FEDERAL COURT OF AUSTRALIA

PB Foods Ltd v Malanda Dairy Foods Ltd [1999] FCA 1602

TRADE MARKS – application to register CHOC CHILL subject to “claim to vary” where mark applied to goods of other flavours – application opposed – opponent was unregistered proprietor of mark CHILL by virtue of prior use in Queensland and Northern Territory – at time of application applicant had used CHOC CHILL only in Western Australia – whether CHOC CHILL substantially identical to CHILL – whether honest concurrent use or other special circumstances made it proper to permit registration – delegate found special circumstances but not honest concurrent use – delegate decided to register applicant’s trade mark subject to limitation of registration to Western Australia - whether appropriate to impose geographical restriction on applicant and, if so, extent of such restriction.

Trade Marks Act 1955 (Cth), ss 34(1), 40

The Shell Co of Australia Limited v Esso Standard Oil (Australia) Limited (1962)

109 CLR 407 applied

Bodyline Cosmetics Ltd v Brot Bodyline (1993) 27 IPR 315 applied

Carnival Cruiselines Inc v Sitmar Cruises Ltd (1994) 120 ALR 495 applied

Moorgate Tobacco Co Ltd v Phillip Morris Ltd (1980) 145 CLR 457 referred to

Moorgate Tobacco Co Ltd v Phillip Morris Ltd [No 2] (1984) 156 CLR 414 referred to

Olin Corp v Pacemaker Pool Supplies (1984) 4 IPR 526 referred to

Alex Pirie & Sons Ltd’s Application (1932) 49 RPC 195 and (1933) 50 RPC 147 referred to

John Fitton & Co Ltd’s Application (1949) 66 RPC 110 followed

Registrar of Trade Marks v Muller (1980) 144 CLR 37 referred to

Burger King Corporation v Registrar of Trade Marks (1973) 128 CLR 417 referred to

Karu Pty Ltd v Jose (1994) 30 IPR 407 followed

Somers v Greenbelt Pacific Pty Ltd (1998) 42 IPR 587 referred to

Microcom Pty Ltd v Microcom Systems Inc (1998) 41 IPR 163 referred to

Re Peddie (1943) 61 RPC 31 referred to

PB FOODS LTD v MALANDA DAIRY FOODS LTD

W 7 of 1999

CARR J

17 NOVEMBER 1999

PERTH

THE COURT ORDERS THAT:

1.         The application is allowed to the extent that the decision of the delegate on 15 December 1998 is hereby varied so that the period of two months in which the applicant may indicate its agreement to the territorial limitation of registration, referred to in that decision, is extended to two months from the date of this judgment.

2.         The application be otherwise dismissed.

3.         The applicant pay the respondent’s costs of the application.

Note:    Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

REASONS FOR JUDGMENT

Introduction

1                     This is an appeal, pursuant to s 51 of the Trade Marks Act 1955 (Cth) (“the 1955 Act”), from the decision of a delegate of the Registrar of Trade Marks under s 50 of the 1955 Act. On 15 December 1998 the delegate refused the applicant’s application for registration of the trade mark CHOC CHILL unless the applicant agreed, within two months of her decision, to limit such registration to the State of Western Australia.  The applicant seeks orders that the trade mark be registered without any territorial limitation, or in the alternative with a less restrictive territorial limitation.

Factual Background

2                     The applicant was incorporated in Western Australia.  At the time when it applied for registration of the trade mark CHOC CHILL, its name was Peters (WA) Limited.  The applicant trades under the names of “Peters” and “Brownes”.  It manufactures and sells ice-cream and other dairy products.  Its dairy products division manufactures white milks, flavoured milks, cream, juices, custards, yoghurts, desserts, dips and cheeses.

3                     On 1 April 1992, the applicant first used the trade mark CHOC CHILL to market some of its flavoured milk products.  It also started to use variants of that trade mark which varied in accordance with the flavour of the milk.  Those variants included COFFEE CHILL, BANANA CHILL and BERRY CHILL.  Since that date, the applicant has continued to sell flavoured milk in Western Australia under marks which included CHILL. 

4                     On 7 May 1992, the applicant applied to register CHOC CHILL as a trade mark throughout Australia for all goods in class 29.

5                     The respondent is a wholly-owned subsidiary of Australian Co-operative Foods Limited, which trades under the registered business name “Dairy Farmers”.  It operates the Dairy Farmers’ business in North Queensland.  On 23 February 1992 (i.e. some five weeks before the applicant first used the mark CHOC CHILL) the respondent first used the trade mark CHILL to market the flavoured milk which it produced.  Since then it has continuously sold flavoured milk under that name in Queensland and the Northern Territory. 

6                     On 19 May 1994 the respondent filed an application (No 630247) for registration of the trade mark CHILL FLAVOURED MILK.  In view of the descriptive nature of the second and third words in that mark, I have regarded that application as being one whereby the respondent seeks registration of its proprietorship of the trade mark CHILL.  At the hearing in this Court, the applicant conceded that the respondent was the proprietor of the trade mark CHILL.  Before the delegate, it had denied such proprietorship.

7                     When, on 7 May 1992, the applicant applied to register the trade mark CHOC CHILL throughout Australia, neither the applicant nor the respondent was aware of the other party’s use.  The applicant claims, and the claim is not disputed, that it did not become aware of the respondent’s use of the trade mark CHILL until December 1992. 

8                     On 2 February 1996, the respondent lodged a notice of opposition to the registration of the trade mark CHOC CHILL.

The Delegate’s Decision

9                     The delegate decided that the opponent, Malanda Dairy Foods Limited (the respondent in these proceedings) had succeeded in its claim to prior use of the trade mark CHILL.  The delegate held that the respondent had established its claim to proprietorship as at the date when the applicant lodged its application.  The delegate further held that the trade mark CHILL was substantially identical to CHOC CHILL, the trade mark which the applicant had sought to register.

10                  The delegate then turned to the question of whether there had been either honest concurrent use or whether there existed other special circumstances which made it proper to permit registration of CHOC CHILL.  As a matter of convenience, I shall refer to that mark as “the applicant’s mark” or “its mark”.  The delegate found that there had been honest concurrent use, but of limited extent.  She further found that, given the substantial identity of the two trade marks and the fact that they were used on identical goods, there was a strong probability of confusion if the trade marks were to be used in the same market areas.  However, if the use continued to be confined to the geographically remote markets of Western Australia and North Queensland respectively, the likelihood of confusion would remain at a very low level.  But as, so the delegate found, each party wished to extend the area of use of its trade mark, the delegate felt that she should consider what, if any, geographical limitation might be fair and reasonable to impose on the subject application.

11                  On the question of inconvenience, the delegate held that neither party had a clear claim to be more inconvenienced than the other if they were able to continue use of their marks.

12                  The delegate concluded that the period of concurrent use was too short to provide a sufficient basis on its own to allow the applicant’s mark to proceed to registration.  However, she considered that there were other special circumstances which would permit registration.  The special circumstances which the delegate identified were the very short period separating the commencement of use by the two parties and the similar extent of the independent use which they had made of their marks in distantly separated regions.  The delegate considered that if she refused to allow the applicant’s trade mark to proceed, it was likely that the respondent’s application 630247 (against which the application had been cited) might proceed to acceptance.  The applicant could then re-apply and, on the basis of its use in the State of Western Australia during the period since 1992, was likely to obtain an acceptance limited to that State under s 44(3) of the Trade Marks Act 1995 (Cth) (“the 1995 Act”).  The delegate considered that those were special circumstances which allowed her to exercise her discretion under s 34(1), which she was prepared to do.  The delegate’s decision was that, provided that the applicant agreed, within two months, to a limitation of the registration to the State of Western Australia, she would register the application under the provisions of s 34(1).

Grounds of Appeal

13                  At the trial, the applicant’s grounds of appeal were that:

(a)        the delegate erred in holding that the trade mark CHILL used by the respondent was identical, or substantially identical, to the applicant’s trade mark CHOC CHILL (and its variants COFFEE CHILL, STRAWBERRY CHILL, VANILLA CHILL, etc);

(b)        the delegate erred in holding that the applicant had not established honest concurrent use of its trademark CHOC CHILL (and its variants) pursuant to section 34(1) of the Trade Marks Act 1955;

(c)        the Delegate, having held that there were special circumstances allowing the registration of the applicant’s trade mark CHOC CHILL (and its variants), erred in holding that the registration should be limited to the State of Western Australia.

14                  At the hearing, the applicant abandoned two former grounds of appeal which were that:

·          the delegate erred in holding that the minimal and isolated prior use of the trade mark CHILL by the respondent was sufficient to support the respondent’s proprietorship of the trade mark;

·          the delegate erred in holding that the respondent was proprietor of the trade mark CHILL;

The Statutory Framework

15                  As the applicant’s application was pending immediately before 1 January 1996, the provisions of the 1955 Act continue to apply to it – see Part 22 of the 1995 Act.

16                  Section 40 of the 1955 Act relevantly provided that a person who claimed to be the proprietor of a trade mark might make application to the Registrar for the registration of that trade mark in Part A or Part B of the Register.  The case was fought on the basis that if the trade mark CHOC CHILL was identical or substantially identical to the respondent’s trade mark CHILL then it (the applicant) was not the proprietor of the mark and could only obtain registration under s 34(1) of the 1955 Act.

17                  Section 34(1) of the 1955 Act provided as follows:

“34(1)  In case of honest concurrent use or of other special circumstances which, in the opinion of the Registrar, make it proper so to do, the Registrar may permit the registration of trade marks which are substantially identical or deceptively similar, or, but for the honest concurrent use or other special circumstances would be deceptively similar, for the same goods or services or other goods or services, by more than 1 proprietor subject to such conditions and limitations (if any) as the Registrar imposes.”

ISSUES TO BE DECIDED

1.         Is the trade mark CHILL identical or substantially identical to CHOC CHILL?

Applicant’s Submissions

18                  The parties were agreed about the relevant test for whether marks were substantially identical, being a test different from the test for whether marks are deceptively similar.  The test involves comparison of the marks “side by side” – The Shell Co of Australia Limited v Esso Standard Oil (Australia) Limited (1962) 109 CLR 407 at 414; Bodyline Cosmetics Ltd v Brot Bodyline (1993) 27 IPR 315 at 319.

19                  The applicant submitted that the “side by side” test was to compare CHILL on the one hand with CHOC CHILL, COFFEE CHILL, STRAWBERRY CHILL and VANILLA CHILL on the other hand.  The applicant contended that there was no “total impression of similarity” between the marks – a reference to the test formulated by Gummow J in Carnival Cruiselines Inc v Sitmar Cruises Ltd (1994) 120 ALR 495 at 513.  It was irrelevant, so it was put, that the words CHOC, COFFEE, STRAWBERRY or VANILLA were descriptive of the flavour of the product.  The trade mark consisted of two words and it was the “total impression” of the two marks which must be considered in a side by side comparison with the mark CHILL.  Further, the first word had an impact because of its position.

Respondent’s Submissions

20                  The respondent submitted that, in comparing the two rival marks, the essential comparison was between CHILL and CHILL.  The words CHOC, STRAWBERRY, COFFEE and VANILLA were descriptors in the sense of descriptive terms that could not themselves be trade marks and which describe a variant of the applicant’s trade mark.  They were descriptive, so it was submitted, because they were so specified in the trade mark application, by which the applicant was bound.  They were purely descriptive in a grammatical sense and CHOC was used by the applicant itself as a descriptor on its chocolate flavoured milk containers.  If the applicant were successful in “negating” the status of CHOC as being purely descriptive then, so the respondent contended, that would undermine the whole basis of the applicant’s application for registration.  Its “claim to vary” type of application could not succeed.

21                  When CHILL was compared side by side with CHOC CHILL and the other variants, their similarities and differences noted and the importance of these assessed, they showed, so the respondent contended, substantial identity when regard was had to the essential features of the marks and the total impression of resemblance that emerged from the comparison.  The essential feature of each of the two rival marks was the word CHILL.  In terms of the applicant’s application for registration, that was the only constant feature in the mark.  The descriptors were not distinctive enough in themselves to be registered.  There was no doubt that CHOC and the other descriptive variants were descriptive terms.  Purely descriptive terms were to be discounted either very heavily or totally.

My Reasoning

22                  The applicant’s application for registration of a trade mark relevantly read as follows:

“We, Peters (W.A.) Limited, A.C.N. 008 668 602 of 465 Scarborough Road, Osborne Park, 6017 in the State of Western Australia, Australia

the proprietor of the trade mark, a representation of which is affixed to the Schedule of this application/annexed to this application hereby apply for registration of the trade mark in Part A of the Register of Trade Marks in respect of:

                All goods in this class including chocolate flavoured milk, coffee flavoured milk, vanilla flavoured milk, strawberry flavoured milk and other dairy products

being goods included in Class No. 29

. . .

SCHEDULE

CHOC CHILL

                The descriptor CHOC appearing in the mark is varied in use in accordance with the application of the mark to goods of other flavours comprised in the specification.

Dated this     7^th day of      May   1992.

23                  It will be recalled that the applicant now concedes that the respondent was, at the time of the applicant’s application, the proprietor of the trade mark CHILL.

24                  I accept the respondent’s submission, based largely on dictionary definitions, that the word Choc is an abbreviation for “chocolate” and that it is a description of the flavour of the milk.  There was no contrary submission. 

25                  I accept also that words such as choc, vanilla, strawberry and the like are not distinctive enough, or capable of becoming distinctive, so as to be registered as trade marks: see for example Burger King Corporation v Registrar of Trade Marks (1973) 128 CLR 417.  Mr W S Martin QC, counsel for the applicant, again did not contest that point but, quite properly, said that Burger King decided a different question to the issue of substantial identity raised in the present matter. 

26                  In Carnival Cruiselines Inc v Sitmar Cruises Ltd (1994) 120 ALR 495 at 513, Gummow J said this:

“When the decision [a reference to Shell Co of Australia Ltd v Rohm & Haas Co (1949) 78 CLR 601 at 629] is understood in this way, it does not supply any general authority for the proposition that in the case of disputed claims to proprietorship under the present statute anything less than substantial identity between the two marks will suffice.  The phrase “substantially identical” … requires a total impression of similarity to emerge from a comparison between the two marks.  In a real sense a claim to proprietorship of the one extends to the other.  But to go beyond this is, in my view, not possible.” 

27                  In Karu Pty Ltd v Jose (1994) 30 IPR 407 at 415, Drummond J noted that the above observation was obiter, but agreed with it and applied it.  I shall take the same course.

28                  The phrase “substantially identical” as it appears in s 62 (which is concerned with infringement) was discussed by Windeyer J in Shell Co of Australia Ltd at 414.  His Honour described the test in the following terms:

“In considering whether marks are substantially identical they should, I think, be compared side by side, their similarities and differences noted and the importance of these assessed having regard to the essential features of the registered mark and the total impression of resemblance or dissimilarity that emerges from the comparison.”

29                  The first question which I have to decide, in applying the above test is whether I should compare CHOC CHILL (and COFFEE CHILL, VANILLA CHILL and STRAWBERRY CHILL) with CHILL?

30                  In my view, the comparison side by side should be with CHOC CHILL on the one hand (or COFFEE CHILL, VANILLA CHILL, STRAWBERRY CHILL) and CHILL on the other.  My reason for that is that CHOC CHILL is the name for which the applicant seeks registration. 

31                  Having said that, I consider that the essential feature of the trade mark is the word CHILL.  When one considers the basic policy of the 1955 Act, it is the word CHILL which serves to denote the trade origin of the goods. 

32                  The word CHOC has, almost exclusively, different work to do.  It describes the flavour of the goods.  Registration is sought on the basis that that description will change with the flavour to COFFEE, VANILLA, STRAWBERRY and the like.  Those words are (to borrow from a decision cited below) utterly descriptive.

33                  I have had regard to the cases cited on behalf of the applicant where a mark consisting of two words has been compared with a mark consisting of one word.  They included Carnival Cruiselines where one of the comparisons was between SITMAR’S FUNSHIPand FUN SHIP.  In that case (at 513) Gummow J expressed the view that there would be no material distinction to be drawn between FUN SHIP and FUNSHIP or between the addition of the definite article or the use of the plural.  However, FUN SHIPwas a substantially different trade mark to SITMAR’S FUNSHIP and FAIRSTAR THE FUNSHIP.  Mr Martin referred me to other decisions where marks consisting of two words were compared with a mark consisting of one word, many of which were not curial decisions.  I will not refer to them all (they are collected at paragraph 8 of the applicant’s outline of submissions).  However, Mr Martin singled out a comparison between PLANET2000 and PLANET in Somers v Greenbelt Pacific Pty Ltd (1998) 42 IPR 587 at 589 (a decision of a senior examiner of trade marks).  In that case the senior examiner held that despite the fact that the numeral “2000” added little inherent adaptation to distinguish the goods of the applicant from those of other traders, the marks PLANET and PLANET 2000 when placed side by side, had a clearly identifiable difference.

34                  On the other hand, in Microcom Pty Ltd v Microcom Systems Inc (1998) 41 IPR 163 at 168 Hearing Officer Forno compared MICROCOM with MICROCOM NETWORKING PROTOCOL and said this:

“… I do not think that the additional words “Networking Protocol” are sufficient to differentiate the applicant’s and opponent’s marks.  Those two words are utterly descriptive for some of the goods covered and add nothing to the mark.  This is, I think, analogous to the situation where, say, the trade mark Rinso was being compared with another mark Rinso Washing Powder.  Clearly, these marks are substantially the same.  I think that any comparison between the present opponent’s mark and that covered by No. 523656, [Microcom Networking Procol] would lead to a conclusion that those marks are also substantially the same.”

35                  I have considered the applicant’s submission that the first word of a mark has an impact because of its position.  I think the validity of that observation depends very much upon what that first word is and what the second word is.  For example, if the word were “The” then it would have very little impact – see the passage from Carnival Cruiselines referred to above. 

36                  Mr Martin was unable to take me to any case in which a “claim to vary” had been given weight in the side by side comparison.  He submitted that there was an analogy to cases in which there was a disclaimer on the registration.  He referred me to Sizzler Restaurants International Inc v Grater Seven Pty Ltd (1996) 38 IPR 201 in which (at 209) Hearing Officer Homann said:

“Closer resemblance is apparent between the opponent’s latter mark SIZZLER and MEXICANA SIZZLERS where the differences lie in the word “Mexicana” and the plural form of “Sizzler”.  For the purposes of comparison, however, the word “Mexicana” cannot be ignored, even if it is disclaimed on the registration as a non-distinctive word indicating a particular style or flavour of food, as suggested by Mr Chrysiliou [counsel for the opponent]: see Re “Granada” Trade Mark [1979] RPC 303.  This additional word in the applicant’s mark is responsible for leaving a total impression in one’s mind of a mark which, when the marks are inspected in close proximity, by no stretch of imagination could be regarded as identical or substantially the same mark as that of opponent’s registration No. 414008 [SIZZLER].”

37                  I accept that there is a reasonable analogy to be drawn between a disclaimer and what is called a “claim to vary”.  As Mr Shanahan explains in “Australian Law of Trade Marks and Passing Off” (2 ed) at 214 a “claim to vary” is an undertaking that the description within the mark will be varied in accordance with the goods or services in relation to which it is used.

38                  The question to be decided in each case is largely one of fact, provided that the test is properly applied.  Comparing CHOC CHILL, or COFFEE CHILL, or VANILLA CHILL or STRAWBERRY CHILL with CHILL, I note the differences comprising an extra word of varying length the function of which is to describe flavour, but I note the similarity of the constant use of the word CHILL.  I have already mentioned the importance of CHILL and the degree to which it is essential to the mark.  Bearing in mind the relative importance of CHILL I give very little weight to the descriptors CHOC, COFFEE, VANILLA or STRAWBERRY.  In the end, I found myself in agreement with the delegate’s reasoning and conclusion which is set out at p 10 of her reasons as follows:

“When the side by side comparison is made between the mark CHILL, used by Malanda, and the application trade mark it is not a simple one to one comparison.  P B Foods’ mark is not simply CHOC CHILL.  PB Foods has chosen to file its mark as one which will be varied in use and in doing so has made it clear that the essential feature of its trade mark is the word CHILL which is used with a purely descriptive variable feature.  In selecting the goods, a prospective purchaser will therefore recognise the word CHILL as the badge of origin and will see the word CHOC or COFFEE or STRAWBERRY or VANILLA as nominating nothing more than the flavour of the product.  When considered in this light, it seems to me that the comparison between CHILL and CHOC CHILL does lead to a “total impression of similarity” and the proprietorship claim is supported.”

39                  In my opinion, applying the test referred to in the authorities cited above, the marks are substantially identical.  I now turn to the applicant’s alternative grounds of appeal.

2.         Was there honest concurrent use making it proper to permit registration of the applicant’s trade mark?

Applicant’s Contentions

40                  The applicant contended that the delegate erred in holding that it was not entitled to registration of CHOC CHILL on the basis of honest concurrent use.

41                  The applicant accepted the well-established six criteria in relation to justifying honest concurrent use of a mark.  However, the applicant submitted that the list was not necessarily exhaustive.  The list, which is derived from the decision in John Fitton & Co Ltd’s Application (1949) 66 RPC 110 (but which decision in turn was largely derived from Lord Tomlin’s speech in Alex Pirie & Sons Ltd’s Application (1933) 50 RPC 147 at 159-160), comprises:

·          the honesty of the concurrent use;

·          the extent of the use in duration, area and volume;

·          the degree of confusion likely to ensue;

·          whether any instances of confusion have in fact occurred;

·          the relative inconvenience which would be caused to the respective parties; and

·          any conditions or limitations.

42                  The applicant pointed out that it was not disputed that its use was honest.  It was common ground that it did not know of the respondent’s trade mark CHILL until after it started using CHOC CHILL. 

43                  The applicant relied upon authorities which, so it submitted, were to the effect that once honesty of use was established, the other factors were of lesser importance: Buler Trade Mark [1975] 92 RPC 275 at 289; Granada Trade Mark [1979] 96 RPC 303.

44                  As to the extent of use, the applicant referred to the period of its use between the launch of CHOC CHILL on 1 April 1992 and its application to register that name on 7 May 1992.  It submitted that although the period was of relatively short duration, the use of the trade mark during that period was substantial.  Furthermore, its use, so it contended, should be directly compared with the use by the respondent which was also of relatively short duration i.e. between 23 February 1992 and 7 May 1992.

45                  The applicant submitted that in relation to the degree of confusion likely to ensue, it could be seen that the use of CHILL by the respondent was quite different to the use of CHOC CHILL by the applicant.  Even if the products were on the shelf side by side there was, so it was contended, little likelihood of confusion.  The applicant referred to Exhibits JCN12 and JCN13 for that comparison. 

46                  In any event, so the applicant submitted, the products of the applicant and the respondent have not and are unlikely to appear on the same shelf because the respondent had not sold any products under the trade mark CHILL outside Queensland.  Further there was no evidence that the respondent intended to sell products under the name CHILL outside Queensland, whereas the applicant’s evidence is that it intended to sell its CHOC CHILL products throughout Australia.

47                  Even if the products were sold side by side, the applicant submitted that a degree of permissible confusion was contemplated by s 34(1) of the 1955 Act: Buler Trade Mark (1975) 92 RPC 275 at 289; Olin Corp v Pacemaker Pool Supplies (1984) 4 IPR 526 at 530.

48                  The applicant contended that there was no evidence of actual confusion between the respondent’s mark and its mark.  This was not surprising, considering that the use had been limited to Queensland and Western Australia respectively. 

49                  On the question of relative inconvenience, the applicant submitted that it would suffer substantial inconvenience if it could not register CHOC CHILL throughout Australia, because of its intention to sell CHOC CHILL product throughout Australia.  It had already delayed the launch of its product in the Eastern States because of the dispute between the applicant and the respondent.  The applicant submitted that if it could not obtain registration of the trade mark CHOC CHILL for those States it would run a risk that it would be sued by the respondent for infringement of the CHILL trademark, should the respondent obtain registration of that mark.  The applicant would only have a defence to such infringement proceedings if it could register CHOC CHILL without geographical restriction.

50                  Alternatively, so the applicant submitted, if CHOC CHILL were registered throughout Australia except Queensland and the Northern Territory, any inconvenience to the applicant would be much less.  Although it might not be able to sell its products in Queensland and the Northern Territory, it would be able to sell its products in other important markets including New South Wales and Victoria.

51                  The applicant submitted that there was no evidence that the respondent intended to sell CHILL outside Queensland.  The applicant referred to evidence that companies associated with the respondent sell flavoured milk under the trade mark DARE in New South Wales and Victoria. 

52                  The applicant contended that on weighing each of the factors referred to above, the registration of CHOC CHILL should be allowed on the basis of honest concurrent use.

Respondent’s Contentions

53                  The respondent contended that the delegate had correctly found that relief should be granted to the applicant under the heading of “special circumstances” rather than honest concurrent use.

54                  The respondent submitted that five weeks use could not establish honest concurrent use.  Even 2¼ years had been held to be exceptionally short: Re Peddie (1943) 61 RPC 31 at 36-37.  Furthermore, there was very little evidence to establish the volume of sales during that period.  The correct approach to the matter was to regard the respondent, as the proprietor of the trade mark, as having the right to be registered in respect of its mark throughout Australia.  The applicant had no right or entitlement to registration, but could call for the exercise of a discretion in special circumstances. 

55                  On the question of the applicant’s intentions, the respondent submitted that the relevant period was that between the 1 April 1992 and 7 May 1992.  There was no evidence that during that period the applicant had any intention to sell its products outside Western Australia.  Alternatively, any such intent was irrelevant to the question of honest concurrent use.  Only actual use counted in that regard.  [In reply, the applicant submitted that intent was relevant in the exercise of the delegate’s discretion].

My Reasoning

56                  In my view, the evidence does show honest concurrent use by the applicant within the meaning of s 34(1) of the 1955 Act. 

57                  It is common ground that the applicant’s use was honest i.e. that it did not know of the respondent’s trade mark CHILL until December 1992. 

58                  I do not accept the applicant’s submission that once honesty of use is established, the other relevant factors of are lesser importance.  As I read the authorities (including Granada Trade Mark), honesty is essential, but not sufficient to render the other relevant factors relatively unimportant. 

59                  It is true, as the respondent pointed out, that there does not appear to have been a decided case in which five weeks has been held to be of sufficient duration to support a finding of honest concurrent use.  However, as Lord Hanworth MR observed in Pirie at 212:

“It would be impossible to say that in all cases a particular span of time must be accomplished before it can be treated as justifying a user within section 21” (the then equivalent in the United Kingdom of s 34(1) of the 1955 Act). 

60                  I think that this period of five weeks must be seen in the context of the use by the respondent which was itself only some ten weeks.  In terms of area, the evidence is that the applicant’s sales were conducted during the relevant period throughout Western Australia.  The volume of such sales was also substantial.  I infer such substantiality from paragraphs 4 and 6 of Mr Peter Clark’s statutory declaration of 15 January 1997.  Mr Clark deposes to the fact that when the respondent launched the product CHOC CHILL in April 1992, it was heavily advertised through television commercials and point of sale material.  He gives the wholesale value of sales under the trade mark CHOC CHILL for the financial year ended 30 June 1992 as $2,652,127.00.  Those sales were achieved over a period of 12 weeks.  To obtain some idea of the likely sales during the first five weeks of that period, I have assumed (perhaps without justification, but the exercise is not a precise one) that an average for the 12 weeks could be applied.  That results in sales of approximately $1,105,000.00 for the 5 weeks in question.  Mr Clark, in paragraph 7 of the same statutory declaration, deposes to advertising expenditure on products sold under the trade mark CHOC CHILL in Western Australia during the relevant 12 weeks as being $269,164.00.  Making the same calculation based on averaging, it seems reasonable to infer, and I do, that the applicant outlaid about $112,000 on such advertising during the relevant 5 week period.  Its expenditure during that period may have been higher than average due to the fact that the launch was on 1 April 1992. 

61                  I reject the applicant’s submissions in relation to the degree of confusion likely to ensue if its mark is registered.  I have already found that the two marks are substantially identical.  I have looked at the exhibits proffered by the applicant for its contention that there is little likelihood of confusion.  They were exhibits JCN12 and JCN13, being the cartons in which the flavoured milk of the respective parties is marketed.  Despite the very different colouring of those exhibits, the word CHILL is very prominent on the respondent’s carton and is the most prominent word on the applicant’s carton where it is used as CHOCCHILL.  I formed a similar impression from examination of exhibits PMC6, PMC7, PMC8 and PMC9 of Mr Clark’s statutory declaration.  My assessment is that there would be a high probability of confusion if the parties used CHOC CHILL and CHILL to sell their products in the same geographic market.  In Ms Jane Cassidy-Norrish’s statutory declaration of 15 January 1997, she describes, so far as the applicant was concerned, the derivation of the trade mark CHILL.  At para 5 of that statutory declaration Ms Cassidy-Norrish refers to the “CHILL flavoured milk product range”.  Ms Cassidy-Norrish exhibits a memorandum prepared by the applicant’s advertising agents, Marketforce, as one which listed various trade marks which were under consideration by the applicant at that time.  So far as is relevant, that memorandum very much focussed on the word CHILL.  I think that if the parties were to trade under their respective marks in the same market there would be a real likelihood of confusion, contrary to the public interest.  I accept that the authorities show that a degree of permissible confusion is contemplated by s 34(1).  However, the matter of confusion is, in my view, of particular importance when considering whether any conditions should be imposed. 

62                  There is no evidence of any instances of confusion which have in fact occurred.  This is not surprising as the applicant’s trade has to date been confined to Western Australia and the respondent’s trade to Queensland and the Northern Territory.

63                  The relative inconvenience to the respective parties very much depends, in my opinion, on what, if any, would be an appropriate geographical restriction to impose by way of condition.  I see the matters as to some extent overlapping.  The applicant recognised this in its outline of submissions and I deal with that aspect below.

3.         Did the delegate err in imposing the geographical restriction condition?

Applicant’s Contentions

64                  The applicant relied partly on the submissions which it put in relation to the question of honest concurrent use.  It emphasised that it would suffer considerable hardship if it were not able to register and use CHOC CHILL outside Western Australia.  In particular it would not be able to pursue its strategy of a national brand for its very successful flavoured milk product.  The fact that the respondent and not the applicant was first to use a trade mark featuring the word CHILL (by a matter of a few weeks only) was, so it was put, fortuitous.  In effect, the two companies started use of the trade mark featuring the word CHILL at the same time and at different ends of the country.  This was, so the applicant submitted, precisely the sort of scenario which was contemplated by s 34(1). 

65                  The applicant suggested that there were two alternatives open to the Registrar and to this Court.  First, registration might be granted in favour of the applicant throughout Australia.  The respondent might achieve similar registration in relation to its mark.  The result would then be that each party could compete with the other throughout Australia but each would have protection from any other competitors seeking to use the marks.  The second alternative was that the application for registration should be granted in respect of the whole of Australia other than Queensland and the Northern Territory.  The applicant speculated that in that event the respondent might obtain registration of its mark for the whole of Australia except Western Australia. 

The Respondent’s Contentions

66                  At the hearing before the delegate, the respondent had opposed any registration of the applicant’s trade mark.  At the hearing in this Court, the respondent conceded that the restricted grant made by the Registrar was appropriate.

67                  The respondent contended that the decision to impose the restrictive geographical condition should be upheld, whether the use by the applicant qualified as honest concurrent use or only on the basis of special circumstances: Alex Pirie & Sons Ltd’s Application at 159-160; John Fitton & Co Ltd’s Application; cf Olin Corp v Pacemaker Pool Supplies.  The respondent argued that it was established law that although the matter came to the Federal Court for a hearing de novo, the Court should attach great weight to the opinion of the Registrar or his or her delegate: Eclipse Sleep Products Inc v Registrar of Trade Marks (1957) 99 CLR 300 at 321-322; Registrar of Trade Marks v Muller (1980) 144 CLR 37 at 41.

68                  The respondent also relied upon its submissions in relation to honest concurrent use.

My Reasoning

69                  The main thrust of the applicant’s arguments was that it had demonstrated an intention to use the mark CHILL to sell flavoured milk outside Western Australia whereas the respondent, although adducing some evidence of national exposure of its mark, had given no evidence of any intention to use its mark outside Queensland or the Northern Territory.  The applicant submitted that the delegate had erred in that regard when, in the passage set out below (from p 14 of her reasons) she stated that each party wished to extend the area of use of their trade marks.  The relevant passage read as follows:

“Any conditions or limitations

The history of the adoption and concurrent use of the two trade marks for more than six years shows that the trade marks could co-exist without confusion or conflict if they continued to be used in the widely separated areas where they have been used to date.  This could be achieved by the imposition of mutually exclusive geographical limitations on their use but as each party wishes to extend the area of use of their trade marks I must consider, in respect of the matter before me, what, if any, geographical limitation might be fair and reasonable to impose on the subject application.”

70                  A question arises as to whether consideration of the applicant’s intention to use the trade mark CHILL outside Western Australia should, for the purposes of the exercise of the discretion, be confined to the five week period between 1 April 1992 and 7 May 1992.  The respondent so contended.  The general rule seems to be that the fate of an application is to be judged as at the date of application – see Mr Shanahan’s observation to that effect at p 39 of his book and the cases there cited.

71                  However, s 34(1) can, in my opinion, reasonably be viewed as in the nature of a type of exception to the normal registration process.  There is a discretion to be exercised and, although there does not appear to be any authority directly in point, it seems to me that, to some extent, matters occurring after the application date may be taken into consideration in the exercise of that discretion.  It is accepted, on the authorities, that relative inconvenience to the respective parties is a relevant factor.  It seems to be somewhat artificial, when exercising or re-exercising a discretion and being obliged to take into account the relative inconvenience likely to flow from the exercise of that discretion, to confine consideration of that relevant matter to the situation which existed some 7 years ago. 

72                  I propose to take into account the respective intentions of the parties both during the 5 week period identified above and subsequently.

73                  The relevant honest concurrent use in this matter was confined to Western Australia.  There are some very slight indicators of the applicant’s intentions to use the mark outside Western Australia during the relevant 5 week period.  At paragraph 11 of Mr Clark’s first statutory declaration he said:

“However, in view of the overwhelming success of the product in Western Australia my company has always intended to expand the promotion and sales of products under the trade mark CHOC CHILL into other states of Australia, including South Australia, Victoria and New South Wales.”

74                  Immediately after that passage Mr Clark referred to a memorandum said to evidence an intention that a similar marketing strategy to that employed in Western Australia would be adopted in the eastern states of Australia.  That memorandum was dated 4 February 1993.  Ms Cassidy-Norrish in her affidavit of 5 August 1999 gave some evidence on this point.  At para 16 she said:

“…Generally, the strategic direction of PB Foods has been to try to expand its operations into the rest of Australia and overseas markets.  This has been a consistent theme of PB Foods business planning since I joined the company in 1989.”

75                  I take into account the contents of paras 16, 17, 18 and 19 of that affidavit.  At para 19, Ms Cassidy-Norrish deposes generally to the applicant’s strategy in the early 1990s as she understood it.  However, I accept the submission made by Dr J T Schoombee (who with Mr A J Davidson appeared as counsel for the respondent) that there is no properly-dated document emanating from the 5 week period which shows an intent on the applicant’s part, existing during that period, to use the trade mark CHOC CHILL outside Western Australia.

76                  I am not prepared to find on the basis of the very slight evidence adduced to that effect, that during the relevant period (i.e. between 1 April 1992 and 7 May 1992) the applicant intended to use the trade mark outside Western Australia.  I accept that the applicant has since formed such an intention and there is abundant evidence to that effect.  The most cogent piece of hard evidence in that regard was the applicant’s contract to sell flavoured milk to Franklins (Vic) Limited for sale in that company’s supermarkets in Victoria.  There is some doubt whether those products were going to be sold under the trade mark CHOC CHILL.  Mr Clark at para 12 of his statutory declaration dated 15 January 1997 declared to that effect.  But the document which he exhibited by the relevant paragraph of that statutory declaration referred to the products as being “Brownes Chill”.  However, for the purposes of this application I shall assume that the applicant intended to use the trade mark CHOC CHILL.  As it turned out, no sales were made.  

77                  I accept that if registration of its trade mark is confined to Western Australia, then the applicant will be put to substantial inconvenience.  First, there is the loss of potential sales revenue which might be generated by use of the trade mark in other States.  Secondly, if it decides to use its trade mark in other States, there is the risk of facing infringement proceedings brought by the respondent.  There are also the other matters summarised earlier, including not being able to have a national brand.

78                  But those are inconveniences which would be sustained by any person not having proprietorship of a trade mark.  The scheme of the Act is not proprietorship by registration but rather registration of proprietorship, although such registration confers various benefits including some protection from infringement proceedings.  Seen in that light, s 34(1) can be regarded as an exception to the general statutory scheme by providing for registration where there is honest concurrent use or there are other special circumstances which justify registration.

79                  No case was cited to me in which the discretion conferred by s 34(1) or its counterparts had been exercised in respect of an area extending beyond the area in which concurrent use took place.  In Fitton at 116 the Assistant Comptroller seems to have taken it as axiomatic that registration under s 12(1) of the Trade Marks Act 1938 (UK) could not extend outside the area of antecedent use (England and Wales) or to goods in respect of which the relevant trade mark had not been used (goods for export).  In Olin the applicant obtained Australia-wide registration, but on the basis that in respect of Western Australia s 34(1) applied to such registration.  That is not, in my view, a case where honest concurrent use resulted in registration outside the area of such use.  However, I shall assume, without deciding, that under the 1955 Act registration may be granted outside the area of honest concurrent use.

80                  In my view, the applicant’s submissions overlook the basic fact that even though the respondent’s use of the mark CHILL to date has been confined to Queensland and the Northern Territory, it is the proprietor of that mark and as such is entitled to registration throughout Australia.  It was the author of the mark and it was the first to use it.  Admittedly it was only the first by some five weeks, but the applicant has abandoned its argument that that period was of a de minimis character.  The applicant expressly acknowledged the respondent’s proprietorship of the mark. 

81                  I think that I am entitled to take into account, in the exercise of my discretion, and I do so, the very fact that the respondent has applied for registration of its mark and also the respondent’s evidence that it has achieved some national exposure for that mark.  This was achieved through sponsorship of a sporting team (whose games were televised in places outside Queensland) and by entering its products in agricultural shows outside Queensland.  What I make from that evidence is that the respondent is in a position, or is moving towards a position, where it would be able to use its mark to sell flavoured milk outside Queensland and the Northern Territory if it chose to do so. 

82                  In those circumstances, I do not think that it is a determinative or very major factor that the applicant, on the present state of intentions, may be more greatly inconvenienced than the respondent by the condition confining its registration to Western Australia.  I take into account that even if, as the evidence demonstrates, the respondent has no present intention to sell outside Queensland or the Northern Territory under its trade mark, it would be detrimental to it to place obstacles in its path should it elect to take that course in future.

83                  I do not think that it would be a proper exercise of the discretion conferred by s 34(1) either to grant registration of the mark throughout Australia or in Australia excluding Queensland and the Northern Territory.  I say this, first, for the reasons which I have set out immediately above.  Secondly, as I have already mentioned earlier in these reasons, I consider that there would be a high probability of confusion arising from the identicalness of the marks. 

84                  I consider that the delegate exercised her discretion in an entirely appropriate manner when she granted registration of the applicant’s application but confined that registration to the State of Western Australia.

Conclusion

85                  For the above reasons the application will be dismissed.

Associate:

Dated:              17 November 1999