The first question to be determined in deciding whether a trade mark is capable of distinguishing the applicant’s goods and/or services is: to what extent is the applicant's trade mark inherently adapted to distinguish their goods or services? This determination involves a two-part process:

firstly, determining the ordinary signification of the trade mark in the light of the applied for goods and/or services; and
secondly, determining the likelihood that other traders might legitimately wish to use the trade mark for that ordinary signification in connection with their similar goods or services.

All trade marks examined will fall into one of three categories:

a. trade marks that, prima facie, are sufficiently inherently adapted to distinguish and are therefore prima facie capable of distinguishing;

b. trade marks that have some limited inherent adaptation to distinguish but are not prima facie capable of distinguishing;

c. trade marks that, prima facie, have no inherent adaptation to distinguish.

Inherent adaptation to distinguish is a concept that refers to a quality of the trade mark itself and cannot be acquired through use in the market place. In Burger King Corporation v Registrar of Trade Marks (1973) 128 CLR 417, 424 (‘The Whopper Case’) Gibbs J said in relation to paragraph 26(2)(a) of the 1955 Act:

Inherent adaptability is something which depends on the nature of the trade mark itself - see Clark Equipment Co v Registrar of Trade Marks [(1964) 111 CLR 511 at 515 - the Michigan case] - and therefore is not something that can be acquired; the inherent nature of the trade mark itself cannot be changed by use or otherwise.

In Michigan Kitto J at 513 sets out the criteria for deciding whether a trade mark is inherently adapted to distinguish:

That ultimate question must not be misunderstood [that is, "whether the mark is registrable as being 'adapted to distinguish' the applicant's goods"]. It is not whether the mark will be adapted to distinguish the registered owner's goods if it be registered and other persons consequently find themselves precluded from using it. The question is whether the mark, considered quite apart from the effects of registration, is such that by its use the applicant is likely to attain his object of thereby distinguishing his goods from the goods of others. In Registrar of Trade Marks v W. and G. Du Cros Ltd. (1913) AC 624 at 634, 635) Lord Parker of Waddington having remarked upon the difficulty of finding the right criterion by which to determine whether a proposed mark is or is not "adapted to distinguish" the applicant's goods defined the crucial question practically as I have stated it, and added two sentences which have often been quoted but to which it is well to return for an understanding of the problem in a case such as the present. His Lordship said: "The applicant's chance of success in this respect (i.e. in distinguishing his goods by means of the mark, apart from the effects of registration) must, I think, largely depend upon whether other traders are likely, in the ordinary course of their businesses and without any improper motive, to desire to use the same mark, or some mark nearly resembling it, upon or in connection with their own goods. It is apparent from the history of trade marks in this country that both the Legislature and the Courts have always shown a natural disinclination to allow any person to obtain by registration under the Trade Marks Acts a monopoly in what others may legitimately desire to use." The interests of strangers and of the public are thus bound up with the whole question, as Hamilton L.J. pointed out in the case of R. J. Lea, Ltd. 30 RPC 216 at 227; but to say this is not to treat the question as depending upon some vague notion of public policy; it is to insist that the question whether a mark is adapted to distinguish be tested by reference to the likelihood that other persons, trading in goods of the relevant kind and being actuated only by proper motives - in the exercise, that is to say, of the common right of the public to make honest use of words forming part of the common heritage, for the sake of the signification which they ordinarily possess - will think of the word and want to use it in connection with similar goods in any manner which would infringe a registered trade mark granted in respect of it.

In F. H. Faulding & Son Ltd v Imperial Chemical Industries of Australia and New Zealand Ltd. (1965) 112 CLR 537 at 555 (‘Barrier Cream Case’), Kitto J summarised the appropriate inquiry as follows:

The question to be asked in order to test whether a word is adapted to distinguish one trader's goods from the goods of all others is whether the word is one which other traders are likely in the ordinary course of their business and without any improper motive, to desire to use upon or in connection with their goods.

This summary is a very useful one for the purposes of examination and should form the basic inquiry when examining a trade mark's capacity to distinguish. It was approved by the Federal Court of Australia in Chancellor, Masters and Scholars of the University of Oxford t/a Oxford University Press v The Registrar of Trade Marks (1990) 17 IPR 509 (‘Oxford’), and more recently in Ocean Spray Cranberries Inc v Registrar of Trade Marks (2000) 47 IPR 579 (‘Cranberry Classic’).

More recently, the High Court in Cantarella Bros Pty Limited v Modena Trading Pty Limited [2014] HCA 48 (‘Cantarella’) endorsed that the proper test for assessing the inherent capacity of a trade mark to distinguish remains that articulated by Kitto J in Michigan. In doing so, the majority discussed the meaning of Kitto J’s words:

[T]he question whether a mark is adapted to distinguish be tested by reference to the likelihood that other persons, trading in goods of the relevant kind and being actuated only by proper motives - in the exercise, that is to say, of the common right of the public to make honest use of words forming part of the common heritage, for the sake of the signification which they ordinarily possess - will think of the word and want to use it in connection with similar goods in any manner which would infringe a registered trade mark granted in respect of it [Emphasis added];

in particular the purport of the bolded words. The majority made the following observations at [59]:

The principles settled by this Court (and the United Kingdom authorities found in this Court to be persuasive) require that a foreign word be examined from the point of view of the possible impairment of the rights of honest traders and from the point of view of the public. It is the “ordinary signification” of the word, in Australia, to persons who will purchase, consume or trade in the goods which permits a conclusion to be drawn as to whether the word contains a “direct reference” to the relevant goods (prima facie not registrable) or makes a “covert and skilful allusion” to the relevant goods (prima facie registrable). When the “other traders” test from Du Cros is applied to a word (other than a geographical name or a surname), the test refers to the legitimate desire of other traders to use a word which is directly descriptive in respect of the same or similar goods. The test does not encompass the desire of other traders to use words which in relation to the goods are allusive or metaphorical. In relation to a word mark, English or foreign, “inherent adaption to distinguish” requires examination of the word itself, in the context of its proposed application to particular goods in Australia.

Whilst it is noted that the Cantarella decision dealt with non-English words, the judgement of the majority is relevant to the inherent adaptation of any word or words to distinguish. Specifically, the majority also stated:

[70] In accordance with the principles established in Mark Foy’s and restated in Clark Equipment, Faulding and Burger King, determining whether a trade mark is “inherently adapted to distinguish”, as required by s 41(3), requires consideration of the “ordinary signification” of the words proposed as trade marks to any person in Australia concerned with the goods to which the proposed trade mark is to be applied.

[71] As shown by the authorities in this court, the consideration of the “ordinary signification” of any word or words (English or foreign) which constitute a trade mark is crucial, whether (as here) a trade mark consisting of such a word or words is alleged not to be registrable because it is not an invented word and it has “direct” reference to the character and quality of goods, or because it is a laudatory epithet or a geographical name, or because it is a surname, or because it has lost its distinctiveness, or because it never had the requisite distinctiveness to start with. Once the “ordinary signification” of a word, English or foreign, is established an inquiry can then be made into whether other traders might legitimately need to use the word in respect of their goods. If a foreign word contains an allusive reference to the relevant goods it is prima facie qualified for the grant of a monopoly. However, if the foreign word is understood by the target audience as having a directly descriptive meaning in relation to the relevant goods, then prima facie the proprietor is not entitled to a monopoly of it. Speaking generally, words which are prima facie entitled to a monopoly secured by registration are inherently adapted to distinguish.

In summary, the Cantarella decision makes clear that when considering the inherent distinctiveness of a trade mark, consideration should first be given to the ‘ordinary signification’ (or ‘ordinary meaning’) of the words comprising the trade mark to anyone in Australia purchasing, consuming or trading in the relevant goods/services. Consideration should then be given as to the likelihood of other persons desiring to use the words for the sake of their ordinary signification, in keeping with the principles espoused in the Michigan case.