Active Concepts Pty Ltd v True North Consulting

[2003] ATMO 16

TRADE MARKS ACT 1995

DECISION OF A DELEGATE OF THE REGISTRAR OF TRADE MARKS WITH REASONS

Re:Opposition by Active Concepts Pty Ltd to registration of trade mark application 808832(38) - FUNNELWEB INTERNET - filed in the name of True North Consulting.

Date of Decision:	10 March 2003
Delegate:	Senior Examiner Deirdre O'Brien
Representation:	Opponent - Ms Susan Gatford of counsel instructed by Macpherson & Kelley Applicant - Mr Glenn Luthy of True North Consulting Pty Ltd
Decision:	ss. 43, 44, 58 and 60 grounds relied on.  s44(2) ground made out, however provisions of s44(4) applied. Registration allowed subject to amendment of services. No award as to costs.

Background

On 29 September 1999, True North Consulting (the applicant) applied to register the trade mark funnelweb internet in respect of telecommunication and Internet access provision in class 38.

The application was advertised as accepted in the Australian Official Journal of Trade Marks on 27 July 2000.  On 4 September 2000, within the time allowed to do so, Active Concepts Pty Ltd (the opponent) filed Notice of Opposition to registration.  The opponent subsequently filed and served evidence in support of the opposition.  That evidence essentially consists of a statutory declaration made on 19 January 2001 by Darren Williams, a director of the opponent, with exhibits DW1 to DW14 inclusive.  There is a second declaration by Mr Williams on file which corrects a mistake in his first declaration.  There is nothing of substance in the second declaration and I do not refer to it in this decision. As evidence in answer, the applicant filed a joint statutory declaration by Damien Jolly, Christopher Leahey and Glenn Luthy, made 15 February 2002, with appendices numbered 1 to 56 inclusive. 

Pursuant to section 54 of the Trade Marks Act 1995 (the Act), both parties requested to be heard.  The matter came before me, as the Registrar's delegate, at a hearing held in Canberra on 17 October 2002.  Mr Glenn Luthy of the applicant appeared on its behalf; Ms Susan Gatford of counsel, instructed by Macpherson & Kelley, Lawyers of Dandenong, appeared on behalf of the opponent.

Notice of Opposition

The Notice of Opposition cites numerous grounds, however the opponent has only filed evidence or made submissions in support of the grounds under sections 43, 44, 58 and 60 of the Act.  There is no evidence or submissions with respect to the other grounds and I find they have not been made out.

I will first deal with the ground based on section 58 as my finding in that regard will affect my findings with respect to the other grounds.

Ground based on Section 58

This ground in the Notice of Opposition reads:

The applicant is not the owner of the opposed trade mark.

The presumption of registrability underpinning the Act means that in opposition proceedings the onus is on the opponent to make out the ground of opposition (see section 55). In other words, the onus here is not on the applicant to further satisfy me that it is the owner of the trade mark.  Its claim to ownership is founded in the making of the application[1].  The onus rests with the opponent to upset this claim.  The opponent has provided nothing in evidence in support of this ground, however Ms Gatford has submitted that there is sufficient information in the applicant's evidence for me to be satisfied that this ground is made out. 

[1] Shell Co (Aust) Ltd v Rohm and Haas Co (1949) 78 CLR 601

When the Registrar is required by the Act to be 'satisfied' of any matter, the requisite degree of satisfaction is reached on the balance of probabilities[2]. Further, Dixon J said in Briginshaw v Briginshaw (1938) 60 CLR 336 at 362:

[2] Blount Inc v Registrar of Trade Marks 40 IPR 498 at 504

... reasonable satisfaction is not a state of mind that is attained or established independently of the nature and consequence of the fact or facts to be proved.  The seriousness of an allegation made, the inherent unlikelihood of an occurrence of a given description, or the gravity of the consequences flowing from a particular finding are considerations which must affect the answer to the question whether the issue has been proved to the reasonable satisfaction of the tribunal.  In such matters "reasonable satisfaction" should not be produced by inexact proofs, indefinite testimony or indirect inferences. [emphasis added]

Accordingly, in deciding this ground of opposition, I need to consider whether, on the basis of the applicant's evidence and the opponent's submissions, it is likely that the applicant is not the owner of the trade mark.

Ms Gatford submits the applicant's evidence shows there was a partnership existing at the time of first use of the subject trade mark and that it is the partnership which is the owner.  She further submits there is nothing in evidence which establishes title to the trade mark has been transferred from that partnership to the applicant.

The applicant's evidence shows the name FunnelWeb Internet was conceived at a brainstorming session in December 1995.  However the persons who first think of a name are not necessarily the owners of the trade mark, nor are the persons who register it as a business name.  It is the person or persons who first use the name in Australia as a trade mark in the course of trade before the application is filed who have a claim to ownership[3].  The applicant's evidence shows the subject trade mark and a substantially identical trade mark were used during the course of trade in 1996 in relation to Internet access services.  This is evidenced by the inclusion of FunnelWeb Internet in the names of ACT Internet Service Providers listed in the August 1996 edition of the magazine Internet.au (Appendix 48) and by business cards and stationery from 1996 bearing the name Funnelweb Internet Service Provider (Appendices 31 and 32). In the balance sheet for FunnelWeb Internet Service Provider as at 30 June 1996 (Appendix 16), Messrs AJ King, CH Leahey, DG Jolly and GI Luthy are named as partners.

[3] Shell Co (Aust) Ltd v Rohm and Haas Co (1949) 78 CLR 601

Section 6 of the Partnership Act 1963 of the Australian Capital Territory provides:

Partnership is the relation which subsists between persons carrying on a business in common with a view of profit.

According to Keith Fletcher at p28 of his The Law of Partnership in Australia and New Zealand (The Law Book Company Ltd, 1991, 6^th Edition):

To constitute a partnership within the meaning of the Act[s], three elements are essential.  First, a business must be carried on; secondly, it must be carried on by persons in common; and thirdly, there must be a view of profit. 

I am satisfied from the applicant's evidence that, in 1996, Messrs King, Leahey, Jolly and Luthy were in partnership.  For convenience I shall refer to it as the FunnelWeb Internet partnership.  I agree with Ms Gatford that this partnership was the first Australian user of the trade mark. Ms Gatford submitted that there is no evidence to show that title to the trade mark passed to the applicant as would be the case if the partnership had been the applicant's predecessor in business.  She argues that the existence of two names in the signage at the applicant's business premises (Appendix 20) could mean that the FunnelWeb Internet partnership is still extant.  In other words, it is possible there are two legal entities carrying on business at the same address, one being the aforesaid partnership and the other the applicant. 

The applicant is a company which was incorporated on 18 December 1996 and given the ACN 076837039 (Appendix 7). The applicant's evidence contains its income and expenditure statements for the financial years 1997/98, 1998/99 and 1999/2000 (Appendix 17) and extracts from the its general ledger between 1.7.2000 and 15.12.2001 (Appendix 27).  There are no balance sheets for FunnelWeb Internet Service Provider in evidence apart from that referred to earlier.

On the other hand there are invoices in evidence, variously addressed to Funnel Web Internet, Funnel Web ISP or Funnel Web Internet Service Provider, which date from the years 1997 to 2001 (Appendices 19, 20, 25, 34, 36, 37 and 39), that is, after the date of incorporation of the applicant.  I find these invoices establish that the business registered as FunnelWeb Internet Service Provider traded in those years.  However they do not show that the business was still owned by the aforementioned partnership.  On the contrary, the following pieces of evidence indicate to me that from 1997 onwards, the business was owned by the applicant.

• Invoices from 1997 to 2001 for newspaper advertisements for FunnelWeb Internet were addressed to the applicant (Appendices 46 & 47).

• In a copy of a facsimile sent on 19 November 1999 to a third party by Ms Tracey Haylen of the applicant (Appendix 25), Ms Haylen states:

  The ACN number for True North Consulting and FunnelWeb Internet is 076 837 039.

• The December 1999 invoice for the FunnelWeb Internet sign was sent to True North Consulting as were August 1999 invoices for clothing bearing the words FunnelWeb Internet (Appendices 21 and 21).

• A letter dated 4 December 2001 from the Telecommunications Industry Ombudsman to Ms Tracey Haylen refers to True North Consulting Pty Ltd t/as FunnelWeb Internet (Appendix 12).

• In the professional indemnity insurance policy for the period 15 February 2001 to 14 February 2002, the name of the insured is given as True North Consulting Pty Ltd T/as Funnelweb Internet Service Providers (Appendix 42).

• The declarants of the supporting declarations at Appendix 40 all state that True North Consulting Pty Ltd also trades as FunnelWeb Internet.

• Undated information material at Appendix 33 about FunnelWeb Internet services begins:

  FunnelWeb Internet, a fully owned subsidiary of True North,......

On these bases, I am satisfied on the balance of probabilities that the FunnelWeb Internet partnership did not continue beyond 1996.  I am also satisfied that from 1997 onwards, the applicant has carried on business under the name FunnelWeb Internet.

I turn now to the issue of whether it is likely that the FunnelWeb Internet partnership was the applicant's predecessor in business and that the applicant thereby acquired ownership of the trade mark. According to D.R. Shanahan in his Australian Law of Trade Marks and Passing Off (The Law Book Company Ltd, 1990, 2^nd Edition, at p348):

A predecessor in business is one from whom the mark was obtained by a transfer with the goodwill of the business concerned in the goods or services in question.

The applicant's evidence shows the business known as FunnelWeb Internet Service Providers and using the trade mark FunnelWeb Internet has been trading continuously since 1996.  The numbers of Internet subscribers using FunnelWeb Internet as their access provider are supplied for the years 1996 to 2001 inclusive (Appendix 45).  The declarants in two of the supporting declarations at Appendix 40 state they have been using FunnelWeb Internet since 1996. The applicant's evidence does not identify the office holders of the applicant at the time of its incorporation. However, the declaration was made by three members of the FunnelWeb Internet partnership, namely Messrs Leahey, Jolly and Luthy.  There is nothing in evidence to show that there was any dispute between Messrs Leahey, Jolly and Luthy and the fourth member of the FunnelWeb Internet partnership, Mr King, about the right of the applicant to use the trade mark.  All this points to the applicant having been formed to take over the Internet service provider business started by the partnership. 

On these bases, I am not satisfied that there is anything in the applicant's evidence that unsettles its claim to ownership of the trade mark.  The 'overall impact'[4] of the applicant's evidence is that the first Australian user of the trade mark, the FunnelWeb Internet partnership, was the applicant's predecessor in business and that ownership of the trade mark passed to the applicant when it took over the business.  To make out this ground of opposition, the opponent needed to provide evidence that the applicant is not the owner.  It has not done so.  Accordingly, this ground of opposition fails.

[4] Blount Inc v Registrar of Trade Marks 40 IPR 498 at 510

Ground based on Section 44

This ground in the Notice of Opposition reads:

The opposed trade mark is substantially identical with or deceptively similar to one or more trade mark registration and/or application having an earlier priority date in respect of similar goods/services or closely related goods/services.

In support of this ground the opponent has cited its registration 739765 for the trade mark funnel web in respect of following goods in class 9:

Computer software for statistical analysis and profiling of World Wide Web and Internet usage, including communication and information transaction processing; computer software for electronic commerce; graphical display software; the aforesaid goods including software in the form of floppy discs, CD ROM's and other storage mediums available from the Internet

Registration 739765 has an earlier priority date than that of the opposed application.

Using the test for substantial identity provided by Windeyer J in Shell Co. (Aust) Ltd v Esso Standard Oil (Aust) Ltd 109 CLR 407 at 414, I find the opposed trade mark, funnelweb internet, is substantially identical with the cited trade mark, funnel web. Although in the opposed trade mark, the words funnel web have been conjoined, this does not change the meaning of the words in any way, nor the way they are spoken. In other words the essential feature of both trade marks is the same. The opposed trade mark does contain the word internet, however this is merely a description of the services being offered and does not alter the impression created by the trade mark in any substantial way[5]. 

[5] PB Foods Ltd v Malanda Dairy Foods Ltd 47 IPR 47 at 54-55

I find that some of the applicant's services are closely related[6] to some of the goods of the cited registration, namely:

[6] See remarks of French J in Registrar of Trade Marks v Woolworths Ltd 45 IPR 411 at 423-424

Computer software for statistical analysis and profiling of World Wide Web and Internet usage, including communication and information transaction processing

It is my understanding that some Internet service providers will, upon request, supply statistical information about site usage to those of their subscribers who have their own web page.  The opponent's evidence shows that Internet service providers form part of the target market for its software.  In other words, it is likely that the opponent's statistical software will be used by Internet service providers in the provision of their services. The applicant's services encompass those of an Internet service provider.  On this basis, I am satisfied that the applicant's services are closely related to the cited goods.

I have found that the opposed trade mark is substantially identical with the cited trade mark, that its services are closely related to the goods of the cited trade mark and that the cited registration has an earlier priority date than the opposed application.  There is therefore ground for rejecting this application under s44(2).  However that is not the end of the matter. Subsection 44(4) provides:

44(4) If the Registrar in either case is satisfied that the applicant, or the applicant and the predecessor in title of the applicant, have continuously used the applicant's trade mark for a period:

(a) beginning before the priority date for the registration of the other trade mark in respect of:

(i) the similar goods or closely related services; or
(ii) the similar services or closely related goods; and

(b) ending on the priority date for the registration of the applicant's trade mark;

the Registrar may not reject the application because of the existence of the other trade mark.

In other words, if am satisfied that s44(4) has been made out, I have the discretion to register the application, notwithstanding the ground for rejection under s44(2).

As indicated earlier in my discussion of the s58 ground, I am satisfied that the applicant and its predecessor in title, the FunnelWeb Internet partnership, have continuously used the opposed trade mark from 1996, that is, from before the priority date of the cited registration, until the priority date of this application.  That use was in relation to the provision of access to the Internet.  Accordingly, provided the applicant limits its application to those services, I intend to apply s44(4) and not reject the application on the basis of the ground established under s44(2). 

Ground based on Section 60

This ground in the Notice of Opposition reads:

The opposed trade mark is substantially identical with or deceptively similar to a trade mark that, before the priority date of the opposed trade mark, had acquired a reputation in Australia such that the use of the opposed trade mark would be likely to deceive or cause confusion.

The opponent has cited its trade mark registration 739765 in support of this ground.  Having already found that the cited trade mark is substantially identical with the opposed trade mark, I now need to consider whether or not it had a reputation in Australia before the date of filing this application, namely 29 September 1999 (the relevant date). To paraphrase Kenny J at 127-8 in McCormick & Co Inc v McCormick, 51 IPR 102, I need to be satisfied that in Australia before the relevant date the cited trade mark was recognised by the public generally. Elsewhere in that case Her Honour noted with approval the common practice of determining reputation by reference to sales and advertising figures and the way the trade mark has been promoted[7].  Relevant sales do not necessarily have to have taken place within Australia.  It is possible for an overseas reputation to spill over into the Australian marketplace[8]. Whether a trade mark has acquired a reputation, however, is a question of fact[9] and to be determined on the balance of probabilities.

[7] Ibid at 129-130

[8] ConAgra Inc v McCain Foods (Aust) Pty Ltd 23 IPR 193 at 233

[9] Ibid at 234

I consider the cited trade mark to be a memorable one, likely to remain in the minds of Australian consumers because of its connection with the Australian funnel web spider and the allusion to the World Wide Web.  The opponent uses the trade mark on 'web site monitoring and analysis software'.  However, there had only been two years of use prior to the relevant date and the majority of sales in that time seem to have taken place in the US. There was a marked increase in sales over those two years.  Nevertheless, worldwide sales at the relevant date were less than a million dollars per annum. An article from The Age dated 11 May 1999 (Exhibit DW10 to Williams declaration) indicates that one of the opponent's competitors in the same goods, Webtrends, had annual sales in 1998 of around $8 million. Elsewhere in his declaration Mr Williams asserts the opponent is the third largest provider of Internet auditing and analysis software in the world.  That may have been true in January 2001 when he made the declaration.  It is not necessarily true for September 1999. In the May 1999 Age article referred to earlier, Mr Williams is quoted as saying he 'hopes his small company, not even mentioned as a threat by bigger rivals Webtrends, Accrue and Net.Genesis in various US Securities and Exchange Commission filings, can garner a substantial following'.  

Moreover the opponent's methods of promotion fall far short of what I consider would be required to establish a reputation in such a relatively short period.  According to the Williams declaration, advertising and promotion were principally through the opponent's web site, That web site no longer exists.  Although the Williams declaration indicates the kind of information that was available at the web site, there is nothing in evidence to show what the home page looked like in the period 1997 to 1999.  Site usage statistics from early 1999 to March 2000 are in evidence (Exhibit DW11).  These are expressed in the number of 'hits' per month.  It is my understanding, however, that the number of hits recorded at a web site does not necessarily mean the same number of persons visited the site. 

In addition to the web site, the opponent  promoted its software by attending trade shows and distributing brochures.  It also advertised the software in printed publications.  All these activities conducted over a sufficiently long period of time may result in the trade mark acquiring a reputation among ordinary users of the Internet in Australia.  I am not satisfied, however, that this would have happened within two years. I have taken into account the apparently unsolicited articles in evidence about the opponent's web business and the software bearing the cited trade mark which appeared in the trade press in 1998 and 1999 (Exhibit DW10).  It is the business of the trade press to be aware of what products are in the marketplace.  That is a very different thing from reputation established in the mind of the purchasing public.

In her submissions Ms Gatford pointed out that three of the five declarants at Appendix 40 of the applicant's evidence state that they have heard of the opponent's Funnel Web software.  I do not place great weight on this.  The declarants do not state when and how they became aware of the software, nor do they state that the software had a reputation at the relevant date.  Ms Gatford also referred to the opponent's receipt of one of the 1999 Australian Financial Review/Telstra Internet awards.  There is nothing in evidence to show the basis on which the award was made or the extent to which this event was brought to the attention of the public or otherwise contributed to the reputation of the opponent's trade mark.

I am not satisfied the cited trade mark had a reputation in Australia at the relevant date and I find this ground of opposition is not made out.

Ground based on Section 43

This ground in the Notice of Opposition reads:

Use of the opposed trade mark in relation to the specified goods/services would be likely to deceive or cause confusion.

No submissions were made by Ms Gatford in relation to this ground.  However, as Mr Williams did address the matter in his declaration, I will deal with it briefly. 

The provisions of s43 are applied when there is some connotation inherent in the trade mark applied for which is likely to lead to deception and confusion[10].  The connotations that arise in association with the trade mark of this application, funnelweb internet, are those of the Australian spider and its web.  By that means there is clear reference to the World Wide Web, however I find such reference is not likely to lead to deception or confusion. Accordingly, this ground is not made out.

[10] George Schmidt v Down To Earth (Victoria) Co-operative Society Ltd 41 IPR 632; T.G.I. Friday's Australia Pty Ltd v TGI Friday's Inc [2000] FCA 720

Decision

Section 55 of the Act requires me to decide whether or not the trade mark should be registered, having regard to the extent to which any ground of opposition has been established.  Only the ground under s44(2) has been made out.  However, on the basis of the applicant's evidence, I intend to apply s44(4) and register the application provided its services are limited to provision of Internet access.  The applicant has already requested that its services be amended accordingly.

At the hearing and in written representations, the opponent has argued that, as the applicant has only supplied its Internet access services to subscribers within the ACT and the surrounding region, the Registrar should limit its registration to that geographical area.   Subsection 55(b) does give the Registrar the authority to register a trade mark subject to conditions and limitations.  However I am satisfied the applicant is the owner of the trade mark with respect to Internet access services.  I do not think it is fair and reasonable to expect it to confine its registration to the small geographical area in which it currently has subscribers. A geographical limitation may adversely affect its ability to defend its trade mark against unauthorised use by other traders.  Moreover I am not satisfied that such a restriction is practicable.  The applicant is offering its services on the Internet.  By that means it is using its trade mark Australia wide even though its target market at present is confined to a particular area.

Accordingly, I do not intend to apply any conditions or limitations.  It is necessary, however, for an error in the applicant's details recorded at the Trade Mark Office to be corrected.  The applicant's name appears as True North Consulting whereas the evidence shows its correct name is True North Consulting Pty Ltd.  The applicant has already requested that the correction be made pursuant to s66.

I direct that the amendment to the services and the correction of owner name be carried out upon expiry of 30 days from the date of this decision.  The application may then proceed to registration under the provisions of s44(4) provided the registration fee has been paid.  If the Registrar has been served with a notice of appeal in the meantime, I direct that registration shall not occur until the appeal has been decided or discontinued.

Costs

Each party has sought their costs.  The opponent has been unsuccessful in relation to three of the grounds relied upon, and only partially successful in relation to its s44 ground.  The applicant has been only partially successful in defending its application.  Accordingly, I consider it appropriate that each party bears its own costs.

Deirdre O'Brien
Senior Examiner
Trade Marks Hearings
10 March 2003