Case Note: what is a community bank?

In Community First Credit Union Limited v Bendigo and Adelaide Bank Limited [2019] FCA 1553, Justice Markovic of the Federal Court upheld an appeal by Community First Credit Union Limited (CFCU) against the refusal of its trade mark application for “Community First Bank” and “Community First Mutual Bank” and also agreed that the Bendigo Trade Marks for the words “Community Bank” be removed from the Trade Marks Register.

The decision did not affect Bendigo’s Trade Mark for “Bendigo Bank Community Bank Branch” (the Bendigo Composite Mark).

The meaning of “community bank” was a key issue in whether Bendigo’s trade mark was merely descriptive or distinctive under section 41 of the Trade Marks Act.

CFCU had previously registered a trade mark for the words “Community First” with a priority date of 23 October 1998 and is now seeking to become a bank but Bendigo’s trade mark was blocking a name change.

The relevant Bendigo Marks had priority dates for “Community Bank” of 8 February 1999 and 24 August 2001.

Evidence included the reasons for Macquarie Dictionary’s inclusion of “community bank”  as a generic term for the first time in its 2003 edition meaning “a bank which is owned and managed locally and which serves the needs of the local community.”

Other evidence related to the phrase “bank the community” and banking CMEs [cooperative and mutual enterprises] which have a business model that allows them to make a surplus in order to provide banking services and products that are sustainable, affordable and socially responsible to their members/customers. The CME (as a financial institution) is there solely for the community that collectively owns the bank, it returns all of its profit to its members and does not have any third-party stakeholders (ie shareholders) who are not also members/customers.

There was also discussion of the terms “customer-owned”, “member-owned” and “community-owned” and whether Bendigo’s banking model is “a type of franchise operation” which should be distinguished from community banking.

CFCU submitted that the term “community bank” as used by Bendigo bears its natural and ordinary signification to consumers of banking services in Australia, namely a bank situated in a particular community or locality including a bank providing banking services for the people of a particular community or locality; “community” has its ordinary meaning and includes the local people or any group within society, whether defined by geographical location or by similar characteristics; and “bank” also has its ordinary signification being a financial establishment, including a deposit taking institution. CFCU submitted that, given those significations, the Bendigo Word Mark was not at its priority date to any extent inherently capable of distinguishing Bendigo’s services and should have been rejected under s 41(3) of the TM Act.

Bendigo submitted that the Bendigo Community Marks are capable of distinguishing its services and that the marks were correctly accepted for registration pursuant to s 41 of the TM Act. Bendigo relied on the evidence of Mr Hunt (who was the managing director and CEO of Bendigo until 2009) and his description of the strategy to develop a new bank branch concept commencing in 1997. It further submitted that when it adopted the Bendigo Community Marks in 1997 there was no other ADI in Australia using the term “community bank” and it was unique to Bendigo. Bendigo contended that, from the perspective of consumers and traders, when it combined the words “community” and “bank” and started using the combined term in 1998, it had no direct meaning and that the term “community”, while having a descriptive element, has a wide range of meanings.”.

Justice Markovic concluded:

“…the words “community” and “bank” have their ordinary signification namely, in the case of “community”, the local people or people gathered or brought together by some commonality and, in the case of “bank”, a financial establishment or institution. Those asserted meanings are reinforced by the dictionary definition of the word “community”. The Macquarie Dictionary (Federation Edition, 2001), an excerpt from which was tendered in evidence by Bendigo, defines community to mean, amongst other things “a social group of any size whose members reside in a specific locality, share government, and have a cultural and historical heritage” or “similar character; agreement; identity”.

When used in combination the words “community” and “bank” convey the meaning of the provision of financial services to a group of people brought together by a common feature, for example geography, occupation or workplace. The use of these terms in conjunction is not so unique as to alter the meanings that “community” and “bank” possess individually.

There is no covert or skilful allusion to the Services provided by Bendigo. The combined words are directly descriptive of the Services offered, namely the provision of financial services to a community of people defined by geography.

There is no doubt that, via the franchise banking model, Mr Hunt developed Bendigo’s community banking model commencing in 1997, addressing both the needs of regional Australian communities faced with bank branch closures and Bendigo’s business imperatives. He described the model as embodying the disciplines and accountabilities of a shareholder model of ownership with the incentives implicit in a cooperative model. The franchise banking model promulgated by Bendigo seemed to be the first of its kind in Australia. Mr Hunt believed that he was using terms, namely “community bank” and “community banking”, which were original and previously unused in Australia to describe the concept.

But uniqueness of the franchising model and Mr Hunt’s belief about the originality in Australia of the words to describe the model and its branches is not to the point….

The ordinary signification of the term “community bank” is a provider of banking services or financial institution that serves a particular community, whether defined by geography, workplace, trade or other feature. It is directly descriptive of the Services. Further, the evidence establishes that other traders, not actuated by improper motive, might, and indeed did as at the Priority Dates, legitimately desire to use those words for their ordinary signification.

In those circumstances in my opinion, as at the Priority Dates, the words “community bank” and thus the Bendigo Community Marks were not inherently adapted to distinguish the Services from the services of others pursuant to s 41(3) of the TM Act.

…..As I have come to the view that the Bendigo Community Marks could have been successfully opposed under s 41 of the TM Act, it falls to me to determine whether in the exercise of my discretion an order should be made for rectification of the Register by cancelling or removing the Bendigo Community Marks from the Register as sought by CFCU….

…the statutory discretion to cancel or remove the Bendigo Community Marks has been enlivened. Having considered the matters raised by Bendigo and the evidence relied on by it, in my opinion the evidence does not disclose sufficient reason not to cancel the Bendigo Community Marks.

….that there has been no opposition to registration of the Bendigo Community Marks for some 20 years is not a persuasive factor. There may be many reasons why such an application was not made earlier, including a disinclination to pursue hard fought litigation in the nature of these proceedings….

Secondly, Bendigo points to the fact that in the period following registration of the Bendigo Community Marks it has grown a business with over 300 Bendigo community bank branches and there has been significant investment on the part of Bendigo and its franchisees in the franchise business … It contends that the business was built by reference to the Bendigo Community Marks. But Bendigo is required to use and to the extent it has used the Bendigo Community Marks, in particular the Bendigo Word Mark, it has done so in conjunction with signage or markings that signify to consumers that it is the provider of the banking services in the Bendigo community bank branches. In most instances it is the Bendigo Composite Mark that has been used for this purpose. Bendigo has not demonstrated that it is by reference to use of the Bendigo Community Marks alone that it has built the Bendigo community bank franchise business.

In any event, Bendigo is the registered proprietor of the Bendigo Composite Mark with a priority date of 21 October 1997. This was the mark in use as at the dates of application for the Bendigo Community Marks … and the evidence demonstrated that since that time Bendigo has used that mark extensively. There is no application to remove that mark from the Register. Bendigo will be able to continue to use the Bendigo Composite Mark which meets the requirements of the regulator.

Thirdly, that CFCU’s witnesses accepted in cross-examination that Bendigo should be able to continue to use the term “community bank” does not justify a mark that is not valid remaining on the Register.

…In any event, the removal of the Bendigo Community Marks from the Register will not preclude Bendigo from using the term “community bank”, particularly as it retains ownership of the Bendigo Composite Mark.”

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