High steaks: McDonald’s loses trade mark beef against Hungry Jack’s, but “25% more beef” claim is misleading

In one of the first judgments to interpret the High Court of Australia’s recent decision in Self Care, Hungry Jack’s BIG JACK was found not to infringe McDonald’s BIG MAC trade mark. However, the claim that the Big Jack had “25% more Aussie beef” than the Big Mac was found to be misleading or deceptive, emphasising the caution required with comparative advertising claims.

Key takeaways

  • This is one of the first judgments to apply and interpret the High Court’s recent decision in Self Care IP Holdings v Allergan Australia Pty Ltd [2023] HCA 8 (Self Care), which we reported on earlier this year.
  • While admittedly artificial, following the decision in Self Care, whether trade marks are deceptively similar must be assessed without considering any reputation in either mark, or any other branding or surrounding livery that is used on or in relation to the products along with the allegedly infringing trade mark.
  • In assessing whether a representation is misleading or deceptive, it is the impression given to customers by the representation itself that is relevant, even if the same statement, in relation to the same or similar products, would be interpreted differently in other purchasing circumstances.
Read our full article here

Authors and contacts

Rebekah Gay
Rebekah Gay
Partner and Joint Global Head of Intellectual Property, Sydney
+61 2 9225 5242
Aaron Hayward
Aaron Hayward
Senior Associate, Sydney
+61 2 9225 5739
Isobel Patmore
Isobel Patmore
Solicitor, Sydney
+61 2 9322 4648

Australian High Court smooths out wrinkle in trade mark law: Reputation not relevant to ‘deceptive similarity’ test of infringement

The High Court has clearly set out in Self Care v Allergan that the reputation of a trade mark is not relevant when assessing deceptive similarity in infringement proceedings.1 In a unanimous decision, overruling a three-judge bench of the Full Federal Court, the High Court held that Self Care did not infringe Allergan’s ‘BOTOX’ mark by its use of either “instant Botox® alternative” or “PROTOX”, nor did it mislead consumers about the long term efficacy of its product.

Key takeaways

  • The reputation of a registered trade mark or its owner is not relevant to the assessment of deceptive similarity in an infringement action under section 120(1) of the Trade Marks Act 1995 (Cth) (Act).
  • There are four prescribed and limited circumstances in which the consideration of reputation is expressly addressed by the Act. In all other circumstances, the monopoly of a registered trade mark is limited to the particulars recorded on the public register.
  • The two elements in determining infringement under section 120(1) are often conflated. Whether the sign was (1) used as a trade mark, and (2) deceptively similar to the registered mark, must be assessed independently. The factors relevant to the likelihood of deception have no role in determining whether the sign was used as a trade mark in the first place.
  • The High Court’s decision brings some relief for advertisers used to advertising their wares by comparison to their competitors, in finding that the phrase “instant BOTOX® alternative” was descriptive and not used as a trade mark.
Read our full article here

Key contacts

Shaun McVicar
Shaun McVicar
Partner, Melbourne
+61 3 9288 1587
Bryce Robinson
Bryce Robinson
Solicitor, Melbourne
+61 3 9288 1155

Real Estate Guide to IP – Updated for 2023

In conjunction with our Real Estate division, the Herbert Smith Freehills London IP group has published a guide to the intellectual property issues that can arise in relation to real estate.

It can be the case that sites or buildings are purchased without necessarily considering fully whether the underlying intellectual property assets are being transferred and what future access or control the new owner may need, or the vendor wish to retain.

Key areas may include access to and rights to copy and use plans, or any marketing materials showing layouts or photographs of the property which the purchaser may wish to reuse. The control of the website for the building including the domain name should be considered, as well as more obvious things like the branding of the building or use of the name under which it was previously known. Social media accounts and any apps connected to the property will also need to be assessed and control gained when ownership of the real estate is transferred.

Here are a few questions those involved should be asking:

  • Does your property have a distinctive name or logo?
  • Is there a website or an app associated with your property?
  • Is there content on that website or app that the new owner would like to reuse or control?
  • Are there social media accounts that specifically relate to the property? Do these need to be transferred or deactivated?
  • Are there architectural plans that might be needed for redevelopment or planning applications?
  • Are there marketing materials which might be needed by the new owner?

Read our Real Estate Guide to IP for answers to these and many other intellectual property issues that can arise in relation to real estate.

Authors

Jonathan Turnbull
Jonathan Turnbull
Partner, IP, London
+44 20 7466 2174
Kathryn Oie
Kathryn Oie
Of Counsel, Real Estate, London
+44 20 7466 3897
Rachel Montagnon
Rachel Montagnon
Professional Support Consultant, IP, London
+44 20 7466 2217
Heather Newton
Heather Newton
Senior Associate, IP, London
+44 20 7466 2984

 

The IP in NFTs – IP issues when minting NFTS – IP ownership and infringement in the metaverse

Creating an NFT can give rise to other IP issues, aside from questions of transfer of rights. In particular there is the issue of who in fact has the right to create and release NFTs and whether the NFT infringes third party rights.

In this third of our series of NFT IP blog posts, we deal with “minting”, ie the creation and sale of NFTs.

Who has the right to create the NFT?

The first important consideration is understanding who actually has the right to create (“mint”) an  NFT based on a work.  In this context, it is crucial to assess the underlying contract (if any) regulating a commercial relationship to understand who has the right to mint an NFT.  Minting an NFT without the right to do so could constitute copyright infringement, infringing the rights of reproduction and communication to the public in the work.  In some jurisdictions, it could also give rise to an infringement of the author’s moral rights if the NFT creation was seen as a distortion of the original work that could be detrimental to the artist’s reputation or more generally as a derogatory treatment of the work.

An example of the issue of the minting of an NFT causing IP problems, because of ownership, is the case of Miramax v Quentin Tarantino which is currently being heard before the US Federal Court.  In late 2021, Tarantino minted and sold NFTs relating to his movie, Pulp Fiction.  Miramax alleges that these NFTs were sold in breach of contract, and infringed trade marks and copyright owned by Miramax.  Tarantino, conversely, asserts that his contract with Miramax from 1993 reserved him certain limited rights, including the right to engage in acts such as the sale of these NFTs.  This case highlights the importance of clarifying contractual rights and limitations to ensure that the person wanting to mint an NFT based on copyrighted material indeed holds the right to do so.  Parties may also seek to enter into a subsequent agreement which clarifies the position in relation to the creation and sale of NFTs, in cases where the earlier agreement does not expressly address this (which seems likely for any contracts pre-2021).

Infringement of IP rights and protection of brands

It is of course an infringement of IP rights where content is used in an NFT without permission.  Most often (as above) it is a copyright issue, but trade marks can also be involved, in particular where branded goods are being reproduced via NFTs for use in a virtual environment such as the Metaverse.

Infringement or “fair use”: An example of how trade marks can play a vital role in product protection in relation to NFT is the Hermès/Birkin dispute.  Hermès, the creator of the Birkin handbag, is currently engaged in trade mark litigation against an artist who minted and sold NFTs depicting the Birkin handbag, rendered in colourful faux fur (called the ‘MetaBirkins’ collection).  This case explores whether the conduct of the artist constitutes trade mark infringement including trade mark dilution (if the consumers would be misled and perceive the MetaBirkin NFT as coming from Hermès), or if the NFT collection is actually a tribute to the iconic handbag and constitutes a lawful use of IP protected asset according to the US “fair use” doctrine (as the Campbell’s Soup cans were for Andy Warhol).

Descriptive use: The minting and sale of an NFT may also give rise to issues with third party IP where it is being used in a purportedly descriptive manner.  NFTs can function as a digital certificate over physical goods, which may enable consumers of those physical goods to conveniently sell, store and buy the goods.  However, this raises the question about whether or not a trader is allowed to mint and sell an NFT that contains the trade mark/s of a third party, with the intention of describing the goods with which the NFT is associated.  This question is currently being considered in the case of Nike v StockX by the New York District Court

The issue before the court is whether the use of third party trade marks in an NFT to sell branded goods is an infringement. StockX, an online reseller of sneakers and other streetwear, introduced a series of NFTs called ‘Vault NFTs’, which feature the image of sneakers (including Nike-branded shoes).  The NFTs entitle the holder to redeem the NFT in exchange for the shoes depicted by the image, but StockX will keep the shoes safely stored until they are redeemed.  This promotes an active market in shoe reselling, without the need to physically transfer the shoes between seller and purchaser.  However, Nike has argued that the use of its trade marks in the image associated with the NFTs constitutes trade mark infringement.  StockX argues that it is merely using the marks in a descriptive manner, to inform the NFT holders the type of shoes to which the NFT relates.

In our next blog post we look at what strategies brand owners and consumer product manufacturer can adopt to protect their rights.   

See our earlier blog posts in this series here – including an explanation of what NFTs are; how they can create effective control over digital assets and the use of NFTs for provenance and anti-counterfeiting;  and IP misconceptions and issues that we have seen arise in the NFT space in relation to rights transfer or use following purchase.

Follow our NFT blog series by subscribing to our blog IPNotes.  

A briefing containing the first four blog posts in our IP and NFTs series is now available to download in PDF format. 

Contacts

George McCubbin
George McCubbin
Senior Associate - London
+44 20 7466 2764
Giulia Maienza
Giulia Maienza
Associate - Milan
+39 02 3602 1396
Rachel Montagnon
Rachel Montagnon
Professional Support Consultant - London
+44 20 7466 2217
Andrew Moir
Andrew Moir
Partner - London
+44 20 7466 2773
Pietro Pouche
Pietro Pouche
Partner - Milan
+39 02 3602 1394

The IP in NFTs – What is being purchased?

As we reported in our first blog post in this series, non-fungible tokens (NFTs) are a new asset class that is being adopted eagerly across all sectors, raising some interesting challenges from an IP perspective.

While NFTs have demonstrated themselves to be a powerful tool in the new digital era, they remain poorly understood, in particular in relation to the rights that are (or are not) transferred on purchase of an NFT.

Releasing (known as “minting”) and purchasing NFTs can give rise to a number of IP-related issues, such as:

  • Who has the right to create and release NFTs?
  • Does the NFT infringe third party rights?
  • What rights are transferred with the NFT (and on resale)?
  • How this rights transfer is achieved?

In our series of blog posts on NFTs, we explore intellectual property considerations, misconceptions and issues that we have seen arise in the NFT space over the last year, including in this blog post those around rights transfer or use following purchase.

Misconceptions around the transfer of rights

One common IP misconception, relevant to NFTs, is well illustrated by the case of Spice DAO, the Decentralised Autonomous Organisation (DAO) which was set up to fund the purchase of a book: director Alejandro Jodorowsky’s adaptation of Frank Herbert’s science fiction story ‘Dune’, that was being sold at auction.  The DAO ended up winning the auction, paying €2.7 million, almost 100 times more than it was estimated that the book would sell for.  After the purchase, Spice DAO said that its mission was to “Produce an original animated limited series inspired by the book and sell it to a streaming service“.  However, as was subsequently pointed out to the DAO, purchasing the physical book does not necessarily include an assignment of the copyright underlying the book.  As such, Spice DAO had no rights to create derivative works simply because they owned the book.

The same is true of NFTs: the NFT is just a ‘certificate of authenticity’ for the digital asset, it does not intrinsically transfer any IP rights to the digital asset itself to the purchaser of the NFT.  This has parallels to fine art, where the acquisition of a painting does not give the purchaser any right to the underlying copyright in the painting itself (unless there is an agreement with the copyright holder that specifies otherwise, or in some cases where the painting is a commission).

Accordingly, as the default case, the purchase of an NFT does not assign (transfer) copyright or other IP rights to the purchaser.  This default position can be amended by contract in a number of ways:

  • For example, the terms and conditions of the online marketplace where the NFT is sold (such as OpenSea, Nifty Gateway and Rarible) may specify that the NFT sale is accompanied by an assignment or licence of IP rights in the digital asset associated with the NFT. However, in practice, these marketplaces do not contain IP-related terms and conditions – although this could change in the future, and it is advisable to check this before the sale/purchase of an NFT on a marketplace.
  • Alternatively, the ‘smart contract’ by which the NFT is minted may contain provisions related to IP rights. A ‘smart contract’ is a computer program that is stored on the blockchain, which facilitates the creation and transfer of NFTs.  Different smart contracts can exist on the same blockchain, and NFTs can be created using these different contracts.
  • The smart contract that is currently most commonly used for NFTs on the Etherium blockchain is known as the ERC-721 standard, which does not contain any special rules in relation to IP.
  • Conversely, a different smart contract, known as EIP-721, specifies that “Copyright and related rights waived via CC0“, with the reference to CC0 meaning that ‘creative commons’ is intended to apply to the NFT and the underlying digital asset, and that IP rights are waived on minting.
  • Finally, the creators of the NFT may attempt to define the IP rights in relation to the NFT, before or after the sale of the NFT. Yuga Labs LLC, the creators of the Bored Ape Yacht Club NFT collection, have stated on their website that holders of its NFTs have “a worldwide, royalty-free license to use, copy, and display the purchased Art … for your own personal, non-commercial use” and “an unlimited, worldwide license to use, copy, and display the purchased Art for the purpose of creating derivative works based upon the Art (“Commercial Use”).”  However, there are various issues if an NFT purchaser seeks to rely on such a statement.  For example, depending on the jurisdiction and the rights being assigned and/or licensed, a statement on a website may be insufficient to meet the formality requirements for an IP assignment and/or licence, rendering the transfer incomplete.  Furthermore, because of the imprecise and often incomplete nature of such statements, the rights being transferred are often unclear and capable of misunderstanding.  In the Yuga Labs LLC case, the statement draws a distinction between ‘personal, non-commercial use’, which is ‘royalty-free’, and ‘commercial use’, which is not expressed to be royalty free, but it does not then explain if there is intended to be a royalty (and what this may be).  A holder of a Bored Ape Yacht Club NFT may think that they are free to use the NFT for commercial purposes, whereas, in reality, Yuga Labs LLC may subsequently seek royalties from the holder.

 

See the first post in our series which looked at what NFTs are and how they can create effective control over digital assets and the use of NFTs for provenance and anti-counterfeiting. Other posts in the series look at IP issues associated with the minting of NFTs, and at branding issues for NFTs and the metaverse.

Follow our NFT series by subscribing to our blog IPNotes.

A briefing containing the first four blog posts in our IP and NFTs series is now available to download in PDF format. 

Contacts

George McCubbin
George McCubbin
Senior Associate - London
+44 20 7466 2764
Giulia Maienza
Giulia Maienza
Associate - Milan
+39 02 3602 1396
Rachel Montagnon
Rachel Montagnon
Professional Support Consultant - London
+44 20 7466 2217
Andrew Moir
Andrew Moir
Partner - London
+44 20 7466 2773
Pietro Pouche
Pietro Pouche
Partner - Milan
+39 02 3602 1394

The IP in NFTs – what you need to know

Non-fungible tokens (NFTs) are one of the hottest intellectual property (IP) topics currently. NFTs can be used simply for marketing purposes or as a new form of asset to attract investment or as part of the transfer of products and services into the metaverse.

This new asset class has exploded across all sectors and raises some interesting challenges from an IP perspective.  While NFTs have demonstrated themselves to be a powerful tool in the new digital era, they remain poorly understood.

NFTs can refer to or contain valuable intellectual property rights, for example, digital artwork, branded goods, or logos.  Ensuring intellectual property rights are protected and respected should be a paramount consideration in NFT projects.

Releasing NFTs can give rise to a number of IP-related issues, such as:

  • Who has the right to create and release NFTs
  • Does the NFT infringe third party rights
  • What rights are transferred with the NFT (and on resale)
  • How this rights transfer is achieved

Even if there is no intention to create and release NFTs, brands must be vigilant to protect their IP in the metaverse and new web3 economy.  Any strategy could include monitoring of key marketplaces and platforms, defensive registration of domain names (including the new Ethereum Name Service) and trade marks in new digital classes, and developing policies to employ if infringement is detected.

In our series of blog posts on NFTs, we explore intellectual property considerations, misconceptions and issues that we are seeing arising in the NFT space, including, in this blog post, clarifying what NFTs are and how they can create effective control over digital assets and the use of NFTs for provenance and anti-counterfeiting.

Other blog posts in our series look at the IP rights that are being purchased (or not) with an NFT, IP issues associated with the minting of NFTs, and what can be done to protect the rights of brand owners in relation to NFTs and the metaverse.

What are NFTs?

NFTs are uniquely identifiable tokens, “minted” (created) using blockchain technology.  When an NFT is created on the blockchain, the token is added as a ‘block’ of digital data to the chain.  Because these blocks are linked together, the data in each block is immutable (that is, it cannot be changed without affecting the whole chain).

The NFT itself is a collection of data that provides information about the token, such as its contract address, token ID and name, and the ‘identity’ of the original creator.  While NFTs are commonly associated with a digital asset, such as an image or movie, this asset does not form part of the NFT’s metadata.  Instead, the NFT metadata will link to the location where the digital asset is stored (such as a website address).

In a parallel to the traditional fine art world, an NFT could be thought of as the certificate of authenticity for a print or painting.  In this sense, an NFT functions as a digital certificate of ownership over a digital asset, but it is not the digital asset itself.

One NFT collection illustrates the distinction between an NFT and the underlying digital asset.  In March 2021, an artist known as @neitherconfirm created an NFT series called ‘atlas III’ with each NFT in the series linking to a JPEG image file, showing an abstract portrait at the time of the sale of the NFT.  However, once the NFTs were purchased, the artist swapped the JPEGs to images of rugs.  This was possible because the NFTs linked to image files that were stored at a website address which the artist had access to.  There are solutions to prevent this from happening, such as minting the NFT using the InterPlanetary File System (IPFS), which effectively preserves the image file and prevents tampering, but this ‘atlas III’ auction shows how an NFT is not the same as the digital asset that it links to.

NFTs can create effective control over digital assets

The quintessential use case for NFTs, to date, has been the sale and trade of digital assets like art, design and digital fashion.  NFTs create scarcity for a digital asset that otherwise, because of their digital nature, would be capable of infinite dissemination.

NFTs, provenance and anti-counterfeiting

The ability of NFTs to provide provenance over digital assets has also transferred into the real-world, and it is now common to see NFTs that are associated with physical products.  For example, brands can now sell an NFT which is redeemable for a physical product (such as fine wine or sneakers), which creates a convenient market for the trade of those goods.  The NFT also functions as an anti-counterfeiting tool to disrupt unlawful activities and tackle infringing copying of goods.

 

Other posts in our IP in NFTs series look at the IP rights being purchased (or not) with an NFT, at IP issues associated with the minting of NFTs, and at branding issues for NFTs and the metaverse.

Follow our NFT blog series by subscribing to our blog IPNotes.

For comment on how NFTs are being regulated in the UK and EU, please see our HSF blog post here.

A briefing containing the first four blog posts in our IP and NFTs series is now available to download in PDF format. 

Contacts

George McCubbin
George McCubbin
Senior Associate - London
+44 20 7466 2764
Giulia Maienza
Giulia Maienza
Associate - Milan
+39 02 3602 1396
Rachel Montagnon
Rachel Montagnon
Professional Support Consultant - London
+44 20 7466 2217
Andrew Moir
Andrew Moir
Partner - London
+44 20 7466 2773
Pietro Pouche
Pietro Pouche
Partner - Milan
+39 02 3602 1394

 

 

EU General Court rules that Guerlain’s shape of Rouge G lipstick enjoys trade mark protection

The EU General Court (“GC“) has overturned EUIPO and Board of Appeal decisions, ruling that the shape of a lipstick may be registered as a 3D trade mark insofar as it represents a memorable shape that will be perceived by the relevant public as one that departs significantly from the norms and customs of the cosmetics sector.

In its analysis of the distinctive character of the sign, the GC did not take into account the originality of the shape nor the high-quality design or its successful aesthetic appeal. It instead considered the range of different shapes of lipsticks available on the market and focused on the objective and uncommon visual effect of the Guerlain’s shape on the relevant public.

In a Current Intelligence Note recently published in the Oxford Journal of Intellectual Property Law and Practice, Giulia Maienza analyses the GC’s ruling and the practical significance of this decision for the luxury and cosmetic sectors. You can find the full article here.

Giulia Maienza
Giulia Maienza
Associate, Milan
+39 342 663 2405

Marketing a product as an “alternative” is no answer to trade mark infringement

The Full Court of the Australian Federal Court has found that marketing a product as an “alternative” to a trade-marked brand is no answer to a claim of infringing use as a trade mark. In Allergan Australia Pty Ltd v Self Care IP Holdings Pty Ltd [2021] FCAFC 163, Justices Jagot, Lee and Thawley took a broad view of trade mark “use”, and the likelihood of confusion on the part of consumers, to find that both “PROTOX” and “instant Botox® alternative” are deceptively similar to the appellant’s “BOTOX” mark, and that the protection of the Respondent’s defensive registration was ineffective.

KEY TAKEAWAYS

  • The use of the phrase “instant Botox® alternative” was held to constitute use “as a trade mark”, such that it infringed the registered trade mark for BOTOX.
  • Although it will depend on context, the mere use of the word “alternative” to describe a product (for example, “instant Botox® alternative”) may not be sufficient to avoid trade mark infringement. Indeed, in some circumstances it may imply some association in the trade source.
  • Although an exception exists under the Trade Marks Act for comparative advertising, it is easy to fall outside the protection of that provision. In particular, simply referring to a competitor product is not enough to fall within its scope.
  • Advertisers should be cautious to avoid references to competitor products that seek to leverage off the competitor’s reputation, rather than advertise comparatively with that product in good faith.

BACKGROUND

The well-known injectable powder Botox is used in therapeutic and cosmetic treatments. It is manufactured, sponsored and sold in Australia by Allergan, under its various “BOTOX” trade marks. Those trade marks are registered for a variety of goods, including “anti-ageing” and “anti-wrinkle” cosmetics.

In 2014 Self Care launched a range of anti-wrinkle skin care products under the brand name “Freezeframe”. The Freezeframe line included “PROTOX”, a skincare product styled as an injection-free solution to “prolong the look of Botox®”, and a product “Inhibox” that was said to be an “instant Botox® alternative”. Self Care sold these products, and others, under its trade mark, “FREEZEFRAME”. Later, it obtained registration of the trade mark “FREEZEFRAME PROTOX” over the opposition by Allergan.

Allergan commenced proceedings alleging, amongst other things, that Self Care had infringed Allergan’s BOTOX trade mark both by its use of “PROTOX” and by its use of “instant Botox® alternative” in relation to Inhibox.

The primary judge found in Self Care’s favour, holding that “PROTOX” was not deceptively similar to “BOTOX”, and that the phrase “instant Botox® alternative” did not constitute infringing use of BOTOX “as a trade mark”. These findings were overturned by the Full Court on appeal.

THE FULL COURT’S DECISION

PROTOX is deceptively similar to BOTOX

The primary judge had held that PROTOX was not deceptively similar to BOTOX because his Honour found that, although consumers would be reminded of BOTOX upon seeing PROTOX branding for anti-wrinkle cream, they would not have confused PROTOX products for BOTOX products.

The Full Court agreed with the primary judge’s factual findings, but disagreed that this meant that PROTOX was not deceptively similar to BOTOX. This is because the Full Court clarified that the relevant “deception” is not whether consumers would confuse one product for the other, but whether consumers would be caused to wonder whether the underlying products were from the same source. The similarity between the words was such that a consumer might wonder whether the products were associated: for example, a consumer may wonder whether those behind BOTOX had decided to expand their product range to include topical cosmetic products such as “PROTOX”.The mark was therefore deceptively similar to Allergan’s mark for the purposes of section 120 of the Trade Marks Act 1995 (Cth) (Trade Marks Act).

Defensive registration ineffective

Self Care argued that it had an express defence to infringement, because it had obtained a trade mark registration for “FREEZEFRAME PROTOX”. However, in fact the livery of the Protox product did not use the words together in a composite manner. The words appeared on different facets of the packaging, and used a different colour palette, font and font case. The Full Court therefore agreed with the primary judge that the word “PROTOX” was used as a distinct trade mark, such that Self Care’s registration for FREEZEFRAME PROTOX did not provide it with a defence to infringement.

“Instant Botox® alternative” is used “as a trade mark”

Under Australia’s Trade Marks Act, simply using another registered trade mark does not amount to infringement of that trade mark, unless it is used “as a trade mark”. That is generally understood to mean that the mark must be used as a “badge of origin” in relation to the goods or services.

The primary judge had considered that Self Care’s use of the phrase “instant Botox® alternative” was descriptive. His Honour also considered that the word “alternative” effectively distinguished the Inhibox product from the Botox product, and therefore the phrase was not used by Self Care as a badge of origin for the Inhibox product.

The Full Court disagreed, and found the phrase “instant Botox® alternative” as a whole was used as a trade mark because:

  • Although the word “alternative” implied the two products were different, it did not entail that the products came from a different source.
  • Although “instant” and “alternative” are descriptive, the whole phrase “instant Botox® alternative” was not purely descriptive. Instead, it denoted some trade source connection with the Botox products (to the effect that Inhibox product was not the Botox product).
  • The Inhibox product packaging and website displayed the words “Inhibox”, “Freezeframe” and “instant Botox® alternative” with such prominence that each appeared as a trade mark.
  • Even though the product packaging identified Allergan as the owner of the “BOTOX” mark, this was not sufficient to dispel doubt as to the trade source of Inhibox. Even a diligent consumer might reasonably think that Self Care enjoyed some form of licence or authorisation from Allergan in order to use the mark on its product.

Comparative advertising & use “in good faith”

Self Care also sought to invoke certain exceptions to infringement under the Trade Marks Act in relation to its use of “instant Botox® alternative”, including that its use of the phrase was “for the purposes of comparative advertising” within the meaning of section 122(1)(d). The Full Court rejected this argument, because:

  • On a technical level, their Honours said that the exception was not applicable to Self Care as the provision refers to “use of the trade mark” (that is, “BOTOX”), whereas the infringing use was of the phrase “instant Botox® alternative”.
  • Even if the exception could apply, the Court held that Self Care’s conduct could not be characterised as “comparative advertising”, since the phase “instant Botox® alternative” was “used to leverage off the reputation of BOTOX, not to advertise Inhibox comparatively with Botox”. The finding that consumers would be caused to wonder if the products came from the same source was relevant to this conclusion.

Self Care also sought to rely on other exceptions, which provide that a person does not infringe a registered trade mark if they use the sign “in good faith” to indicate some characteristic or the intended purpose of goods or services. The Court also rejected these arguments for similar reasons.

Misleading representations: time matters

As well as its claim for trade mark infringement, Allergan had alleged that the phrase “instant Botox® alternative” conveyed that Inhibox would give results of the same quality or standard as Botox, which Allergan alleged was misleading or deceptive in contravention of the Australian Consumer Law (ACL).2

The Court agreed that the phrase “instant Botox® alternative” would have been understood by relevant consumers to convey that Inhibox both caused a similar reduction in the appearance of wrinkles, and that this effect lasted as long, as Botox. In this regard, the Court also noted that the target market included consumers who understood that Botox continued to “have effect for a period of 4 months after treatment”. By contrast, at their highest, studies relied on by Self Care established that their active ingredient would reduce wrinkles “over a 28-day period of application”, but said nothing about the duration of the effect after the application had ceased. As such, the Court also agreed that this phrase contravened the ACL.

IMPLICATIONS

The Full Court’s findings serve as an important reminder for persons seeking to distinguish their goods or services from those of competitors. Although each case will turn on its facts, the mere styling of a product as an “alternative” may not sufficiently distinguish the trade source of a competitor product to avoid liability in trade mark infringement.

Similarly, although Australia’s Trade Marks Act provides an express exception to infringement for comparative advertising, the Court’s reasoning demonstrates that the scope of this exception can be narrow, and it is easy to fall outside its ambit. In both cases, it may be relevant to enquire whether the impugned conduct was done in good faith for the relevant descriptive purpose, or whether it was done so as to “leverage off the reputation of” the registered trade mark.

The decision also serves as an important reminder that defensive marks will not always be effective to protect against claims of trade mark infringement. Where a registered mark is comprised of two or more words (or other elements), the mark must be used in its entirety in order to be availed of the protection under the registration.

As explained above, the Court’s ruling that the phrase “instant Botox® alternative” was used as a trade mark is not without controversy. While it is possible that this could be appealed to the High Court, Self Care would need to seek special leave to appeal. Special leave is discretionary, and is reserved for cases which meet certain public interest thresholds.3 As such, it is unclear that special leave would be granted.

Businesses will need to tread carefully when marketing their products by reference to other goods. Descriptive or comparative phrases are not necessarily exempt from trade mark infringement—as always, context is key.


  1. [2021] FCAFC 163.
  2. Competition and Consumer Act 2010 (Cth), Schedule 2, ss 18, 29(1)(a), (g).
  3. Judiciary Act 1903 (Cth) s 35A.

Sophie Yates
Sophie Yates
Solicitor, Sydmey
+61 2 9322 4897

Bryce Robinson
Bryce Robinson
Solicitor, Melbourne
+61 3 9288 1155

Shaun McVicar
Shaun McVicar
Partner, Melbourne
+61 3 9288 1587
Aaron Hayward
Aaron Hayward
Senior Associate, Sydney
+61 2 9225 5739

Sky kicks trade mark bad faith claims back into the box as Court of Appeal allows its appeal in Sky v SkyKick

The Court of Appeal of England and Wales has granted Sky’s appeal from the High Court decision that had held that some of its trade mark registrations were applied for in part in bad faith. In its Sky v SkyKick appeal decision of 26 July 2021, the Court of Appeal (CA) (Lord Justice Sir Christopher Floyd giving the leading judgment) found that it was not bad faith not to have an intention on application to use a mark for everything that could fall within a  specification term (here “computer software”), nor was there a requirement to demonstrate a commercial strategy for using every type of good or service that could fall within a general description. The decision reaffirms that bad faith will only be found in exceptional circumstances, which were ultimately not found in this case.

Background

The Court of Appeal’s decision follows several rounds of litigation for Sky and SkyKick, including a reference to the CJEU in January 2020 (Case C-371/18 – see our report here), where the court provided clarification on important questions about the extent of the monopoly businesses can obtain legitimately through the registration of a trade mark. The CJEU held that a registered trade mark could not be declared wholly or partly invalid as a result of a lack of clarity and precision of the terms used to designate the goods and services covered by that registration. Further, whilst invalidity on the ground of bad faith may be triggered where an applicant registers a mark without any intention to use it in relation to specified goods and services, bad faith will only be established in exceptional circumstances. This outcome was helpful to existing trade mark proprietors and favoured the existing status quo of the trade mark system, including the UK’s.

On return to the High Court, Sky succeeded in its claim of infringement of its SKY trade mark (registered for telecommunications services and electronic mail services, among other things), by SkyKick’s use of “SkyKick” as a word and figuratively (for email services), but, significantly, whilst also giving Sky the opportunity to withdraw allegations of infringement based upon elements of its wider trade mark registration specification that Lord Justice Arnold (sitting in the High Court) found to be registered in bad faith (Sky v SkyKick [2020] EWHC 990 (Ch), 29 April 2020), rather than striking them down directly. The High Court held that certain of Sky’s trade marks were partially invalid on grounds that they were filed in bad faith.  Lord Justice Arnold had already found that certain registrations had been applied for in respect of certain goods and services for which Sky had no reasonable commercial rationale to do so. The Judge innovatively decided to cut down Sky’s registration for “computer software” to arrive at what he believed to be a fair specification, rather than rely upon SkyKick’s or Sky’s submissions.  He gave Sky seven days to withdraw that part of the infringement claim that relates to the removed part of the specification, in return for the court making no order as to the declaration of invalidity sought by SkyKick on that part of the registration.  That left Sky not being compelled by court order to adjust its specification. Sky appealed.

Bad faith claims

A finding of bad faith is an absolute ground for invalidity of a trade mark registration and leads to revocation of the trade mark.  This case examined whether revocation could occur in part or in full in relation to use which did not encompass the full possible extent of the goods or services covered by a general term in the specification.

SkyKick’s complaint was that “Sky did not intend to use the mark in respect of all computer software, and there was no prospect of their using the mark in relation to all computer software. It is true that Sky had no prospect of using the mark in relation to every conceivable sub-division of computer software, but that fact is not, in my judgment, a relevant or objective indication of bad faith” held Floyd LJ. “It is no more of an indication of bad faith than would be an allegation on the facts of Jaguar Land Rover that the proprietors had no prospect of using the mark registered for land vehicles more broadly than “cars”“.

The CA further held that it was not the case that an applicant for a trade mark had to formulate a commercial strategy for using the mark in relation to every species of goods or services falling within a general description or else be held to have applied in bad faith.

Floyd LJ held that: “Such an applicant is entitled to say “I am using the mark for specific goods falling within description X. I have no idea precisely where my business in goods of that description will develop in the next 5 years, but there will undoubtedly be more such goods than there are now.” Such an applicant would always be forced to accept that there was no prospect whatsoever that it would use the mark for every variety of goods within the description. Such an applicant could not, however, be accused of bad faith in the light of its strategy for applying for protection of sufficient width to cover some further, as yet unformulated, goods within the same category.”  

A reaffirmation that exceptional circumstances are needed for bad faith – good news for trade mark proprietors

The High Court decision appeared to be one driven by policy, building on the CJEU decision: parts of wide trade mark specifications will be struck down, if certain terms seek over broad protection not justified by actual use or the reasonable prospect of use at the time and not filed for legitimate business reasons.  It also opened a new line of attack for parties defending trade mark claims against brand owners, to force them to open up the history of why broad registrations were filed and seek extensive disclosure as to the trade mark proprietor’s motives at the date of filing.  This proved to be an uncomfortable area for in-house teams in the interim (prior to the successful appeal), since the effect was such that they would need to either seek to preserve legally privileged communications and not be able to use them to defend such allegations or have to waive privilege to fight them.

The CA’s more trade mark proprietor-friendly interpretation of the CJEU’s decision (which due to retained EU law is still part of the UK law post-Brexit, although the CA could have chosen to depart from this if it had wished – see our discussion here), which reaffirms that bad faith will only be found in truly exceptional circumstances and that proprietors are not required to provide proof of commercial intent to use the trade mark across the full extent of the specification where a relatively generic term like “computer software” is used, will therefore be welcomed by brand owners with broad or generically phrased specifications.

Authors and Contacts: 

Rachel Montagnon
Rachel Montagnon
Professional Support Consultant, London
+44 20 7466 2217
Victoria Horsey
Victoria Horsey
Senior Associate, London
+44 20 7466 2701