Intellectual Property Update - Metricon Homes Pty Ltd v Zac Homes Pty Ltd

BY TOM CORDINER QC, MELISSA MARCUS AND MARCUS FLEMING

[2021] FCCA 394

Use of the phrases “Love where you live?” and “You love where you live” held not to constitute use of those phrases as a trade mark for the purposes of s 120.

In this judgment, Judge Baird considered a separate question posed by the Federal Circuit Court on 13 August 2019 and heard on 8 October 2019 as to whether Zac Homes’ use of the phrases “Love where you live?” on its website and “You love where you live” in a radio advertisement, constituted use of those phrases as a trade mark for the purposes of section 120 of the Trade Marks Act. Her Honour answered “No” to that question.

Her Honour set out the principles involved in determining whether the use of a sign is a use as a trade mark, referring in the main to the recitation of the following principles by the Full Court of the Federal Court in Nature’s Blend Pty Ltd v Nestle Australia Ltd [2010] FCAFC 117; (2010) 87 IPR 464:

1. a mark may contain descriptive elements but still be a ‘badge of origin’;
2. the appropriate question to ask is whether the impugned words would appear to consumers as possessing the character of the brand;
3. the purpose and nature of the impugned use is the relevant inquiry in answering the question whether the use complained of is a use “as a trade mark”;
4. consideration of the totality of the packaging, including the way in which the words are displayed in relation to the goods and the existence of a label of a clear and dominant brand, are relevant in determining the purpose and nature (or “context”) of the impugned words;
5. in determining the nature and purpose of the impugned words, the court must ask what a person looking at the label would see and take from it

Her Honour also referred to Justice Hill’s observation in Aldi Stores Ltd Partnership v Frito-Lay Trading Co GmbH [2001] FCA 187; (2001) 54 IPR 344 (Full Court) at [23] that where a phrase has a clear meaning in ordinary use, the question of whether the use is trade mark use is more difficult than in the case of an inverted word or combination of words, “as the word or combination of words may either have taken on a secondary meaning indicating the origin of the goods or may simply convey an ordinary meaning (ie some message other than the trade origin of the goods)[…]”.

As to the use of the phrase “Love where you live?” on the Zac Homes website, her Honour considered that the phrase was posing a conversational question which was answered by the phrase “Stay where you are!”. In that context, the impugned phrase was introductory and descriptive to potential consumers of the services offered by Zac Homes. The use was also in smaller font than other elements on the website, including the Zac Homes mark.

Her Honour concluded (at [29]) that:

[T]he impugned phrase is answered by directing the reader/viewer to the services of Zac Homes as the provider of a solution to the question posed does not transform the phrase from its ordinary meaning to one having, or taking on, a secondary meaning: as indicating the origin of particular services. The impugned phrase does not function as a badge of origin so as to distinguish Zac Homes’ services from similar services offered by other persons. The message conveyed by the phrase asks the reader whether they describe themselves as persons – who ‘love where you live’. In context, the phrase merely conveys its ordinary meaning, and invites the reader to interrogate themselves as to whether they fit the description.

In the radio advertisement, the phrase “You love where you live” was used once at the beginning of the ad over one second, and by comparison the Zac Homes brand was used five times. Her Honour considered that the phrase was merely introductory and used to give narrative context to the announcement that followed and would not strike the listener as a badge of origin. Her Honour equated the case to the one in Hoser v Sportsbet Pty Ltd [2018] FCA 1557 where Sportsbet’s use of the phrase ‘OI, SNAKE MAN!’ in a television advertisement was at issue. In that case, Robertson J found that the phrase was not used as a trade mark because the words “snake man” were used for the purpose of narrative structure, and were merely introductory to the premise of the commercial. For that and a few other reasons, her Honour concluded that Zac Homes’ use of the phrase “You love where you live” in the radio advertisement was also not use as a trade mark.

The authors observe that the posing of this question was somewhat unusual given an answer either way does not, on its face, appear to have been likely to dispose of the case or make it more efficient. The question did not address Metricon’s claims for passing off or contravention of the Australian Consumer Law for misleading or deceptive conduct. Furthermore, answering the question in the negative only did away with the trade mark infringement part of the case which would appear, at first blush, likely to have involved mostly legal submission, and, to the extent evidence was relevant, would have involved much the same evidence as will be required on the remaining claims. It may be noted that it also took almost 19 months from the date the separate question was posed to its determination – it seems plausible that the entire proceeding could have been determined in that same time.