Cantarella Bros Pty Ltd v Lavazza Australia Pty Ltd (No. 3)  FCA 1258
Author Tom Cordiner KC, Melissa Marcus, Clare Cunliffe, Marcus Fleming & Amy Surkis |
14th November, 2023
Ownership and inherent distinctiveness of a trade mark - section 41 (inherent ability to distinguish) - section 58 - Du Cros point
Cantarella Bros Pty Ltd (Cantarella), sued the respondents, Lavazza Australia Pty Ltd (Lavazza Australia) and Lavazza Australia OCS Pty Ltd (Lavazza OCS) (together Lavazza), under section 120(1) of the Trade Marks Act 1995 (Cth) (TMA) for infringement of two registered trade marks;trade mark No. 829098 (the 098 mark) and trade mark No. 1583290 (the 290 mark)- each of which is the word mark ORO registered in class 30 for “Coffee; beverages made with a base of coffee, espresso; ready-to-drink coffee; coffee based beverages” (the ORO word mark).
The acts of infringement included supply of various goods and advertising of the goods on websites.
Lavazza did not dispute that the goods had been supplied and advertised. However, Lavazza disputed that the 098 mark and the 290 mark had been infringed on the basis that Lavazza said it did not use the word “oro” as a trade mark. Examples of some of the goods and the manner in which Lavazza had used the word “oro” on them is set out at the end of this note.
Lavazza also argued that if found to have used the word “oro” as a trade mark, it was able to rely upon various defences to infringement.
By way of cross-claim, Lavazza also challenged the registration of the ORO word mark for two reasons. Firstly, Lavazza claimed that each mark was not inherently adapted to distinguish Cantarella’s goods from the goods of other persons and, therefore, did not meet the requirements of s 41 of the TMA as in force at the relevant time; and secondly, Cantarella was not, in any event, the owner in Australia of the ORO word mark in respect of coffee.
This case took place against the background of earlier litigation which Cantarella brought against Modena Trading Pty Ltd (Modena) for infringement of the 098 mark and another registered trade mark—trade mark No. 878231 (the 231 mark) comprising the words CINQUE STELLE in class 30 for “Coffee, coffee essences and coffee extracts; coffee substitutes; and extracts of coffee substitutes; coffee-based drinks; tea, tea extracts and tea-based drinks; cocoa, cocoa-based preparations and drinks” (the Modena proceeding). Cantarella also advanced other causes of action against Modena (for contravention of the Trade Practices Act 1974 (Cth) and the Australian Consumer Law, and for passing-off).
In the Modena proceeding, Cantarella established infringement of the two marks - Cantarella Bros Pty Ltd v Modena Trading Pty Ltd  FCA 8; 229 ALR 752 (Cantarella (PJ)). Modena failed in its defence that it had not used the two marks as trade marks and had only used the words “oro” and “cinque stelle” in good faith to indicate the characteristics of the coffee products the subject of the infringement claims. Modena also failed in its cross-claim which asserted (i) that the registrations of the two marks should be cancelled on the ground that, with reference to s 41 of the TMA in its then form, the marks were not capable of distinguishing Cantarella’s goods from the goods of other persons, and (ii) removal of the marks for non-use.
In relation to Cantarella’s case for infringement against Lavazza, Justice Yates accepted that the word ‘oro’ was one of the dominant features on the product packaging (although not ‘the’ dominant feature), along with the name LAVAZZA. His Honour agreed with Cantarella that the use of the word “oro” on the packaging in question was trade mark use . The word “oro” and the word LAVAZZA were each functioning independently, as trade marks on the packaging. Whilst, on the packaging, the word “oro” was used in proximity to the word “qualità”, Justice Yates did not accept that there was any necessary connection between the two words for trade mark purposes. In his view, for trade mark purposes, the two words function independently of each other, particularly given the different sizes and stylistic representations of the two words, with the word “oro” functioning as a trade mark. His Honour concluded that the word “qualità” was not functioning as a trade mark and, even if traders or customers were to associate the two words because of their proximity to each other on the packaging, it did not follow that the word “oro” was not functioning, in its own right, as a trade mark.
Justice Yates stated that whilst it might be accepted that other traders had used the word “oro” in relation to their coffee products, this did not mean that the word “oro”, as represented in the impugned packaging, was not being used as a trade mark. His Honour also did not accept that mere common use of a particular word in a given trade means that the word is precluded from functioning as a trade mark in that trade. Further, use of the word “oro” on coffee capsules within packaging for such products was use of the word within the course of trade and use as a trade mark.
In relation to the various defences relied upon by Lavazza pursuant to sections 124 of the TMA (prior use), 122(1)(b)(i) (good faith use to indicate quality etc), 122(1)(c) (exercising a right given under the TMA) and 122(1)(f) and (fa) (would obtain registration in their own right), Yates J stated that if he had been required to reach a determination on each, each would have failed. Due to his Honour’s findings concerning ownership of the ORO word mark, no determination was needed. In the course of considering each defence, Justice Yates made some interesting observations about the various defences and highlighted some internal difficulties with the operation of the TMA. For example, his Honour noted that current authority suggests that the operation of s 44 of the TMA, and the other grounds for rejecting or opposing a trade mark application, operate independently of each other. Therefore, section 60 of the TMA (a ground of opposition to the registration of a mark based on the likelihood of deception or confusion arising from the use of the mark having regard to an earlier mark’s reputation) operates independently of s 44(3), and that s 44(3) does not provide an exception to the operation of s 60. His Honour stated that this reasoning suggests that s 58 also operates independently of s 44(3) as a ground of opposition to registration and that s 44(3) does not provide an exception to that provision.
Justice Yates noted that if that is the correct position, the defence under s 122(1)(f) could not be made out successfully in the present case given the findings he made in respect of the ownership of the ORO word mark for coffee. If Cantarella could not legitimately claim to be the owner of the ORO word mark for coffee, based on his findings of ownership referred to below, neither could Lavazza Australia or Lavazza OCS could legitimately claim to be the owner of that mark. Therefore, they could not obtain registration of it.
In Justice Yates’ opinion, giving section 58 of the TMA an operation that is independent of section 44(3) robs the latter provision of practical effect. If the registered owner of a trade mark is truly the owner of that mark, every application under s 44(3) could be met with a section 58 objection by the registered owner. Therefore, there is an apparent conflict between the operation of s 44(3) and the operation of s 58 of the Act. One wonders whether Justice Yates is sending a signal that legislative intervention may be needed in relation to this matter.
In relation to Lavazza’s cross claim, it sought removal of the ORO word mark on the basis of sections 88(1)(a), 88(2)(a), relying in turn on section 41 of the TMA (the ORO word mark had no inherent ability to distinguish), and on 58 of the TMA (Cantarella was not the owner of the ORO word mark).
In relation to the case based on section 41 of the TMA, Lavazza sought to press what it referred to as the “Du Cros point”, referring to Registrar of Trade marks v W & G Du Cros Ltd  AC 624. Lavazza submitted that the test for whether a word mark is inherently adapted to distinguish is to be drawn from Lord Parker’s speech in Du Cros. According to Lavazza, “descriptiveness” is not the only factor that can deprive a trade mark of the inherent capacity to distinguish under the test established in Du Cros. A trade mark can lack an inherent capacity to distinguish by reason of its “commonality” rather than its “descriptiveness” and that the test referred to by Kitto J in Clark Equipment Co v Registrar of Trade Marks  HCA 55; (1964) 111 CLR 511 only dealt with lack of inherent capacity to distinguish by reason of descriptiveness. According to Lavazza, the High Court in the Modena proceeding:
determined the question of inherent adaptation to distinguish by reference to the narrow question of descriptiveness and did not consider the broader question of whether ORO lacked capacity to distinguish Cantarella’s coffee simply because it was commonly used by numerous other coffee traders and thus could not distinguish one trader’s coffee.
Lavazza’s case concerning the Du Cros point was rejected by Yates J, his Honouring stating that Lavazza’s invitation to consider this “broader question” is not an invitation that a judge at first instance can accept. Rather, the High Court authoritatively decided that the correct test to apply when determining whether a word mark is inherently adapted to distinguish for the purposes of s 41 of the Act is the test stated by Kitto J in Clark Equipment, not the arguably broader “traders test” found in Lord Parker’s speech in Du Cros. Justice Yates stated that as the majority in the High Court had explained, the desire of other traders to use the word in question is a function of the meaning that that word bears, according to its ordinary signification, in relation to the goods or services for which the mark is, or is sought to be, registered.
The second aspect to Lavazza’s section 41 case was based on Kitto J’s test in Clark Equipment and required Lavazza to establish that, at the relevant time for each mark, the word “oro” had an ordinary signification in relation to the registered goods. By way of reminder, Kitto J referred to “the exercise ... of the common right of the public to make honest use of words forming part of the common heritage, for the sake of the signification which they ordinarily possess”. Justice Yates stated that for the purposes of this case, a word will have an “ordinary signification” if it has been received into Australian English and has a commonly understood and commonly shared meaning by ordinary members throughout the Australian community at large. Consideration of the community at large was apt as coffee is a commodity and a familiar beverage consumed by many. Justice Yates did note that different considerations (and not the community at large) may apply where the trade is more specialised and directed to, for example, those possessing special vocational or technical interests.
Yates J rejected Cantarella’s submission that it was not open to the Court to make any finding in relation to the section 41 ground which conflicts with the High Court’s decision in the Modena proceeding. Nevertheless, Lavazza’s section 41 case failed as the evidence fell short of establishing that the word “oro” had been received into Australian English such that the ordinary signification of “oro” is “gold”.
When all appeared to be lost, section 58 emerged late in the piece as Lavazza’s knight in shining armour. While Lavazza could not make out its case that it was the owner of the ORO word mark for the purposes of section 58 of the TMA, it succeeded in establishing that Caffè Molinari SpA (Molinari) was the owner of the mark. Lavazza had argued that Cantarella’s claim to ownership of the ORO word mark was defeated by the sale of coffee by Molinari to CMS Coffee Machine Services Pty Ltd (CMS, later called Saeco Australia Pty Ltd (Saeco)) in Australia from September 1995, which Lavazza said amounted to use of the word “oro” as a trade mark. This is before the first date on which Cantarella said it used the ORO word mark in respect of coffee. Justice Yates was satisfied that Molinari had used the word “oro” as a trade mark in Australia prior to Cantarella’s first use, and that Cantarella had not made out its case on abandonment (that Molinari had abandoned the oro mark). Justice Yates was satisfied that the evidence established that before Cantarella’s first use of the ORO word mark in relation to coffee, before the priority date of the 098 mark, and before and after the priority date of the 290 mark, as well as at the commencement of the present proceeding (including the commencement of Lavazza’s cross-claim), Molinari had used the word “oro” as a trade mark in Australia in relation to coffee.
Justice Yates declined to exercise his discretion and not cancel the ORO word mark, concluding that leaving the marks registered would not be in the public interest: Cantarella was not the owner of the marks and its claim to ownership could not depend on the nature of the scope of its reputation. Even once removed from the Register, Cantarella would maintain its common law rights in the mark (and ability to sue for misleading or deceptive conduct for example, based on its reputation)