A popular product doesn’t always mean a famous trade mark

A popular product doesn’t always mean a famous trade mark

A popular product doesn’t always mean a famous trade mark

The case of Hills Industries Ltd v Bitek Pty Ltd1

In a trade mark dispute spanning more than six years, brown-goods distributor Hills Industries (Hills) has had a pyrrhic victory against Bitek Pty Ltd (Bitek), a distributor of television installation accessories. Hills narrowly succeeded in a trade mark infringement dispute against Bitek, but ultimately failed to prevent the registration of Bitek’s mark.

This article first appeared in the Intellectual Property Law Bulletin (Vol 24, No. 1, May 2011) and is republished here with permission.

The decision demonstrates that evidence of high sales of goods bearing a particular trade mark may not be sufficient to show that a trade mark is well known in Australia, or that it has acquired a reputation. The decision also confirmed the Federal Court’s view in McCormick & Co v McCormick2 that a s 60 objection to trade mark registration will prevail over an entitlement to registration under s 44.

The relevant trade marks

Hills owned a registered series mark (No 901020) for the words DGTEC, DGTEK and DGTECH, registered in class 9 for “digital and electronic products including televisions, video players, DVD players, CD players, decoders and cameras”, with a priority date of 23 January 2002. On 4 July 2003, Bitek applied for “Digitek” (Application No 960495) in class 9 for “TV installation accessories including external TV antennas, none of the foregoing being set-top boxes”.

The DGTEC mark had been used on set-top boxes in Australia by Hills and/or its predecessor in title, DGTEC Pty Ltd, since 2001, and had been used on other products including digital video recorders, LCD televisions, CD and MP3 players, DVD player/recorders, micro-stereo sound systems, iPod docking speakers and web-based cameras since after November 2005. These products were sold though national retailers including Dick Smith, The Good Guys, Harvey Norman, Retravision and Myer.

Since January 2004, Bitek had used the Digitek mark in Australia on various products including cables, antennas, leads, TV and projector mounting brackets, switch selectors, connectors, wall plates, splitters, multi-switches, cable ties, cable clips, cable caddies, industrial tools, digital set-top boxes, video senders, video intercoms and remote controls.

The Federal Court proceedings

In January 2008, Hills’s opposition to registration of Bitek’s mark was unsuccessful. Hills appealed to the Federal Court against the opposition decision and also claimed (in separate proceedings heard concurrently) that Bitek had infringed Hills’s mark and breached ss 52 and 53 of the Trade Practices Act 1974 (Cth). Bitek cross-claimed, seeking to have Hills’s mark removed from the register on the basis of non-use.

Given the breadth of the parties’ claims, the decision traversed many sections of the Trade Marks Act 1995 (Cth). Overall, Lander J held:

  1. that the Digitek and DGTEC/DGTEK/DGTECH marks were deceptively similar;
  2. that “televisions” and “television installation accessories” were not similar goods or goods of the same description;
  3. that Bitek’s Digitek mark should be registered, as Hills’s objections under s 44(1), 60 and 42(b), had not been made out;
  4. obiter, that had Hills’s objection under s 44(1) been made out, Bitek would not have been entitled to rely on the “honest concurrent user” exception under s 44(3)(a) or the “other circumstances” exception under s 44(3)(b);
  5. that Hills’s DGTEC/DGTEK/DGTECH mark should remain on the register, but the registration of that trade mark was narrowed slightly to remove some designated goods on the basis of non-use; and
  6. that Bitek had infringed Hills’s mark under s 120(1) and (2) by its use of the Digitek mark on set-top boxes and remote controls. All other use of the Digitek mark by Bitek on other goods such as antennas, cables, splitters, AV selectors, video intercoms, switches and multi-switches, was held not to infringe Hills’s mark.

Justice Lander reserved his decision on the alleged breaches of the Trade Practices Act, pending further submissions from the parties.

The decision raised a number of interesting points, namely:

  1. The relationship between ss 44 and 60: Lander J confirmed (obiter) the decision in McCormick & Co v McCormick, that an objection to registration made out under s 60 will override an entitlement to registration under the s 44(3)(a) “honest concurrent user” provisions.3
  2. Evidence of honest concurrent use: Lander J held, obiter, that Bitek would not have been able to rely on the s 44(3)(a) honest concurrent user defence, as there was no evidence that Bitek had used the Digitek mark on any goods specified in its application, before it applied for its trade mark.4 The only evidence of use of the Digitek mark on those goods was after the date of filing, which Lander J held was irrelevant for the purposes of s 44(3)(a). Lander J was also not prepared to consider Bitek’s post-filing date use of its mark under s 44(3)(b).5
  3. Proof of reputation: Lander J held that evidence of sales of goods under or by reference to a trade mark, may not necessarily establish that the mark was well-known in Australia (for s 120(3) purposes) or that it had acquired a reputation (for s 60 purposes).6 Lander J held that set-top boxes are not sold by reference to brand name. Accordingly, Hills’s evidence of high sales (approximately $20 million) of set-top boxes did not demonstrate that Hills had acquired a reputation in the DGTEC mark, or that the mark was well-known in Australia.7
  4. Proof of the likelihood of deception or confusion under s 60: Lander J held (again, obiter) that where it was established that a mark had acquired a reputation in Australia, for the purposes of s 60, it did not necessarily follow that the use of that mark, or a substantially identical or deceptively similar mark, by another person would be likely to deceive or cause confusion.8 Lander J noted that s 60 requires a staged enquiry, first, whether the marks are substantially identical or deceptively similar, second, whether the opponent’s mark had acquired a reputation before the priority date for the registration of the opposed mark, and third, whether because of that reputation, the use of the opposed mark would be likely to deceive or cause confusion.
  5. Proof of use of series marks: Lander J accepted that it was not necessary, for the purpose of non-use removal proceedings, for Hills to demonstrate that it had used each of the marks in the series. Evidence of use of one of those marks (DGTEC) was sufficient to constitute evidence of use of any of the other marks in the series (DGTEK or DGTECH).9
  6. The effective date of a removal order: Lander J followed the Full Federal Court’s decision in E & J Gallo Winery v Lion Nathan (Australia) Pty Ltd10 and held that an order for removal of a trade mark could not operate retrospectively and therefore a successful removal action could not provide a defence to past trade mark infringement.11
  7. The s 122(1)(fa) “entitlement to registration” defence: Lander J held that, other than in relation to set-top boxes and remote controls (which were not included in Bitek’s registration), Bitek could rely on the s 122(1)(fa) defence to trade mark infringement, on the grounds that it would have been entitled to registration of its own mark.12

Conclusion

Notwithstanding Hills’s limited success in the trade mark infringement case, Bitek may have ultimately won the overall battle, given that it obtained a trade mark registration for almost all of the designated goods for which it originally applied for registration.

The take-home message for lawyers and attorneys is that proof of reputation in a trade mark involves more than just proving the volume of sales of goods bearing that mark in Australia. Even in the face of very high sales figures, a court may have regard to the nature of the goods and the extent to which a consumer pays attention to the trade mark when purchasing those goods, and in some circumstances may ultimately hold that the mark has not acquired a reputation or is not well-known.

Endnotes

  1. Hills Industries Ltd v Bitek Pty Ltd [2011] FCA 94.
  2. McCormick & Co v McCormick (2000) 51 IPR 102.
  3. Above note 1 at [216].
  4. Above note 1 at [163].
  5. Above note 1 at [181].
  6. Above note 1 at [195] and [358].
  7. For the same reason, Lander J gave less weight to Bitek’s evidence regarding sales of its Digitek-branded products, under s 44(3)(b): at [182].
  8. Above note 1 at [201]–[202].
  9. Above note 1 at [258].
  10. E & J Gallo Winery v Lion Nathan (Australia) Pty Ltd [2009] 175 FCR 386.
  11. Above note 1 at [255].
  12. Above note 1 at [360].