Craft brewer’s desire to distinguish using “URBAN” pales in comparison to its descriptive character

Urban Alley Brewery Pty Ltd v La Sirène Pty Ltd [2020] FCA 82

(7 February 2020)

http://www.austlii.edu.au/cgi-bin/viewdoc/au/cases/cth/FCA/2020/82.html

Trade Marks – infringement – whether using “Urban Ale” as a trade mark or good faith use – cancellation on various grounds – discretion – groundless threats of trade mark infringement

As the Bard once famously said, “Dost thou think, because thou are virtuous, there shall be no more cakes and ale?” In the present case, the applicant, Urban Alley, virtuous as it might be, could not convince the Court to enjoin the enjoyment of its competitor’s ale. It also got a fair serve of humble pie: Urban Alley Brewery Pty Ltd v La Sirène Pty Ltd [2020] FCA 82.

Urban Alley operates a microbrewery in the Docklands area in Melbourne from which it produces a craft beer under the registered trade mark URBAN ALE (with a priority date of 14 June 2016). La Sirène also produces craft beer, and around October 2016 began producing, marketing and selling a craft beer under the name “URBAN PALE” using this label.

In February 2018, Urban Alley initiated proceedings for trade mark infringement, breaches of the Australian Consumer Law and passing off. Presumably as a back-up measure, in October 2018 La Sirène applied to register the words “FARMHOUSE STYLE URBAN PALE BY LA SIRÈNE” and its label as marks in their own right; these marks were registered in June 2019. Unsurprisingly, Urban Alley amended its claims to also seek cancellation pursuant to s 88(1)(a) of the Trade Marks Act 1995 (Cth) of La Sirène’s marks (relying on the usual suite of similarity/confusion/deception grounds under ss 44, 42(b), 60 and 88(2)(c) of that Act).

In response, La Sirène sought cancellation of the URBAN ALE mark on the basis of s 41 (lack of capability of distinguishing the registered owner’s good), s 44 (deceptive similarity to a prior registered mark, URBAN BREWING COMPANY, registered to Urban Purveyor Group) and s 58 (the true owner of the URBAN ALE mark alleged to be the aforementioned Urban Purveyor Group, owner of the aforementioned URBAN BREWING COMPANY mark). It also raised defences under s 120 (lack of use of URBAN PALE “as a trade mark”), s 122(1)(b)(i) (good faith use of the name Urban Pale to indicate characteristics of its beer), s 124 (continuous prior use of an unregistered trade mark, in this case “urban”) and s 122(1)(e) (exercise of a right to use a trade mark given to La Sirène under the Act, leveraging the fact that its word and label marks proceeded to registration). The latter defence depended, of course, on Urban Alley’s application for cancellation being unsuccessful.

Justice O’Bryan identified the key questions for determination as the “the ordinary signification of the words ‘urban’ and ‘ale’ when used in connection with beer and whether the Urban Ale mark was capable of distinguishing the craft beer product sold by Urban Alley”. Neither of those issues was determined in favour of Urban Alley, such that ultimately its proceedings for infringement and cancellation of La Sirène’s marks were dismissed. Further, his Honour upheld La Sirène’s application for cancellation of the URBAN ALE mark, for the reasons set out below.

Much of the challenge for Urban Alley’s case lay in the history of the use of URBAN ALE by the mark’s original owner (CSBC, a related company to Urban Alley) and Urban Alley itself. The product was launched in May 2016, under two marks, “Once Bitter” and “Urban Ale”. CSBC sought and obtained registration for URBAN ALE and ONCE BITTER separately, one month apart. The “Once Bitter” mark was, however, given much greater prominence on the product’s packaging and labelling, and in some contexts no reference was made to “Urban Ale” at all. Further, in other contexts (including statements made by CSBS and Urban Alley’s CEO, Mr Meltzer) the words “Urban Ale” were used to describe the style of beer. Urban Alley’s evidence suggested that the element “urban” was intended to evoke images of the “laneway culture” of the “great city” of Melbourne, and Mr Meltzer “wanted to create a new style of beer and a segment of the craft beer market that the business could own”. We note that “owning” a segment of a market and “owning” the words used to describe that segment are two very different things, and the Act may be of little assistance in achieving either!

It was not until late 2017 that Urban Alley acquired the assets of CSBS and began promoting its product by reference only to the URBAN ALE mark (Mr Meltzer having decided to drop the “Once Bitter” part of the name to avoid consumers mistakenly thinking the beer tasted bitter). Urban Alley launched its current “Urban Ale” product in May 2018, from which point the mark featured prominently in its packaging, labelling and promotional material. At all times, the sales of CSBS/Urban Alley’s products were “modest”, particularly in the period between the original launch in May 2016 and the release of La Sirène’s product in October 2016.

La Sirène’s business dates back to 2010. Its brewery produces a “farmhouse” style of beer, but from an inner suburb of Melbourne. By the end of 2015, the operators of the brewery had taken to referring to their operations and style of beer as “Urban Farmhouse”, juxtaposing the concept of a traditionally farm-based beer brewed in an urban location. His Honour accepted La Sirène’s evidence that the “urban” element of their branding derived from that consideration, and that La Sirène was unaware of Urban Alley’s product when it launched its product in October 2016.

Urban Alley produced no evidence of actual confusion, save for a search of a Dan Murphy’s website for “urban ale” which produced images of the parties’ products. In rejecting those results as evidence of a risk of confusion, his Honour observed, “It is common for an internet search to produce results based on similar but not identical search terms. The search results depicted each of the parties’ products and the question of confusion needs to be considered by reference to the labelling and promotion of the competing products.”

In considering La Sirène’s application for cancellation of the URBAN ALE mark, his Honour looked first at the question of whether the mark was inherently adapted to distinguish Urban Alley’s goods (Urban Alley did not seek to establish that the mark in fact distinguished its goods, given the limited use of the mark before the priority date). His Honour outlined a number of examples of use of the word “urban” in Australia by consumers, commentators and traders alike in a descriptive sense dating back to 2009, in connection with beer and “urban breweries”. His Honour observed, “It is a well-known fact that many traditional or mainstream brewers are located in urban areas.” Further, the evidence demonstrated that brewers (of all sizes, not just brewers of craft beers) and beer suppliers have chosen to use the word “urban” in their products and their own company names on numerous occasions.

His Honour held (and the parties largely agreed) that the word “urban” as applied to beer and breweries conveys that the relevant beer was brewed in a city rather than a country location and, on another level also is associated with the (in some minds) “trendier” segment of craft beers and microbreweries. The parties also agreed (Mr Meltzer’s ambitions aside) that “urban ale” was not descriptive of a style or flavour of beer beyond what would normally be conveyed by the word “ale” alone. But this does not mean when used in connection with beer that “urban ale” is allusive or metaphorical. The words signify a craft beer brewed in an inner-city location. They are descriptive and laudatory, and the evidence pointed to their use as such. In those circumstances, his Honour concluded that the mark was not capable of distinguishing Urban Alley’s beer products within the meaning of s 41(1), and the Court’s discretion under s 88(1)(a) to order cancellation of a registration that should have been rejected was enlivened.

Adding weight to that discretion was his Honour’s acceptance of La Sirène’s challenge to URBAN ALE on the ground of deceptive similarity to URBAN BREWING COMPANY. Although not substantially identical, there was a real risk that Australian consumers would be misled into believing goods bearing the two marks came from a common origin, due to the close association in meaning between “Brewing Company” and “Ale” prefixed by the common element “Urban”. We note that that conclusion does not bode well for other registered “Urban” marks cited by Urban Alley in support of its claim, such as URBAN CELLARS or one of La Sirène’s other marks, URBAN FARMHOUSE BREWING COMPANY. But because ownership of a registered trade mark extends only to marks that are substantially identical to the registered mark (see Carnival Cruise Lines Inc v Sitmar Cruises Ltd (1994) 120 ALR 495 at 513; 31 IPR 375; AIPC 91-049, per Gummow J), La Sirène’s further ground that Urban Purveyor Group was the true owner of the URBAN ALE mark was rejected.

Urban Alley failed to demonstrate a sufficient reason for words that legitimate traders might wish to use for their ordinary signification to remain on the register of Trade Marks. Accordingly, his Honour ordered cancellation of the URBAN ALE mark.

Given the matters set out above, it is unsurprising that Urban Alley’s primary claims for trade mark infringement, misleading or deceptive conduct and passing off were all unsuccessful. So for La Sirène’s case: ale’s well that ends well, and Urban Alley’s case paled in comparison.

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