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Trademark Lawyer Sydney – Federal Court – Urban Ale v Urban Pale

Urban Alley Brewery Pty Ltd v La Sirene Pty Ltd [2020] FCA 82 (7 February 2020)

Urban Alley was unsuccessful in its allegations against La Sirene and also had the misfortune of having its trade mark registration cancelled.
Urban Alley alleged La Sirene infringed its trademark registration for Urban Ale covering beer in class 32 with a priority date of 14 June 2016. It also alleged La Sirene’s conduct was misleading and deceptive and constituted passing off.

La Sirene cross-claimed seeking cancellation of the URBAN ALE mark on grounds that it was wrongly registered and sought a declaration that Urban Alley’s allegation of infringement was a groundless threat.

Background

Urban Alley produces and sells craft beer products. Its business was originally conducted by Collins Street Brewing Co. Pty Ltd. Its beer was initially produced by a contract brewer and offered for sale under the Once Bitter Urban Ale label shown below from May 2016.

Trademark-Lawyer-Once-Bitter-Urban-Ale-Label

 

The accompanying press releases and other business documents used the words Urban Ale in a manner which described the style or flavor of the beer.

By around mid 2017 a decision was made to drop use of Once Bitter and from November 2017 coasters were produced which featured the Urban Ale mark (without Once Bitter).

The business of Collins Street Brewing Co. Pty Ltd was sold to Laneway Brewery Pty Ltd on 21 December 2017 which changed its name to Urban Alley Brewery Pty Ltd on 30 April 2018. The sale included a transfer of all trade mark rights and goodwill.

From May 2018, Urban Alley started selling a new craft beer under the URBAN ALE label shown below:

Trademark-Lawyer-Urban-Ale-Label

From September 2018, Urban Alley commenced producing and selling its own beer at its microbrewery and pub (which it called its “brewpub”). It continues to distribute its beer through other independent retail outlets.

Sometime after December 2018 and by at least June 2019, Urban Alley changed the label of its Urban Ale product to that shown below:

Trademark-Lawyer-Urban-Ale-Label-Updated

The sales revenues and marketing expenditure for the Once Bitter and Urban Ale products were modest.

La Sirene also produces and sells craft beers in Melbourne. From around December 2015 it described its business as an Urban Farmhouse as it produced Farmhouse style beers in an urban location in Melbourne. In October 2016 it started selling a pale ale craft beer under the trade mark URBAN PALE with a label shown below:

Trademark-Lawyer-Urban-Pale-Label

It registered this label as a trade mark for beer with effect from 26 October 2018. It also obtained trademark registration of the words FARMHOUSE STYLE URBAN PALE BY LA SIRENE for beer with effect from 24 October 2018. Both registrations carried s44(3)(b) endorsements.

Urban Alley also sought cancellation of these marks on grounds that they were wrongly registered.

The evidence established that the word “urban” has been used in connection with breweries and beer products for a considerable period of time, both in Australia and in other countries. A number of brewers and beer suppliers have chosen to use the word “urban” in the name of their beer products. The usage is not confined to craft beer producers.

There was no evidence of any actual confusion between Urban Alley’s URBAN ALE product and La Sirene’s URBAN PALE product.

Cancellation of the Urban Ale trade mark registration

O’Bryan J firstly considered La Sirene’s cross-claim for cancellation of the Urban Ale trademark registration. This was based on the following 3 grounds:

(a) under s 41 on the basis that the mark is not capable of distinguishing Urban Alley’s goods (in respect of which the trade mark is registered) from the goods of other persons;

(b) under s 44 on the basis that the mark is substantially identical with or deceptively similar to the prior registered mark “Urban Brewing Company”; and

(c) under s 58 on the basis that Urban Alley is not the owner of the mark (based on the registration of the prior mark Urban Brewing Company).

Under s41, La Sirene argued that the ordinary signification of the words “urban ale” is to describe an ale made in an urban area or intended for consumption by an urban audience. His Honour agreed and found that the Urban Ale mark is not to any extent inherently adapted to distinguish Urban Alley’s beer products from those of other beer producers. As such, the discretion to cancel the trademark registration was enlivened.

Under s44, his Honour agreed with La Sirene that the Urban Ale mark was deceptively similar to the earlier registered Urban Brewing Company mark. Again, the discretion to cancel the Urban Ale trademark registration was enlivened.

The s58 ground for cancellation was rejected as his Honour did not consider Urban Ale to be substantially identical with Urban Brewing Company.

O’Bryan J then went on to consider the discretion in s88(1)(a) to cancel the Urban Ale trademark registration. His Honour found cancellation was appropriate. Urban Alley did not provide a sufficient reason not to order the cancellation of the Urban Ale mark. The public interest would be adversely affected if the registration remained. The evidence of Urban Alley was insufficient to establish that it has developed a significant reputation in the Urban Ale mark in respect of beer in Australia.

Infringement of Urban Ale trade mark registration

Given O’Bryan J’s finding that the Urban Ale trademark registration should be cancelled, the  infringement action brought by Urban Alley necessarily fell away. Nonetheless, his Honour went on to consider infringement in case his order cancelling the Urban Ale registration is challenged on appeal.

Under the infringement claim, La Sirene did not contest Urban Alley’s allegation that URBAN PALE was substantially identical with or deceptively similar to the Urban Ale registered mark. Rather, it sought to make out one or more defences to infringement. O’Bryan J considered that La SIrene had established two defences to infringement.

Firstly, La Sirene contended that it had not used URBAN PALE as a trade mark  as required under s120 and O’Bryan J agreed with this. His Honour considered the evidence supported use of PALE ALE as a product name that is descriptive of the nature and style of the beer product, even though it appeared prominently on the labels.

Secondly, La Sirene contended that it has used the name Urban Pale in good faith to indicate the kind, quality, geographical origin, or some other characteristic, of its beer product. Again, O’Bryan J agreed with  this and so the defence under s122(1)(b)(1) was available. His Honour considered that the use of the word “urban” is descriptive and laudatory, conveying that the product is cool or trendy and suited to inner-city beer drinkers. As such, when used in connection with beer, it indicates the kind, quality or other characteristic of the product.

Thirdly, La Sirene contended that it has used an unregistered trade mark, being the word “urban”, continuously in the course of trade in relation to craft beer products continuously from late 2015 which was before the 14 June 2016 priority date of the Urban Ale registration or the earliest use of the Urban Ale mark in May 2016. However, O’Bryan J disagreed and considered that there needs to be prior continuous use of the unregistered mark subject of the alleged infringement, namely URBAN PALE and La Sirene commenced using this subsequently in October 2016. Hence, the s124 defence was unavailable.

Australian Consumer Law and Passing Off

Urban Alley claimed that the use of the Urban Pale name by La Sirène constitutes misleading and deceptive conduct in breach of ss 18 and 29(1)(g) and (h) of the Australian Consumer Law (ACL) as well as the tort of passing off.

O’Bryan J dismissed these claims and agreed with La Sirene that, as at the date it launched its Urban Pale product in October 2016, it was unlikely that any segment of the market into which Urban Alley and La Sirene sold their respective products would have been misled by the packaging of La Sirene’s product or its associated marketing into believing that the products had the same source.

Firstly, the name “Urban Ale” is descriptive. Secondly, the evidence was insufficient to show that Urban Alley had acquired a reputation in this name as at October 2016. By that time, it only had around 6 months use in the manner shown on the Once Bitter product labelling. Thirdly, the packaging and labelling of La Sirene’s Urban Pale product differed in fundamental ways form that of Urban Alley’s Once Bitter product. Fourthly, La Sirene promoted and marketed its Urban Pale product as being produced by La Sirene.

La Sirene’s trade mark registrations

In defence of Urban Alley’s infringement claim, La Sirene also relied on its trade mark registrations for its URBAN PALE label and FARMHOUSE STYLE URBAN PALE BY LA SIRENE as providing a right to use these marks. This defence could only be applicable for the period since the date of registration of those marks, being 24 and 26 October 2018 respectively.

Urban Alley sought to negative the availability of this defence by seeking cancellation of these marks on grounds that they were wrongly registered, by relying on the following grounds:

(a) under s 44  on the basis that the La Sirene marks are substantially identical with, or deceptively similar to, the registered Urban Ale mark;

(b) under s 42(b) on the basis that the use of the La Sirene marks would be contrary to law because such use constitutes misleading and deceptive conduct in breach of ss 18 and 29 of the ACL and the tort of passing off;

(c) under s 60 on the basis that, before the 24 and 26 October 2018 priority dates of La Sirene’s registered marks, the Urban Ale mark had acquired a reputation in Australia and, because of that reputation, use of the La Sirene marks would be likely to deceive or cause confusion; and

(d) under s 88(2)(c), on the basis that, as at the filing date of the claim (being 11 June 2019), the use of the La Sirene marks is likely to deceive or cause confusion.

Given O’Bryan J’s earlier findings, (a) failed because his Honour found that the Urban Ale mark should be cancelled and (b) failed because his Honour dismissed the ACL and passing off claims. Grounds (c) and (d) also failed because his Honour was not satisfied that Urban Alley had established the requisite reputation in its Urban Ale mark as at the relevant dates.

Hence, La Sirene could rely on this defence to infringement under s122(1)(e), particularly arising from registration of its label mark, from after the date of registration. It was not strictly necessary for his Honour to consider the availability of this defence arising from its word mark registration (where Urban Alley contended that this mark had not been used).

Groundless threats

In its cross-claim, La Sirene also sought a declaration that Urban made groundless threats of infringement on 23 March 2017 and the action for infringement was not brought by Urban Alley with due diligence as it was commenced on 1 March 2018. However, O’Bryan J dismissed this cross-claim.

O’Bryan J observed that the text and structure of s129 indicate that it is not concerned with the question whether a person, who threatens to bring a trade mark infringement action against another person, has a reasonable basis for believing that the other person has infringed. Rather, it is concerned with the question whether the allegation is correct.

In any event, his Honour found La Sirene’s claim could not be brought against Urban Alley because it did not threaten to bring an action against La Sirene. Rather, the threat was made by Urban Alley’s predecessor in title, namely Collins Street Brewing Co. Pty Ltd.

 

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