Global Brand Marketing Inc v YD Pty Ltd  FCA 605
On 7 May 2008 the Federal Court handed down a decision which confirms that shapes or features thereof which include functional and nondescriptive and non-functional features may be registrable provided the non-descriptive and non-functional features supersede, submerge or overwhelm the other features.
The Court was satisfied that patterns on the soles of shoes and panelling on shoes constituted trade mark use. Moreover, the case supports the interesting proposition that filing a trade mark application in the name of an entity which effectively is not the true owner of the mark may not necessarily be fatal to the validity of a resulting registration, provided the application is assigned to the rightful owner while the application is proceeding.
Facts of the case
The second Applicant, Diesel SpA (“Diesel”) is the registered owner of Australian Trade Mark No. 986709 in class 25 (“the Sole Mark”) and No. 986713 in class (“the Shape Mark”). Representations of the marks are as follows:
- Registration No. 986709
- Registration No. 986713
The Sole Mark has no endorsement and proceeded directly to acceptance. The Shape Mark was accepted under section 41(3) of the Trade Marks Act 1995 (“the Act”) after Diesel clarified the exact nature of the mark by entering an endorsement. The first Respondent, YD Pty Limited (“YD”) sold three styles of footwear, the PHOTON shoe, the CUBE shoe and the GAMON shoe, which featured a pattern on the sole, and distinctive panelling. Diesel alleged that YD infringed the Sole Mark by selling the PHOTON, CUBE and GAMON footwear and infringed the Shape Mark by selling the PHOTON and CUBE footwear. The Judge was not satisfied there were any relevant sales by YD of GAMON shoes and accordingly the decision related only to the PHOTON and the CUBE shoes. YD denied infringement and cross-claimed that the Sole Mark and Shape Mark should be removed from the Trade Marks Register as they did not comply with the requirements of sections 41 and 58 of the Act.
According to section 120(1) of the Act, a person infringes a registered trade mark if the person uses as a trade mark a sign that is substantially identical with, or deceptively similar to, the trade mark in relation to goods or services in respect of which the trade mark is registered.
The Judge was satisfied that the sole pattern of YD’s PHOTON and CUBE shoe was used as a trade mark. The Judge considered that any functionality of the grip offered by the sole was overwhelmed by the nondescriptive aspect of the sole. The Judge was also satisfied that five of the ten features of YD’s shoes were used as trade marks and were not either functional or in common use. However, the Judge was not satisfied that the CUBE sole was substantially identical or deceptively similar to the Sole Mark, principally because it did not feature a stylised “D”. The Judge was also not satisfied the CUBE and PHOTON shoes were substantially identical or deceptively similar to the Shape Mark on the basis they did not feature the stylised “D”, had not panels on the sole, featured a pattern on the sole which was different to the Shape Mark, had two rubber panels and was labelled with “YD” on the inside of the sole.
The Judge also noted that the risk of confusion in this case was mitigated by the circumstances in which the products were bought and sold. In this respect, evidence considered by the Judge included the market and shoe industry, namely that YD’s shoes were sold overwhelmingly in YD stores, consumer knowledge, namely that Diesel’s shoes were expensive (top price $290) while YD’s shoes were less (top price $139), the class of consumer and purchasing habits, namely that the class of consumers could be described as “metro-shoppers”, people with large amounts of expendable income and “slave of fashion” and that shoes were purchased not on impulse but after inspection, try onononononfitting and discussion with a sales assistant. Expert evidence was also supplied and accepted setting out common components of the shoe. The Judge considered that all of these factors mitigated against the prospects of confusion arising between the respective products.
Section 41 of the Act provides that an application for registration of a trade mark must be rejected if the trade mark is not capable of distinguishing the applicant’s goods or services from those of other persons.
The Judge found that the combination of the stylised “D” on rear and outer side of the Shape Mark, the shoe shape, the crosshatched sole pattern with a rectangle containing the stylised “D” and two oblique stripes on sides and one vertical stripe on the rear were sufficient to render the Shape Mark inherently distinctive. The Judge was also satisfied that the diamond shape pattern and stylised “D” on the sole of the Sole Mark was a combination sufficient to distinguish it from other trainers.
Section 58 of the Act provides that registration of a trade mark may be opposed on the ground that the applicant is not the owner of the trade mark. Section 6 of the Act defines “applicant” as “the person in whose name the application is for the time being proceeding”.
From June 1997 to July 2006, Global created designs for footwear to be sold under the Diesel brand pursuant to a License Agreement with Diesel. Applications for the Sole Mark and Shape Mark were filed on 29 January 2004 in the name of Diesel’s licensee and distributor, Global Brand Marketing Inc. (“Global”), subsequently assigned to Diesel while the applications were progressing on 11 June 2004. Diesel had significant quality control over the footwear under the License Agreement. YD argued Global’s use of the Sole Mark and the Shape Marks was use by Diesel and that as the validity of a registration is to be determined at the filing date, the registrations were invalid and liable to be cancelled because Global was never the owner of the Sole Mark and the Shape Mark.
The Judge rejected YD’s argument, finding that Diesel was the owner of only part of the Sole Mark and the Shape Mark, constituting the stylised “D”. This is because the License Agreement expressly applied to the word “DIESEL” and the stylised “D” trade mark. The Judge accepted that the “D” device was used by Global under license but that the Sole Mark and Shape Mark were not.
Moreover, the Judge did not consider that ownership is to be tested as at the date of application. Instead, the Judge referred to the definition of application in section 6 of the ACT which is the person in whose name the application is for the time being proceeding. The assignment of the Sole Mark and the Shape Mark to Diesel occurred while the applications were proceeding so that Diesel was after 11 June 2004, the applicant for registration “as the person in whose name the application is at the time being proceeding”. The Judge found that as a result of the assignment, Diesel had become the applicant. It was then the owner of the marks because it already owned the “D” device, and had acquired the “balance” of the marks from Global which had assigned the applications to Diesel with the intention of Diesel of becoming registered.
The Judge also found that at the date Global applied for the applications, they held the applications on constructive trust for Diesel. As a result of Diesel’s duties and obligations under the license, which provided that the parties were to give assistance in every initiative aimed at protecting and defending the trade marks, Global should be taken to have applied for the “D” device (part of the Sole Mark and the Shape Mark) for the benefit of Diesel. However, this point was ultimately not the determining factor on the section 58 cross claim, having regard to the Judge’s previous finding.