Direct mail service provider takes leave of its SENSIS

Sensis Pty Ltd v Senses Direct Mail and Fulfillment Pty Ltd [2019] FCA 719

(24 May 2019)

Trade marks – infringement – defences – use of a mark for which the alleged infringer would have obtained registration – date at which assessment of registrability is to be made

Sensis Pty Ltd (“Sensis”) owns the SENSIS trade marks registered in respect of the following services in class 35:

advertising services; marketing, merchandising, retail and wholesale distribution services (excluding transport); business advisory services; business planning and analysis services; collection, preparation, compilation, storage, processing, retrieval and provision of business information; and business information services

and the following services in class 42, amongst others:

data security services; extraction and retrieval of information and data mining by means of computer networks

Senses Direct Mail and Fulfillment Pty Ltd (“SDM”) carries on a direct mail service using the brand SENSES DIRECT and associated device.  In 2016, SDM applied to register the mark and device in respect of “marketing services and business marketing consulting” in class 35.  The applications are not yet accepted.

Sensis sued SDM for infringement of its registered SENSIS trade marks.  While SDM accepted that it used its marks in relation to the registered services, in particular, “advertising services” and “marketing […] distribution services (excluding transport)”, it denied infringement on the basis that: (a) the marks were not deceptively similar; and (b) the defence under section 122(1)(fa) of the Trade Marks Act 1995 (Cth) (the “Act”) would apply, namely that SDM was using a mark for which it would obtain registration if it were to have applied for registration at the relevant time.  SDM also cross-claimed for removal of certain services from the SENSIS registrations by reason of non-use.

Justice Davies found that the marks were deceptively similar.  An interesting question then arose as to whether the section 122(1)(fa) defence was to be assessed at the time SDM’s infringing conduct commenced, the date on which its defence was filed or the date of the hearing.  That is, at what date would SDM need to have been able to obtain registration for the defence to apply?

The factual questions under the defence were whether: (a) SDM had engaged in honest concurrent use of the SENSES DIRECT mark at the relevant date (necessarily required to overcome the section 44 objection to registration of SDM’s mark); and (b) whether, because of the reputation of the SENSIS marks at the relevant date, use of the SENSES DIRECT mark would be likely to cause confusion for the purposes of section 60 of the Act.

SDM contended that the Full Court in Anchorage Capital Partners Pty Ltd v ACPA Pty Ltd (2018) 259 FCR 514 (“Anchorage”) at [210]-[217] was wrong to conclude, in obiter, that section 122(1)(fa) is concerned with the state of affairs in existence as at the date the alleged infringing conduct occurs.  SDM contended that the correct date for assessment of section 122(1)(fa) was either the date on which the infringer actually filed a trade mark application or, alternatively, the date upon which it filed its defence relying on section 122(1)(fa) or at trial.

SDM observed that for section 122(1)(fa) to be determined at the date of first use of the impugned mark would be nonsensical because the infringer could not rely on honest concurrent use under section 44(3)(a) to overcome a section 44 objection to hypothetical registration of the impugned mark.  Next SDM observed that, where the Act intended to import a temporal requirement, it did so expressly, and it did not do so in section 122(a)(fa).  Next SDM contended that the Full Court’s reasoning in Anchorage was unsound in seeking to demarcate the defences in sections 122(1)(e), 122(1)(fa) and 124 when overlap between those defences is unavoidable and not problematic.  Another argument raised by SDM was that, given each use by a respondent of a trade mark is a discrete infringement, it would be an odd outcome that the defence could apply to late uses but not the first use of the mark.  SDM also referred to the legislative history of the defence.

In short, Justice Davies was far from convinced.  Her Honour pointed out that the language in section 122(1)(fa) “if the person were to apply for [the impugned mark]” requires the hypothesis of an application for registration, not an actual application.  Therefore, the time at which an actual application is made has no bearing on the defence.  The date of hearing was also readily discounted because “the defence must be available to the respondent on the facts and evidence at the time it is raised, without which the defence must fail”.  Furthermore, section 122(1)(e), which provides a defence where the infringer is exercising a right existing under the Act (that is, using a registered trade mark), was considered to provide important context, as it is concerned with the state of affairs existing at the time of the alleged infringement.  Conformably, her Honour held that the defence under section 122(1)(fa) should be directed to the same time.  Furthermore, given section 122(1)(fa) is concerned with providing a defence to section 120(1), her Honour found it readily apparent that the defence is concerned with the state of affairs in existence at the date of the alleged infringing conduct.

Finally, her Honour found that the submission that in order to give section 44(3)(a) (honest concurrent use) any meaningful operation, section 122(1)(fa) must be assessed at a later date than the respondent’s first use of its mark, was a “bootstraps argument” as it assumes Anchorage was wrong.  To be fair, it is not clear how this is a bootstraps argument.  Indeed, Her Honour accepted that the defence must fail because SDM “cannot show honest concurrent use for the purposes of s 44(3)(a) because its first use of its mark constituted infringing use”.  Her Honour concluded: “However, the question of construction [of section 122(1)(fa)] is not resolved by whether s 44(3)(a) is available to be relied on by the respondent as a defence to this particular infringement claim.”

The authors note that it is difficult to envisage a circumstance where the prior user defence under section 124 is not available and the section 122(1)(fa) defence could be.  To explain: where there is no prior user defence, the registered mark the respondent is said to infringe will necessarily be substantially identical or deceptively similar to the impugned mark and hold an earlier priority date than the hypothetical application date for the impugned mark.  Therefore, the registered mark would stand in the way of registration of the impugned mark by reason of section 44.  If the relevant date for testing section 122(1)(fa) is the date of first infringing use of the mark, section 44(3)(a) could only work where the impugned mark had first been used before the priority date of the registered trade mark – in which case section 124 would apply, rendering section 122(1)(fa) potentially otiose.

Her Honour then considered, if she were wrong about the date at which the section 122(1)(fa) defence was to be assessed, whether SDM had engaged in honest concurrent use of its mark from the date that it filed its application for the SENSES DIRECT trade mark, some three years after it started using them.

Sensis was said to carry on a business of “direct marketing and data processing” in Australia but may be remembered by many as responsible for the Yellow Pages, White Pages, Whereis and CitySearch directories.  However, while SDM’s general manager, Mr Mina, was aware of the brand Sensis when he was developing the brand SENSES DIRECT, not only did he not know of the connection between Sensis and those directories, but the Sensis name did not appear as a result of any of the Google and ASIC searches that he conducted at the time of developing his brands and when he sought to registered his brands, the examiner did not raise the SENSIS marks as a concern.  Accordingly, her Honour accepted that Mr Mina’s searches were conducted with diligence and reasonable care and that he had therefore adopted the SENSES DIRECT marks honestly.  Furthermore, while her Honour found that the potential for real confusion between the marks should have been apparent to Mr Mina because SDM’s customers from time to time referred to it as SENSIS DIRECT or just SENSIS, her Honour concluded that this did not mean that SDM’s use of its marks ceased to be honest.

Nevertheless, her Honour pointed out that section 44(3)(a) is a discretionary provision and it was also necessary to:

take into account the extent of the respondent’s use of its marks, the degree of confusion likely to ensue between the marks in question and the relative inconvenience to each of the parties if registration was to occur.

Put shortly, in doing so, her Honour found that SDM would not have obtained registration of its marks because the discretion would not have been applied in its favour.

It was not therefore necessary for her Honour to consider whether SDM’s hypothetical trade mark application for SENSES DIRECT would fail by reason of section 60 and the reputation of the SENSIS marks.  Nevertheless, her Honour considered the issue.  First, her Honour rejected SDM’s contention that Justice Kenny in McCormick & Company Inc v McCormick (2000) 51 IPR 102 was wrong to hold that a finding of honest concurrent use under section 44(3)(a) of the Act did not overcome a finding that use of the mark would cause confusion under section 60 of the Act.  Next her Honour considered whether Sensis’s reputation in the SENSIS mark extended beyond Sensis’s directory services and whether, because of that reputation, use of the SENSES DIRECT mark would be likely to cause confusion.  Her Honour did not accept that the reputation extended beyond directories and certainly not into advertising and marketing services more generally.  Therefore, section 60 would not have applied.

On the non-use application, Justice Davies found that the SENSIS mark had been used in the non-use period and so the application failed.  Even if wrong about that, her Honour concluded that she would have applied the discretion in section 101(3) of the Act to refuse to cancel the SENSIS trade mark registrations in respect of the services in issue.

Therefore, SDM was found to have infringed the SENSIS registered marks.