Ain't no rest for the Wicked?  Federal Court considers authorisation in dismissing Wicked Sister claim for trade mark infringement

What you need to know

• The Federal Court of Australia has largely dismissed claims by the maker of Wicked Sister desserts against the maker of Wicked dipping sauces for trade mark infringement, misleading or deceptive conduct, passing off and rectification of the Trade Marks Register.
• The Court used the opportunity to confirm that if a trade mark owner merely authorises use of its trade mark, it cannot be the subject of an action for direct liability pursuant to s 120 of the Trade Marks Act 1995 (Cth).
• However, that party's conduct may still amount to conduct for the purposes of a claim for misleading or deceptive conduct and the tort of passing off.

PDP Capital Pty Ltd (PDP) manufactures and sells a range of chilled dessert products and snacks under the brand WICKED SISTER.  Grasshopper Ventures (Grasshopper) is an IP holding company that authorises the use of the brand WICKED on a range of dipping sauces and other products.

PDP brought proceedings against Grasshopper in the Federal Court alleging Grasshopper infringed its Wicked Sister word and device marks by using a new WICKED device mark (New Wicked Mark), and also engaged in misleading or deceptive conduct and passing off.

PDP also sought rectification of the Trade Marks Register by cancellation, amendment or removal of Grasshopper's original WICKED device mark (Wicked Tail Mark).  Grasshopper cross-claimed and also sought rectification of the Wicked Sister marks.

It was a complex case with multiple claims and cross claims.  We address some of the key findings in this article and in our next edition, we will dive deeper into some aspects.

The following marks were the subject of the dispute:

Above: Wicked Sister Device Mark

Above: Wicked Tail Mark

Above: New Wicked Mark

Were the marks deceptively similar?

The Court first considered whether the New Wicked Mark was deceptively similar to the Wicked Sister marks and ultimately found that these marks were not deceptively similar.  

The marks were not aurally or phonetically similar as the New Wicked Mark was made up of one word while the Wicked Sister Marks were made up of multiple words and so took on a different meaning.  The marks were also not visually similar as the New Wicked Mark and the Wicked Sister marks used different stylisation and fonts.  Further, the Court noted that the word WICKED is an adjective, and while used alone it serves merely as an abstract concept, when used in the context of a noun, in this instance SISTER, it takes on a definite meaning.  In this regard, the marks were also conceptually different.  

Moreover, the Wicked Sister marks did not influence the design of the New Wicked Mark, and the Court placed very little weight on PDP's evidence of confusion.  Together, these factors were sufficient to persuade the Court to dismiss PDP's claim for trade mark infringement.

Could Grasshopper be liable for trade mark infringement in any case?

In dismissing the claim for trade mark infringement, the Court noted that, even if infringement was established, Grasshopper, who merely authorised the use of the New Wicked Mark to a trading entity, could not be found liable under s 120 of the Trade Marks Act 1995 (Cth).  

The mere act of authorising the use of a trade mark is not capable of constituting trade mark infringement as the Trade Mark Act does not include any statutory tort of authorisation. 

However, while such a party may not be directly liable for infringement, this does not mean the party could never be found liable for infringement.  For example, the party may still be liable for trade mark infringement as an action may lie against such a party as a joint tortfeasor.

Was there misleading or deceptive conduct and passing off?

The Court then considered PDP's misleading or deceptive conduct and passing off claims and found that these claims must also fail.

The Court had already found the marks were not deceptively similar.  Moreover, the Court noted that:

• that the nature of the products was different (one was shelf-stable and not dairy based while the other was a refrigerated dairy dessert);
• supermarkets sold the products in different areas (one in stable ambient temperatures and the other in the refrigerated section);
• the packaging of the products was different; and
• Grasshopper had a stronger reputation to the WICKED brand than PDP did to the WICKED SISTER products.

Could Grasshopper be liable for these claims in any case?

Grasshopper contended that, as it was a mere IP holding company and did not conduct any sales and promotional activity, it could not have made the alleged misleading or deceptive representations to the public even if the claims were established.  The Court disagreed.  

In some cases, where an unrelated third party has provided a label which is then published by another party and is alleged to contain misleading or deceptive representations, it may be that a claim for misleading or deceptive conduct cannot succeed against the third party.  However, this was not the case for Grasshopper.  

The Court considered that Grasshopper provided (and was well aware that it provided) the trading entity with the capacity to make particular representations through use and branding.  If those representations were found to be misleading or deceptive, Grasshopper may be liable for those claims.

Rectification applications

Separately, the Court considered Grasshopper and PDP's respective rectification applications.  

As a preliminary step, the Court considered Grasshopper's contention that PDP's Wicked Sister Device Mark should never have been registered in the face of an earlier registration for a different Wicked Sister device mark (owned by a separate PDP entity).  The Court dismissed this argument, finding that a member of the public would be able to inspect the Register and discern who bore the ultimately responsibility for the goods.  However, the Court agreed with Grasshopper's contention that PDP could not claim to be the "true owner" of the Wicked Sister Device Mark when the separate PDP entity was the owner and user of the earlier-registered mark (applying Pham Global Pty Ltd v Insight Clinical Imaging Pty Ltd (2017) 251 FCR 379).

Grasshopper was also successful in establishing its rectification argument for removal for non-use in relation to some of the categories of goods in the Wicked Sister marks.  

The Court largely dismissed PDP's rectification application or exercised its discretion not to remove the trade marks in relation to certain goods on the basis that PDP had not made out the opposition grounds on the evidence before the Court.

Authors: Caroline Christian, Lawyer; and Anita Cade, Partner.