A single vowel and the addition of the word “DIRECT” were not enough to separate SENSES DIRECT from SENSIS.
In Sensis Pty Ltd v Senses Direct Mail and Fulfillment Pty Ltd [2019] FCA 719, the Federal Court found that SENSES DIRECT was deceptively similar to the registered SENSIS trade marks and that its use in relation to advertising and marketing services amounted to trade mark infringement.
The dispute was not simply about how closely two words looked on paper. Customers had repeatedly referred to Senses Direct as “Sensis Direct” or simply “Sensis”, and there was evidence of a prospective customer initially believing that Senses Direct was connected with Sensis. The Court considered this evidence significant when assessing whether the similarity between the marks created a real risk of confusion.
The decision also dealt with a more difficult question. Senses Direct had adopted its mark honestly and had been using it for several years. Could that honest concurrent use provide a defence to infringement? The answer turned largely on timing.
Background of the dispute
Sensis Pty Ltd carried on a direct marketing and data processing business in Australia. It owned two registrations for the plain word SENSIS, including a Class 35 registration dating from 2001 and a later registration covering services in Classes 35 and 42.
The registrations covered a broad range of services including advertising, marketing, business information, data processing and related services. The marks had originally been owned by Telstra Corporation Limited and were assigned to Sensis with effect from February 2014, together with the accrued rights to pursue earlier infringements.
Senses Direct Mail and Fulfillment Pty Ltd commenced business in 2013. Its principal activity was direct mail marketing, although its business extended into areas such as creative services, data solutions and multi-channel marketing. It used the marks SENSES DIRECT and SENSES DATA, both as words and as part of logos.
In February 2016, Senses Direct applied to register its device marks for marketing services and business marketing consulting in Class 35. Sensis subsequently commenced proceedings alleging that the use of SENSES DIRECT and SENSES DATA infringed its SENSIS registrations under section 120(1) of the Trade Marks Act 1995 (Cth).
Senses Direct did not contest the claim relating to SENSES DATA by the time of the hearing. The principal dispute therefore concerned SENSES DIRECT.
Senses Direct also brought a cross-claim seeking to remove certain services from the SENSIS registrations for non-use.
The main issues
The Court was required to determine several interconnected questions.
The first was whether SENSES DIRECT was deceptively similar to SENSIS.
If it was, the Court then had to consider whether Senses Direct could rely on the defence in section 122(1)(fa). That provision, as it then stood, could protect a person from infringement if the Court considered that the person would obtain registration of the deceptively similar mark if they applied for it.
That question brought the honest concurrent use provisions in section 44(3) into play.
The Court also considered Sensis’ reputation for the purposes of section 60 and Senses Direct’s cross-claim seeking partial removal of the SENSIS registrations for non-use.
Were SENSIS and SENSES DIRECT deceptively similar?
The Court found that they were.
The starting point was the established principle that deceptive similarity is not determined by placing two marks next to each other and carefully identifying their differences.
Consumers do not usually have both marks before them. The assessment instead takes account of imperfect recollection and the general impression left by the earlier mark. The question is whether the resemblance creates a real and tangible danger that a person may wonder whether the respective services come from the same commercial source.
Applying that approach, Justice Davies considered there to be considerable visual and aural similarity between SENSIS and SENSES.
The difference was only the vowel in the second syllable. The words looked very similar and sounded very similar when spoken.
The Court rejected the suggestion that the different “IS” and “ES” endings created a meaningful aural distinction. The analysis was not one of carefully pronouncing each word syllable by syllable. It was concerned with the impression that would remain with an ordinary person encountering the marks in the marketplace.
The word “DIRECT” did not remove the similarity
Senses Direct argued that its mark had to be considered as a whole. That was correct as a matter of principle, but it did not mean that the additional word “DIRECT” prevented deceptive similarity.
The Court considered “DIRECT” to be descriptive in the context of the respondent’s business. It did not introduce enough distinctiveness to overcome the close resemblance between SENSES and SENSIS.
This is an important feature of the decision. Adding another word to an existing mark will not necessarily avoid infringement, particularly where the added word is descriptive or otherwise lacking in distinctiveness.
The dominant impression created by SENSES remained extremely close to SENSIS. The additional descriptive material was not enough to remove the risk that someone with an imperfect recollection of SENSIS might associate SENSES DIRECT with the same source.
Misspellings became important evidence
The evidence went considerably further than a theoretical comparison of the two marks.
There were numerous examples of customers and others referring to the respondent as “Sensis Direct” or simply “Sensis”, including people who had previously dealt with the respondent.
Senses Direct sought to characterise these as typographical mistakes. The Court was not persuaded.
Justice Davies noted that the letters “e” and “i” were not adjacent on a keyboard. More importantly, the mistakes consistently involved the ordinary word SENSES being written as the invented word SENSIS.
For the Court, the repeated errors reinforced the conclusion that the two expressions were visually and aurally close and that confusion was not merely hypothetical.
There was also evidence from a marketing manager whose colleague suggested Senses Direct as a possible direct mail provider. On hearing the name, he initially queried whether “Sensis” would be too large a provider for their needs. He later investigated and discovered that Senses Direct was unrelated to Sensis.
That confusion did not continue through to the eventual purchasing decision, but it did not need to.
Trade mark law does not require confusion to persist until a transaction is completed. Initial confusion can be sufficient. The fact that further investigation eventually corrects a mistaken impression does not necessarily remove the significance of that initial reaction.
Sophisticated business customers can still be confused
Senses Direct placed considerable emphasis on the nature of its customers.
Its services were largely purchased by businesses and charities. The purchasing process could involve discussions, detailed quotations, meetings and interaction with senior managers or marketing personnel. The respondent therefore argued that its customers were relatively sophisticated and would exercise care before engaging a service provider.
The Court accepted that these customers were likely to exercise a greater degree of attention than an ordinary consumer purchasing a low-value everyday item.
That did not resolve the issue.
Senses Direct was using its mark for more than the narrow physical processing of direct mail. Its website and promotional activities extended into graphic design, creative services, copywriting, multi-channel campaigns, data services and marketing solutions more generally.
This brought the respondent closer to the wider advertising and marketing activities associated with Sensis. The broader the respondent presented its service offering, the greater the opportunity for the similarity between the marks to matter.
The case therefore shows that the sophistication of the relevant customer is an important circumstance, but it is not a complete answer to deceptive similarity.
Honest adoption did not prevent infringement
One of the more interesting aspects of the case concerned how the SENSES DIRECT name had been adopted.
The evidence was that the respondent’s managing director developed the name from the concept that physical direct mail can appeal to the recipient’s senses.
Before establishing the business, he carried out Google searches for SENSES and SENSES DIRECT, searched ASIC records and checked the availability of the relevant domain name. The SENSIS mark did not emerge in the searches relied upon in his evidence.
The Court accepted that Senses Direct had adopted its marks honestly.
Even the later instances in which customers referred to the business as “Sensis” did not cause the Court to find that its continued use had become dishonest. There was no evidence that the respondent had selected its name to take Sensis’ customers or exploit Sensis’ reputation.
That finding, however, was not enough to establish the statutory defence.
The timing problem with honest concurrent use
Senses Direct relied on section 122(1)(fa), arguing in substance that it could have obtained registration of its mark through the honest concurrent use discretion in section 44(3).
A crucial question was therefore when the Court should assess whether the respondent would have obtained registration.
Senses Direct argued for later dates, including the date on which it filed its trade mark application in February 2016, the date on which it filed its defence, or potentially the time of the hearing.
Sensis argued that the relevant point was the time of the allegedly infringing conduct.
Justice Davies followed the Full Court’s reasoning in Anchorage Capital Partners Pty Ltd v ACPA Pty Ltd and held that the section 122(1)(fa) defence had to be assessed by reference to the circumstances existing at the time of the alleged infringing use.
That conclusion presented Senses Direct with a fundamental problem.
Its first use of SENSES DIRECT was itself the infringing use. At that point, it could not rely on a history of concurrent use because no period of concurrent use had yet occurred.
The later years of honest use could not retrospectively provide a defence to the infringement that had already commenced. The Court therefore held that section 44(3) was not available to support the section 122(1)(fa) defence.
The Court nevertheless considered the honest concurrent use argument on an alternative basis. Although the adoption of SENSES DIRECT was honest, Justice Davies indicated that the discretion to register the mark would not have been exercised in the respondent’s favour.
Sensis had used its marks for substantially longer, had invested heavily in advertising and promotion, and there was significant evidence demonstrating the potential for confusion. The businesses were also not operating in completely separate markets. Although refusing registration would cause considerable inconvenience to Senses Direct, that factor did not outweigh the others.
The distinction is important. Honest adoption does not create an automatic entitlement to registration. Honesty is one part of the inquiry.
Sensis’ reputation under section 60
Sensis also argued that SENSES DIRECT would not have been registrable because of section 60 of the Trade Marks Act.
The Court accepted that SENSIS had acquired a considerable reputation in Australia in relation to its directory services before Senses Direct commenced using its mark in May 2013.
The difficulty was proving the necessary reputation more broadly.
The evidence showed that Sensis was strongly associated with businesses such as Yellow Pages and White Pages. Its later rebranding efforts were directed partly at repositioning Sensis as a broader digital marketing and advertising business.
Justice Davies was not satisfied that, as at May 2013, Sensis had established a substantial reputation under the SENSIS mark for advertising and marketing services more generally, beyond its reputation in directory services. The evidence concerning the later rebranding campaign was also insufficient to establish the broader reputation necessary for the section 60 argument.
Section 60 therefore did not independently prevent registration of SENSES DIRECT.
This finding did not change the infringement result. The section 122(1)(fa) defence had already failed because Senses Direct could not establish the necessary registrability of its mark at the time of the first infringing use.
The non-use cross-claim
Senses Direct attempted to reduce the scope of Sensis’ registrations by bringing a non-use cross-claim.
It sought to remove coverage relating to various direct mail marketing activities, including planning, preparation and distribution of direct mail marketing materials, mail fulfilment, mailing lists, SMS messaging and electronic mail messaging.
Sensis relied particularly on its MacroMatch service.
MacroMatch was a data validation and cleansing service which allowed businesses to check, correct and enhance customer contact information. The service could assist with direct mail, email and SMS campaigns by improving the accuracy and quality of customer databases.
Senses Direct argued that this was different from its own activities because Sensis was providing data cleansing as a standalone service, whereas its own data processing formed part of an overall direct mail service.
The Court considered that distinction too narrow.
From the customer’s perspective, both activities involved data processing designed to facilitate marketing activities. There was also evidence that the parties’ data services competed for the same customers and used similar data sources.
The Court accordingly found that Sensis had used its marks during the relevant non-use period in respect of services falling within the scope of those challenged services.
The non-use challenge therefore did not provide Senses Direct with an alternative route around the infringement finding.
The outcome
The Federal Court ultimately found that:
- SENSES DIRECT was deceptively similar to SENSIS;
- the section 122(1)(fa) defence had to be assessed at the date of the alleged infringing conduct;
- Senses Direct could not rely on honest concurrent use for that purpose because it had no use preceding its first infringing use;
- Sensis had not established the broader reputation necessary to prevent registration under section 60; and
- Sensis had demonstrated use of its marks during the relevant non-use period in respect of the services challenged by Senses Direct.
Sensis therefore succeeded in establishing infringement under section 120(1).
Commercial Significance
The decision provides several useful lessons for businesses choosing and defending trade marks.
First, small spelling differences can carry surprisingly little weight. SENSIS and SENSES differed by a single vowel, and SENSES DIRECT included an additional word, but the overall visual and aural impression remained sufficiently close to create a real risk of confusion.
Second, adding a descriptive word may not cure an otherwise problematic mark. “DIRECT” described an aspect of the respondent’s business and did little to distinguish the commercial impression created by SENSES.
Third, actual marketplace evidence can be particularly persuasive. The repeated references to “Sensis Direct” and the evidence of a customer initially believing that the respondent was Sensis supported what might otherwise have remained an abstract comparison between two words.
Fourth, sophisticated purchasers are not immune from trade mark confusion. Careful investigation later in the purchasing process may correct an initial misunderstanding, but that does not necessarily eliminate deceptive similarity.
Fifth, honest concurrent use should not be treated as a general safety net for a business that has traded under a conflicting mark for several years. The timing of the statutory defence matters. In this case, the respondent’s first use was already infringing, which prevented its subsequent history of use from providing the necessary defence under section 122(1)(fa).
The decision also highlights the difference between honest adoption and legal entitlement. A trader may have independently developed a name, undertaken searches and acted without any intention to take advantage of another business, yet still infringe an earlier registered trade mark.
Finally, the case demonstrates the importance of maintaining evidence of genuine use across the services covered by a registration. Sensis was able to resist the non-use challenge because it could connect its MacroMatch activities with the relevant direct marketing services during the statutory period.
For businesses selecting a new brand, a company name search, domain name search or general internet search cannot replace a careful assessment of existing trade mark rights. The question is not simply whether the proposed name is identical to an existing mark, but whether consumers encountering it in the relevant commercial setting may be left wondering whether the two businesses are connected.
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