Intellectual Property Law Update - McD Asia Pacific LLC v Hungry Jack’s Pty Ltd [2023] FCA 1412

Author Tom Cordiner KC, Melissa Marcus, Clare Cunliffe, Marcus Fleming & Amy Surkis |  18th March, 2024

Trade marks - deceptive similarity - consideration of intention to mislead or deceive

McD Asia Pacific LLC and McDonald’s Australia Limited (collectively, McDonald’s) are respectively the licensor and authorised user of the branding associated with the McDonald’s chain of quick service restaurants. Hungry Jack’s Pty Ltd is a franchisee of Burger King Corporation, which trades under the name HUNGRY JACK’S and associated branding. Since 1971, Hungry Jack’s has competed with McDonald’s in provision of fast food in Australia.

Since 1968, McDonald’s restaurants in the USA have been selling the BIG MAC hamburger, which has been sold in Australia since operations commenced here in 1971. By 2020, there were 890 outlets operating in Australia.

McD Asia is the registered owner of word trade marks for BIG MAC (271329 for meat, poultry and game, including hamburger patties, meat extracts; preserved, dried and cooked fruits and vegetables, eggs, milk and other dairy products; edible oils and fats, preserves, pickles in class 30 and 271330 for Hamburgers; coffee, tea, cocoa, rice, coffee substitutes; flour and preparations made from cereals; bread, biscuits; yeast, baking powder; salt, mustard, pepper, vinegar, sauces, spices in class 30) and MEGA MAC (1539657 in respect of class 30 for edible sandwiches, meat sandwiches, pork sandwiches, fish sandwiches, chicken sandwiches, biscuits, bread, cakes, cookies, chocolate, coffee, coffee substitutes, tea, mustard, oatmeal, pastries, sauces, seasonings, sugar – which for the authors raises the question of which sandwiches are not ‘edible sandwiches’).

In early 2020, Hungry Jack’s began to sell hamburgers by reference to the names BIG JACK and MEGA JACK. McDonald’s sued Hungry Jack’s, contending that Hungry Jack’s use of BIG JACK and MEGA MAC was an infringement of its BIG MAC and MEGA MAC trade marks under s 120(1), that the BIG JACK mark should be removed from the Trade Marks Register and that Hungry Jack’s had misrepresented to consumers that its BIG JACK hamburger contains 25% more Aussie beef than the BIG MAC hamburger (the 25% more Aussie beef representation) in breach of the provisions of the Australian Consumer Law (ACL).

McDonald’s argued that its trade mark 271330 for BIG MAC for “hamburgers” in class 30 was infringed by Hungry Jack’s’ use of the BIG JACK name because BIG JACK is a sign that is deceptively similar to the BIG MAC mark and that Hungry Jack’s’ use of the words MEGA JACK was an infringement of its registered trade mark No 1539657 for MEGA MAC for “edible sandwiches, meat sandwiches” in class 30 because MEGA JACK is a sign that is deceptively similar to the MEGA MAC mark.

McDonald’s argued that Hungry Jack’s deliberately adopted the BIG JACK and MEGA JACK marks for the purpose of promoting in the mind of consumers a connection or affiliation between BIG MAC and MEGA MAC hamburgers and those respectively marked BIG JACK and MEGA MAC.

Hungry Jack’s did not dispute its use of the impugned marks was use as a trade mark, so the only issue was whether the competing marks were deceptively similar.

Are other aspects of the alleged infringer’s packaging relevant to trade mark infringement?

Hungry Jack’s argued that, following Self Care IP Holdings Pty Ltd v Allergan Australia Pty Ltd [2023] HCA 8; (2023) 408 ALR 195, it was appropriate to consider other aspects of the use of the impugned mark, including other aspects of the packaging. Hungry Jack’s argument was based on the bolded sentence below, which appears at [29] of Self Care (emboldening by Burley J):

[29] The issue is not abstract similarity, but deceptive similarity. The marks are not to be looked at side by side. Instead, the notional buyer's imperfect recollection of the registered mark lies at the centre of the test for deceptive similarity. The test assumes that the notional buyer has an imperfect recollection of the mark as registered. The notional buyer is assumed to have seen the registered mark used in relation to the full range of goods to which the registration extends. The correct approach is to compare the impression (allowing for imperfect recollection) that the notional buyer would have of the registered mark (as notionally used on all of the goods covered by the registration), with the impression that the notional buyer would have of the alleged infringer's mark (as actually used). As has been explained by the Full Federal Court, "[t]hat degree of artificiality can be justified on the ground that it is necessary in order to provide protection to the proprietor's statutory monopoly to its full extent".

Justice Burley did not accept Hungry Jack’s submission. His Honour concluded that the Court was referring to the actual use of the impugned trade mark in the sense of the use of the impugned sign alone, rather than the broader context of use. His Honour reached this view because first, the focal point of the High Court’s consideration was on the relevance of reputation within the statutory test for deceptive similarity under s 120(1). In reaching its conclusions on that subject, the High Court provided a succinct review of about a century of law on the subject of deceptive similarity. His Honour considered that it would be surprising if the Court intended to overrule or change well-established principle in the manner Hungry Jack’s contended without addressing it squarely and in such short form, and that the better view is that it did not do so. Secondly, the three cases cited in support of the proposition made in [29] meant use of the impugned mark when they referred to actual use. Thirdly, Burley J considered Hungry Jack’s’ approach could not be reconciled with [33] of Self Care, which states (emboldening by Burley J):

In considering the likelihood of confusion or deception, "the court is not looking to the totality of the conduct of the defendant in the same way as in a passing off suit". In addition to the degree of similarity between the marks, the assessment takes account of the effect of that similarity considered in relation to the alleged infringer's actual use of the mark, as well as the circumstances of the goods, the character of the likely customers, and the market covered by the monopoly attached to the registered trade mark. Consideration of the context of those surrounding circumstances does not "open the door" for examination of the actual use of the registered mark, or, as will be explained, any consideration of the reputation associated with the mark84.

Fourthly, Hungry Jack’s relied on [69]-[71] of Self Care. Justice Burley accepted that paragraph [70] of that judgment includes parts that might suggest that the High Court took into account factors that went beyond a comparison of the marks and had regard to extraneous features of the packaging. Nevertheless, since [71] of Self Care commences with the statement that the High Court is applying the “applicable principles”, his Honour concluded that the relevant reasoning on the facts was to be found in third and fourth sentences of [71] as follows:

…As explained, the marks are sufficiently distinctive such that there is no real danger that the notional buyer would confuse the marks or products. The similarities between the marks, considered in the circumstances, are not such that the notional buyer nevertheless is likely to wonder whether the products come from the same trade source….

That conclusion picks up the comparison of the marks. Having reached that conclusion, Burley J held that the statement in Self Care that the conclusion is “reinforced” by the proximity of the impugned use to another mark may be regarded as obiter dicta, the legal conclusion having already been provided to the effect that, regardless of the presence of the other mark, the impugned mark was not deceptively similar to the registered mark. With respect, these authors agree, and consider that Burley J has neatly resolved an apparent difficulty in reconciling Self Care with the existing jurisprudence. Justice Burley referred with approval to Jackman J’s treatment of the same issue in The Agency Group Australia Limited v H.A.S. Real Estate Pty Ltd [2023] FCA 482 at [56]-[59] (but does not mention paragraph [60], in which Jackman J suggests that passages from [70] and [71] of Self Care should be disregarded).

Were the marks deceptively similar?

Justice Burley noted that the trade mark registrations for BIG MAC and MEGA MAC relevantly concern hamburgers, and that the notional buyer is a person interested in acquiring a product from a quick service restaurant, purchased in store, from a drive-through outlet, or online. The hamburgers may be taken to be lower cost items that are cooked and sold for the convenience of consumers who are cost conscious, short of time, or both. Justice Burley accepted that because people will eat hamburgers, they are likely to pay some attention to make sure that they get the right product and are not likely to be particularly careless or inattentive. The goods the subject of the registration appeal to a broad range of consumers, from the youthful to the elderly.

His Honour noted that Self Care confirms that the reputation that McDonald’s has garnered in its trade marks is irrelevant as is any reputation that Hungry Jack’s has in its trade marks, meaning the notional consumer would not approach either of the trade marks with preconceptions based on their experience with McDonald’s or Hungry Jack’s or any of their branding.

In relation to the BIG MAC mark, Burley J noted that the trade mark is of two words of one syllable each. The word BIG is descriptive, and a person unfamiliar with McDonald’s would understand the word to convey something about the product promoted for sale, namely a hamburger that is large (big) as opposed to a small one. His Honour considered that the word BIG may be regarded laudatory as well as descriptive, and that it was a common adjective. His Honour observed MAC is a one syllable word. It has a soft beginning (“m” sound) and a hard end, most likely pronounced “ack”. Although McDonald’s submitted that many would see the word as the familiar or colloquial abbreviation of a person’s name, Burley J considered it more likely that “Mac” may be understood to be a coined or unusual forename or surname, which may be Scottish or Irish, an abbreviation of a longer name or a word conveying no particular meaning. His Honour considered the BIG MAC as a whole to be a short, snappy, two-word mark, which draws attention to something that is large, namely a large “Mac”, “Mac” being the name of the product. The words together would be separately pronounced and read with the strong “b” providing a point of contrast to the softer “m” of the second word.

In the BIG JACK mark, Burley J considered the word “big” would have the same descriptive and laudatory connotations. The word “big” will be understood to identify a characteristic of the word that follows. Unlike MAC, his Honour concluded that the word JACK is an easily recognised forename and would be understood as such by most consumers, although it could also have other meanings which are unlikely to be considered. His Honour considered that consumers will more likely consider BIG JACK to be some sort of personified hamburger that is large. The word Jack has a strong “j” sound and finishes with a hard “ack”.

Based on the consumer’s imperfect recollection and noting that consumers of hamburgers within the class of goods of McDonald’s trade mark registration are likely to pay reasonable attention to a sign that denotes what it is that they will be eating, Burley J concluded that the notional consumer will recognise that BIG is a descriptive and possibly laudatory term that is commonly used and likely give this lesser emphasis as a point of recollection than the word MAC, which would be identified an important and distinctive part of the mark. The same is true for BIG JACK. Burley J considered consumers are likely to note several similarities: both contain two short monosyllabic words, both begin with BIG, both finish with an “ack” sound.

Allowing for imperfect recollection, Burley J did not think it likely that typical consumers will confuse JACK for MAC or BIG JACK for BIG MAC or be caused to wonder whether hamburger products sold under and by reference to BIG JACK come from the same source or are affiliated with the trader who sells the BIG MAC. His Honour observed that Jack is a very recognisable forename and that MAC is an unusual name or abbreviation, and that although both are BIG, the idea conveyed by JACK and MAC is different. The words look and sound different, the “j” being quite distinctive of “m” both visually and phonetically. Justice Burley reasoned that whilst there is a similar rhyme to the conclusion of the two marks when said aloud, there is a phonetic difference between the spoken aspect of “Mac” and “Jack”, and people are likely to be attuned to noticing differences in forenames and more likely to remember the different look and sound of the words MAC and JACK as points of distinction. His Honour concluded that BIG JACK is not deceptively similar to BIG MAC and, for the same reasons, MEGA JACK is not deceptively similar to MEGA MAC.

Hungry Jack’s did not intend to appropriate McDonald’s reputation

There was written evidence from the Chief Marketing Officer of Hungry Jack’s, Mr Baird, that there was an element of cheekiness in naming the product BIG JACK, due to the rhyming of “Jack” and “Mac” in BIG MAC and that Mr Baird was aware that the name would likely be perceived as a deliberate taunt of McDonald’s. In his oral evidence, Mr Baird made it clear that his view was that there would be no consumer confusion as a result of the choice of BIG JACK for several reasons: the established level of competition between McDonald’s and Hungry Jack’s; the fact that both businesses use distinctive branding, such as their logos and names; and the differences in the word marks. Mr Baird denied that Hungry Jack’s intended to cause consumers to wonder whether the BIG JACK came from McDonalds.

Justice Burley accepted that evidence, and rejected McDonald’s submission that Hungry Jack’s fashioned the names for the purpose of misleading consumers – the “element of cheekiness” was intended to invite a comparison and contrast, not to confuse. In this respect, his Honour observed that while reputation is not relevant to the assessment of whether two marks are deceptively similar, a trader’s knowledge or perception of reputation may be relevant to the assessment of whether they had an intention to mislead or deceive in using a particular trade mark. Parenthetically, the authors note that a subjective intention to fashion a mark to mislead consumers is self-evidently not going to be conducted as an abstract notional assessment by the putative infringer. The proposition that the infringer’s intention is relevant to the question of deceptive similarity is based on the adoption of a mark or get-up “for the purpose of appropriating part of the trade or reputation of a rival”. If that is still relevant to the assessment of whether the use of a mark is “fitted for the purpose and therefore likely to deceive or confuse” (that is, deceptively similar), then it is difficult to understand how reputation can be put aside altogether. Nonetheless, that is clearly the current state of the law. In this case, Mr Baird’s knowledge of each of McDonald’s and Hungry Jack’s reputation led him to the view that it was inconceivable that there would be confusion.

Why McDonald’s validity challenge to the BIG JACK registration failed

McDonald’s relied on three grounds of cancellation of the BIG JACK mark pursuant to s 88(1)(a) and 88(2)(a), and in the alternative s 88(2)(c), of the Trade Marks Act. His Honour accepted that McDonald’s was an aggrieved person.

First, pursuant to s 44(1), that before the priority date for the BIG JACK mark, McDonald’s submitted that the McDonald’s’ BIG MAC marks had been registered in respect of similar goods and the BIG JACK mark is deceptively similar to the BIG MAC mark. This ground failed, given Burley J’s decision that BIG JACK is not deceptively similar to BIG MAC.

Secondly, pursuant to s 60, that before the priority date for the BIG JACK mark, McDonald’s submitted that the BIG MAC mark had acquired a reputation in Australia and because of that reputation the use of the BIG JACK mark would be likely to deceive or cause confusion. This ground failed because Burley J found that the notional person, familiar with the enormous reputation of BIG MAC, would be likely to remember the entirety of the BIG MAC mark and immediately perceive the differences between it and BIG JACK. Justice Burley did not consider that the notional consumer would have cause to wonder whether products displayed and sold under the BIG JACK mark are from a common source with those displayed and sold under the BIG MAC mark, given the differences between the marks and the strong reputation attaching to the BIG MAC mark. His Honour concluded it was most unlikely that consumers would be likely to be confused or deceived.

Thirdly, pursuant to s 88(1)(a) and (2)(c), McDonald’s argued that because of the circumstances applying at the time of the application for rectification (being 28 August 2020), the use of the BIG JACK mark is likely to deceive or cause confusion. His Honour rejected this argument for the same reason as the s 60 argument.

Why Hungry Jack’s’ non-use ground failed

Hungry Jack’s sought an order directing the Registrar of Trade Marks to remove the MEGA MAC trade mark from the Register pursuant to s 92(4)(b) for non-use. It was agreed that MEGA MAC had not been used in respect of some of the specified goods (pork sandwiches, fish sandwiches, chicken sandwiches, biscuits, bread, cakes, cookies, chocolate, coffee, coffee substitutes, tea, mustard, oatmeal, pastries, sauces, seasonings, sugar). The issue was whether it had been used in respect of hamburgers. Hungry Jack’s accepted that if the mark had been used, the discretion under s 101(3) of the Trade Marks Act should be favourably exercised so as to permit not only edible sandwiches and meat sandwiches, but also “pork sandwiches, fish sandwiches and chicken sandwiches” to remain on the Register.

McDonald’s led evidence that MEGA MAC had been used at six stores during the non-use period to describe a Big Mac with four, rather than two, patties (some of the authors observe that this seems like too much Big Mac; others are interested). “Non-trivial” volumes of sales were made in respect to it. In light of this evidence, Burley J concluded that at least for the six identified stores, McDonald’s made substantial bona fide use of the MEGA MAC mark in connection with the double sized BIG MAC style hamburger and that McDonald’s had discharged the onus upon it to establish that it has used the MEGA MAC mark in relation to hamburgers during the non-use period, with the consequence that the registration in respect of edible sandwiches and meat sandwiches may remain on the Register, but that biscuits, cakes, cookies, chocolate, coffee, coffee substitutes, tea, mustard, oatmeal, pastries, sauces, seasonings, sugar must be removed from the registration. Given McDonald’s business, the authors assume the loss of those designated goods would not be of any great import to the business.

The Australian Consumer Law claim

There is one respect in which McDonald’s succeeded substantively. Hungry Jack’s ran two advertisements referring to the litigation and stating that the BIG JACK had “25% more Aussie Beef”. Hungry Jack’s accepted it had made the representation, that the unnamed comparator was the Big Mac, and that the representation was made in trade or commerce. There were only two issues to be resolved: first, whether the advertisements convey the representation to consumers that the BIG JACK contains 25% more Aussie beef by cooked weight or uncooked weight; and, secondly, if by cooked weight, whether the evidence of cooked weight adduced by McDonald’s was sufficiently reliable for it to discharge its onus. If it was, then there was no dispute that the representation is false.

Justice Burley reasoned that the viewer is unlikely to pay close attention to every aspect of the advertisements, but will form a general impression of its message, which is that the BIG JACK has 25% more Australian beef in it that the McDonald’s equivalent, the BIG MAC. His Honour did not think that the consumer will pay much regard to the distinction between cooked and pre-cooked weight. To the extent that they did, he considered many are likely to form an impression that it is cooked weight. That impression is supported by the images of the patties being at an advanced stage of cooking, and the concluding image of a ready to eat hamburger meal. His Honour concluded that the message is that, when you eat a BIG JACK, you will be eating 25% more Aussie beef than when you eat the BIG MAC.

Justice Burley accepted McDonald’s evidence of weight, from an analytical chemist and from a food chemist who each bought multiple BIG MACs at multiple stores and multiple BIG JACKs at multiple stores, in each case without cheese and condiments, and weighed them using a NATA accredited balance (the authors observe that the analytical chemist might well have been bemused by the nature of the task that was set for them).

Hungry Jack’s levelled a series of criticisms at this evidence. However, his Honour did not consider that any of those criticisms were likely to have a material bearing on the results recorded which indicated that the meat in the BIG JACK is far short of being 25% greater than the meat in the BIG MAC (it was between 12.5% and 15.3% greater). Justice Burley concluded that the results demonstrated, with a very considerable margin of error, that the weight difference is significantly less than 25%.

The authors observe that the outcome reinforces the need to tread carefully with comparative claims. Make sure you have the data to support any claim of superiority before you make it, particularly where your claim is quantified, and consider how the claim might be variously understood and, if there is ambiguity, either ensure the claim covers all possibilities or address the ambiguity.