“Shape Shopfitters” unable to stop “Shape Australia”

In the recent case Shape Shopfitters Pty Ltd v Shape Australia Pty Ltd (No 3) [2017] FCA 865, Justice Mortimer dismissed a case brought by Shape Shopfitters against Shape Australia for trade mark infringement, misleading or deceptive conduct and false or misleading representations in contravention of sections 18 and 29(1)(g) & (h) of the Australian Consumer Law, and passing off. 

Background to the dispute – The Parties’ businesses

Both Shape Shopfitters (the Applicant) and Shape Australia (the Respondent) engage in fit-out and refurbishment work for the commercial construction industry. Both parties, relatively recently, changed their company name to include “Shape” as the first word in their name. In particular:

• in 2012, the Applicant changed its name from “Billings Long Constructions Pty Ltd” to “Shape Shopfitters Pty Ltd”. The Applicant’s primary service includes fit outs for retail food outlets, such as Grill’d, Brumby’s and Schnitz. On average, 50% of its work was conducted in Victoria, and its average contract was worth just over $39,000; and
• in 2015, the Respondent rebranded from “ISIS” to “Shape Australia”. The Respondent conducts a much larger business than the Applicant, fitting out existing buildings including offices, hotels, university buildings and casinos. Although it sometimes does work for food outlets, this is not its usual type of client. On average, the Respondent’s project size is $1.55 million, and it has offices located in the capital city of every State except Tasmania.

Trade mark infringement of logo mark not established

The Applicant’s trade mark registration is for the “SHAPE SHOPFITTERS” logo shown below, in the left hand image. The Applicant argued that Shape Australia (the Respondent) was infringing its trade mark registration by using:

1.the word SHAPE simpliciter;

2.the word SHAPE in a stylised device mark against a transparent background with a circular border and with a stylised “A” (as shown below); and

3.the word SHAPE in a stylised device mark against a coloured circular background and with a stylised “A” (as also shown below).

Shape Shopfitter’s Trade Mark

Shape Australia’s SHAPE “Device Marks”
 

Her Honour dealt with this aspect of the case quite quickly, finding that the marks were not deceptively similar, and thus there was no trade mark infringement, because:

• although the word SHAPE is a feature of the Applicant’s trade mark registration, so is the use of the word “Shopfitters”. This is emphasised by the alliterative effect when both words are used together;
• the “bottle cap border” is a distinctive feature of the Applicant’s trade mark registration; and
• neither the word “Shopfitters” or the “bottle cap border” can be found in the Respondent’s “SHAPE” Device Marks, or in the use of “SHAPE” as a word.

Given these findings, her Honour stated that there was no need to express an opinion on whether the difference in colour between the Applicant’s blue trade mark registration and the “SHAPE” Device Marks could preclude a finding of infringement, an argument put forward by the Respondent. The Respondent’s argument is surprising, because the currently accepted position is that, without an official limitation noted on a registration, the fact that a mark is registered in a particular colour will not be considered indicative of a restriction as to colour (see section 70(3) of the Trade Marks Act 1995 (Cth), and the (earlier) Full Federal Court judgment in Pham Global Pty Ltd v Insight Clinical Imaging Pty Ltd [2017] FCAFC 83 at [2]).

Misleading or deceptive conduct and passing off also not established

The central issue of this case was whether the Respondent’s promotion, provision and sale of commercial construction services using the word SHAPE, including as a name, would lead people to (incorrectly) believe that the Respondent’s business was related or connected to the Applicant’s business, perhaps by way of the Applicant being an “arm” of the Respondent’s larger “group”.

The relevant class of people was broad

There was a debate about which type of people made up the relevant class to whom the Respondent’s representations were made. The following points were argued.

• The Respondent contended that the class of persons should be limited to “prospective purchasers” of services from both companies. This would have been a very narrow class, as the Applicant’s customers were primarily retail food outlets while the Respondent tended to provide services to more sophisticated commercial building projects (and the overlap between those two classes was limited). Justice Mortimer disagreed with this contention.
• The Applicant contended that the relevant class should include participants in the commercial construction industry who were affected by or exposed to the Respondent’s conduct in the promotion, provision and sale of commercial construction services. This included buyers and clients, third party trade subcontractors and providers of other services such as design and architectural services. There was no reason in principle to confine the class to “consumers” or “purchasers” only. Her Honour ultimately agreed with the Applicant’s submission. 

This finding assisted the Applicant to establish a broader class of relevant persons, who would have been exposed to both the Applicant’s and the Respondent’s businesses. Importantly, while the Applicant could only provide limited evidence of overlapping customers between the two parties, it could establish an overlap between subcontractors who had worked for both parties. Justice Mortimer found that any overlap in the people actually dealing with each party was likely to be forensically relevant “because it provides the setting or context for the alleged likely erroneous belief”.

Mere confusion does not constitute “misleading or deceptive conduct” or passing off

Her Honour then considered whether anyone in the relevant class of consumers had actually been misled. Her Honour’s conclusion on this point turned on the difference between confusion and deception. Although there was clear evidence of actual confusion, this was not sufficient for a finding that those same people had been misled or deceived. In these particular circumstances the following matters were relevant:

• One of the Applicant’s examples of actual confusion involved subcontractors who had sent invoices (and other communications) erroneously to the Respondent in respect of work completed for the Applicant. This evidence, however, did not establish the “extra step” of the subcontractors believing that the Applicant formed part of, or was linked in any way, to the Respondent (i.e. they had not been deceived).
• The Respondent led evidence that, where invoices and communication was incorrectly directed to one of their offices, they took steps to correct the error and dispel any confusion. As a result, it was argued that there could not be any sustained or ongoing belief that the two parties were connected.
• People were engaged by the Applicant and the Respondent over long periods of time, often repetitively. In particular, much of the Applicant’s work was obtained through personal contacts and existing business relationships. These people were found to be less susceptible to any potential deception, and unlikely to believe the Respondent was in some way connected with the Applicant.
• A significant number of other businesses also had the word SHAPE and a broadly “construction-related” word in their corporate name (e.g. Shape Building; Shape Design; Shape Constructions; Shape Fitouts etc.). This suggested that “participants in the commercial construction industry” would come across many “SHAPE” entities, and were less likely to consider them all to be related to one-another.

Her Honour also noted the word “SHAPE” is an otherwise ordinary English word, and sought to avoid an outcome that would provide the Applicant with a statutory monopoly over such a word.

Although the absence of evidence of anyone actually being misled or deceived was not determinative, in this case, the Respondent’s conduct did not convey any representation that the two parties were connected, or in some other way linked, so contraventions of sections 18 and 29(1)(g) and (h) of the Australian Consumer Law, and passing off, were not established.

Key lessons

• This case provides another example of the difficulty of establishing misleading or deceptive conduct under section 18 of the Australian Consumer Law and passing off. Here, even though the parties both operate similar businesses and both use the same word (SHAPE) as the first word of their businesses, no cause of action was established. The best way to protect the trade marks used by businesses is to seek trade mark registration of those marks.
• Trade mark registrations for logos including common words may result in a narrower form of protection than desired. It is always worth considering whether trade mark registrations for broad trade marks, for example, words alone, might be successfully obtained.
• It is important to remember when establishing a new business (or as was the case here, rebranding an old one), the best trade marks are often made up words, or words with no connection to the goods or services they are being applied to. This will help establish a broader monopoly against potential competitors.