Symbion Pharmacy Services Pty Ltd v Idameneo (No 789) Limited [2011] FCA 389 (20 April 2011)

Last Updated: 21 April 2011

FEDERAL COURT OF AUSTRALIA

Symbion Pharmacy Services Pty Ltd v Idameneo (No 789) Limited

[2011] FCA 389

Citation:		Symbion Pharmacy Services Pty Ltd v Idameneo (No 789) Limited [2011] FCA 389
Parties:		SYMBION PHARMACY SERVICES PTY LTD (ABN 25 000 875 034) v IDAMENEO (NO 789) LIMITED (ABN 56 004 073 410)
File number:		VID 401 of 2010
Judge:		JESSUP J
Date of judgment:		20 April 2011
Catchwords:		INTELLECTUAL PROPERTY – Trade marks – Determination of question of deceptive similarity – Whether mark so nearly resembles registered mark as to be likely to deceive or to cause confusion – Mark denoting medical services – Services acquired only on reference by medical practitioner – Whether specialist evidence required as to likelihood of deception or confusion – Whether infringement case can succeed in absence of such evidence. CONTRACTS – Agreement not to use certain trade marks – Whether assignment to party entitled to benefit of agreement necessary – Whether contractual term “similar to or capable of being confused with” to be equated with statutory trade mark term “likely to deceive or cause confusion” – Contractual obligation assumed by party already using arguably similar mark – Whether obligation subject to implied exception in favour of continued use of that mark. INTELLECTUAL PROPERTY – Trade marks – Agreement not to use certain trade marks – Whether mark used “similar to or capable of being confused with” mark protected under agreement – Approach to assessment of confusing similarity.
Legislation:		Trade Marks Act 1995 (Cth) ss 10, 120(1)
Cases cited:		Australian Woollen Mills Ltd v F S Walton & Co Ltd [1937] HCA 51; (1937) 58 CLR 641 BP Refinery (Westernport) Pty Limited v Shire of Hastings [1977] HCA 40; (1977) 180 CLR 266 General Electric Co Limited (USA) v General Electric Co Limited [1972] 1 WLR 729 Interlego AG and Another v Croner Trading Pty Limited [1992] FCA 624; (1992) 39 FCR 348 NSW Dairy Corporation v Murray-Goulburn Co-operative Co Ltd (1989) 86 ALR 549 The Shell Company of Australia Ltd v Esso Standard Oil (Australia) Ltd (1961) 109 CLR 407
Date of hearing:	28 February, 1-3 March 2011
Place:	Melbourne
Division:	GENERAL DIVISION
Category:	Catchwords
Number of paragraphs:	52
Counsel for the Applicant:	Mr B Caine SC with Mr L Merrick
Solicitor for the Applicant:	Spruson and Ferguson Lawyers
Counsel for the Respondent:	Mr D Studdy SC with Mr J Hennessy
Solicitor for the Respondent:	Gilbert and Tobin

IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY
GENERAL DIVISION	VID 401 of 2010

BETWEEN:	SYMBION PHARMACY SERVICES PTY LTD (ABN 25 000 875 034) Applicant
AND:	IDAMENEO (NO 789) LIMITED (ABN 56 004 073 410) Respondent

JUDGE:	JESSUP J
DATE OF ORDER:	20 APRIL 2011
WHERE MADE:	MELBOURNE

THE COURT ORDERS THAT:

1. The proceeding be listed at 9:30 am on Monday 9 May 2011 for the purpose of hearing the parties on the orders to be made to reflect the reasons of the court published today, and on the question of costs.
2. No less than 7 days before the date referred to in the previous paragraph, the parties exchange, and file, their draft minutes of the orders proposed to be made.
   

Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
The text of entered orders can be located using Federal Law Search on the Court’s website.

IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY
GENERAL DIVISION	VID 401 of 2010

BETWEEN:	SYMBION PHARMACY SERVICES PTY LTD (ABN 25 000 875 034) Applicant
AND:	IDAMENEO (NO 789) LIMITED (ABN 56 004 073 410) Respondent

JUDGE:	JESSUP J
DATE:	20 APRIL 2011
PLACE:	MELBOURNE

REASONS FOR JUDGMENT

1. In this proceeding, the applicant, Symbion Pharmacy Services Pty Ltd, alleges that the respondent, Idameneo (No 789) Limited, has infringed a trade mark registered in the name of the applicant under the Trade Marks Act 1995 (Cth) (“the registered mark”) and has breached a provision of a contract made in October 2008 by which it agreed not to use the registered mark or a corresponding unregistered mark, or any mark similar thereto or capable of being confused therewith. That contract was part of a series of transactions by which the applicant, then a subsidiary of the respondent, was sold to a third party. Broadly speaking, the name and marks under which the applicant traded were, by those transactions, retained by (or, as necessary, transferred to) the applicant, and the respondent made corresponding promises not to use them. It is the respondent’s use of another, arguably similar, mark (“the respondent’s mark”) which has given rise to this proceeding.

THE FACTS

2. Prior to any of the events which are presently controversial, there were two corporate groups providing services within what I shall describe as the allied health sector. One was the Mayne group of companies, which included the respondent – then known as Mayne Limited – and its subsidiaries. The other was the Primary Health group of companies, which included Primary Healthcare Limited (“Primary”) and its subsidiaries.
3. Over many years, the Primary group operated businesses of various kinds in the allied health sector. One such business was the provision of diagnostic imaging services, which were provided both in medical centres and externally. Such services had been provided, in some areas at least, since the late 1980’s. They were provided in medical centres operated within the Primary group in Victoria, South Australia and Queensland under the business name “Primary Diagnostics” between 2001 and late 2006. In 2005, the Primary group undertook a re-branding of its diagnostic imaging services. An aspect of that was the registration of the business name “Healthscan” in respect of those services. Another aspect was the development of a logo for the diagnostic imaging services, which ultimately led to the adoption of the respondent’s mark.
4. Joanne Alicia Ryan of Socket to Me Pty Ltd, a graphic design and advertising services company, was contacted by a representative of Primary about the design of a new logo in late 2004. After some initial, and apparently inconclusive, developments, Ms Ryan commenced work on the logo in mid-2005. Various possible examples were presented to Primary, and it was in late August 2005 that Ms Ryan settled on a final design. She then proceeded to develop various items of stationery that would use the logo in conjunction with the new name for diagnostic imaging services, “Healthscan”. She was, it seems, still working on this project in mid-2006. She sent the final versions to her client on 15 July 2006. Ms Ryan’s logo was accepted, and put into use. It was the respondent’s mark.
5. At the time, the subsidiary through which Primary conducted its diagnostic imaging services was Idameneo (No 123) Pty Ltd (“Idameneo 123”). That company used stationery which bore the respondent’s mark from about 20 November 2006 in five medical and dental centres in Victoria. In the months which followed, Idameneo 123 was using the mark on X-ray envelopes, appointment cards, chiropractic forms, referral forms, computer forms and, in some situations, business cards. Idameneo 123 commenced to use the mark on similar forms in South Australia in March 2007. It commenced to do so in Queensland in May 2007. The position in these three States, therefore, was that, commencing with Victoria in November 2006, by about the middle of 2007 the respondent’s mark was being used on stationery items of the kind to which I have referred. Save as described in this paragraph, there is no evidence of Idameneo 123, or of any other company in the Primary group, using the respondent’s mark at about that time.
6. The respondent’s mark was used, in conjunction with the name “Healthscan Specialist Imaging”, on reception signage at a number of sites in South Australia from about August 2007. The mark was used in the same setting on reception signage at three sites in Victoria from about June 2009. Otherwise, there is no evidence of use by Idameneo 123, or by any other company in the Primary group, of the respondent’s mark on reception signage by mid-2009.
7. As used, the following is the respondent’s mark:

8. Turning to developments within the Mayne group, in 2005 the respondent (as I have said, then called Mayne Group Limited) conducted various businesses which included the provision of medical services and medical analysis, the operation of medical centres and practices, the provision of diagnostic imaging and pathology services, and the operation of pharmacies and the distribution of pharmaceutical products. The two last-mentioned businesses – pharmacies and pharmaceutical products distribution – were operated by the applicant, a subsidiary of the respondent.
9. In 2005, the respondent undertook a de-merger, the result of which was the incorporation of Mayne Pharma Limited to conduct the group’s pharmaceutical manufacturing business (which is not relevant to this proceeding) and the retention by the respondent of the other businesses. The pharmaceutical products wholesaling business continued to be conducted by the applicant. As part of the de-merger process, the respondent commissioned Cato Purnell Partners, graphic designers, to develop a new name and logo for its businesses. Their proposal, which was accepted and subsequently implemented, was for the new name to be “Symbion”, and for the new logo to be a device as follows:

The respondent changed its name from Mayne Group Limited to Symbion Health Limited. Thenceforth, the respondent, and all of its subsidiaries which are presently relevant, including the applicant, traded as “Symbion” and used the new logo. That use was widespread and, I would infer, notorious within the allied health sector.

10. It was an important aspect of the respondent’s rebranding that this device would be shown in green, ie as set out above. For the most part, the use of the logo by the applicant was, and continues to be, conformable with this requirement. In some situations, where the background colour is itself green (as in, for example, the tubs in which supplies are delivered to pharmacies), or where the colour or makeup of the fabric of the item in which the logo is printed makes the use of some other colour beneficial (as in, for example, promotional lanyards distributed by the applicant), the logo may appear in a different colour. But the clear impression conveyed by the evidence is that situations such as these are subsidiary. When used in signage at premises, for example, the logo is always in green, as shown above.
11. An application to register the new Symbion logo as a trade mark under the Trade Marks Act was made on 14 November 2005 by the respondent, and was, in due course, granted. That gave rise to what I have described as the registered mark. As shown on the register, the registered mark is as follows:

The mark is registered in respect of various goods and services, including the following services:

Medical services; medical analysis; provision of pharmacy advice; pharmacy services; the operation of rest and convalescent homes; operation of medical centres and medical practices; medical and heath care services including provision of diagnostic, imaging, pathology, general practitioner, hospital and related services ....

The mark has been registered since 14 November 2005.

12. In its case as presented in court, the applicant made a distinction between the registered mark and the green version of the logo as actually used. The latter was referred to as the “device mark”. The respondent accepted this distinction, and I shall do likewise. For my own part, particularly given the terms of s 70(3) of the Trade Marks Act, I would not readily accept that there were two separate marks involved here, but, as indicated above, the parties proceeded on that basis and, as will appear, nothing ultimately turns on the point.
13. Down to the events to which I next refer, therefore, the position was more or less as follows. There were two significant groups in the allied health sector, the Symbion group and the Primary group. Companies in the Symbion group, including both the respondent and the applicant, traded by reference to the device mark. The registered mark was registered in the name of the respondent. The applicant was engaged substantially in the wholesaling of pharmaceutical products. Elsewhere in the group, the respondent provided diagnostic imaging services. In the Primary group, Idameneo 123 provided diagnostic imaging services, and made some limited use of the respondent’s mark, as set out in paras 5-6 above.
14. In August 2007, Primary acquired 20% of the respondent, and on 28 April 2008, Primary completed the compulsory acquisition of the remaining shares in the respondent. This meant that Primary owned the respondent, which in turn owned the applicant. It also meant that Primary had acquired a suite of diagnostic imaging units operated by the respondent. Predominantly, those units were located either within private hospitals or on stand-alone sites. After the acquisition, they carried on business as “Healthcare Imaging Services Network”, with each unit typically adopting an individual name by reference to its location, eg “Glen Waverley Medical Imaging”. At some point (when is not clear on the evidence) Primary caused these businesses to be conducted by companies, other than the respondent, of which Primary itself was and is the ultimate parent. What is clear, however, is that, following the acquisition, these businesses continued to use the device mark as an element in their branding.
15. Primary had never conducted a business in the wholesaling of pharmaceuticals, and had no intention of doing so. Accordingly, on 19 August 2008, the respondent sold the applicant to Zuellig Australia Pharmacy Services Pty Ltd (“Zuellig”), by way of a share sale agreement. Under that agreement, the respondent agreed to assign to the applicant all of its right, title and interest in and to what were described as “the Symbion marks”. That term was defined by reference to a table set out in a schedule to the agreement, two of the entries in the table being identified as:

(a) The “SYMBION Triangle Device”, said to be registered in Australia with the number 1085313; and

(b) the word “SYMBION”, said to be registered in Australia with the numbers 1076070 and 1078001;
each in relation to classes 3, 5, 9, 35, 42 and 44. The “SYMBION Triangle Device” was the registered mark.

16. Also in the share sale agreement, Zuellig agreed to procure that, with effect from completion, the applicant would grant the respondent a licence to use the Symbion marks pursuant to a “retained business transitional mark licence agreement” (“the licence agreement”), the terms of which were also set out in a schedule to the share sale agreement. The licence agreement was to be between the applicant as “owner” and the respondent as “head licensee”. It was subsequently executed conformably with its terms as set out in the schedule to the share sale agreement. I shall refer further to those terms in that context below. In the share sale agreement, the respondent also agreed to use its reasonable endeavours to procure that the use of the Symbion marks by itself and its remaining subsidiaries be “transitioned out within 12 months after the completion date”.
17. On 21 August 2008, the respondent accepted the applicant’s offer to pay $10 in consideration of the respondent procuring the assignment to the applicant of all of the respondent’s right, title and interest to the “trade mark registrations” set out in a schedule to the applicant’s offer in that behalf made on 20 August 2008. Relevantly to the present proceeding, one of the trade marks listed in the schedule was identified as the “SYMBION Triangle Device”, namely, the registered mark. There was, therefore, a contract to procure the assignment of the registered mark. It is an oddity of the case, however, that no assignment as such is in evidence. Notwithstanding that deficiency, the respondent conducted its case on the basis that the registered mark had been assigned to the applicant. It did contend that the device mark had not otherwise been assigned, and it is true that there is no evidence of a written assignment of that mark. The offer which was accepted on 21 August 2008 referred only to the registered mark. Whether the applicant’s cause of action in contract in relation to the device mark was, and is, thereby compromised is a question to which I shall return in due course.
18. On 31 October 2008, the applicant and the respondent executed the licence agreement, as a deed. By that agreement, the applicant, as owner, granted to the respondent and its subsidiaries “an irrevocable, worldwide, royalty free, non-transferrable, non-exclusive, non-sub-licensable licence to use the Trade Marks”, being the registered trade marks, the marks in respect of which registration had been applied for and the unregistered mark set out in the schedule to the agreement. The schedule was headed “Trade Marks” and had three sections: first, a table in which various trade marks were listed, including “SYMBION Triangle Device” (the registered mark); secondly, the words “SYMBION” and “FAULDING”; and thirdly a representation of a device which corresponded with the registered mark, or, if the distinction be important, with a black-and-white version of the device mark. The term of the licence was to be two years.
19. It is the following provision of the licence agreement which has become controversial in this proceeding:

Use of Similar Marks
Except as permitted by this deed, the [respondent] must not, and must ensure that each Licensee does not, use:
(a) any Trade Mark; or
(b) any Mark similar to or capable of being confused with any of the Trade Marks or which contain the words SYMBION or FAULDING,
as a trade mark, business name, domain name or otherwise anywhere in the world.

By a combination of definitions in the licence agreement and the share sale agreement, a “licensee” was a subsidiary of the respondent other than the applicant (and its subsidiaries, if any) and other than a company called Symbion CP Holdings Pty Ltd (and its subsidiaries, if any).

20. Pursuant to the licence granted under the licence agreement, the respondent and other companies acquired by Primary continued to use the device mark within the two-year term referred to. As mentioned above, however, the respondent was required, under the share sale agreement, to cause the use of that mark to be “transitioned out” within 12 months. Although it seems that the respondent may have been somewhat tardy in complying with that obligation, that is not the foundation of the applicant’s present complaint. Rather, the source of the complaint is that, in relation to the diagnostic imaging units, the respondent (or some other responsible company within the Primary group) caused the device mark to be replaced by the respondent’s mark. Broadly speaking as I understand it, there came to be produced a situation in which Primary’s original imaging business, operated by Idameneo 123 under the “Healthscan” name, and Primary’s newly-acquired imaging business, operated under the “Healthcare Imaging” name, were both using, as a trade mark, the respondent’s mark.
21. The present proceeding is concerned with allegations by the applicant that the respondent’s continued use of the respondent’s mark is an infringement of the registered mark, and a contravention of clause 5.5 of the licence agreement. As will be apparent from my recitation of the facts above, between about the end of April 2008 and completion of the share sale agreement made on 19 August 2008, the applicant was a subsidiary of the respondent, which was in turn a subsidiary of Primary. During that time, the respondent was known as Symbion Health Limited and widely used the registered mark. Another subsidiary of Primary, Idameneo 123, was using, to some extent at least, the respondent’s mark. There is nothing in the documents which indicates, and no evidence otherwise to the effect, that either Primary or the respondent gave any attention to the prospect that the continued use of the respondent’s mark by Idameneo 123 might raise issues either under the Trade Marks Act or under clause 5.5 of the licence agreement.

THE APPLICANT’S CASE UNDER THE TRADE MARKS ACT

22. The applicant sues under s 120(1) of the Trade Marks Act, which provides:

A person infringes a registered trade mark if the person uses as a trade mark a sign that is substantially identical with, or deceptively similar to, the trade mark in relation to goods or services in respect of which the trade mark is registered.

On the facts of the present case, the respondent uses the respondent’s mark, as a Trade Mark, in relation to the provision of radiology services. Services of that kind are within the class of services in respect of which the registered mark is registered. It was not submitted on behalf of the applicant that the respondent’s mark was “substantially identical with” the registered mark. Rather, the applicant’s case was that the respondent’s mark was “deceptively similar to” the registered mark. That expression is defined in s 10 of the Trade Marks Act, which provides:

For the purposes of this Act, a trade mark is taken to be deceptively similar to another trade mark if it so nearly resembles that other trade mark that it is likely to deceive or cause confusion.

The question, then, is whether the respondent’s mark so nearly resembles the registered mark that it is likely to deceive or to cause confusion.

23. It was submitted on behalf of the respondent that radiology services fell within the following principle stated by Lord Diplock in General Electric Co Limited (USA) v General Electric Co Limited [1972] 1 WLR 729, 737-738:

My Lords, where goods are of a kind which are not normally sold to the general public for consumption or domestic use but are sold in a specialised market consisting of persons engaged in a particular trade, evidence of persons accustomed to dealing in that market as to the likelihood of deception or confusion is essential. A judge, though he must use his common sense in assessing the credibility and probative value of that evidence, is not entitled to supplement any deficiency in evidence of this kind by giving effect to his own subjective view as to whether or not he himself would be likely to be deceived or confused.

It is clear from the terms of s 11 of the Trade Marks Act 1938 (UK), with which his Lordship dealt in the relevant part of his speech, that this passage would have direct application to the question arising under s 10 of the Trade Marks Act.

24. The respondent submitted that radiology services were sold in a specialised market rather than to the general public for consumption or domestic use. The market consisted of medical, and at times dental, practitioners, whose decision it was to refer patients for diagnostic imaging and, in such cases, to select the appropriate service provider. It relied on the evidence of Dr Edmond Gregory Thomas Bateman, the managing director of Primary, who practised full-time as a general practitioner between 1967 and 2004 (since which he practised part time as a general practitioner). In his affidavit sworn on 28 October 2010, Dr Bateman said:

The primary customers of the Diagnostic Imaging Services are doctors, including general practitioners, specialists and doctors working at hospitals who identify a need for, and refer patients to, those services.
...
Based on my experience as a general practitioner and from discussions I have had with many doctors over the years, I am aware that outside of hospitals, doctors will refer patients to diagnostic imaging providers, and the results of the diagnostic imaging will be sent back to the doctor, or are immediately provided to the patient to convey to the doctor. Since patients can only access their services by way of a referral by a doctor, the Diagnostic Imaging Services do not promote their services directly to the general public.

Based on my experience as a general practitioner and from discussions I have had with many doctors over the years, when doctors refer a patient to a provider of diagnostic imaging, they have to provide the patient with the name and address of the company in question. That is, doctors cannot make a diagnostic imaging referral unless they are aware of the identity of the diagnostic imaging provider.

Dr Bateman said that dentists also used diagnostic imaging services, but that referrals from dentists generally formed a small percentage of all referrals. Dr Bateman was not cross-examined.

25. Counsel for the applicant accepted that the radiology services with reference to which the respondent’s mark is used are supplied only on referral by a medical or dental practitioner and, as I understood them, that it would be the practitioner who would always decide to which service provider such referral would be made. In the light of the unchallenged evidence of Dr Bateman to which I have referred, I do not think that any other position would have been maintainable. Although, in a strictly contractual sense, it will be the patient (ie the consumer) who is the customer of the radiology services provider, and who pays for those services, this strikes me as a distinction which does not involve a difference in the context of applying the law as stated by Lord Diplock in GE. I did not understand counsel for the applicant to suggest otherwise. Neither did they suggest that GE was not good law in Australia (and it was treated as good law by the Full Court in Interlego AG and Another v Croner Trading Pty Limited [1992] FCA 624; (1992) 39 FCR 348, 387-388), or that it did not have direct application to the question arising under s 10 of the Trade Marks Act. Notwithstanding those concessions, counsel for the applicant submitted that the present case was not one to which the principle stated by Lord Diplock had application.
26. It was submitted that there was nothing about the specialised nature of the environment in which a doctor or dentist chose to refer a patient for radiology “that meant that their likely perception of the mark was, in some sense ... idiosyncratic or unusual, in the sense that it would differ from [that of] normal consumers of those services ....” It was said that doctors were “confronted with trade marks as part of their daily life”, and that, if a doctor encountered a mark in the practice of his or her profession, there would be nothing “to suggest the nature of the industry, or the market, would make any difference at all” to the way in which he or she responded. Counsel continued:

The real question in applying the observations of Lord Diplock is whether there’s something about the way in which a consumer or, in this case I will call them a trader for convenience, someone in the marketplace might encounter the mark requires your Honour to consider that through a tutored eye, and there’s nothing about this case that suggests your Honour has to have particular knowledge of idiosyncratic aspects of the marketplace at all.

The person to whom counsel referred as “a trader for convenience” was, of course, the putative medical practitioner, or occasionally dentist, who would refer patients for diagnostic imaging.

27. The difficulty with these submissions made on behalf of the applicant is that they seek to place a gloss on the uncomplicated statement made by Lord Diplock in GE. They seek to have that statement read as though it applied not to services sold in a specialised market, but only to services, and to markets, in the context of which the court took the view that the questions arising under s 10 could not be resolved without the assistance of “a tutored eye”, being an eye that would necessarily perceive the mark in an “idiosyncratic or unusual” way. In my view, however, for the court to embark upon a consideration of the matter at this level would go at least part of the way towards providing an answer to the question which, according to Lord Diplock, was a matter for specialised evidence. That is to say, the court should not be astute to decide for itself, in the absence of such evidence, whether there was anything about the contentious mark which would have a particular significance, and therefore a potential to cause, or to eliminate, deception or confusion, in the eye of those who work in the specialised market with reference to which the mark is used.
28. Although Lord Diplock’s statement was accepted as applicable under the Trade Marks Act, I would venture to add, with respect, my opinion that the soundness of it is self-evident, particularly in markets which involve the delivery of scientific goods or services. To a lay eye (such as that of a Judge), two marks may appear very similar. To a specialised eye, however, the marks may be stylised representations of different pieces of laboratory or diagnostic equipment (for example) as between which there could be no possibility of confusion. In the context of the present case, this is not altogether a theoretical distinction. In his affidavit sworn on 31 October 2010, Edmund James Carmodine Bateman gave the following evidence about the respondent’s mark:

We chose to adopt the Healthscan Swirl logo because we believed that it reflected the growing technological advancements in radiology with the patient at its centre. I thought the logo incorporated concepts associated with new technology such as helical CT imaging whereby imaging (x-ray) tubes are rotated around the patient to complete multi-dimensional images that greatly enhance patient care. This was the reason for its appeal to me and after consultation with Dr Bateman, its selection as the new logo. In my view, the Healthscan Swirl logo (with the hole at its centre) appeared to reflect the shape of the hole in gantry within a helical CT scanner.

Mr Bateman was not cross-examined. I am disposed to think that this evidence provides some confirmation of the utility, and of the importance, of the principle stated by Lord Diplock in the context of the present case.

29. The applicant called no specialised evidence as to the tendency of the respondent’s mark to deceive, or to cause confusion, with reference to radiology services. In the circumstances, the applicant’s claims under the Trade Marks Act must be dismissed.

THE APPLICANT’S CASE IN CONTRACT

30. Turning to the applicant’s case in contract, it alleges that, by the use of the respondent’s mark, the respondent is in breach of cl 5.5 of the licence agreement. It is not, of course, said that the respondent has used either the registered mark or the device mark as such, but it is alleged that the respondent’s mark is “similar to or capable of being confused with” one or other, or both, of those marks. Before reaching the point at which the respondent’s mark and the mark or marks protected by the licence agreement must be visually compared, there are several general issues as to the applicant’s entitlement to relief under cl 5.5 which arise on the submissions made by the parties. For the sake of simplicity, in this part of my reasons, where I intend to refer to either the device mark or the registered mark without discrimination, I shall use the term “the applicant’s mark”.
31. The first issue is whether the device mark (as distinct from the registered mark) was assigned to the applicant at all. The respondent says not. It points out, correctly, that the intellectual property offer of 20 August 2008 related only to the registered mark, and that there is not, otherwise, any evidence of an assignment of the device mark as distinct from the registered mark. That is correct so far as it goes. In my view, however, the applicant’s entitlement to relief under cl 5.5 of the licence agreement does not depend on the fact of an assignment of the device mark. In terms, the licence agreement relates to the device mark as much as it does to the registered mark, and the respondent has promised not to use either. If this promise is enforceable in equity, at least as between the applicant and the respondent, there is no need to look further for evidence of an assignment. The substance of the respondent’s promise is that it would, in favour of the applicant, forswear any further use of the device mark. Subject to the respondent’s other contentions to which I shall come, I consider that the applicant has a clear title to enforce that promise.
32. The second issue relates to the relevance of the provisions of the Trade Marks Act to the construction of cl 5.5. Here a number of questions arise. The respondent submitted that the words “similar to or capable of being confused with” in cl 5.5(b) of the licence agreement should be so construed as to go no further than the expression “deceptively similar” in the Trade Marks Act. That is to say, the prohibition in cl 5.5(b) should extend only to the use of a mark which so nearly resembles the applicant’s mark as to be likely to deceive or to cause confusion. It was submitted that the licence agreement was concerned with trade marks, in the lexicon of which the terminology used in cl 5.5(b) had an accepted, long-established, understanding. It was said that the parties could not have intended to set up a prohibition which ran parallel with, but which was not quite the same as, that contained in the Trade Marks Act itself.
33. It is significant that the prohibition in cl 5.5(b) includes the use of registered trade marks. Thus it is clear that the parties intended to add a contractual restraint to that which existed under the Trade Marks Act. Quite apart from the content of the restraint, the terms of the clause departed from those of the Act in two respects at least. First, the effect of the clause was, in part, to impose upon the respondent an obligation to police compliance on the part of its subsidiaries. Secondly, the prohibition was concerned with the use of a mark (and of similar etc marks) not only as a trade mark, but also as a business name, domain name “or otherwise”. That is to say, it would be a breach of cl 5.5 if the applicant’s mark, or a mark similar to or capable of being confused with any such mark, were used in one of these ways even if there was not the physical or other relation to the relevant goods and services required by subss (4) and (5) of s 7 of the Trade Marks Act. There are, therefore, indications that, in adopting cl 5.5 in its existing terms, the parties did not have in mind confining themselves to the regime of protections provided by the Trade Marks Act.
34. Turning then to the content of the restraint set up by cl 5.5(b), it is clear that, in terms at least, this provision uses a different test from that which applies under s 10 of the Trade Marks Act. There are two aspects of that difference which presently require consideration. The first relates to the circumstance that the provision contains what appears to be an alternative: “... similar to or capable of being confused with”. On the applicant’s case, these are true alternatives to which effect must be given: the first question is whether the respondent’s mark is similar to the applicant’s mark, and if so, no question of the potential for confusion need be considered. By contrast, s 10 of the Act sets up a single test which links resemblance with the (consequential) likelihood of confusion.
35. I am not attracted by the construction for which the applicant contends. Devoid of context, the word “similar” can be most unhelpful in conveying a meaning. It is the context which provides the connotation. For example, a consumer who is unable to buy his or her customary brand of a particular product might ask the retailer: “Have you anything similar?” Normally, such an inquiry would connote a similarity with respect to the purpose for which the requested product was to be used. The present context is that of a trade mark, that is to say, of a mark of distinction of the services of the respondent in the course of trade. In that context, there is a sense in which the composite expression “similar to or capable of being confused with” conveys a more satisfactory understanding of the intention of the draftsman than either “similar to” or “capable of being confused with” standing alone. In my view, the kind of similarity with which the provision is concerned is that which is capable of causing confusion. The confusion, quite evidently, is between the mark presumptively being used by the respondent and the relevant mark protected by cl 5.5(b). I propose to decide this point by reference to such an understanding of this provision.
36. The second aspect is that involved in the respondent’s submission that cl 5.5(b) should be construed such that, in point of content, the restraint therein precisely mirrors that in s 10 of the Trade Marks Act. The respect in which the test stated by the contractual provision conspicuously differs from that under s 10 is that it is concerned with similarity which is capable of causing confusion, whereas the section is concerned with resemblance which is likely to deceive or to cause confusion. Here I think that the applicant has the better of the argument. It is as clear as may be that the parties to the licence agreement were conscious of the circumstance that many of the marks referred therein were registered under the Trade Marks Act; and it may be inferred that they had an active appreciation of the requirements of s 10. I have no reason to doubt that their choice of different language by which to express the prohibition in cl 5.5(b) was a conscious one. I consider that for the court to conflate, as it were, the terms of that prohibition into those of s 10 of the Trade Marks Act would be to neutralise that choice, and would go against the parties’ intentions.
37. It must be recognised that the prohibition arising under cl 5.5(b) of the licence agreement is not a matter of legislation. It is the result of a commercial bargain concluded between substantial organisations. Those prohibitions formed part of the consideration passing from the Primary group to Zuellig within the larger transaction by which the applicant was sold to the latter. If I were to construe the clause as though it went no further than replicating the corresponding provisions of the Trade Marks Act – and on the assumption, which I must make for present purposes, that the clause is somewhat more favourable to the applicant than the Act – I would be diminishing the value of that consideration. Given that the applicant’s mark was, before the making of the licence agreement, the property of a company within the Primary group, and given the allocation of that mark, and of the Symbion name and goodwill generally, to the applicant, I should not regard it as in the least surprising that the applicant should request, and that the respondent should accede to, the imposition of a prohibition in terms more extensive than those correspondingly to be found in the Trade Marks Act.
38. The next question which arises with respect to the potential relevance of trade mark law to the operation of cl 5.5(b) is one which relates to the approach to the visual comparison which is proper to be taken in making the judgment required by this provision. Under the Trade Marks Act, when considering whether a mark so nearly resembles a trade mark that it is likely to deceive or to cause confusion, one does not place the two marks side by side and undertake a precise comparison of their individual features. Rather, one approaches the problem from the perspective of those who see the allegedly infringing mark for the first time, and have an imperfect recollection of the protected mark from previous exposure: Australian Woollen Mills Ltd v F S Walton & Co Ltd [1937] HCA 51; (1937) 58 CLR 641, 658; The Shell Company of Australia Ltd v Esso Standard Oil (Australia) Ltd (1961) 109 CLR 407, 414-415; NSW Dairy Corporation v Murray-Goulburn Co-operative Co Ltd (1989) 86 ALR 549, 589. In the context of cl 5.5(b), the question is whether the respondent’s mark would, by reason of similarity, be capable of being confused with the applicant’s mark in the eyes of the person who has some previous acquaintance with the latter. I consider that the approach which the authorities have taken under the Trade Marks Act is a useful one to take under cl 5.5, so long as one remembers that the test as such is not the same.
39. There is one further observation I would make before leaving the general area of the extent to which the construction and enforcement of cl 5.5(b) may properly be informed by trade mark law. As mentioned above, under the Trade Marks Act, where the goods or services in question are offered in a specialised market, the owner of a mark cannot succeed on the question of deceptive or confusing resemblance without specialised evidence. In the present case, it was not submitted on behalf of the respondent that the same principle applied to the determination of the question of similarity which is capable of causing confusion under cl 5.5(b). Indeed, it was implicit in its submission that that determination was proper to be done by the court, unassisted by any such evidence.
40. The third issue was one of construction with respect to cl 5.5, and relates not to the Trade Marks Act but to the relationship between the parties who negotiated the licence agreement, and the setting in which that took place. It was submitted on behalf of the respondent that to construe cl 5.5 as potentially the source of a prohibition against the use of the respondent’s mark would be unreasonable, and could not have been what the parties intended. The force of the point was based upon the circumstance that, as at August 2008 when the substance of the provisions of the licence agreement was settled, the respondent’s mark had been devised, and was in use, albeit to a limited extent, by Idameneo 123, then a company within the Primary group, as was the applicant itself. It was submitted on behalf of the respondent that the reasonable bystander would have regarded it as unlikely that the respondent, when agreeing to the terms of cl 5.5, had in mind setting up a prohibition upon a then existing use of the respondent’s mark. It was submitted that for the applicant to have insisted on such a prohibition would rightly have been regarded, both by the respondent and by the bystander, as quite unreasonable, and that the general words of the prohibition should not be understood in such a sense.
41. The respondent’s argument appears to involve the proposition that cl 5.5 of the licence agreement should be read subject to an implied qualification that, whatever may be the actual position with respect to similarity or the prospect of confusion, the respondent’s mark itself would never be caught thereby. The agreement is, of course, an apparently complete, professionally drafted, written agreement, and the implication of terms could be done only in accordance with the conditions referred to in BP Refinery (Westernport) Pty Limited v Shire of Hastings [1977] HCA 40; (1977) 180 CLR 266, 283. In my view, the implied term proposed by the respondent would satisfy neither the second nor the third of those conditions: the implication is not necessary to give business efficacy to the licence agreement, and the implication is not so obvious that it “goes without saying”.
42. A substantial difficulty facing the respondent with respect to the third condition is that there is no evidence that the applicant, or that Zuellig, knew of the existence of the respondent’s mark in the period August-October 2008. Indeed, so far as revealed in the evidence, it was not until February 2010 that the applicant first learnt of the existence of that mark. It is true that the applicant did not call anyone who was involved in the negotiation of the share sale agreement and the other agreements in the second half of 2008, but neither was any evidence led on behalf of the respondent from which it might be inferred that any executive, director or officer of the applicant knew of the respondent’s mark at that time. The respondent has invited me to assume that no evidence which might have been given by those who were involved in the negotiation of the relevant agreement in 2008 would have assisted the applicant on this question, and I would not be unsympathetic to that invitation if the evidence which had been called reached the point of requiring the applicant to provide a response. However, given the timing of the introduction of the respondent’s mark to which I have referred to in paras 5-6 above, I am not disposed, in the absence of any evidence on the point, to consider it intuitively unlikely that the applicant would be unaware of the respondent’s mark at the relevant time. As against this, if the existence of the respondent’s mark was as self-evident to the respondent as the respondent claims it should have been to the applicant, it might be expected that the respondent’s own negotiators would have raised the matter in the context of negotiating cl 5.5 of the licence agreement. I do not think that the respondent has made good its case for an implied qualification to be read into the express terms of that clause.
43. The fourth issue also arose under a submission made by the respondent. It was said that the court should not be persuaded that the respondent’s mark fell within the words of cl 5.5 because both that mark and the applicant’s mark existed within a broad universe of marks and logos in the allied health sector, many of which had similarities as between themselves, and had features in common with each of the marks which are contentious in this proceeding. The respondent tendered examples of such marks and logos, and, during cross-examination, had the General Manager of Retail Services of the applicant, Andrew John Vidler, recognise where various similarities lay, with a view to providing a foundation for the submission, which was made on its behalf, that the respects in which the respondent’s mark and the applicant’s mark were similar were features commonly observed across the sector.
44. I find this submission unattractive, for two reasons. First, I have difficulty appreciating how the comparison between two marks which is required by the terms of cl 5.5 can be affected, one way or the other, by the presence or absence of other similar marks in the same industrial sector. In an extreme case, there may be another mark the use of which would be a self-evident breach of cl 5.5, but the existence thereof could not bear upon the comparison required by the clause. (And I mention in this respect that one of the marks to which Mr Vidler was referred drew a response from him to the effect that the applicant was opposing an application to register the mark under the Trade Marks Act.) Secondly, the matter cannot be approached as though the applicant and the respondent were two completely independent trading entities within the allied health sector. The fact is that they were previously part of the same corporate group, and they went their separate ways by reference to the terms of a commercial bargain made between their now respective parent companies, part of which was the acceptance by the respondent of a specific restraint upon its use of marks which were similar to, or capable of being confused with, the applicant’s marks. Alone of all companies in the allied health sector, the respondent’s branding activities are subject to that restraint. It is a restraint which the respondent voluntarily undertook, as part of the consideration which passed under a commercial bargain which I must assume that its parent, Primary, regarded as satisfactory. The application of cl 5.5 cannot, in my view, be influenced by the practices of other companies.
45. The fifth issue concerns the circumstances in which the respondent’s mark and the applicant’s mark are used. The respondent pointed to the fact that the respondent’s mark is used in connection with the delivery of diagnostic imaging services, the customers for which – as a practical reality if not strictly as a matter of contract – are medical and dental practitioners. By contrast, the applicant’s mark is used in connection with the wholesale distribution of pharmaceutical products (some small number of which are “over the counter” products branded with the applicant’s mark and which, therefore, may find their way ultimately into the hands of consumers). According to the respondent, these are quite distinct settings in which the respective marks are used, and there could be little or no possibility of the similarity between the marks, assuming there to be one, causing confusion.
46. In terms at least, cl 5.5 is concerned with a mark, as such, being confused with the applicant’s mark, as such. It is not the putative use of a mark that is to be compared with the corresponding use of the applicant’s mark for the potential of those uses to cause confusion. However, it is the use of a mark which is the subject of the prohibition in the clause, and I accept that the setting in which a mark is used may either strengthen or weaken a case by the applicant that the mark is similar to the applicant’s mark in a way that may confuse. Thus I am prepared, favourably for the respondent, to give cl 5.5 a construction that would allow the particular circumstances of the allegedly contravening use to inform the judgment whether the mark so used is similar to or capable of being confused with the applicant’s mark.
47. But I do not accept the respondent’s factual submission that the circumstances in which the respondent’s mark is used are so distinct from the business activities of the applicant as to leave no realistic scope for confusion by reason of similarity. Both marks are used in the allied health sector: indeed, before 2008, the applicant’s mark was used by the respondent and its subsidiaries (then not part of the Primary group) in both the pharmaceutical and the imaging parts of that sector. I think I am entitled to regard it as notorious that there is a degree of contact, at both the professional and the consumer levels, as between these parts, such as would make it quite unsurprising if the same people – to some extent at least – had occasion to encounter both the respondent’s mark and the applicant’s mark from time to time. And there is some evidence that the respondent’s mark is used in settings, such as the premises of hospitals, where those who have regular business dealings with the applicant – pharmacists and the staff of hospital pharmacy departments, for example – might be expected to be found. If there is such similarity between the marks as would be capable of causing confusion – a question to which I turn next – I would not accept that the respective areas of operation are so distinct as to exclude the reasonable prospect of that confusion arising in fact.
48. That leaves the question whether the respondent’s use of the respondent’s mark is in breach of cl 5.5 of the licence agreement as I have construed it. Here I must resist the temptation to lay out a catalogue of similarities and differences as between the marks being compared, but must confine myself to those features of both which would bear upon the prospect that an observer, previously acquainted with the applicant’s mark, would be confused upon encountering the respondent’s mark. For these purposes I take the respondent’s mark as represented in para 7 above, and the applicant’s mark in the colour of the device mark.
49. In my view, features which these marks have in common and which would carry the potential for confusion are the following. First, the marks both embody an internal space defined by a continuous, non-rectangular, ample surrounding portion, as in, for example, an automotive tyre or a donut. Secondly, a distinctive (and, in my view, memorable) feature of the surrounding portion on both is that it folds backwards and inwards on itself alternately, giving something of the impression of motility, if not fluidity. Thirdly, the internal space in both marks has the appearance of a Reuleaux triangle, or at least of a generally triangular space with curved sides and rounded corners. And fourthly, the respondent’s mark is generally (although not in all respects) of a similar colour to that of the applicant’s mark.
50. By contrast, the differences between the marks are such as would best be noted by the observer who had the two marks side-by-side, and was astute to discern matters of detail. At that level, these differences cannot be denied. First, the external shape of the respondent’s mark is circular, whereas that of the applicant’s mark is triangular. Secondly, the respondent’s mark is ornamented with straight, curved and looped lines whereas the applicant’s mark has no such ornamentation. Thirdly, to the extent that it represents a triangle, the internal space in the respondent’s mark sits on the base thereof, whereas that in the applicant’s mark sits on the apex. And fourthly, blue shading is an observable feature of some sections of the respondent’s mark, whereas there is no such shading in the applicant’s mark.
51. Taking these similarities and differences into account, the question is whether, as a matter of overall impression, the net result is that the respondent’s mark is similar to the applicant’s mark to an extent capable of causing confusion. In my opinion it is. As I have stressed above, the question is not whether the resemblance is such as would be likely to cause confusion. It will be sufficient if it is such as would be capable of causing confusion. That is a lower bar than is put in place by s 10 of the Trade Marks Act. On the facts of the present case, I am satisfied that the applicant has crossed it.
52. There will be judgment for the applicant under cl 5.5 of the licence agreement. I shall hear the parties on the terms of the orders necessary to give effect to this conclusion; and as to costs.
    

I certify that the preceding fifty-two (52) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Jessup.

Associate:

Dated: 20 April 2011