KETTLE" when used in relation to potato chips with the distinctive kind of potato chip manufactured by Kettle, and the importance of the word "KETTLE" in the expression "KETTLE COOKED POTATO CHIPS", it is probable that the word "KETTLE" rather than the compound adjective "KETTLE COOKED" would make and leave an impression. For that reason I think that in the particular context with which I am concerned, "KETTLE COOKED" is deceptively similar to the Trade Mark.
Frito-Lay submits that a finding of infringement would be tantamount to granting to Kettle a monopoly over an ordinary word in the language - a form of copyright. I do not agree. A word may be "ordinary" when used in one way but extraordinary when used in another. I have referred to the familiar meaning of "kettle" earlier. According to that meaning, the word simply does not "fit" in the expression "KETTLE COOKED". While grammatically "KETTLE COOKED" clearly means "cooked by the use of a kettle", because the notion of cooking in a kettle is extraordinary, it is not possible to view that expression when read by potential buyers in the "route trade" and in supermarkets as merely descriptive of a cooking process.
The position can be illustrated by way of a contrast with the expression "home cooked". The word "home" is an ordinary word which, applied to those goods in respect of which the Trade Mark is registered, has no "direct reference to the character or quality of the goods". Let it be assumed that it was registered in respect of them and that another manufacturer could and did truly describe its potato chips as "home cooked". That would seem to be a case of an ordinary descriptive use and, depending on all relevant circumstances, not at all a trade mark use. The question would remain as to the impact on potential buyers in all the circumstances of the particular case, but at least there is a clear distinction between the readily understandable conjunction of words in the familiar expression "home cooked" and the incongruous conjunction of words in the unfamiliar expression "kettle cooked".
Exclusion under para 64 (1) (b) of the TM Act
It becomes necessary to consider Frito-Lay's submission based on para 64 (1) (b) of the TM Act. On 5 October 1994, Allens advised it by telephone that a Full Court had dismissed Smiths' appeal against Burchett J's decision in Apand. On 12 October 1994 Allens forwarded to officers of Pepsico Australia Pty Ltd, one of the two partners trading as "Frito-Lay", a copy of the Full Court's Reasons for Decision. From that time, Frito-Lay knew that there may be a difficulty in using the conjoined "THINS" and "KETTLE COOKED" expressions as previously contemplated. On 3 November 1994, Frito-Lay sent to Allens revised designs. On 4 November 1994 Allens replied noting that the expression "KETTLE COOKED" was being used in conjunction with "POTATO CHIPS" and not where consumers would expect a brand name to appear, and expressed the opinion that Frito-Lay would be able to defend the packaging.
Following a meeting on 8 December Allens wrote at length to Frito-Lay. They recommended the insertion of a "sub brand" between "THINS" and "KETTLE COOKED POTATO CHIPS" in order to reinforce the descriptive role of the latter. Prudently, Allens warned that "KETTLE COOKED" must never be used otherwise than in the format proposed, and, in particular, that it must never be used as part of such abbreviations as "THINS TM KETTLE", "THINS TM KETTLE COOKED" or "THINS TM KCPC".
Frito-Lay's packets were produced in January 1995. In late February 1995 it provided the final packages to Allens. Allens advised that in their opinion the final packages as proposed did not use "KETTLE" as a trade mark or as part of a trade mark.
There is no doubt that the grammatical role played by "KETTLE COOKED", the interposition of the words "DOUBLE CRUNCH" and the relegation of the expression "KETTLE COOKED" to third line status where they are conjoined to the words "POTATO CHIPS" were all correctly identified by Allens as factors assisting to make for a descriptive use. I have held that they are not used "purely for the purposes of description" (F H Faulding & Co Ltd v Imperial Chemical Industries of Australia and New Zealand Ltd (1965) 112 CLR 537 at 543 (McTiernan J)) and still include a substantial element of trade mark use.
Frito-Lay acted honestly, took top level legal advice and believed that its packaging did not infringe the Trade Mark. But such a belief does not establish good faith for the purposes of the provision: James Watt Constructions Pty Ltd v Circle-E Pty Ltd [1970] 3 NSWR 481 (Hope J). It describes Frito-Lay's position to say that, knowing of the existence of the Trade Mark, it wished to take advantage, to the maximum extent permissible without infringing the Trade Mark, of the secondary meaning which Kettle had built up for the name "KETTLE".
In my opinion, in these circumstances, the use made by Frito-Lay of "KETTLE" on its packets does not fall within para 64 (1) (b) of the TM Act. The sense intended to be conveyed by that paragraph is best recognised upon a reading of it as a whole. Its primary concern is the trader who, intending only to describe the character or quality of its goods or services, chances to use a word or words which trespass upon another's trade mark of the existence of which the trader was unaware. The present facts are far removed from that situation. Frito-Lay's purposes were mixed: they included a description of the character and quality of its potato chips but they also included the use of the Trade Mark for its own sake, that is, as a trade mark. Frito-Lay has sought to render the word constituting the Trade Mark generic by invoking a sense of the word unfamiliar to the public today, although perhaps well known in former times. In Johnson & Johnson (at 355) Gummow J said, after referring to authorities on para 64 (1) (b), that the Court should be slow to put on the paragraph an interpretation which would countenance the undermining of a registered trade mark by an assiduous infringer. Counsel for Kettle graphically referred to the steps taken by Frito-Lay as "genericide", which I take to mean on the facts of this case, the emptying of the word "KETTLE" of its secondary meaning in favour of a generalisation of its reference when used in relation to potato chips.
In my view, Frito-Lay's use of "KETTLE" and "KETTLE COOKED" on its packets was not purely descriptive of the character or quality of its chips and was, although Frito-Lay acted honestly and took steps directed to ensuring that an infringement of the Trade Mark did not occur, not "in good faith" for the purposes of para 64 (1) (b) of the TM Act.
Trade mark infringement and s 64 (1) (b) exclusion - some decided cases
Although the decided cases depend on their own facts and often involve matters of impression, I will refer to some which bear some resemblance to the present case. In J B Stone & Co Ltd v Steelace Manufacturing Co Ltd (1929) 46 RPC 406 (CA) the word "Alligator" was registered as a trade mark in respect of steel belt lacing, the plaintiff being the registered proprietor. The plaintiff's belting was distinguished by the form of a teethed fastener. The defendant ("Steelace") advertised its belting as "Alligator pattern" and this was held to be an infringement. Lawrence LJ said this:
"In my judgment it is absurd to say
that the registration of the fancy word 'Alligator' in respect of steel belt lacing
interferes with the use by the Defendants of a bona fide description of
the character and quality of their steel belt lacing. It is admitted that the word 'Alligator' has
up to the present time been used upon or in connection with the goods
manufactured by the Plaintiffs and upon or in connection with no other goods;
and further, it is proved that the Defendants themselves have for several years
past carried on their business of manufacturing and selling steel belt lacing
without using that word. In my opinion
the object of Section 44 [cf para 64 (1) (b) of the Australian Act] was to
safeguard traders in cases where the registered trade mark consisted of more or
less descriptive words forming part of the ordinary English language, without
the use of which other traders would find some difficulty in describing certain
qualities of their goods; but was never intended and does not operate to enable
a trader to
make use of a rival trader's registered trade mark consisting of a fancy word
having no reference to the character and quality of the goods in order more
readily to sell his own goods." (at 417)
Similarly, at 419, Slesser LJ said:
" ...: under the words 'Steelace Beltlacing' appear the words 'Alligator Pattern'. Now, it is really not disputed that had the advertisement merely stated 'Alligator' without the word 'Pattern', such user of that registered trade mark would clearly have been improper. Much of the case for the Respondents here has turned upon the argument that the word 'Pattern' has given to the whole description such a generality that no longer can it properly be said to be a Trade Mark within the ambit of Section 3 of the Act of 1905 [cf the definition of 'Trade Mark' in sub-s 6 (1) of the Australian Act], in that it does not really indicate the goods of the proprietor but merely indicates a type of goods which are to be bought upon the market."
His Lordship went on to reject the submission.
Their Lordships' observations are, in my view, applicable to the Trade Mark and to Frito-Lay's use of the expression "KETTLE COOKED" in the present case.
In Bass, Ratcliff & Gretton Ltd v Nicholson & Sons Ltd (1931) 49 RPC 88 (HL), a case concerning beer, two classes of "quality marks" (or descriptive marks) were referred to: those which denote a quality common to a trade and those which are peculiar to one manufacturer. It was said that the latter denotes "a special quality not of beer generally, but of beer exclusively brewed by [Nicholson]" (at 99 per Lord Buckmaster) and "a particular quality of the goods of [the] particular manufacturer, and therefore necessarily denotes origin" (at 107 per Lord Russell of Killowen). Lord MacMillan said this:
"It is no doubt of the essence of a trade mark that it should indicate origin and be used as indicative of origin and not merely as indicative of the quality of the goods. The distinction is a real one, but there is nothing to prevent a mark on goods being used to serve both purposes, for they are not necessarily mutually exclusive. A mark originally adopted to indicate that the goods to which it is applied are of a particular quality may readily come to be recognised as indicating that they are produce of the manufacturer who makes goods of that quality." (at 109)
Again, I am of the view that these observations are generally applicable to the facts of the present case.
Another case of relevance is James Watt Constructions Pty Ltd v Circle-E Pty Ltd [1970] 3 NSWR 481 (Hope J) in which the words "Barrier Beam" were registered in Part B of the Register in respect of electronically controlled machine guards. The defendant used those words in advertising its own guards and contended that this was a description rather than a trade mark use. As well, it challenged the registration of the plaintiff's mark. Hope J found infringement established, holding that although both the word "Barrier" and the word "Beam" were words of description and could be and had been used in descriptions of electronic machine guards, the expression "Barrier Beam" had acquired a secondary meaning when used in relation to such guards as indicating the plaintiff's product. The position is a fortiori in relation to "KETTLE" when used in relation to Kettle's potato chips because that word, unlike "barrier beam", is not directly descriptive of the product.
Finally, although much was made of the size of the letters in the word "PRITIKIN" in the finding of trade mark infringement in Berzins Specialty Bakeries Pty Ltd v Monty's Continental Bakery (Vic) Pty Ltd (1987) 15 FCR 402 (Jenkinson J), that case also shows that a word may be used as a trade mark although performing a grammatically descriptive role. The collocation of words there was:
"Wholemeal
Pritikin
style bread"
As I said earlier, Frito-Lay is using the word "KETTLE" in a conjunction of words signifying "KETTLE style potato chips".
These cases lend some support to the conclusion that there was trade mark infringement in the present case which I reached earlier.
TP Act and passing off
My conclusion in relation to trade mark infringement makes it unnecessary for me to deal with Kettle's claims of contravention of the TP Act and passing off. However, it is appropriate that I indicate that I am not persuaded that Kettle has made out its case under either of these heads. It is clear from the format of Frito-Lay's packets that the manufacturer is "THINS". I do not think that the public would be misled or deceived into thinking that there was any connection between the manufacturer of the potato chips in those packets and Kettle. Kettle does not suggest that those potato chips were not cooked in a "kettle". Nor has Kettle attempted to make a case that they lack the distinctive qualities associated with, or are inferior in quality to, Kettle's own potato chips.
Similarly, I do not think that a case of passing off is made out by Kettle.
CONCLUSION
For the foregoing reasons, Kettle is entitled to relief in respect of infringement of the Trade Mark. The proceedings will be stood over to a date for the making of orders. On that occasion short minutes of orders should be submitted in an agreed form, or if agreement has not been reached, in the
forms contended for by the respective parties.
I certify that this and the preceding 49 pages are a true copy of the Reasons for Judgment of the Honourable Justice Lindgren.
Associate:
Dated: 24 October 1995
Heard: 20 April, 1 May 1995
Place: Sydney
Decision: 24 October 1995
Appearances: Mr D K Catterns QC with Ms S J Goddard of counsel instructed by Freehill Hollingdale & Page appeared for the applicant.
Mr F M Douglas QC with Mr S Habib of counsel instructed by Allen Allen & Hemsley appeared for the respondents.
