Author
Maurice Gonsalves  
Partner

Maurice Gonsalves  
Partner
T +61 2 9296 2166
19 May 2006

Dilution down under: The protection of well-known trademarks in Australia

The following article was originally published by Sweet & Maxwell in the European Intellectual Property Review, 2006, Volume 28(3), pp 174-181

Abstract

Considers the extent to which Australian law provides an anti dilution remedy for the protection of well known trade marks. Reviews the legislative provisions on anti dilution in the US and EC, compares the Australian regime under the Trade Marks Act 1995 section 120(3) and explores the meaning of "anti dilution" and the opinions of commentators who maintain that Australia possesses no such remedy. Discusses the legislative history of section 120, its derivation from the Agreement on Trade-Related Aspects of Intellectual Property Rights 1994 (TRIPs) Article 16(3), the construction of both provisions and Australian case law involving section 120. Analyses the US and EC approach to "mental association" and suggests how the provisions of the 1995 Act could be interpreted to provide a broad anti dilution remedy.

Recent decisions in the United States and EU have focused attention on the way in which "anti-dilution" provisions protect well-known trade marks. This article examines the protection of well-known trade marks under Australian law to determine the extent to which existing Australian law provides an anti-dilution remedy. It suggests that, contrary to comments made by some Australian commentators, Australian trade marks legislation does in effect provide an anti-dilution remedy.

"Anti-dilution" provisions in the United States and EU

For the purposes of comparison, and for the purpose of defining what an "anti-dilution" provision is, it is useful to commence by setting out the "anti-dilution" provisions in the United States and the EU.

The anti-dilution provisions in the US Federal Trademark Dilution Act ("FTDA") provide as follows:

"The owner of a famous mark shall be entitled, subject to the principles of equity and upon such terms as the court deems reasonable, to an injunction against another person's commercial use in commerce of a mark or trade name, if such use begins after the mark has become famous and causes dilution of the distinctive quality of the mark, and to obtain such other relief as is provided in this subsection.

The term "dilution" means the lessening of the capacity of a famous mark to identify and distinguish goods or services, regardless of the presence or absence of-

(1) competition between the owner of the mark and other parties; or

(2) likelihood of confusion, mistake or deception".

The EU provision is contained in Article 5(2) of the Trade Marks Directive which states:

"Any Member State may also provide that the proprietor [of a registered trade mark] shall be entitled to prevent all third parties not having his consent from using in the course of trade any sign which is identical with, or similar to, the trade mark in relation to goods or services which are not similar to those for which the trade mark is registered, where the latter has a reputation in the Member State and where use of that sign without due cause takes unfair advantage of, or is detrimental to, the distinctive character or the repute of the trade mark".

There has been important judicial exposition of this provision: in Adidas-Salmon AG v Fitnessworld Trading Ltd, [FN1] the ECJ held that:

(1) the protection conferred by Article 5(2) is not conditional on a finding of a similarity between the mark with the reputation and a sign such that there exists a likelihood of confusion between them on the part of the relevant section of the public; and

(2) it is sufficient for the degree of similarity between the mark with a reputation and the sign to have the effect that the relevant section of the public establishes a link between the sign and the mark.

As pointed out by McCarthy, Article 5(2) is "widely seen as a prohibition on dilution". [FN2] Article 5(2)will be discussed further below.

The statutory provisions in Australia

In Australia, trade marks which are famous, or to use the statutory description, trade marks which are "well known in Australia", are protected by section 120(3) of the Trade Marks Act 1995 (Cth) (the "Act"). Section 120(3) is a subsection of the general infringement provision, section 120. It is useful to set out section 120 in full in order to appreciate the context in which sub section (3) appears.

Section 120 provides that:

"(1) A person infringes a registered trade mark if the person uses as a trade mark a sign that is substantially identical with, or deceptively similar to, the trade mark in relation to goods or services in respect of which the trade mark is registered.

(2) A person infringes a registered trade mark if the person uses as a trade mark a sign that is substantially identical with, or deceptively similar to, the trade mark in relation to:

(a) goods of the same description as that of goods (registered goods) in respect of which the trade mark is registered; or

(b) services that are closely related to registered goods; or

(c) services of the same description as that of services (registered services) in respect of which the trade mark is registered; or

(d) goods that are closely related to registered services."

However, the person is not taken to have infringed the trade mark if the person establishes that using the sign as the person did is not likely to deceive or cause confusion.

(3) A person infringes a registered trade mark if:

(a) the trade mark is well known in Australia; and

(b) the person uses as a trade mark a sign that is substantially identical with, or deceptively similar to, the trade mark in relation to:

(i) goods (unrelated goods) that are not of the same description as that of the goods in respect of which the trade mark is registered (registered goods) or are not closely related to services in respect of which the trade mark is registered (registered services);

(ii) services (unrelated services) that are not of the same description as that of the registered services or are not closely related to registered goods; and

(c) because the trade mark is well-known, the sign would likely to be taken as indicating a connection between the unrelated goods or services and the registered owner of the trade mark; and

(d) for that reason, the interests of the registered owner are likely to be adversely affected.

(4) In deciding, for the purposes of paragraph 3(a), whether a trade mark is 'well known in Australia', one must take account of the extent to which the trade mark is known within the relevant sector of the public, whether as a result of the promotion of the trade mark or for any other reason".

An anti-dilution provision?

Anti-dilution provision defined

It is fair to say that over the last few years, there seems to be an emerging view in Australia that section 120(3) does not provide an anti-dilution remedy. This view seems to have been propounded with little supporting analysis. One of the purposes of this article is to show that section 120(3) does indeed provide an anti-dilution remedy, and that the opposing view is contrary to the legislative history of the provision, to obiter dicta of the High Court of Australia, and to the emerging law in the EU.

To properly examine this issue, it is necessary to first define what is meant by an "anti-dilution" provision.

Using the US definition of "dilution", an anti-dilution provision is best defined as one which has both the following characteristics:

(1) it protects a well-known trade mark against a loss of distinctiveness; and

(2) it does not require proof of actual confusion on the part of consumers, but equally the existence of consumer confusion does not remove protection.

In his seminal article on dilution, Schechter described the loss of distinctiveness protected by anti-dilution provisions as "a gradual whittling away or dispersion of the identity and hold upon the public mind of the mark or name by its use upon non-competing goods". [FN3] It is the "watering down" of the distinctiveness of a mark that the metaphor "dilution" describes. This kind of dilution is what Advocate General Jacobs, in his opinion in the Adidas case, referred to [FN4] as dilution in its "classic sense" [FN5], and it is often referred to as "blurring".

The other type of harm to a trade mark which is often also included under the rubric of "dilution" in the United States [FN6], and, increasingly, the EU jurisprudence [FN7] on dilution is "tarnishment". That involves an injury to the reputation of the trade mark by "a use of an infringing mark to appeal to the public's senses in such a way that the trade mark's power of attraction is affected". It typically involves a disparaging use.

A flawed prevailing wisdom

In 1997, two years after the enactment of the Act, it was stated by one of Australia's leading trade mark writers that "Australia has no law of dilution". [FN8] Since then this view has been perpetuated, usually with little or no justification with reference to the text of section 120(3).

In an Issues Paper published in February 2002 by the Australian Government's Advisory Council on Intellectual Property, [FN9] the Council asserted, without analysis, that subs section 120(3) and 120(4) of the Act are:

"limited in the scope of the protection they provide and fall far short of the anti-dilution provisions which are now included in the Lanham Act in the United States".

It then called for submissions on, among other things, what rights should flow to a mark accorded "well-known" or "famous" status.

The submission made by the Law Council of Australia in response to the Issues Paper also asserted, without analysis, that "no anti-dilution remedy" existed in the Act and that to succeed under section 120(3) "the owner of a well-known trade mark must prove the likelihood of confusion between the defendant's goods and services and the trade mark owner". [FN10]

The notion that section 120(3) requires proof of a likelihood of confusion also appears to be basis for other Australian commentators asserting that section 120(3) does not provide an anti-dilution remedy. For example, in a recent article by Stevens, he has put forward the view that section 120(3) does not provide a "direct" anti-dilution remedy, and that the section requires a likelihood of confusion, [FN11] *176 because of the "connection requirement". Interestingly, this appears contrary to the view expressed by Stevens in a 1996 article he co-authored, [FN12] to the effect that:

"since indicating a connection appears to be something less than actual deception or confusion, and given that the section specifically refers to the use of trade marks in relation to unrelated goods, it is not unreasonable to argue that s 120(3) may herald the introduction of statutory protection against the dilution of well-known trade marks".

This view that section 120(3) requires proof of confusion again appears in an October 2004 report by a Committee of the International Trademark Association. [FN13] In fact that view is, without any support or analysis, given the status of the prevailing wisdom in Australia, because the Committee says that section 120(3) is "generally regarded" as requiring likelihood of confusion.

The authors should point out, however, that not all commentators share this restricted view of section 120(3). For example, in its submission to the Review of Enforcement of Trade Marks conducted by the Advisory Council on Intellectual Property, the Intellectual Property Research Institute of Australia concluded that "subsection 120(3), even as currently drafted, has the potential to offer significant anti-dilution protection to well-known or famous trade marks". [FN14]

Mistaken connection

In the tort of the passing off, and even for the purposes of section 52 of the federal Trade Practices Act, [FN15] only mistaken connections found a cause of action. This arises from the requirement that there be a misrepresentation, which is an element of both causes of action. [FN16] The types of mistaken connections in Australian passing off and section 52 cases are broader than mere mistakes as to origin, and include mistaken connections as to sponsorship, affiliation and association between the plaintiff and the defendant or the defendant's goods. Indeed, it has been held that where there is a mistaken association, it does not matter that the precise nature of the association is difficult to define. [FN17]

The authors surmise that many Australian commentators have been overly influenced by the requirements of the law of passing off and section 52, and the requirement for confusion as to origin under traditional trade mark law. In the present authors' opinion, while mistaken connections as to origin, affiliation, sponsorship or affiliation would meet the requirements of section 120(3), it is not necessary that there be confusion or that the connection be mistaken. To impose such a requirement ignores both the drafting history of the legislation, and the stark contrast between subs section (2) and (3) of section 120.

Legislative history of section 120(3) and statutory construction

Derivation from Article 16(3) of TRIPs

Subsections 120(3) and 120(4) of the Act were introduced to comply with, [FN18] and closely track the wording of, Article 16(3) of the TRIPs Agreement, which provides:

"Article 6bis of the Paris Convention (1967) shall apply, mutatis mutandis, to goods or services which are not similar to those in respect of which a trademark is registered, provided that use of that trademark in relation to those goods or services would indicate a connection between those goods or services and the owner of the registered trademark and provided that the interests of the owner of the registered trade mark are likely to be damaged by such use".

Importantly, the requirement in section 120(3) that the sign would be likely to be taken as "indicating a connection between the unrelated goods or services and the registered owner of the trade mark" is completely congruent with the requirement in Article 16(3) that the use of the well-known mark would "indicate a connection between those goods or services and the owner of the registered trade mark".

Statutory construction

It is a rule of statutory construction in Australia that [FN19]:

"Where a statute or subordinate legislation is ambiguous, the courts should favour that construction which accords with Australia's obligations under a treaty or international convention to which Australia is a party, at least in those cases in which the legislation is enacted after, or in contemplation of, entry into, or ratification of, the relevant international instrument. That is because Parliament, prima facie, intends to give effect to Australia's obligations under international law".

Section 120(3) clearly falls within this principle as legislation intended to implement Article 16(3) of TRIPs.

Section 120(2) creates an infringement action for the use of a substantially identical or deceptively similar sign on goods or services which are closely related or of the same description as those for which a mark is registered. However, it is a defence to section 120(2) that the use is "not likely to deceive or cause confusion".

In the authors' view if the legislature intended to include a requirement of likelihood of confusion in the subsection directly following section 120(2), they would have done so using the same formulation of words as appears in section 120(2), that is, that the use was "likely to deceive or cause confusion". The use of a different expression, *177 "indicating a connection", is clearly intended to perform a different function: in this case, to pick up the words of Article 16(3) of TRIPs. While there may be some legitimate debate about the exact content of "indicating a connection", the authors consider that to simply assert, without analysis, that confusion or a mistaken connection is required in an action under section 120(3) ignores the difference between section 120(2) and section 120(3) and the legislative intent as disclosed in the Explanatory Memorandum.

Construction of Article 16(3) of TRIPs

Given the origin of section 120(3) and the rule of statutory construction discussed above, those who assert that the "connection requirement" in section 120(3) requires proof of confusion or mistaken connection must inevitably take the view that Article 16(3) of TRIPs requires proof of confusion or mistaken connection. However, this view is directly contrary to the opinion of the author of the authoritative textbook on the drafting history of the TRIPs Agreement. Professor Daniel Gervais, [FN20] who is described by the chairman of the Negotiating Group on TRIPs as having "an insider's view of how the [TRIPs] negotiations developed", [FN21] is of the opinion that Article 16(3) of TRIPs:

"protects against 'dilution' of a mark, including use detrimental to a mark's reputation (not necessarily a well-known mark), its quality indication and the goodwill attached to it. This is a combination of 'passing off' and general unfair competition elements. Through the reference to Article 6bis, Article 16(3) also protects the public against the confusing effects of such use". [FN22]

Similarly, those who would assert that section 120(3) does not protect against dilution types of harm must logically defend at least one of the two following propositions:

(1) that there is a difference of meaning between "damaged" and "adversely affected"; or

(2) that Article 16(3) of TRIPs does not intend to protect against dilution types of harm.

As to proposition (1) above, this would appear difficult, if not impossible to defend from a semantic perspective, at least in the English-speaking world. It is submitted that only an implausibly narrow construction of the words in section 120(3) can sustain such a difference in meaning. Indeed there is a good argument that "adversely affected" imposes a lower threshold for, and encompasses a wider range of, harm to a trade mark owner's interests than does the word "damaged".

Proposition (2) above is contrary to Professor Gervais's express reference to Article 16(3) protecting against "dilution of a mark, including a use detrimental to the mark's reputation", that is, both blurring and tarnishment.

As noted earlier, the words "interests of the trade mark owner are likely to be adversely affected" are wide enough to cover an adverse effect on the trade mark owner's interests due to blurring and tarnishment, if such an adverse effect can be demonstrated or inferred. Indeed, in so far as tarnishment is concerned, the words in the US state dilution legislation which were regarded by the US Supreme Court in Victoria's Secret [FN23] as expressly protecting against tarnishment (namely, "injury to business reputation") are actually narrower than the Australian form of words.

Judicial exposition of section 120(3) in Australia

There have been very few decided cases in Australia which have mentioned section 120(3) and still fewer which have discussed the provision in detail.

The authors' researches have located the following cases which consider section 120(3) to any extent, in the order in which they were handed down: Coca-Cola Co v All-Fect Distributors Ltd [FN24]; Lone Star Steakhouse & Saloon v Zurcas [FN25]; Campomar v Nike [FN26]; San Remo Macaroni Co. Pty Ltd v San Remo Gourmet Coffee Pty Ltd [FN27]; and Virgin Enterprises v Klapsas. [FN28]

Only Coca-Cola and Nike discuss the provision to any significant extent. All of the other cases involved situations where the court found that there was confusion or misleading or deceptive conduct in any event, and so there was no need to consider whether some connection falling short of confusion would suffice for the purposes of section 120(3). Accordingly, the authors will turn only to discuss Coca-Cola and Nike.

Coca-Cola v All-Fect

In Coca-Cola Company v All-Fect Distributors Ltd, [FN29] Merkel J. considered a claim by Coca-Cola that the sale by the respondent of a cola confectionery with a shape similar to the distinctive Coke contour bottle was an infringement of a registered trade mark held by Coca-Cola which comprised a two-dimensional drawing of the contour bottle.

At first instance in the Federal Court, Merkel J. held that:

  • the respondent had not used the contour bottle trade mark in respect of goods in respect of which the trade mark is registered, and so there could be no infringement under section 120(1);
  • the respondent's confectionery were not goods of the same description as, or closely related to, beverages, and so there could no infringement under section 120(2);
  • there was no infringement under section 120(3) because the respondent had not used the contour bottle mark "as a trade mark", because:

"the cola bottle confectionery is merely recognisable as having the well-known shape of the contour bottle *178 but would not be likely to be believed or expected to have a trade or commercial connection of some kind with the applicant by reason of having that shape. Likewise consumers would be unlikely to be led to wonder whether it might the case that the confectionery comes from the same source as Coca-Cola." [FN30]

Merkel J. did not expressly make a finding on whether there was the requisite connection for the purposes of section 120(3), because he based his decision on whether the shape mark had been "used as a trade mark" by All-Fect. It is fair to say that Merkel J. seems to assume that the requisite "connection" under section 120(3) was a "commercial connection" of "association" or "endorsement" or the like. [FN31] However no argument appears to have been presented that section 120(3) could be satisfied by any other form of connection--Coca-Cola appeared content to argue that such a connection could be established in this case.

On appeal, the Full Court of the Federal Court overturned Merkel J.'s finding that All-Fect had not used the contour bottle shape mark as a trade mark, because the test was not whether the use of the contour bottle shape indicated a connection between the confectionery and Coca-Cola, but whether the use indicated a connection between the confectionery and All-Fect. [FN32] The Full Court held that on the facts there was such a connection. [FN33] Merkel J.'s finding that the goods were not of the same description as goods in respect of which the mark was registered was also overturned, on the basis that at trial this had been conceded by the respondents. [FN34] The result was that the matter was remitted to Merkel J. to determine whether there had been infringement under section 120(2), and section 120(3) dropped out of the picture. There is no report of the remitted proceedings.

As no finding was made by Merkel J. on the type of connection required by section 120(3), and as Merkel J.'s decision was overturned on appeal, it is submitted that Merkel's J. decision has no precedent value on this point.

Campomar v Nike

Campomar v Nike [FN35] was a case brought by Nike, the global sportswear concern, against a Spanish company, Campomar, which held trade mark registrations for Nike in relation to cosmetics. The applicant sought expungement from the register of Campomar's Nike trademarks and injunctive relief in passing off and under section 52 of the Trade Practices Act. The trade mark aspects of the case were decided under the Trade Marks Act 1955 (the predecessor to the Trade Marks Act 1995). Section 120(3) was therefore not in issue in the case. A unanimous seven-member bench of the High Court of Australia [FN36] made the following obiter dicta comments [FN37]:

"In this decade, legislation in the United States(1), the United Kingdom(2), and now in Australia(3) to varying degrees has extended the infringement action to restrain activities which are likely adversely to affect the interests of the owner of a 'famous' or 'well-known' trade mark by the 'dilution' of its distinctive qualities or of its value to the owner.

Such provisions represent legislative responses to the claims of trade mark owners to protection where, particularly by successful advertising, the fame of a mark carries its function beyond the traditional role as an identifier of origin. The 'dilution' theory of liability 'does not require proof of a likelihood of confusion'; rather, what is protected is 'the commercial value or "selling power" of a mark by prohibiting uses that dilute the distinctiveness of the mark or tarnish the associations evoked by the mark'. The term 'dilution' has an uncertain scope of application. It also is used to describe the processes by which a mark, such as 'Linoleum' or 'Pyrex', becomes generic and the effects of the use of a mark in parody."

The footnotes shown as (1), (2) and (3) above are footnotes in the judgment to the Federal Trademark Dilution Act of 1995, 15 U.S.C.S. § 1125; the Trade Marks Act 1994 (United Kingdom), section 10; and section 120(3), (4) of the Trade Marks Act 1995, respectively.

This statement from the apex of the Australian judicial system, although obiter dicta, provides powerful support for the proposition that section 120(3) is an "anti-dilution" provision which does not require proof of confusion or mistaken connection.

Conclusion to case studies

No Australian case has yet set a precedent as to whether a connection falling short of confusion or mistaken connection would be sufficient for the purposes of section 120(3). It appears that in Coca-Cola v All-Fect, Merkel J. proceeded on the assumption that confusion or mistaken connection was required to be demonstrated; however, the decision has no precedent value and is in any event contrary to obiter dicta of seven judges of the High Court of Australia in the later case of Campomar v Nike.

"Taken as indicating a connection" is not synonymous with confusion or mistaken connection

The proposition that a requirement of "taken as indicating a connection" necessarily connotes a requirement for confusion or mistaken connection ignores the emerging European jurisprudence on Article 5(2) of the Trade Marks Directive. That jurisprudence is to the effect that there can be a connection or link between a sign and a famous mark, even in the absence of confusion.

In Adidas, the European Court of Justice uses the expression "makes a connection between the sign and *179 the mark", as being synonymous with "establishes a link between the sign and mark". This language is redolent of the language of section 120(3), although the judgment in Adidas refers to the connection being between the sign and the mark rather than between the sign and the registered owner of the well-known mark. The authors consider that nothing turns on this difference, and the "connection" requirement in section 120(3) is similarly able to encompass different types of connections, or links, in the minds of consumers which fall short of a mistaken connection.

Once the mistaken connection or confusion requirement is rejected as a necessary element of section 120(3), one is left to grapple with the problem of what type of connection will be sufficient. Some assistance may be derived from a consideration of the "mental association" requirement which the US Supreme Court discussed in Victoria's Secret and which is well known to European lawyers from Benelux law.

"Association" under Benelux law and the decision in Adidas

In Puma/Sabel, [FN38] the ECJ had to determine the meaning of Article 5(1)(b) of the Trade Marks Directive, which refers to a "likelihood of confusion on the part of the public, which includes the likelihood of association between the sign and the trade mark". The ECJ held that a mere mental association between the sign and the trade mark was insufficient for there to be infringement under Article 5(1)(b), and confusion as to origin or source was necessary. In doing so, the ECJ held that Article 5(1)(b) did not import the Benelux concept of infringement and its doctrine of "association".

The Benelux doctrine of "association" is perhaps best known from the Claereyn [FN39] case, which held that the trade mark Claeryn for gin was infringed by the use of the trade mark Klarein for a cleaning agent, on the basis that the Klarein mark would call to mind Claeryn gin, and this would invoke inappropriate associations between gin and a cleaning agent, even though the public would not be confused as to the source of the two products.

Advocate General Jacob's opinion in Adidas appeared to be an invitation to the ECJ to re-embrace some form of the Benelux conception of "association" in the context of Article 5(2), notwithstanding its inapplicability to Article 5(1)(b). However, in making this invitation the Advocate General has used the word "connection" rather "association", for the reason that otherwise there will be a misunderstanding between, on the one hand, the sense in which the word "association" is used in Article 5(1)(b) and, on the other hand, the sense in which it would be used as a judicial gloss on Article 5(2). [FN40]

The ECJ in Adidas accepted Advocate General Jacob's invitation to use the word "connection" instead of "association", and also inserted its own new synonym of "link", at [29] of its judgment:

"The infringements referred to in Article 5(2) of the Directive, where they occur, are the consequence of a certain degree of similarity between the mark and the sign, by virtue of which the relevant section of the public makes a connection between the sign and the mark, that is to say, establishes a link between them, even though it does not confuse them (see to that effect, Case C-375/97 General Motors [1999] ECRI-5421, paragraph 23)".

It is submitted that the only reason that the ECJ did not use the word "association" in Adidas was a fear that confusion would be caused between two different uses of the word "association" in Article 5(1)(b) on the one hand, and the judicial explanation of Article 5(2) on the other. Instead, the ECJ has used the words "connection" and "link"; "connection" being a word which is used both in Article 16(3) of TRIPs and section 120(3) of the Act. The ECJ's decision thus provides support for the concept of "association" being applied under Article 16 and hence under section 120(3) of the Act.

"Mental association" in US dilution law

Ringling Bros-Barnum & Bailey Combined Shows v Utah Div of Travel Development [FN41] involved a claim that Utah's use on its licence plates of the phrase "greatest snow on earth" was causing dilution of the phrase "greatest show on earth". The Court of Appeals for the Fourth Circuit held:

"that to establish dilution of a famous mark under the federal Act requires proof that (1) a defendant has made use of a junior mark sufficiently similar to the famous mark to evoke in a relevant universe of consumers a mental association of the two that (2) has caused (3) actual economic harm to the famous mark's economic value by lessening its former selling power as an advertising agent for its goods or services".

In Victoria's Secret, the Court of Appeals for the Sixth Circuit expressly rejected the finding by the Fourth Circuit in Ringling Bros about the need for actual harm to be proved, and other circuits had expressed different views about the "actual harm" issue. To resolve the conflict, the US Supreme Court heard the case, and held that, at least in the case of nonidentical marks, evidence would be required to prove that the mental associations made by consumers had lessened the capacity of the famous mark to distinguish goods and services. However, what is clear from the Supreme Court's judgment is that requirement (1), the evocation of a mental association in consumers, is an uncontroversial requirement of a dilution claim in US law. There is some uncertainty as to whether the association can be inferred or must be proved directly (in the case itself there was direct evidence of a mental association in the mind of a consumer).

It is submitted that the evocation of a mental association in the minds of consumers under US law is similar, if not identical, to the "association" requirement in Benelux law, which has now found its way into EU law as a "link" or "connection" under Article 5(2).

Groundless concern about "thought crimes"

One concern about a test which merely requires the junior mark to evoke a mental association or connection with the well-known mark is that the owner of a junior mark should not suffer liability merely because of the thoughts his mark might evoke in consumers, in circumstances where there is no confusion.

However, it is submitted that any concerns about overbroad protection are unfounded because of the need for the trade mark owner to satisfy the court of the effect that the mental connection or association has on the trade mark owner.

The burden of the Supreme Court's decision in Victoria's Secret is that the trade mark owner must be able to satisfy the court that the mental association has or will cause the trade mark owner harm of the type specified. The owner of a junior mark cannot commit a "thought crime" merely by causing an association to be evoked in the minds of consumers.

Similarly, to make out a cause of action under section 120(3), a trade mark owner must establish that the "trade mark owner's interests are likely to be adversely affected" for the reason that the sign in question indicates a connection. The important point here is that a likely adverse effect on interests will need to be established as an effect of the particular type of connection shown.

Suggested connection for the purposes of section 120(3)

The authors suggest that, drawing on US and EU dilution law, and consistent with the TRIPs Agreement, the requirement under section 120(3) of the Act of "indicating a connection between the mark and the trade mark owner" would be met when the sign in question "evokes a mental association" between itself and the well-known mark of the trade mark owner in the mind of consumers, in the sense that the consumer:

(1) calls the well-known mark to mind upon viewing the mark in question; and

(2) is consciously aware that the well-known mark has been called to be mind (i.e it is not a subliminal or subconscious process of which the consumer is unaware).

The requirement in (2) is suggested because if a mental connection is to suffice, it seems reasonable that it must be one which can be expressly articulated by the person making the connection. Further, in section 120(3), the use of the words "taken as indicating" suggests that the connection must be indicated objectively (even if not expressly), which seems to require that it is able to be articulated by the person who has had the connection indicated to them. Otherwise we quickly descend from trade mark law into psychology and metaphysics.

The application of these criteria can be illustrated by applying the above conception of "indicating a connection" to the facts of the Victoria's Secret case. In that case, the defendant used the mark Victor's Secret on a retail store in a strip mall, selling men's and women's lingerie, adult videos and sex toys. The plaintiff, the owner of the famous Victoria's Secret mark for women's lingerie, sued for trade mark dilution.

It is submitted that if the consumer's "internal monologue", for want of a better expression, was to the following effect:

"Oh, VICTOR'S SECRET for a sex shop--it's a spoof on VICTORIA'S SECRET for lingerie. I get it",

then the requirements of a "connection" in section 120(3), or a "link" for Article 5(2), would be met, even if the consumer was well aware that the two businesses had no trade affiliation or association. Here the "connection" which is made by the consumer between the sign and the trade mark owner is an awareness that Victor's Secret is seeking to spoof or parody the famous mark Victoria's Secret. Note that it is not a mistaken connection; that is indeed what Victor's Secret is seeking to do. But it is submitted that there is nothing in section 120(3) which requires the connection to be a mistaken connection.

However, if the consumer was not consciously aware of Victoria's Secret, but merely had a vague feeling that Victor's Secret reminded her of a trade mark she had seen before, this would not be sufficient for the relevant link or connection to be established, because of the suggested requirement in (2) that the "connection" be a conscious one which is able to be articulated.

Or to take the famous example of the use of Kodak on a piano, [FN42] if the consumer's internal monologue was as follows:

"Oh, KODAK pianos, like KODAK cameras. I wonder if they are from the same people? I doubt it, they seem too different",

it is submitted that the "indicates a connection" requirement in section 120(3), or "establishes a link" requirement in Adidas, would also be met.

In Australian section 52 jurisprudence, a mere "causing to wonder" whether goods came from the same source has been held to be insufficient to be misleading and deceptive conduct, because for section 52 purposes there must be, in all the circumstances, a misrepresentation. [FN43] It is submitted that in contrast, a causing to wonder, even if the consumer eventually decided the goods were probably not from the same or an affiliated source, would be a sufficient connection for the purposes of section 120(3). A mental connection has been made between the junior mark and the well-known mark, which falls short of a mistaken connection, but it is a connection none the less.

While in Adidas the ECJ held that Article 5(2) extended to include goods which are not similar, it seems highly unlikely that an Australian court would reach such a contra-literal interpretation of section 120(3). However, the anomaly which might be thought to arise from this position (that the owner of a famous mark has less protection in relation to similar goods than in relation to non-similar goods, owing to the existence of the "confusion" defence in section 120(2)) is more theoretical than real. It is hard to imagine a situation in which a use of a famous mark on similar goods would not be likely to deceive or cause confusion.

Conclusion

In the authors' view the Australian Trade Marks Act 1995 does in effect provide a broad anti-dilution remedy to the owners of marks which are well known in Australia generally, or which are well known among a particular segment of the public in Australia. Coupled with the protection offered by the law of passing off and section 52 of the Trade Practices Act, well-known marks are well protected in Australia.

FN1. [2003] 1 C.M.L.R. 14.

FN2. McCarthy, "Proving a Trademark Has Been Diluted: Theories or Facts?" (2004) 41(3) Houston Law Review 713 at p.716, citing Case 292/00 Davidoff & Cie SA v Gofkid Ltd [2003] C.M.L.R. 35, AG7 (2003).

FN3. Schechter, "The Rational Basis of Trademark Protection" (1927) 40 Harv. L. Rev. 813.

FN4. Adidas, fn.1 above, at [37].

FN5. Perhaps the best common law example of this form of dilution is the "champagne" case: Taittinger SA v Allbev Ltd [1993] F.S.R. 641.

FN6. In Moseley v Secret Catalogue, Inc 537 U.S. 418, 423 (2003), the US Supreme Court questioned whether the Federal Trademark Dilution Act protected against "tarnishment" as well as blurring, by contrasting it with the state antidilution provisions which expressly refer to "injury to business reputation" (at 9 of the Opinion).

FN7. Opinion of Advocate General Jacobs in the Adidas case, fn.1 above, at [37] to [38].

FN8. Daniel Shanahan, "Australia" in Mostert (ed.), Famous and Well Known Marks: an international analysis (1997), p.179.

FN9. Advisory Council on Intellectual Property, Review of Enforcement of Trade Marks, section 4.8.3 at 35, www.acip.gov. ay/review.htm.

FN10. www.acip.gov.au/submissions/council.pdf .

FN11. Trevor Stevens, "Dilution in Australia: waiting in the wings" (2004) 16(8) Australian Intellectual Property Law Bulletin 129 at p.129.

FN12. Frederick Mostert and Trevor Stevens, "The Protection of Well-known Trade Marks on Non-competing Goods" (1996) 7 Australian Intellectual Property Law Journal 76 at 84.

FN13. "Australia" section at pp.4 to 7 of The Protection of Well-Known Marks in Asia-Pacific, Latin America and Africa by the International Trademark Association (October 2004), p.6; available at www.inta.org/membersonly/downloads/ref Asian.pdf .

FN14. www.acip.gov.au/submissions/Ipria.pdf .

FN15. A federal law prohibiting, "in trade or commerce, conduct which is misleading or deceptive or is likely to mislead or deceive".

FN16. Taco Co ofAustralia Inc v Taco Bell Pty Ltd (1982) 42 A.L.R. 177.

FN17. Twentieth Century Fox Film Corp v South Australian Brewing Co (1996) 34 I.P.R. 225 at 242.

FN18. See the Explanatory Memorandum to the legislation at para.98.

FN19. Minister for Immigration & Ethnic Affairs v Teoh (1994) 183 C.L.R. 273 at 287-288.

FN20. Gervais, The TRIPS Agreement: Drafting History and Analysis (Sweet & Maxwell, London, 1998).

FN21. ibid., Foreword by Lars Arnell.

FN22. ibid., at p.111 (emphasis added).

FN23. Moseley v Secret Catalogue, Inc, fn.6 above, at para.9 of the Opinion.

FN24. (1998) 43 I.P.R. 47, and on appeal (1999) 47 I.P.R. 481.

FN25. (2000) 48 I.P.R. 325.

FN26. (2000) 202 C.L.R. 45.

FN27. (2000) 50 I.P.R. 321.

FN28. (2002) A.I.P.C. 91-760; [2001] F.C.A. 1502.

FN29. fn.24 above, 43 I.P.R. 47.

FN30. ibid., at 65.

FN31. ibid., at 61-65.

FN32. fn.24 above, 47 I.P.R. 481 at 490.

FN33. ibid., at 492.

FN34. ibid., at 495.

FN35. fn.26 above.

FN36. The highest appellate Court in Australia; the functional equivalent of the House of Lords in the United Kingdom or the Supreme Court in the United States.

FN37. fn.26 above, at 65-66; at [42] to [43] (emphasis added).

FN38. Case 251/95, Sabel BV v Puma AG [1997] E.C.R. I-6191; [1998] 1 C.M.L.R. 445.

FN39. Benelux Court of Justice, March 1, 1975, NJ 2975, 473, BIE 1975.

FN40. fn.1 above: see [49] and fn.27 of the Advocate General's opinion.

FN41. 170 F. 3d 449 (1999).

FN42. McCarthy, "Proving a Trademark Has Been Diluted: Theories or Facts?" (2004) 41(3) Houston Law Review 713 at p.745.

FN43. Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd (1982) 149 C.L.R. 191.

European Intellectual Property Review

2006

Article

DILUTION DOWN UNDER: THE PROTECTION OF WELL-KNOWN TRADE MARKS IN AUSTRALIA

Maurice Gonsalves.

Patrick Flynn.

Copyright (c) 1999 Sweet & Maxwell Limited and Contributors

Cases: Adidas-Salomon AG v Fitnessworld Trading Ltd (C408/01) [2003] E.C.R. I-12537 (ECJ (6th Chamber))

Coca-Cola Co v All-Fect Distributors Ltd (1999) 47 I.P.R. 481 (Fed Ct (Aus) (Full Ct))

Campomar Sociedad Lda v Nike International Ltd (2000) 202 C.L.R. 45 (HC (Aus))

Moseley v V Secret Catalogue Inc 123 S.Ct 1115 (2003) (Sup Ct (US))

Legislation: Trade Marks Act 1995 (Australia) section 120(3)

Trade Practices Act 1974 (Australia) section 52

Agreement on Trade-Related Aspects of Intellectual Property Rights 1994 Article 16(3)

Council Directive 89/104 on trade marks Article 5(2)

Subject: INTELLECTUAL PROPERTY. Other related subjects: Legal systems