Case: Nature's Blend Pty Ltd v Nestle Australia Ltd  FCAFC 117
Judges: Stone, Gordon and McKerracher JJ
Whether or not use of a trade mark has the necessary characteristics to qualify for a finding of infringement must be tested with reference to the context in which it is used. That context includes such factors as style, size, location and the presence of other more prominent trade marks,
In my post of 24 March 2010, I reported on the decision of a single judge of the Federal Court in connection with this dispute. That court found that the use of the words "luscious lips" in a blurb that appeared on the back of a package was not use of those words as a trade mark. The judge was influenced by the fact that the package already showed both "Allen's" and "Nestle" in a prominent manner that indicated that they were being used as trade marks, thus diluting the effect of "luscious lips" as it appeared in relatively small type together with a number of other names on the back of the package.
In this case, the Full Federal Court said that the primary judge was correct and therefore that there was no infringement.
Usefully, their honours set out the principles governing use as a trade mark for a finding of infringement by a user:
1. Use as a trade mark is use of the mark as a "badge of origin", a sign used to distinguish goods dealt with in the course of trade by a person from goods so dealt with by someone else. See Coca-Cola Co v All-Fect Distributors Ltd (1999) 96 FCR 107 and E & J Gallo Winery v Lion Nathan Australia Pty Ltd (2010) 265 ALR 645.
2. A mark may contain descriptive elements but still be a "badge of origin". See Johnson & Johnson Australia Pty Ltd v Sterling Pharmaceuticals Pty Ltd  FCA 310; Pepsico Australia Pty Ltd v Kettle Chip Co Pty Ltd(1996) 135 ALR 192; Aldi Stores Ltd Partnership v Frito-Lay Trading GmbH  FCA 1874.
3. The appropriate question to be asked is whether the impugned words would appear to consumers as possessing the character of the brand: Shell Company of Australia Ltd v Esso Standard Oil (Australia) Ltd  HCA 66.
4. The purpose and nature of the impugned use is the relevant inquiry in answering the question whether the use complained of is use "as a trade mark".
5. Consideration of the totality of the packaging, including the way in which the words are displayed in relation to the goods and the existence of a label of a clear and dominant brand, are relevant in determining the purpose and nature (or "context") of the impugned words: Anheuser-Busch, Inc v Budějovick[yacute] Budvar, Národní Podnik  FCA 390.
6. In determining the nature and purpose of the impugned words, the Court must ask what a person looking at the label would see and take from the words.
Was "Luscious Lips" Used as a Trade Mark?
Nature's Blend complained that the primary judge had given insufficient attention to the meaning of the mark. They said that the evidence pointed away from the expression "luscious lips" having any meaning in relation to confectionery at the time that it was coined by Ms Robinson, one of the appellants. They argued that it had a meaning quite apart from confectionery in that it described the shape and physical appearance of female human lips.
However, their honours said that there is no requirement that the meaning of a registered mark must first be ascertained. There was no dispute that the words used by Nestle were substantially identical to those used by Nature's Blend. Had there been an issue on this topic, the evaluation of the registered trade mark would have required close consideration.
There was no error by the primary judge in failing to ascribe a meaning to "Luscious Lips". It was the impugned conduct that was the relevant point of the inquiry.
It followed that the appropriate question was whether the words "Luscious Lips" would have appeared to consumers as possessing the character of a brand. The context of the use is thus all important. The analysis of the primary judge was held to be correct in that he examined the way in which the words were used in their context including the totality of the packaging in order to assess the purpose and nature of the words used in their context including the totality of the packaging in order to assess the purpose and nature of the words from the perspective of a consumer reading the label.
Nature's Blend contended that a reasonable consumer would consider all of the packaging in this case and would read the back of the packets, as well as the front. Nestle accepted that reasonable consumers would be expected to look at the back of the packet before purchase, but the Court said that was not the same as accepting that all consumers would actually read the blurb.
In any event, reading the blurb would simply reveal that one of the mixed lollies was described in a light and amusing context as being "luscious Lips". By that time, the consumer would have already seen that it was an Allen's brand. Furthermore, the consumer would see another very well known trade mark, namely "Nestle". Thus, the consumer would be left in no doubt as to the commercial origin of the product by the time he or she has read the relatively long description referring to one of the lollies as being "luscious Lips".
Their honours cited Mark Foys Ltd v Davies Coop and Co Ltd (the Tub Happy case) HCA 41 , a passage of which is worth setting out here: "the fundamental question remains, ...whether those to whom the user is directed are being invited to purchase the goods (or services) "partly because" ... they are described by the words in question."
Thus, the primary judge was correct in taking into account the prominence of the registered Allen's and Nestle marks on the packaging in contrast to the location and style of "luscious Lips".