Australian Professional Drag Racing Ltd v Australian National Drag Racing Association Limited

[2017] ATMO 97

TRADE MARKS ACT 1995

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

Re:Opposition by Australian Professional Drag Racing Ltd to registration of trade mark application 1670835 (41) – Nitro Australia - in the name of Australian National Drag Racing Association Limited

Delegate:	Nicholas Smith Decision on the Written Record
Decision:	2017 ATMO 97 Trade Marks Act 1995 (Cth) - Section 52 opposition: ss 41, 59, 62A considered – grounds not established – trade mark to proceed to registration

Background

1. This is an opposition brought by Australian Professional Drag Racing Ltd (‘Opponent’) pursuant to s 52 of the Trade Marks Act 1995 (Cth) (‘Act’) to the registration of the trade mark subject of the application detailed below in the name of Australian National Drag Racing Association Limited (‘Applicant’): 

Application Number:	1670835
Filing Date:	27 January 2015
Goods and Services:	Class 41: Entertainment services; sporting services; sporting activities; arranging of sporting events; management of sporting events; organisation and management of promotions (entertainment events and sporting events); production of television programs; production of films and videos; information services relating to sport   (collectively ‘Applicant’s Services’)
Trade Mark:	Nitro Australia       (‘Trade Mark’)

2. Following the advertisement on 3 December 2015 in the Australian Official Journal of Trade Marks of the application’s acceptance for possible registration, the Opponent filed a Notice of Intention to Oppose on 25 January 2016 and a Statement of Grounds and Particulars on 25 February 2016.  The SGP was assessed by this office as inadequate and following further communication between this office and the Opponent, a revised Statement of Grounds and Particulars (‘SGP’) was filed on 14 March 2016. The Applicant filed a Notice of Intention to Defend on 31 March 2016. The SGP raised grounds of opposition under ss 41, 59 and 62A of the Act.

Evidence

3. The Opponent filed Evidence in Support of its opposition (‘EIS’) on 15 July 2016.  This evidence consists of a declaration made on 12 July 2016 by Lex Raymond Swayn, a journalist with expertise in drag racing which exhibits a series of unmarked promotional posters (‘Swayn Declaration’). 

4. The Swayn Declaration contains the following claims/statements:

·    The term ‘nitro’ is a common abbreviation for Nitromethane.  Nitromethane is an organic compound with a variety of industrial applications and is commonly used as an engine fuel within the sport of drag racing.  The term ‘nitro’ has been used for various racing events, including events that feature particular cars that use ‘nitro’ such as ‘Nitro Harleys’ or ‘nitro funny cars’.  The term ‘nitro’ is a term of common usage in the sport of drag racing and conveys the type and category of racing being referred to.

·    The Applicant is a body that sanctions drag racing events.  Drag racing events are organised by individual race tracks and/or bodies such as the Opponent.  Given that the Applicant is a sanctioning body and that it has not used ‘Nitro’ or ‘Nitro Australia’ previously, there is no reason to expect that the Applicant would legitimately seek to use the Trade Mark in the future.

·    The Applicant and the Opponent (and various race tracks that are affiliated with the Opponent) are presently in dispute; with the Opponent’s affiliated race tracks no longer seeking to maintain the sanctioning of the Applicant to stage their events.  In such circumstances it is likely that the Applicant seeks registration of the Trade Mark for the purposes of preventing the Opponent and its race tracks from using any mark similar to the Trade Mark.   

5. The Applicant chose not to file evidence in answer.  Once the time allowed for filing evidence had ended the parties were given an opportunity to request a hearing or to file written submissions.  Neither party chose to avail themselves of these opportunities.  By letter from IP Australia dated 30 May 2017 the parties were notified that as neither party had requested a hearing the matter would be given to a delegate of the Registrar for a decision based on the written record.  The letter indicated that the parties had one month from the date of the letter to file any written submissions they wished to reply upon.  Neither party filed any submissions.

6. I am a delegate of the Registrar of Trade Marks and I am to decide the opposition as required by s 55 of the Act which provides that, unless the proceedings are discontinued, dismissed, or have lapsed under s 54A, the Registrar must, at the end, decide:

(a)to refuse to register the trade mark; or

(b)to register the trade mark (with or without conditions or limitations) in respect of the goods and/or services then specified in the application;

having regard to the extent (if any) to which any ground on which the application was opposed has been established.

Grounds of Opposition, Onus and Standard of Proof

7. As indicated above the SGP nominates grounds of opposition under ss 41, 59 and 62A. To successfully oppose the application the Opponent bears the onus of proof. ^[1] 

[1] Food Channel Network Pty Ltd v Television Food Network GP [2010] FCAFC 58, [32].

8. The relevant standard of proof is the ordinary civil standard based on the balance of probabilities.[2]  The date at which the rights of the parties are to be determined is 27 January 2015, being the filing date of the application in Australia (‘relevant date’).

Discussion

[2] Following Pfizer Products Inc v Karam (2006) 70 IPR 599, [6]-[26], and Telstra Corporation Limited v Phone Directories Company Pty Ltd [2015] FCAFC 156, [133].

Section 41

9. The relevant provisions of the Act with respect to the s 41 ground are reproduced below:

Section 41 - Trade mark not distinguishing applicant's goods or services

1. An application for the registration of a trade mark must be rejected if the trade mark is not capable of distinguishing the applicant's goods or services in respect of which the trade mark is sought to be registered (the designated goods or services) from the goods or services of other persons.

   Note:          For goods of a person and services of a person see section 6.

2. A trade mark is taken not to be capable of distinguishing the designated goods or services from the goods or services of other persons only if either subsection (3) or (4) applies to the trade mark.

3. This subsection applies to a trade mark if:

   (a)the trade mark is not to any extent inherently adapted to distinguish the designated goods or services from the goods or services of other persons; and

   (b)the applicant has not used the trade mark before the filing date in respect of the application to such an extent that the trade mark does in fact distinguish the designated goods or services as being those of the applicant.

4. This subsection applies to a trade mark if:

   (a)the trade mark is, to some extent, but not sufficiently, inherently adapted to distinguish the designated goods or services from the goods or services of other persons; and

   (b)the trade mark does not and will not distinguish the designated goods or services as being those of the applicant having regard to the combined effect of the following:

   (i)the extent to which the trade mark is inherently adapted to distinguish            the goods or services from the goods or services of other persons;

   (ii)            the use, or intended use, of the trade mark by the applicant;

   (iii)           any other circumstances.

   Note 1:       Trade marks that are not inherently adapted to distinguish goods or services are mostly trade marks that consist wholly of a sign that is ordinarily used to indicate:

   (a)the kind, quality, quantity, intended purpose, value, geographical origin, or some other characteristic, of goods or services; or

   (b)the time of production of goods or of the rendering of services.

5. With respect to s 41 it is appropriate to discuss the ‘presumption of registrability’. As was explained by the Hearing Officer in Unilever plc v Beiersdorf AG:

   Section 33 of the Act states that the Registrar must accept an application unless satisfied that it has not been made in accordance with the Act, (which is not relevant here), or that there are grounds under the Act for rejecting it. In this regard s 33 embodies what is often referred to as a ‘presumption of registrability.’ As was explained in Blount Inc v Registrar of Trade Marks[3] (‘Oregon’), however, prior to the [Intellectual Property Laws Amendment (Raising the Bar) Act 2012 (“the Amending Act”)] ss 41(5) and (6) as they then were, (which essentially correspond to current ss 41(4) and (3) respectively), effectively shifted the onus onto an applicant. Section 41 was thus amended to address that inconsistency, with the Explanatory Memorandum to the Intellectual Property Laws Amendment (Raising the Bar) Bill 2011 (‘the EM’) stating at page 146:

   [3] (1998) 40 IPR 498, 505.

   The changes are intended to clarify that the presumption of registrability, as provided for in section 33, does apply to section 41. … The intention is that, if the Registrar is equally unsure of whether the mark is or is not capable of distinguishing, that doubt should be resolved in the applicant’s favour.

   The Amending Act was not however intended to alter the relevant standard for registrability. In this regard the EM goes on to state (also at page 146):

   Note that while the amendment [to s 41] ensures that the onus rests with the Registrar during examination, it is not intended to require that the trade mark should clearly not be registered. Rather, as with other grounds it is intended that the delegate need only be satisfied that a ground exists on the balance of probabilities.

   The amendments are not meant to alter the key concepts of “inherently adapted to distinguish”, “capable of distinguishing” and “does or will distinguish”.  The judicial tests for these terms are settled and the amendments are not intended to change the legal concept of a trade mark distinguishing the applicant’s goods or services from others.

   Branson J’s analysis at 504 in Oregon of the operation of s 41 as it stood prior to the Amending Act, as paraphrased below, also remains apt in relation to the amended section:

   Having taken [the extent of inherent adaptation] into account, it is theoretically open to [me] to conclude:

   (a) that the [Trade Mark] is inherently adapted to distinguish the [Applicant’s Services] from the goods or services of other persons and capable, on that basis alone, of so distinguishing the [Applicant’s Services]; [that is, neither s 41(3) nor s 41(4) applies] or

   (b) that the [Trade Mark] is not to any extent inherently adapted to distinguish the [Applicant’s Services] from the goods or services of other persons; [that is, s 41(3) applies] or

   (c) that the [Trade Mark] is to some extent inherently adapted to distinguish the [Claimed Goods] from the goods or services of other persons, but there is uncertainty, on that basis alone, that the trade mark is actually capable of so distinguishing the [Applicant’s Services]. [that is, s 41(4) applies][4]

   [4] [2017] ATMO 25, [38]-[40].

6. Paraphrasing what the same Hearing Officer said in Pacific Magazines Pty Ltd v Bauer Consumer Media Ltd[5]:

   As mentioned in paragraph [7] above the Opponent bears the onus of establishing its s 41 ground of opposition. However, its onus is effectively limited to satisfying me that the [Trade] Mark is not sufficiently adapted to distinguish the Applicant’s Goods and Services as to qualify for registration on that basis alone, being the issue addressed in particular by s 41(3) [as it stood prior to the Amending Act.][6]  In this regard both parties agreed that, as Mr Rubetzki put it:

   When assessing whether a mark is sufficiently adapted to distinguish the Applicant’s Goods and Services, it should be presumed that the mark is sufficiently adapted to distinguish unless the Registrar is satisfied otherwise. However, if it is necessary to consider the mark under ss 41(3)(b) or (4)(b) (as they now stand), the Applicant must demonstrate that the criteria referred to in those sub-sections are made out.

   [5] [2015] ATMO 69 at [16]-[18]. I have in the main also retained the Hearing Officer’s original footnotes.

   [6] See Sports Warehouse, Inc v Fry Consulting Pty Ltd (2010) 87 IPR 300, [26]-[29], [40] for a full discussion on this point,

   Consideration of the Opposed Mark under section 41(3)

   In accordance with Branson J’s analysis then, the first issue which arises for consideration is “the extent to which the trade mark is inherently adapted to distinguish the designated goods or services from the goods or services of other persons.”  Justice Kitto in Clark Equipment Company v Registrar of Trade Marks stated that:

   [T]he question whether a mark is adapted to distinguish [is to] 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 connexion with similar goods in any manner which would infringe a registered trade mark granted in respect of it. [7]

   More recently, the High Court in Cantarella Bros Pty Limited v Modena Trading Pty Limited considered the former s 41(3) and in particular the question of whether a trade mark is inherently adapted to distinguish in some detail. In a joint judgment the majority of the Court explicitly approved Kitto J’s above-quoted words and went on to say at [70]-[71] (with original footnotes omitted and my emphasis added in bold):

   Interpretation of s 41(3)

   [70] In accordance with the principles established in [Mark Foy’s Ltd v Davies Coop & Co Ltd[8]] and restated in [Clark], [FH Faulding & Co Ltd v Imperial Chemical Industries Ltd[9]] and [Burger King Corporation v Registrar of Trade Marks[10]], 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. [11]

   [7] (1964) 111 CLR 511, 514. The case concerned possible registration of the claimed trade mark MICHIGAN in Part B of the then two part Register as a mark ‘capable of becoming distinctive’ under s 25(1) of the now repealed Trade Marks Act 1955.  Under s 26 of that Act a trade mark could not be considered distinctive unless it was ‘adapted to distinguish’ the relevant goods or services.

   [8] (1956) 95 CLR 190.

   [9] (1965) 112 CLR 537.

   [10] (1973) 128 CLR 417.

   [11] (2014) 254 CLR 337, [70]-[71].

7. The ground based on s 41 of the Act is particularised in the SGP by reference to the term ‘nitro’ being short for ‘nitromethane’ and one in common use in drag racing to describe categories of drag racing events.

8. Accepting that the term ‘nitro’ is short for ‘nitromethane’, then the ordinary signification of the words ‘nitro australia’ is ‘nitromethane australia’.  As such I find that the Trade Mark is not descriptive of the Applicant’s Services, since nitromethane is merely a component used by some drag racing vehicles as part of their sport.  Furthermore the Trade Mark is not a reference, direct or otherwise, to the character or quality of the Applicant’s Services and is not laudatory.

9. The EIS claims that the term ‘nitro’ has been used in drag racing in Australia, either to refer to particular drag racing events or refer to some categories of drag racing cars.  Examining the documentary evidence in the EIS closely, I note that the EIS consists of a number of posters that refer to drag racing events with the word ‘nitro’ included.  Discounting the evidence that consist of posters for events or films taking place outside Australia, what I am left with is evidence that, at various points in the last 15 years, there have been drag racing events in the Perth Motorplex that feature, as a particular event, ‘Nitro Funny cars’.  While there have been occasional races (as part of broader drag racing events) that feature ‘Nitro Funny Cars’ at a single venue, the limited nature of the evidence before the Registrar is insufficient to satisfy the onus placed on the Opponent to show that the Trade Mark is not sufficiently adapted to distinguish the Applicant’s Services.  In particular I am not satisfied that other traders would, without improper motive, want to use the expression ‘Nitro Australia’ for the sake of its ordinary signification in a manner which would infringe a trade mark granted in respect of it.

10. I find that the Opponent has failed to discharge the onus it bears in establishing the ground of opposition under s 41.

Section 59

1. Section 59 of the Act is reproduced below:

   59 - Applicant not intending to use trade mark

   The registration of a trade mark may be opposed on the ground that the applicant does not intend:

   (a)    to use, or authorise the use of, the trade mark in Australia, or

   (b)    to assign the trade mark to a body corporate for use by the body Corporate in Australia;

   in relation to the goods and/or services specified in the application.

2. The relevant date for assessing the Applicant’s intention to use the Trade Mark is the filing date being 27 January 2015.[12]

   [12] See the discussion of the authorities in Foxtel Management Pty Ltd v 111Pix.com Limited [2012] ATMO 29, [31]. The relevant authorities are Suyen Corporation v Americana International Limited [2010] FCA 638; (2010) 87 IPR 262 (‘Suyen’) and Food Channel Network Pty Ltd v Television Food Network GP [2010] FCAFC 58; (2010) 86 IPR 437. (‘Food Channel’)

3. The nature of the intention in s 59 was considered by Jacobsen J in Health World Ltd v Shin-Sun Australia Pty Ltd (‘Health World’) where he stated:

   In my view, the intention, or lack thereof, to which s 59 is directed, is a ‘real and definite intention’ of the applicant for registration, to use the mark publicly as a trade mark, although it is not necessary that the intention be immediate or within a limited time.[13]

   [13] [2008] 75 IPR 478, [160].

4. There is a presumption that where an application has been filed, the applicant has the requisite intention.  However:

   There is authority for the proposition that where an applicant for registration has been put on notice that its intention to use the mark was in issue, and has not responded to the opponent’s evidence, a finding of lack of intention may be made.

   The principle which underlies these authorities seems to me to be that the evidentiary onus shifts to the applicant for registration where an opponent makes a prima facie case of lack of intention to use the mark.[14]

   [14] Ibid [162]-[63] (citations omitted).

1. Justice Jacobsen also recognised the difficulty that an opponent has in establishing a ground under s 59, stating in the same case:

   The subjective nature of the intention, the presumption of intention flowing from the application for registration and the onus on an opponent usually make it difficult for an opposition or an application for rectification, to succeed on this ground.[15]

   [15] Ibid [161] (citations omitted).

2. In view of the authorities discussed above, the onus of establishing the ground of opposition pursuant to s 59 remains with the Opponent until it has established a prima facie case that on the relevant date the Applicant lacked the requisite intention. If the Opponent establishes a prima facie case the onus then shifts to the Applicant for rebuttal.

3. The Opponent has particularised the ground of opposition in the SGP as follows (numbering removed):

   The Applicant, Australian National Drag Racing Association, is a sanctioning body.  Drag racing events are organised by the individual race tracks and/or bodies such as the Opponent.  It is those individual race tracts – not the sanctioning bodies – that determine which categories race at which events, and when and how the categories are promoted.  Given the Applicant’s background, purpose, and the fact that it has not, of its own initiative, used the “Nitro” or “Nitro Australia” marks at any time previously, there is no reason to expect that the Applicant would legitimately now seek to use the “Nitro Australia” trade mark in the future.

4. The evidence is identical to the particulars set out above.  While the Applicant’s case is not assisted by its failure to file any evidence in this proceeding, I find that the evidence provided by the Opponent is insufficient to shift the evidentiary onus on to the Applicant.  Although the Applicant is a governing body of the sport of drag racing in Australia, this does not preclude the possibility that it wishes to use the Trade Mark, either directly or through licensing the Trade Mark to race track owners, for the Applicant’s Services.

5. In circumstances where the evidence in support of the s 59 ground of opposition is very limited, I am not satisfied that the Opponent established a prima facie case that the Applicant lacked the requisite intention as at the relevant date. Consequently the Opponent has failed to establish a ground of opposition pursuant to s 59 of the Act.

Section 62A

1. Section 62A of the Act is reproduced below:

   62A Application made in bad faith

   The registration of a trade mark may be opposed on the ground that the application was made in bad faith.

2. The Explanatory Memorandum to the Trade Marks Amendment Bill 2006 provided some non-exhaustive examples of applications made in bad faith:

• persons who monitor new property developments, register the names of new developments as trade marks for a number of services and then threaten the property developers with trade mark infringement proceedings unless the developers licence or buy the trade marks;

• persons who have a history of applying for trade marks that are deliberate misspellings of other registered trade marks;

• persons who identify trade marks used overseas but with no Australian use as yet who then apply to register the trade marks in Australia for the express purpose of selling them to the overseas owners.

1. The case of Fry Consulting Pty Ltd v Sports Warehouse Inc (No 2) is a current leading Australian authority on this section.  In that case, Dodds-Streeton J made the following comments, quoting from Harrison’s Trade Mark Application[16]:

   Clearly the court, when considering bad faith, cannot apply a purely subjective test, called by Lord Hutton ‘the Robin Hood test’. The dishonest person or one with low standards cannot be permitted to obtain trade mark registrations in circumstances where a person abiding by a reasonable standard would not. The registration of a trade mark is designed to enable bona fide proprietors to protect their proprietary rights without having to prove unfair trading. Registration is not provided to help those with low moral standards.

   … The words ‘bad faith’ suggest a mental state. Clearly when considering the question of whether an application to register is made in bad faith all the circumstances will be relevant. However the court must decide whether the knowledge of the applicant was such that his decision to apply for registration would be regarded as in bad faith by persons adopting proper standards.[17]

   [16] [2004] EWCA Civ 1028; [2005] FSR 10.

   [17] [2012] FCA 81, [147].

2. Her Honour continued later in the same decision:

   The formulation in United Kingdom authority of bad faith as falling short of the standards of acceptable commercial behaviour observed by reasonable and experienced persons in a particular area is, in my view, an apt touchstone. An overly literal application may, however, tend to negate the relevance attributed to the applicant’s mental state in the combined test preferred in Harrison.

   Further, in my view, mere negligence, incompetence or a lack of prudence to reasonable and experienced standards would not, in themselves, suffice, as the concept of bad faith imports conduct which, irrespective of the form it takes, is of an unscrupulous, underhand or unconscientious character.[18]

   [18] Ibid [165]-[166].

3. The Opponent has particularised this ground of opposition in the SGP by reference to a dispute between the Applicant and the Opponent, the Applicant’s past lack of use of the term ‘nitro’ or ‘nitro Australia’ and suggested that the Applicant seeks registration of the Trade Mark for the purpose of preventing the Opponent and its constituent race tracks from being able to use any mark similar to ‘nitro’ or ‘nitro Australia’.

4. The onus is on the Opponent to establish bad faith and it will not be found easily given the serious nature of the allegation.[19] In the present case the allegations made by the Opponent are essentially speculative, do not fall within the non-exhaustive examples set out in the Explanatory Memorandum referred to in paragraph 26 above, and are reliant on the Registrar taking a particular view of the Applicant’s conduct in the context of a broader dispute between the Applicant and Opponent, of which no significant evidence is provided. In circumstances where the evidence in support of the s 62A ground of opposition is very limited and the Opponent bears the onus, I am not satisfied the Applicant’s conduct in filing the application was unscrupulous, underhanded or unconscientious in character. Consequently I find that the Opponent has failed to establish the ground of opposition under s 62A.

   [19] Hard Coffee Pty Ltd v Hard Coffee Main Beach Pty Ltd [2009] ATMO 26,[12].

Decision

1. The Opponent has failed to establish the grounds of opposition it nominated in the SGP.  Trade mark application no. 1670835 may proceed to registration not less than one month from the date of this decision.  If the Registrar has been served with a notice of appeal before that time, I direct that registration shall not occur until either the appeal is withdrawn or discontinued.  Otherwise the disposition of the application should be in accordance with the Court’s order or direction.

Nicholas Smith
Hearing Officer
Oppositions and Hearings
8 September 2017