Advantage Group Ltd v Advantage Computers Ltd

Court of Appeal

Gault P, Keith and Glazebrook JJ, 9-10 September, 7 October 2002

This case concerned the computer/IT company Advantage Computers and the publicly listed company, Advantage Group. Advantage Group had traditionally operated as an eftpos company, but from mid 1999 it moved into the IT field through a series of acquisitions of IT companies, which it subsequently re-branded ADVANTAGE.

Advantage Computers alleged that Advantage Group's activities infringed its trade mark ADVANTAGE, which it had registered in relation to a number of computer-related goods and services in classes 9 and 42. Advantage Group responded by seeking to have Advantage Computers' trade mark registrations expunged. It also raised a number of defences and counterclaims to the infringement action.

Sections 12(a) and 13

Coincidentally, one of the defences raised by Advantage Group was that the use of the name ADVANTAGE fell within section 12(a), i.e. bona fide use of own name. Advantage Computers claimed that, by reason of section 13 of the Trade Marks Act 1953, section 12(a) was not available to companies (the Anheuser decision had not been delivered at the time the Advantage case was argued).

In its decision, the Court of Appeal simply adopted its reasoning from the Anheuser case in relation to the correct interpretation of ss12(a) and 13. Again, however, section 13 was not crucial as the Court upheld the trial Judge's finding that Advantage Group's use of its own name was not bona fide. In delivering the decision of the Court, Gault P stated that the use of the trade mark ADVANTAGE was quite plainly not use of the corporate names of the companies forming Advantage Group but was use as a trade mark to identify the Advantage Group and the goods and services the group offered. His Honour held that section 12(a) does not protect use of a single word taken from a corporate name, prominently presented with the first letter in logo form as the masthead for the business of the parent company and each of its subsidiaries.

The Court held that to the extent that comments of Laddie J in the well-known Mercury Communication case [1995] FSR 850 might be construed widely enough to encompass use in such a manner they were "compelled to disagree. It would enable the exclusion to destroy the value of trade mark registrations". However the Court held that on its reading the judgment did not go that far.

A further important finding in the decision was that the test of bona fides is not to be judged subjectively. The Court approved the approach in its earlier Anheuser Busch decision and that described in the US text McCarthy on Trade Marks and Unfair Competition (4th edition para 13.22) namely that the objective facts of probable customer confusion are more important than trying to determine what was going on in the defendant's mind. As stated in an Arizona Court "both the first user and the public may be as readily wounded by the ostrich as the fox".

Section 16

The Court of Appeal decision in Advantage is also interesting for the comments made in relation to the relevant date at which s16 of the Trade Marks Act should be considered (i.e. the prohibition on registration as a trade mark of any matter the use of which would be likely to deceive or cause confusion).

Counsel for Advantage Group submitted that it is the date on which the mark is actually entered on the register, not the date of application (i.e. the deemed date of registration), that the lawfulness of the registration under s16 is to be considered. It was argued that the Commissioner might refuse to grant registration if, between the date of application and the date of registration, circumstances developed bringing the use of the mark within the prohibition in s16.

This suggestion was first raised in Singapore in Tiffany & Co v Fabrique de Tabac Reunies [1999] 3 SLR 147, 163 and was considered recently in the decision of the New Zealand Court of Appeal McCain Foods (Aust) Pty Ltd v Conagra Inc.

Although in this case the Court did not make a final finding on the issue, it was plainly unenthusiastic about this somewhat novel argument. Gault P stated that the argument:

Has not been supported in New Zealand or England where s16 or its equivalent has existed for nearly a century;
Seems inconsistent with ss 28 and 73;
Is inconsistent with the Court of Appeal decision in Pioneer Hi-Bred Corn Company v Hy-Line Chicks Pty Ltd [1978] 2 NZLR 50, 61; and
Would present real difficulties for the Commissioner who would be required, in effect, to re-examine applications at the time of grant.