Reputation in Trade Mark Infringement: Why Some Courts Think it Matters and Why it Should Not

Date01 June 2010
Published date01 June 2010
Subject MatterArticle
Mark Davison*
Australian case law on infringement of registered trad e marks has placed an increasing
emphasis on the reputation of the owner of the registered trade mark in determining
whether infringement has occurred. Consideration of the trade mark owner's
reputation has been included in determining whether the s ign used by the defendant is
deceptively similar to the registered trade mark and, more recently, in determining
whether the defendant has used its allegedly infringing sign 'as a trade mark'. Neither
development is consiste nt with either the law relating to registered trade marks or the
underlying policy rea sons for the system of registration. This article discusses the case
law which has introduced the tendency of the courts to consider the reputation
associated with an owner of a registered trade mark in determining infringement
proceedings, the reasons why such an approach is not consistent with the legislation
nor with the rationale underlying our registered trade mark system.
In particular, one of the objectives of the registered trade mark system is to provide
a bright line that deli neates the property rights of the registered owner. The bright line
is publicly available information as to who has the rights in a trade mark and what
those rights are.1 These rights are defined by reference to the act of registration, not by
reference to the rights t o protection of the reputation of the registered owner conferred
by a passing off action which are independent of the rights flowing from registration.
Consequently, if the rights conferred by registration are diminished or enhance d by
reference to the trade mark owner's reputation, the exercise of delineating the rights of
the owner in advance would be rendered nugatory to the extent that they are so
diminished or enhanced. For that reason alone conside rable caution should be
exercised before i ntroducing evidence of a trade mark owner's reputation in the
process of determining whether its trade mark has been infringed.
While the trade mark registration system grew out of the original tort of passing off,
there are fundamental differ ences between the way in which the registered system
confers protection on trade marks and the way in which t he tort of passing off
* Professor, Faculty of Law, Mon ash University an d Special Counsel, Knightsbridge
1 Robert Burrell and Michael Handler, 'The Intersection between Registered and
Unregistered Trade Marks' (2007) 35 Federal Law Review 375.
232 Federal Law Review Volume 38
indirectly confers pr otection on trade marks.2 Under the tort of passing off, protection
is not conferred on the trade mark per se. Instead, the protection is conferred on the
reputation associated with the trade mark. This fundamental proposition was the
cause of some debate for many years but is now an entrenched and irrefutable
proposition. The leading English authority on the point is the House of Lords decision
in Spalding and Brothers v AW Gammage Ltd ('Spalding v Gammag e'),3 decided soon after
the turn of the 20th century.
The facts of the seminal case exemplify the point. The plaintiff, Spalding, produce d
various types of balls. Each was described as an 'Orb' with various epithets such as
'Improved Orb' or 'Improved 1910 Orb' or 'Improved Sewn Orb' being ascribed to
different types of the Orb ball. As a consequence, Spalding acquired a significant
reputation with the public that was associated with 'Orb' balls. The balls described as
'Improved Orb' or 'Improved 1910 Orb' were moulded and regarded as inferior balls to
the 'I mproved Sewn Orb' which, as the name suggests, was sewn together. Spalding
discontinued the manufacturing and sale of the moulded balls in order to make and
sell the 'Improved Sewn Orb'. The defenda nt obtained a supply of the moulded balls
but advertised them for public sale with the description of 'Improved Sewn Orb'.
Consumers were misled by the defendant's co nduct. Spalding had acquired
independent reputations for both of its Orb balls and consumers were generally aware
of the two types of balls and the respective qualities and prices of each. The
defendant's conduct passed off the moulded balls as the sewn, higher quality balls. The
House of Lords held that the nature of the property owned by Spalding was not in the
name itself but in the goodwill of the trader.
There appears to be considerable diversity of opinion as to the nature of the right,
the invasion of which is the subject of what are known as passing off actions. The more
general opinion appears t o be that the right is a right of property which naturally
demands an answer to the question property in what? Some authoritie s say
property in the mark, name, or get up properly used by the defendant. Others say,
property and bus iness or g oodwill likely t o be injured by the misrepresentation. If the
right invaded is a right of property at all, there are, I think, strong reasons for
preferring the latter view. In the first place, cases of misrepresentation by the use of a
mark, name, or get up do not exhaust all possible cases of misrepresentation. If A says
falsely, 'These goods I am selling are B's goods,' there is no mark, name or get up
infringed unless it be B's name, and if he falsely says, 'These are B's goods of a
particular quality' where the goods are i n fact B's goods, there is no name that is
infringed at all. Even in the case of what are sometimes referred to as common law
trade marks the property, if any, of the so-called owner is in its nature transitory, and
only exists so long as the mark is distinctive of his goods in the eyes of the public or a
class of the public. Indeed, the necessity of proving this distinctiveness in each case as
a step in the proof of the false representation relied on was one of the evils sought to be
2 For the purposes of this a rticle, passing off and related statutory causes of action such as
those relying on s 52 of the Trade Practices Act 1974 (Cth) will be treated as identical. See
Mark Davison, Kate Johnston and Patricia Kennedy, Shanahan's Australian Law of Trade
Marks and Passing Off (4th ed, 2008) 82331.

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