Urban Alley Brewery Pty Ltd v La Sirène Pty Ltd  FCAFC 186 (4 November 2020)
The Full Federal Court has upheld the primary judge’s decision to cancel Urban Alley Brewery Pty Ltd’s (Urban Alley) registration for “Urban Ale”. The decision considers the issue of distinctiveness and highlights important lessons regarding the enforcement of trade marks which have descriptive significance, within the trade and relevant market.
Urban Alley owned Registration No. 1775261 for the trade mark Urban Ale covering “beer” in Class 32 and dated 14 June 2016. Urban Alley sued La Sirène Pty Ltd (La Sirène) for use of the trade mark:
(URBAN PALE label) on its beer product, launched in October 2016. Urban Alley also sought cancellation of La Sirène’s registration for the URBAN PALE label.
La Sirène filed a cross claim for cancellation of Urban Alley’s Urban Ale registration under s88(1)(a) of the Trade Marks Act 1995 on the basis that:
- Urban Ale is not capable of distinguishing beer products (s 41(1)); and
- Urban Ale was deceptively similar to an earlier third party mark Urban Brewing Company, registered under Registration No. 1760362 and covering beer (s 44(1)). 
In the primary decision Justice O’Bryan cancelled the Urban Ale mark on both grounds, finding that:
- Urban Ale was not capable of distinguishing beers because the ordinary signification of the combination “urban” and “ale” was of a craft beer brewed in an inner-city location; and
- Urban Ale was deceptively similar to the earlier Urban Brewing Company mark.
While there was no infringement because the Urban Ale registration was cancelled, the primary judge went on to consider whether La Sirène’s use of its URBAN PALE logo would have infringed the Urban Ale registration, and if so, whether it had defences to infringement that:
- La Sirène used URBAN PALE in good faith to indicate the kind, quality or other characteristics of the products (s 122(1)(b)(i); and
- La Sirène was exercising its rights to use the mark as registered (s 122(1)(e)) as it had obtained a registration for the URBAN PALE label in use during the litigation.
The primary judge found that URBAN PALE was used as a product name and not as a trade mark, and therefore did not infringe the Urban Ale registration.
On upholding the first defence, La Sirène was found to have used URBAN PALE as a description to indicate the nature and style of the product as a craft beer brewed in an urban location.
In relation to the second defence, La Sirène had used its URBAN PALE label as registered under its Registration No. 1961656 and so had a defence under s 122(1)(e). 
The primary judge also found that Urban Alley had not made out grounds for cancellation of La Sirène’s registration for the URBAN PALE label.
Urban Alley appealed, challenging the primary judge’s findings.
- Capable of distinguishing
On the first ground of appeal, that the primary judge erred in finding Urban Ale not capable of distinguishing, the judges noted that the primary judge’s finding might ordinarily seem surprising. However, their honours noted that the decision was based on contextual facts and usage of the word “urban” in the brewery trade. They referred to the primary judge’s findings that:
- it was well understood that many brewers are located in urban areas and, when used in relation to beer, “urban” “conveyed the meaning that the beer was brewed in a city location as opposed to a country location”;
- “‘urban’ had come to signify craft beer made in an inner city location” and could also be laudatory indicating that the beer is “fashinonable”, “trendy” or “cool”  ;
- there was evidence that journalists had used “urban” to refer to beer producers and breweries had used “urban” as part of their product names;
- ordinary consumers would understand “urban” as referring to a craft beer produced in an innner city location; and
- “urban ale”, in its ordinary signification, would therefore indicate craft beer produced in an urban location.
The judges found no appealable error in the primary judge’s finding and agreed that Urban Ale was not capable of distinguishing. 
- Deceptive similarity
The appeal judges found no error in the primary judge’s finding that “Urban Ale” was deceptively similar to the “Urban Brewing Company” mark.
On appeal, Urban Alley argued that the primary judge’s comments that the marks meant different things – with Urban Ale referring to beer and Urban Brewing Company referring to a maker of beer – meant that the judge ought to have found the marks not deceptively similar. However, the appeal judges noted that these comments were made in the side by side comparison of marks for assessing whether the marks were substantially identical. The judges noted that “ the test of deceptive similarity is fundamentally different. It is not a studied comparison. Rather, it is a comparison between one mark and the impression of another mark carried away and hypothetically recalled, paying due regard to the fact that recollection is not always perfect”.  The appeal judges agreed with the primary judge’s finding that, while Urban Ale and Urban Brewing Company had different meanings in a side by side comparison, there is a close association between the two marks making them deceptively similar.
Urban Alley also argued that substantial weight should be given to the other elements “ale” and “brewing company” in the marks and that those elements had “no relevant trade mark resemblance”.  However, their honours noted that the marks must be considered as a whole:
“It is impermissible to dissect each mark to emphasise its disparate elements and then compare the disparate elements of each in order to reach a conclusion on deceptive resemblance. To start with, this would leave out entirely the impact of the common element “urban”. It would also ignore the synergy between the word “urban” and the other word(s) in each mark. This synergy contributes to the impression gained of each mark, which is carried forward into the relevant comparison between the two.”. 
Given that “ale” and “brewing company” would be clearly associated in meaning, and were both combined with the element “urban”, the appeal judges agreed that the marks were deceptively similar.
While the appeal judges upheld the primary judge’s decision to cancel the Urban Ale mark, and the case on infringement could not therefore succeed, the judges went on to consider the other grounds of appeal.
- Use of URBAN PALE as a trade mark
On the question of whether La Sirène used URBAN PALE as a trade mark, the appeal judges agreed with the primary judge’s finding that URBAN PALE was used as “a product name that is descriptive of the nature and style of the beer product”.  They agreed that consumers would understand URBAN PALE as referring to a craft beer brewed in an inner city location (“urban”) in a pale ale style (“pale”) and would not see URBAN PALE as a trade mark for distinguishing the beer products from those of other traders.
They noted that URBAN PALE was the most prominent element on La Sirene’s label and that ordinarily this would be persuasive in finding trade mark use. However, because URBAN PALE would be seen as a product description, trade mark use could not be found. The judges referred to the primary judge’s words “I do not consider that prominence converts the essentially descriptive name into a mark indicating the source of origin”. 
Urban Alley’s appeal was dismissed on all grounds. 
This decision is a reminder of the limitations of adopting and registering marks with descriptive significance. Competitors may easily avoid infringement where they can argue that they are using their trade mark descriptively. Further, a registration for a descriptive mark will be vulnerable to cancellation on the basis that it lacks distinctiveness. Trade mark owners are advised that the strongest rights to be obtained are in registrations for marks which have no descriptive significance in relation to the goods or services.
The case also indicates that giving prominence to a mark in labelling will not convert descriptive words into trade marks. Further, registering a label with prominent, but descriptive, elements will not give exclusive rights to the descriptive elements.
 In the primary decision La Sirène had also sought cancellation of the Urban Ale registration on the basis that Urban Alley was not the owner of the Urban Ale mark due to the earlier registration for Urban Brewing Company (s 58). This was dismissed on the basis that the marks were not substantially identical and the primary judge’s decision on this point was not appealed.
 La Sirène had also raised a defence under s 222(1)(e) on the basis of its registration for “Farmhouse Style Urban Pale by La Serene” covering beers. However, the primary judge did not consider it necessary to consider that defence, given that La Sirène could already rely on its registration for the URBAN PALE logo for the defence under s 222(1)(e).
 Ibid, paragraph 60.
 Urban Alley had argued that the primary judge had suggested that “Urban Ale” was allusive and metaphorical when finding that it indicates beer made in an urban location which is “cool” or “trendy” and therefore could not be directly descriptive. This was dismissed, with the judges saying “urban” has a clear and direct meaning. They also tried to argue that the mark did not indicate a characteristic of the beers and therefore did not fall within the Note after s 41 because it did not indicate a “characteristic” of the beers in terms of flavour or style. This argument was unsuccessful, with the judges finding that Urban Ale could indicate other “characteristics” such as beers produced in an inner city location.
 Ibid, paragraph 99.
 Ibid, paragraphs 105 and 106.
 Ibid, paragraph 106.
 Ibid, paragraph 119.
 Ibid, paragraph 119.
 The judges did not need to consider Urban Alley’s challenge of the primary judge’s decision that La Sirène could rely on the defence that it used URBAN PALE to indicate the kind, quality or other characteristics of the beer products (s 122(1)(b)(i). This was because they had already upheld the primary judge’s decision that Urban Ale functions descriptively and is not inherently adapted to distinguish and the issues were essentially the same in relation to URBAN PALE.
Urban Alley had also challenged the primary judge’s finding that La Sirène would have a defence under s 122(1)(e), as it used the URBAN PALE label as registered, and the primary judge’s refusal to cancel La Sirène’s registration for the URBAN PALE label. These grounds of appeal were dismissed. Firstly, it was unnecessary and too remote to consider any defence under s 122(1)(e), given there was no infringement. Secondly, Urban Alley’s registration for Urban Ale, which would have blocked the application for the URBAN PALE logo, had been removed from the Register.