The dispute between Mars Australia Pty Ltd and Delfi Chocolate Manufacturing S.A. over the mark MALTITOS generated two decisions that together constitute an important clarification of the interaction between deceptive similarity and reputation-based opposition under the Trade Marks Act 1995 (Cth). The delegate’s decision ([2014] ATMO 113) and the Federal Court appeal ([2015] FCA 1065, Jessup J) each reached an identical conclusion on the deceptive similarity ground under section 44, yet diverged sharply on the reputation-based opposition under section 60. The net outcome, following Jessup J’s reversal of the delegate’s section 60 finding, was an order that MALTITOS proceed to registration, notwithstanding the undisputed and substantial reputation of MALTESERS in the Australian confectionery market.
Background of the Dispute
On 15 March 2013, Delfi Chocolate Manufacturing S.A., a Singaporean entity, filed Australian trade mark application no. 1546597 for the word mark MALTITOS in Class 30, covering confectionery, biscuits, chocolate, cocoa, and products made from or including chocolate and/or cocoa. Delfi claimed a convention priority date of 16 October 2012, referable to its Singapore application no. T1215392H. Notably, on the same date, Delfi also filed application no. 1546603 for DELFI MALTITOS over an identical specification; following the withdrawal of an initial opposition, that composite mark subsequently proceeded to registration.
The application for MALTITOS alone attracted the opposition of Mars Australia Pty Ltd, the registered proprietor of MALTESERS, one of the most enduring and widely recognised confectionery trade marks in Australia. MALTESERS has been sold continuously in Australia since approximately 1953, has attracted sustained advertising expenditure across six decades, and had been the subject of Federal Court litigation in 2009 in which Perram J described the mark as “very famous” and observed that consumers generally must be taken to be familiar with it. Mars filed its notice of intention to oppose on 4 July 2013, initially pressing grounds under sections 44, 60, 42(b) and 43 of the Act. By the time of the hearing before the delegate in October 2014, only the grounds under sections 44 and 60 were pursued.
Heard in Canberra on 28 October 2014, the opposition was determined by Hearing Officer Heath Wilson. Mars was represented by Ross McLean of Baker and McKenzie; Delfi was represented by Ed Heerey of Counsel, instructed by Shyama Jayaswal of Minter Ellison. Evidence comprised a declaration from Catherine Knight, Mars’s Segment Leader for Bite Size products, attaching substantial annexures concerning the history, sales, and promotion of MALTESERS, together with a statutory declaration from Robert Cooper on behalf of Delfi. In the Federal Court appeal, heard de novo on 22 and 23 June 2015 in Melbourne, Delfi was represented by A Ryan SC with Heerey and P Creighton-Selvay; Mars by S Burley SC with L Merrick.
The Issues
Two grounds of opposition were pressed at both the delegate level and, by way of cross-appeal, before Jessup J. The first, under section 44(1)(a), required determination of whether MALTITOS was deceptively similar to MALTESERS, which is registered in respect of confectionery and related goods. The second, under section 60, required determination of whether, because of the reputation acquired by MALTESERS in Australia before Delfi’s priority date, the use of MALTITOS would be likely to deceive or cause confusion. The grounds attracted different outcomes at each adjudicative tier, and the tension between them, particularly the question of whether a strong reputation amplifies or diminishes the prospect of confusion, lies at the heart of the analysis that follows.
Deceptive Similarity
Both the delegate and Jessup J rejected the section 44 opposition. Section 44(1)(a) mandates refusal of an application where the applicant’s mark is substantially identical with, or deceptively similar to, an earlier registered mark covering similar goods. Section 10 of the Act defines deceptive similarity as a resemblance so close that the mark is likely to deceive or cause confusion. The applicable standard, long settled since Australian Woollen Mills Ltd v F S Walton and Company Ltd (1937) 58 CLR 641, requires an assessment of the impression left in the mind of a notional consumer exercising ordinary intelligence and caution, rather than a side-by-side comparison of the marks themselves.
Both decisions acknowledged the identical prefix “MALT-” as the most structurally significant shared element. The general principle that the opening syllable of a word trade mark tends to carry the greatest weight in the consumer’s recollection, articulated in London Lubricants (1920) Ltd’s Application (1925) 42 RPC 264, was central to Mars’s case. Against this, the delegate observed that where a common element carries descriptive significance in relation to the goods (as “MALT” does for confectionery), courts and tribunals have traditionally treated that element as less distinctive and directed closer attention to the non-common portions of the competing marks: see Broadhead’s Application (1950) 67 RPC 215. The delegate found that “MALT” had been subsumed into each mark as an invented whole, reducing the force of the descriptive discount but also limiting the weight attributable to the identical prefix. Both marks were to be assessed in their entirety.
On the suffixes, which differ markedly, both decision-makers concluded that the visual and aural distinctiveness of “-ESERS” and “-ITOS” was sufficient to dispel any real likelihood of confusion. At the delegate level, the Hearing Officer rejected the proposition advanced by Mars that Australian consumers would naturally slur the terminal syllables of MALTITOS so as to render it phonetically similar to MALTESERS, finding that the more natural pronunciation would be either “Mal-tee-toss” or “Mal-tee-toes”, consistent with the phonetic pattern of Spanish or Italian loan words such as “burritos” or “mosquitoes”. In the Federal Court, this conclusion was reinforced by the expert evidence of Associate Professor Felicity Cox of the Department of Linguistics at Macquarie University. Her phonetic analysis demonstrated that the final two syllables of each mark differ in vowel quality, consonant voicing, and manner of articulation. She noted that the “-itos” component of MALTITOS rhymes with “vetoes”, whereas the “-esers” component of MALTESERS rhymes with “visas”, and that the consonants separating those final syllables, namely /t/ (voiceless alveolar stop) and /z/ (voiced alveolar fricative), are sufficiently distinct in English phonology to signal a meaningful difference in meaning. Jessup J found this evidence entirely uncontested in cross-examination and unaddressed in final submissions on behalf of Mars.
Jessup J also addressed the Aldi principle, drawn from Aldi Stores Ltd Partnership v Frito-Lay Trading Co GmbH (2001) 54 IPR 344, which prohibits an assessment of likelihood of confusion by reference to the particular style, colour, get-up, or font in which an applicant’s mark happens to have been used. Much of Mars’s factual case before the Federal Court concentrated on the confusion that would result if MALTITOS were presented in the same lettering, font, colour scheme, and packaging style as the well-known MALTESERS livery. Jessup J was unpersuaded that such considerations were permissible in a proceeding confined to whether a single word in upper case letters should be registered. Those matters, his Honour observed, were central aspects of any passing off action that Mars might bring, but they had no place in the present opposition proceedings.
Reputation as a Source of Confusion
The delegate’s acceptance of the section 60 ground turned on a particular view of how the scope of the mark’s registration interacted with the demonstrated reputation of MALTESERS. The delegate accepted, as conceded by Delfi, that MALTESERS had acquired a substantial reputation in Australia well before the priority date of 16 October 2012. This satisfied section 60(a). The question under section 60(b) was whether, because of that reputation, the use of MALTITOS would be likely to deceive or cause confusion.
The delegate acknowledged the principle, derived from Flight Centre Pty Ltd v World Flight Centre Pty Ltd [2003] ATMO 60, that reputation can operate as a double-edged sword: if consumers are highly familiar with an existing mark, they may be better placed to distinguish it from later marks, thereby reducing rather than increasing the likelihood of confusion. However, the delegate considered that on the facts before him, the reputation of MALTESERS operated against Delfi rather than in its favour. Three considerations were material. First, the marks shared a degree of similarity that could not be entirely dismissed, even though that similarity was insufficient to support a section 44 finding. Second, the registration, if granted, would authorise use of MALTITOS in any style, colour, or get-up whatsoever, including styles approximating the familiar MALTESERS livery. Third, and most pointedly, Mars’s own trade mark portfolio included the mark MALTEASTER, a registered variation deployed for Easter confectionery, which the delegate treated as evidence that Mars had conditioned Australian consumers to perceive playful variations on the MALTESERS brand as emanating from the same commercial source. Viewed through that lens, the delegate was satisfied that a real and tangible danger of confusion would arise from use of the mark in a form permitted by the registration, and refused registration accordingly.
Section 60 decision reversal
Jessup J’s reversal of the section 60 finding represents the analytically more significant contribution of this litigation. His Honour conducted a careful examination of the legislative history of section 60, noting that the 2006 amendment to the Trade Marks Act removed the prior requirement that the opposed mark be substantially identical with or deceptively similar to the earlier mark before the reputation-based limb could operate at all. The Explanatory Memorandum for that amendment confirmed that the purpose of the provision is to protect marks with an established reputation even where the opposed mark does not satisfy the tests for substantial identity or deceptive similarity, and that the test is written so as to apply to all marks. Jessup J also addressed an argument advanced by Delfi that section 60 was confined to the protection of unregistered marks with a reputation; he rejected this reading, finding no textual or extrinsic support for so limiting the section.
On the substantive question of confusion under section 60(b), Jessup J applied a materially different analytic framework from the delegate’s. The critical distinction, as his Honour articulated it, concerns the sophistication of the notional consumer that section 60 contemplates. Under section 44, the consumer is someone who has had no more than some prior exposure to the opponent’s mark. Under section 60, the notional consumer is assumed to have that level of awareness of the opponent’s mark as is consistent with the content and extent of its reputation. Where the reputation is very widespread and solid, as the evidence established in respect of MALTESERS, the consumer brought to mind for the purposes of section 60 will have a considerably more detailed and reliable recollection of the opponent’s mark than the consumer relevant to section 44. It follows, on Jessup J’s reasoning, that a consumer with that sharper awareness of MALTESERS would, upon encountering MALTITOS, be immediately struck by the differences between the two marks rather than misled by their similarities. Familiarity with one mark makes it less, not more, likely that a consumer will conflate it with a different mark: “the strong reputation of the respondent’s mark would, if anything, make that conclusion a more likely one.”
His Honour expressly declined to draw any assistance from the MALTEASTER registration. The mere fact that Mars had itself adopted a playful variant on MALTESERS for a seasonal product did not, in his Honour’s view, establish that consumers had been trained to regard phonetically proximate invented words as denoting a Mars product. That inference required a degree of speculation about consumer psychology that the evidence did not support. Equally, considerations of get-up, which had figured in the delegate’s reasoning through the observation that a registration of MALTITOS would permit use in a style approximating the MALTESERS packaging, were regarded by Jessup J as irrelevant to the registration question. The Aldi principle applies with equal force under section 60 as under section 44: the mark is assessed as a word, and assessment must not be contaminated by assumptions about how the registrant might choose to present it.
Commercial Significance
This sequence of decisions carries practical consequence for trade mark applicants, brand owners, and opposition practitioners advising on the Australian register. The reversal confirms that the threshold for a successful section 60 opposition is not automatically satisfied by demonstrated reputation, however pervasive. A proprietor must establish that the reputation of its mark is the operative cause of likely confusion in the minds of consumers assumed to possess that very reputation as a baseline. Where the reputation is so entrenched that the relevant consumer can be expected to detect differences rather than be misled by superficial similarities, that reputation will deflect rather than support the opposition.
For brand owners in the confectionery sector, and more broadly in fast-moving consumer goods categories where brand equity is typically high and consumer familiarity with leading marks is pervasive, the decisions counsel against treating the strength of an existing registration as a reliable proxy for the strength of an opposition. Practitioners advising opponents should scrutinize whether the reputation evidence, taken on its own terms, supports or undermines the inference of likely confusion. Practitioners advising applicants should be alert to the argument that consumer familiarity with the opponent’s mark enhances, rather than diminishes, the consumer’s capacity to distinguish it from the mark in issue.
The deployment of expert phonetic evidence by Delfi before the Federal Court also warrants attention. Associate Professor Cox’s evidence was dispositive on the aural similarity question and went entirely unanswered by Mars. In proceedings where the aural resemblance of invented word marks is genuinely in contest, and particularly where marks derive structural elements from non-English linguistic traditions (here, the Spanish or Italian “-ito” diminutive suffix), appropriately qualified expert linguistics evidence can materially advance an applicant’s position and, as this case demonstrates, can withstand forensic scrutiny to a decisive degree.
Contact us to learn more about how LexGeneris can assist you with all your intellectual property needs. You can also schedule a no-cost consultation with our team of expert IP Attorneys Australia, IP Attorneys India, and IP Attorneys New Zealand
