PDP Capital Pty Ltd v Grasshopper Ventures Pty Ltd  FCA 1078 (30 July 2020)
PDP failed in their claims for trademark infringement, misleading or deceptive conduct under the Australian Consumer Law and passing off at Common Law.
PDP also failed in their claim to cancel Grasshopper’s earlier trademark registration, but were partially successful in their challenge to this registration on the ground of non-use.
Grasshopper’s cross claim for cancellation of the WICKED SISTER trademark registrations failed, but it was partially successful in its challenges to these registrations on the ground of non-use.
This case is particularly noteworthy in the context of arguments concerning (1) the ramifications on ownership arising from registrations for similar marks being in differing names (even by members of the same corporate group) and (2) the absence of any statutory tort of authorisation in the Trade Marks Act with the result that an IP holding company which merely authorises use of a mark by others cannot be subject to direct liability for infringement.
PDP manufacture and sell, since 2008, a range of chilled dairy desserts and snacks under the brand WICKED SISTER.
PDP own trademark registrations for WICKED SISTER in plain word and stylised forms covering various goods in classes 29 and 30. The earliest stylised registration dates from 29 May 2008.
Earliest stylised Wicked Sister registered mark owned by PDP Fine Foods Pty Ltd
Later stylised Wicked Sister registered mark owned by PDP Capital Pty Ltd
The earliest stylised Wicked Sister registration was owned by PDP Fine Foods Pty Ltd, but the later registrations for the plain word and stylised marks were owned by PDP Capital Pty Ltd (a related IP holding company) and achieved with consent from PDP Fine Foods Pty Ltd. The differing ownership was a telling factor in Grasshopper’s cross-claim for cancellation of the later registrations in the name of PDP Capital.
Grasshopper is an IP holding company which authorised use by various entities in a business involving the sale, since 2002, of dipping sauces under the brand WICKED which was updated and modernised in 2014. The original branding was phased out by early 2016. The product range was extended to waffle dippers in 2018.
Original WICKED brand
Updated WICKED brand
Grasshopper owns a trademark registration for the original WICKED brand in class 30 dating from 18 February 2005. It also has an accepted trademark application for the plain word WICKED which is being opposed by PDP and a pending application for the updated WICKED brand each in class 30.
The WICKED SISTER and WICKED products are sold through Coles supermarkets in the refrigerated section and PDP’s evidence included some instances of confusion.
Similarity of the respective marks and goods
Markovic J found the updated WICKED brand was not substantially identical with or deceptively similar to any of the WICKED SISTER marks even though the relevant goods are fast moving consumer goods sold at a low price point.
Her Honour went on to find dipping sauces were not similar to desserts, rice pudding or any of the other goods covered by the earliest trademark registration in the name of PDP Fine Foods. However, the later registrations in the name of PDP Capital specifically covered dipping sauces and her Honour considered waffle dippers fell within the description of bakery products which were also covered by the later registrations.
Grasshopper’s cross-claim for rectification
Given Markovic J’s finding that the updated WICKED brand was not substantially identical with or deceptively similar to any of the WICKED SISTER marks, it was unnecessary for her Honour to decide Grasshopper’s cross-claim for rectification of PDP Fine Foods’ earliest trademark registration which dated from 29 May 2008 under sections 44, 60 or 88(2) (c) of the Trade Marks Act.
For its cross-claim against the later WICKED SISTER registrations owned by PDP Capital which dated from 9 February 2016, Grasshopper also argued, under s44, that these registrations should not have been registered in the face of the earliest registration (owned by another person, namely PDP Fine Foods) and PDP Capital could not rely on consent under s44(3)(b) because it was not proper for PDP Capital to use an asset protection mechanism to avoid or minimise capital gains tax. Markovic J found against Grasshopper on this aspect. Her Honour considered this strategy, although something which should not be condoned, does not affect the integrity or information function of the Register. However, her Honour upheld Grasshopper’s argument under s58 that PDP Capital could not claim to be the owner of the later registered marks when PDP Fine Foods was the owner and user of the earliest registered stylised Wicked Sister mark.
Grasshopper’s cross-claim for rectification of the later WICKED SISTER registrations in the name of PDP Capital under s60 was not considered by her Honour given her finding that updated WICKED brand was not substantially identical with or deceptively similar to any of the WICKED SISTER marks. However, deceptive similarity is not a requirement under s60, rather it is the risk of confusion arising from the reputation of another mark.
Under 88(2)(c), an application for rectification of the Register is based on use of the challenged registered mark being likely to deceive or cause confusion because of the circumstances applying at the time when the application for rectification is filed (being 21 September 2018). This ground was also not considered by her Honour given her finding the updated WICKED brand was not substantially identical with or deceptively similar to any of the WICKED SISTER marks.
Nonetheless, having found that Grasshopper’s cross-claim for rectification of the later WICKED SISTER registrations in the name of PDP Capital was made out under s58, her Honour considered it was not appropriate to exercise discretion under s88(1) and cancel these registrations because there was no risk of confusion to consumers. There was a unity of purpose between PDP Fine Foods and PDP Capital.
Grasshopper’s non-use removal applications
Grasshopper sought partial restriction of the earliest stylised Wicked Sister registered mark in the name of PDP Fine Foods on the ground of non-use. The primary issue was whether PDP could rely on sales of variously flavoured rice puddings as constituting use for “sauces for rice” and her Honour found against PDP on this issue. Further, PDP could not rely on discretion because it could not show that it would be reasonable not to remove this registered mark for goods where no use was shown.
The challenge to the later trademark registrations in the name of PDP Capital was based under s92(4)(a) with Grasshopper alleging that PDP had no intention to use the relevant marks for certain goods in classes 29 and 30 at the time of filing and there was no actual good faith use of these marks. Markovic J found that PDP Capital’s evidence had not rebutted the allegation of lack of intention to use these marks at their filing dates and so it was unnecessary for Grasshopper’s evidence to have shifted the onus of proof to PDP. However, her Honour found some actual good faith use of these marks by PDP. In particular, use for custard was sufficient to show use for goods embraced by the claim to ‘dessert sauces’, use for Tiramisu was sufficient to show use for ‘cakes’, use for rice puddings was sufficient to show use for ‘puddings’, and use for panna cotta was sufficient to show use for goods embraced by the general claim to ‘all other desserts in this class including prepared desserts’. There was no evidence showing use for bakery products, confectionery, ice cream confections, dipping sauces, or any yoghurt products.
Having found s92(4)(a) was established for some goods, Markovic J then went on to consider whether she should exercise discretion and leave the relevant marks on the Register and largely found against PDP on this aspect. However, her Honour considered the claim to ‘dessert sauces’ should be limited to ‘custard’, while the general claim to ‘all other desserts in this class including prepared desserts’ could remain because the WICKED SISTER product range included similar goods to this claim.
PDP’s allegation of trademark infringement
Having decided Grasshopper’s cross-claims and the resultant goods remaining in the various WICKED SISTER trademark registrations owned by the PDP entities, Markovic J then went on to consider whether use of the updated WICKED brand for dipping sauces and waffle dippers infringed any of PDP’s registrations. Of course, having previously reached the view that the updated WICKED brand was not substantially identical with or deceptively similar to any of the WICKED SISTER registered marks, PDP’s infringement claim failed and it was unnecessary for her Honour to consider any of the defences relied upon by Grasshopper.
However, for completeness, her Honour did make some comments on a threshold argument put forward by Grasshopper that the mere act of authorising use of a trade mark is not capable of constituting trade mark infringement. Put simply, the issue for resolution was whether, where an authorised user is alleged to have engaged in infringing conduct under s 120 pursuant to its authorisation, the owner of the infringing mark (whether registered or unregistered) can also be liable for direct infringement under s 120. Markovic J would have determined this issue in favour of Grasshopper. The Trade Marks Act does not include any statutory tort of authorisation and Grasshopper’s authorisation of the use of the updated WICKED brand is not capable of constituting trade mark infringement. Hence, in its role as the owner of the updated WICKED brand who licensed it to other entities to use, it cannot be the subject of the present action for direct liability pursuant to s 120 of the Trade Marks Act. Although her Honour did point out that her view on this issue does not mean that no cause of action would lie against Grasshopper or a party in its position. An action may lie against such a party as a joint tortfeasor, but that is not the basis on which PDP sought to impugn Grasshopper’s conduct in the present case.
PDP’s allegation under the Australian Consumer Law
PDP also alleged that Grasshopper’s conduct in selling dipping sauces and waffle dippers under the updated WICKED brand was misleading or deceptive and contravened s18 and s29 of the Australian Consumer Law. Grasshopper countered this by arguing that, (1) as a mere IP holding company, it cannot have made any of the alleged misrepresentations and, (2) consumers are unlikely to be misled or deceived due to the differences in the respective brands and the circumstances surrounding the sale of the respective products. Markovic J rejected contention (1) but upheld (2) and rejected PDP’s claim under this ground. Her Honour also found that PDP’s reputation in the WICKED SISTER brand had not been established as at 2014 when use of the updated WICKED brand commenced.
PDP’s allegation of Passing Off
PDP also alleged that Grasshopper is passing off its products as those of PDP and relied on the same matters as those in the Australian Consumer Law claim. However, Markovic J also dismissed this claim. Specifically, PDP had not established a relevant reputation as at the date of the alleged impugned conduct in 2014 and her Honour was not satisfied that PDP had established that a large number of consumers are liable to be deceived by Grasshopper’s use of the updated WICKED brand.
PDP’s claim for rectification
PDP alleged Grasshopper’s trademark registration for the original WICKED brand in class 30 dating from 18 February 2005 should not have been registered having regard to s58 and s59 grounds for opposition available at that time, but this claim was dismissed.
The relevant trademark registration was filed by Mr Valentine and subsequently assigned to Brisbane Market Brokers Pty Ltd and then to Grasshopper. However, during the period from about 30 July 2003 to 15 November 2009, the WICKED business was operated by Wicked Products Pty Ltd and PDP alleged that company was the true owner of that mark. However, Markovic J found in favour of Grasshopper and was satisfied that Mr Valentine was the author of this trade mark, he adopted it with the intention of using it and did use it and thereafter authorised its use by Wicked Products. Consequently, the s58 ground failed.
Under the s59 ground, PDP alleged that Mr Valentine did not intend to use this mark for all the claimed goods, but her Honour rejected that claim as well.
PDP’s non-use removal application
PDP also sought to remove, or at least restrict, Grasshopper’s trademark registration for the original WICKED brand on the ground of non-use. The s92(4)(a) ground was quickly dismissed as Markovic J had already found that Mr Valentine did have an intention to use this registered mark as at its filing date. Under the s92(4)(b) ground, the relevant non-use period was the three years period from 18 September 2015 to 18 September 2018. In this regard, it will be recalled that the original WICKED brand was updated and modernised in 2014, with the original branding being phased out by early 2016.
Grasshopper conceded it had not used this registered mark for certain goods being dessert toppings and sauces. There was also no use for any confectionery products. However, Grasshopper rebutted the allegation of non-use for dips including chocolate dips, where the evidence included packaging used during the phasing out period. Nonetheless, Markovic J was prepared to exercise discretion and leave this mark on the Register for all the goods except savoury dips.
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