Korolak v Campbell (No 2) [2023] FedCFamC2G 1222 (“Korolak”)

Author: Zeinab Farhat, Progressive Legal

Korolak is a recent Federal Court decision which considers a wide range of issues, in particular, the use of the words “Financial Foreplay” in relation to podcasts distributed by the Respondent’s and whether such use amounted to trade mark infringement, breaches of the Australian Consumer Law and tort of passing off.

The decision demonstrates the importance of having a registered trade mark, and the strength this provides in any enforcement action brought against an infringing party who is using a trade mark in relation to the same or similar goods and services to which a trade mark is registered. 

Facts

Korolak (“the Applicant”) claimed that from 12 February 2020 to May 2021 and beyond, Ms Campbell (“the First Respondent”) and SASS Financial Australia Pty Ltd (“the Second Respondent”) infringed the Applicant’s registered trade mark for the words “Financial Foreplay” in relation to podcasts created and made available by the First and Second Respondent. This also included material which was posted on various social media platforms.

The Applicant is the registered owner of the following registered trade marks: 

• TM no. 1762611 for the words “FINANCIAL FOREPLAY” registered in classes, 16, 35, 36 and 41; and  
• TM no. 12136530 also for the words “FINANCIAL FOREPLAY” registered in class 9.  

Korolak also alleged that the use of the words “Financial Foreplay” by the First and Second Respondent constituted conduct that amounted to misleading or deceptive conduct under the ACL, and, amounted to a breach of the tort of passing off.  

The First and Second Respondent accepted that the First Respondent used the words “Financial Foreplay”. However, the use of such words was in conjunction with the words “Sugarmamma”, and that the First Respondent’s use of the words was in her capacity as an employee and director of the Second Respondent.  

The First and Second Respondent claimed that the First Respondent also did not use the words “Financial Foreplay” as a “trade mark” or in relation to the goods and services of the same description. It was also claimed that the Applicant did not have a reputation that associated “Financial Foreplay” with the services offered by Korolak. As such, the First Respondent’s use of the words “Financial Foreplay” was not likely to mislead or deceive.

Issues

The Court considered a wide range of issues as outlined at para [163]. The issues for consideration were outlined as follows:  

1. “what were the goods or services the Respondents provided in relation to which the respondents used the alleged infringing signs?;  
2. as for the relevant goods or services, are they goods or services in respect of which the trade mark is registered?;  
3. To the extent (b) is answered in the negative, are any of the relevant goods or services of the same description as that of the registered goods or the registered services, or closely related to the registered services or registered goods, as the case may be?;  
4. assuming (b) or (c) or both are answered in the affirmative, did either or both the respondents use the alleged infringing signs in relation to the relevant goods or services and, if so, did they use the alleged infringing signs as a trade mark? 
5. assuming (d) is answered in the affirmative, are the alleged infringing signs; and substantially identical with, or deceptively similar to, the trade mark? 
6. assuming (e) is answered in the affirmative, and assuming Ms Campbell was involved in the use of the words “Financial Foreplay” solely as an employee and director of SASS, is Ms Campbell personally liable for such conduct?” 

Decision

The Respondent infringed the trade mark through the use of the words “Financial Foreplay” in relation to the Financial Foreplay podcasts (“FF Podcasts”) by: 

1. posting logos on Instagram and Facebook to advertise the FF Podcasts;  
2. using that same logo when describing the FF Podcasts;  
3. using the words “Financial Foreplay” to advertises the FF Podcasts; and  
4. using the words “Financial Foreplay” in the FF Podcasts themselves.  

The Applicant’s election for an Account of Profits was rejected as Korolak had failed to establish that the Respondent’s had made a profit.  

The Respondent’s were found not to have engaged in misleading or deceptive conduct, nor breached the tort of passing off.  

No injunction was granted as there was no evidence that the First Respondent could have stopped the traces of “Sugar Mamma Financial Foreplay that remained”. However, submissions were invited to be made by the parties in this regard.  

The parties were also invited to submit whether declarations should be granted.  

No order was made as to costs until the parties made their submissions.  

The only orders made related to a direction to the parties to file and serve submissions as directed.  

Brief Background

The Applicant, First Respondent’s and Second Respondent’s activities

The Applicant contended that since at least 2009, she had been using the words “Financial Foreplay” extensively. For brevity, such activities, included and were not limited to arranging for publication of a book titled “Financial Foreplay”, being the registrant of a domain using the words, and operating social media accounts on Twitter, Youtube and Facebook which used the words “Financial Foreplay” whether as a username, title etc.

The Applicant claimed that she supplies financial advice, business advice, education programs and training. The Applicant generally described her services as including: “coaching, consulting, financial management advice, educational programs, authorship, training, speaking and podcasting”.

The First Respondent is a financial planner who also authored books pertaining to financial advice.

The Second Respondent is a registered company to which the First Respondent is the sole director. The Second Respondent is a financial advisory business for high net wealth individuals. The First Respondent claimed she provides such advice as an employee of the Second Respondent.

Sugarmamma

Sugarmamma is the name of the content platform in which the First Respondent provides education about financial literacy. The Second Respondent also operates the sugar mama website.

The First Respondent also set up other platforms such as YouTube, Instagram and Tiktok for the sugar mama brand.

The First Respondent’s conduct in relation to the words “Financial Foreplay”

On 27 June 2020, the first episode of sugarmamma’s “Financial Foreplay” podcast was available for download. The First Respondent published 26 podcasts with that that title (the FF Podcasts). The First Respondent claimed she did so for the Second Respondent who ran sugarmamma tv.

The First Respondent claimed that before the launch of the FF Podcasts, she conducted searches to see whether there were any other podcasts with that name, she claimed that none of her searches revealed the Applicant or the book she had published which contained those words.

Evidence identified by the Applicant

The Applicant, as part of her first affidavit, provided a number of screenshots predominately from social media platforms.

HeadStart assessment and Correspondence sent

In or around November to December 2020, SASS applied for registration of the words “SugarMamma’s Financial Foreplay” in classes 9, 36, 38 and 41 despite receiving an Adverse TM HeadStart Assessment Report.

The application received an adverse examination report and cited the Applicant’s registered trade marks as objections.

During the application process, correspondence was also sent to and from the Applicant pertaining to the alleged trade mark infringement.

Reasoning

Trade Mark Infringement

It was held that trade mark infringement had been made out, by producing and making available the FF Podcasts, the Respondents provided services that constituted “advisory services relating to finance”, “advisory services relating to financial matters”, and “advisory services relating to money management” which are services in which the trade mark has been registered. The words “financial foreplay” are identical to the Applicant’s registered marks, and the words “sugarmamma financial foreplay” are words which are substantially identical or deceptively similar to the registered marks.

In reaching this conclusion, the Court considered among other things:

Services and goods in respect of which the Trade Mark has been registered?: The Court considered the meaning and construction of: “finance”, “financial matters” , “money management”, “advisory services” and “relating to”. The Court concluded that the interpretation of those words at least included the conveying of information which comprises an opinion etc, or, the conveying of information in relation to the use of money etc as described at [187] of the judgement.

Was making the FF Podcasts available to the public one of the registered services?: The Court held that the by producing and making available to the public the FF Podcasts, the conveying of information had occurred as per the explanation of “advisory services” as identified at paragraph 185 of the judgement. It was held that:

1. the information conveyed by the FF podcasts was about and related to the use of money; and
2. was directed to people who wished or intended to deliberate about the use of money.

Use of “Financial Foreplay” “as a trade mark”?: in relation to whether to the use of “financial foreplay” in relation to the FF Podcasts was use as a trade mark, the Court answered this question in the affirmative and noted that:

1. this is an objective exercise which occurs without reference to the respondent’s subjective intention;
2. it required an assessment of the “the objective purpose and nature of the respondents’ use of “Financial Foreplay” by reference to the relevant context, which includes the relevant trade, the way in which the words “Financial Foreplay” have been displayed, and how those words would present themselves to persons who read them and form a view about what they connote” at [201];
3. “the relevant trade”: it was held that publishing and making available on various sites of the FF Podcasts which consisted of the information they did, constituted “advisory services relating to finance”, “advisory services relating to financial matters” and “advisory services relating to money management”. Further, the class of people who would have become aware of the FF podcasts included those who visited the First Respondent’s social media accounts, who searched the word “finance” etc.
4. “use”: in relation to the use of the words “financial foreplay” and the manner in which they were used, it was held that:
   • the word “financial” is descriptive;
   • the word “foreplay” can be descriptive but is incapable of being descriptive as and when it is prefaced by the word “financial”. It was noted that a reasonable member of the target class would have understood the purpose/ placement of the word “financial” as associating the phrase with the person who thought to have combined this with the word “foreplay”. By extension, this may have suggested to a reasonable person of the target class that the purpose of the words “financial foreplay” being used in relation to podcasts, “was to was to associate the contents of the FF Podcasts which was described as “SugarMamma’s Financial Foreplay” with the person who came up with the idea of combining the words “financial” and “foreplay” at [203];
   • display of words: the words were prominently displayed in the logos which were posted on the Respondent’s social media accounts, and in descriptions of the FF podcasts. The words were also used aurally in the FF Podcasts.

Substantially identical with or deceptively similar?: the words “financial foreplay” are identical to the Applicant’s registered mark. Where the Respondent’s used the word’s in conjunction with “sugar mamma”, this was substantially identical to the Applicant’s registered mark.

Liability of respondents

The question for consideration was whether the First Respondent acted in her personal capacity, jointly or in concert with the Second Respondent.  

The First Respondent submitted that she engaged in such conduct as an employee and Director of the Second Respondent.  

The Court rejected the First Respondent’s submissions which appeared to assume that tortious acts committed by an employee or agent thereby does not render that employee or agent liable for the act(s) committed. The Court cited several authorities, namely those which confirmed that a tortious act committed by an employee still renders that person liable for the act and cited Houghton v Arms which states that: “..in the world of tort the status of an individual as an employee does not divest that person of personal liability for wrongful acts committed while an employee” (Houghton v Arms [2006] HCA 59, at [40]; cited at [214]).  

If the First Respondent was not personally liable, then it was held that the First Respondent was jointly liable with the Second Respondent, in particular, because the First Respondent was the sole director and shareholder , made the decisions herself in relation to the FF Podcasts and would have been entitled to receive any profit and benefit the Second Respondent made from its use of the words (applying Hashtag Burgers Pty Ltd v In-N-Out Burgers, Inc [2020] FCAFC 235, at [138] at [222]).  

Ultimately, it was held that the First Respondent liable for the infringing acts committed.

ACL and Passing off

In relation to the Applicant’s ACL and passing off claim, the Court held that the Applicant did not have a reputation in the words “Financial Foreplay” and hence her claim failed. Even if she was able to prove a reputation, she had not established that the First Applicant’s use of the words was misleading or deceptive or that the Respondent’s use of the words amounted to a deception.

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