Caporaso Pty Ltd v Mercato Centrale Australia Pty Ltd

This dispute was between two food and hospitality businesses using branding built around the Italian word “mercato”. Caporaso operated an Italian-themed supermarket, restaurant and wine retail business. It owned three registered trade marks incorporating MERCATO. Mercato Centrale Australia operated a business providing retail food and beverage services from Collins Street in Melbourne under the name “Il Mercato Centrale”, and it used three unregistered marks that also incorporated the same word.

Caporaso sued for trade mark infringement. Mercato Centrale did not just deny infringement. It also attacked the validity and scope of Caporaso’s registrations. That changed the shape of the case. It was no longer only about whether the names were too close. It also became a case about whether the registration being enforced should stay on the register at all, and if so, in what form.

The Full Court reasons identify Caporaso’s marks as the plain word mark MERCATO, a fancy word mark incorporating MERCATO, and the Red Man Logo. Mercato Centrale’s marks were MERCATO CENTRALE, IL MERCATO CENTRALE and a Mercato Centrale logo. The plain word mark had a priority date of 21 March 2016. The fancy word mark had a priority date of 4 August 2008. The Red Man Logo had a priority date of 14 May 2009.

The plain word mark and the fancy word mark each carried an endorsement stating that the applicant had advised that the Italian word MERCATO appearing in the trade mark translates as MARKET. The reasons also record that Mercato Centrale had attempted to register its own marks for certain services, but had withdrawn some applications, while the logo application remained opposed.

At trial, Caporaso alleged that Mercato Centrale had used and intended to continue using signs that were substantially identical or deceptively similar to one or more of Caporaso’s registered marks. The infringement case was put on two alternative bases under s 120 of the Trade Marks Act. One was use for the same goods and services. The other was use for goods and services of the same description, or services closely related to the registered goods.

Mercato Centrale accepted that it had used, and intended to use, its marks in relation to certain goods and services. The primary judge also found that the marks would be used in relation to the overall business precinct, including retailing of goods. The reasons describe this as enough to capture what the parties treated as the high water mark of Caporaso’s infringement case, namely use of the combined words mercato centrale in respect of retailing services against the plain word mark MERCATO registered for the same retail services.

Mercato Centrale’s cross-claim was broader than a simple non-infringement defence. The primary judge described it as raising five broad questions: distinctiveness, confusion, ownership, misrepresentation and limitation. By the time the matter reached the Full Court, not all of those issues remained live. Mercato Centrale abandoned one aspect of its cross-appeal and pressed only the argument that the plain word mark should be cancelled because it had been accepted on the basis of evidence or representations that were false in material particulars.

Caporaso’s appeal focused on two issues. First, whether the primary judge should have exercised, or considered exercising, a discretion under s 88 not to amend the registration after finding a prior ownership problem for some Class 43 services. Secondly, whether the primary judge had erred in finding no deceptive similarity between the competing marks.

The Full Court said the main issues on the appeal and cross-appeal were these. First, whether the primary judge erred in dismissing the cross-claim that the plain word mark should be cancelled because the Registrar had accepted the application on the basis of evidence or representations that were false in material particulars. Secondly, whether the primary judge erred in narrowing the Class 43 services because a non-party had made prior use of the mark in relation to restaurant services. Thirdly, whether the primary judge erred in finding no deceptive similarity between Caporaso’s registered marks and Mercato Centrale’s marks.

One important point in the reasons is what was no longer in issue. There was no challenge on appeal to the primary judge’s conclusion that the word mercato had no ordinary signification in Australia to relevant English-speakers, other than as an allusive reference to Italy, either at the priority dates or when the cross-claim was commenced. So the appeal had to be decided on the footing that MERCATO was inherently adapted to distinguish.

That mattered because it shaped the false representations argument. The examiner had considered that the mark under examination was not inherently adapted to distinguish in respect of a certain class and sought evidence or representations about prior use. The primary judge later held that the mark was inherently adapted to distinguish, which meant prior use was not necessary to the correct registrability analysis. The question then became whether false statements about prior use could still support cancellation under s 62(b).

The Full Court’s catchwords answer that question clearly at a high level. The court held that the ground of opposition in s 62(b) can be established even where the evidence or representations are false in particulars that were not relevant to a proper assessment of registrability, provided the requisite causal link with acceptance of the mark for registration exists. Because the available text cuts off during the detailed discussion of this issue, the exact reasoning on that causal link should be checked in the complete reasons by anyone needing a technical analysis.

The reasons record that the facts relevant to the misrepresentation issue were mostly uncontentious. The applicants for the plain word mark were John Caporaso and his wife Rose Caporaso. The applications were filed before the incorporation of the appellant company, and the trade marks were later assigned to the appellant by an assignment dated 19 March 2019.

Mercato Centrale alleged that registration of the plain word mark had been secured on the basis of a statutory declaration by John Caporaso containing misrepresentations about prior use of MERCATO as a trade mark. The primary judge identified representations made to the examiner on 14 October 2016 by a statutory declaration dated 10 October 2016. Those included statements that the trade mark MERCATO was used in connection with a business first established by Mr Caporaso’s parents in 1972 under the name “Imma and Mario’s Mercato”, that from June 2005 the store and business began to be referred to simply as MERCATO, that the MERCATO brand had been used in connection with the family business since the early 1970s, and that the business had been known solely by MERCATO for over a decade.

The primary judge recorded that Mr Caporaso acknowledged in his affidavit that the first of those representations was incorrect, because his parents’ business was in fact known from 1972 as “Imma and Mario’s Continental”. The primary judge also recorded that Mr Caporaso ultimately conceded in evidence that other representations in the statutory declaration were also untrue. The reasons state that there was no dispute that the statutory declaration and the covering letter to the examiner contained evidence or representations that were false. The available text then cuts off during the primary judge’s discussion.

For businesses, this is the practical danger zone. Historical use evidence often gets prepared years after the events, sometimes by founders or family members relying on memory. But once those statements are put before the examiner, they become part of the legal record. If they are later shown to be wrong, they can become a direct attack point in cancellation proceedings.

The ownership issue arose because of evidence about a Daylesford restaurant business using MERCATO @ daylesford. The primary judge explained that only a person claiming to be the owner of a trade mark may apply for registration, and that at common law the owner is the first person to use it, or a substantially identical mark, as a trade mark. This part of the case was pressed only in relation to the plain word mark and only for certain Class 43 services.

The primary judge found that MERCATO @ daylesford had been used as a trade mark before the priority date, but only for services involving the provision of food and drink at cafes and restaurants, not for the whole of Class 43. The primary judge did not accept that MERCATO @ daylesford itself was substantially identical to the plain word mark because of the added elements. However, the judge did accept that the plain word mercato, standing alone, had been used as a trade mark in connection with the same business through the website address “www.mercatorestaurant.com.au”. Because “restaurant” was descriptive, the website address was treated as substantially identical to MERCATO standing alone.

That finding led the primary judge to narrow the Class 43 services covered by the plain word mark. The Full Court’s catchwords state that, if the issue arose, it would be appropriate to order that the register be rectified. In the end, however, the Full Court allowed the cross-appeal on the false representations issue and ordered cancellation of the plain word mark entirely, so the narrower ownership point did not save the registration.

This part of the case is a reminder that ownership is assessed at the filing date, not by who later builds the larger business. If another trader has already used the same or a substantially identical mark for the same kind of services, your registration may be vulnerable at least in part. Hospitality businesses are especially exposed because local prior use can be informal, geographically limited and easy to miss.

At first instance, the primary judge held that MERCATO CENTRALE was not deceptively similar to MERCATO. A key part of that reasoning was that the mark had to be considered as a whole, that it consisted of two Italian-sounding words, and that neither word had a proven meaning in English. The primary judge treated both words as distinctive and of equal significance, and considered CENTRALE to be an obvious differentiating feature.

On appeal, it was accepted that the word centrale would be understood to mean central. The Full Court’s catchwords state that, if not cancelled, the MERCATO mark would have been infringed by the MERCATO CENTRALE mark. The court also held that neither of the other Caporaso marks was infringed by any of Mercato Centrale’s marks. So the Full Court disagreed with the primary judge on the comparison between MERCATO and MERCATO CENTRALE, but not across the board.

That outcome matters because it shows how close these cases can be. A business might think that adding a second word, especially one with a foreign-language flavour, creates enough distance. This case shows that assumption can be dangerous. Even though the plain word mark was ultimately cancelled, the Full Court still made clear that MERCATO CENTRALE would have infringed MERCATO if the registration had remained in place.

For businesses choosing names, the lesson is not that every added word fails. It is that the comparison is always mark against mark in context, and a shared core element may still dominate the analysis. If the first or memorable part of your proposed brand is someone else’s registered mark, adding a descriptor, location or secondary word may not solve the problem.

The Full Court dismissed Caporaso’s appeal and allowed Mercato Centrale’s cross-appeal. It set aside parts of the primary judge’s orders and ordered that the cross-claim be allowed. Most importantly, the court ordered rectification of the Register by cancelling Trade Mark No 1760112 for the word MERCATO.

The court also ordered that, subject to any variation, Caporaso pay Mercato Centrale’s costs of the proceeding, including the cross-claim, and the costs of the appeal and cross-appeal. The orders allowed either party to seek a variation of the costs orders by filing evidence and short written submissions by the dates specified in the orders, with any application to be determined on the papers unless otherwise ordered.

So the final commercial position was mixed but decisive. Caporaso failed in its appeal. Mercato Centrale succeeded in having the key word mark cancelled. At the same time, the Full Court indicated that MERCATO CENTRALE would have infringed MERCATO if the registration had survived. That combination makes the case especially useful for business readers because it shows that infringement strength and registration validity are separate questions. A business can have a potentially strong infringement point and still lose the case because the registration itself falls away.

If you are considering enforcement, this is the strategic warning. Before relying on a registration in negotiations or litigation, stress-test the registration first. Review ownership, prior use, examiner correspondence, declarations and any factual statements made during prosecution. A weak filing history can turn an enforcement action into a cancellation case.

First, accuracy in trade mark prosecution matters. If an examiner asks for evidence or representations about prior use, do not assume the details are harmless because you believe the mark is registrable anyway. On this decision, false material may still support cancellation if it helped cause acceptance. That creates a real risk for businesses that rely on broad, unverified statements about family history, long trading history or inherited goodwill.

Secondly, enforcement can expose your own vulnerabilities. Caporaso brought the infringement case, but Mercato Centrale’s cross-claim succeeded in cancelling the key word mark. That is a common commercial pattern in trade mark litigation. The party asserting rights may end up defending the validity of those rights in detail.

Thirdly, ownership and scope should be checked before filing and before enforcement. The Daylesford prior use issue shows how a local earlier user can affect service coverage. If your business operates in hospitality, retail or franchising, earlier use by another trader in one town or one venue may still matter. Search broadly and document your own first use carefully.

Fourthly, do not assume that adding another word avoids infringement risk. The Full Court held that MERCATO CENTRALE would have infringed MERCATO if the registration had not been cancelled. Businesses launching precincts, venues, product lines or franchise-style concepts often try to differentiate by adding a descriptor. That may not be enough if the shared registered element remains the key point of recall.

The Full Court judgment was delivered on 6 December 2024. The appeal was from the primary judgment delivered on 26 February 2024, with a further decision on orders referred to in the reasons as Caporaso Pty Ltd v Mercato Centrale Australia Pty Ltd (No 2) [2024] FCA 256. The hearing of the appeal took place on 15 August 2024.

This page explains the decision using the published reasons and orders that are available. Part of the discussion on the false representations issue is cut off in the available text, so the explanation of the court's precise reasoning on the causal link under s 62(b) should be treated with care by technical readers. The broad outcome and the key holdings stated in the catchwords and orders are clear.