Brand protection – it’s not child’s play
Two children’s toy manufacturers have gone head to head in a trade mark dispute heard before the Federal Court of Australia.
The dispute arose when Australian company Playgro alleged its PLAYGRO trade marks were infringed contrary to s 120(1) of the Trade Mark Act 1995 (Cth) by Playgo Art & Craft Manufactory and Playgo Toy Enterprises, both incorporated in Hong Kong.
During 2013 and 2014, Playgo sold and delivered in China toys bearing its PLAYGO Device Mark to Myer and to a subsidiary of Woolworths, for sale to customers in Australia. The toys were then sold to Australian consumers at Myer, Woolworths and Big W stores.
The key issues in the case turned upon two main questions:
- Was the PLAYGO Device Mark substantially identical with or deceptively similar to Playgro’s registered trade marks?
- Did the Playgo companies ‘use’ as a trade mark in Australia the Playgo Device Mark, when the toys were in fact sold by the various retailers?
The court ultimately found that the PLAYGO was not ‘substantially identical’ to Playgro’s trade marks, but it was ‘deceptively similar’. Playgo also ‘used’ as a trade mark the PLAYGO Device Mark in relation to toys in Australia and therefore infringed the Playgro trade marks.
Substantially identical or deceptively similar
To determine whether the PLAYGRO and PLAYGO trade marks were substantially identical, the Court examined the marks side-by-side, noting their similarities and differences. The Court ultimately found that the marks could not be substantially identical because the PLAYGO device mark, with its white lettering on a red background and the words PLAY and GO on separate lines, had a distinct appearance from the PLAYGRO mark.
When considering deceptive similarity, however, the Court does not carry out a side-by-side comparison, but rather compares the trade marks from the perspective of the ordinary person’s imperfect recollection of an applicant’s mark and their impression of a respondent’s mark. The Court found that the marks were deceptively similar because the first syllable ‘Play’ in each mark was identical, the last syllable was almost identical and was visually and phonetically very similar (i.e. ‘GRO’ and ‘GO), varying only through the presence of the letter ‘R’, and, when considered as a whole, the marks looked and sounded very similar. On this basis, the Court considered it was likely that there was a real danger of confusion arising from the imperfect recollections of an ordinary person, particularly the imperfect recollections of consumers who only occasionally purchase children’s toys. Such consumers might very well be caused to wonder whether the two products in fact come from the same source. Playgro was thus successful on the ground of deceptive similarity.
Use as a trade mark in Australia
The issue of whether the PLAYGO Device Mark was used as a trade mark in Australia arose in circumstances where Playgo actually sold and delivered the toys bearing the mark to Myer and Woolworths in China, but knowing that they were ultimately for sale to customers in Australia. Notwithstanding that Playgo sold the products in China, the Court found that Playgo had used the PLAYGO Device Mark in Australia because it was used as a ‘badge of origin’ to indicate a connection in the course of trade between the goods and Playgo. Playgo did not cease to use the PLAYGO Device Mark upon delivery of the goods to Myer and Woolworths in China; rather, the mark was being used by Playgo so long as the goods were in the course of trade and it was indicative that they were the Playgo’s products. The goods remained ‘in the course of trade’ until their ultimate sale to customers in Australia by the various retailers and, as such, infringement was established.
The rematch
This month, the Court made further orders in the dispute because the parties were unable to agree on orders to give effect to the Court’s first judgment. One of the key bones of contention in these new proceedings was whether the declaration of infringement should extend to the use of the word ‘Playgo’ in addition to the PLAYGO Device Mark.
In this case, Playgo argued that using the word ‘Playgo’ in the fine print on their packaging was not ‘use as a trade mark’, but merely use as a legend to refer to the Playgo Device Mark. The Court was not moved by this argument and found that the use of the word ‘Playgo’, even only in the fine print on product packaging, was ‘use as a trade mark’ because it would have appeared to consumers to indicate a connection in the course of trade between Playgo and the products. This view was supported by the fact that Playgo had used the word ‘Playgo’ immediately followed by the letters ‘TM’ and the words “is a trade mark of, which were strong indicators the word was being used as a trade mark.
Having established that the use of the word was ‘use as a trade mark’, the Court considered whether the word ‘Playgo’ was deceptively similar to ‘Playgro’. For the same reasons given in the first case, the Court found that the words were deceptively similar and therefore made a declaration of infringement in relation to the word in addition to the Playgo Device Mark.
Lessons for brands & their agencies
In a crowded market such as children’s toys, it is not surprising that conflict arises as companies try to protect their valuable brand assets and intellectual property. This dispute is another reminder to brands and their agencies that a trade mark does not have to be strictly identical to an existing trade mark in order to be found to infringe that trade mark. It is therefore essential that brands and their agencies carry out proper checks and due diligence for potentially infringing trade marks before launching their products in Australia. This due diligence should include exhaustive searches for existing trade marks along with reputational searches for any common law trade marks, to determine whether or not there are likely to be any barriers to the registration or use of your proposed trade mark in Australia.
For assistance with trade mark and brand protection matters, contact us on (02) 9163 8958.