Coffee company Cantarella sues Modena over Trade Mark infringement – misleading and deceptive conduc

Coffee company Cantarella sues Modena over Trade Mark infringement – misleading and deceptive conduc

Coffee company Cantarella sues Modena over Trade Mark infringement – misleading and deceptive conduc

Cantarella Bros Pty Limited v Modena Trading Pty Limited [2013] FCA 8

Cantarella has used the “Oro” mark since 1996 and the “Cinque Stelle” mark since 2000 extensively throughout Australia in relation to its coffee products produced from imported coffee beans and marketed and sold under its “Vittoria” house mark.  It has had registrations since 2000 and 2001, respectively.

In late 2009 Modena began to import into Australia and distribute “Caffè Molinari” coffee products from Italy, some initially under the “Caffè Molinari, Cinque Stelle and Caffè Molinari Oro” trade marks.  Since June 2011, product previously branded as “Caffè Molinari Oro” was rebranded as “Caffè Molinari Qualita Oro”.

Cantarella sued Modena for trade mark infringement, misleading and deceptive conduct, misrepresentation and passing off.

Modena’s Defence to Trade Mark infringement

Modena denied infringement claiming it was not using “Oro” or “Cinque Stelle” as trade marks and that its use of these words fell within the scope of the defence under section 122(1)(b)(i) of the Trade Marks Act, namely, that these words were being used in good faith to indicate the kind, quality or some other characteristic of its goods. 

Modena also sought cancellation of both of Cantarella’s trade mark registrations on 2 grounds:

  1. Modena referred to the English meaning of the words “Oro” – namely, “gold” and “Cinque Stelle” – namely, “five stars”, and argued that the English version of each of the trade marks was descriptive and therefore unregisterable as a trade mark.  It claimed the same objection applies to the foreign equivalent also.  Modena claimed that neither of Cantarella’s trade marks were inherently adapted to distinguish Cantarella’s products from those of other traders; that the “Oro” and “Cinque Stelle” trade marks on both Cantarella’s products and those imported by Modena described the character or quality of the particular goods.  Modena also referred to the use of the word “Oro” on the coffee products of other traders.  
  2. That neither had been used as a trade mark. 

Modena also sought removal of Cantarella’s “Cinque Stelle” registration on the ground that it was limited to a specific script and that Cantarella had not used that form of script.

Distinctiveness of Cantarella’s “Oro” and Cinque Stelle” Trade Marks

The Court indicated that had Cantarella’s trade marks been in the English form, namely “Gold” and “Five Stars”, they would not have been distinctive and therefore could not have been registered.  However, the relevant test here was – “whether the particular words [i.e. the foreign words] that are intended to constitute the trade mark are sufficiently well understood in Australia”. 

The Court held that no more than a “very small minority” of English speaking Australians would understand the English meaning of these words.  It therefore concluded that “Cinque Stelle” and “Oro” were capable of distinguishing Cantarella’s goods from those of others and rejected Modena’s claim for cancellation.

“Cinque Stelle” Script

The Trade Marks Register described the “type” of the “Cinque Stelle” trade mark as “fancy”.  However, it appeared on the Register in bold Times New Roman script.  The Court rejected Modena’s claim that the registration is limited to the particular script shown in the Register.  The Court noted there was no disclaimer in the “Cinque Stelle” registration and concluded that irrespective of the script in which the trade mark appeared in the Register, the registration was not limited to that particular script.  Modena’s case for removal of the “Cinque Stelle” registration for non-use therefore failed. 

“Use by Cantarella of “Cinque Stelle” and “Oro” as Trade Marks

Modena argued that there was no use of “Cinque Stelle” or “Oro” as trade marks since the respective words always appeared with Cantarella’s “Vittoria” house trade mark.  Modena argued that “Cinque Stelle” and “Oro” were no more than brands used to distinguish between different “Vittoria” products and did not distinguish Cantarella’s products from those of other traders.  Modena also referred to the use by other traders of the word “oro” to identify products within their ranges. 

The Court rejected Modena’s argument.  The Court confirmed that more than one trade mark can be used at the same time, here for example, “Vittoria” together with either “Cinque Stelle” or “Oro”.  The Court held that “Cinque Stelle” and “Oro” had been used as trade marks by Cantarella even if “invariably” together with “Vittoria”.  Modena’s case for removal of the “Cinque Stelle” and “Oro” registrations based on non-use therefore also failed.

Infringing Use of the “Cinque Stelle” and “Oro” Trade Marks by Modena

Under Australian trade mark law, infringement requires use of the offending sign “as a trade mark”. 

Cantarella argued that the appearance of the words “Cinque Stelle” and “Oro” on the front of the coffee products imported into and sold in Australia by it – in particular the prominence and size of the lettering on the products relative to the words “Caffè Molinari” – amounted to trade mark use.  Cantarella also challenged the use of these trade marks on Modena’s website and elsewhere on product packaging. 

Modena denied use of “Cinque Stelle” and “Oro” as trade marks.  The Court referred to several examples where “Cinque Stelle” or “Oro” appeared on product packaging or the Modena website and in each case concluded that the words were being used as a trade mark, i.e., as a badge of origin for the goods, and such use therefore infringed Cantarella’s registrations. 

The fact that the “Cinque Stelle” and “Oro” trade marks appeared in a particular script on the products dealt with by Modena did not affect the finding of infringement.

Defence to Infringement – using a sign to refer to the kind, quality or other characteristic of goods.

As discussed, Modena argued that its use of “Cinque Stelle” and “Oro” meaning “Five Stars” and “Gold” were references to the kind, quality or characteristics of its coffee products, denoting a degree of excellence in the goods. 

Relevantly, since June 2011 the word “Oro” only ever appeared in any use by Modena with the word “Qualita”.  Cantarella accepted this.  It wasn’t challenged as infringing use. 

Further, in more recent times the words “Cinque Stelle” only appeared on the back of the product packaging with other Italian content and with an English translation which stated that “Cinque Stelle” is the coffee bar line.  Modena argued that these words referred to a characteristic of the coffee, namely that the “Cinque Stelle” range formed part of Molinari’s coffee bar line, and also distinguished the various “Cinque Stelle” blends presented in a particular packaging (as being of the highest quality) from other Molinari products. 

Defence requires use of the Trade Mark “in good faith”

For this defence to arise, the alleged infringer must be using the registered trade mark in good faith for one of the described purposes.

Before Modena established its coffee distribution business in late 2009, other companies connected to Mr Pagent had operated car dealerships and restaurants where Vittoria’s “Cinque Stelle” and “Oro” coffees were supplied under Mr Pagent’s direction.

Mr Pagent rejected that consumers could possibly confuse Caffè Molinari and Vittoria products under the brands “Cinque Stelle” or “Oro”.  He also denied knowing about Cantarella’s trade mark registrations at any time before receiving the letter of demand.  Cantarella produced evidence of negotiations held in 2003 between Cantarella and Mr Pagent contemplating a distribution arrangement whereby another of Mr Pagent’s companies would distribute Cantarella’s “Cinque Stelle” and “Oro” brands in the UK.

Cantarella’s evidence also referred to the use of the symbol ® next to the trade marks “Oro” and “Cinque Stelle” on its Vittoria products.  Mr Pagent claimed not to understand the meaning of the ® symbol but then failed to explain why Modena used the ® symbol on its own signage and order forms.

Despite Cantarella’s evidence showing a chef of Modena’s restaurant in an advertisement for Vittoria coffee praising the quality of Vittoria coffee, Mr Pagent gave evidence that the only reason why Vittoria coffees were supplied in his dealerships was because of his personal relationship with Cantarella’s CEO.

The Court held that Modena was using both the “Cinque Stelle” and “Oro” trade marks and not simply as an indication of the quality of the products it was distributing.  The defence under s122(1)(b)(i) did not succeed and it was therefore not necessary for the Court to rule on the good faith element of the defence.

Misleading and deceptive conduct, misinterpretation and passing off

Although Cantarella’s products are not sold directly to the public, it claimed that consumers of its products in venues serving coffee made from the Caffè Molinari “Cinque Stelle” or “Oro” product would think it originates from Cantarella.

The Court did not accept the evidence led by Cantarella of the superiority of its “Vittoria” coffee products over the “Caffè Molinari” coffee products.

The Court also rejected Cantarella’s claim for misrepresentation because all use of “Cinque Stelle” and “Oro” on the Caffè Molinari products occurred together with the words “Caffè Molinari”.

Cantarella’s claim for passing off also failed because it did not establish that its “Cinque Stelle” and “Oro” trade marks had any goodwill independent of the registrations. 

Relief – Cantarella had not suffered loss or damage

Cantarella was granted injunctions against Modena to restrain future infringement of both the “Cinque Stelle” and “Oro” trade marks.

Cantarella sought to recover damages based on a reasonable royalty for use of its registered trade marks.  It claimed 5% of Modena’s total sales of products bearing the infringing marks but led no evidence to support 5% as the reasonable royalty and no evidence of the licences it claimed it had previously granted or to support its alleged lost reputation.  Ultimately, the Court did not accept that Cantarella had suffered any loss or damage by reason of the infringing conduct. 

Cantarella had elected to recover damages and not an account of profits.

As Cantarella was “substantially successful” in the proceeding, Modena was ordered to pay 90% of Cantarella’s costs. 

Lessons for Trade Mark owners

  • A foreign trade mark will be registrable in Australia – even if the English translation would not be – where the foreign word is not commonly understood by Australians to have its (English) translated meaning. 
  • Multiple trade marks can be validly used simultaneously on the same goods.
  • Cases where there will be a defence to trade mark infringement based on use of the registered mark to indicate the kind, quality or other characteristic of the relevant goods will be uncommon, even more so because such infringing use must also be in good faith. 
  • Awards of damages will not inevitably follow from a finding of trade mark infringement.  Loss or damage must still be established. 
  • In cases where actual loss or what a notional licence fee is is difficult to  establish, an applicant should elect an account of profits as the relief for infringement, forcing the infringer to identify its sales and to substantiate its profits. 

Note: Modena has filed a Notice of Appeal against the decision.  A decision from the Full Court is unlikely until 2014.