It was argued by Planet Health that there was no use of the FOREVER YOUNG trade mark during the non-use period because Eurark supplied its goods only for personal consumption direct to consumers and this was not trade mark use on the basis of the High Court case of WD & HO Wills (Aust) Limited v Rothmans Ltd (1955) 92 CLR 131, (1956) 94 CLR 182 (the “Pall Mall case”). The hearing officer distinguished this case on the basis that the supply by Eurark went beyond provision for personal use. The referral marketing scheme involved members promoting Eurark’s goods to obtain new members who would purchase goods. This earned compensation for the referring member. In addition, several hundred catalogues were sent to Australia each year in the non-use period.

More significantly, the hearing officer noted that the Pall Mall case was decided well before the electronic age of business transactions. He quoted with approval a passage from Ward Group Pty Ltd v Brodie & Stone Plc (2005) 64 IPR 1 which dealt with use of a trade mark over the internet. In relation to a case where an order had been placed for goods over the internet, the Court found that the first time that the trade mark would have been used in Australia was when the purchasers were informed that their orders had been accepted. A further use of the trade mark occurred in Australia when the goods were delivered. The hearing officer seems to be saying that, quite apart from the referral selling issue, orders over the internet, which are accepted and goods delivered, constitute use in Australia even if they are for personal use.

It was also argued by Planet Health that that there was no use in good faith because Eurark’s goods were therapeutic goods which should be registered pursuant to the Therapeutic Goods Act 1989 and the Therapeutic Goods Regulations 1990. As they were not so registered, it was argued that the goods could not be legally advertised or distributed in Australia. The hearing officer was not satisfied that use of a trade mark contrary to the Therapeutic Goods Act and Regulations was relevant to whether or not a trade mark is used in good faith (as is required by the non-use provisions) as this requirement is made out if there is a real use in a commercial sense. Even if it were relevant, the hearing officer considered that the goods were offered as cosmetic rather than therapeutic goods.

The decision is important because it suggests that the widespread practice of sales of goods to Australians by overseas entities over the internet will constitute trade mark use in Australia even though the goods are purchased by consumers for personal use. The decision is also significant in that it suggests that use of a trade mark contrary to the Therapeutic Goods legislation is not relevant in a non-use action.

Condoms are medical devices under the TG Act and must be registered on the Australian Therapeutic Goods Register (“ATGR”) before being imported into Australia.  Failure to register such goods before importation gives rise to civil and criminal liability under the TG Act.   

The Delegate found the assessment as to whether use of the mark was contrary to law was to be undertaken as at the priority date but looking forward to prospective conduct after registration was effected.  So whilst there had been no importation of the condoms as at the priority date, it was a relevant consideration that the Applicant had later imported the condoms in breach of the TG Act. 

In his decision, the Delegate noted that an applicant for trade mark registration may file an application whilst it is still finalising business arrangements, such as, obtaining the appropriate regulatory approvals.  The Delegate considered a number of earlier decisions where an applicant’s use of a trade mark would have been contrary to law unless the necessary approvals, licences or permissions were obtained.  In those cases, the Delegate found the applicants had been given the ‘benefit of the doubt’ in the sense that it was presumed an applicant would obtain the necessary approvals before actual use of the trade mark commenced. 

The present case was distinguished as the importation of the condoms had already occurred and the mark had been used illegally.  The Delegate also accepted Virgin Enterprises’ submissions that the labelling for the imported condoms did not comply with the TG Act’s labelling requirements.  Registration of the trade mark was therefore refused on the basis its use was, on the balance of probabilities, in contravention of the TG Act which was said to have the result of “effectively determin[ing] the hypothetical question of whether use of the mark would be contrary to law as of [the Priority Date]”.
 
Virgin Enterprises also attacked the application on the basis that the Applicant had no intention to use the trade mark at the time of filing, which is a ground of opposition pursuant to s.59 of the Trade Marks Act.  Virgin Enterprises had undertaken various investigations which had found inter alia: there was no listing on the ATGR for the condoms; the Applicant’s principal place of business was a residence with no apparent commercial activity taking place; and no contact details or a website could be located for the Chinese manufacturer. 

The Delegate accepted the Applicant’s evidence that it intended to sell condoms bearing the trade mark to various hotels and pubs throughout Australia despite the lack of documentary evidence to support this statement.  He also accepted that the Applicant’s relationship with its Chinese manufacturer had broken down so the Applicant was unable to produce invoices or shipping documents to support its statement.  Virgin Enterprises’ evidence of the apparent lack of business activity was not considered sufficient to find the Applicant did not have an intention to use the trade mark at the time of filing of its application.

This decision illustrates the importance of obtaining advice from a lawyer or trade mark attorney who can identify all relevant grounds of opposition, based on the circumstances of use and adoption of a particular trade mark.

Ownership

The Court found the primary judge had erred in ruling that Television had made out a prima facie case that The Food Channel Pty Ltd (“Channel”) (the applicant at the time of filing) was not the owner of the trade mark pursuant to s.58 ground of opposition.

Issues as to ownership arose because the application was filed for FOOD CHANNEL (logo) in August 2003 in the name of Channel and was later assigned to Network. Paul Lawrence controlled both the Network and Channel entities.

The trial judge found that the evidence as to whether Channel or Network was the owner of the mark was confusing. Her Honour ruled that the onus shifted to Network to establish that Channel was the owner of the trade mark at the time of filing the application and that Network had not discharged this onus.

However, the Full Federal Court found it was incorrect for the onus to be shifted to Network. On the facts, it was unclear as to which entity was the first user and therefore, owner of the trade mark. As such, the court found that Television had failed to demonstrate that there was a prior user of the mark which defeated Network’s claim to ownership.

Intention to use

The Court also overturned the trial judge’s decision that Channel had no intention to use the trade mark or authorise use of the trade mark at the filing date of the application and that Television had established the s.59 ground of opposition.

The trial judge considered Television had made a prima facie case that neither Channel or Network had an intention to use because the evidence as to use was from Mr Lawrence who was not an applicant and that this evidence further confused the issue as to which entity used the mark. The onus therefore shifted to Network to establish there was an intention to use at the time of filing which it had failed to do. The trial judge considered the fact that Network and Channel had the same director and shareholder to be of no relevance for the purposes of determining intention to use.

However, the Full Court found the relevant intention was that of Mr Lawrence, as the party controlling both Network and Channel, and that his evidence suggested an intention to use the trade mark. It also considered that on the evidence Network had used the trade mark on recipe cards it supplied to butchers to give to their customers and had used the mark on class 16 goods. As such, Television had failed to establish the s.59 ground of opposition.

Deceptive similarity

On the issue of deceptive similarity, the Full Court found the trial judge had made two errors in principle. Firstly, by expressly declining to consider the comparison of the marks as a whole and also by failing to appreciate that the comparison was of marks used in different trades (class 16 in the case of the Network mark and class 41 in the case of the Television marks).

The Full Court found there were three significant factors that pointed against the marks being deceptively similar. It found the marks did not look the same, did not sound the same and shared only the common element ‘food’.

It also considered that a comparison as to deceptive similarity, one had to bear in mind the difference in trade between the class 16 goods of the FOOD CHANNEL mark and Television’s class 41 services of ‘education; providing of training; entertainment, sporting and cultural activities.

The court said “The differences between the two marks are so significant, considered in relation to the different trades in which they are used, that we are unable to conclude that Network’s mark is likely to deceive or confuse confusion that goods bearing its mark originate from Television”.

Accordingly, the s.44 ground of opposition was not established.

In a further blow for Television, the Court upheld Network’s appeal against an award of costs which had been made on the basis of a finding that Network’s conduct had frustrated an earlier mediation.

Gallo submitted that in assessing whether there was use of the trade mark it was necessary to consider three basic propositions:
a)      that use means use of the trade mark as a badge of origin indicating a connection between the goods and the trade mark owner;
b)      that use of the trade mark was to be determined objectively without reference to the subjective trading intentions of the trade mark owner; and
c)      that goods relevantly remain in the course of trade until they are acquired for consumption.

The High Court considered that each of these propositions were consistent with long standing authority.

Lion Nathan sought to uphold the Full Court’s decision by reference to Estex Clothing Manufacturers v Ellis and Goldstein (1967) 116 CLR 254, and in particular statements made in that decision about the need for a trade mark owner to project their goods into the course of trade in Australia in order for there to be the necessary trade mark use. The High Court found that Lion Nathan’s contention that it was a necessary condition to establish a use in Australia that an overseas manufacturer knowingly “projects” his goods into the course of trade in Australia was a misreading of the judgment in Estex.

The High Court stated that:

The capacity of a trade mark to distinguish a registered owner’s goods from those of others, as required by s 17, does not depend on whether the owner knowingly projects the goods into the Australian market.  It depends on the goods being in the course of trade in Australia.  Each occasion of trade in Australia, whilst goods sold under the trade mark remain in the course of trade, is a use for the purposes of the Trade Marks Act.

Further:

An overseas manufacturer who has registered a trade mark in Australia and who himself (or through an authorised user) places the trade mark on goods which are then sold to a trader overseas can be said to be a user of the trade mark when those same goods, to which the trade mark is affixed, are in the course of trade, that is, are offered for sale and sold in Australia.  This is because the trade mark remains the trade mark of the registered owner (through an authorised user if there is one) whilst the goods are in the course of trade before they are bought for consumption.

Accordingly, on the facts of this case, there was use of the registered trade mark on vendible products offered for sale and sold in Australia sufficient to defeat the non-use application.

In its judgement, the High Court considered the history between the parties to highlight “the curious character of the Full Court’s conclusion, where there are two rival traders who have lost no opportunity to attack each other’s attempts to register trade marks both before the Registrar and in four sets of court proceedings which have so far been heard by 10 judges, that neither of them is aggrieved, and each is to be regarded as falling within a class of inter-meddlers, lacking any interest to be protected”.

The High Court found the Full Federal Court erred in adopting the exhaustive test for standing from the case of Kraft v Gaines, which included the requirement that a rival have a desire, or intention to use the mark to qualify as a ‘person aggrieved’.   Instead, the Court found the test of whether a party was a ‘person aggrieved’ was whether the parties were trade rivals in relation to the goods to which the mark was applied, as stated by Lord Pierce in Powell v The Birmingham Vinegar Brewery Co Ltd.  The Court said it did not matter whether or not they intended to use the mark on those goods.   As Health World and Shin-Sun were rivals in selling the health products, Health World was held to be a ‘person aggrieved’ for the purposes of s.88 and s.92.

Crennan J whilst concurring with the majority of CJ French, Gummow, Heydon and Bell JJ that Health World was a ‘person aggrieved’, considered an important element of Lord Pearce’s test to be the potential for, or actuality of a business being “affected”.   She considered the fact that Health World was asserting its right to conduct business in goods of the same description as Shin-Sun’s goods, under its trade mark INNER HEALTH PLUS, without having that business affected by a concurrent registration of the trade mark HEALTHPLUS, which Health World contended was erroneously registered, satisfied Lord Pearce’s test of whether a party is a ‘person aggrieved’.  Accordingly, Crennan J did not consider it necessary to decide the issue of whether it is sufficient for a ‘person aggrieved’ to prove no more than trade rivalry with the registrant of the trade mark sought to be removed. 

These matters have been remitted back to the Full Federal Court which must now consider whether to uphold the primary judge’s findings that Shin-Sun’s mark should be removed from the Register pursuant to s.88 and s.92(4)(b).

Note:  The Act no longer requires a party to establish it is a ‘person aggrieved’ to lodge an application for removal pursuant to s.92(1). 

While the two countries treat each other in the same way when it comes to cross-border court proceedings, this legislation will enable closer integration of the two civil justice systems.

Some important measures in the Bill include:

1. Simplifying the service requirement for civil court proceedings.  For instance the new legislation will enable a statement of claim filed in a court to be served on someone in New Zealand as of right and visa versa. A plaintiff will no longer be required to prove a connection between the proceedings and New Zealand, or to seek leave of the court.
2. The New Zealand Bill and its Australian equivalent will adopt a common give-way rule for deciding which country’s court should hear a dispute. The current problem of courts in New Zealand and Australian applying different tests to decide this issue leading to unnecessary expense and uncertainty will hopefully be ameliorated.
3. The Bill will expand the range of Australian court judgments that can be enforced in New Zealand, and simplify the process for enforcing them. Currently, only final money judgments from one country may be enforced in the other. This Bill extends this to include final non-money judgments, such as an injunction. The only ground for not enforcing an Australian judgment will be public policy.  However, it will continue the case that any challenge to the merits of a judgment will meed to be raised with the original court.
4. The Bill also introduces new measures to improve regulatory enforcement. New Zealand and Australia both have a strong mutual interest in the integrity of trans-Tasman markets and the effective enforcement of each other’s regulatory regimes. The bill will allow all Australian civil pecuniary penalties to be enforced in New Zealand, unless they are specifically excluded from the regime. The parallel legislation in Australia contains mirror provisions.
5. The Bill will also allow criminal fines to be enforced in the same way as a civil judgment debt is but only in respect of those regulatory regimes that affect the integrity, effectiveness, and efficiency of trans-Tasman markets.
6. Finally the Bill will simplify the conduct of court proceedings in various ways including through the use of technology.

Oakley sought interlocutory relief against the owner of the goods in Oakley, Inc v Elkofairi [2010] FCA 188. However, the parties reached an agreement on the first day of the proceedings in the Federal Court resulting in a consent order permanently restraining Elkofairi from importing and selling goods bearing Oakley’s trade marks or any marks substantially identical with or deceptively to, and from assisting any other person to do so.

Elkofairi was also required to forfeit the goods to the Commonwealth for disposal. It was ordered to deliver up to Oakley’s lawyers any goods or documents in his possession, custody or control which bore Oakley’s trade marks or any name, word, mark, sign or device substantially identical or deceptive similar thereto, applied without Oakley’s authority.

This case demonstrates the value of registered trade mark owners having an effective strategy to combat counterfeiters. Such a strategy should include the lodgement of a Notice of Objection with Customs, identifying a company’s registered trade marks and copyright material. By way of example, Oakley also relies on consumers to report the present of counterfeit goods in the marketplace and on the Internet.  Consumers can dob in a counterfeiter by reporting sightings of allegedly fake products through the company’s website.