Sunny Roo trade mark deceptively similar to Sunny Boy trade mark

Sunny Roo trade mark deceptively similar to Sunny Boy trade mark

Sunny Roo trade mark deceptively similar to Sunny Boy trade mark

SMA Solar Technology AG v Beyond Building Systems Pty Ltd (No 5) [2012] FCA 1483

In a trade mark dispute having its origins in the Federal government’s solar panel subsidy scheme, the Federal Court in SMA Solar Technology AG v Beyond Building Systems Pty Ltd1 found that use by Beyond Building Systems Pty Ltd (BBS) of the mark Sunny Roo constituted passing off and misleading and deceptive conduct, and was an infringement of SMA’s registered trade mark Sunny Boy in respect of inverters and inverter installation services.

By the time of the trial BBS was in liquidation. The applicant, SMA Solar Technology AG (SMA), also alleged that a company related to BBS, Ipevo Pty Ltd (Ipevo) was jointly liable for BBS’ infringing activities. Ipevo’s joint liability was established by the terms of a trade mark licence Ipevo had granted BBS and, separately, because Ipevo and BBS both would have known that BBS’ use of the Sunny Roo mark on its inverters was likely to mislead consumers into believing the goods were connected with SMA.

Solar products in trade mark infringement dispute

Before the Federal government introduced a subsidy scheme for solar panels, SMA was the main player in Australian solar inverter market: it had an 80-85% market share. SMA sold its inverters under the mark Sunny Boy and a number of other “Sunny” marks. Solar inverters convert the direct current of electricity generated by sunlight collected on solar panels into alternating current.

BBS was an installer and supplier of solar panel systems, and initially purchased its solar inverters from SMA. Due to the boom in the solar panel market following the government subsidy, and subsequent inverter supply shortages, BBS began manufacturing its own inverters. BBS began selling those, and other items including solar panels, under marks such as Sunny Roo, Sunny Roo Products and a Sunny Roo logo featuring a kangaroo in sunglasses.

Actual confusion between Sunny Roo and Sunny Boy; demonstrated infringing conduct

Evidence was given by SMA’s employees that SMA was frequently contacted by people complaining about BBS’ Sunny Roo solar inverters. The court accepted that SMA had a strong reputation in the mark Sunny Boy and that consumers actually mistakenly thought that Sunny Roo products were SMA’s Sunny Boy products. The court found damage to SMA’s goodwill had occurred2 and BBS had engaged in passing off and misleading and deceptive conduct in contravention of the Australian Consumer Law.

Trade mark infringement – goods not of the same description

SMA’s Sunny Boy trade mark registration specified inverters but not energy generators such as solar panels. The court found that the marks Sunny Roo, Sunny Roo Products and the Sunny Roo logo were deceptively similar to Sunny Boy. Thus, BBS’ use of these various Sunny Roo marks in respect of inverters and inverter installation services infringed SMA’s registration. Interestingly, the court considered that solar panels were not goods of the same description as solar inverters, on the basis of the technical difference between an energy generator and an energy converter, and that one was not substitutable for the other. This led to the finding that use of the Sunny Roo marks on solar panels did not infringe SMA’s registration. On the other hand, installation services for inverters were held to be services closely related to inverters and therefore there was infringement.

Joint liability of Ipevo – scope of trade mark licence

A director of BBS obtained a trade mark registration for the Sunny Roo logo. The BBS director (who was also a director of Ipevo) assigned his trade mark registration to Ipevo, who then licensed the use of the registered mark to BBS. The court found that if Ipevo had licensed BBS to use the Sunny Roo mark and the Sunny Roo logo, that was sufficient to establish Ipevo’s joint liability. It was therefore necessary to consider the scope of the trade mark licence.

Interestingly, the trade mark licence did not expressly identify which trade marks Ipevo had licensed to BBS. Nevertheless, the parties agreed that a licence to use the Sunny Roo logo had been granted to BBS. Ipevo argued that it had not granted BBS a licence to use Sunny Roo “without more”, so Ipevo could not be jointly liable for contraventions arising from BBS’ uses of Sunny Roo without the logo.

The court rejected Ipevo’s interpretation of the licence because:

  • Ipevo had granted BBS a licence to use its “intellectual property”;
  • “intellectual property” included improvements to the intellectual property, and the improvements included modifications or derivatives of the intellectual property made during the licence term. This covered modifications or derivations of the Sunny Roo logo; and
  • Sunny Roo “without more” was a derivative of the licensed Sunny Roo logo registration, so Ipevo had granted BBS a licence to use Sunny Roo without the logo.

Given the scope of the licence, and the involvement of common directors, the court found Ipevo was jointly liable for and was knowingly involved in, all BBS’ infringing uses of Sunny Roo.

Key lessons for trade mark owners arising from this case

  1. Keep good records of any instances of consumers being confused between your and your competitor’s products, as they might be invaluable in any action fending off a competitor coming too close to your trade marks.
  2. In a licensing dispute, a party’s actions are likely to be more closely scrutinised where the parties are in a non-arms’ length relationship.
  3. Draft trade mark and other IP licences carefully to ensure the IP being licensed is clear to avoid unintended consequences, such as joint liability for a licensee’s infringing activities.

Endnotes

  1. (No 5) [2012] FCA 1483.
  2. Issues of liability and quantum were split, so the court did not need to determine the amount of this damage.