17 Jan 2012

No breach of trade mark licence agreement

by Brett Doyle

The Full Court of the Federal Court of Australia has overturned a finding that there had been a breach of a trade mark licence agreement between two formerly associated companies.      

As part of a complex de-merger of a medical group, Symbion licensed Idameneo to use the logo depicted below for two years. The logo was registered without colour restriction for a broad range of medical goods and services. The green version had been used as the former group's house mark.   

    Idameneo 1 Idameneo 2      

Idameneo continued to use the following unregistered logo, developed five years earlier:                                                         

Idameneo 3







 Trademarks "manifestly different"

The primary judge dismissed Symbion's claim for statutory infringement but held that Idameneo had breached the licence by using a mark "similar to or capable of being confused with" Symbion's mark.

Dismissing Symbion's appeal, the three appeal judges unanimously held that the Symbion and Idameneo marks were "manifestly different" and not capable of being confused. They appear to have arrived at this conclusion based on a side-by-side comparison [paras 53 & 54]. This contradicts established authority for comparisons under the Trade Marks Act, where a side-by-side comparison is only relevant when determining substantial identity, not deceptive similarity.

This finding disposed of all issues in the appeal but the Full Court went on to observe:

  • there was no direct evidence of an assignment of the Symbion mark from Idameneo to Symbion; however, the trade mark licence amounted to an acknowledgement of title, preventing Idameneo from denying Symbion's ownership.

  • when deceptive similarity/likelihood of confusion concerns a specialised market (as with allied health services), there must be evidence from the trade of the likelihood of deception or confusion. The Full Court found that the judge could not rely on personal impressions or general knowledge and referred to the comments of Lord Diplock in General Electric Co Ltd (USA) v General Electric Co Ltd [1972] 1 WLR 729 at 737H-738A. This principle was relevant to the contractual breach as well as to the question of statutory infringement.

  • the fact that the parties had used language different from that used in the Trade Marks Act defining "deceptive similarity" was not definitive. Standard principles of contractual construction were relevant. The intention of the parties must be found in the wording of the licence agreement or the circumstances of the contract. The licence agreement was concerned with protecting Symbion's goodwill, for which actual evidence is required when markets are specialised. The limitations on Idameneo's use of similar marks must be read in this light.

  • it was wrong to conflate "similar to" and "capable of being confused with". "Similar to" dealt with likeness or similarity as perceived by the ordinary viewer within the specialised market. "Capable of being confused with" had to concern more than theoretical confusion and must be related to a capacity to damage Symbion's goodwill. Within the specialised markets, Idameneo's use did not fall within either expression.

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Clayton Utz communications are intended to provide commentary and general information. They should not be relied upon as legal advice. Formal legal advice should be sought in particular transactions or on matters of interest arising from this communication. Persons listed may not be admitted in all States and Territories.