Introduction
Following a long-standing trade mark battle, on appeal the Full Court (Yates, Burley and Rofe JJ) of the Federal Court of Australia has overturned the earlier decision of Markovic J in Taylor v Killer Queen, LLC (No 5) [2023] FCA 364.
The Full Court has partially upheld the appeal of trade mark infringement by Ms Kathryn Hudson A.K.A. American singer Katy Perry (the singer) and her related entities, resulting in the cancellation of an Australian trade mark registration in the name of Ms Katie Taylor A.K.A. Australian fashion designer Katie Perry (the designer). The cancellation was based on two grounds: the trade mark was invalidly registered in 2008 (the designer was aware of the singer’s reputation), and the likelihood of deception or confusion had increased as the singer’s fame had grown by the time her cross-claim was filed in 2019.
As a result, and subject to any appeal to the High Court by the designer, the singer and her companies are able to sell KATY PERRY-branded clothing in Australia. The broader implications of this decision are discussed at the end of this article.
Key takeaways
If a third party’s trade mark has acquired a reputation, it can impact the validity of another similar trade mark’s registration in Australia. This is true even if the reputation is not in respect of the same goods/services covered by the trade mark registration or if the relevant reputation has grown after the trade mark was registered. The key issue is whether, as a result of that reputation, the use of the applied-for (or registered) mark is likely to deceive or cause confusion.
It is critical for trade mark owners to complete thorough due diligence before investing in a brand to avoid costly legal disputes and potential invalidation of their trade marks many years later.
The ’own name’ defence under s 122(1)(a)(i) of the Trade Marks Act 1995 (Cth) (the Act) can apply to a person’s use of an adopted name and is not limited to a legal or registered name.
Even if a trade mark has been honestly adopted, it may be difficult to establish there has been honest concurrent use for the purpose of ss 44(3) and 122(1)(f)-(fa) of the Act unless the first use of the allegedly infringing trade mark in Australia in respect of the relevant goods/services was non-infringing (that is before the priority date of the infringed registration), although the law is somewhat unsettled in this regard.
Background
The designer started her ‘Katie Perry’ fashion label in Australia in 2007, based on the designer’s legal name at birth (although the designer also went by the name Katie Howell).
On the other hand, the singer adopted ‘Katy Perry’ as her stage name in the US in about 2002. The singer’s musical career took off after a few years and the primary judge found that the singer had acquired an international reputation in her name in entertainment and music by the time that the designer started her business five years later.
The designer originally filed an Australian trade mark application for a stylised Katie Perry logo on 13 September 2007 in respect of ‘clothing and fashion designing’ in Class 42, which was accepted by IP Australia but allowed to lapse in July 2008. The designer subsequently filed an Australian trade mark application for the Katie Perry word mark on 29 September 2008, which proceeded to registration. By that stage, the designer knew the singer was an internationally famous pop star, and that musical artists often sold clothing merchandise bearing their names at concerts.
From early 2008, the singer’s manager, Mr Jensen, had identified Australia was going to be an important market for the singer’s career. This involved planning a worldwide concert tour scheduled for 2009, where Australia was to be included. In or around May 2009, the singer’s manager became aware of the designer’s use of the KATIE PERRY mark and was concerned that her purpose of doing so was to obtain a financial advantage based on the singer’s reputation and upcoming tour in Australia. The singer’s lawyers sent a cease and desist letter to the designer and offered settlement terms to co-exist on the Register, which was refused by the designer.
The singer filed an Australian trade mark application for KATY PERRY on 26 June 2009 in respect of music-related goods and services in Classes 9 and 41, as well as various kinds of clothing in Class 25. That application faced a citation objection under s 44 of the Act based on the designer’s earlier trade mark registration. In order to overcome that objection and achieve registration of her mark in Classes 9 and 41, the singer deleted Class 25 from her trade mark application.
However, the singer proceeded to sell KATY PERRY-branded merchandise in Australia, including clothing, headgear and footwear. The singer and her associated companies commissioned several merchandising companies, including Bravado International Group Inc (Bravado), to produce and sell such merchandise. At that stage, the singer and her management team were aware of the trade mark infringement risk, but considered there was no risk of anyone in Australia being confused because of the singer’s earlier adoption and stronger reputation in the mark. The singer and her team also did not receive any complaint from the designer during the singer’s Australian concert tour in August 2009, at which KATY PERRY branded merchandise was sold, which led them to believe the issue had been dropped by the designer. However, years later, the designer’s lawyers sent a letter of demand to the singer’s team in September 2019 (just prior to the commencement of the original legal proceedings).
In the 2023 matter, Markovic J found that the singer and her company Kitty Purry, Inc. (Kitty Purry) had infringed the designer’s trade mark registration. However, the singer’s other companies, Killer Queen, LLC (Killer Queen) and Purrfect Ventures, LLC (Purrfect Ventures), were not found to be liable. The singer and her companies were originally unsuccessful in their attempt to cancel the designer’s trade mark registration. Both parties appealed the decision on various grounds.
Appeal proceedings
In the appeal, the Full Court noted that both parties had chosen to put every conceivably arguable factual and legal contention into issue. It was not a simple case.
The singer and her companies relied upon seven grounds of appeal. On the other hand, the designer cross-appealed certain aspects of Markovic J’s decision, including in relation to the findings that:
the goods covered by the designer’s registration (‘clothes’ in Class 25) do not extend to headgear and footwear
Killer Queen and Purrfect Ventures were not joint tortfeasors
the singer could rely on the ‘own name’ defence to trade mark infringement.
The ‘clothes’ issue
The designer’s mark was only registered in respect of ‘clothes’ in Class 25. The designer argued that clothes extends to headgear and footwear, and therefore additional goods (for example, shoes) sold by the singer and her companies infringed the designer’s trade mark registration. The primary judge and appellate Court agreed that the word ‘clothes’ does not extend to headgear and footwear.
It was held that mark owners must clearly specify the goods covered by their registration and the designer did not nominate headgear or footwear in her trade mark specification. It was held that while the class headings can sometimes help to resolve ambiguity, primacy must be given to the words actually chosen by the trade mark owner to limit the scope of the monopoly they claim.
The joint tortfeasor issue
The singer had many companies and agreements in place with merchandisers. The Full Court found that the singer was a joint tortfeasor with Kitty Purry and Bravado because Kitty Purry was considered an alter ego of the singer, and because of the contractual relationship between the singer, Kitty Purry and Bravado.
However, the Full Court found that the singer was not a joint tortfeasor with two other merchandisers, Blackout Merch and Epic Rights, because of the specific contractual arrangements between those parties. Killer Queen was also found to not be a joint tortfeasor as that company did not play an active role in the commission of the tort – it was simply the licensor of the Katy Perry mark. The designer did not press the cross-appeal grounds in relation to Purrfect Ventures.
Good faith, honest concurrent use and use of own name defences
The designer argued that the singer should not be able to rely on the ‘own name’ defence under s 122(1)(a) of the Act because ‘Katy Perry’ was neither the singer’s legal name nor was it used in good faith. The Full Court upheld Markovic J’s finding that this defence can apply to a person’s use of an adopted name, including a stage name.
The Full Court also agreed with Markovic J that the use of the name by the singer was in good faith based on all of the relevant circumstances, including the adoption of the Katy Perry mark overseas five years before the designer started her business, the reputation acquired by the singer in that time, the objectively reasonable basis for the singer’s belief that no confusion was likely to arise from the use of Katy Perry’s name on clothes in Australia (including that at the time use commenced, there was no reputation in the designer’s mark) having relied upon the trusted advice of her manager, Mr Jensen. The Full Court found that the singer was therefore able to rely on the ‘own name’ defence. However, this defence was not available to the singer’s companies.
The designer also argued the singer should not be able to rely on the “honest concurrent use” defence under ss 44(3) and 122(1)(f)-(fa) of the Act. This defence was assessed as at the date of the singer’s Australian trade mark application (26 June 2009), rather than the first pleaded act of actionable infringement (which was 24 October 2013 because earlier infringements were statute barred because of the six-year limitation period).
Although the Full Court observed that mere lodgement of a trade mark application is not use of the trade mark itself, the trial judge and the Full Court unusually proceeded on the basis that the date of the first alleged infringing conduct was the date on which the singer lodged her Australian trade mark application (26 June 2009).
The Full Court found that the use of the Katy Perry mark by the singer was in fact ‘honest’ for similar reasons that it was in ‘good faith (see above). However, the Full Court found that there had not been any ‘non-infringing’ use of the Katy Perry mark in Australia in respect of clothes as at 26 June 2009, therefore, the use was not ‘concurrent’. As such, the Full Court found that the singer could not rely on this defence.
Cancellation of the designer’s registration
Notwithstanding the above findings in relation to the trade mark infringement and defence issues, the Full Court ultimately found that the designer’s trade mark registration:
(a) Should never have been registered by virtue of s 60 of the Act because the singer’s KATY PERRY mark had acquired a reputation in Australia before the priority date of the designer’s trade mark application (29 September 2008) and because of that reputation, the use of the Katie Perry mark by the designer was likely to deceive or cause confusion. The Full Court found that the primary judge had erred by limiting the scope of reputation to music and entertainment, not considering the common practice of pop stars merchandising their brands into clothing lines, as well as placing undue emphasis on the absence of evidence for actual consumer confusion (this was due to the minimal use of the designer’s mark). The Full Court also confirmed that the post-priority date use of the Katy Perry mark on clothes with images of the singer was not relevant, as the Federal Court instead needed to consider the notional use of the KATIE PERRY mark that could be made by the designer as at 29 September 2008 for the purpose of s 60 of the Act.
(b) Should be cancelled under s 88(2)(c) of the Act on the basis that, because of the circumstances applying at the time when the cross-claim was filed in 2019, the use of the Katie Perry mark by the designer was likely to deceive or cause confusion. In this regard, the Full Court took into account the large reputation in the singer’s trade mark (which had grown substantially after the filing date of the designer’s trade mark application) and found that, because of that reputation, consumers were likely to be deceived or confused as to whether clothes branded with the designer’s mark came from the same source as clothes branded with the singer’s mark.
The Full Court declined to exercise its discretion to maintain the designer’s registration under s 89 of the Act. In doing so, the Full Court took a number of circumstances into account, including the designer’s knowledge of the singer when the designer filed her trade mark application, her understanding that musicians sold clothing bearing their names at concerts and often moved into merchandising, refusing the co-existence agreement, the singer using her name as a trade mark in the US since 2002 (and did not adopt the trade mark to take advantage of the designer’s trade mark), and the fact that the designer had sought to align herself with the singer in order to obtain some benefit (which would only increase the likelihood of consumers potentially being deceived or confused).
As a result, the Full Court ordered the cancellation of the designer’s Australian trade mark registration, set aside Markovic’s earlier orders (including the order restraining Kitty Purry from selling Katy Perry-branded clothes in Australia) and ordered the designer to pay the singer’s costs of the appeal and the cross-appeal.
Implications
The cancellation of the designer’s registration has been stayed to give the designer an opportunity to apply for special leave to the High Court.
However, the outcome of this appeal serves as a cautionary tale for trade mark owners to complete thorough due diligence before investing in a new brand, not only in relation to registered trade marks owned by third parties but also third party reputational rights.
This decision also shines a spotlight on the relevant date for assessing whether there has been honest concurrent use for the purpose of ss 44(3) and 122(1)(f)-(fa) of the Act. Consistent with earlier decisions, the trial judge and Full Court in this case proceeded on the basis the application of the honest concurrent use provision is to be assessed as at the date of the first alleged infringing conduct. The Full Court’s comments in this regard are obiter dicta given the Full Court’s finding that the designer’s registration should be cancelled.
If that is the correct approach, it will be impossible for a respondent to establish the honest concurrent use defence where their first use of the mark was after the priority date of the infringed registration. This essentially limits the utility of the honest concurrent use defence to matters where the first use of the infringing mark was before the priority date of the infringed registration, but after the first use of the registered mark (as otherwise, the respondent should be able to rely on the prior continuous use defence).
Other decisions support the view that the relevant date for assessing the application of s 44(3) is at the time of the exercise of the discretion, at least with regard to s 44(3)(b). As such, this issue is somewhat unsettled and is one of the issues that is expected to be considered by the Full Court in the appeal in respect of the decision in Firstmac Limited v Zip Co Limited [2023] FCA 540, so watch this space.