The Full Federal Court recently handed down its decision in Swancom Pty Ltd v The Jazz Corner Hotel Pty Ltd [2022] FCAFC 157, in which the Court unanimously dismissed Swancom’s appeal from O’Bryan J’s decision in Swancom Pty Ltd v The Jazz Corner Hotel Pty Ltd (No 2) [2021] FCA 328.  The primary judge dismissed Swancom’s trade mark infringement claim against the Respondents on the basis that the marks CORNER HOTEL and JAZZ CORNER HOTEL (and variations thereto) are not deceptively similar.  At first instance, the Respondents were also largely unsuccessful in their cross-claim which sought cancellation of Swancom’s CORNER marks in respect of their registered class 41 services, based on the marks’ alleged lack of distinctiveness and the likelihood of confusion caused by Swancom’s use of its marks.  For the sake of brevity, this case note will focus on the Full Court’s reasoning in upholding O’Bryan J’s finding that Swancom’s marks are not deceptively similar to the Respondents’ JAZZ CORNER marks.

Key takeaway

The Full Court in this case took great pains to reiterate that, when assessing deceptive similarity for the purposes of section 120(1) of the Trade Marks Act, the relevant comparative exercise involves an examination of the marks themselves and the effect of any similarities between the marks on the minds of hypothetical consumers, rather than how the marks have been used, or any reputation associated with the marks.  Any attempt at introducing into this exercise extraneous considerations – whether masquerading as the ‘acquired distinctiveness’ of a mark or not – will be met with disapproval by the Court.  Accordingly, trade mark owners who gained registration of wholly descriptive marks through prior use should not expect to rely upon such prior use when seeking to establish deceptive similarity under section 120(1) of the Act.

Background

Swancom owns and operates a live music and hospitality venue which had long been known as the ‘Corner Hotel’, located in the junction of two street corners in the suburb of Richmond in Melbourne. It is also the owner of various trade mark registrations including CORNER HOTEL (no. 1388154), CORNER (no. 1442211) and THE CORNER (no. 1669900), in classes 41 and 43 for a range of live music and hospitality services.

The three Respondents before the primary judge conduct related businesses, including a hotel called ‘The Jazz Corner Hotel’ and a jazz music venue called ‘Bird’s Basement’, at a building located near the corner of William and La Trobe Streets in the Melbourne CBD (William Street Building).

Swancom alleged that the Respondents infringed its registered trade marks by using, without permission, various trade marks containing the words ‘Jazz Corner’ including:

1. THE JAZZ CORNER OF MELBOURNE and JAZZ CORNER OF MELBOURNE (Jazz Corner of Melbourne Marks); and
2. THE JAZZ CORNER HOTEL, JAZZ CORNER HOTEL and JAZZCORNERHOTEL (Jazz Corner Hotel Marks)

(collectively, the Jazz Corner Marks).

The primary judge found that the First and Second Respondents had used the Jazz Corner of Melbourne Marks as trade marks in respect of all businesses conducted by the Respondents at the William Street Building, and that the First Respondent had used the Jazz Corner Hotel Marks as trade marks in respect of live music services.

Issues in dispute

After considering the widespread usage of the word ‘corner’ in the names of hotels, cafes and bars, the primary judge opined that the words ‘corner hotel’ were understood by hotel service consumers as being primarily descriptive of a hotel situated on a corner, with a secondary connotation of a hotel ‘round the corner’. Nonetheless, his Honour found that, despite their inherent descriptiveness, Swancom’s marks had in fact acquired distinctiveness in respect of class 41 services through prior use.  Further, given such prevalent use of the word ‘corner’ in the names of local hospitality businesses, there was no real or tangible risk that Swancom’s use of the word would cause confusion between its services and the entertainment services offered by another hospitality business.

Despite his Honour’s finding on the acquired distinctiveness of Swancom’s marks, O’Bryan J held that those marks are not deceptively similar to any of the Jazz Corner Marks.  When comparing Swancom’s marks with the Jazz Corner Marks for the purpose of section 120(1), his Honour discounted the words ‘corner hotel’ due to their inherent lack of distinctiveness and widespread usage, and concluded that the addition of almost any adjective to those words is likely to render a name distinctive.  Despite the fact that the word ‘jazz’ has a dictionary meaning, his Honour found that it leaves a more striking impression, given its less common usage in the names of hospitality businesses, as well as its evocative resonance which stems from the distinctive style of jazz music.

On appeal, Swancom submitted that the primary judge erred in not taking into consideration the acquired distinctive meaning of Swancom’s marks, in concluding that there was only a remote risk that an ordinary member of the public would be confused about whether the live music services promoted by the use of the Jazz Corner Marks originated from Swancom.

The Full Court’s findings

The Full Court noted at [64] that the introduction of section 41(6) into the current Trade Marks Act allowed for the registration of marks that were only capable of distinguishing on the basis of prior use.  However, the process by which a mark is assessed as to its registrability is separate and distinct from the comparative exercise that must be undertaken to determine trade mark infringement under section 120(1) of the Act: [67].  Importantly, the Full Court stressed at [68] that “[o]nce registered, all marks are treated equally for consideration of whether they are infringed pursuant to s 120(1) of the Act, irrespective of how they came to be registered”.  This is regardless of whether the mark that is alleged to have been infringed is, on one end of the spectrum, virtually unknown, or on the other end of the spectrum, prominently used.

In rejecting Swancom’s submission that, for the purposes of section 120(1), a hypothetical ordinary member of the public should be credited with the acquired distinctive meaning of CORNER HOTEL in respect of live music services, the Full Court had regard to a long line of authorities on the test for deceptive similarity, beginning with Dixon and McTiernan JJ’s oft-cited judgment in Australian Woollen Mills v F.S. Walton & CO Ltd (1937) 58 CLR 641, in which their Honours held at 658:

An attempt should be made to estimate the effect or impression produced on the mind of potential customers by the mark or device for which the protection of an injunction is sought.  The impression or recollection which is carried away and retained is necessarily the basis of any mistaken belief that the challenged mark or device is the same. … The usual manner in which ordinary people behave must be the test of what confusion or deception may be expected. Potential buyers of goods are not to be credited with any high perception or habitual caution.  On the other hand, exceptional carelessness or stupidity may be disregarded.  The course of business and the way in which the particular class of goods are sold gives … the setting, and the habits and observation of men considered in the mass affords the standard.

In the Full Court’s view, the authorities make clear that it is the imperfect recollection of the registered mark, not any knowledge about the actual use of the mark, or any reputation associated with it, that is central to the test for deceptive similarity: [77].  While the context of the surrounding circumstances should not be disregarded, this does not allow for a detailed examination of the actual use of the mark, or any reputation associated with it. 

The Full Court noted at [80] that the law is not fully settled as to whether reputation associated with a mark should be considered in circumstances where the mark has a degree of widespread notoriety.  However, in any event, it is undisputed that Swancom’s marks do not enjoy such notorious ubiquity to warrant consideration of their reputation for the purposes of section 120(1).  This is to be contrasted with the position under section 120(3) where actual knowledge of the mark is of paramount importance. 

Accordingly, at [83] the Full Court concluded that

In the same way that any reputation in the registered mark or idiosyncrasies in its actual manner of use are to be ignored, the consumer’s impression and recollection of the registered mark is not to be augmented by knowledge of any factual distinctiveness that the mark may have acquired through use before its filing date. 

The Full Court was critical that Swancom’s primary submission in the appeal was, in substance, really no more than a contention that the primary judge should have taken into account Swancom’s reputation in its marks.  In rejecting that submission (as well as Swancom’s secondary submissions), the Full Court held that the primary judge did not err in finding that Swancom’s marks are not deceptively similar to the Jazz Corner Marks.

You can read the full text of the Full Court’s decision here.