Recent case highlights complexity of law around trade marks

The potential overlap between liability for trade-mark infringement, the common law tort of passing off and misleading and deceptive conduct remains an important consideration for all agencies.

In CI JI Family Pty Ltd v National Australian Nappies (NAN) Pty Ltd [2014] FCA 79, the Federal Court held that the owner of a registered trade mark had engaged in misleading and deceptive conduct by utilising its trade mark.

Section 18 of the Australian Consumer Law (Schedule 2 of the Competition and Consumer Act 2010 (Cth)), which applies as a law of Queensland through the Fair Trading Act 1989, provides that 'a person must not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive'.

The applicants and respondents were previously in partnership together, operating under the business name Nappy Land. The partnership was dissolved and the applicants continued carrying on business in New South Wales using the name Nappyland. The applicants also continued to hold the registered business name Nappy Land in New South Wales.

The respondents subsequently registered a composite trade mark incorporating the words Nappy Land and the domain name www.nappyland.com.au. The respondents also registered the business name Nappy Land in Victoria, Queensland and South Australia.

The applicants sought to restrain the respondents from using the name Nappy Land or a variant of that name in New South Wales on the basis that the promotion of the respondents’ business in that state was causing confusion amongst the applicant’s customers.

In seeking injunctive relief, the applicants relied on s 18 of the Australian Consumer Law and the tort of passing off.

The registration of a trade mark provides the owner with a number of exclusive rights to use that trade mark. The respondents argued that the registration of the trade mark was a complete answer in response to the statutory prohibition against misleading and deceptive conduct or for any remedy founded upon the tort of passing off.

The respondents’ argument was rejected. The court held that the registration of a trade mark does not extend to providing a licence to engage in conduct that is misleading or deceptive or that constitutes a passing off.

Section 230 of the Trade Marks Act 1995 (Cth) expressly provides that the registration of a trade mark is not a defence to an action for passing off. The court similarly found that a registered trade mark does not affect the operation of s 18 of the Australian Consumer Law.

Although there is an overlap between the causes of action for breach of the Australian Consumer Law and the tort of passing off, the court found that the use by the respondents in New South Wales of the words Nappy Land and their registered domain name, in relation to the sale of nappies and related products, constituted both misleading or deceptive conduct and a passing off.

Following the judgment, the respondents successfully registered a word trade mark for Nappy Land (Trade Mark No. 1602034) in relation to gloves, stationery and paper products and are the current applicants for a word trade mark for Nappy Land in relation to baby products, including nappies (Trade Mark Application No. 1609902). The applicants also have applied for a composite trade mark for the combined word Nappyland in relation to nappies (Trade Mark Application No. 1576937). The parties are both seeking to confirm or extend their proprietary rights in the words Nappy Land and Nappyland.

It remains important for agencies to consider the necessity to register one or more trade marks in relation to their activities. However, agencies need to ensure that they do not engage in conduct that is misleading or deceptive under s 18 of the Australian Consumer Law or that would otherwise amount to passing off at common law.

Although there are a number of elements of both causes of action that may be difficult for a third party to establish against an agency, particularly the requirement for the conduct to have been engaged in ‘trade or commerce’ or the ‘course of trade’, it remains possible for agencies to be liable for misleading or deceptive conduct or passing off.

^{The information in this publication is provided for general purposes only. It is not to be relied on as a substitute for legal advice. Crown Law and the Department of Justice and Attorney-General accept no liability for losses caused by reliance on the material in this publication. Formal legal advice should be obtained for particular matters.}