31 Jan 2013

Rooing the day: Sunny Boy wins trade mark infringement

by Brett Doyle

A recent case involving solar inverters is a nice example of how trade marks can be deceptively similar even without an actual intention to deceive.

On 21 December 2012, Justice Perram of the Federal Court of Australia upheld complaints of trade mark infringement by SMA Solar Technology AG, the owner of the SOLAR BOY trade mark registration, and its Australian subsidiary against Beyond Building Systems Pty Ltd and Ipevo, its licensor, for use of SUNNY ROO in relation to solar inverters and associated installation services (SMA Solar Technology AG v Beyond Building Systems Pty Ltd (No. 5) [2012] FCA 1483).

The case is a nice example of how marks can be deceptively similar even without an actual intention to deceive.

The sunny marks for solar inverters

SMA Solar Technology (SMA) had significant reputation in SUNNY BOY for solar inverters and was the market leader, enjoying 80-85% market share before demand outstripped supply, opening up opportunities for competitors. Beyond Building Systems (BBS), who had previously sold SUNNY BOY and other brands of inverters, entered the market, using the following trade marks, licensed by Ipevo, a company with a common director: SUNNY ROO, SUNNY ROO PRODUCTS and the two logos:

 Sunny Roo from Byron Bay                            Sunny Roo

SMA claimed that the licensed use of the SUNNY ROO marks:

  • infringed its registered trade mark;
  • amounted to passing off at common law; and
  • breached consumer protection statutes that prohibit engaging in misleading or deceptive conduct.

BBS was in liquidation. The proceedings were defended by Ipevo, whom SMA alleged was a contributory infringer, joint tortfeasor and knowingly concerned in the consumer deception.

The SUNNY ROO brand had been developed by BBS's marketing manager to give a relaxed, laid-back, "Antipodean flavour", to allude to the sun, and to "Sunny" as a colloquial first name. It was, however, the knowledge of the company in adopting the SUNNY ROO brand that was critical, not the intention of the brand creator, which had never been to trade off the reputation in SUNNY BOY.

Passing off at common law

Important to the judgment was the BBS's knowledge of the market. Placing SUNNY in front of ROO was apt to suggest a connection with SMA's SUNNY BOY mark. It must have been reasonably foreseeable that confusion would be inevitable. There was substantial evidence of actual confusion. Despite multiple possible meanings, the word SUNNY had acquired a secondary meaning associated with SMA's products. SMA therefore made out its case for passing off. Ipevo's licensing of SUNNY ROO, even though only of a derivative mark, meant it was jointly liable as a tortfeasor.

Breach of consumer laws

On the basis of the same findings, BBS had engaged in misleading or deceptive conduct in trade. Ipevo was "knowingly involved" in the contravention because, at the date of the trade mark licence, Mr Smith, a director of both BBS and Ipevo, must have been aware that confusion was likely.

Infringement of registered trade mark

As regards statutory infringement of the registered SUNNY BOY mark, BBS had clearly used the SUNNY ROO marks as a brand (badge of origin) directed at purchasers and had used them on the registered goods, solar inverters. The real issue was whether the general similarity rose to the level of deceptive similarity.

Despite SUNNY having a clear association with the solar industry and despite SMA's not establishing a monopoly in SUNNY per se, Justice Perram held SUNNY BOY and SUNNY ROO to be likely to deceive or cause confusion. The tipping points seem to have been that BBS sold both SMA's SUNNY BOY and its own SUNNY ROO inverters and the factual evidence of confusion backing up this conclusion. The two SUNNY ROO logos were also held to be deceptively similar because "a reasonable doubt" is sufficient and, on the facts, inverters bearing the logos were still erroneously returned to SMA for repair.

Use of the SUNNY ROO marks on related installation services was sufficiently closely related to the registered goods but there was no statutory infringement when used on solar panels or other accessories because those goods, though related, were not sufficiently close. The judge relied principally on the fact that the goods were not substitutable for each other and use of goods in association with each other was not sufficient.

Judgment was given against both BBS (in liquidation) and Ipevo but the judge would not enter default judgment against BBS for matters not established against Ipevo.

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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.