Beer drinkers know what they like: things of Stone & Wood

Trade marks – misleading or deceptive conduct – passing off – whether separate reputation in mark – differences in get up – unjustified threats – delay in bringing infringement action – whether claimant acted with due diligence

Stone & Wood Group Pty Ltd v Intellectual Property Development Corporation Pty Ltd  [2018] FCAFC 29

 

The appellant (Stone & Wood) produces a beer that has been marketed since late 2010 as “Stone & Wood Pacific Ale”; Stone & Wood also owns an Australian registered trade mark for the logo for its product shown in the pictures below.  In January 2015, the respondents (collectively Elixir) launched a beer called “Thunder Road Pacific Ale”, although this was re-named “Thunder Road Pacific” following letters of demand from Stone & Wood.  The two products and beer tap decals are shown below.


At trial, Stone & Wood prosecuted the usual trifecta of claims: trade mark infringement; misleading or deceptive conduct and false or misleading representations in contravention of the Australian Consumer Law; and passing off.  Stone & Wood was unsuccessful on all three fronts.  Stone & Wood appealed against the orders dismissing its claims under the Australian Consumer Law and for passing off.

Certain findings of fact at trial proved fatal to Stone & Wood’s case at first instance, and ultimately on the appeal.  First, the learned trial judge held that Stone & Wood did not enjoy a substantial reputation in the words “Pacific Ale” by themselves, only in conjunction with “Stone & Wood” (as shown on the packaging).  Secondly, the term “Pacific ale” had a descriptive quality (as to geographical location, or perhaps a calming effect), as accepted by Stone & Wood’s evidence and, indeed, its online marketing.  Finally, there were sufficient differences between the get-up, colour and language of the parties’ products such that consumers would be unlikely mistakenly to assume a connection between them.  The trial judge also did not accept that Elixir had sought to take advantage of Stone & Wood’s reputation in “Pacific Ale”, as opposed to the success of the concept of a “Pacific” beer brewed from Australian or New Zealand hops; the steps taken by Elixir to distinguish its product from that of Stone & Wood were sufficient to defeat Stone & Wood’s claims.

On appeal, the Full Court (Allsop CJ, Nicholas and Katzmann JJ) accepted that there was evidence that supported Stone & Wood’s case, such as that some consumers and sellers of Stone & Wood’s product referred to it simply as “Pacific Ale”, and that the parties’ products have a similar taste and aroma.  However, such conclusions must be “taken in the milieu of all the evidence with its subtlety and context”.  The Full Court noted at [63], for example, that the consumer in the relevant market “is alive to the different identity and products of the brewers” and “is interested and attentive to what is being sold”.  When all the evidence was considered in context, the Court found no error with the trial judge’s findings of fact or application of the law.  Accordingly, Stone & Wood’s appeal was dismissed.

At trial, the trial judge found in favour of Elixir’s cross-claim under section 129 of the Trade Marks Act 1995 (Cth) that Stone & Wood had made groundless threats of an action for trade mark infringement.  Stone & Wood appealed that decision.  The issue on appeal was whether Stone & Wood had brought its trade mark infringement action “with due diligence” within the meaning of section 129(5).  The defence under section 129(4) was not available because Stone & Wood failed to make out trade mark infringement.

Elixir’s complaint centred on Stone & Wood’s pre-litigation correspondence.  That correspondence had referred to its registered trade mark, but the original claim filed on 20 May 2015 did not include a claim for trade mark infringement.  Such a claim was not added until after Elixir had filed its cross-claim on 18 June 2015; on the following day Stone & Wood sought to include a trade mark infringement claim.  No explanation for the delay was offered.  Stone & Wood did suggest that its original causes of action were “considered sufficient to meet its objectives”, but the trial judge noted this explained only the omission of a trade mark claim, not the reasons for delay.  Both the trial judge and the Full Court also held that to consider Stone & Wood’s actions only after Elixir had raised its cross-claim was the wrong inquiry; section 129(5) requires consideration of a trade mark owner’s actions from the time the original threats were made.

The authors note that this aspect of the case highlights a difficulty for rights holders.  It is customary for a trade mark owner to identify the full sweep of its rights – registered and unregistered – in pre-action correspondence, but if it ultimately elects not to prosecute infringement for any identified registered marks then section 129 may be enlivened.  On the other hand, prosecuting hopeless infringement claims is apt to have costs consequences down the track.  A rights holder therefore needs to consider carefully the prudence of raising any registered trade mark when it first contacts a potential infringer, not simply when drawing pleadings.

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