Proactive trade mark strategies are essential 12 min read
In allowing the appeal by Global Retail Brands Australia Pty Ltd (GRBA), the Full Court of the Federal Court found that its use of the 
mark (the House B&B Mark) did not constitute misleading or deceptive conduct or passing off in relation to proceedings brought by Bed Bath 'N' Table Pty Ltd (BBNT) concerning its registered 
mark (the BBNT Mark).
In this Insight, we examine GRBA's successful appeal, including why the decision is a cautionary tale, particularly for well-known brands in relation to the importance of building up reputation in sub-brands or truncated versions of key marks, and provide valuable insights in relation to proactive trade mark strategy.
Key takeaways
- Whether or not conduct is likely to mislead or deceive is an objective question which the court must determine for itself. Conduct will be likely to mislead or deceive if there is a real or not remote chance or possibility that the relevant person or class of persons will be misled or deceived. It is not sufficient to merely demonstrate that the conduct may cause ordinary and reasonable consumers to wonder if there is an association.
- A finding of subjective wilful blindness on the part of a respondent does not rise to the level of, and should not be confused with. an intention to mislead or deceive.
- In borderline cases of misleading or deceptive conduct, evidence of an intention to deceive or cause confusion can be a relevant factor to take into account in the evaluation of whether there was objectively misleading or deceptive conduct.
- Expert evidence may be of limited assistance in determining whether consumers are likely to be misled, and the question is ultimately a matter for the court’s impression.
Overview
BBNT brought trade mark infringement proceedings in relation to the BBNT Mark, as well as claims under the Australia Consumer Law (ACL) and for passing off. At first instance, Justice Rofe found that BBNT failed in its trade mark infringement claim, but somewhat surprisingly, succeeded in its ACL and passing off claims. This was despite findings by Justice Rofe that the marks were not deceptively similar and that BBNT did not have any independent reputation in BED BATH or in BED & BATH alone (only in the composite phrase BED BATH N TABLE).
The Full Court allowed the appeal and found that the primary judge had erred in holding that the use by GRBA of its House B&B Mark constituted misleading or deceptive conduct and passing off. BBNT's cross-appeal on infringement failed.
The ACL appeal
Background to the dispute
BBNT has traded under and by reference to the name BED BATH 'N' TABLE since 1976. Since the 1990s, it has consistently used the branding. The appearance of BBNT stores is typically a Hampton's style, with white walls, wooden floorboards, and no discount signage. It has a dominant position in the soft homewares sector. The evidence also established that no other retailer had used the words 'bed' or 'bath' in their store names or external signage since that time up to the present. Other retailers had used "bed" and "bath" inside their stores as category descriptors only (not as trade marks).
GRBA has operated retail stores under the House brand since at least 1978 and is well-established in the hard homewares market. It has operated under the trade mark 'House' as well as under a series of sub-brands ('House WAREHOUSE', 'House OUTLET' etc). House stores typically feature discount marketing in crowded displays.
In May 2021, GRBA began operating a new soft homewares business using the House B&B Mark. GRBA contended that the intention of adopting the House B&B Mark was to advertise that House had extended into bedroom and bathroom products. GRBA considered obtaining legal advice for the re-branding, but apparently ultimately adopted the new branding without legal consultation. There was also evidence that GRBA was aware of BBNT's marketing of its brand, including an email in which an employee of GRBA stated 'we will have Bed bath and table running scared'.
The dispute
BBNT brought a claim against GRBA in the Federal Court, alleging that GRBA, in using its House B&B Mark, had:
- infringed the BBNT Mark, contravening section 120 of the Trade Marks Act 1995 (Cth) (TMA);
- contravened ss 18(1) and 29(1)(a), (g) and (h) of the ACL; and
- engaged in the tort of passing off.
BBNT also had a trade mark opposition on foot but deferred this to run the Federal Court proceedings.
At first instance, Justice Rofe was not satisfied that GRBA had infringed BBNT's trade marks because her Honour found that the House B&B Mark was not substantially identical or deceptively similar to the BBNT Mark. There were a number of key differences between the marks including the presence of 'N’ TABLE' in the BBNT mark, the presence of the visually significant 'House' in the House B&B mark, and differences in presentation and orientation.
Her Honour did find, however, that, by using its House B&B Mark, GRBA had contravened the ACL, and engaged in the tort of passing off.
GRBA appealed the finding with respect to the ACL and passing off claims, and BBNT challenged the finding of lack of trade mark infringement in a cross claim (which ultimately failed). This Insight focuses on the Full Court's reasoning with respect to the ACL claim.
Misleading or deceptive conduct?
The primary judge had found that GRBA’s use of the House B&B Mark was likely to mislead or deceive the ordinary and reasonable consumer, even though the marks were not deceptively similar. The Full Court challenged a number of aspects of her Honour's reasoning. We focus below on how the issues of reputation, the test for misleading or deceptive conduct, descriptiveness, and intention played into the decision:
(a) Reputation
Justice Rofe considered that the reputation of BBNT was 'crucial' to the different outcomes for the trade mark infringement claim and the misleading conduct claim. Her Honour noted that BBNT had acquired an extensive reputation in the BBNT Mark in the soft homewares market in Australia for over 40 years. Although Justice Rofe found that BBNT had a reputation in the BBNT Mark, her Honour did not find that it had an independent reputation in BED BATH or in BED & BATH alone. BBNT had provided some evidence of truncation of the BBNT Mark by consumers to 'BED BATH' or 'BED & BATH', however, Justice Rofe ultimately did not think the evidence provided of some truncation in informal settings (such as telephone calls and in-store conversations) justified a finding that ordinary consumers typically truncated the mark, or that BBNT had any reputation in 'BED BATH' or 'BED & BATH'. Her Honour nevertheless went on to find that reasonable consumers coming across the House B&B Mark and store for the first time would question whether there was some association between this brand and BBNT (for instance, questioning whether they had merged or whether GRBA had taken over BBNT).
The Full Court, however, considered that Justice Rofe's finding that there was no independent reputation in 'BED BATH' or 'BED & BATH' demonstrated that it was the use of the composite phrase 'BED BATH ‘N’ TABLE' or 'BED BATH AND TABLE' only that would indicate the existence of a commercial association between the business operating under that name and another business using a different name which also included the words 'BED & BATH.' As a result, the Full Court found that Justice Rofe's findings on reputation were inconsistent with her conclusion that the use by GRBA of the House B&B Mark was likely to lead ordinary and reasonable consumers to believe that the store was associated in some way with stores operated under the BBNT name.
(b) Test for misleading or deceptive conduct
Further, the Full Court found that Justice Rofe erred in applying the test for misleading or deceptive conduct. The court highlighted that even if use of the House B&B Mark by GRBA 'may cause ordinary and reasonable consumers to wonder if there is any such association' (which, as outlined above, the Full Court considered unlikely), that would not be sufficient to justify a finding that GRBA had engaged in conduct likely to mislead or deceive. Rather, conduct will be likely to mislead or deceive if there is a real or not remote chance or possibility that the relevant person or class of persons will be misled or deceived. This is an objective question which the court must determine for itself.
(c) Descriptiveness
The Full Court also emphasised that conduct that causes confusion is not necessarily co-extensive with misleading or deceptive conduct. It cited a passage from Hornsby Building Information Centre Pty Ltd v Sydney Building Information Centre Ltd which highlights that choosing descriptive words as a part of a trade name can enliven the possibility of blunders by members of the public, and that this small risk of confusion must be accepted:
'So long as descriptive words are used by two traders as part of their respective trade names, it is possible that some members of the public will be confused whatever the differentiating words may be.” The risk of confusion must be accepted, to do otherwise is to give to one who appropriates to himself descriptive words an unfair monopoly in those words and might even deter others from pursuing the occupation which the words describe.'
The Full Court accepted that the BBNT Mark is not purely descriptive (BBNT does not sell beds, baths or tables); rather it is partly descriptive. Drawing a somewhat long bow, the Full Court considered that the BBNT Mark conveys that the products on sale in the stores trading under the BBNT mark are related in some way to beds baths and tables.
The Full Court considered that there are two ways that consumers might be confused by use of the House B&B Mark:
- by confusing the two marks despite the differentiating element of HOUSE; or
- by drawing an inference from the presence of BED BATH or BED & BATH in the two marks that there was some association between the businesses using them.
The Full Federal Court dismissed the first option, opining that the differences between the two marks were substantial and obvious to anyone but a careless observer. It dismissed the second option on the basis that their Honours considered that, even if consumers associated the words BED & BATH with BBNT, they were unlikely to be misled into thinking that the two businesses were associated, given the significant differences between the two names. In the Full Court's opinion, consumers were likely to do no more than infer that both businesses were engaged in the supply of soft homewares for bedrooms and bathrooms.
(d) Intention
The case law indicates that an intention to deceive can be relevant to whether conduct is likely to mislead or deceive. At first instance, Justice Rofe found that GRBA's failure to seek legal advice in relation to the re-branding, its knowledge of BBNT's reputation and 'fierce' determination not to alter the House B&B Mark even after becoming aware of some evidence of confusion with BBNT's brand, fell short of intention to deceive, but did amount to 'wilful blindness'. Her Honour took this wilful blindness into account when she considered whether there was misleading or deceptive conduct. However, the Full Court noted that intention is only one factor among many in the assessment, and ultimately even if there is an intention to deceive, if the impugned mark does not sufficiently resemble the registered owner's mark, there will be no likelihood of deception. The Full Court also highlighted that the case law (Verrocchi v Direct Chemist Outlet Pty Ltd [2016] FCAFC 104) indicates that an intention to deceive ought only to be taken into account in borderline cases of misleading or deceptive conduct, which their Honours considered this case was not. In any event, 'wilful blindness' was not equivalent to an 'intention to deceive'. The Full Court found that the primary judge had misapplied the test, by relying on wilful blindness to the risk of confusion as 'reliable and expert opinion on the question of whether GRBA's conduct was likely to deceive, particularly in circumstances where her Honour declined to find that GRBA had any commercial dishonest intention to appropriate part of BBNT's trade or reputation.'
Ultimately, the Full Court found that the primary judge erred in concluding that, by using the House B&B mark, GRBA had engaged in misleading or deceptive conduct, and the appeal was allowed.
Actions you can take now
- This decision indicates the importance of proactive trade mark strategies, even for longstanding brands with significant reputation. Reputation cannot be taken into account in trade mark infringement proceedings under sections 120(1) or 120(2) TMA, and generally only under s60 at the opposition stage, although in the context of registration it may still be possible to consider reputation under section 44 in arguments concerning imperfect recollection. So, even if a company's brand is very well known in Australia, this does not matter for an assessment of infringement (whether the impugned mark is substantially identical or deceptively similar to the well-known mark).
- Careful and proactive branding strategies should be considered, for instance: ensuring that any sub-brands, brand extensions, or truncated versions of the brand are protected alongside the core marks. It is advisable to monitor actual use of your company's marks in the market and keep up to date with any changes in how the marks are used by consumers. If there are truncated versions being used, or quasi descriptive aspects of the marks that you would nevertheless not like a competitor to be able to capitalise on (such as BED & BATH or BED N BATH), it will be important to seek to register these versions with appropriate modifications.
- Similarly, even if these sub-brands or truncated versions cannot be registered immediately, companies can nevertheless implement strategies to build up reputation in them (with a view to future registration). In this case, a failure to build up reputation in BED BATH or BED & BATH made it difficult for BBNT to make out an ACL claim in relation to GRBA's use of the House B&B Mark. GRBA was able to argue its use was not misleading or deceptive as BBNT did not have reputation in BED BATH or BED & BATH alone.
- When making strategic decisions between trade mark opposition proceedings and actions for infringement and under the ACL, it is important to consider which provisions best serve your interests and enforcement objectives. In this case, BBNT deferred its opposition proceeding to the House B&B Mark in order to bring proceedings in the Federal Court. With the benefit of hindsight, might BBNT have fared better by focusing on the opposition, which allows prior reputation in a mark that is not deceptively similar to the opposed mark to be taken into account? While a successful opposition would not have prevented use of the challenged mark, it may have encouraged the parties to review their respective positions.