Federal Court: December 2024

CONSUMER LAW

Misleading or deceptive conduct – inferences as to whether conduct misleading or deceptive – Australian Woollen Mills test – trade mark infringement

In Global Retail Brands Australia Pty Ltd v Bed Bath ‘N’ Table Pty Ltd [2024] FCAFC 139, the Full Court of the Federal Court of Australia (Nicholas, Katzmann and Downes JJ) considered the elements of misleading or deceptive conduct and false or misleading representations under sections 18 and 29 of the Competition and Consumer Act 2010 (Cth) sch 2 (‘ACL’) respectively. The dispute concerned the use of trade marks by two home furnishing stores. In so doing, the Full Court provided clarity on the relevance of an alleged contravener’s subjective knowledge of a risk of confusion with another’s trade mark, and the standard of confusion necessary to establish a contravention of sections 18 or 29 of the ACL.

Facts

The respondent (‘BBNT’), who was the applicant at first instance, was the registered owner of a trade mark, ‘BED BATH ‘N’ TABLE’, in various classes of goods essentially constituting what are known as ‘soft homewares’ (textiles, soft furnishings, bedroom items, bathroom items, kitchenwares and the like). It had operated under that trade mark and name since 1976, and was in a dominant position in the soft homewares sector throughout Australia. The applicant (‘GRBA’), who was the respondent at first instance, or its predecessors in title, had operated under the ‘House B&B’ name since at least 1978, becoming well established in the ‘hard homewares’ (pots, pans, plates, knives and the like) market and developing a substantial reputation throughout Australia.

In 2020, GRBA acquired from administrators the ‘MyHouse’ business, which had hitherto sold primarily soft homewares, and in 2021 GRBA commenced to sell soft homewares from the stores acquired as part of the MyHouse acquisition (and a small number of newly-opened stores), doing so under the name ‘House Bed & Bath’. BBNT alleged:

1. the use of ‘House Bed & Bath’ by GRBA infringed its trade mark in ‘BED BATH ‘N’ TABLE’ as it was deceptively similar thereto under section 120 of the Trade Marks Act 1995 (Cth);
2. the use of the ‘House Bed & Bath’ mark constituted misleading or deceptive conduct under section 18 of the ACL and false or misleading representations under section 29(1)(g) and (h) of the ACL; and
3. the use of the ‘House Bed & Bath’ mark constituted the tort of passing off.

BBNT was unsuccessful at first instance in its trade mark infringement claim, but was successful in its ACL and passing off claims. Relevantly, the primary judge found that BBNT had not established that it had any reputation, in a formal or institutional sense, in ‘BED BATH’ or ‘BED & BATH’ alone (as distinct from its full trade mark ‘BED BATH ‘N’ TABLE’), and that the use of ‘Bed & Bath’ in ‘House Bed & Bath’ were used merely to designate a sub-brand of the well-known brand ‘House’. However, her Honour also found that the evidence of certain e-mails between executives of GRBA established that GBRA was wilfully blind as to the risk of confusion between ‘House Bed & Bath’ and ‘BED BATH ‘N’ TABLE’, which constituted ‘highly relevant’ expert opinion on the question of whether GRBA’s conduct was likely to mislead or deceive (applying Australian Woollen Mills Ltd v FD Walton & Co Ltd [1937] HCA 51 (‘Australian Woollen Mills‘)). This allowed her Honour to infer that the use of ‘House Bed & Bath’ would cause an ordinary and reasonable person to wonder or question whether ‘House Bed & Bath’ was affiliated with ‘BED BATH ‘N’ TABLE’, thus constituting contraventions of sections 18 and 29(1)(g) and (h), and passing off.

Her Honour found that any evidence of actual confusion was limited and of low quality, and did not establish actual confusion for the purposes of sections 18 and 29. The distinction which the trial judge regarded as crucial to her different findings in respect of, on the one hand, trade mark infringement and, on the other hand, contravention of the ACL and passing off, was the reputation which she accepted BBNT had built up in the soft homewares market in its over 40 years of operation. This factor is irrelevant to establishing trade mark infringement.

GRBA appealed in respect of the primary judge’s findings on the ACL and passing off claims, and BBNT cross-appealed in respect of the dismissal of the trade mark infringement claim.

Decision

The Full Court, in joint judgment, allowed GRBA’s appeal in respect of the ACL and passing off claims, and dismissed BBNT’s cross-appeal in respect of trade mark infringement. The Full Court found that, given the trial judge’s own finding that BBNT had not established any independent reputation in ‘BED BATH’ or ‘BED & BATH’, her Honour erred in finding the use of ‘House Bed & Bath’ by GRBA was misleading or deceptive. Given this lack of an independent reputation in ‘BED BATH’ or ‘BED & BATH’, the difference between ‘BED BATH ‘N’ TABLE’ and ‘House Bed & Bath’ was ‘substantial and obvious to anyone but the most careless observer’ and ‘the ordinary and reasonable consumer would be very unlikely to confuse the two marks irrespective of whether they knew of BBNT’ (at [82]).  Even if an ordinary and reasonable consumer did associate the words ‘BED & BATH’ with BBNT, they ‘would do not more than infer that both businesses were engaged in the supply of soft homewares for bedrooms and bathrooms’ (at [84]). This was supported by the finding that the designations ‘bed’ and ‘bath’, either alone or together, were commonly used as descriptors of categories of homewares within physical stores and online, albeit that prior to 2021 only BBNT had used those words in the name of its store.

The Full Court was also critical of the primary judge’s use of the e-mails between GRBA executives as expert opinion to establish GRBA’s conduct was misleading or deceptive (or likely to mislead or deceive). Whether conduct is misleading or deceptive (or likely to mislead or deceive) is a conclusion the Court itself must draw on an objective basis, and ‘we do not think that [the executive chairman’s] subjective state of mind was capable of providing any reliable evidence on the objective question’ of whether the conduct was misleading or deceptive, or likely to mislead or deceive (at [88]). Further, the trial judge stopped short of finding GRBA had any subjective intention to mislead or deceive consumers (as distinct from wilful blindness to the risk of confusion), and the Full Court also did not accept that the e-mails between the GRBA executives established any subjective intention to mislead or deceive (at [104]).

As such, the trial judge was found to have misapplied the Australian Woollen Mills test, which requires a subjective intention to mislead or deceive to be established in order for the court to draw the inference that the conduct was indeed objectively misleading or deceptive (or likely to mislead or deceive) (at [71]). Conduct that merely causes a person to wonder or question whether two entities are affiliated does not reach the standard required to make out a contravention of sections 18 or 29 of the ACL. Given the trial judge found (and the Full Court agreed) there was insufficient evidence of actual confusion, the Full Court held that no misleading or deceptive conduct was established, either by inference or by actual evidence.  Against this background, the Full Court also found the passing off claim was not established.

As to the cross-appeal, the Full Court was unpersuaded there was any error in the trial judge’s findings, and found against BBNT on its trade mark infringement claim. BBNT did not have a trade mark in ‘BED & BATH’ separately from ‘BED BATH ‘N’ TABLE’. The word ‘House’ was prominent, and in that respect obviously distinct from BBNT’s trade mark, in GRBA’s use of ‘House Bed & Bath’. GRBA was also found to employ ‘Bed & Bath’ in a ‘largely descriptive character’ and, consequently, ‘House Bed & Bath’ was not deceptively similar to BBNT’s trade mark (at [118]).