Intellectual Property Update - Henley Arch Pty Ltd v Henley Constructions Pty Ltd [2021] FCA 1369

In Henley Arch Pty Ltd v Henley Constructions Pty Ltd, Henley Arch claimed that Henley Constructions had infringed its six registered and unregistered trade marks, and contravened sections 18 and 29 of the Australian Consumer Law, by using marks comprising or including the name Henley in the course of its business, and that Mr Sarkis, who controlled the company, was jointly liable.

Henley Constructions contended that the marks were not distinctive, that Henley Arch’s HENLEY mark had been accepted on the basis of false particulars, or that the HENLEY and HENLEY PROPERTIES marks had not been used either in New South Wales between 7 October 2015 and October 2018 or nationally and ought therefore be removed or subject to limitations under section 92 and section 102 of the Trade Marks Act 1995 (Cth) to restrict their use in relation to multi-dwelling residential apartment buildings or to provide that the registration did not cover New South Wales.

Trade Mark Claim

Henley Arch alleged that its marks (for HENLEY, a logo incorporating the words HENLEY PROPERTIES, HENLEY WORLD OF HOMES, HENLEY ESSENCE, HENLEY RESERVE and HENLEY COLLECTION) were infringed by the use of:

• the first Henley Constructions logo on a website and at construction sites;
• the domain name henleyconstructions.com.au on its website and at construction sites, on business cards, Instagram and Facebook;
• the Second Henley Constructions logo on a website, a brochure and on a website for a construction project;
• HENLEY CONSTRUCTIONS in an advertisement, on Facebook, on websites for project developments and for Henley Constructions and on hoardings;
• HENLEY on its website, in advertisements, on number plates and on websites for construction projects;
• 1300 HENLEY on a website, on business cards and on Facebook;
• the third Henley Constructions logo on vehicles, hoarding, signage at sites, buildings, Instagram and Facebook, and safety hats and hi-vis clothing;
• THE HENLEY DISPLAY GALLERY on buildings, websites, cranes, Facebook and Instagram;
• #henleyconstructions, #henleygallery, #henley and images of the third logo on decals, hoardings, and hi-vis clothing on Instagram and Facebook;
• Henleygallery.com.au and HENLEY BUILT on its website; and
• HNLY on number plates.

Apart from the HENLEY CONSTRUCTIONS sign, Henley Constructions denied that it had used the marks as trade marks.

Justice Anderson found that the use of a telephone number (1300HENLEY) and number plates were not trade mark use (the first was a contact number and the second was a way of identifying a vehicle). With respect, the authors consider that conclusion is contestable, since although the words were incorporated into a phone number or a number plate, they were clearly being used for another (trade mark) purpose. However, Anderson J found that Henley Constructions had used each of the other signs as trade marks for its building and construction services in a manner which infringed. His Honour found that each of the signs had been used in relation to either the provision of Henley Construction’s building services or the promotion of those services in a manner which would lead a person viewing those signs as badges of origin. He found that HENLEY was substantially identical to the HENLEY mark, that HENLEY CONSTRUCTIONS was substantially identical to the HENLEY mark and the HENLEY PROPERTIES mark, that the HENLEY CONSTRUCTIONS sign and the other infringing signs were deceptively similar to HENLEY PROPERTIES because each incorporated HENLEY as the key memorable feature, that each infringing sign was deceptively similar to HENLEY WORLD OF HOMES because the dominant memorable feature is the word HENLEY, and that each infringing sign was deceptively similar to HENLEY ESSENCE, HENLEY RESERVE and HENLEY COLLECTION.

Justice Anderson found that, before incorporating Henley Constructions in December 2006, Mr Sarkis had knowledge of the business of Henley Arch and its use of the names “Henley Properties Group” and “Henley”. Mr Sarkis had that knowledge because his wife had informed him that she had conducted Google searches and ascertained the existence of Henley Arch’s website <www.henley.com.au> and the use of the names “Henley Properties Group” and “Henley”. Justice Anderson found that Mr Sarkis had knowledge of Henley Arch’s use of “Henley Properties Group” and “Henley” prior to the incorporation of Henley Constructions Pty Ltd on 13 December 2006 but obtained registration of the names “Henley Constructions” and “Henley Developments” for the benefit of the first respondent. It was not clear whether Mr Sarkis was put on notice that there was a company in Sydney that had used the name “Henley Constructions”. In any event, after receiving notice, Mr Sarkis failed to make any further enquiries. This fell short of what could reasonably be considered to be the enquiries one would make if acting honestly and in good faith.

Justice Anderson found that the use of the third Henley Constructions logo, from the time of its adoption sometime after 10 May 2017 (the date of Henley Constructions’ reply to Henley Arch’s letter of demand), and all uses of the mark “Henley Constructions” after that date, was not in good faith.

His Honour found that Mr Sarkis did not have an honest belief that there would be no confusion as a result of the use of the third Henley Constructions logo or any of the other “HENLEY CONSTRUCTIONS” marks and that Mr Sarkis and Henley Constructions did not act in good faith in using Henley Constructions’ own name either prior to receipt of the letter of demand from Henley Arch on 13 April 2017 or after that date.

Justice Anderson rejected Henley Constructions’ defence under section 122(1)(fa) of the Trade Marks Act that it would have the right to register HENLEY CONSTRUCTIONS. His Honour found that in February 2007, when its use of the mark started, Henley Constructions would not have been entitled to register its mark, because Henley Arch could have opposed the registration under section 58 (because Henley Constructions was not the owner), section 44 (because Henley Constructions had not established honest concurrent use of the HENLEY CONSTRUCTIONS mark), section 42(b) (because the use of the HENLEY CONSTRUCTIONS mark contravened sections 52 and 53 of the Trade Practices Act 1974 (Cth) and so the use was contrary to law), and section 60 (because Henley Arch had a significant reputation which extended into New South Wales as a builder of homes, including multi-dwelling residential townhouses). His Honour held that he would not have allowed registration in light of the adverse findings he had made concerning the initial adoption of the name.

Justice Anderson also rejected Henley Constructions’ defence under section 122(1)(a)(i) that by using HENLEY CONSTRUCTIONS it had used its own name in good faith, because from the very first use Mr Sarkis and Henley Constructions knew of Henley Arch’s business, its website and the HENLEY PROPERTIES device mark. Further, after being put on notice by Henley Arch’s cease and desist letter, Henley Constructions ramped up its promotional activity and increased the size of the word HENLEY and reduced the size of CONSTRUCTIONS in a new logo, so that it became more likely that consumers would be confused.

Justice Anderson also rejected Henley Constructions’ prior use defence against the HENLEY ESSENCE, HENLEY RESERVE and HENLEY COLLECTION marks under section 124, because he concluded that Henley Arch had continuously used the HENLEY mark since at least 2006, and he concluded that use of each of the marks was use of the HENLEY registered mark. [His Honour noted that if he was mistaken in that conclusion, Henley Constructions had not used the relevant signs before the HENLEY ESSENCE, HENLEY RESERVE and HENLEY COLLECTION marks were registered.]

Justice Anderson dismissed Henley Constructions’ cross-claim.

Although Anderson J accepted that HENLEY, without more, was a non-distinctive mark, he found that at the priority date, Henley Arch had extensively used HENLEY for more than 15 years, so that the HENLEY mark had the capacity to distinguish and HENLEY had acquired distinctiveness under section 41(5) of the Trade Marks Act. His Honour also concluded that the HENLEY mark had in fact become distinctive of Henley Arch under section 41(6).

Justice Anderson also rejected Henley Constructions’ assertion that the HENLEY mark was accepted on the basis of false representations (the alleged representations were that other traders would be highly unlikely to want to use the term HENLEY as a trade mark to describe similar services, that Henley Arch intended to extend its use of the mark, that the HENLEY trade mark was displayed in Queensland and South Australia, and that Henley Arch had spent specified amounts on advertising and promoting by reference to the HENLEY mark). Justice Anderson was not satisfied that the statements conveyed the alleged representations or that the mark was accepted on the basis of the representations.

Justice Anderson rejected the submission that Henley Arch had not used the HENLEY trade mark in New South Wales from 7 October 2015 to October 2018. His Honour found that Henley Arch had proven on the balance of probabilities that it had used the HENLEY mark in relation to the services in the relevant period, on the website and its device marks. He found that the use of descriptive words, such as PROPERTIES or graphic elements did not substantially affect the identity of the mark, and that it promoted its services for detached houses and townhouses, including to New South Wales residents, under the HENLEY mark, from its website. The website received thousands of visits from people located in New South Wales, which constituted use in New South Wales. Henley Arch also built houses for New South Wales customers, and used its devices and “by Henley” on contracts and emails in relation to those customers. Since he did not accept that there had been non-use, Anderson J did not accept that it was appropriate to impose geographical limitations on the registration of the mark under section 102.

Nor did Anderson J accept that the HENLEY mark should be subject to a limitation to exclude multi-dwelling residential apartment buildings. His Honour did not accept that there was a meaningful distinction between building and construction services and building and construction services in respect of multi-dwelling residential apartments, and in any case, there was evidence Henley Arch had used HENLEY in relation to multi-dwelling apartments.

Justice Anderson observed that even if he was not persuaded that Henley Arch had relevantly used the HENLEY mark, he would have exercised the discretion conferred by section 101(3) of the Trade Marks Act. His Honour was satisfied that it is reasonable that the HENLEY mark should not be removed from the Register, given that Henley Constructions took no steps to ascertain from the Register whether anyone had a right to exclude their use of the mark, Mr Sarkis knew of Henley Arch and its use of HENLEY PROPERTIES and HENLEY, and therefore did not act with commercial honesty, and there was sufficient use in New South Wales and in relation to multi-dwelling residential apartment buildings.

Similarly, Anderson J rejected the claim that HENLEY PROPERTIES and the HENLEY PROPERTIES device mark had not been used, or had not been used in New South Wales, or that the mark should be subject to a limitation to exclude protection in New South Wales. His Honour found that Henley Arch had used devices which were substantially identical to the HENLEY PROPERTIES mark, including during the non-use period. His Honour observed that even if that position were doubted, he would have exercised his discretion not to remove the mark, including because a limitation would create fragmented ownership of the mark and because the relevant services were of the same description.

Australian Consumer Law

In relation to the Australian Consumer Law claim, Anderson J found that Henley Arch had a significant reputation throughout Victoria, Queensland and South Australia, which extended into New South Wales, and that this reputation was not limited to single dwelling detached homes but extended to multi-dwelling residential townhouses or homes more generally. Justice Anderson also rejected Henley Constructions’ contention that the Australian building industry was State and Territory based rather than national, and its contention that Henley Arch’s reputation was limited to exclude confusion arising from the use of HENLEY CONSTRUCTIONS in relation to the construction of multi-dwelling residential apartment buildings. His Honour found that Henley Constructions had used HENLEY CONSTRUCTIONS and “Henley” from February 2007, and that Henley Constructions ramped up its marketing activity from February 2017.

Justice Anderson found that by engaging in this conduct, Henley Constructions had represented that it was Henley Arch, that it was affiliated with Henley Arch, that it was sponsored or approved by Henley Arch, that its services were provided by, or with the licence or authority of, Henley Arch, that its services were affiliated with Henley Arch and/or that its services were sponsored or approved by Henley Arch, and that these representations were false. Accordingly, his Honour found that Henley Constructions had contravened sections 18, 29(1)(g) and 29(1)(h) of the Australian Consumer Law.

Ancillary Liability

Justice Anderson held that Mr Sarkis had ancillary liability as a joint tortfeasor for trade mark infringement and that Mr Sarkis was liable for aiding and abetting or being knowingly concerned in Henley Constructions’ contraventions of the Australian Consumer Law because he was the sole director of Henley Constructions, he was responsible for management decisions, he was the sole shareholder, he was knowingly involved in the company’s wrongdoing and he was instrumental in choosing Henley Constructions’ name, logo and branding, deliberately and with reckless indifference to consumer confusion.

Relief

Justice Anderson found that Henley Arch was entitled to declarations and injunctions. He deferred the question of Henley Arch’s entitlement to an account of profits.

Henley Constructions has applied for leave to appeal (leave is required since the decision was interlocutory, pending the determination of pecuniary relief).