Tiles and trials: Full Court refuses Caesarstone's trade mark applications

What you need to know

• The Full Federal Court has overturned the decision to allow the registration of Caesarstone's "Caesarstone" trade marks.
• The primary judge erred in finding that Caesarstone had demonstrated honest concurrent use of the marks in relation to goods that were excluded from the scope of the applications.
• Simply providing instructions and/or support to trade mark licensees (eg distributors) who then transform your goods into end products, may not be sufficient to show that you have exercised control over the use of your trade mark in relation to those end products.

What you need to do

• If you need to rely on honest concurrent use to obtain a trade mark registration (in the face of an earlier conflicting registration), make sure that you have used your mark on goods and/or services that are actually covered by your application.
• If you use third party licensees to distribute your goods in Australia, make sure you can demonstrate that you have exercised sufficient control over the use of your mark (including direct quality control in respect of the end products).

Background

Ceramiche Caesar manufactures ceramic tiles for indoor and outdoor flooring and wall cladding, and has sold its tiles in Australia since 1988. In 2004, Ceramiche Caesar registered the following mark (the Caesar Mark) for “ceramic tiles for indoor and outdoor use”:

Caesarstone is an Israeli company that manufactures and sells large quartz slabs bearing the mark CAESARSTONE.  Between 2003 and 2006, these slabs were distributed in Australia by third party licensees of Caesarstone.  From 2006 onwards, Caesarstone used its Australian subsidiary to sell its slabs in Australia.  The right of Caesarstone to sell slabs under the CAESARSTONE mark in Australia has never been in dispute.  Caesarstone has an existing trade mark covering items such as bench tops, which was not in issue in this proceeding.

Caesarstone's trade mark applications

Between 2005 and 2007, Caesarstone filed various trade mark applications for CAESARSTONE and a stylised version of this mark.  These applications variously included "tiles" and services related to tiles.  However, Caesarstone later amended the goods to expressly exclude tiles, to overcome the Trade Marks Office's objection based on the earlier registration for the Caesar Mark.

Notwithstanding the amendment of the specification, Ceramiche Caesar successfully opposed some of Caesarstone's applications, and Caesarstone appealed the Registrar's decision to the Federal Court.  

Multiple proceedings

As a preliminary note, the Full Court's substantive findings on appeal (which are discussed below) were in respect of Caesarstone's application for the word mark CAESARSTONE for goods only (the first proceeding).  

There were two other proceedings for determination, respectively relating to Caesarstone's applications for the stylised version of this mark, and the word mark CAESARSTONE covering services.  However, Caesarstone accepted that the result of these two proceedings should follow the result of the first proceeding.  Accordingly, given that Ceramiche Caesar was successful in the first proceeding, the other two proceedings were also found in favour of Ceramiche Caesar.

First instance decision

In the first proceeding, the primary judge found that CAESARSTONE was deceptively similar to the Caesar Mark, and that Caesarstone's application covered closely related goods to those covered by Ceramiche Caesar's registration.  However, the primary judge concluded that the CAESARSTONE application could proceed to registration, because Caesarstone had demonstrated honest concurrent use in respect of floor panels and wall cladding in the nature of tiles (by the use of the mark by Caesarstone's licensees between 2003 and 2006).  

On appeal to the Full Federal Court 

No honest concurrent use

The Full Court held that it was not open to find that Caesarstone had demonstrated honest concurrent use in relation to "tiles", because tiles were expressly carved out of the specification of the goods (ie the specification stated "none of the foregoing being in the nature of tiles").  A finding of honest concurrent use must be a finding of use in respect of goods that are in fact specified in the trade mark application.  

The primary judge's finding that there was honest concurrent use was limited to goods in the nature of tiles, and not non-tile floor panels and wall cladding.  Accordingly, there was no remaining or alternative honest concurrent use on which Caesarstone could rely. 

Insufficient control over prior use of mark

While not necessary, the Full Court also considered Ceramiche's second appeal basis.  The Full Court concluded that the primary judge erred in finding that Caesarstone exercised control over its licensees' use of the mark in Australia.  It was wrong of the primary judge to consider "individual instances" of control (eg Caesarstone giving instructions to the licensees about the storage and transport of the slabs, and providing marketing and technical support services) rather than the "whole picture".  

The licensees were unrelated entities to which Caesarstone only provided raw material slabs.  The licensees undertook significant work to transform those slabs into the designated goods, and Caesarstone did not have direct control over that work or the use of the mark in relation to those goods.  There was no evidence that Caesarstone ever inspected the licensees' work or conducted any quality control regarding the final products.

Orders

The Court ordered that Caesarstone's applications and registration be refused or cancelled (as applicable), and that Caesarstone pay Ceramiche Caesar's costs of the proceedings before the primary judge and on appeal.

Authors: Will Scott, Senior Associate; and Kellech Smith, Partner.