Calico Global Pty Ltd v Calico LLC
[2018] FCA 2096
•21 December 2018
FEDERAL COURT OF AUSTRALIA
Calico Global Pty Ltd v Calico LLC [2018] FCA 2096
Appeal from: Calico LLC v Calico Global Pty Ltd [2016] ATMO 86 File number: QUD 854 of 2016 Judge: RARES J Date of judgment: 21 December 2018 Catchwords: TRADE MARKS – Trade Marks Act 1995 (Cth) – appeal from Registrar’s decision to remove registration of trade mark from one class of services under s 101(1) Trade Marks Act 1995– whether non-use or use in good faith during three year period prior to application to remove – where unregistered assignment by registered owner of trade mark – where unregistered assignee licensed trade mark to licensee – whether any uses after assignment and licence were by registered owner or authorised user – whether use of trade mark was as badge of origin of services – whether use was of character appropriate to class of registration
TRADE MARKS – s 101(3) Trade Marks Act 1995– discretion to allow registration to remain where grounds of opposition established – where registered owner engaged in conduct not in good faith to interfere with opponent’s use – where real risk of future repetition of confusing conduct – where trade mark registration in another class not challenged – whether detriment if discretion not exercised
Legislation: Trade Marks Act 1995 (Cth) ss 6, 7, 8, 17, 92, 100, 101, 104
Trade Marks Regulations 1995 (Cth) Sch 1Cases cited: Anchorage Capital Partners Pty Ltd v ACPA Pty Ltd (2013) 351 ALR 436
Ansul BV v Ajax Brandbeveiliging BV [2005] Ch 97
Austin Nichols & Company Inc v Lodestar Anstalt (No 1) (2012) 202 FCR 490
Coca Cola Co v All-Fect Distributors Ltd (1999) 96 FCR 107
Dick Smith Investments Pty Ltd v Ramsey (2016) 120 IPR 270
E & J Gallo Winery v Lion Nathan Australia Pty Ltd (2010) 241 CLR 144
Electrolux Ltd v Electrix Ltd (1952) 71 RPC 23
Lodestar Anstalt v Campari America LLC (2016) 244 FCR 557MID Sydney Pty Ltd v Australian Tourism Co Ltd (1998) 90 FCR 236
Norman v Federal Commissioner of Taxation (1963) 109 CLR 9
Optical 88 Ltd v Optical 88 Pty Ltd (2011) 197 FCR 67
Paragon Shoes Pty Ltd v Paragini Distributors (NSW) Pty Ltd (1988) 13 IPR 323Re Nodoz Trade Mark [1962] RPC 1
Salomon v A Salomon & Co Ltd [1897] AC 22
Unilever Australia Ltd v Karounos (2001) 113 FCR 322
Woolly Bull Enterprises Pty Ltd v Reynolds (2001) 107 FCR 166Date of hearing: 10-12 October 2017 and 29 November 2017 Date of last submissions: 13 December 2017 Registry: New South Wales Division: General Division National Practice Area: Intellectual Property Sub-area: Trade Marks Category: Catchwords Number of paragraphs: 132 Counsel for the Appellant: Mr B Gardiner Solicitor for the Appellant: HopgoodGanim Lawyers Counsel for the Respondent: Mr J Hennessy SC and Mr A Lang Solicitor for the Respondent: Gilbert + Tobin ORDERS
QUD 854 of 2016 BETWEEN: CALICO GLOBAL PTY LTD
Appellant
AND: CALICO LLC
Respondent
JUDGE:
RARES J
DATE OF ORDER:
21 December 2018
THE COURT ORDERS THAT:
1.The appeal be dismissed.
2.The appellant pay the respondent’s costs.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
REASONS FOR JUDGMENT
RARES J:
‘Calico’ is an ordinary English word meaning a cotton cloth. Each side in this litigation used the word in its corporate name and seeks to exploit it as a trade mark of services unconnected to fabrics.
Calico Global Pty Ltd has appealed under s 104 of the Trade Marks Act 1995 (Cth) from the decision of a delegate of the Registrar of Trade Marks under s 101(1) of the Act to remove its registered trade mark number 1005184 (the 184 mark), from the Register of Trade Marks in relation to services in class 44. The 184 mark was registered from 7 June 2004 as a word mark being ‘calico’ in classes 41 and 44. During the hearing of the appeal, Global narrowed the scope of the services in class 44 for which it seeks restoration in respect of the 184 mark. In final address, Global sought to further amend the scope of those services so that they would be limited to the following description of the proposed services:
provision of advice and information regarding diet, nutrition, exercise and fitness.
Calico LLC, the respondent, was incorporated in the United States of America in 2013. There was a well-publicised worldwide launch of its services that occurred on 19 September 2013. Calico LLC applied for registration of its ‘CALICO’ mark as a word mark in Australia in application number 1611319 in classes 5, 10 and 44, with a priority date of 18 September 2013. Calico LLC sought registration of “CALICO” as a word mark in, among others, class 44 in respect of:
Providing medical information, consultancy and advisory services for the treatment of aging, immunological diseases and degenerative conditions of the body, the promotion of life extension, and restoration of youthful bodily functions.
Calico LLC applied to the Registrar on 15 May 2014 for removal from class 44 of the 184 mark.
Classes 41 and 44 in Sch 1 of the Trade Marks Regulations 1995 (Cth) comprise the following classes of services:
41 Education; providing of training; entertainment; sporting and cultural activities.
44 Medical services; veterinary services; hygienic and beauty care for human beings or animals; agriculture, horticulture and forestry services.
Originally, Global brought a second appeal against another decision of the Registrar to remove its registered trade mark 1582486 (the 486 mark) that Global had lodged for filing on 26 September 2013, after Calico LLC’s launch. However, in its closing written submissions, Global abandoned that appeal. Both appeals were heard together and evidence in each was evidence in the other.
Calico LLC opposed the amendment of the proposed services and maintained that the 184 mark was not entitled to registration in class 44 at all, including if it were limited to the proposed services. The substantive issues in the appeal are that:
(1)Global had not used the 184 mark at any time during the continuous three year period ending one month before 15 May 2014 (being the day that Calico LLC filed its application for removal of the 184 mark) within the meaning of ss 7, 8 and 92(4) of the Act and, in any event, any use of the 184 mark by Global was that of a licensee from an unregistered assignee and had not been a use by the owner of the 184 mark in good faith in respect of any of the proposed services within the meaning of s 100(3)(b) (the non-use issue);
(2)at its highest, Global’s evidence of use of the 184 mark during the three year period showed was that it only could support the following specification of services in class 44: “the provision of advice and information regarding exercise and fitness, namely in relation to a fitness website and mobile software application” (Calico LLC added the italicised words to, and deleted “nutrition” and “diet” from, Global’s wording of its proposed services) (the excessive scope issue); and
(3)if Calico LLC’s grounds of opposition were established, whether it would be reasonable, within the meaning of s 101(3), to reverse the Registrar’s decision and decide that the 184 mark should remain on the Register in respect of the proposed services in class 44 (the discretion issue).
The legislative scheme
Relevantly, s 17 provided:
17 What is a trade mark?
A trade mark is a sign used, or intended to be used, to distinguish goods or services dealt with or provided in the course of trade by a person from goods or services so dealt with or provided by any other person.
Note: For sign see section 6.
The definition in s 6(1) of the Act provided that ‘registered owner’, in relation to a trade mark, “means the person in whose name the trade mark is registered” and that ‘sign’ included any word. Relevantly, the Act provided in s 7(3) and (5) that an authorised use of a trade mark (in relation to services) by a person (within the meaning of s 8) was deemed to be use of the trade mark “by the owner of the trade mark” being a use “in physical or other relation to the services” (emphasis added).
Next, s 8 provided:
8 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). (emphasis in original)
Importantly, s 92(1) provided that a person could apply to the Registrar to have a trade mark that was registered removed from the Register and s 92(4)(b) provided:
(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:
…
(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. (emphasis in original)
Section 100(1)(c) placed the onus of proof on the person who opposes an application under s 92(4)(b) “to rebut”:
(c)any 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.
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)).
Note 2:For file, month and registered owner see section 6. (emphasis in original)
Next, s 100(3)(b) provided:
(3)For the purposes of paragraph 1(c), 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:
….
(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
…
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)).
Note 2: For registered owner see section 6. (bold non-italic emphasis added)
And s 101(2) and (3) provided:
(2)Subject to subsection (3) and to section 102, if, at the end of the proceedings relating to an opposed application, the court is satisfied that the grounds on which the application was made have been established, the court may order the Registrar to remove the trade mark from the Register in respect of any or all of the goods and/or services to which the application relates.
(3)If satisfied that it is reasonable to do so, the Registrar or the court may decide that the trade mark should not be removed from the Register even if the grounds on which the application was made have been established.
Background – the parties
Kevin Owens was the registered owner of the 184 mark from 7 June 2004 to 27 May 2014 (which included the whole of the relevant period). Kevin Owens had worked in the United Kingdom as a qualified engineer for over 10 years before he purchased a petrol station there in 1994. He had a keen interest in fitness and, in about 1996, exploited an opportunity to establish a women’s only health club on the adjoining land. He promoted that business using a concept of “energy balance”, based on each woman’s “calories in” and “calories out” balance, leading to him coining the word “calico”, as a shortening of CALories In Calories Out. He said:
To grow the brand I realised Calico had to be scaleable and outside the restrictions of needing to attend a gym. I developed the Calico concept to find out how much energy an individual needed to consume and expend for good health. This was based on standardised outdoor activity to measure energy expenditure, and biometric algorithms to work out the customer's daily calorific requirements.
The Calico concept was to partner with local authorities and install markers at 500m intervals on popular outdoor walking tracks to measure energy expenditure. We call these markers "Calico fitness totems". By knowing the user's biometrics and energy expenditure an algorithm could work out the daily nutrition and activity balance the user needs for good health. Securing local government contracts secured long term business.
He registered the word mark ‘calico’ in the United Kingdom in 2004, before emigrating with his family to Perth. He and his wife, Lynne Owens, incorporated Calico Pty Ltd on 22 November 2006 and each then held beneficially 1 of its only 2 issued shares.
On 16 May 2011, Global was incorporated. Calico Pty Ltd then owned 1,012,500 of Global’s 1,562,500 issued shares (about 64.8%), Brookvalley Pty Ltd held about 350,000 shares (about 22.4%), and each of Jack Owens (who was Kevin Owens’ son) and Linc Capital Pty Ltd owned 100,000 shares (about 6.4%). Kevin Owens was managing director of each of Calico Pty Ltd and Global. He was the only director of Calico Pty Ltd and was one of four directors of Global along with Jack Owens, David Carlson and Jeffrey Leach. For the reasons I later explain, I formed an adverse view of the credibility and reliability of each of Kevin Owens and Jack Owens.
Dr Arthur Levinson is the chief executive officer of Calico LLC. He is the chairman of Apple Inc. He was awarded his doctorate in biochemistry by Princeton University. He was, among others, a former chief executive officer and chairman of the pharmaceutical corporation, Genentech Inc, a director (between 2004 and 2009) of Google Inc, and Hoffman-La Roche. He has been a director or member of several professional and advisory boards associated with Princeton and Harvard Universities and the Massachusetts Institute of Technology. He was the author, or a co-author, of over 80 scientific articles and a named inventor on 11 United States patents.
Dr Levinson gave evidence (by videolink). I formed the view that he was an impressive and reliable witness and I have accepted his evidence. He said that Calico LLC was an enterprise that focussed on “anti-ageing, treatment of degenerative conditions, and promotion of life extension generally”. He said that he was responsible for selecting the name and trade mark “CALICO” in around June 2013 as a shorthand for “California Life Company”. He said that he was not (and, to the best of his knowledge, no other persons involved in the name selection process were) aware of any third party use of the CALICO trade mark “for services relating to anti-ageing, treatment of degenerative conditions, or the promotion of life extension”.
The launch of the company, Calico LLC, occurred on 19 September 2013 when one of the founders of Google, Larry Page, made a Google+ post. On 18 September 2013, Google issued a press release announcing that Calico was a new company focused on health and well-being “in particular the challenge of aging and associated diseases”. The press release quoted Mr Page, Dr Levinson, Franz Humer, the Chairman of Hoffman-La Roche, and Tim Cook, the chief executive officer of Apple, discussing the perceived future direction of the new company. These included Dr Levinson saying that he had devoted much of his life to science and technology with the goal of improving human health and that he had been inspired by Mr Page’s focus on (in the latter’s words) “moonshot thinking around healthcare and biotechnology” to improve millions of lives. The launch received wide publicity internationally, including in Australian media.
Dr Levinson said that the services of Calico LLC “necessarily incorporate research into ageing, immunological diseases and degenerative conditions of the body, the promotion of life extension, and restoration of youthful bodily functions”. He accepted, in cross-examination, that it was possible for a person to provide medical information without doing research to obtain the information but he thought that, where one did relevant research, it necessarily resulted in medical information. As he said, based on his experience, research is the source of discovery and forms the basis of medical information, consultancy and advice.
Dr Levinson was concerned that the then description of the class 44 services in the 184 mark’s registration included “research services”, which he saw as being integral and similar to the class 44 services for which Calico LLC sought registration of its word mark. As I have noted (at [2] above), Global no longer seeks to include “research services” in the class 44 description of services for the 184 mark. Nonetheless, Calico LLC argued that the potential for confusion remains in what Global now seeks to include in the registration of the 184 mark in class 44 as the proposed services.
The assignment and licence of the 184 mark
On 19 July 2011, first, Kevin Owens, Jack Owens and Calico Pty Ltd entered into a deed under which Kevin Owens assigned the 184 mark to Calico Pty Ltd (the assignment) and, secondly, it, as assignee, entered into an exclusive licence agreement with Global under which Global had exclusive use of the 184 mark. Although both Kevin Owens and Jack Owens were described as assignors in the assignment, there was no evidence or issue before me that Jack Owens had any legal or beneficial interest in the 184 mark. The assignment was not recorded in the Register until 22 May 2014.
Under the assignment, the “assignor” assigned “his entire right, title and interest” in a broad description of intellectual property identified in schedule 2, including the rights to any patentable invention relating to “the Calico System”, copyrights, confidential information, domain names and the “rights to any names or trade marks (whether registered or not) used in connection with the Calico System” (cl 2.1) (emphasis added). The deed also defined intellectual property as meaning, among others, any trade mark (cl 1.1). Thus, the assignment included the 184 mark (as was common ground). The deed described the Calico System in schedule 1 as:
The Calico System:
Means the system known as the Calico System which is a system that includes any Intellectual Property Rights associated with the Calico System.
The Calico System works with local councils and landowners to deliver measurable health and fitness programs on-line including mobile phone and RFID technology and supported by new media revenue streams. (emphasis added)
The licence was effected by a deed between Calico Pty Ltd as trustee for the Owens Family Trust (called “the Company” in the deed) and Global and commenced on 19 July 2011 and would continue until terminated under cl 5 (cll 1.1 and 2). Under cl 3.1, Calico Pty Ltd granted Global “a transferable, exclusive, royalty free licence with the right to grant sub-licences to use the Calico System for the Term of this Deed for the Purpose within the Territory upon the terms and conditions of this deed” (emphasis added). The Calico System was defined in schedule 1 to the licence in the same terms as in the assignment. “The Purpose” of the licence, set out in schedule 2, was:
Subject to the provisions of this Deed the Licensee is permitted to use, reproduce, or adapt the Calico System for the purpose of carrying out commercial demonstrations, displays, preparing reports, analysing or gathering statistics and to (where necessary) combine the Calico System with data held by the Licensee, and to sell, hire, lease, sub-licence the Calico System and carry out any other required activity in order to commercialise the Calico System for the purposes of running a commercial business. (emphasis added)
Clause 4 of the licence set out conditions of use that, among others, obliged Global, as licensee, to 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 4.1(a)(v)) and not to assign, transfer or charge any of its rights under the licence or the licence itself, unless Calico Pty Ltd gave its approval in writing (cl 4.1(b)(iv)). Importantly, cl 4(a)(iii) required Global to:
in all correspondence and other dealings relating to the Calico System, clearly indicate that [Global] is acting as licensee of [Calico Pty Ltd]. (emphasis added)
The date of the assignment divided in two, the three year period under s 92(4)(b) ending on 15 April 2014 (being one month before Calico LLC filed its application for removal). In order to rebut Calico LLC’s allegation of non-use of the 184 mark in respect of services in class 44, Global had to establish that the 184 mark had been used in good faith by its registered owner, Kevin Owens, or by a person whom he authorised (within the meaning of ss 7(3) and 8) in the period between 15 April 2011 and 19 July 2011 (the first period), or, by a person whom he had authorised, namely his assignee, Calico Pty Ltd, or its licensee, Global, in the period between 19 July 2011 and 15 April 2014 (the second period).
Authorised use – principles
In order to amount to use as a trade mark within the meaning of the Act, there must be use of the mark as a badge of origin of, relevantly, services, in the sense that the mark indicates a connection in the course of trade between services and the person who applies the mark to, or in relation to, the provision of the services. This requirement flows from the definition in s 17 of the Act that a trade mark is “a sign used…to distinguish…services dealt with or provided in the course of trade by a person from…services dealt with or provided by any other person”: E & J Gallo Winery v Lion Nathan Australia Pty Ltd (2010) 241 CLR 144 at 162-163 [42]-[44], per French CJ, Gummow, Crennan and Bell JJ, approving Coca Cola Co v All-Fect Distributors Ltd (1999) 96 FCR 107 at 115 [19], per Black CJ, Sundberg and Finkelstein JJ. As Nicholas, Yates and Beach JJ held in Anchorage Capital Partners Pty Ltd v ACPA Pty Ltd (2013) 351 ALR 436 at 451 [56], whether or not there is a trade mark use of a mark depends on the context in which the relevant use occurs and, relevantly, a mark may be used as a trade mark simultaneously with it performing one or more functions in addition to it being a badge of origin.
In other words, the use of a mark as a trade mark is a use that informs, or signifies, in all the circumstances to third persons to whom a service is offered or provided in the course of trade, that the service originates from the registered, or common law, owner of the trade mark. The mere presence of a word, that also happens to be a trade mark in, on or in connection with, the provision of services without something in the use of a mark, consisting of a word, that draws a connection to its owner so as to distinguish the services as those of the owner, is insufficient to constitute use of the word as a trade mark within the meaning of s 17. For example, a person labelling a bottle ‘Apple juice’ ordinarily would not be using the word ‘Apple’ as a word mark in a way capable of suggesting a connection in the course of trade with Apple Inc, one of the largest multinational corporations in the world that sells mobile phones, computers and associated hardware and software products. Such an infringing use would only occur if, in the example, the apple juice producer affixed a mark, such as a logo or symbol, to the juice container that created, or was calculated to create, an apparent connection between the producer and the multinational corporation suggesting, in the course of trade, that the latter provided or dealt with the juice.
In Lodestar Anstalt v Campari America LLC (2016) 244 FCR 557 at 580-581 [95]-[98], Besanko J (with whose reasons Allsop CJ at 559 [1], Greenwood J at 560 [3] and Nicholas J at 584 [112] agreed) said that “control” in s 8 of the Act meant actual control in relation to the use of the trade mark, including, from time to time, in order to determine whether use of the trade mark was under the control of the registered owner. He said that while this involved questions of fact and degree, s 8 required that “[t]here must be control as a matter of substance”. And, he explained, the expression “under the control of”, as used in s 8, required that the trade mark had to indicate a connection in the course of trade with the registered owner. He added:
The connection may be slight, such as selection or quality control or control of the user in the sense in which a parent company controls a subsidiary. (emphasis added)
Besanko J held that the mere fact that the registered owner granted a licence, or revocable authority, to use the trade mark would not be sufficient, of itself, to establish control over the grantee’s use of the trade mark within the meaning of s 8: Lodestar 244 FCR at 581 [97]. His Honour also said (at 581 [98]):
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”. (emphasis added)
When a person, other than the registered owner, such as an unregistered assignee, uses a registered trade mark, the Act employs the concepts of use and control by the “owner” of the trade mark in s 8 in order to ensure that the statutory protection for the trade mark is available, but limited, to achieve the purpose of a trade mark as defined in s 17. In other words, as s 17 provides, a trade mark is a sign that, relevantly, is used to distinguish goods or services dealt with, or provided, in the course of trade by the registered owner (or an authorised user under s 8) from goods or services so dealt with, or provided, by any other person. A trade mark serves the function of establishing a visual, aural or sensory connection (because it is a sign) between the particular goods or services and its registered owner as the provider of those goods or services. This explains the requirements in the Act that, if another person uses a registered owner’s trade mark, the user must be authorised to do so by the “owner” and the use must be under the registered owner’s control, or the control of an assignee who is an owner of the trade mark within the meaning of s 8, and, through it, an authorised user so as to maintain, by the use, a perceived (and actual) connection between the goods or services and the person registered as the owner or who is, in fact, the owner of the trade mark.
The parties both appeared to have accepted that a single bona fide use during the three year period would be sufficient to defeat a removal application under s 92(4), relying on what Drummond J held in Woolly Bull Enterprises Pty Ltd v Reynolds (2001) 107 FCR 166 at 171 [14]-[16], which Hill J followed in Unilever Australia Ltd v Karounos (2001) 113 FCR 322 at 339 [64], as did Katzmann J in Dick Smith Investments Pty Ltd v Ramsey (2016) 120 IPR 270 at 286 [109]. However, in Gallo 241 CLR at 168-169 [64], French CJ, Gummow, Crennan and Bell JJ, while refraining from deciding the correctness of Drummond J’s view, identified authorities of Wilberforce J (Re Nodoz Trade Mark [1962] RPC 1 at 7), the Court of Appeal of England and Wales (Electrolux Ltd v Electrix Ltd (1952) 71 RPC 23 at 36, per Sir Raymond Evershed MR) and the Court of Justice of the European Communities (Ansul BV v Ajax Brandbeveiliging BV [2005] Ch 97 at 116 [39]), that suggested that a single use may not be sufficient to prevent removal of a mark for non-use and that, in deciding if a use was bona fide, it may be necessary to engage in a qualitative evaluation of the genuineness of any use or uses to determine whether such use was ordinary and genuine, judged by commercial standards (cf. Gallo 241 CLR at 168-169 [62]-[64]).
In order to amount to a use of a trade mark “in good faith” within the meaning of ss 92(4)(b)(ii) and 100(1)(c) and (3), ordinarily the use should be ordinary and genuine, judged by commercial standards: Gallo 241 CLR at 168 [62]. However, as French CJ, Gummow, Crennan and Bell JJ explained, a use for a purpose, such as contrivance to defeat a trade rival’s plans, may lack the necessary quality of genuineness. In addition, a use may still be genuine, even if it only occurs after the user appreciates that the registration of the trade mark may be vulnerable to attack on the grounds of non-use. One factor that may be taken into consideration in evaluating the genuineness of use is the quantum of sales. But, a fictitious or colourable use will not be genuine (241 CLR at 168-169 [62]-[65]).
The delegate’s decision
The delegate found that there had been no authorised use of the 184 mark in the first and second periods. First, he found that the legal effect of the assignment and licence, together with Kevin Owens’ role as the directing mind of both Calico Pty Ltd and Global, were insufficient to establish that Calico Pty Ltd had been an authorised user during the three year period. Secondly, he found that Global had used the 184 mark with the permission of Calico Pty Ltd, not the registered owner, Kevin Owens, and that, accordingly, Global’s use could not qualify as an authorised use. Thirdly, the delegate also was not persuaded that it was reasonable to exercise his discretion under s 101(3) in Global’s favour. He observed that on the evidence before him (which was more limited than on this appeal) the nature and operation of Global’s business under the 184 mark were more appropriately covered by its registration under class 41.
The non-use issue – background
Global identified instances of what it contended amounted to uses of the 184 mark in each of the first and second periods which I will consider below. Before doing so, I will set out some background facts.
In his affidavit sworn 26 May 2017, Kevin Owens said that Calico Pty Ltd was the user of the 184 mark throughout the first period and Global the user throughout the second period. He said that his son, Jack Owens, was a gym instructor and had occupied an “Operations Role for the Calico Business” since it started trading in Australia. He said that Jack Owens had a background in information technology and was primarily responsible for the business’ “online presence and for the design and implementation of the technology that delivers our health related solutions”.
The nature of the services associated with the use of the 184 mark on which Global relied was the website, and a Calico iPhone application (app) for its “free online fitness and nutrition program”. That program could be used in conjunction with hollow totem poles (described in some of the evidence as “Calico fitness totems”) that Global erected in parks in three local government council areas in Perth, Western Australia. The totems were like mileposts, signifying to persons, including a user of the app, that he or she had walked or run a set distance between the totem just reached and the previous totem that the person had encountered. The totem was no more than a post or sign and had no electronic or other connectivity with any Apple mobile phone of the walker or jogger on which the app had been installed.
Before the first period, Global had sold a product called a fit chip to its members to enable them to record or count their steps. Global purchased the fit chips from FitLinxx, which was a supplier to the fitness facility market, and on sold them to members. The fit chip clipped onto the member’s footwear and was supposed to download data. However, FitLinxx went out of business before 15 April 2011 and Global ceased supplying fit chips. Thereafter, Global had its members use the app to obtain step data to provide their input into their online profiles on the website.
Global last updated the app in March 2013. By July 2017 that update was no longer compatible with the then current version of the Apple operating system. There was never an Android equivalent for the app.
Jack Owens sought to embellish the nature of what the website did by reference to the screenshot of a webpage as at 31 August 2011:
Jack Owens said that, when a person joined as “Calico member”, he or she could log onto the members only section of the website and access pages such as that in the screenshot above which, he claimed, showed the “outputs of the medical algorithm”. He asserted that this algorithm was a trade secret. In cross-examination, he agreed that when a member entered the required personal information into the various boxes on the personal webpage, it used that information to calculate the person’s body mass index, or BMI. He said that:
Body mass index is considered a medical algorithm, as well as blood pressure algorithms… It goes through the algorithms and then the website produces a report as to the state of their health and… gives other indications as to their general wellbeing.
He advocated from the witness box Global’s then current (and not yet abandoned case), that it provided services in the health industry, by the following unresponsive evidence, that characterised his testimony:
And the BMI is a standard calculation known in the fitness industry, isnt it? --- In the health industry. Yes.
What about the fitness industry? I asked you about the fitness industry? --- Both.
Both the fitness industry and the health industry? --- Yes. (emphasis added)
Jack Owens also accepted that the only goal that a member could specify on the website was one related to his or her weight. He said that the website calculated a member’s fitness plan (of taking a specific number of steps or walking for a specified distance or passing a number of totems) and nutrition plan using his or her BMI, which came directly from the Australian Recommended Dietary Intake for the person’s BMI.
Kevin Owens and Jack Owens tried on two occasions before the launch of Calico LLC to interest Google in a collaboration to exploit the potential of the totems and app. On 1 May 2012, Kevin Owens met Chris Francis, partner and development manager of the online partnership group of Google Australia and New Zealand. As Kevin Owens accepted, in cross-examination, he explained to Mr Francis, and confirmed in an email that he sent to Mr Francis on 2 May 2012, that the Calico business provided both the app and online software to the public free of charge. The business also provided the local government councils with the “outdoor fitness totems” and what he said (but of which there was no documentary evidence) were reports of usage in their areas. I do not accept Jack Owens’ evidence that he showed council officials such reports on a laptop or computer screen. Jack Owens said in cross-examination:
…we didn’t. I’m disappointed that we didn’t provide email. It would have just been too much for us to either provide in print form or email, because the reports were either too specific or too much. It was easier for us to just deal with our contacts that we had in those government areas and to be able to react to new reports that they wanted to produce… But the admin reports formed part of regular meetings with those governments. So they were produced, usually, at the Local Government building in person.
MR HENNESSY: On a screen? --- On the screen. (emphasis added)
Kevin Owens told Mr Francis that the funding to support those free services would come from sponsors and advertisers in focused, location based marketing and new media. However, nothing came of the approach to Mr Francis.
The second occasion occurred in April 2013 when Kevin Owens and Jack Owens travelled to the United States of America as part of a delegation organised by an American body called Advance, which took Australian business people to America to introduce them to contacts, with a view to exploring whether they could collaborate commercially. One meeting on this trip was at Google’s Mountain View campus in Silicon Valley, California. Once again, Kevin Owens and Jack Owens discussed the Calico business with Google executives but, ultimately, Google was not interested in pursuing a relationship.
Global’s attempts to bring pressure on Calico LLC
After the launch of Calico LLC on 19 September 2013, Global began to seek to create a nexus between it and health, ageing and medicine.
Lauren Eade, a solicitor acting for Calico LLC, gave evidence, that I accept, that her searches of the wayback machine revealed that, as at 19 September 2013, the domain name ‘calicohealth.com’ was registered and parked on a placeholder webpage of the domain name registrar, Crazy Domains.
Kevin Owens read the 18 September 2013 Google press release at about the time it was published. He gave this evidence in cross-examination:
And you appreciated that Calico LLC would be involved in research and development as part of the project? --- No. I knew they’re highly secretive, and there was no words about what they are. (emphasis added)
He also had asserted in his first affidavit that he had not seen any mention of Calico being interested in or planning to conduct research. Ultimately, he conceded that:
when you read this press release and you saw those words, you understood that amongst other things that this venture would be engaged in conducting research? --- I’m sure it did.
On 22 September 2013, Jack Owens emailed two of the Google executives whom he and his father had met in April 2013. In the email he described having spoken to its recipients “about our start-up population health company” and claimed that he “[j]ust wanted to give you a heads up on recent reports about Google’s health company also called Calico”. Jack Owens accepted that, prior to sending this email, there were no descriptions of the Calico business as a “population health company”. He said that he saw this as “partnership opportunity”. When this came to nothing, as he said, “we were going to enforce our trade mark rights”.
Ms Eade said that on 7 October 2013, both Global’s Facebook and Twitter pages began using the words ‘medicine’ and ‘ageing’ for the first time and posts of articles and information specifically in relation to those topics began appearing. Similarly, Global established a new website, calicohealth.com (the new website) to which its Facebook page first began referring on about 5 August 2014, instead of to the (original) website.
Jack Owens denied that the appearance, from 7 October 2013, of the words ‘medicine’ and ‘ageing’ on the Facebook and Twitter pages was because of his knowledge and awareness of Calico LLC. I do not believe that denial. It was no coincidence that these postings begin in early October 2013, just after Calico Pty Ltd applied on 26 September 2013 to register the 486 mark. Ultimately, he asserted that “we updated the social media after the launch of Calico LLC to ensure that we reflected what we were offering”, having just before testified “I don’t know what the motivation was” (emphasis added). I find that he knew exactly, when giving his evidence, his motivation was, namely to create, for the first time, an appearance of use of the 184 mark in the very area that Calico LLC would operate.
By early 2014, as its attempts to engage in a business venture with Google failed, Global’s business began to falter. Kevin Owens agreed that it had never earned any income and had “always burned cash”.
On 2 April 2014, Jack Owens emailed Monique Liburd, one of Google’s trademark counsel in California, referring to previous emails between them and a telephone conversation that had occurred in the preceding week. Jack Owens asserted, in the email, that, in the past week, Global had confirmed, first, a long term arrangement with an unnamed, major national and international publicly listed retailer, secondly, a long term health research project with a major internationally renowned Australian university that had campuses around Asia, and thirdly, a new and substantial equity partner. He wrote that, given “this continued progress we are seeking a resolution of the issues…sooner rather than later”. He also wrote:
Of particular concern is the use of the name Calico and the confusion/damage it is causing to our ongoing activities. It is not acceptable that Google Calico continue to use the name Calico and infringe on our Trade Mark.
Further, Calico continues to be approached by the media in relation to this clear conflict and infringement.
We remain open to resolving this with a business arrangement suitable to both parties prior to our finalising arrangements with the equity partner noted at 3 above, as they have indicated a strong willingness to involve their US legal team in the matter. (emphasis added)
Ms Liburd understood (as I find Global intended) that email to be an indication that the new partner “had an appetite for a legal dispute”. In fact, as Jack Owens admitted in cross-examination, there was no long term arrangement with a retailer. Nor was there a long term health research project with a university. Rather, Global had written a letter of intent to Curtin University on 6 March 2014 proposing a project. As Kevin Owens admitted in his evidence, “we never moved forward on it”. The new equity partner was Mr Leach.
On 15 May 2014, Calico LLC filed its application seeking, among other remedies, revocation of the class 44 registration of the 184 mark. Around this time it also made a separate application seeking revocation of the registration of the 486 mark.
On 20 May 2014, Calico Pty Ltd entered into a second deed of arrangement under which it assigned the 184 mark to Global. Both the assignment and the second deed were recorded in the Register and relevantly, by late May 2014, Global had become the registered owner of the 184 mark.
On about 5 August 2014, Global’s Facebook page profile picture, at the top of the new website, changed from how it had appeared on and before 28 June 2014. The new profile picture depicted a blurred image of the previous one (which had people walking along a shaded path), and now appeared as:
Until 4 August 2014, there had been no suggestion on either of Global’s websites that it provided services in relation to, or having, a connection with, “Health/Medical/ Pharmaceutical” issues. The depiction of the stethoscope and the heart shaped logo also first appeared on the new website at this time. Moreover, Ms Eade also said that as at 1 October 2014, none of the website, the new website, the Facebook or Twitter pages that Global maintained, had any reference to a claim that Global offered, or intended to offer, research services itself or under the 184 mark.
Global made no updates after August 2015 to statistics on the website and the latest posting of a fitness article occurred on 27 April 2016. As Jack Owens said in cross-examination “we’ve had a long period of inactivity; primarily due to the resources having to be focused elsewhere”.
The delegate heard the oppositions on 26 July 2016.
On 28 September 2016, Kevin Owens entered into a deed of acknowledgement and forbearance with Global. Under the deed, Global acknowledged that on an insolvency event occurring to it, Kevin Owens had the right to require Global to transfer, among others, the 184 mark to him. The entry into the deed followed Global’s and Kevin Owens’ earlier entry into an undated “supplementary deed to deed of assignment” that provided in cl 2 that if Global became subject to an insolvency event, trade mark rights (including the 184 mark) would revert “to [Kevin] Owens”.
On 30 September 2016 Global resolved to place itself in a creditors’ voluntary liquidation.
On 19 October 2016 and 4 November 2016, respectively, the delegate upheld the removal applications for the 184 and 486 marks.
On 9 November 2016, Kevin Owens entered into a funding agreement with Mr Leach. The agreement recited that:
·Global was in voluntary liquidation and was “current owner” of the intellectual property and trademarks (including the 184 mark);
·the liquidators were raising $240,000 for Global to mount an appeal, in respect of revocation of class 44 services from the 184 mark and to seek an injunction against Calico LLC and Google; and
·should the liquidators fail to raise that capital by April 2017, Global’s directors could extend their appointment or dismiss them.
Mr Leach was to fund the proceeding by instalments. Kevin Owens promised that if Mr Leach funded the proceeding and if Global were wound up so that the intellectual property reverted to Kevin Owens, he would transfer all of it to a new entity to be owned 60% by Mr Leach and 40% by him, with existing shareholder loans being “transferred” to the new entity. Kevin Owens promised to provide “control to [Mr Leach] to deal directly with Google or others regarding the sale of IP rights”. If the liquidators obtained full funding for the proceeding, so that Global remained under their control, any payments by Mr Leach would be refunded.
On 16 June 2017, Global’s shareholders, Kevin Owens, Jack Owens, Mr Leach and Mr Carlson, agreed that they could remove the liquidators because they had failed to raise funding. The shareholders agreement provided that, in return for Mr Leach agreeing to fund this appeal (and actually doing so), the other shareholders agreed to dilute their shareholdings so that Mr Leach would hold 60% of the issued shares in Global.
On 30 August 2017, Kevin Owens executed a deed poll relating to Global. That recited his entry, on 28 September 2016, into the deed. Under the deed poll, Kevin Owens promised not to exercise his rights that would accrue to him if the winding up were terminated (cl 2.1). He acknowledged that part of his deal with Mr Leach was that, if Mr Leach injected the money needed to fund this appeal and Global came out of liquidation, in order to pursue the appeal, he (Kevin Owens) would leave the ownership of, among other rights, the 184 mark in Global. That would leave Mr Leach in control of Global, as I find he was at the hearing of the appeal. Although available to give evidence, Mr Leach did not do so.
On 31 August 2017, the Supreme Court of Western Australia ordered the termination of the winding up, which the liquidators did not oppose.
Global’s suggested use of the 184 mark in the first period
Global identified, in its closing submissions, the following as instances of use of the 184 mark in relation to the “provision of advice and information regarding health and fitness” in the first period:
(1)According to Jack Owens, 43 persons joined the website in the first period. He said that the website had operated since August 2009 and that it had been used originally for “Calico’s membership driven health service which provided its users with online health tools and content”.
(2)According to Jack Owens, the website homepage, as at 22 April 2011, had a link to a heart rate tool and conveyed advice to a reader that he or she could enter his or her resting heart rate “to gain information on your heart rate training zones”. The homepage also described Calico as a free “community health service designed to Activate Public Space”.
(3)On 21 May 2011, The Cambridge Post newspaper published an article relating to the proposed installation of Calico fitness totems in the Town of Cambridge.
(4)On 30 May 2011, the Chief Executive Officer of the Town of Cambridge wrote a letter headed “Calico Community Fitness Program” to Kevin Owens “Managing Director, CALICO” advising him of the Council’s decision on 24 May 2011 to approve “the installation of the Calico totem poles” for a three year period, subject to entry into a memorandum of understanding.
(5)On 6 July 2011, a YouTube video relating to implementation of the Calico program in the City of Cockburn was uploaded. The video discussed the Calico fitness program and described how a user could calculate fitness goals by entering, as inputs, his or her biometric data and use a fit chip to monitor activity.
(6)A booklet dealing with “Calico/PEET staff wellness program”, a 12 month corporate health package, “in relation to nutrition and exercise”. Kevin Owens said that he provided PEET Group with the booklet in a presentation in April 2011.
(7)On 14 July 2011, Jack Owens posted the first tweet on the @calicoAU Twitter account that read “Calico – Calories In, Calories Out – an exciting and innovative way to keep fit. Now on Twitter!”.
Use of the 184 mark in the first period - Consideration
A trade mark creates a statutory monopoly over its use to distinguish goods or services dealt with in the course of trade within the particular class (of goods or services) in which the trade mark is registered. Thus, when evaluating whether a suggested use is a use of the trade mark for the purpose of s 92(4), a court has to characterise the nature of the use and the trade in the course of which that use is said to have occurred: cf. MID Sydney Pty Ltd v Australian Tourism Co Ltd (1998) 90 FCR 236 at 243C – 244F, per Burchett, Sackville and Lehane JJ.
Moreover, the use of a trade mark must be as a badge of origin of the goods or services so as to connect the person using it as being their source or origin. It is not a use of a trade mark, within the meaning of s 92(4), for a person to apply or use it in relation to goods or services that merely pass through his, her or its hands as a down-stream supplier. That is because, as Cowdroy, Middleton and Jagot JJ held in Optical 88 Ltd v Optical 88 Pty Ltd (2011) 197 FCR 67 at 77 [22]-[23], such an application or use is not in a true sense a signification that the person actually was the source or origin of those goods or services that the person deals with or provides in the course of trade.
Here, there is a question whether the proposed services relied on by Global as uses, are properly characterised as uses falling within class 44.
Kevin Owens admitted in cross-examination that the Calico business was “an outdoor and online fitness system in Australia” that worked in two ways, “by allowing users to set personal fitness goals and attain them… supported by… Calico fitness totems”. He also agreed that the business delivered “free online fitness nutrition programs and tools”.
The essential character of the website and its pages is centred around the themes of nutrition, exercise or fitness. One webpage entitled “My Biometrics” contained data that the user entered and a single goal, namely a target weight, that he or she set. This character is reflected in the seven uses on which Global relied in the first period.
As to (1): The website home page, as it appeared between August 2009 and February 2012, was headed on the left hand side with a logo styled use of “Calico” and to its right, it gave a series of links running across the top of the page entitled “My Calico”, “Community”, “Nutrition”, “Fitness” and “Store”. A search box was at the far end of the top line. The top half of the “My Calico” page appeared as depicted below:
To an ordinary reasonable viewer, the website appeared in its content, set up and practical appearance to be all about fitness goals and a user’s measures of activity, exercise, weight and nutrition. I do not accept Jack Owens’ characterisation of the website as a “membership driven health service” providing “online health tools and content”. Rather, as his father admitted, the website delivered “free online fitness nutrition programs and tools” (see [76] above).
As to (2): There was no evidence of what the heart rate tool was beyond the website telling the viewer “Enter your resting heart rate to gain information on your heart rate training zones” (emphasis added). This indicated that the purpose of the tool was to do with what the member might consider in his or her training for fitness purposes. The use of the app in activation of public space, was a reference to using it together with the totems to measure the distance the member had covered on any particular day or days.
As to (3), (4) and (5): As I have explained, the totems (described as “fitness totems”) were used, sometimes together with the app, for the purpose of exercise. The YouTube video discussed an online system that used fitness totems, the amount of exercise and what users ate, to work out how much they should eat and what exercise they needed to do to burn off the calories that they consumed. Moreover, the letter from the Town of Cambridge cannot be a use of a trade mark by Global, since Global was the recipient of the letter, not its author.
As to (6): The booklet was, again, concerned with nutrition and exercise.
As to (7): The tweet dealt with fitness and nutrition (to the extent that it referred to calories).
Global’s suggested uses of the 184 mark in the second period
Global relied on the fact that because Kevin Owens was the managing director of both Calico Pty Ltd and Global, by virtue of his holding that position, any use by each of the 184 mark, was a use by him as its registered owner. It also argued that, for the purposes of s 100(3)(b), it would be reasonable in all the circumstances to treat use by Calico Pty Ltd as use by Kevin Owens as registered owner.
Global argued that the following were instances of use of the 184 mark during the second period namely:
(1)The formation of “partnerships” between Global, representing “the Calico Business” and three local government councils as each constituting a separate use. Global described those uses in respect of the Towns of:
(a)Cambridge, from May 2011, as a use in relation to fitness totems in local parklands promoted through local newspapers;
(b)Kwinana, from August 2011, as a use, in Kevin Owens’ words, “in relation to the promotion of healthy living and improved community futures”; and
(c)Cockburn, from September 2011, as a use in relation to the installation of fitness totems, promoted through local media and online.
(2)The formation of a “partnership” between the “Calico Business” and Diabetes Australia, that Kevin Owens described as being “for medical research and health promotion objectives”. Global relied on a statement by Michael Goodman, Diabetes Australia’s National Fundraising Director, in a letter he wrote to Kevin Owens on 30 July 2013:
Diabetes Australia can enhance the health messages provided by Calico, linking physical activity to the prevention of type 2 diabetes, as well as cardiovascular disease and stroke. (emphasis added)
(3)The provision of health assessment tools via the website, since August 2009, that according to Jack Owens, as summarised in Global’s closing written submissions:
can assist with diagnosis of weight-related health issues, setting of treatment plans, goals and objectives including provision of ‘heart rate tool’ and ‘daily targets based on your goal and health report diagnosis’. (emphasis added)
(4)The provision, on the website, according to Jack Owens, of information and advice in relation to health and fitness, three examples of which, he said, were:
(a)in February 2012, providing an answer to a user’s question about her fitness program;
(b)in March 2012, posting an article headed “Salt Shaken” by a “Glen Cardwell, Calico’s Nutritionist”; and
(c)in March 2012, posting an article headed “How exercise protects you from diabetes” by “David Beard, Calico’s exercise physiologist”.
(5)The provision of individualised health reports via the website that, according to Jack Owens, included “Measurements History”, “Health Reports History” (including BMI, blood pressure, heart rate and body fat percentage information) and “Goals History”.
(6)From 15 July 2011, the provision on Global’s Twitter account of information and advice, according to Jack Owens, in relation to health and fitness, on topics that “primarily address diet, nutrition, exercise and fitness and extend to health related topics such as ‘the link between alcohol and cancer’”.
(7)From 17 August 2011, the provision of information via Facebook, according to Jack Owens, of advice in relation to health and fitness.
Use of the s 184 mark in the second period – consideration
Before considering each of the instances of use on which Global relied, it is important to appreciate that, throughout the second period, Calico Pty Ltd was the assignee of the 184 mark and Global was the exclusive licensee. The terms of the licence gave Global, not Kevin Owens, full control of the 184 mark subject to conditions, including that Global would:
·clearly indicate in all its correspondence and dealings that it was acting as Calico Pty Ltd’s licensee (cl 4(a)(iii)); and
·observe any directions or instructions that Calico Pty Ltd might give it (cl 4(a)(v)).
There was no evidence:
·of Global ever complying with its obligation, under cl 4(a)(iii) of the licence, to indicate clearly or at all that Global was acting as the licensee of Calico Pty Ltd in all Global’s correspondence and other dealings relating to the 184 mark or any other aspect and the Calico System (as defined in the assignment of the licence);
·of Calico Pty Ltd ever giving any direction or instruction under cl 4(a)(v); or
·of Calico Pty Ltd authorising Global to use the 184 mark.
The terms of the assignment precluded Kevin Owens, after its execution, from using the 184 mark as registered owner. That was because he had assigned all his rights to Calico Pty Ltd and, in turn, by granting the licence, it had allowed Global to decide how it wished to use or deploy the 184 mark.
In those circumstances, on 19 July 2011 Kevin Owens made a deliberate decision to enter into the assignment and so to give up his control of the 184 mark, as registered owner, to Calico Pty Ltd. Thereafter, Calico Pty Ltd exercised its own rights to enter into the licence with Global. These interpositions between Kevin Owens and the person with the right to use the 184 mark, had the legal effect of distancing him from exercising, as registered owner, any active or practical quality or other control over the services in relation to which the 184 mark was used.
Global accepted, in its final address, that there was no evidence of any act or use by Kevin Owens or Calico Pty Ltd in the second period that exhibited any actual instance of control by either of them in relation to Global’s use of the 184 mark from time to time: Lodestar 244 FCR at 580-581 [95]-[98]. Rather, Global relied on Kevin Owens’ status as Calico Pty Ltd’s managing director as the basis on which it could be inferred that Calico Pty Ltd, through him and the licence, controlled Global’s use of the 184 mark.
I reject that argument. Global could not identify any act or any other action that occurred in the second period in which Kevin Owens did anything that amounted to use by him or to the exercise by him of control over the use of the 184 mark. A use by Calico Pty Ltd was not a use by Kevin Owens as registered owner and a use by Global was not a use by Calico Pty Ltd as assignee. Calico Pty Ltd had a distinct legal personality from that of its members and officers, including Kevin Owens: Lodestar 244 FCR at 581 [97] (see [30]-[32] above); see too Salomon v A Salomon & Co Ltd [1897] AC 22. The mere facts that Kevin Owens was the managing director of both corporations and owned 50% of the issued capital of Calico Pty Ltd, and that in turn, controlled Global, did not establish that he exercised actual control of any use of the 184 mark in the second period. Moreover, the differences in shareholdings in each of Global and Calico Pty Ltd demonstrated that neither was wholly the creature of, or completely controlled by, Kevin Owens. The two corporations had other shareholders who were not mere nominees or bare trustees for him.
By entering into the licence, Calico Pty Ltd interposed Global between it and Kevin Owens in the control of the 184 mark. Nothing in the arrangements among Kevin Owens, Calico Pty Ltd and Global during the second period, provided a basis, for the purposes of s 100(3)(b), on which it would be reasonable, in all the circumstances, to treat any use of the 184 mark by the exclusive licensee, Global, as first, a use per se by the assignee, Calico Pty Ltd, or, secondly, a use by Kevin Owens. Neither corporation was supervised, under the respective contract (the assignment and the licence), in the exploitation of the 184 mark as it saw fit, free of direction of, or control by, Kevin Owens.
I do not accept as accurate Jack Owens’ assertions as to the character of the uses in examples (3)-(6) in respect of the second period. Jack Owens was an unsatisfactory witness. He fabricated results, purporting to be taken as screenshots on a particular date by the wayback machine, by falsifying the dates of the posting of the content on the website. He was prone to say in evidence what he thought would advance Global’s case, regardless of its truth or accuracy. I formed the view that his evidence could not be relied on unless it was either not in issue or corroborated independently of any material he produced to support it.
Another example of Jack Owens’ conduct that was calculated to support Global’s (subsequently abandoned) case that it provided medical services, was his alteration, after the launch of Calico LLC, of the title of David Beard, as now being “Calico’s Exercise Physiologist and Healthy Aging Expert”, that he effected on the website. The website included posts of articles made before September 2013 that credited Mr Beard with being simply “Calico’s exercise physiologist”. He gave this evidence about how Mr Beard’s new title came about:
MR HENNESSY: Are you suggesting to his Honour that that name change is purely coincidental insofar as it appears after September 2013 when Calico LLC launched? --- I don’t know when that was changed. I acknowledge that it was changed after Calico LLC and there – I’m sure that there was something in there to ensure that David’s expertise were recognised.
HIS HONOUR: Why did it change after Calico LLC became known to you? Why did it change after? --- I can’t recall why, but I would imagine it would be because we wanted his expertise to be recognised. He’s primarily our exercise physiologist, but he has he has always had this expertise in healthy aging, and I think it was just we would have wanted that to ensure that it wasn’t drowned out or forgotten or missed out. (emphasis added)
I do not believe Jack Owens’ evidence that Mr Beard was ever, or ever properly called, a healthy aging expert for Global. Jack Owens contrived to add that description after 19 September 2013 in order to bolster Global’s contrived case that it provided medical services with a view to blocking Calico LLC from being able to register its trade mark without coming to commercial terms with Global and Calico Pty Ltd.
The essential character of the uses on which Global relied as uses of the 184 mark in the second period was that of a connection with fitness, exercise and nutrition. As Kevin Owens described it, accurately, it was “an outdoor and online fitness system” (see [76] above). I reject Global’s argument that any of the uses on which it relied were uses of the 184 mark during the second period: cf. Optical 88 197 FCR at 77 [22]-[23].
As to (1): Each of the “partnerships” with the local government councils concerned the use of the totems in local parks or other public land for fitness. Global relied on Kevin Owens’ evidence that, in 2013, Kwinana and the Calico business promoted an event called “Petscapade” in which pet owners walked their pets for, what Kevin Owens asserted, was “the health of the pet and the owner”. A poster promoting the event depicted a totem with the branding “Calico” and “Petscapade”. I do not accept Kevin Owens’ characterisation of this event as being for health, as opposed to being for fitness or exercise. Eating an apple a day, may, as the children’s rhyme goes, keep the doctor away, but a vendor of apples could not suggest that the application of his, her or its brand in connection with the sale of apples, was a use of the brand as a trade mark in respect of “medical services” within the meaning of that expression in class 44.
The use of the brand “Calico” in each of the situations in which Global worked with, or with the permission of, the three local government councils, would signify to an ordinary reasonable person no greater connection with the provision of services than that totems and the app were associated with fitness and exercise.
As to (2): I found Kevin Owens to be an unsatisfactory witness. He exaggerated and misrepresented what he and Global had done, relevantly, in relation to the 184 mark. For example, he falsely said in his first affidavit that in about June 2013, Global had entered into a “partnership” with Diabetes Australia for medical research and health promotion objectives. In fact, there was no partnership between Global and Diabetes Australia for any medical research. The proposed “partnership” involved only both organisations utilising, as Mr Goodman wrote to Kevin Owens on 30 July 2013, “the opportunity to increase awareness of our brands and encourage Australians to engage with physical activity through using the Calico system”. Kevin Owens emailed a reply on the same day saying that he was “looking forward to working up a draft promotional plan” for an intended launch in November 2013, that did not proceed after the September 2013 launch of Calico LLC.
The relationship between Diabetes Australia and Global did not involve the promotion of the word “Calico” as a trade mark to any extent beyond its association with physical activity. That use of the 184 mark did not distinguish any services that Calico Pty Ltd or Kevin Owens provided in the course of trade as being health or medical services, which, obviously, were activities of Diabetes Australia. Mr Goodman’s 30 July 2013 letter was, of course, not a use of the 184 mark by its registered owner or unregistered assignee or someone authorised by either to use it. Again, Mr Goodman’s statement that the proposed cross-promotional activities could “enhance the health messages provided by Calico” was no more than a statement of the obvious, namely, that physical exercise is healthy, as is evident from the phrase “linking physical activity to the prevention of type 2 diabetes” that Mr Goodman added immediately after his reference to the “health messages”.
As to (3): There was no diagnosis performed by or on the website, nor did it deal with treatment plans or health issues. As I explained at [41]-[44] above, the website simply calculated a person’s BMI or nutrition plan from the data entered by the member and publicly available information that Global could not claim to have originated. The purpose for which the website tool was used, and its output, was to determine an exercise program for the member based on his or her data entries. And, as I found at [44] above, the only goal that a member could specify using the website was one related to his or her weight, which provided the content for the exercise and any dietary program.
As to (4): None of the examples went beyond a use in relation to fitness, exercise and or nutrition. The February 2012 questioner inquired about how she could “get more active”. Jack Owens answered by introducing himself as “Calico’s Fitness advisor”. He wrote that “without knowing more about you, I can only give general information” which he then did concerning how to increase, progressively, the distance one could run. Kevin Owens added his own encouraging comment and then stated “David Beard our fitness expert is fantastic at helping people get started”. The two posted articles concerned fitness, exercise and nutrition. The second article stated “Exercise is a critical element to fight diabetes”. A note on each of the two articles stated that it had been “posted…11th Nov 2011 05.15pm”. However, the two articles were first posted respectively on the website on 17 and 18 March 2012, as the evidence of Christopher Butler, office manager of the Internet Archive which created and operates the wayback machine, established. Mr Butler’s evidence also showed that the ‘Salt shaken’ article was first posted to the nutrition page of the website and the article about diabetes to the fitness blog page.
Ms Eade also exhibited to her affidavit a screenshot taken on 28 July 2014 of what was then the last archived version of the website found on the wayback machine. That version was dated 13 January 2013 (which she incorrectly said was dated 13 July 2013) and it did not include any “Health and Prevention” tab or link. That version also included statements such as “we love healthy communities!” and “choose Calico for your next corporate health program”, in, what I find, was the context of presenting a fitness and nutrition program. Global only began posting articles about medicine, health and ageing after the launch of Calico LLC, as the evidence of Ms Eade established. She exhibited copies of the Global’s Facebook and Twitter pages that revealed that there had been no use of the words “medicine” and “ageing” on either platform prior to 7 October 2013. The addition of those articles and the use of the terms “medicine” and “ageing” were, in context, a contrivance to create the false impression that Global was the source or origin of services for the provision of or connected to medical services.
As to (5): As I explained at [41]-[44], the information that the website provided was in the form of a repetition of data entered by the user or member and an output being a standard BMI measurement. This use related to the provision of information about exercise fitness and nutrition.
As to (6): The Twitter account postings also related to exercise, fitness and nutrition. For example, a tweet on 27 March 2012 stated “New ad campaign aimed at highlighting the link between alcohol and cancer. No more than two drinks per sitting in …”
As to (7): The Facebook postings similarly related to exercise, fitness and nutrition. For example, on 22 March 2012, there was a post headed “Look after the soles of your feet” with advice from a podiatrist, and on 22 May 2012 a post, being a republication of an article from The Washington Post, headed “7 bad foods that are actually good for you”.
Use of the 184 mark – conclusion
For the reasons above, I am not satisfied that Global established that it used the 184 mark during the three year period ending on 15 April 2014 in relation to or “regarding health” so as to fall within the class of “medical services” within class 44. On the evidence, the use of the 184 mark was confined to the provision of advice and information regarding exercise, fitness and nutrition in relation to an exercise, fitness and nutrition website, mobile software application and totems used as distance indicators.
None of Kevin Owens, Calico Pty Ltd or Global used the 184 mark in the first or second period in relation to research services at all. Moreover, they only began deploying references, and material relating, to medicine and ageing on social media and the website after 19 September 2013. I find that those references were not genuine commercial uses but were included to seek to support an attempt by Global to bring pressure on Calico LLC to enter into commercial arrangements with Global before it would permit Calico LLC to register, or operate using, the CALICO mark. Global engaged in this actively in order to obtain benefits derived from Global’s colourable and false assertion of it being a source or provider of services that it did not provide.
The excessive scope issue – Global’s submissions
Global argued that the proposed services reflected the uses to which Global had put the 184 mark. It contended that it still needed the protection of registration in class 44 for the proposed services in addition to its (unopposed) registration in class 41 because its services protected by the latter registration were not coextensive with the proposed services in class 44. It submitted that its class 41 registration related to “education, provision of training, entertainment, sporting and cultural activities” and particular inclusions, such as “health club and fitness services and advice regarding exercise”, but those services did not include information or advice relating to nutrition or diet. Global argued that it had legitimate trade mark rights in respect of its class 44 registration of the 184 mark and was entitled to exercise them in full, including by opposing the registration of the CALICO mark. It contended that its position was similar to that of the successful unregistered assignee in Paragon Shoes Pty Ltd v Paragini Distributors (NSW) Pty Ltd (1988) 13 IPR 323 at 344-345.
The excessive scope issue – consideration
As I have found above, Global failed to prove that, during the first or second periods, first, Kevin Owens as registered owner, or Calico Pty Ltd as unregistered assignee, had used the 184 mark at all and, secondly, any such use as Global relied on was a use of the 184 mark in respect of the proposed services, or otherwise.
In those circumstances, Global seeks the exercise, in its favour, of the discretion under s 100(3)(b)(ii) to treat one or more of the suggested uses of the 184 mark as a use in relation to the proposed services by the registered owner, Kevin Owens or by an authorised user (assuming that I granted leave to Global to narrow the services in class 44 for which it is registered).
I reject Global’s argument. In Paragon Shoes 13 IPR at 343-345, there were two unregistered assignments of a trade mark that had occurred during business reorganisations within a group controlled by the one family under which ownership of the trade mark passed. The registered owner had been dissolved 10 years before the hearing but the second assignee had the same name as the registered owner. The family had conducted a substantial business for over 50 years through the registered owner and, later, each assignee using the trade mark as a badge of origin for the relevant goods.
Woodward J held that, despite the failures to register the two assignments, the current assignee had established that the discretion, under the earlier legislation, not to remove the trade mark for non-use should be exercised in its favour. He considered as relevant, first, the public interest, and whether anyone had been, or would be, deceived by the continuing registration of the trade mark. He noted that the public has an interest in the preservation of an established trade mark. Secondly, he gave weight to the unimpeached title to the trade mark and its continuous exercise in good faith by the person entitled to it. Thirdly, Woodward J said that if there were no adverse effect on the public interest and the person seeking the favourable exercise of the discretion showed a good title and that it had engaged in such use in good faith, then it was possible to overlook technicalities or defects in legal formalities (13 IPR at 345).
I am of opinion that, since any use on which Global relied was not a use of the 184 mark by the registered owner, Kevin Owens, or his assignee, Calico Pty Ltd, or its licensee, Global, it is not open to exercise the discretion under s 100(3)(b)(ii). One purpose of the grant of the discretion is to protect the interest of the unregistered assignee or owner and the registered owner in retaining the registration of a trade mark, if the conditions in s 100(3)(b)(i) or (ii) are established; namely that the opponent (here, Global, now being the registered owner) establishes that during the three year period, Kevin Owens as registered owner, the unregistered assignee, Calico Pty Ltd, or Global as an authorised user, used, or actually controlled the use of, the 184 mark in good faith in relation, relevantly, to the proposed services.
Importantly, s 8 does not refer to the registered owner exercising over, or having control of, the trade mark. Rather, s 8 deals with the concept of control by the “owner”, an expression that is not defined in the Act. When, as here, an absolute assignment transfers the whole of the beneficial interest in a trade mark to an assignee, the expression “owner” as used in s 8, is apt to apply to the unregistered assignee. After all, the effect in law of an immediate and absolute assignment by deed of an existing proprietary right is to transfer the ownership of the right to the assignee: cf. Norman v Federal Commissioner of Taxation (1963) 109 CLR 9 at 26, per Windeyer J.
The effect of the assignment was to make over, once for all, the beneficial interest in the 184 mark to Calico Pty Ltd. It could compel Kevin Owens to execute any documents necessary to cause the Registrar to register it as registered owner of the 184 mark (as cl 5 of the assignment expressly provided). In that context, Calico Pty Ltd could authorise and control, as owner within the meaning of s 8, any use by Global that otherwise met the requirements of an authorised use under s 8. Any such authorised use by Global would be a use by Calico Pty Ltd as unregistered assignee but not a use by the registered owner. Crucially, s 100(3) applies to non-use by the registered owner (or an authorised user of the registered owner). However, one purpose of the Parliament creating the discretion in s 100(3) was to enable an unregistered assignee to satisfy the Registrar or a court that it is reasonable, in all of the circumstances, to treat the assignee’s use as a use of the trade mark, as occurred in Paragon Shoes 13 IPR at 344‑345. This construction of ss 8 and 100(3)(b) gives effect to the evident intention of the Act to protect the integrity of the Register by confining uses of a trade mark to ones that use it as a badge of origin of goods or services under the control of the registered owner or unregistered assignee.
In any event, on the evidence, neither Kevin Owens, nor Calico Pty Ltd, exercised any actual or other control over Global’s use of the 184 mark at any time during the first or second periods.
Once Global became aware of the launch of Calico LLC, some of its actions directed uses of the 184 mark that were not uses in good faith, including its actions in seeking to expand without a legitimate basis the range of services in class 44 for which the 184 mark was used as a trade mark to overlap those of the CALICO mark, as I have found.
The proposed services are not services within class 44. It would not conduce to the maintenance of the integrity of the Register to grant Global’s application to amend the range of services to the proposed services to limit them in class 44 to the proposed services (and so to narrow the original scope of the 184 mark’s registration in class 44). That is because none of the proposed services accurately reflect a use (or a bona fide use) of the 184 mark by Global in respect of services in class 44 during the three years before Calico LLC filed its removal application.
The proposed services do not represent any use of the 184 mark, during the three years ending 15 April 2014, in the course of trade by any person with a proprietary interest in the 184 mark as a sign used to distinguish Global’s services dealt with or provided by Kevin Owens or Calico Pty Ltd from services of any other person.
For the reasons above, I am of opinion that it is not reasonable, in all the circumstances, to treat the use of the 184 mark during any of the first and second periods as a use by Kevin Owens (in the first period) or Calico Pty Ltd, as assignee (in the second period) (either by themselves or by Global as an authorised user) in relation to any of the proposed services as a use by the registered owner for the purpose of s 100(3)(b)(ii).
The discretion issue – Global’s submissions
Global argued, in its opening written submissions (when the scope of the class 44 services was wider than those in the proposed services) that given its “extensive use” of the 184 mark, “its removal in relation to similar health-related services is likely to lead to confusion” and that there was evidence of actual confusion at the time of the launch of Calico LLC. Global contended that there was no evidence supporting Calico LLC’s argument that Global had come out of liquidation for the “sole purpose of trying to force Google Inc to purchase its trade mark or to seek damages in trade mark infringement proceedings”.
Global accepted, in its closing written submissions, that both Kevin Owens and Jack Owens “were, at times, in both business dealings after the launch of Calico LLC and in their evidence, prone to inaccuracy and exaggeration”. It submitted that while this conduct was “regrettable”, it was excusable because of the pressure that they were under both financially and because of a perceived commercial threat from a large, very well resourced potential competitor. It argued that the overstatements and inaccuracies in Jack Owens’ email dated 2 April 2014 to Mr Liburd, while “not commendable”, should be seen in context as an attempt to attract Google’s attention to that it might reengage in discussions, rather than as a serious attempt to mislead it.
The discretion issue – consideration
I am of opinion that Global’s conduct after the launch of Calico LLC was calculated, deliberately, to create confusion and to interfere with Calico LLC’s bona fine use of the CALICO mark. The opening submission that Global propounded, namely that given its use of the 184 mark was in relation to similar health-related services to those for which Calico LLC sought registration of the CALICO mark, was an admission that must redound on Global. It, rather than Calico LLC, sought to generate the confusion by claiming or feigning the provision of services that Global did not actually provide in order to create, what it hoped would be, a situation in which Calico LLC would be forced to come to terms with Global. Moreover, Global’s disingenuous, and indeed dishonest, behaviour continued during this appeal.
Section 101(3) can only apply because Calico LLC has established the grounds for removal of the registration in class 44 of the 184 mark. The section creates a discretion to allow the trade mark to remain registered despite the success of the party applying for its removal in proving its case. But, the Court will only exercise its discretion under s 101(3) if the registered owner or assignee establishes, as the section requires, that it is reasonable to do so in its favour.
Thus, the question under s 101(3) is whether it is reasonable not to remove the trade mark despite its non-use or lack of use in good faith: Austin Nichols & Company Inc v Lodestar Anstalt (No 1) (2012) 202 FCR 490 at 496-497 [28], per Jacobson, Yates and Katzmann JJ. They said that authorities on earlier legislation were not relevant to identifying the test for s 101(3) albeit that considerations that those cases identified may still be relevant to be taken into account in exercising the current discretion (202 FCR at 496-497 [28], 497-498 [35]-[38]). They held that the discretion was a broad one, limited only by the subject-matter, scope and purpose of the Act, and in particular Pt 9 (in which ss 92, 100 and 101 are found) (at 497 [35]). Their Honours continued (at 498 [38]):
The purpose of Pt 9 is to provide for the removal of unused trade marks from the Register. In that regard it is plainly designed to protect the integrity of the Register, and in this way, the interests of the consumer. At the same time, however, it seeks to accommodate, where reasonable, the interests of the registered trade mark owners. Otherwise, there would be no need for the discretion. (emphasis added)
Jacobson, Yates and Katzmann JJ held that for the discretion under s 101(3) to be exercised in favour of the registered owner, that person had the onus of positively satisfying the Court that it was reasonable that the trade mark should not be removed: Austin Nichols 202 FCR at 500 [44]. That placed the onus on Global to establish that it is reasonable to leave the registration of the 184 mark in class 44 in place, under s 101(3), in circumstances where it has failed to prove its case under s 100(3)(b) to rebut Calico LLC’s allegation of non-use.
I reject Global’s argument that it would be reasonable to exercise the discretion not to remove the 184 mark from class 44 in the Register. First, the three year period of non-use included over six months after the launch of Calico LLC. During that six month period, Kevin Owens, Jack Owens, Calico Pty Ltd and Global sought to, and did, use the 184 mark otherwise than in good faith for the purpose of creating the potential for confusion between it and the CALICO mark in order to pressure Google and Calico LLC to arrive at some commercial agreement for Global’s benefit. That conduct created the real risk of future repetition and (as Global’s case in opening this appeal sought to prove) the potential for confusion between the two trade marks, which does not now exist. This is because of Global’s non-use of the 184 mark in respect of services in class 44 in the three year period and the fact that Global has never provided research or other services similar to the bona fide uses to which Calico LLC has put, and intends to put, the CALICO mark.
Secondly, there was a lack of integrity of Kevin Owens and Jack Owens in their dealings with the 184 mark after the launch of Calico LLC and in their evidence. There was also no evidence from Global’s newly controlling shareholder, Mr Leach, about his intentions, beyond his funding and, I infer, control of the conduct of Global’s appeal. I infer that had Mr Leach given evidence it would not have assisted Global’s case on any issue. That reinforces my concern that allowing the 184 mark to remain registered in class 44 would permit Global to engage in further tactics and behaviour calculated to create confusion and to seek, again, to pressure Calico LLC and Google into dealing commercially with Global so as to remove any possible threat of Global bringing infringement proceedings based on the continuing registration of the 184 mark in class 44.
Thirdly, since Global did not use the 184 mark in relation to the proposed services in the three year period (or use it in good faith in the period after the launch of Calico LLC), there is little to no chance of it sustaining detriment or damage were its registration in class 44 removed. Global can use or continue to use the 184 mark in class 41 in which it is registered. The protection of the integrity of the Register would not be served by allowing Global to retain the registration of the 184 mark in class 44.
It is not in the public interest to allow Global to be registered as owner of the 184 mark in respect of the proposed services in class 44. For these reasons, Global has not persuaded me that it is reasonable that the registration of the 184 mark in class 44 should remain in place.
Conclusion
For the reasons above, I will dismiss the appeal with costs. I also refuse to allow the amendment of the proposed services because it would be futile to do so.
I certify that the preceding one hundred and thirty-two (132) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Rares. Associate:
Dated: 21 December 2018.
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