Are hidden Trade Marks registrable?

Dr. Victoria Longshaw and Mr. David Franklin

In a recent decision by the High Court of New Zealand, NYDJ Apparel LLC v Commissioner of Trade Marks [2014] NZHC 2678, the Court considered the registrability of a Trade Mark that is not typically displayed in plain sight.

The background of the case

NYDJ Apparel LLC (“NYDJ”), a US company, has since 2003 been manufacturing and selling jeans designed for curvy or older women. The jeans are designed to flatten the belly and the lower abdomen by way of inner panels sewn to the inside of the front pockets, which create a horizontal band across the front of the abdomen, reducing the stretch of the garment in that area.

The jeans are sold in many countries around the world under the Trade Marks “Tummy Tuck” and “Not Your Daughters Jeans” and include a criss-cross stitching pattern applied to the inside of the two front pockets to designate that the jeans have the slimming panels, as follows:

tm1

NYDJ jeans bearing this stitching pattern have been sold in New Zealand since 2007 in both small boutiques and department stores.

Marketing activities include promotion of the jeans through “fit days”, involving a “fitting expert” who assists customers with the selection and fit of the jeans and shows customers the stitching on the inside of the jeans. Promotional and marketing activities make use of the following NYDJ Trade Mark which includes two red crosses in a stylised version of the criss-cross stitching:

tm2

NYDJ applied to register the Trade Mark in Class 25 as a criss-cross stitching pattern on the inside pocket of a pair of jeans, for articles of clothing as shown in the following representation:

tm3

The IPONZ Decision

The Trade Marks Examiner formally rejected the Application on the basis that the Mark was not considered to be distinctive.

The Applicant requested a hearing, at which the Assistant Commissioner directed that the Trade Mark not be registered. The Assistant Commissioner considered that the criss-cross stitching design had a “low level” of inherent distinctiveness.

Since the Mark is not a highly stylised image or device, and comprises a simple criss-cross stitching pattern, the Assistant Commissioner concluded that consumers may assume it to be functional, particularly as the Mark had been selected to highlight a particular technical function of garment.

The location of the stitching design on the inside garment was considered to be one where consumers are less accustomed to finding a trade mark. Consumers were likely to assume that the stitching had a functional purpose for strengthening or reinforcing the jeans, and other traders may wish to incorporate such a simple stitching design on the inside of their garments.

In considering evidence of use of the Mark to determine if it had acquired distinctiveness, the Assistant Commissioner was not convinced that consumers would associate the Mark with NYDJ. Most of the advertising material submitted made little or no reference to the criss-cross stitching, and it was not clear to the Assistant Commissioner that even purchasers of the jeans would see the criss-cross stitching as a Trade Mark. Furthermore, customers who had already purchased the jeans would not become “walking advertisements” for the Mark, because it was located inside the garment. NYDJ failed to convince the Assistant Commissioner that consumers would recognise the stitching both as a trade mark and as a trade mark connected with NYDJ.

The Appeal Decision

On appeal to the High Court, NYDJ argued that plain and simple Trade Marks can nevertheless be distinctive, and gave the red sole of a Christian Louboutin shoe as an example. Furthermore, jeans are commonly distinguished by the stitching applied to, for example, the pockets of Levis, Wrangler and Lee jeans, some of which are registered Trade Marks.

The Court considered two issues: (1) whether the Trade Mark had an inherent distinctive character and (2) whether the Trade Mark had acquired a distinctive character.

(1) Inherent distinctive character of the stitching

The Court acknowledged that stitching on jeans is capable of distinguishing the goods. However, since the stitching was ordinary machine stitching, it held that the contrasting red and purple colours made the difference and enhanced the distinctive character of the Mark. Without the colour contrast, the Court considered that the Mark was less inherently distinctive and consumers could well regard the stitching as having a general functional purpose.

(2) Acquired distinctiveness through use

In assessing whether the Mark had acquired distinctiveness through use, the Court said that the Assistant Commissioner had raised the bar too high. It also regarded the use of the criss-cross Mark in the “NYDJ” logo Mark as serving to link the criss-cross pattern to NYDJ. The fitting days assisted in pointing out the criss-cross stitching to customers, and NYDJ’s evidence showed that many retailers also regarded the stitching on the inside of the jeans as distinctive and associated with NYDJ. The Court ruled the evidence was sufficient to show that distinctiveness had been acquired through the use made by NYDJ of the Trade Mark.

The Commissioner concluded that the Trade Mark was therefore distinctive and registrable subject to the Application being amended as follows:

  1. The Explanation of the Mark be amended to say a “non-functional criss-cross stitching pattern in a contrasting red or purple colour, on the inside pocket of a pair of jeans,…”
  2. The Goods “articles of clothing” be limited to “jeans;” and
  3. A disclaimer be included that the registration of the Trade Mark gives “no right to the exclusive use of stitching in a criss-cross pattern except in the form shown and explained in the registration.”

Conclusion

Interestingly, the relatively hidden location of the Mark in this case on the inside of the garment, was not considered to be a bar to its registrability. Once purchased, it was not necessary for distinctiveness purposes for the Mark to be visible on the goods. Accordingly, if it can be demonstrated that consumers are aware of the hidden Mark before and at the time of purchase and that it serves to distinguish a trader’s goods from others, then the Mark is arguably distinctive.

Pharmaceutical Bioequivalence and Patent Claim infringement: a Catch 22

Dr. Victoria Longshaw and Dr. Elizabeth Houlihan

In a recent case before the Federal Court of Australia, Glaxo SmithKline Australia Pty Ltd v Pharmacor Pty Ltd (2014), Glaxo SmithKline Australia Pty Ltd (“GSK”) successfully applied under r 7.23 of the Federal Court Rules 2011 (Cth) that Pharmacor Pty Ltd (“Pharmacor”) give discovery and inspection of various documents lodged at the TGA and, in terms of Section 23 of the Federal Court of Australia Act 1976 (Cth), provide a sample of at least 50 tablets of each of its two modified release oral paracetamol products (“the Pharmacor Products”).

The Application for discovery and inspection was made by GSK on the grounds of potential entitlement to relief, including injunctive relief, declaration and damages, as a result of Pharmacor’s alleged misrepresentations of bioequivalence of its products to the TGA; the actual or anticipated promotion of Pharmacor’s products to pharmacists and consumers; and Pharmacor’s alleged potential infringement of the claims of Australian Patent No. 2001260212 (“the Patent”).

What is interesting about this case is that the discovery and inspection order was obtained on the basis of the actual or anticipated promotion of Pharmacor’s products to pharmacists and consumers. GSK’s arguments relating to Pharmacor’s alleged misrepresentations to the TGA and potential infringement of the Patent failed.

This decision is relevant to pharmaceutical companies seeking to protect their Patent Rights in Australia. It is also relevant to generic pharmaceutical companies who are preparing to enter the market and planning their marketing and promotion efforts accordingly.

Background

The Patent is filed in the name of GlaxoSmithKline Consumer Healthcare Investments (Ireland) (No. 2) Ltd and relates to bilayer sustained release oral paracetamol tablet with a stipulated dissolution rate. GSK, an exclusive licensee, has been marketing and supplying two products in Australia which are covered by the Patent: Panadol Back and Neck Long-Lasting, and Panadol Osteo, since 2001 and 2005, respectively. Until about October 2012, the GSK products were the only modified release paracetamol products registered on the Australian Register of Therapeutic Goods (“ARTG”).

Pharmacor registered the Pharmacor Products on the ARTG and applied to have the products listed on the Schedule of Pharmaceutical Benefits (“PBS”).

GSK applied to the Federal Court for an Order of discovery and inspection, asserting that it did not have sufficient information to decide whether or not to commence Patent infringement proceedings against Pharmacor. GSK contended that there was reasonable cause to believe that it had a right to obtain relief and that Pharmacor had misrepresented the bioequivalence of its products to the TGA; had passed off its products to pharmacists and consumers as bioequivalent to Panadol Osteo; and that Pharmacor’s actions constituted potential infringement of the Claims of the Patent.

Pharmacor argued that the Pharmacor Products were bioequivalent to Panadol Osteo, but that they were differently formulated such that they do not infringe any of the Claims of the Patent.

In response, GSK argued that if the Pharmacor Products were not bioequivalent to Panadol Osteo, then they would be unlikely to provide adequate therapeutic plasma concentrations for the required eight hours, leading to consumer confusion and potentially resulting in the undesirable use of higher doses.

The Court held that:

  • There was no reason to believe that Pharmacor has made any misrepresentations to the TGA or that there has been any mischaracterisation of bioequivalence of the Pharmacor Products to the TGA.
  • The specification of the Patent demonstrated that there can be bioequivalence between two products which demonstrate different pharmacokinetic properties. GSK was considered to have failed to establish the requisite belief in relation to the potential Patent infringement claims.
  • There was a reasonable belief that Panadol Osteo has different therapeutic effects to the Pharmacor Products and accordingly that the promotion and representations by Pharmacor to pharmacists and consumers regarding “bioequivalence as approved by the TGA” or “brand equivalents as approved” without disclosing the relevant differences may constitute misleading or deceptive conduct.

GSK was thus considered to be entitled to an order for preliminary discovery in relation to Pharmacor’s representations or “half-truth scenario” under the Australian Consumer Law.

Take-home message

Where a Patent infringer has applied to the TGA for registration of a generic product demonstrating bioequivalence to another product, and claims to avoid infringement of an Australian Patent for that product due to formulation and/or pharmacokinetic differences, then any representations to the public of bioequivalence or “brand equivalence” may constitute misleading and deceptive conduct.

Patent owners in Australia for inventions in the pharmaceutical industry can look to this decision as support for obtaining a court Order for discovery and inspection of documents and pharmaceutical samples from potential infringers. However, such an Order may be more easily obtained under Australian Consumer Law on the basis of misrepresentations of bioequivalence made by the potential infringer, if any, to customers and pharmacists than on a claim of potential patent infringement.