The Full Federal Court has dismissed an appeal by Chemist Warehouse, who argued that its competitor Direct Chemist Outlet (DCO) had adopted a get-up and colour scheme on their pharmacy storefronts which was likely to mislead or deceive consumers into believing that the two businesses were associated.
Chemist Warehouse tried to establish that their storefront get-up and trade indicia (predominant use of the yellow, the use of red and blue, the words “Chemist Warehouse” in white writing against a red background and the words “Discount Chemist”) had become distinctive of and associated with Chemist Warehouse, such that the get-up had acquired a secondary reputation independent of any trade name or trade mark. It was the similarity between DCO’s and Chemist Warehouse’s secondary branding, in the absence of any sufficiently distinctive primary branding by DCO, that Chemist Warehouse said created the false impression of a trade connection between the two businesses.
The Full Court found that Chemist Warehouse had not established any secondary reputation beyond its reputation in the Chemist Warehouse “red house with a chimney” logo, and that DCO’s red half-sunburst logo (in addition to the appearance of their stores) was distinctive enough to identify different chemist brands, not associated ones.
The Full Court also found that while DCO did deliberately copy features of the Chemist Warehouse get-up and colour scheme, there is nothing impermissible in copying parts of a rival’s get-up per se, so long as there is nothing misleading or deceptive or likely to mislead or deceive as a result of such copying. (We would also add—so long as the copying does not infringe copyright). The court accepted that DCO intended to copy elements of Chemist Warehouse’s get-up, but was not satisfied that the effect of this copying was to mislead or deceive consumers.
In dismissing Chemist Warehouse’s claim that the colour yellow acted as one of their key branding elements and was associated with Chemist Warehouse, the Full Court agreed with the primary judge that yellow is primarily a functional colour, used to grab attention of consumers and communicate cheapness, good value or discounted items. The colour was not sufficiently associated with Chemist Warehouse to denote a trade origin, and is used by discount retailers across a range of industries.
This decision shows the difficulties involved in establishing a reputation for goods and services based on the get-up used by the supplier. Even if such a reputation is established, the court will consider whether the competing trader has done enough to differentiate itself so that consumers are not, nor likely to be, misled or deceived.
A registered trade mark is the best protection for business branding. However, a business should avoid trying to trade mark words that are common or too descriptive, e.g. ‘Australia’s Cheapest Chemist’, which the primary judge said conveyed only “geographical location, price and nature of business respectively” and so lacked the necessary distinctiveness.
One strategy to overcome such a lack of distinctiveness (apart from choosing non-descriptive or unique branding) is to include words, colours, and shapes in a composite trade mark application. These words, colours or shapes, taken individually, may not be adapted to distinguish the applicant’s goods or services from those of a competitor, but, when taken together, are more likely to meet the requirements of the Trade Marks Act.
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