C&S Investments Pty Ltd v Klinic Solutions Australasia Pty Ltd
[2019] FCCA 1741
•24 June 2019
FEDERAL CIRCUIT COURT OF AUSTRALIA
| C&S INVESTMENTS PTY LTD v KLINIC SOLUTIONS AUSTRALASIA PTY LTD | [2019] FCCA 1741 |
| Catchwords: INTELLECTUAL PROPERTY – Trade marks – application for infringement of trade mark by the respondent – whether misleading or deceptive conduct by the respondent – no evidence led in support of the applicant’s application – application dismissed. INTELLECTUAL PROPERTY – Trade marks – cross claim for cancellation of the trade mark – whether the Register should be rectified by cancellation of the trade mark in accordance with s 88(1)(a) of the Trade Marks Act 1995 (Cth) – whether the applicant is the owner of the trade mark – whether the applicant intends to use or authorise use of the trade mark in Australia, or 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 trade mark application – whether the application for the trade mark was made in bad faith – trade mark should be cancelled from the date of registration – cross-claim allowed. COSTS – costs awarded on an indemnity basis. |
| Legislation: Civil Dispute Resolution Act 2011 (Cth), s.12 Federal Court of Australia Act 1976 (Cth), pt.VB Trade Marks Act 1995 (Cth), ss.6, 17, 27, 58, 59, 62A, 88, 192 |
| Cases cited: Anchorage Capital Partners Pty Limited v ACPA Pty Ltd [2018] FCAFC 6 Bauer Consumer Media Ltd v Evergreen Television Pty Ltd [2019] FCAFC 71 Bohemia Crystal Pty Ltd v Host Corporation Pty Ltd [2018] FCA 235 DC Comics v Cheqout Pty Ltd [2013] FCA 478 E & J Gallo Winery v Lion Nathan Australia Pty Limited (2010) 241 CLR 144 Food Channel Network Pty Ltd v Television Food Network GP [2010] FCAFC 58 Moorgate Tobacco Co Ltd v Philip Morris Ltd (No 2) (1984) 156 CLR 414 Pham Global Pty Ltd v Insight Clinical Imaging Pty Ltd [2017] FCAFC 83 |
| Applicant: | C&S INVESTMENTS PTY LTD |
| Respondent: | KLINIC SOLUTIONS AUSTRALASIA PTY LTD |
| File Number: | SYG 1051 of 2018 |
| Judgment of: | Judge Street |
| Hearing date: | 24 June 2019 |
| Date of Last Submission: | 24 June 2019 |
| Delivered at: | Sydney |
| Delivered on: | 24 June 2019 |
REPRESENTATION
| Counsel for the Applicant: | Mr A Duc |
| Solicitors for the Applicant: | Mr Grossman, McEvoy Legal |
| Counsel for the Respondent: | Ms S Stewart |
| Solicitors for the Respondent: | Clayton Utz |
ORDERS
Grant leave to the Applicants to file in Court the affidavit of Shaun Victor Kerrigan sworn 20 June 2019.
Grant leave to the Applicants to rely upon the application in a case for an adjournment and direct the same to be filed by 5:00pm today.
The application in a case seeking an adjournment is dismissed.
Grant leave to counsel for the Applicants to withdraw from the proceedings.
Grant leave to the Cross-Claimant to file in Court the original of Annexure D to the affidavit of Shaun Robert James Baldwin of 17 December 2018 and the same will be marked confidential Exhibit B which is not to be placed on any accessible public record and is not to be accessed without the order of a Judge of the Court or a Judge of an appellate Court.
Grant leave for the filing in Court of the Affidavit of Catherine Mary Still sworn 20 June 2019 and the Court directs that an electronic copy be filed by close of business today.
The Register of Trade Marks be rectified by cancelling Australian trade mark registration number 1724663 for the word “MDERMA” (the MDERMA Trade Mark), with effect from its priority date.
The application for infringement of the MDERMA Trade Mark is dismissed.
The Applicants/Cross-Respondent pay the Respondent/Cross-Claimant’s costs of the proceeding including the cross claim on an indemnity basis as agreed or taxed.
DATE OF ORDERS: 24 June 2019
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT SYDNEY |
SYG 1051 of 2018
| C&S INVESTMENTS PTY LTD |
Applicant
And
| KLINIC SOLUTIONS AUSTRALASIA PTY LTD |
Respondent
REASONS FOR JUDGMENT
These are proceedings within the Court’s jurisdiction under s 192 of the Trade Marks Act 1995 (Cth) (“the Act”).
Background
The proceedings were commenced on 13 April 2018. At that stage, the applicant was seeking relief in respect of an alleged infringement of trade mark as well as alleged misleading and deceptive conduct.
The pleading alleged that the applicant is the registered owner of the trade mark in respect of the word “MDerma”, number 1724663, relating to Class 10 and Class 44, and with a priority date of 29 September 2015 (“the MDerma Trade Mark”). The pleading asserted that the applicant was the registered owner of the MDerma Trade Mark, having exclusive right to use the MDerma Trade Mark and to authorise other persons to use the MDerma Trade Mark in relation to the goods and services in respect of which the MDerma Trade Mark is registered. The pleading alleged use and the infringement of the MDerma Trade Mark by the respondent.
On 2 July 2018, orders were made by this Court in relation to the case management of the matter. On 30 July 2018, a defence and cross-claim was filed by the respondent.
The cross-claimant sought relief in the nature of expungement of the MDerma Trade Mark. By reason of an order pursuant to s 88(1)(a) of the Act that the Register be rectified by cancelling the registration of the MDerma Trade Mark which is the subject of the substantive proceedings by the applicant. The cross-claimant alleged that it is an “aggrieved person” within the meaning of s 88(1) of the Act in circumstances where it has been the subject of these proceedings in which relief has been sought against it by the applicant.
The cross-claimant noted that the cross-respondent has not used the MDerma Trade Mark in Australia. The cross-claimant alleged that the manufacturer of MDerma branded products was Dermapen LLC, a limited liability company incorporated pursuant to the laws of Delaware in the United States of America.
The cross-claimant alleged that, since at least 2 June 2015, it has been the exclusive Australian distributor of MDerma products on behalf of Dermapen LLC and has placed orders for and received MDerma products from Dermapen LLC, which have been promoted and sold in the Australian market.
The cross-claimant explained that the MDerma products are designed for use in providing MDerma-branded cosmeceutical services, being a non-invasive, regenerative micro-needling treatment for the skin. The cross-claimant alleged that, since at least 2 June 2015, it has imported and distributed, advertised and promoted, offered or exposed for sale, supplied and otherwise distributed for sale MDerma products and MDerma services to the cosmeceutical industry and to consumers in Australia. The cross-claimant identified in that regard its website in the name of “ and a sub-domain, use and distribution of a promotional leaflet entitled “MDerma Fractional Dermal-Needling System” available on its website and distributed as hard copy brochure to customers in the cosmeceutical industry and to consumers, a website in the name of “ videos published on YouTube by the cross-claimant, Instagram posts published by the cross-claimant, promotional and editorial materials including an editorial piece published in July 2015 in the “Cosmetic Surgery & Beauty” August – October 2015 edition, and numerous sales to customers in the cosmeceutical industry and to consumers of cosmeceutical products and services.
In those circumstances, the cross-claimant alleged that, since at least 2 June 2015, it has used the mark “MDerma” as a sign to distinguish goods and services dealt with or provided in the course of trade by it from those of other traders (“the MDerma mark”), within the meaning of ss 6 and 17 of the Act. The cross-claimant alleged that its use of the MDerma mark on MDerma products and MDerma services in Australia precedes the priority date of the MDerma Trade Mark, being 29 September 2015.
The cross-claimant alleged that the MDerma Trade Mark is liable to be cancelled with effect from the priority date pursuant to ss 88(1)(a) and 88(2)(a) of the Act on a combination of grounds.
The cross-claimant alleged that the cross-respondent is not the owner of the MDerma Trade Mark within the meaning of s 58 of the Act. The cross-claimant also alleged that the cross-respondent did not intend to use the MDerma Trade Mark in good faith in Australia, or to assign the MDerma Trade Mark to a body corporate for use in Australia in relation to the goods and services specified in the application, or within the meaning of s 59 of the Act, because the MDerma Trade Mark has not been used by the cross-respondent in Australia. The cross-claimant also alleged that the cross-respondent made its application for the MDerma Trade Mark in bad faith within the meaning of s 62A of the Act, as the cross-respondent was, or ought to have been, aware of the cross-claimant’s use of the MDerma mark in Australia because of the cross-claimant’s activities between June 2015 and the priority date.
On 13 August 2018, a defence to the cross-claim was filed by the cross-respondent. That defence reflected, in general, denials and non-admissions.
On 23 August 2018, this Court made orders for the filing of the applicant’s evidence, the respondent’s evidence (including with respect to the cross-claim) and the applicant’s evidence in reply, and fixing the matter for a case management hearing on 14 February 2019. This Court also made an order that the parties and their representatives are to conduct themselves as if bound by Part VB of the Federal Court of Australia Act 1976 (Cth).
On 26 October 2018, an affidavit was filed on behalf of the applicant by Steven Brian Marshall sworn on 22 October 2018. On 18 December 2018, an affidavit was filed on behalf of the respondent by Shaun Robert James Baldwin sworn on 17 December 2018.
On 14 February 2019, this Court made further orders fixing the matter for hearing on 24 June 2019. This Court also made orders directing the applicant to file and serve submissions, a chronology and list of objections on or before 24 April 2019, and giving the applicant until 13 March 2019 to file any further affidavit evidence in reply. This Court also made procedural orders in respect of the respondent’s further evidence, submissions, chronology and list of objections. The Court’s orders in respect of the applicant were not complied with.
Adjournment
At the commencement of the hearing today, the Court granted leave to the applicants to rely upon an application in a case seeking an adjournment and directed the same to be filed by the applicant by 5:00pm.
In support of the application for an adjournment, Mr Duc of counsel appeared on behalf of the applicant. Mr Duc relied on an affidavit of Shaun Victor Kerrigan, the solicitor on the record, sworn on 20 June 2019, which identified that there was a witness who is currently overseas, being Mr Marshall, and that there is no likelihood of his return before the end of the month. The affidavit alleged that Mr Kerrigan was informed that the reason for Mr Marshall’s overseas departure, was to deal with particular regulatory issues. The affidavit alleged that Mr Marshall was only made aware of the particular regulatory issues on or around 14 June 2019. The affidavit otherwise referred to the alleged nature of the obligations that might have required Mr Marshall travelling overseas.
Mr Duc also tendered a medical certificate, marked Exhibit 1, which identified that Mr Kerrigan, the solicitor on the record and apparently the principal of the law firm McEvoy Legal, is unfit for work from 20 June 2019 until 7 July 2019.
Suffice to say that the affidavit evidence in support of the adjournment application falls well short of explaining the applicant’s non-compliance with the Court’s orders of 14 February 2019. Mr Duc did identify that orders could be made by the Court in relation to costs thrown away by reason of an adjournment. The belated application for an adjournment has not been properly explained in the affidavit of Mr Kerrigan. There also has not been a proper explanation given in relation to the arrangements in respect of the witness said to have gone overseas and why no steps were taken to make an application for appearance by audio or video link.
Whilst the Court accepts that Mr Kerrigan may be unwell, it is apparent that there are other solicitors within the firm. It is also apparent from the affidavit that has been read on behalf of the respondent that there were steps taken by the respondent to engage with the applicant consistent with the Court order that was made in respect of the parties and their representatives conducting themselves as if being bound by Part VB of the Federal Court of Australia Act1976 (Cth). The respondent also engaged with the applicant seeking a response in relation to the failure by the applicant to take steps to comply with the Court’s orders. Those communications were made to more than just Mr Kerrigan, and included communications to Mr Grossman. The communications, on the affidavit evidence, were not responded to and, on their face, reflect a failure by both the applicant and the applicant’s representatives to comply with the obligations of the Court order made in respect of Part VB of the Federal Court of Australia Act 1976 (Cth).
Further, and in any event, the respondent’s position is that the applicant has failed to comply with the orders made by this Court on 14 February 2019.
If proper grounds had been made out for an adjournment, the Court would accommodate the same. The applicant in this case had been given a hearing date, an opportunity to present its case, and an opportunity to pursue the relief that it was seeking. The adjournment application is too late, and this Court is not persuaded that an adjournment is warranted in the interests of the administration of justice. The Court does not accept that a costs order adequately addresses the applicant’s non-compliance with the Court’s orders that have been made. The applicant has failed to comply with the Court’s orders and adequately explain its non-compliance.
In these circumstances, the application for an adjournment is refused as the Court is not satisfied that an adjournment is warranted in the interests of the administration of justice.
The Court granted leave to Mr Duc as counsel for the applicant to withdraw and the solicitor present on behalf of McEvoy Legal, Mr Grossman, indicated that he wished to remain in Court in an observing role. No representative has acted for the applicant in the presentation of the case. Accordingly, the affidavit of Mr Marshall has not been read and the Court does not need to deal with the objections that were made to that affidavit. The Court notes, however, that it would have upheld each of the objections that have been filed in respect of that affidavit.
Amended Statement of Claim
Affidavit evidence has been read by the respondent in respect of three affidavits by Mr Baldwin, who the Court notes attended the hearing. In respect of the affidavit of Shaun Robert James Baldwin sworn on 17 December 2018 (“the first affidavit”), Annexure D was marked as a confidential Exhibit B. The first affidavit identified sales in respect of MDerma products, and there are a substantial number of invoices identified in confidential Exhibit B that support the respondent’s use of the mark as alleged in the cross-claim.
Mr Baldwin in the first affidavit explained his background in the sale and marketing of medical equipment, supplies and services. Mr Baldwin also explained the circumstances giving rise to the establishment of the respondent, which commenced trading in July 2013, and his role as its chief executive. Mr Baldwin also identified sales by the respondent under the MDerma mark in Australia and the supply of MDerma products to the respondent by a particular entity.
Mr Baldwin in the first affidavit also explained the nature of the respondent’s product the subject of the MDerma mark, being a fractional dermal needling system designed to stimulate regeneration of the skin’s epidermal cells. The product involves a process which uses sterile, sealed, individual and disposable needle cartridges to ensure a patient’s safety. Each cartridge has a number of needles of a particular gauge which penetrate the skin vertically and generate small micro-skin channels, which also stimulate the natural production of collagen. The treatments using the product the subject of the MDerma mark are similar to fractional laser treatments, but without the same side effects or the long recovery time. The fractional treatments involve using the needles in the tip and positioning them in such a way that they leave tiny gaps on the skin, so that not all of the skin is damaged. This process allows the skin to heal faster. The disposable needles are said to reduce the risk of cross-contamination, and the adjustable depth of the needles allows treatment that is adaptable to individual needs.
Mr Baldwin in the first affidavit identified the respondent as having been sent devices and cartridges by Dermagen which were tested in early 2015. Mr Baldwin identified that, since 2 June 2015, the respondent has been the exclusive Australian distributor of the MDerma products on behalf of Dermagen. Mr Baldwin identified that the respondent placed its first order for the products the subject of the MDerma mark with Dermagen on 2 June 2015. Annexed to the first affidavit and marked with the letter “B” was an invoice consistent with that assertion and evidencing the use of MDerma products by the respondent. Mr Baldwin also identified the first orders which were received from Australian customers in June 2015, and in respect of which invoices were then sent.
Mr Baldwin in the first affidavit deposed to the respondent promoting MDerma products by performing live demonstrations to practitioners, as well as editorials, advertisements in trade press and through social media. Mr Baldwin identified a copy of a promotion for MDerma products by the respondent sent out by email in July 2015. Mr Baldwin also identified a promotional article published in the “Cosmetic Surgery & Beauty” August – October 2015 edition in respect of the respondent’s use of MDerma products. That article was delivered to subscribers in or around July 2015 and was a source of orders received by the respondent in July 2015 and in Australia. Mr Baldwin also identified an article relating to MDerma products published in the “Spa+Clinic” October 2015 edition. That article was placed by the respondent and required two or three months of engagement with the publisher prior to that publication. Mr Baldwin also identified a copy of the respondent’s webpages promoting MDerma products.
Mr Baldwin also identified brochures published by the respondent, first used in July 2015, followed by a second version of the brochure which was introduced in February 2017, and then a further, and now current, version of the brochure which started to be used in June 2018.
Mr Baldwin also identified that the respondent entered into an agreement in October 2015 for the creation of an “MDerma Certificate of Training” with an entity called Lime Graphic Design. Mr Baldwin also identified fliers, which the respondent had produced at the end of 2015 or the beginning of 2016, advertising various ways in which MDerma tips could be purchased and the price. There was also put into evidence a copy of a MDerma promotion by the respondent published via YouTube.
The Court accepts the evidence identified by the respondent in respect of the use of the MDerma mark and finds that the respondent has engaged in extensive marketing and promotion of MDerma products under the MDerma mark during the period June 2015 and thereafter.
Mr Baldwin in the first affidavit identified that the respondent advertises its entire range of products and has done so from June 2015. Mr Baldwin also identified that, until served with the application and statement of claim, he was not aware that the MDerma Trade Mark had been registered by the applicant or, indeed, by any other person or company. Mr Baldwin identified not being aware of any person or entity distributing MDerma products, at least in Australia, other than the respondent.
Mr Baldwin in the first affidavit alleged that, to the best of his knowledge, the applicant had never used the MDerma Trade Mark in Australia. Mr Baldwin also deposed to the belief that the applicant has not intended to use, or authorised the use of, the MDerma Trade Mark in Australia, or to assign the MDerma Trade Mark to a body corporate for use by a body corporate in relation to MDerma products. Mr Baldwin also identified that the registration of the MDerma Trade Mark was not opposed because the respondent had no knowledge of the application made by the applicants.
Mr Baldwin in the first affidavit identified that, in any event, the respondent had publicly used the MDerma mark in Australia at least by June/July 2015, which is earlier than the priority date of the MDerma Trade Mark being 29 September 2015. Mr Baldwin alleged that the applicant, he believed, would have been well aware of the respondent’s prior use of the MDerma mark as at the priority date and consequently proceeded with the application in bad faith and knowing that it was not the owner of the MDerma mark.
Mr Baldwin in the first affidavit identified that, once becoming aware that the MDerma Trade Mark had been registered by the applicant, the respondent lodged an application for registration of the MDerma mark on 9 May 2018, number 1925514, in classes 10 and 44, and that this application had been suspended pending the outcome of these proceedings.
Mr Baldwin in the first affidavit identified his belief that there has been no use of the MDerma Trade Mark by the applicant on goods or services in Australia at any time up to and including the swearing of the first affidavit on 17 December 2018.
Mr Baldwin in the first affidavit identified him having never seen an alleged brochure by the applicant. Mr Baldwin identified having undertaken internet searches of the word “MDerma” and that the only use of the MDerma Trade Mark able to be located is the use of the MDerma mark by the respondent or by companies or businesses promoting the products and services which had been supplied by the respondent.
Mr Baldwin in the first affidavit also identified proceedings that had been commenced in the United States District Court in and for the District of Utah, Central Division by Dermapen LLC against 4Everyoung Limited, Biosoft (Aust) Pty Ltd dba Dermapenworld, Equipmed International Pty Limited dba Dermapenworld, and Stene Marshall dba Dermapenworld.
Mr Baldwin also identified that the respondent has been the exclusive distributor in Australia of MDerma products since 4 December 2014, as well as tendering certain company searches.
No evidence has been led in support of the applicant’s application. On that ground alone, the applicant’s application should be dismissed.
The kernel of the case, however, is one in respect of which the real issue is whether, pursuant to the cross-claim, the MDerma Trade Mark should be expunged. For the reasons that follow, the Court is satisfied that the MDerma Trade Mark should be cancelled from the date of registration. It follows that the applicant’s claim for infringement in the substantive proceedings could not, in any event, succeed.
Cross-claim
The cross-claimant identified different bases upon which it was alleged the MDerma Trade Mark should be cancelled. The Court has taken into account the definition of “trade mark” in s 17 of the Act, as well as the provisions of s 27 of the Act in respect of a person that can apply for registration of a trade mark. The Court has also taken into account that a trade mark may be opposed on at least the following grounds:
a)the applicant is not the owner of the trade mark (s 58 of the Act);
b)the applicant does not intend to use or authorise use of the trade mark in Australia, or 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 (s 59 of the Act); and
c)the application was made in bad faith (s 62A of the Act).
The Court has taken into account the principles in relation to s 88 of the Act identified in Anchorage Capital Partners Pty Limited v ACPA Pty Ltd [2018] FCAFC 6 (“Anchorage”). The Court may order the cancellation of a registered trade mark on any of the grounds on which the registration of the trade mark could have been opposed under the Act.
It is on these grounds that the cross-claimant has sought the cancellation of the MDerma Trade Mark as identified in the cross-claim. The Court is satisfied that each of the grounds of opposition raised by the cross-claimant under s 58, 59 and 62A of the Act have been proven on the balance of probabilities.
The Court is, for the reasons earlier given in respect of the bringing of this proceeding, satisfied that the cross-claimant is an “aggrieved person” within the meaning of s 88 of the Act and entitled to seek the relief sought in the cross-claim against the cross-respondents.
In Anchorage, the Full Court of the Federal Court expressly referred to the fact that a claim to ownership of a trade mark may be defeated if another person has previously used the mark or a substantially identical mark in Australia, as a mark in relation to the same goods or services, or goods or services of the same kind, as those the subject of the application for registration.
The Court finds that the cross-claimant has previously used the MDerma mark prior to the priority date of the MDerma Trade Mark, and as a trade mark in relation to the same goods or services, or goods or services of the same kind, as those that are the subject of the cross-respondent’s application for registration. Whilst slight use of a trade mark may be sufficient, it is apparent that there has been substantial use of the MDerma mark by the cross-claimant. That use occurred prior to the priority date of the MDerma Trade Mark, and the cross-claimant has a prior claim of ownership which is superior to, and defeats, the cross-respondent’s claim.
The Court has taken into account the principles concerning the use of a trade mark referred to in E & J Gallo Winery v Lion Nathan Australia Pty Ltd (2010) 241 CLR 144 at [43]. On the evidence before the Court, the cross-claimant has demonstrated that the cross-claimant’s use of the MDerma mark as a trade mark in Australia commenced at least by 2 June 2015 when it became the exclusive Australian distributor of MDerma products on behalf of Dermagen and also engaged in activities in promoting MDerma products, including advertisements, articles and online content.
The Court has also taken into account the principles identified in Moorgate Tobacco Co Ltd v Philip Morris Ltd (No 2) (1984) 156 CLR 414 at 433 to 434. The Court finds that the first invoice for sale by the cross-claimant to an Australian customer was dated 29 July 2015. The Court has earlier referred to the confidential Exhibit B in respect of the sales made by the cross-claimant of MDerma products, being the devices and tips, commencing in July 2015.
The Court has taken into account that there has been no evidence of use by the cross-respondent in relation to the use of the MDerma Trade Mark at any time before or after the priority date in Australia. The Court finds that the cross-claimant is the prior user of the MDerma mark, having first used the MDerma mark in Australia from at least 2 June 2015.
Accordingly, the Court is satisfied that the cross-claimant has established a ground of opposition under s 58 of the Act and, pursuant to s 88 of the Act, the Court is satisfied that on this ground alone the registration of the MDerma Trade Mark should be cancelled. This alone is a ground upon which the applicant is entitled to the relief sought in the cross-claim.
In respect of s 59 of the Act, and whether at the date of filing the cross-respondent had the intention to use the MDerma mark for registered goods and/or registered services within the meaning of s 59 of the Act, the Court has taken into account the principles identified by Burley J in Bauer Consumer Media Ltd v Evergreen Television Pty Ltd [2019] FCAFC 71 at [247]. In that regard, the requirement under s 27(1)(b) of the Act is using or intending to use the trade mark in relation to the goods or services. The Court also takes into account what was said by the Full Court of the Federal Court in Food Channel Network Pty Ltd v Television Food Network GP [2010] FCAFC 58 at [74] that an applicant’s lack of intention to use a trade mark must be established at the date of filing. It follows from that case that the use or non-use of a trade mark may be relevant for the purpose of drawing inferences as to the issue of intention at the date of application. The Court also takes into account what was said by the Full Court of the Federal Court in Pham Global Pty Ltd v Insight Clinical Imaging Pty Ltd [2017] FCAFC 83 at [32].
The Court accepts that the respondent has demonstrated a prima facie case of a lack of intention by the cross-respondent to use the MDerma Trade Mark, and the cross-respondent has failed to discharge the onus upon it in respect of demonstrating its intention to use the mark. That prima facie case in relation to s 59 of the Act is supported by the fact that, as at the priority date, the respondent or an authorised user had not used the MDerma Trade Mark in Australia and the respondent or an authorised user has not at any time used in Australia the MDerma Trade Mark as a trade mark.
The Court has also taken into account the evidence that was given by Mr Baldwin as to his absence of knowledge of any such use of the MDerma Trade Mark in Australia, and the absence of evidence in the circumstances of the present case of any actual use of the MDerma Trade Mark in Australia by the applicant either before the priority date or thereafter.
Accordingly, the Court finds that the respondent at the time of registration did not intend to use or authorise the use of the MDerma Trade Mark in Australia, or to assign the MDerma Trade Mark to a body corporate for use by the body corporate in Australia in relation to the goods and services the subject of registration.
Accordingly, the cross-claimant has established the ground of opposition under s 59 of the Act. In all the circumstances, the Court is satisfied on that further ground that the MDerma Trade Mark should be cancelled and the cross-claimant should obtain the relief sought in the cross-claim.
The cross-claimant also seeks expungement on the grounds of s 62A of the Act. The Court has taken into account that it is not necessary to establish dishonesty for there to be a finding of bad faith, see DC Comics v Cheqout Pty Ltd [2013] FCA 478 at [62].
There is no explanation before the Court as to the circumstances in which the cross-respondent obtained the registration of the MDerma Trade Mark. Given the prior use by the cross-claimant, the Court does infer that the cross-respondent’s conduct in obtaining the registration falls short of the standard of acceptable commercial behaviour by a reasonable and experienced person. The Court makes this finding having taken into account the publicity and other activities surrounding the promotion of MDerma products by the cross-claimant in Australia before the priority date of the MDerma Trade Mark. The Court finds that the cross-respondent must have been aware of that use by the cross-claimant.
The Court has taken into account the principles identified by Burley J in Bohemia Crystal Pty Ltd v Host Corporation Pty Ltd [2018] FCA 235. The evidence, however, does not disclose sufficient reason not to cancel the MDerma Trade Mark in that the Court has not been persuaded that there is sufficient reason not to order its cancellation. In these circumstances, the Court is satisfied that the further grounds of opposition under s 62A of the Act have been made out by the cross-claimant. In all the circumstances, the Court is satisfied that on this further ground the MDerma Trade Mark should be cancelled.
The Court also takes into account what was said by the Full Court in Anchorage at [192], that there is a public interest in ensuring that no registration of a trade mark continues if it is found to be invalid. For the reasons given above, the Court is satisfied that the cross-claimant has made out each of the grounds of opposition identified in the cross-claim. In those circumstances, it would be unjust for the cross-claimant to be the subject of further inconvenience if the mark were not to be cancelled.
The Court accepts that the MDerma Trade Mark should be cancelled from the priority date pursuant to both ss 88(1)(a) and 88(2)(a) of the Act.
Costs
On the respondent’s application for costs on an indemnity basis, the Court granted leave for the filing in Court of the affidavit of Catherine Mary Still sworn 20 June 2019, and directed that an electronic copy of that affidavit be filed by close of business.
The respondent has asked for costs of the proceedings, including the cross-claim, on an indemnity basis. The respondent has relied upon s 12 of the Civil Dispute Resolution Act 2011 (Cth) and the absence of any genuine steps taken by the applicant at the time these proceedings were commenced. The respondent has also relied upon this Court’s findings in relation to s 62A of the Act. The Court has also taken into account the making of an offer of settlement as identified in the affidavit of Catherine Mary Still sworn on 20 June 2019.
The Court has also taken into account the failure by the applicant to comply with the Court’s orders that were made on 14 February 2019, as well as the failure by the applicant to comply with the Court’s order made on 23 August 2018 that required the parties and their representatives to conduct themselves as if bound by Part VB of the Federal Court of Australia Act 1976 (Cth).
The Court is satisfied that the unreasonable conduct of the applicant has caused the respondent to incur substantial legal costs. The Court is satisfied that this is an appropriate case in which to depart from the ordinary rule that the costs should be paid on a party/party basis. The Court expressly, in that regard, also takes into account s 12 of the Civil Dispute Resolution Act 2011 (Cth) in finding that this is an appropriate case in which to order the costs be paid on an indemnity basis. There was no proper certificate filed by the applicant in accordance with that provision and no apparent steps taken by the applicant which could be described as genuine steps to resolve the dispute.
For the reasons the Court has identified, the applicant was not entitled to succeed in respect of the relief being sought as the applicant was not, in fact, entitled to the registration of the MDerma Trade Mark and was not the owner of the MDerma mark. The Court is satisfied that this is an appropriate case that, in order to ensure proper compensation for the successful party, costs should be ordered on an indemnity basis.
The Court notes that the respondent did identify, albeit in respect of a limited period, an order for costs against the applicant’s legal practitioner. The Court is not satisfied, notwithstanding the findings that the Court has made, that it is appropriate to make an order against the legal practitioner and declines that request.
I certify that the preceding sixty-eight (68) paragraphs are a true copy of the reasons for judgment of Judge Street
Date: 18 July 2019
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