Nothing eases for Maltesers on appeal
Mars Australia Pty Ltd v Sweet Rewards Pty Ltd  FCAFC 174
While the get-up or trade dress of a product can be protected by trade mark registration, if the brand name is the distinguishing feature of a composite trade mark, a look-alike product that is otherwise clearly labelled with a competitor’s own brand will not necessarily infringe, pass off or mislead.
In Mars Australia Pty Ltd v Sweet Rewards Pty Ltd1 (“Maltesers”) Mars Australia Pty Ltd (“Mars”), which manufactures, distributes, markets and sells the well known chocolate covered malt balls typically in a packet represented as follows:
took action against Sweet Rewards Pty Ltd (“Sweet Rewards”) in the Federal Court of Australia alleging passing off, misleading conduct and false representations under sections 52 and 53 of the Trade Practices Act 1974 (Cth) (“TPA”) and trade mark infringement for distributing “Malt Balls”, principally through Target and Kmart and some discount stores, in a red jar and in an orange jar as depicted below:
The trade mark infringement claims Relevantly, Mars is the owner of registered trade marks for the following mark:
and the series mark:
(collectively, “Maltesers Trade Marks”).
The Primary Decision
The Court was asked to determine if Sweet Rewards had infringed the Maltesers Trade Marks by using as a trade mark a sign that is deceptively similar thereto in relation to goods in respect of which the trade marks are registered. As Sweet Rewards’ “Malt Balls” are goods in respect of which the Maltesers Trade Marks are registered2, the principal issues of contention were whether:
- Sweet Rewards had used the red jar Malt Balls label as a trade mark; and
- the red jar Malt Balls label was deceptively similar to the Maltesers Trade Marks.
Use as a trade mark
By definition, a trade mark is a sign3 (namely, any letter, word, name, signature, numeral, device, brand, heading, label, ticket, aspect of packaging, shape, colour, sound or scent) used, or intended to be used, to distinguish goods or services dealt with or provided in the course of trade by a person from goods or services so dealt with or provided by any other person.4
The trial judge, Perram J, held that Sweet Rewards’ use of the “Delfi” brand on the red jar Malt Balls label was the use of a trade mark and the words “Malt Balls” are used to describe the contents of the jar. Consequently, Mars’ trade mark infringement claim could not be maintained because the “Delfi” mark could not be said to be substantially identical with or deceptively similar to the Maltesers Trade Marks.
A trade mark is taken to be deceptively similar to another trade mark if it so nearly resembles that other trade mark that it is likely to deceive or cause confusion.5
His Honour went on to say that if, contrary to his conclusion, Sweet Rewards’ use of each element of the red jar Malt Balls label said to be the same as the elements of the Maltesers get-up could qualify as trade mark use, the red jar Malt Balls label was not deceptively similar to the Maltesers Trade Marks. This was particularly so in view of the notoriety of the Maltesers Trade Marks and consumers’ general familiarity with them.
Proof of a reputation in a mark may indeed be a double-edged sword. Generally, reputation is irrelevant to the question of trade mark infringement, however, the trial judge in the Maltesers case observed that the authorities establish that:
“… in assessing the notion of a consumer’s imperfect recollection of a mark, the fact that a mark is notoriously so ubiquitous and of such long standing that consumers generally must be taken to be familiar with it and its use in relation to particular goods or services is a relevant consideration.”
The trial judge considered the Maltesers Trade Marks to be very famous such that consumers could not possibly be confused by the Malt Balls packaging.
The passing off and misleading and deceptive conduct claims
Mars argued firstly, that the get-up of Sweet Rewards’ red and orange jars conveyed a representation to the public that the Malt Balls products were associated with Maltesers or Mars.
His Honour was of the view that “The orange jar does not remotely resemble the Maltesers packaging or use all of the essential features of the Maltesers get-up.”
In relation to the red jar, the trial judge held that:
“Because the principal component in the Maltesers get-up is the word “Maltesers”, it is highly unlikely that any ordinary consumer of chocolate confectionary could mistake something which is not called a Malteser for a Malteser. In that sense, Mars is a victim of its own success.”
In addition, His Honour considered the word “Delfi” with a skier motif next to it emblazoned on the label to be a significant feature of the Malt Balls product; the red of the Maltesers products to be quite different to the red of the Malt Balls red jar; and that despite the Maltesers and Malt Balls products both being festooned with floating chocolate balls, this similarity is not sufficient to overcome the effect of the words “Malt Balls”, the “Delfi” mark or the different red colouring.
The second line of argument proffered by Mars was that Sweet Rewards had represented by its red and orange jars that the contents of the Malt Balls had the same ingredients, were made from the same recipe or tasted the same as Maltesers. The Malt Balls product carried no statement to the effect that “Malt Balls taste like Maltesers”. Having found that the packaging of the orange and red jars was not deceptively similar to the Maltesers getup, His Honour rejected Mars’ “product equivalence” argument.
The third way in which Mars presented its passing off and misrepresentation case was that Sweet Rewards had represented that its Malt Balls were equivalent to Maltesers by depicting floating chocolate balls, including some cut through to reveal a yellow filling in conjunction with the words “Malt Balls”. His Honour found that the most important aspect of the Maltesers get-up is the brand “Maltesers” and that “To know that one is eating a “Malt Ball” is to know that one is not eating a Malteser.”
The passing off and TPA claims were therefore also dismissed.
Following the dismissal of Mars’ claims, Sweet Rewards sought an order for indemnity costs as Mars had failed to achieve a result as favourable as settlement offers made by Sweet Rewards by way of two “Calderbank” letters. In short, a Calderbank letter contains a without prejudice offer of settlement that may be drawn to the Court’s attention at the time of awarding costs. If the offer is found to have been unreasonably rejected by the offeree (in this instance, Mars) and the offeror (Sweet Rewards) achieves a result as favourable or more favourable than the terms of the offer, the Court may order the offeree to pay the offeror’s costs on an indemnity costs, rather than make the usual order that the successful party’s costs be taxed on a party/party basis and assessed according to the Court scale of costs.
In the Calderbank letters, Sweet Rewards offered, among other things, to give an undertaking not to sell, import or distribute the red jar product. Perram J ordered Mars to pay the costs of the orange jar claim on an indemnity basis, it being His Honour’s finding that this aspect of Mars’ case was “wholly unmeritorious”.
On the other hand, Perram J did “not think that the pursuit of the red jar case was itself an exercise in tilting at windmills”. Thus Mars’ failure to accept Sweet Rewards’ Calderbank offers should not lead to an indemnity costs order in relation to that part of Mars’ case.
The appeal decision
Emmett, Bennett and Edmonds JJ affirmed the trial judge’s decision on appeal to the Full Court of the Federal Court of Australia. In respect of the trade mark infringement claims, Mars submitted that its reputation was irrelevant to the consideration of whether the elements of the Malt Balls get-up infringed the Maltesers Trade Marks. The Full Court agreed with the trial judge’s finding that the word “Maltesers” is the distinguishing feature of the Maltesers get-up and trade marks, the other features such as the red colour and pictures of the malt balls being found on the evidence to be commonplace on confectionary packaging. Their Honours held that the overall impression in the imperfect recollection of the consumer of the Maltesers Trade Marks is the word “Maltesers”, that the elements of the Malt Balls get-up are not used as a trade mark by Sweet Rewards and that the distinguishing feature of the Malt Balls products is the “Delfi” trade mark.
Food for thought
In considering whether a competing mark is deceptively similar to a registered trade mark, the mark that has been used by the competitor as a trade mark, or moreover, those aspects of the packaging or labelling that denote the competitor product’s origin, must be identified. Further, the fact that a registered trade mark has attained notoriety may be taken into account in the assessment of deceptive similarity.
The Maltesers case, and several other recent Federal Court cases7, serves to highlight that to succeed in a passing off and misleading conduct action, it is necessary to establish that the features of a product get-up:
- are distinctive to a particular trader;
- are not commonly used in the trade or merely descriptive or functional; and
- are used as a badge of origin
Notwithstanding the presence of other distinguishing product name branding to identify the trade source of the product. To revisit Gibbs CJ’s oft-cited passage from the High Court of Australia’s judgment in Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd (“Puxu”) (1982) 42 ALR 1 at 7:
“Speaking generally, the sale by one manufacturer of goods which closely resemble those of another manufacturer is not a breach of s 52 if the goods are properly labelled. There are hundreds of ordinary articles of consumption which, although made by different manufacturers and of different quality, closely resemble one another. In some cases this is because the design of a particular article has traditionally, or over a considerable period of time, been accepted as the most suitable for the purpose which the article serves. In some cases, indeed, no other design would be practicable. In other cases, although the article in question is the product of the invention of a person who is currently trading, the suitability of the design or appearance of the article is such that a market has become established which other manufacturers endeavour to satisfy, as they are entitled to do if no property exists in the design or appearance of the article. In all of these cases, the normal and reasonable way to distinguish one product from another is by marks, brands or labels. If an article is properly labelled so as to show the name of the manufacturer or the source of the article its close resemblance to another article will not mislead an ordinary reasonable member of the public…”
-  FCA 606.
- See section 120 Trade Marks Act 1995 (Cth) (“TMA”).
- See section 6 TMA.
- See section 17 TMA.
- Section 10 TMA.
- See  FCA 899.
- See for example Safari Automotive Technology Pty Ltd v Ironman 4×4 Pty Ltd  FCA 1330; Nutrientwater Pty Ltd v Baco Pty Ltd  FCA 2; Playcorp Group of Companies Pty Ltd v Peter Bodum A/S  FCA 23.