Legal Background

The issue in this case is to establish if;

1. Whether Plainfield Bakery Company is liable for trade mark infringement
2. Whether Plainfield Bakery Company has made unfair profits by causing consumer confusion

Conversely, this paper will rigorously reveal how psychological evidence is accepted as legal evidence when assessing the likelihood of consumer confusion. Further it will examine the relationship between cognitive psychology, trademark infringement and consumer confusion.

It is instructive to note that pursuant to section 21(1) of the Trade Mark Act 1995 (cth) once a trade mark has been registered the trademark becomes the personal property of its owner. Under section 20(1) a trademark owner enjoys the exclusive right to use the trademark with respect to the goods or services that form the basis for the registration of the trademark. Other people may the trademark only if the trade mark owner has given authority to do so. However, section 20(2) provides that if such authority is not sought or granted the trademark owner may seek relief for trademark infringement.

According to section 120 an individual is held to have infringed a trademark if such a person;

1. Uses a sign
2. The sign must be used as a trademark

This implies that the sign must be able to indicate the origin of the goods. In Shell Co. (Aust) Ltd v Esso Standard Oil (Aust) Ltd (1963) the High Court of Australia found that the sign used by shell that appeared to be similar to that of Esso was not used a s a trademark because it did not indicate the origin of the goods but was merely fiving information about the product in form of an advertisement.

In Lupin Ltd. v. Johnson & Johnson (2012) it was held that sign would not be held to have been used a s a trademark it was used to merely describe certain goods or services.

In Philips Electronics v Remington Consumer Products Ltd (2006) it was held that a sign would not be held to have been used as a trade mark if it was used in a functional manner

By dint of section 120 (1) a person is held to have infringed a trademark sign if the sign that has been used must be shown to have a ‘substantial identical similarity’ or is ‘similar in a deceptive manner’ to the registered trademark.

On the other hand section 120 (2) provides that a trade mark is held to have been infringed if

1. The goods have similar descriptions
2. There is a close relation to the services rendered
3. There is a similar description of the services.
4. There is close relation between the goods that are being offered.

According to section 120 (3) a person is held to have infringed a trade mark if the trade mark in question is ‘well known within Australia’. In Virgin Enterprises Ltd v Klapsas (2001) it was held that in determining if a trade mark is well known within a certain particular geographical area in  Australia it is prudent to take into account;

1. The duration and the extent of use of the trade mark
2. The duration and the extent of promotion of the goods or services with the trademark
3. The value that of what is related to the mark

Section 120(3) d provides that the registered owner of the trade mark claiming relief must show that his interest is likely to be affected if the it is not found that the other party is liable for trade mark infringement.

It can be argued that the trademark TAMS TIMS used by Plainfield is a sign that but was not used as a trademark because it did not indicate the origin of the goods. In addition, there is little similarity between the new trade mark and the old one TIM TAM. However, it bears noting that the goods have a profound relationship because both companies deal in production of biscuits. On the flip side, the description of the biscuits made by Plainfield and those made by Arnott’s Biscuits product are not similar and have no close relation. Therefore, it can be concluded that Plainfield is not liable for infringing the trademark belonging to Arnott’s Biscuits product.

Trademark Infringement

To establish if a trade mark has been infringed the court are normally inclined to bring to force the application of the ‘likelihood of consumer confusion test’. The legal definition of consumer confusion has been set out by the court in Polaroid Corp. v. Polarad Elect. Corp (1961) as the ability of a new trade mark to infringe on an existing trademark because of the new trade mark exhibits substantial similarity to the original mark thereby causing consumers to confuse the two marks and make a wrong purchase from the wrong company. The balancing test as established in Polaroid Corp. v. Polarad Elect. Corp (1961) for determining whether a new trade mark is likely to causes consumer confusion includes considering;

1. The strength and distinctiveness of the claimant’s trademark. The claimant must adduce evidence showing that his trade mark is unique and distinctive and hence other users should be stopped from using it.
2. The extent of similarity between the new and the existing trademark
3. The extent of similarity between the goods and services being offered by the two parties in dispute
4. Evidence showing the presence of actual confusion
5. The channel that has been used to market the product. Ideally, the marketing channel must be related for one to held to have infringed the trademark in issue.
6. The level of sophistication that the buyer may have experienced in making the decision to purchase the goods. Ideally, if it is shown that the buyer is knowledgeable it is less likely that he may have been confused by the entrance of a new trade mark.
7. The quality of the goods or services being rendered by the person who just introduced the new trade mark

The confusion will be deemed to have taken place of the trade mark in question was used to arouse the interest of the consumer. In addition consumer confusion may also occur at the point of sale. This implies that it must be show that the consumer is likely to be confused that the goods originate from a wrong company.  Actual confusion occurs if there is evidence to show that the consumer believed that the goods were from a certain company. The High Court of Australia in Gallo Winery v Lion Nathan Australia Pty Limited (2010) held that the defendant in a trade mark infringement case may argue as a defense that the new trade mark did not cause any confusion to the consumers.

It can be argued that the biscuits offered by Plainfield and those offered by Arnott’s Biscuits product are different. This evidence by the fact that they have different sizes, shapes and use different types of packaging. In addition, there is little similarity between the nature of the two trademarks because they have different pronunciation. It can also be contended that the new trade mark is highly unique and distinctive. Therefore, the plausible conclusion is that it is unlikely that the Plainfield’s branding will cause any confusion leading to unfair profiting.  

The tort liability model provides that there is an inherent duty vested on both the plaintiff and defendant to prevent the risk of harm. In determining liability for a civil tort the court looks at the cost benefit analysis of preventing the harm or injury occurring. The cost benefit analysis includes;

1. C (d) -the cost the defendant would have incurred in preventing the damage or loss suffered from occurring
2. C (p) -the cost the plaintiff would have incurred in preventing the damage or loss suffered from occurring
3. P -the probability or the likelihood of the risk would have occurred. The critical question is whether the risk of harm or loss was reasonably foreseeable.
4. L -the actual loss that the plaintiff has suffered as a result of the accident occurring

The owner of a trademark must therefore proof that he has suffered loss as a result of the defendant’s infringement of the trademark. In the present case liability for trademark infringement will be established by examining if the defendant took any reasonable and practicable steps to avoid the loss that has occurred. The claimant in the trademark case, Arnott’s Biscuits must show that there was a foreseeable risk of loss if the defendant Plainfield Bakery Company did not take reasonable and practicable steps to prevent the risk of loss occurring. Therefore the court will look at the cost that Plainfield Bakery Company would have incurred if it took reasonable and practicable steps prevent the loss that Arnott’s Biscuits may have suffered. In determining Plainfield’s Bakery Company liability under the tort model the court will also look at the actual loss that Arnott’s Biscuits may have suffered.

Consumer Confusion

At the onset, it is imperative to note that the courts including the Canadian Supreme Court in Masterpiece Inc v Alavida Lifestyles Inc (2011) have exuded reluctance in accepting psychological evidence to prove consumer confusion in trade mark infringement law. the court in Australia have also been very reluctant to accept empirical evidence explaining the psychological factors that may cause consumer confusion in trade mark law. However, the guiding light with respect to applying psychological evidence lies embedded in Interflora Inc v Marks & Spencer Plc (2015) where Lewison LJ held that the psychological evidence will be accepted in court through the leave of the court, if the court grant leave for a survey to be conducted and if the court grants leave that such psychological evidence is tendered in court. The court also added that the person seeking to rely on psychological evidence to prove that it has real value. The court added that the psychological evidence that may be accepted by the court in proving the likelihood of consumer confusion in trademark infringement include the behavior of consumers in making the purchasing decisions and the consumer shopping behavior.  

In Australian Postal Corporation v Digital Post Australia (2013) the court declined to accept psychological evidence that emerged from surveys that had been conducted to show consumer behavior and consumer confusion in trade mark law. This stemmed from the fact that the sampling methods were poor and the consumers selected to participate in the survey were not appropriate. In Adidas v Pacific Brands (No 3) (2013) the court also declined to accept psychological evidence showing factors that affect consumer confusion in trade mark infringement cases citing that the evidence did not carry sufficient weight to draw the courts attention. Rather interestingly, it has argued that it is incumbent upon lawyers in Australia to ensure that they tender psychological evidence that is credible and has been conducted through proper surveys (Telstra Corporation Ltd v Phone Directories Company Pty Ltd, 2014).

In Cadbury Schweppes Pty Ltd v Darrell Lea Chocolate Shops Pty Ltd (No 4) (2006) the court held that the psychological evidence withdrawn from scientific surveys is likely to be inaccurate because it emerges from artificial circumstances and not the actual circumstances where the consumer may have encountered a trade mark when purchasing a product. In AW Spalding & Bros v AW Gamage Ltd (1915) the court took to the view that psychological evidence is manifested in abstract percentages may be inaccurate and this poses a danger of replacing judicial judgments in court. It appears that even when the psychological evidence showing consumer confusion is compelling the court are inclined on subjecting it to an objective test where they examine what a reasonable person would have inferred of an trade mark in issue (McWilliam’s Wines Pty Ltd v McDonald’s System of Australia Pty Ltd 1980). It is worth noting that the court will not accept consumer confusion that is arising out of erroneous assumptions (Lego Australia Pty Ltd v Paul’s (Merchants) Pty Ltd, 1982).

It can be conceded that the dominant view is that psychological evidence that will be accepted by the courts must emerge from surveys that are conducted in a realistic manner and not hypothetically.

Tort Liability Model

In Trademark law the issues that stem from cognitive psychology and have a profound relation with consumer confusion in trade mark infringement include

1. The state of mind of the consumer at the time of making the decision to purchase a product or pay for a service
2. The evidence and the reasoning that is applied by the courts in determining if a consumer was confused by a certain trademark or there was likelihood of confusion.

Taylor (1965) argues that cognitive psychology is concerned with the behavior of human beings when making decisions. In assessing likelihood of consumer confusion one is required to examine the state of mind of the ordinary reasonable prudent consumer. The fundamental issue is what an ordinary reasonable consumer would behave upon being presented with a product with a certain trade mark (Savin Corp. v. Savin Group, 2004). Ideally, before a consumer elects to purchase a certain product the consumer will have to take into account the brand. Therefore the name, nature and quality of the trademark or brand is likely to affect the decision making process of the consumer. Lee, Christensen, & DeRosia, (2007) argues that the cognitive psychology of the consumer with respect to the likelihood of being confused is highly affected by the motivation of the consumer and the perceived risk that may be involved. Trade mark infringement may be likely to occur if the consumer confuses the source of the product by virtue of the trade mark displayed on the product and therefore makes a wrong choice. The confusion is caused by the consumer’s mental state at the time.

Cognitive psychologists argue that there is a series of mental process that is involved decision making process when selecting a brand.  Weatherall (2017) notes that cognitive behavior of consumers under trade mark law is affected by memory, motivation, perception judgment and evaluation.  However, the evidence that emerges from these factors must be realistic and not hypothetical for the courts to accept it. By and large, it is a plausible conclusion that the concept of confusion in the trade mark legal regime considerably declines to accept psychological evidence.   

Ideally the methods that should be applied in conducting the survey must be credible, sound and reliable for the outcomes to be applied brand owners and the court. The evidence in this case will be gathers from consumers of the biscuits. However, such evidence will not emerge from potential consumers or people who are likely to consume the product but from actual consumers.

1. Were you confused when selecting the product to purchase?

The first question will target to obtain information from the participant showing that he was or was not actually confused.  

1. Were you able to identify the trade mark of the brand?

This is to establish the strength of the uniqueness and distinctiveness of the mark.

1. Did acquire the actual goods or services you intended to purchase?

This question is intended to establish the difference between the two products.

1. Were the goods of the desired quality?

This question seeks to establish if there is a difference in the quality between the goods.

1. Did you have knowledge of the brand you desired to purchase?

This question reveals whether consumer was able distinguish the two trademarks in dispute.

References

Adidas v Pacific Brands (No 3) (2013) 308 ALR 74

Australian Postal Corporation v Digital Post Australia (2013) 308 ALR 1

AW Spalding & Bros v AW Gamage Ltd  [1915] All ER Rep 147.

Cadbury Schweppes Pty Ltd v Darrell Lea Chocolate Shops Pty Ltd (No 4) (2006) 229 ALR 136;  

Gallo Winery v Lion Nathan Australia Pty Limited [2010] HCA 15

Interflora Inc v Marks & Spencer Plc [2015] ETMR 5

Lee, T. R., Christensen, G. L., & DeRosia, E. D. (2007). Trademarks, Consumer Psychology, and the Sophisticated Consumer. Emory LJ, 57, 575.

Lego Australia Pty Ltd v Paul’s  (Merchants) Pty Ltd(1982) 42 ALR 344

Lupin Ltd. v. Johnson & Johnson (L) No 1842 of 2012)

Masterpiece Inc v Alavida Lifestyles Inc [2011] 2 SCR 387

McWilliam’s Wines Pty Ltd v McDonald’s System of Australia Pty Ltd (1980) 33 ALR 394;

Philips Electronics v Remington Consumer Products Ltd [2006] EWCA Civ 16 (26 Jan 2006).

Polaroid Corp. v. Polarad Elect. Corp., 287 F.2d 492 (2^nd Cir. 1961). 

Savin Corp. v. Savin Group, 391 F.3d 439, 461 (2d Cir. 2004)

Shell Co. (Aust) Ltd v Esso Standard Oil (Aust) Ltd (1963) 109 CLR 407

Taylor, W. J. (1965). ” Is marketing a science?” revisited. The Journal of Marketing, 49-53.

Telstra Corporation Ltd v Phone Directories Company Pty Ltd (2014) 316 ALR 590

Trade Mark Act 1995 (cth)

Virgin Enterprises Ltd v Klapsas [2001] FCA 150

Weatherall, K. (2017). The consumer as the empirical measure of trade mark law. The Modern Law Review, 80(1), 57-87.