A dish best served distinct – trade mark conflicts over similar restaurant names

A trade mark is a distinctive sign used to identify and differentiate goods or services. It is a valuable business asset, as it gives the owner of the trade mark the exclusive right to use the trade mark and ability to deter others from using it. However, it is important to understand that having a registered trade mark is not infallible to the opposition by third parties. There are various grounds that a third party can pursue to oppose a trade mark registration that may result in that registered trade mark being cancelled.

Sometimes, these opposition grounds are also used by an alleged trade mark infringer as a counterargument to avoid the allegation of trade infringement by arguing that there was no valid registered registration mark in the first place.

In the recent case of Hemmes Trading Pty Limited v Establishment 203 Pty Ltd [2024] FCA 1100, the defendant, Establishment 203 Pty Ltd (Establishment 203) had made a counterclaim against Hemmes Trading Pty Ltd (Hemmes Trading) that its registered trade mark ‘Establishment’ (Trade Mark) was not distinctive or that Hemmes Trading was not the owner of the Trade Mark at the date of priority, in response to a claim made by Hemmes Trading that Establishment 203 was infringing on their Trade Mark, by using ‘Establishment 203’ as its corporate name, on the basis that it is deceptively similar to ‘Establishment’.

Facts 

Hemmes Trading is the owner of a multi-level restaurant, bar and hotel business in Sydney called the ‘Establishment’ and has a registered word trade mark ‘Establishment’ in the category of restaurant, bar and hotel filed on 23 May 2001 (Priority Date). The Trade Mark had been used by Hemmes Trading before the Priority Date, since September 2000.

Establishment 203 is a Brisbane restaurant that opened in November 2023. This restaurant is part of the family owned Stanbroke corporate group. The family business is predominantly known to be in the beef business in Queensland that owns cattle stations, butcher shops and an abattoir that is given an establishment number ‘203’ by the government.

Hemmes Trading commenced proceedings against Establishment 203 for infringement of its Trade Mark. In response to the infringement claim, Establishment 203 made a counterclaim against Hemmes Trading, arguing that the ‘Establishment’ Trade Mark should be cancelled on the basis that:

• The word ‘Establishment’ is not distinctive and is not capable of distinguishing Hemmes Trading’s services from other restaurant services on the Priority Date; and

• Hemmes Trading was not the owner of the Trade Mark on the Priority Date.

Distinctiveness

One of the key requirements of a trade mark is that it must be capable of distinguishing a person’s goods or services from those of other traders. Often descriptive words relating to the quality of the relevant good or service are not inherently distinctive and cannot be registered as a trade mark. This is to prevent a person from precluding others using such word to refer to their own goods and services with goods or services that have the same quality. For example, using a mark such as ‘Ultra White’ for Paper, or ‘juicy oranges’ for orange juice or using geographical names such as ‘Bass Strait’ for seafood.

However, descriptive words are not precluded from acquiring distinctiveness and in some cases it is possible for a descriptive word to be registered as a trade mark if the applicant can provide evidence to show that the word is ‘inherently adapted to distinguish’ or has acquired distinctiveness through use.

This issue was considered in the Hemmes case. The word ‘Establishment’ is descriptive in nature as it is generally referred to as ‘a place of business’. The Court had to consider whether there was a sufficient degree of distinctiveness to counterbalance the descriptive nature of the word as at the date Hemmes Trading filed its application, 23 May 2001. This meant the Court had to consider whether the word ‘Establishment’ had a new and secondary meaning, different from its primary descriptive one, that consumers would identify as indicating that the services were coming from one trade source.

The Court held the Trade Mark was distinctive and was inherently adapted under s 41(5) of the Trade Mark Act 1995 (Cth), (Act) largely due to the mainstream media using ‘Establishment’ alone to reference Hemmes Trading’s particular restaurant, bar and hotel business. Even if this were not the case, they would have found that it would have acquired distinctiveness through use under s 41(6) of the Act for the following reasons:

• Significant reputation that extended beyond Sydney, including a substantial number of visitors from overseas;

• The venue was subject to numerous reports in newspapers circulating in Australia referring to the ‘Establishment’ as the name of Hemmes Trading’s particular business, rather than generally;

• The Trade Mark was used for 8 months before it was registered, which included a significant total number of patronages due to the Olympics held in Sydney in 2000.

Not the owner

Before the Priority Date, there were several restaurants and bars in Australia which operated under the following names: “The Establishment Restaurant and Supper Room”; “The Establishment Club Restaurant’; and “The Establishment Cocktail Bar” (Earlier Trade Marks).

However, the Federal Court held that none of the owners of the above names were owners of the trade mark ‘Establishment’ because:

• While there was the use of the word ‘Establishment’ in the name, it was accompanied with additional words to create a phrase and a side-by-side comparison of the Trade Mark and these Earlier Trade Marks, the total impression is not substantially similar.

• The Earlier Trade Marks had been abandoned by their owners by either changing the name or closing the business as there had been no use of the Earlier Trade Marks since the end of the 1990s and it is likely that the news had changed, or the business had closed given the lack of use.

The Court rejected the argument that Hemmes Trading did not own the Trade Mark.

Court’s decision

The Federal Court dismissed the cross appeal and found that there was a trade mark infringement under section 120 of the Act on the basis that ‘Establishment 203’ was deceptively similar to the Trade Mark. Although, when comparing the Trade Mark with the Earlier Trade Marks the Court found there was no deceptive similarity because there were other additional words, unfortunately, this was not the case for Establishment 203 because ‘203’ had no meaning or connotation to the consumer. Only consumers with knowledge of the industry of the Queensland beef industry. As such, the Court found that the obscurity of the reference to ‘203’ was likely to leave doubt unresolved in the mind of a consumer as to whether ‘Establishment 203’ is associated with Hemmes Trading’s ‘Establishment’.

Key takeaways

This case highlights the following key points:

• Descriptive words can be used as a trade mark, although evidence is required to show that the particular trade mark is distinctive and capable of distinguishing the trader’s goods or services;

• It is possible to establish distinctiveness of a trade mark in a short period of time, in this case, 8 months. However, this should be considered on a case-by-case basis, given that in this case there were unique circumstances, as the ‘Establishment’ business was able to build a significant reputation in a short period due to the Sydney Olympics and significant national media coverage;

• It is important to undertake due diligence before making an application to register a trade mark. In this case, Hemmes Trading was fortunate that the Earlier Trade Marks were no longer active, and the owners of the Earlier Trade Marks did not challenge its ownership of the Trade Mark;

• The Court will place considerable weight on significant media coverage and third-party perceptions, highlighting that evidence from third-party sources (such as news and media outlets) can be used to show that a mark has acquired secondary meaning in the marketplace.

Author: Kimbeley Nguyen

Contributing partner: Michael Cossetto