The High Court has held in an eagerly awaited trade mark decision that the words 'Cinque Stelle' and 'Oro' (Italian for 'Five Stars' and 'Gold' respectively) are inherently adapted to distinguish one trader's coffee products from another (a requirement of a valid trade mark under section 41 of the Trade Marks Act).

The High Court granted special leave in March 2014 (see our post 'High Court of Australia grants special leave in trade mark case') to hear the dispute between two Australian coffee importers, Cantarella Bros Pty Ltd (Cantarella) and Modena Trading Pty Ltd (Modena).  The Court ultimately allowed Cantarella's appeal from the Full Federal Court by a 4-1 majority (Chief Justice French and Justices Hayne, Crennan and Kiefel forming the majority, with Justice Gageler dissenting).  The majority held that Cantarella's trade marks for the words 'Oro' and 'Cinque Stelle' were valid, which was the same conclusion reached by the trial judge but had been overturned on appeal by the Full Court.  Accordingly Cantarella's trade marks will remain on the Register, and the trial judge's orders that Modena has infringed those marks will stand.

The High Court's decision provides guidance generally on the appropriate test for determining whether a trade mark is inherently adapted to distinguish, as well as specific guidance on the ability to register trade marks over laudatory foreign words.  We explain the background to, and takeaways from, the High Court's decision in further detail below.

Background

Cantarella, the importer and promoter of Vittoria coffee in Australia, alleged that Modena, the exclusive Australian distributor of coffee products produced by the Italian company Caffè Molinari SpA, had infringed Cantarella's 'Cinque Stelle' and 'Oro' trade marks.  Cantarella's complaints arose from Modena supplying coffee blends under various names including Caffè Molinari Oro and Caffè Molinari Cinque Stelle. 

Modena cross-claimed that the 'Cinque Stelle' and 'Oro' trade marks were liable to be cancelled on the ground that they were did not inherently distinguish Cantarella's coffee products from similar products of other persons. 

The law

Section 41 of the Trade Marks Act, which deals with the distinctiveness of a trade mark, was the provision considered by the High Court.  The High Court was required to consider section 41 as it was prior to the 2013 'Raising the Bar' amendments.  However, the High Court's decision will still be applicable as the 2013 amendments were not aimed at substantively altering the test for distinctiveness.

The current subsection 41(1) (formerly subsection 41(2)) requires that a valid trade mark must be capable of distinguishing the goods or services in respect of which the trade mark is sought to be registered.  In deciding this question, the current subsections 41(2)–(4) require the Registrar (or a Court) to consider whether the mark is 'inherently adapted to distinguish the designated goods or services from the goods or services of other persons'.  The interpretation of this phrase was at the centre of the dispute between Cantarella and Modena.

The appropriate legal test

Before explaining the High Court's conclusion as to the appropriate legal test, it is necessary to consider the tests applied by the trial judge and the Full Federal Court.

The trial judge, Justice Emmett, focussed the legal test on whether the Italian words 'Cinque Stelle' and 'Oro' were commonly understood in Australia by 'ordinary English speaking persons' as meaning 'five stars' and 'gold' respectively.  On the facts, Justice Emmett held that the Italian words were not so well understood in Australia.  As such, the marks were sufficiently distinctive.

The Full Federal Court rejected the trial judge's approach.  The Full Court held that the test for distinctiveness should be focussed solely on those who trade in the relevant goods or services, rather than 'ordinary English speaking persons'.  As such, the appropriate test was whether or not such traders were likely, in the ordinary course of their business and without any improper motive, to desire to use the marks in connection with their own goods or services.  The Full Court noted the affinity between the Italian language and culture and Australia's 'coffee heritage', and held that, as a result, other traders were likely to desire to use the 'Cinque Stelle' and 'Oro' marks in connection with their own coffee-related goods.  It was unnecessary, in the opinion of the Full Court, that consumers actually knew the English meaning of 'Cinque Stelle' and 'Oro'.

The majority in the High Court preferred the approach adopted by the trial judge.  Their Honours accepted Cantarella's submission that the test for assessing whether a word is 'inherently adapted to distinguish' has two steps:

1. Determine what the ordinary meaning of the word is to persons in Australia who will purchase, consume or trade in the goods or services.  In a case such as this, that question will inform whether the word is understood by the relevant persons to be directly descriptive of the character or quality of the goods or services; and
2. Once the ordinary meaning of the word is established in that way, test the likelihood that honest traders may wish to use the word in connection with their goods or services because of that ordinary meaning.

Such a test requires that the distinctiveness of a word be examined from the perspective of both traders in the relevant market, and the public generally.  The High Court noted that consideration of the ordinary meaning of the relevant word was particularly crucial where the word allegedly had a direct reference to the character and quality of goods, such as with 'Cinque Stelle' and 'Oro'.

Application of the test to the 'Cinque Stelle' and 'Oro' trade marks

The majority agreed with the trial judge's finding that the 'Cinque Stelle' and 'Oro' marks were inherently adapted to distinguish Cantarella's coffee products from those of other persons.  Their Honours held that the evidence did not show that the words 'Cinque Stelle' and 'Oro' conveyed 'a meaning or idea sufficiently tangible to anyone in Australia concerned with coffee goods as to be words having a direct reference to the character or quality of the goods'.

The majority accepted that Modena's evidence at trial established that the words 'Cinque Stelle' and 'Oro' had been used by traders other than Cantarella and Modena in relation to coffee products.  However, the evidence fell short of establishing that the words 'Cinque Stelle' and 'Oro' were 'understood in Australia by persons concerned with coffee products to be directly descriptive of the character or quality of such goods'.

Takeaways from the High Court's decision

The High Court's decision provides important guidance on the appropriate test for determining when a word mark will satisfy the test for 'inherently adapted to distinguish'. In particular, the majority judgment establishes that:

• There is no special test for assessing the distinctiveness of foreign words – the two step test favoured by the High Court majority (outlined above) should be followed.
• In assessing the 'inherent adaptability to distinguish' of a word, it is insufficient to simply ask whether competitors would want to use that word in connection with a particular kind of product, although this will be relevant.  The test also requires consideration of how persons concerned with the product in Australia would ordinarily understand the word.