Calico Global Pty Ltd v Calico LLC

[2016] ATMO 86

TRADE MARKS ACT 1995

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

Re:Opposition by Calico Global Pty Ltd to application under section 92 of the Act by Calico LLC to remove trade mark number 1005184 (41, 44) - calico - in the name of Calico Global Pty Ltd.

Delegate:	Debrett G. Lyons
Representation:	Opponent: written submission only Applicant: Angus Lang of Counsel instructed by Gilbert & Tobin, Lawyers
Decision:	2016 ATMO 86 Trade Marks Act 1995 – sec.92 application for removal – no use of the Trade Mark by the registered owner or an authorised user; Registrar’s discretion not exercised in Opponent’s favour. Application for partial removal successful; Trade Mark to be removed from the Register for some services.

Background

1. The current details of trade mark registration 1005184 (“the Registration”) follow:

Registration No.

1005184

Owner

Calico Global Pty Ltd       (the “Opponent”)

Registration Date

7 June 2004

Registered Services

Class 41:        Education, provision of training, entertainment, sporting and cultural activities; includes; the provision of on-line electronic publications and digital music (not downloadable) from the Internet, health and club gym, health club and fitness services, advice regarding exercise.

Class 44:        Medical services; veterinary services, hygienic and beauty care for human beings or animals; includes medical analysis for the diagnosis and treatment of persons (such as x-ray examinations and taking blood samples), pharmacy advice, provision of advice and information regarding health and fitness

Trade Mark

calico        (the “Trade Mark”)

1. This decision is pursuant to an application made by Calico LLC (the “Applicant”) to partially remove the Trade Mark from the Register of Trade Marks (the “Removal Application”).

2. Registration of the Trade Mark was obtained by Kevin Owens (“Owens”) who first used the Trade Mark in June 2004 as a sole trader.

3. On 22 November 2006 Owens caused Calico Pty Ltd to be incorporated.

4. In 16 May 2011 Owens caused the Opponent to be incorporated.

5. On 15 May 2014 the Removal Application was made to remove the Trade Mark from the Register of Trade Marks in respect of the class 44 services for which the Trade Mark is registered.

6. On 22 May 2014 the Opponent caused two applications for assignment of the Trade Mark to be recorded - one from Owens to Calico Pty Ltd and a second from Calico Pty Limited to the Opponent.

7. On 5 June 2014 the first was advertised in the Official Journal of Trade Marks and on the 19 June 2014 the second was advertised.

8. The Opponent has opposed the Removal Application.

9. A Notice of Intention to Oppose removal was filed by Calico Pty Ltd on 18 July 2014.

10. A Statement of Grounds and Particulars (“SGP”) was filed by the Opponent on 14 August 2014.

11. The Applicant filed a Notice of Intention to Defend on 15 September 2014.

12. The Applicant requested that the Registrar issue a Notice to Produce (the “Notice”) certain documents.  The Registrar did so and on 24 March 2015 the Notice was served on Owens, Calico Pty Ltd and the Opponent.

13. In compliance with the Notice, the Opponent produced two deeds of assignment and a deed of licence (the “Production Documents”) described in detail later.

14. The parties filed evidence in support, evidence in answer, and evidence in reply, also described later, after which a hearing was convened in Canberra before me, Debrett Lyons, a delegate of the Registrar, on 26 July, 2016. 

15. At the hearing the Applicant was represented by Angus Lang of Counsel, instructed by Lauren Eade of Gilbert & Tobin, Lawyers, who both appeared before me in person.  The Opponent was not represented at the hearing and relied on the written submissions of its attorneys, HopgoodGanim, Lawyers, which had been provided before the hearing in accordance with my directions.

    Legislative framework

16. The Removal Application is made under section 92(4)(b) of the Trade Marks Act 1995 (“the Act”) in respect of the class 44 services for which the Trade Mark is registered (the “Relevant Services”).

17. Part 9 of the Act deals with removal of trade marks from the Register for non-use. Section 92 relevantly provides:

    92Application for removal of trade mark from Register etc.

    (4)An application under subsection (1) or (3) (non‑use application) may be made on either or both of the following grounds, and on no other grounds:

       (a)  …

    (b)that the trade mark has remained registered for a continuous period of 3 years ending one month before the day on which the non‑use application is filed, and, at no time during that period, the person who was then the registered owner:

    (i)used the trade mark in Australia; or

    (ii)used the trade mark in good faith in Australia;

    in relation to the goods and/or services to which the application relates.

    Note 1:For file and month see section 6.

    Note 2:If non‑use of a trade mark has been established in a particular place or export market, then instead of the trade mark being removed from the Register, conditions or limitations may be imposed under section 102 on the registration of the trade mark so that its registration does not extend to that place or export market.

18. Thus, the allegation under s92(4)(b) is that in the three years immediately preceding 15 April 2014 (the “Relevant Period”) the Trade Mark has not been used in good faith in connection with the Relevant Services by “the person who was then the registered owner”.

19. Section 6 of the Act defines the registered owner as the person in whose name the trade mark is registered.

20. Section 100(1)(c) of the Act places the onus on the Opponent to rebut an “allegation made under paragraph 92(4)(b) that the trade mark has not, at any time during the period of 3 years ending one month before the day on which the opposed application was filed, been used, or been used in good faith, by its registered owner in relation to the relevant goods and/or services.”

21. The “note” to section 100(1)(c) of the Act states that:

    Note 1:If the registered owner of the trade mark has authorised another person to use it, any authorised use of the trade mark by that person is taken to be a use of the trade mark by the registered owner (see subsection 7(3)).

22. Section 7(3) provides that:

    Use of trade mark

    (1)…

    (2)…

    (3)An authorised use of a trade mark by a person (see section 8) is taken, for the purposes of this Act, to be a use of the trade mark by the owner of the trade mark.

23. Section 8 provides that:

    Definitions of authorised user and authorised use

    (1)A person is an authorised user of a trade mark if the person uses the trade mark in relation to goods or services under the control of the owner of the trade mark.

    (2)The use of a trade mark by an authorised user of the trade mark is an authorised use of the trade mark to the extent only that the user uses the trade mark under the control of the owner of the trade mark.

    (3)If the owner of a trade mark exercises quality control over goods or services:

    (a)dealt with or provided in the course of trade by another person; and

    (b)in relation to which the trade mark is used;

    the other person is taken, for the purposes of subsection (1), to use the trade mark in relation to the goods or services under the control of the owner.

    (4)If:

    (a)a person deals with or provides, in the course of trade, goods or services in relation to which a trade mark is used; and

    (b)the owner of the trade mark exercises financial control over the other person’s relevant trading activities;

    the other person is taken, for the purposes of subsection (1), to use the trade mark in relation to the goods or services under the control of the owner.

    (5)Subsections (3) and (4) do not limit the meaning of the expression under the control of in subsections (1) and (2).

24. Section 100(3)(b) provides that:

    (3)… the opponent is taken to have rebutted the allegation that the trade mark has not, at any time during the period referred to in that paragraph, been used, or been used in good faith, by its registered owner in relation to the relevant goods and/or services if:

    (a)…

    (b)in a case where the trade mark has been assigned but a record of the assignment has not been entered in the Register:

    (i)the opponent has established that the trade mark, or the trade mark with additions or alterations not substantially affecting its identity, was used in good faith by the assignee of the trade mark in relation to those goods or services during that period and that that use was in accordance with the terms of the assignment; and

    (ii)the Registrar or the court is of the opinion that it is reasonable, having regard to all the circumstances of the case, to treat the use of the trade mark by the assignee during that period as having been a use of the trade mark in relation to those goods or services by the registered owner; or

    …

    Submissions

25. The Applicant’s primary submission rests on the requirement of the Act that the use must be by the registered owner or by an authorised user of the Trade Mark. It submits that any use of the Trade Mark during the Relevant Period was not use by the then owner, Owens, nor could any use be treated as use by Owens.

26. The Applicant’s submission is that the Production Documents have not been incorporated into evidence and cannot be relied upon, but show, in any case, that any use of the Trade Mark was made by Owens as a sole trader from 2004 until November 2006 when Calico Pty Ltd was formed and that, later, in July 2011 Owens entered into a deed of assignment and a deed of licence pursuant to which the Trade Mark was assigned to Calico Pty Ltd and its use licensed to the Opponent.

27. It follows, argues the Applicant, that any use of the Trade Mark:

    ·     “is not use by the registered owner …, Kevin Owens;

    ·     cannot be treated as use by Kevin Owens on the basis of an unrecorded assignment to Calico Pty Ltd under section 100(2)(b)[1] of the Trade Marks Act (since the assignment is not in evidence); and

    · cannot be treated as use inuring to Calico Pty Ltd as the legal owner of the mark for the majority of the removal period under the authorised user provisions of the Trade Marks Act, as the actual user of the mark from at least 19 July 2011 is alleged to be Calico Global (under licence from Calico Pty Ltd), and the alleged licence is not in evidence.”

    [1] I understand this to be intended as a reference to s.100(3)(c).

28. The Opponent’s SGP states:

29. The Opponent’s written submissions in this regard are that:

    “Firstly, it is submitted that the Trade Mark has been used in good faith in Australia during the relevant period by the rightful owner or authorised licensee, as it has been from time to time Kevin Owens, Calico Pty Ltd and Calico Global Pty Ltd, in relation to all of the services in the class 44 of the registration.

    Secondly, and in the alternative …, it is submitted that there are reasonable grounds for the Registrar to exercise discretion under sections 101(3) and 101(4) of the Act not to remove class 44 from the Trade Mark, or any of the services within that class.”

    Evidence

30. This decision is made on the basis of the following evidence:

    Opponent’s Evidence in Support 

    Declaration of Kevin Owens made on 17 December 2014 (Owens 1).

    Applicant’s Evidence in Answer

    Declaration of Lauren Eade made on 21 April 2015;

    Declaration of Monique Liburd made on 21 April 2015 (incorporating a declaration of Dr Arthur Levinson, CEO of Calico LLC made on 1 October 2014).

    Opponent’s Evidence in Reply 

    Declaration of Kevin Owens made on 27 July 2015.

    Production Documents

    §Deed of Assignment of Intellectual Property made 19 July 2011 between Kevin Patrick Owens and Jack Owens – and – Calico Pty Ltd as trustee for the Owens Family Trust

    §Licence to Use the Calico System made 19 July 2011 between Calico Pty Ltd as trustee for the Owens Family Trust and Calico Global Pty Ltd

    §Trade Mark Assignment Deed made 20 May 2014 between Calico Pty Ltd and Calico Global Pty Ltd

31. As noted already, the Production Documents resulted from the Notice.  The Applicant’s submissions rest on the premise that the Production Documents are excluded from the evidence of record as they were not later incorporated into a form proscribed by the Trade Mark Regulations 1995 (the “Regulations”). 

32. Notices to produce are made under section 202(c) of the Act and are part of a process separate from the evidentiary rounds of an opposition controlled by regulation 19. However, the position taken by this Office is that material produced in response to a notice to produce is automatically considered under regulation 21.19. The only limiting consideration is whether or not the non-disclosing party had sufficient opportunity to consider and respond to the disclosed documents. In this case the Applicant had and took that opportunity and I find that the Production Documents form part of the evidence of record.

    Reasoning

33. As stated, the onus of rebutting the allegation of non-use under section 92(4)(b) lies with the Opponent. The burden of proof is the ordinary civil standard of the balance of probabilities.[2]

    [2] Pfizer Products Inc. v Karam [2006] FCA 1663 and more recently: Telstra Corporation Limited v Phone Directories Company Pty Ltd [2015] FCAFC 156.

34. Bearing in mind that the Relevant Period ran from 15 April 2011 to 15 April 2014, I note that Owens was the registered owner of the Trade Mark until 27 May 2014, the day when the assignment from Owens to Calico Pty Ltd was recorded on the Register of Trade Marks.  Owens was therefore the registered owner for all of the Relevant Period.

35. Calico Pty Ltd was incorporated in November 2006 and the Opponent was incorporated in May 2011.  There is no clear evidence that the Trade Mark was used at all by Owens after 2006.  The Opponent must therefore show as a threshold matter that Calico Pty Ltd and/or the Opponent were authorised users of the Trade Mark.[3]

    [3] or that they were unrecorded assignees using the Trade Mark in relation to those goods or services during that period and that that use was in accordance with the terms of the assignment; and that the Registrar is of the opinion that it is reasonable, having regard to all the circumstances of the case, to treat their use of the Trade Mark as having been a use by the registered owner (s100(2)(b)).

36. In particular, the Opponent must show either (i) that in the period 15 April 2011 (commencement of the Relevant Period) to 19 July 2011 (when the Trade Mark was assigned to Calico Pty Ltd and its use was exclusively licensed to the Opponent) the Trade Mark was used by Calico Pty Ltd as an authorised user, or (ii) in the period from 19 July 2011 to 15 April 2014, the Opponent used the Trade Mark as an authorized user, or (iii) in the period from 19 July 2011 to 15 April 2014, Calico Pty Ltd was an unrecorded assignee using the Trade Mark in relation to Relevant Services in accordance with the terms of the assignment and that it is reasonable for the Registrar treat its use of the Trade Mark as having been use by Owens.[4]

    [4] Pursuant to section 100(3)(b).

37. It is against that background that the Production Documents are now examined.

    Deed of Assignment of Intellectual Property made 19 July 2011 between Kevin Patrick Owens and Jack Owens – and – Calico Pty Ltd as trustee for the Owens Family Trust

38. Clause 2.1 of the Deed states:

39. Schedule 1 to the Deed defines “The Calico System”. 

40. Schedule 2 to the Deed defines “Intellectual Property” and includes “the rights to any names or trade marks (whether registered or not) … including “Calico” … .

41. Clause 1.1 of the Deed defines the “Assignors” to mean “both of Kevin Patrick Owens and Jack Owens jointly and severally”.

    Licence to Use the Calico System made 19 July 2011 between Calico Pty Ltd as trustee for the Owens Family Trust and Calico Global Pty Ltd (the “Licence Deed”)

42. This Deed recites that Calico Pty Ltd is the owner of all right, title and interest in the intellectual property in the Calico System.  This includes the Trade Mark.  It recites that Calico Pty Ltd has agreed to grant to the Opponent “an exclusive licence to use the Calico System for the Purpose in accordance with the terms and conditions” of the Deed.

43. Clause 4 imposes obligations on the Opponent to “clearly indicate [in all dealings] that [the Opponent] is acting as the licensee of [Calico Pty Ltd]” (cl. 4.iii); “bring any … infringement of the [Trade Mark] … to the attention of [Calico Pty Ltd]” (cl. 4.iv); “observe all directions and instructions given to it by [Calico Pty Ltd] in relation to the sale, distribution and exploitation of the Calico System” (cl.4.v); “keep full and proper books of accounts” (cl. 4.vi); and “promote and extend the Calico System by advertising and by the distribution of printed matter” (cl. 4.ix).

44. Clause 5.2(c) provides for termination in the event of the Opponent’s “inability … to carry on and maintain the effective commercialization of the Calico System”.

45. Schedule 2 to the Deed defines the “purpose” of the Deed as follows:

    Trade Mark Assignment Deed made 20 May 2014 between Calico Pty Ltd and Calico Global Pty Ltd

46. The recitals (“Background”) to this later Deed are:

47. I can summarily deal with the possibility of use by an unrecorded assignee of the Trade Mark as contemplated by section 100(3)(b) since the simultaneous assignment to Calico Pty Ltd and exclusive licence to the Opponent meant that Calico Pty Ltd never used the Trade Mark as an unrecorded assignee.

48. The remaining questions then are whether or not (a) Calico Pty Ltd was an authorised user for that part of the Relevant Period prior to the Trade Mark being assigned to it on 19 July 2011; and (b) the Opponent was an authorised user for that part of the Relevant Period in which it used the Trade Mark under license from Calico Pty Ltd, the unrecorded assignee.

49. Under section 8 of the Act, authorised use requires use under the control of the trade mark owner. In the recent Full Federal Court decision in Lodestar Anstalt v Campari America LLC [2016] FCAFC 92 (28 June 2016), Basenko J summarises the law at paragraph 63:

    Section 8(1) of the Act defines a person who is an authorised user of a trade mark and the key concept in the subsection is that the trade mark is used in relation to goods or services under the control of the owner of the trade mark. Section 8(2) makes it clear that an authorised use only applies to the extent that the trade mark is used under the control of the owner of the trade mark. By reason of s 7(3) an authorised use is taken to be a use of the trade mark by the owner of the trade mark. Subsections 8(3) and (4) provide for two cases where the use of a trade mark is taken to be use under the control of the owner of the trade mark: the owner of the trade mark exercises quality control over the relevant goods or services or the owner exercises financial control over the other person’s relevant trading activities. Section 8(5) makes it clear that the meaning of the expression under the control of is not limited to the two cases identified in s 8(3) and (4) of the Act.

50. Basenko J later stated that:

    98.        … actual control will be a question of fact and degree. A licence agreement may contain a term that sets in detail a quality standard to be achieved. The details in the agreement may be such that it is not necessary for the registered owner to give directions or instructions from time to time. The licensee, aware of its obligations, may faithfully comply with those obligations without any entreaties or demands from the licensor. The primary judge had such a situation in mind when he referred to cases where there was obedience to the trade mark owner “so instinctive and complete that instruction was not necessary”.

51. In that same case, Katzmann J commented on the construction of section 8 as follows:

    169. Section 8 provides that whether a person is an authorised user of a registered mark and whether the use of the mark by that person is an authorised use depend on whether the person uses the mark under the control of the registered owner (subss (1) and (2)). Subsections (3)–(4) reveal that use will be taken to be use under the control of the owner where, for example, the owner “exercises quality control over goods or services ... dealt with or provided in the course of trade by another person ... and ... in relation to which the mark is used” or “exercises financial control over the other person’s relevant trading activities”. Subsection (5) states that subss (3)–(4) do not limit the meaning of the expression “under the control of” but this statement is ambiguous. It might signify that “control” is not limited to quality control or financial control. On the other hand, it might signify that control is not limited by the context provided by subs (3)–(4). The former construction is the preferable one. In my opinion, the examples given in subss (3) and (4) give colour to the concept of control in s 8. The language used in the two subsections strongly suggests that — regardless of the form control might take — it is the exercise of control that matters, not merely the right to do so.

    …

    184. In my opinion, under the 1995 Act the use of a registered trade mark by an authorised user will only be taken to be use by the registered proprietor of the mark if the registered proprietor exercises control over the use of the mark during the period in question so as to maintain a connection in the course of trade between the goods or services and the registered proprietor. In a case where a registered proprietor of a trade mark is relying on use by an authorised user, it is still necessary to demonstrate that the trade marks indicate a connection in the course of trade with the registered proprietor. The purpose of s 8 is to identify the means by which that is done. …

    185. A bare licence to use a trade mark, particularly a perpetual licence, would not be sufficient. Without more, it would amount to a divestment of control. But there is no reason in principle why control might not be exercised through conditions imposed by agreement on the use to which the trade marks might be put and, in the event of an application to cancel the registration for non-use, proved by evidence that the authorised user is complying with those conditions. Whether or not that is sufficient in any particular case, however, will depend on the terms of the agreement, most importantly whether the control is such as to maintain the registered proprietor’s connection with the marks. As the Act makes clear, that can be achieved if either quality control or financial control is exercised. If it is not, the registered proprietor (upon whom the burden of proof rests), must show that it has exercised some other form of control in the relevant period which maintains its connection with the marks.

1. In the case of Scott-Dibben Pty Ltd v Canterbury District Health Board 2016 ATMO 3, Hearing Officer Kirov wrote:

   … I am mindful of the fact that the Full Federal Court, (in the context of ss 58 and 59 of the Act, it must be said), in Food Channel Network Pty Ltd v Television Food Network GP[5] (“Food Channel”) indicated one should not rush to reflect adversely on the claimed actions or intentions of a claimed user in circumstances where there are no formal arrangements in place between companies controlled by one individual.  In this regard the Court advised at [61]:

   The courts should be cautious to allow the legal fiction of the corporate veil to defeat registration in a case where one of a group of companies, all controlled by the same directing mind and will, used the mark prior to the other.

   However in Food Channel there was evidence before the Court that a single person was “the founder and sole shareholder and director” of both of the companies concerned and the Court accordingly accepted that person was the “directing mind” of both. 

   [5] (2010) 86 IPR 437.

2. Owens 1 is logically flawed when it states that:

3. Owens might have been the directing mind and so it might be said that obedience was “so instinctive and complete that instruction was not necessary”.  Nevertheless, as already observed, there is no evidence of use of the Trade Mark by Owens after the creation of Calico Pty Ltd in 2006 and no documentation as to the arrangements between Owens and Calico Pty Ltd prior to the 2011 assignment.  Directed by the case law there is no reason for me to find that Calico Pty Ltd was an authorised user in the period from 15 April 2011 to 19 July 2011.

4. The next question is whether in the period from 19 July 2011 to 15 April 2014 the Opponent was an authorized user.  On its face, the Licence Deed seems to place control and reporting obligations of a kind on the Opponent.  There is evidence of the ways in which the Trade Mark was used during the Relevant Period and, putting to one side the different question of whether or not that use was in connection with the Relevant Services, there is nothing in that use manifestly at odds with the terms of the Licence Deed. 

5. However, it is not necessary for me to look more into this question of control for the purposes of section 8 for the reason that, from 19 July 2011 to 15 April 2014, the Opponent’s use of the Trade Mark was with the permission of Calico Pty Ltd, not the then registered owner, Owens. Accordingly, the Opponent cannot qualify as an authorised user.

6. For these reasons the Opponent has failed to meet the onus to rebut the allegation of non-use during the Relevant Period under section 92(4)(b).

   The Registrar’s Discretion

   59. I have found that there was no use of the Trade Mark during the Relevant Period but the Opponent asks me in that event to consider section 101 of the Act. Section 101(1) gives the Registrar the discretion to remove the Trade Mark “in respect of any or all of the [Services]”; section 101(3) provides that discretion may be exercised in the Opponent’s favour if the Registrar is satisfied it is reasonable to do so.

7. The Opponent is not required to point to “exceptional circumstances” in order to justify the exercise of that discretion[6] but I am not persuaded that it is reasonable to do so in the present circumstances.  I am not required to find on other issues raised in this opposition given the conclusions I reached, but had it been necessary for me to examine more closely whether or not the Trade Mark had been used in connection with the Relevant Services, my observation is that the Opponent may have been in further difficulty.  Additionally, in so far as the evidence explains the nature and operation of the Opponent’s business under the Trade Mark, my observation is that the class 41 coverage seems more apposite than the Relevant Services.  In short, there is nothing which compels exercise of the Registrar’s discretion in the Opponent’s favour and I decline to do so.

   [6] See Pioneer Computers Australia Pty Ltd v Pioneer KK (2009) 80 IPR 38, where Bennett J said:

   Decision

8. Having regard to the reasons given herein my decision is to remove the Trade Mark from the Register in respect of the class 44 services.

   62.     This removal should be made 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 removal shall not occur until either the appeal is withdrawn or discontinued.  Otherwise the disposition of the registration should be in accordance with the Court’s order or direction.

   Costs

   63.     As the successful party, the Applicant is entitled to its costs and I award costs against the Opponent as per Schedule 8 of the Regulations.

   Debrett G. Lyons
   Hearing Officer
   Trade Marks Hearings
   19 October 2016

   
   

[167] The discretion under s 101(3) is a broad discretion to decide not to remove a trade mark from the register or not to carve out some of the goods and services for which the mark is registered, even if s 92 grounds have been made out, if the court is satisfied that it is reasonable to do so. Irrespective of the lack of use of the trade marks on the removal goods and the removal services in the relevant period, there is a discretion not to alter the registrations.
[168] In Kowa Co Ltd at [98], Lander J rejected the submission that a party seeking the exercise of the discretion needs to show “exceptional circumstances”. In E & J Gallo at [198], Flick J agreed with Lander J that there is no requirement to establish exceptional circumstances. With respect, I also agree with Lander J that there is no warrant to read a requirement for exceptional circumstances into s 101(3).