Inside the Trade Mark Decision of Two Well Known Brands

It has long been held by Australian courts that when assessing the similarity between marks for the purposes of trade mark infringement, the parts of a trade mark that are descriptive or common to the trade must be to some extent discounted.

However as recent decisions show, the outcome will depend on a number of factors including the circumstances in which the allegedly infringing mark was adopted, and the nature of the market in which it is used.

In this article, we take a closer look at a trade mark decision recently handed down by the Federal Court of Australia – Bed Bath ‘N’ Table Pty Ltd v Global Retail Brands Australia Pty Ltd [2023] FCA 1587.

Introducing the Two Parties

Bed Bath ‘N’ Table (BBNT), is a leading retailer in the “soft homewares” space which includes items such as bed linen and bath towels and has operated stores under the Bed Bath ‘N’ Table mark (BBNT Mark) across Australia since 1976. BBNT owns multiple trade mark registrations for the BBNT Mark in relation to soft homewares goods and retailing services. BBNT consistently presents the BBNT Mark as in its branding.

Global Retail Brands Australia (GRBA) operates the retailer “HOUSE”, primarily known for selling kitchenware. GRBA was seeking to expand into the soft homewares space under the mark (House B&B Mark).

The Trade Mark Infringement

BBNT alleged that GRBA had engaged in trade mark infringement and misleading deceptive conduct for using the House B&B Mark in relation to its new line of soft home wares stores.

Both parties agreed that the House B&B Mark was being used in relation to similar goods/services, so the question was whether it was deceptively similar or substantially identical to the BBNT Mark.

BBNT argued that the words “Bed” and “Bath” were essential features of the BBNT Mark and thus the marks were deceptively similar. BBNT also relied on evidence that GRBA’s employees had paid close attention to BBNT when choosing the House B&B Mark.
GRBA argued that the parent brand “House” was the dominant feature of the House B&B Mark, that the elements “Bed” and “Bath” were ubiquitous in the industry and only used as category descriptors GRBA, and that GRBA did not adopt the brand with the intention to mislead.

The Evidence

The evidence showed that GRBA had been planning to launch its soft homewares stores under a different brand (not featuring the “HOUSE” parent brand) until 2 weeks before opening. GRBA then decided to instead adopt the House B&B Mark (after GRBA’s Head of Brand and Media suggested it to its Executive Chairman), in order to leverage the reputation that GRBA already had in the “HOUSE” brand. Internal email communications referred to BBNT “running scared” by the new venture. No legal advice was obtained regarding the ability to use the new House B&B Mark before making the decision to proceed with the brand.

The Court Findings: Substantially Identical or Deceptively Similar?

The court found that it would be extraordinary to think that GRBA did not have BBNT in mind when selecting the House B&B Mark, evidenced by the internal email correspondence. Her Honour also considered that GRBA’s witnesses were not impressive, in that while they had tried deliberately to minimise references to BBNT in their evidence, their cross examination showed that they were keenly aware of BBNT when adopting the House B&B Mark. While the evidence fell short of establishing a commercially dishonest intention to appropriate BBNT’s trade or reputation, GRBA’s conduct was in the nature of “wilful blindness” to any potential for confusion.

The court also found that while the words “bed” and “bath” were used as category descriptors by others in the industry, they were not used as trade marks in the name of any other business. Nothing in GRBA’s internal communications indicated that it intended to use these words merely as category descriptors. The court considered that “bed” and “bath” were also not directly descriptive because the stores did not sell beds or baths. Accordingly, “Bed & Bath” did not serve a wholly descriptive role in the mark, and the combination together with “House” acted as a badge of origin.

However ultimately, the court ruled that the marks were neither substantially identical or deceptively similar because the “’N’ TABLE” element of the BBNT Mark and the “House” element of the House B&B Mark were sufficient to distinguish the marks.

The Court Findings: Was there Misleading and Deceptive Conduct?

The outcome however, was different for misleading and deceptive conduct. When assessing misleading and deceptive conduct, it is permissible for the court to consider all surrounding circumstances, including the overall “get-up” and “look and feel” of the stores, and the reputation of the marks in the marketplace.

The House B&B stores adopted a clean “Hamptons” style look and feel, similar to BBNT stores. This look and feel was common across the soft homewares space. However, it was in contrast to other GRBA “House” stores, which were typically more “cluttered” with discount branding.

BBNT failed to establish a reputation in the words “BED BATH” alone, as it had only ever used the BBNT Mark in full in practice.

BBNT’s evidence from staff that reported confusion between BBNT and House B&B amongst consumers was given minimal weight (but was not discarded), in the absence of direct evidence from any consumers that were actually confused. Further, the evidence also showed there was a significant level of baseline confusion in the marketplace, not related to the similarity of the names of the shops, with consumers not typically paying much attention to branding in this field. As such confusion was easier to establish.

In finding misleading and deceptive conduct, the court considered that reasonable consumers coming across a House B&B store for the first time would question whether there was some kind of association between the two well-known brands – e.g. that House had merged with BBNT or taken it over.

It was the reputation of BBNT that was crucial in leading to the different conclusion in the context of misleading and deceptive conduct vis-à-vis trade mark infringement. The court found that GRBA could not undermine the obvious inference that GRBA borrowed the words “bed” and “bath” from BBNT’s name in order to attract customers from BBNT, and that such borrowing was “fitted for [that] purpose and therefore likely to deceive or confuse”.

Could this have been run as a case of close, but not close enough?

The court stated that it was the reputation of BBNT that led to the different outcome for misleading and deceptive conduct. Ultimately, the court’s impression of GRBA’s witnesses and the circumstances surrounding the adoption of the House B&B Mark appear to have been the deciding factor. If GRBA’s witnesses had been more straightforward about their knowledge of BBNT, it may have been possible to argue that this was yet another example of “close, but not close enough”, particularly given the notoriety of the “House” parent brand that the dominance of that brand in the House B&B Mark.

There are a number of additional questions that this decision raises, including:

If BBNT did not ever use its mark without the “’N’ TABLE’ element and BBNT did not establish a reputation in the words “bed” or “bath” alone, why would consumers consider that the House B&B Mark indicated a collaboration between the two brands?
Is the court’s position that descriptive elements should only be somewhat discounted from the analysis if other traders use them as trade marks their names?
The case authority relied on in relation to taking in account the circumstances of GRBA’s adoption of the House B&B Mark relates to a trader’s intention to mislead or deceive, whereas the court only found that GRBA engaged in “wilful blindness” in the adoption of its House B&B Mark.

Key Takeaways

This case shows that businesses should:

Not assume that words commonly used in the trade are always free for use in their own brands;
Be cautious when adopting any element of branding that other competitors use in their branding (even if descriptive), as it could be perceived by the court as seeking to trade off the competitor’s reputation; and
Always undertake proper freedom to operate searches and obtain legal advice before committing to a new brand.

GRBA still has time to file an appeal in relation to this decision.

If you have any questions regarding this article or your Trade Mark, please do not hesitate to contact Wrays on (08) 9216 5100 or via our email wrays@wrays.com.au