Intellectual Property – Trade Marks – representations “false in material particulars” – deceptive similarity
In Caporaso Pty Ltd v Mercato Centrale Australia Pty Ltd [2024] FCAFC 156, the Full Court of the Federal Court of Australia considered an appeal and cross-appeal concerning trade mark infringement, rectification, and the effect of false representations made during the registration process under the Trade Marks Act 1995 (Cth).
This decision raises two interesting issues. First, it clarifies the interpretation of s 62(b) of the Act, establishing that a misrepresentation made during examination can provide a sufficient basis for cancellation if the misrepresentation materially influences the acceptance decision. Surprisingly, this is the case even if the mark was registrable in law. The decision underscores the importance of honesty in the registration process. Secondly, the decision of the Full Court confirms that, in the context of appeals, where the issue of deceptive similarity arises, an appellant may rely on the ultimate evaluation being in error, without identifying any specific error that caused the supporting analysis “to miscarry”. That conclusion would appear to apply equally to any evaluative question where there is only one correct answer, for example, patent claim construction where the relevant terms have no technical meaning. Deference to the trial judge will be given only where the trial judge is shown to have some advantage over the appellate court by reason of hearing evidence directly.
Background
The appellant, Caporaso Pty Ltd, operates an Italian-themed supermarket, restaurant, and wine retail business, amongst other business ventures, and owned three registered trade marks incorporating the word “mercato”. The respondent, Mercato Centrale, operates a business of providing retail food and beverage services from premises in Collins Street, Melbourne, under the name “Il Mercato Centrale”.
At trial, Caporaso alleged that Mercato Centrale had infringed its registered marks under s 120 of the Act by using its own unregistered marks that also incorporated the word “mercato”. Mercato Centrale denied infringement and brought a cross-claim seeking cancellation or rectification of Caporaso’s marks, arguing that the word “mercato” was not distinctive, that use of two of the marks (the Plain Word Mark and the Fancy Word Mark as defined in that case) would be likely to deceive or cause confusion, that the Caporaso marks had been registered on the basis of false representations, and that Caporaso was not the true owner of the plain word mark at the relevant priority date.
Decision at trial
The primary judge dismissed Caporaso’s infringement claim, on the basis that none of Mercato Centrale’s marks were deceptively similar to Caporaso’s registered marks. Her Honour considered both “mercato” and “centrale” to be distinctive, Italian sounding words. She did not accept that members of the relevant target audience would consider “mercato centrale” to be a sub-brand of “mercato”, finding that the word “centrale” is an obvious differentiating feature that cannot be aside in the assessment.
On the cross-claim, the primary judge:
- rejected arguments that “mercato” was not inherently adapted to distinguish or liable to deceive or cause confusion, finding the evidence did not establish the word bore any ordinary signification in Australia to relevant English-speakers either at the priority dates of the Caporaso marks or when the cross-claim was commenced;
- found that Caporaso’s Plain Word Mark had been registered based on false representations (including claims of prior use from the 1970’s), but held that these were not false “in material particulars” within the meaning of s 62(b) of the Act, because the mark was inherently adapted to distinguish and therefore registrable irrespective of the evidence of prior use; and
- ordered a minor narrowing of the registration for the Plain Word Mark to remove services relating to the provision of food and drink at cafes, restaurants, bars or hotels, due to third party prior use of the domain name “mercatorestaurant.com.au” (pursuant to ss 58 and 88(2)(a) of the Act).
Issues on appeal
Caporaso appealed the primary judge’s decision, challenging the narrowing of services for the Plain Word Mark registration and the finding that the parties’ respective marks were not deceptively similar.
Mercato Centrale cross-appealed, arguing that the Plain Word Mark should have been cancelled in its entirety under s 88(2)(a), on the ground under s 62(b) of the Act, because the Registrar of Trade Marks had accepted the application for registration on the basis of evidence or representations that were false in material particulars. The findings in relation to distinctiveness and confusion were not the subject of cross-appeal.
Cross-appeal – section 62(b) – false representations
The key issue in the cross-appeal was the interpretation of the requirement in s 62(b) that the representations be false “in material particulars”. The Full Court framed the issue as whether the word “material” relates to the Registrar’s acceptance of the application, or whether it relates to the registrability of the mark upon a true analysis of the material that was before the Registrar.
The Full Court undertook a detailed analysis of s 62(b) in the context of the structure of the Act. Observing there was no authority binding on the Court that determined the issue, it analogised the role of s 62(b) to the “false suggestion” ground of revocation in patent law, as discussed in Prestige Group (Australia) Pty Ltd v Dart Industries Inc [1990] FCA 406; 19 IPR 275. The Full Court observed that the role played by s 62(b) of the Act is analogous to that of s 100(1)(k) of the Patents Act 1990 (Cth), the statutory object of which was identified in Prestige Group as the protection of the integrity of the grant process itself. Put another way, the Full Court observed that, like its statutory cousin in the Patents Act, the focus of s 62(b) of the Act is not on the presumption of registrability, but rather it is directed to the process of examination and acceptance itself.
In the result, the Full Court rejected the primary judge’s conclusion that a representation is only false “in material particulars” within the meaning of s 62(b) of the Act where it is false in a respect that is relevant to the application of the Act, properly construed and applied. The Full Court held that a representation is false in material particulars if it is material to the decision to accept the application for registration.
On this basis, the false representations about the historical use of “mercato” were material because they were a materially inducing factor in the Examiner’s decision to accept the whole of the application for the Plain Word Mark for registration. Accordingly, the ground of opposition under s 62(b) of the Act was made out in relation to the whole of the registration.
Having found that the s 62(b) of the Act ground was made out, the Full Court declined to exercise its discretion under s 88(1) not to cancel the registration of the Plain Word Mark. It observed that the statements made by Mr Caporaso to the Examiner were false in significant, not trivial respects. The Full Court did not accept the primary judge’s analysis that the fact that the Plain Word Mark was registrable in any event had any decisive significance, noting that that analysis would take away the independent operation of s 62(b) as a provision directed to the integrity of the trade mark examination and acceptance process. For similar reasons, the Full Court also declined to limit cancellation or rectification to the class 35 services. These authors observe that this finding might see a rise in cancellation or rectification actions relying on s 62(b) of the Act and corresponding discovery requests.
Appeal – deceptive similarity
Having regard to the conclusion on the cross-claim on the s 62(b) ground, the question of deceptive similarity did not arise in relation to the Plain Word Mark, but it remained an issue in relation to the other registered marks of Caporaso. The Full Court addressed the submissions as to deceptive similarity that were made on all of the marks.
A threshold issue that arose was the correct approach to the exercise of the Court’s appellate jurisdiction on the issue of deceptive similarity. Caporaso identified various purported errors in the primary judge’s process of evaluation of deceptive similarity which it contended caused that process to miscarry, such that the Full Court was required to undertake the task of trade mark comparison afresh. Caporaso said it was not necessary to identify an error of law and it was sufficient for the Full Court to come to a different conclusion on the evaluative exercise of deceptive similarity for an appellable error to be established.
Mercato Centrale submitted that the determination of whether trade marks are deceptively similar to each other is a factual enquiry consisting of an evaluative and essentially impressionistic assessment, on which reasonable minds may differ, and that, as a result, it is not sufficient for the success of the appeal that the Full Court might itself have reached a different conclusion from the primary judge on the question of deceptive similarity.
The Full Court affirmed Caporaso’s approach as the correct one. It observed that, while deceptive similarity raises questions involving matters of impression on which reasonable minds may differ, it also raises an objective question based upon a construct to which there is one uniquely correct outcome. That is, marks are either deceptively similar, or they are not. As the Full Court put it “while questions of deceptive similarity for the purposes of claimed trade mark infringement may be evaluative questions involving matters of impression on which reasonable minds may differ, they raise an ‘objective question based upon a construct’ (Self Care at [28]) to which there is one uniquely correct outcome”.
Their Honours observed that, in “relation to an evaluative conclusion, specific error may be shown in a trial judge’s reasoning or approach that falsifies the conclusion. But specific error need not be established. Error may [be] established in an evaluative conclusion where, after giving proper weight and respect to the trial judge’s views and any advantages that the trial judge enjoyed, the appellate court ultimately takes a different view.”
Accordingly, the Court did not require Caporaso to identify a specific legal or factual error beyond convincing the appellate Court that they should come to a different conclusion in the evaluation of deceptive similarity. The Full Court observed that “while it is open to an appellant, and it may be a persuasive form of advocacy, to point to and rely upon specific errors of reasoning as Caporaso did on this appeal, it is also open to an appellant to rely on the ultimate evaluation as itself being in error, without identifying any specific error that caused the supporting analysis “to miscarry”, as Caporaso’s submissions suggested was necessary.”
That observation of course applies to any evaluative question which is ultimately binary – where there is only one correct answer. And so, for example, because there can only be one correct construction of a patent claim (Globaltech Corporation Pty Ltd v Australian Mud Company Pty Ltd [2019] FCAFC 162 at [105],[106]), these authors consider that an appellate court can overturn a trial judge’s claim construction, where a patent claim uses ordinary English language, simply because the appeal judges hold a different view.
On the substantive issue, the Full Court found that the primary judge erred in her assessment of deceptive similarity between the parties’ respective marks, in particular by placing weight on the proposition that, in ordinary English, adjectives do not follow nouns. Before the Full Court, but not before the primary judge, Mercato Central accepted that Australian consumers would understand the word “centrale” to mean “central”. Having regard to these matters, the Full Court held that a substantial number of consumers would consider the mark “MERCATO CENTRALE” as connoting either a variant or sub-brand of “MERCATO”, and that the marks were deceptively similar.
The Full Court found that, had the Plain Word Mark not been cancelled, it would have been infringed by Mercato Centrale. The same conclusion did not follow for Caporaso’s other registered marks: the Full Court did not consider either of them to be deceptively similar to any of the unregistered marks used by Mercato Centrale.
The infringement case was therefore unsuccessful in its entirety.
