Oze, Oze, Oze: A Mitey Victory for Dick Smith Investments Pty Ltd

The Federal Court has ruled that Dick Smith’s Ozemite trade mark can remain on the Register, forcing patriotic-spread-loving Australians to choose between it and competitor, Aussie Mite.

Although Ozemite was registered as a trademark before its homophonic counterpart and thereafter promoted vigorously by “National Living Treasure,” Mr Smith, Ozemite did not reach supermarket shelves for another eight years. In the interim, Roger Ramsey, a South Australian businessman, succeeded before the Trade Marks Office in both registering the Aussie Mite trade mark (over Dick Smith’s opposition) and in having Ozemite removed from the Register for non-use.

The Federal Court’s ruling determined the appeal from this second decision of whether the Ozemite trade mark should be removed from the Register for non-use.

Justice Katzmann’s decision (which contains one of the best 5 word paragraphs we have seen in a judgment at [6] (“The battle lines are clear”) was handed down on 12 August 2016 (Dick Smith Investments Pty Ltd v Ramsey [2016] FCA 939).

The Trade Marks Act 1995 (Cth) allows any person to apply to have a trade mark removed from the register where the registered trade mark in question has been on the Register for five years and has not been used in Australia for a continuous three year period before the filing of the non-use application.

Was there use of the Ozemite trade mark?

It was common ground that the Ozemite product was not sold or offered for sale at any point in time during the relevant non-use period. Mr Ramsey argued that because Mr Smith had not actually sold any Ozemite in the three years prior to the filing of the removal action, or indeed at any time prior to the removal action being filed, it should be removed from the Register. His argument relied on the argument that ‘use as a trademark’ excluded all steps antecedent to offering Ozemite for sale. Mr Smith argued that publicity featuring the Ozemite name during the non-use period evidenced the trade mark’s use: it was not to the point that no products were available for purchase under the trade mark during that time. In particular, Mr Smith referred to “pre-launch” publicity for the product including a Chaser satirical skit and an interview on Adelaide radio.

The plurality of the High Court in E & J Gallo Winery v Lion Nathan Australia Pty Ltd (2010) 241 CLR 144 observed that the reference in s 17 to “in the course of trade” encompasses the idea that the use of a trade mark is use in respect of “vendible articles”. Mr Ramsey argued that there must be “at least a single act of sale” in order for there to be a “vendible article”. Justice Katzmann did not agree. Her Honour found that the reference in Gallo to “vendible goods” did not limit the scope of trade mark use to goods which are actually sold. “Vendible” means goods which are capable of being sold. The High Court were not saying that a single act of sale was necessary to defeat a removal application, rather, their Honour were saying that a single act of sale was sufficient to establish use.

Justice Katzmann found that Mr Smith had used the Ozemite trade mark in the relevant period. Her Honour found that it was unnecessary that any Ozemite actually change hands. Dick Smith did not merely have a subjective intention to use the trade mark – it was enough that the product was promoted and developed with an objectively ascertainable commitment to producing the product that would bear the mark. The Ozemite product remained under development and considerable funds had been invested in its development. The trade mark had been used in the course of production and preparation for the market.

Was there an obstacle to the use of the Ozemite trade mark during the non-use period?

While Justice Katzmann’s finding that the Ozemite trade mark had been used was sufficient to bring Ozemite victory, her Honour also went on to consider whether Mr Smith had made out his other arguments regarding the presence of an obstacle to use of the trade mark and whether it was in any event reasonable for the court to order that the trade mark not be removed from the Register.

In this regard, Mr Smith had claimed a defence to the non-use application, citing circumstances amounting to an obstacle to launching his product beyond his control. The relevant circumstances were the unavailability of spent brewer’s yeast (from which delicious tarry spreads ending in ‘mite’ are made) owing to Kraft’s having “stitched up” the market for the stuff by entering into contracts with major Australian breweries.

Her Honour noted that the difficulties associated with obtaining sufficient quantities of spent brewer’s yeast were exacerbated by Mr Smith’s quest to create ‘a product that tasted like the Vegemite of old,’ that is, ‘before the Americans changed the taste’. Justice Katzmann opined that these two difficulties were not unrelated, given that the original Vegemite was made using spent brewer’s yeast.

It was an insuperable obstacle to the mounting of this defence, however, that by Mr Smith’s own admission, it was the Ozemite developers’ unyielding search for perfection which prevented the product’s release. Indeed, Mr Ramsey had been able to release his product in the same period precisely because he did not seek the same flavoursome replication. In these circumstances, it was not open for Mr Smith to argue that he was prevented from launching his product due to circumstances beyond his control.

Should the Court’s discretion be exercised to allow the mark to remain on the register?

The final issue considered by Justice Katzmann was whether to exercise the Court’s discretion to order that the trade mark not be removed from the Register. This finding was also made in obiter, given the earlier finding that the trade mark had been used during the non-use period and therefore should not be removed. Her Honour concluded that even if she had not already found that Ozemite had been used in the relevant period, she would have exercised her discretion to allow the mark to remain on the Register. In reaching this conclusion, her Honour weighed the factors pressed by each side. For Mr Smith these included that:

  • the registered owner of the mark had never abandoned or intended to abandon it;
  • the owner has always been committed to bringing the product to market;
  • the owner has a residual reputation in the mark;
  • since the statutory period substantial quantities of Ozemite have been sold;
  • in registering Aussie Mite Mr Ramsey misappropriated the Ozemite mark; and
  • removal of the mark could lead to public confusion.

Against these, Mr Ramsey emphasised Mr Smith’s delay, the fact that many of these considerations were undermined because the product was not brought to market in the relevant period and that the significance of Ozemite’s subsequent sales had been overstated.

Justice Katzmann essentially agreed with Mr Smith’s submissions. Justice Katzmann rejected the argument that there had been an unreasonable delay in bringing the products to market and found that the Ozemite trade mark had a residual reputation deriving from the long period during which it had been publicised. Dick Smith argued that Mr Ramsey’s conduct in deliberately appropriating the reputation of the Ozemite name was relevant. Mr Ramsey argued it was “opportunistic” and sought to deflect the argument by submitting that Mr Smith’s own evidence and business practices counted against the exercise of her discretion. The factors relied upon by Mr Ramsey included that Mr Smith’s conduct in:

  • relying in the opposition to the registration of Aussie Mite, on Mr Ramsey’s original plans to call a yeast extract spread Dinky Di-nemite, when it applied to register the same word as a trade mark;
  • giving inconsistent evidence about his own business practices;
  • being sued by Arnotts for infringement of the Tim Tam trade mark through the use of the brand name “Tem p Tins”, which was settled on the basis that he increase the size of the “p”;
  • admitting to engaging in advertising to achieve a reaction; and
  • failing to appear at the hearing before the Registrar or to appeal the opposition decision.Justice Katzmann rejected those submissions and was not convinced. In reaching her conclusion, her Honour noted that she had ‘no confidence in Mr Ramsey’s evidence’ and that ‘[u]nless his evidence is against his interest, or corroborated by independent evidence, it would be unsafe to rely on it.’

Finally, Justice Katzmann found that a member of the public might conclude that Aussie Mite was associated with Mr Smith ‘led astray by the homophony and an imperfect recollection of the Ozemite mark’. There was evidence of actual confusion of customers who thought that an Aussie Mite advertisement was attributable to Dick Smith. There was likely to be less confusion if the Ozemite trade mark remained on the register than if it was removed.

What next?

Ozemite’s appeal was successful, with costs awarded against Aussie Mite. Following the decision, however, the media has reported some some jarring remarks (pun intended) made by Mr Smith about the costs associated with the legal system generally. Mr Smith noted that ‘[t]his is an example of the ridiculous cost of the law, we’ve spent $550,000 on this case so far, and Aussie Mite has spent something like $400,000.’ As Ozemite’s profits go to charity, he also noted that ‘[t]hat’s half a million less going to charities this year. If I knew that, I would have never entered into this, I would have just changed the name to DickyMite.’

Aussie Mite managing director, Elise Ramsey, suggested that the decision has implications for small business operators generally. She said the decision ‘shows that a big company can come along, take over the business name, push them out and drain them’. Ms Ramsey was defiant in the face of this yeasty leviathan, stating that Aussie Mite does not ‘have a problem with Dick Smith having a yeast spread but he didn’t have to use this name. I will be appealing the decision and I’ll take it to the High Court if necessary.

In the meantime, the battle for Ozes/Aussies’ breakfast time tastebuds will be waged at close proximity on supermarket shelves. It remains to be seen whether controversial breakfast spread, marmalade, mite be drawn into the fracas.