Trade Marks, Constructive Trusts & Avoiding Cheaper Options

Edwards v Liquid Engineering 2003 Pty Ltd [2008] FCA 970 (26 June 2008)

http://www.austlii.edu.au/au/cases/cth/FCA/2008/970.html

In a decision handed down late last week, Gordon J found in favour of Liquid Engineering in relation to a number of separate trade marks the subject of various, and in Gordon J's words, 'inapposite claims'.

In relation to the registered mark 'Liquid Engineering', the Edward's use of the word 'liquideng' was found to be deceptively similar with Gordon quoting extensively from Gallo at para 19,'Whether a mark is "deceptively similar" is not to be determined by a side by side comparison, but rather by reference to whether there is a likelihood of deception or confusion from a recollection or impression of the registered mark...It is necessary to make an attempt to estimate the effect or impression produced on the mind of persons of ordinary intelligence and memory. It is the impression or recollection which is carried away and retained that is necessarily the basis of any mistaken belief that the challenged mark is the same...Whether a mark is likely to deceive or cause confusion is, in the end, a question of impression and common sense...'

At para 26 Gordon J added 'It is axiomatic that neither proof of intent nor any element of culpability is required to make out a case of trade mark infringement: Coca-Cola Co v All-Fect Distributors Ltd (1999) 96 FCR 107 at [39]; see also Gallo at [58]. However, it is also true that where intent to deceive is established, "it should be presumed" that the impugned mark is in fact likely to deceive or confuse: Australian Woollen Mills Ltd v F S Walton & Co Ltd (1937) 58 CLR 641, 657. In such a case, the onus to rebut the presumption then falls upon the alleged infringer.

The other two marks 'Exit Rust' and 'Fuel Set' were the subject of a cross claim and her honour held, at para 65, 'where an application for registration is made by other than the true owner, the Court may rectify the situation by imposing a constructive trust on the application and subsequent registration from the date on which the application was lodged and additionally or alternatively rectifying the Register through substitution of the true owner's name: Figgins Holdings Pty Ltd v Registrar of Trade Marks (1995) 59 FCR 147 at 149.' And concluded at para 66, 'As the true beneficial owner of the registered marks from 8 April 2003, LE 2003 is entitled to assert claims against the respondents for any unauthorised, infringing use under the s 120 of the TMA principles identified earlier. I consider that an ordinary person would likely be confused or deceived by the respondents' use of the "Fuel Set" and "Exit Rust" marks in relation to the same goods as LE 2003.'

Our readers may wish to note that constructive trusts are increasingly being relied up in IP matters - see par 137 of Global Brand (although in that case, Sundberg J did not have to decide the point): http://www.iproo.net/2008/05/goods-or-shape-of-goods-as-trade-mark.html

Gordon J ordered Edwards and related parties to pay damages and costs but also ordered that Liquid Engineering pay the costs of the initial part of the proceeding for the action brought under section 92 stating at para 11, while 'LE 2003 contends that such an approach would have the effect of discouraging parties from availing themselves "of the opportunities afforded by the TMA to resolve [trade mark disputes] by application to the Registrar, rather than by the more expensive alternative of Federal Court litigation." That submission, while perhaps unobjectionable as a general proposition, is not appropriate here, where it was apparent that s 92 of the TMA was not apt to raise the real issue between the parties in this case. Parties should not be encouraged to bring inapposite claims on the grounds that they are cheaper; such a strategy may, as this case shows, backfire and if that occurs, it will result in more costs being incurred than if the best claim was brought in the first place. If a dispassionate analysis suggests that the client's only realistic chance of success requires resort to a more expensive forum, then that is the advice an independent adviser should give.’