Canon Kabushiki Kaisha v Robert James Brook and Rachel Brook trading as The Cannon Watch Company

[1996] FCA 756

CATCHWORDS

INTELLECTUAL PROPERTY - TRADE MARKS - Application under s 49(1) of the Trade Marks Act 1955 (Cth) for appeal of the decision of the delegate of the Registrar of Trade Marks - delegate's decision dismissed opposition proceedings of applicant - Whether respondents have established proprietorship of the mark for which they have applied - s 40 Trade Marks Act - authorities discussed - whether applicant has a superior claim to proprietorship - whether the respondents and applicant's goods are goods of the same description - s 33(1) Trade Marks Act - respondents have established sufficient use by them or predecessors in business - goods (that is watches and clocks or calculators with clocks) are not goods of the same description - Similarity of marks under s 33(1) Trade Marks Act - pronunciation identical - marks identical in substance - whether use of mark by applicants in relation to its goods and by the respondents in relation to their goods is likely to deceive or cause confusion among a substantial number of persons - question of fact - whether the respondents can establish prior continuous use within the meaning of s 34(2) Trade Marks Act - whether applicant need establish "blameworthy conduct" under s 28(d) Trade Marks Act - authorities discussed - whether "blameworthy conduct" is required in addition to likely deception or confusion in opposition proceedings under s 28 - decision in New South WalesDairy Corporations v Murray Goulburn Co-operative Company Limited (1990) 171 CLR 363 considered.

Trade Mark Acts 1955 (Cth) ss 51, 49(1), 40, 34(2), 33(1), 28(a) and 28(d)

Trade Mark Regulations (Cth) Schedule 4, class 14

Mooregate Tobacco Ltd v Philip Morris Ltd (No 2) (1984)
156 CLR 414, considered

The Shell Co of Australia Ltd v Rohm and Haas Co (1949)
78 CLR 601, applied

Re Hick's Trade Mark (1897) 22 VLR 636, cited

"Astronaut" Trade Mark (1972) RPC 655, applied

The Shell Company (Australia) Ltd v Esso Standard Oil (Australia) Ltd (1961) 109 CLR 407, applied

Cordova v Vick Chemical Co (1951) 68 RPC 103, cited

McWilliams Wines Pty Ltd v McDonald's System of Australia Pty Ltd (1980) 49 FLR 455, cited

Southern Cross Refrigeration Company v Toowoomba Foundry Pty Ltd (1954) 91 CLR 592, cited

John Crowther & Sons (Milnsbridge) Ltd's Appn (1948)
65 RPC 369, considered

Smith Bartlett & Co v British Pure Oil Grease & Carbide Co Ltd (1934) 51 RPC 157, cited

New South Wales Dairy Corporation v Murray Goulburn Co-operative Company Limited (1990) 171 CLR 363, distinguished, (1990) 24 FCR 370, applied

Australian Securities Commission v Marlborough Gold Mines Ltd (1993) 177 CLR 485, applied

Nike International Ltd v Campomar Sociedad Limitada (unreported, Sheppard J, 8 August 1996), cited

Titan Manufacturing Company Pty Ltd v John Terence Coyne (1991) 22 IPR 613, cited

Unidrive Pty Ltd v Dana Corporation (1995) 32 IPR 155, cited

Johnson & Johnson v Kalnin (1993) 26 IPR 435, cited

Shanahan, D.R.; Australian Law of Trade Marks and Passing Off, 1990 (2nd ed) Law Book Co Ltd Australia

CANON KABUSHIKI KAISHA v
ROBERT JAMES BROOK AND RACHEL BROOK trading as
THE CANNON WATCH COMPANY

No NG 670 OF 1994

Tamberlin J
Sydney
28 August 1996

IN THE FEDERAL COURT OF AUSTRALIA )                 
NEW SOUTH WALES DISTRICT REGISTRY )    No. NG 670 of 1994
GENERAL DIVISION                 )

BETWEEN:          CANON KABUSHIKI KAISHA
  Applicant

AND:              ROBERT JAMES BROOK and
  RACHEL BROOK trading as
  THE CANNON WATCH COMPANY
  Respondents

CORAM:       TAMBERLIN J
PLACE:       SYDNEY
DATED:       28 AUGUST 1996

MINUTE OF ORDERS

THE COURT ORDERS THAT:

1. The application is dismissed

1. The applicant pay the costs of the respondents.

NOTE:     Settlement and entry of orders is dealt with in accordance with Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA )
NEW SOUTH WALES DISTRICT REGISTRY )    No. NG 670 of 1994
GENERAL DIVISION                 )

BETWEEN:          CANON KABUSHIKI KAISHA
  Applicant

AND:              ROBERT JAMES BROOK and
  RACHEL BROOK trading as
  THE CANNON WATCH COMPANY
  Respondents

CORAM:       TAMBERLIN J
PLACE:       SYDNEY
DATED:       28 AUGUST 1996

REASONS FOR JUDGMENT

TAMBERLIN J:

The applicant, Canon Kabushiki Kaisha ("Canon") appeals under s49(1) of the Trade Marks Act 1955 (Cth) ("the Act") from a decision of a delegate of the Registrar of Trade Marks, given on 12 September 1994, dismissing opposition proceedings instituted by the applicant.

An application was made on 10 June 1987 to register the word "CANNON" as a trade mark in respect of watches in Class 14 of Schedule 4 to the Trade Mark Regulations (Cth) ("the Regulations").  The appeal is by way of re-hearing, wherein this Court, exercises de novo the power of the Registrar, under s51 of the Act.

Although the Act has been repealed by s5 of the Trade Marks Act 1995 (Cth), ("the 1995 Act"), s241 of the 1995 Act has the effect that the 1955 Act continues to apply in relation to the present application.

The issues raised in these proceedings are as follows:

(a)Proprietorship - whether the respondents have established that they are proprietors of the mark for which they have applied (s40 of the Act).

(b)Similarity - whether the trade mark "CANNON" is substantially identical with or deceptively similar to the trade mark "Canon" and whether "clocks with calculators" and "watches" come within the description "the same goods" or "goods of the same description" (s33(1) of the Act).

(c)Deception or confusion - whether the mark "CANNON," if used in a normal and fair manner in connection with goods covered by the proposed registration is reasonably likely to cause deception or confusion among a substantial number of persons, having regard to the reputation acquired by the name "Canon" (s28 of the Act).

(d)Blameworthy conduct - whether the applicant must show in addition to the likelihood of deception or confusion that the mark "CANNON" would otherwise not be entitled to protection in a court of justice (s28(d) of the Act).

(e)Continuous user - whether the respondents by themselves or their predecessors in business continuously used the mark "CANNON" before the date of registration, whichever is the earlier, of the mark "Canon", so that the Registrar is prohibited from refusing to register the mark "CANNON" (s34(2) of the Act).

Background

Canon was originally incorporated under the name Seiki Optical Industries Inc. in 1934. In 1935 it adopted "Canon" as a trade mark and its "house mark". The applicant then carried on business as a manufacturer and supplier of cameras which have been promoted and supplied under the trade mark. Over the years its business expanded to include the manufacture and supply throughout the world of a large number of other products. 

In 1947 Canon changed its name to Canon Camera Co. Inc. In 1950, Canon commenced the regular export of Canon brand cameras to many countries and began to sell its cameras in Australia under that mark through an authorised distributor.

In 1956 Canon introduced the logo form of its house mark.

In November 1960 there is evidence that a Mr Holecek advertised in a business directory, described as the "Blinman's Australian Jewellery Buyers' Directory" in respect of "CANNON" watches.

In 1967 Canon commenced sales of "Canon" brand calculators and micrographic equipment in Australia and one year later it changed its name to its present corporate name, Canon Kabushiki Kaisha.

On 23 April 1964, a Mr Hoffman applied for registration of a business name "Atlantic Trading Company" ("ATC"), giving its principal place of business as 29 Bray Street, Spit Junction, in respect of the business the nature of which was manufacturing, importing and wholesaling. It is not clear whether that business related to watches. In July 1966 a Statement of Change in Persons conducting the ATC business, disclosed that Birmingham Company Pty Limited ("Birmingham"), carried on the business. This statement was attested by Mr Holecek, as director of Birmingham and by Mr Hoffman.

In 1967 and 1970 there were renewals of registration of the business name ATC. The forms were signed by Holecek as director. The 1967 renewal describes the nature of the business as being "Wholesalers - watches".

In 1970-1972 Mr Robert Brook (Mr Brook), the first respondent sold CANNON and other brands of wrist watches door to door. He purchased the watches from Holecek of ATC.

In the period 1972-1983 Mr Brook from time to time sold watches, including CANNON watches bought from Holecek, at Paddy's Markets. 

In the period 1970-1974, a Ms Svoboda was employed by Mr Horwatt as a watchmaker's assistant and from 1974 to 1978 she was employed by Holecek. Throughout the period 1970-1978 she stamped the name "CANNON" onto thousands of watch faces while assembling watches imported by Holecek.

There is in evidence, an advertisement of 14 December 1978 for "CANNON" watches, which were sold by Harris Scarfe.

On 9 October 1980, there was an advertisement for "CANNON" watches.  In May 1982 Birmingham ordered 2,000 CANNON watches (described as "Ladies Analogue Quartz Calendar watches") from a company in Hong Kong.

In 1983, a company Mayvic Pty Ltd of which Mr Brook was a director, sold CANNON watches to retail stores and direct to the public through retail stores known as Wizard Variety Stores. In the period, 1985-1988, there are purchase orders  which show the purchase of CANNON watches from a company Hennan Holding Pty Limited ("Hennan"), of which the respondents were the sole directors. In October 1984 Hennan acquired the business name ATC and a stock of CANNON watches.

In 1973 a company Repco Canon Pty Ltd was incorporated and appointed by Canon to sell and service in Australia Canon brand photocopiers. Distribution also commenced in Australia of some promotional items, including clocks.

In 1976 Repco Canon Pty Limited changed its name to Canon Copier Australia Pty Ltd.

In 1978 Canon Australia Pty Limited was incorporated by Canon to sell and service in Australia, Canon brand photographic and business equipment, including photo and video products, typewriters, calculators, computers, micrographic equipment, facsimile machines and printers.

During the period 1973 through 1985 the registration of the name ATC was renewed.

During the period 1980 through 1983 the total sales of Canon brand products in Australia increased from $31.1 million to $70.8 million.

On 10 January 1983 a company known as Dunbosa Pty Ltd ("Dunbosa") was registered with Mr & Mrs Brook shown as directors.

In the period December 1982 through January 1983, there is evidence that the business of ATC was purchased by Brook, on behalf of Dunbosa. The purchase included a right to continue trading from the business premises.

On 10 January 1983, Dunbosa commenced trading as ATC from those premises. Dunbosa then changed its name to Bob J Brook Wholesale Warehouse Pty Ltd ("BJB Warehouse") on 9 February 1983. On 6 June 1983 there was a notification of the change of name from Dunbosa to BJB Wholesale, which was executed by Mr Brook.

In 1983 there is evidence that Canon sold a calculator product with a clock function. This was described as a "calculator product". There was no separate category of clocks sold by Canon.

In 1984 BJB Wholesale went into liquidation and on 10 October 1984 Hennan was incorporated with Mr & Mrs Brook as sole directors and shareholders. In October 1984 Hennan acquired the business name ATC and stock of CANNON watches at an auction of assets of BJB Wholesale.

On 1 January 1985 the business premises of ATC moved to Bondi.

On 16 April 1985 there was a renewal of the name ATC to 1988.

On 10 June 1987, Mr & Mrs Brook applied to register the trade mark "CANNON" in respect of watches in Class 14 to Schedule 4. A notice of opposition was lodged on 19 July 1991.

In 1988 there was a renewal of the registration of the name ATC up to 28 April 1991 and there was a notification that Hennan was trading as ATC and that BJB Wholesale had ceased to trade as ATC. On 4 April 1991 there was a renewal of the registration of the name ATC to 1994 signed by Mr Brook and the nature of the business was described as watch importing.  On 6 September 1991 Hennan applied for renewal of the business name ATC, giving as the nature of the business watch importing. In April 1994, Hennan applied for renewal of the business name ATC. The application form was signed by Robert Brook as director and the nature of the business was described as watch importing.

In July 1994 the opposition hearing took place before a delegate of the Registrar of Trade Marks. On 12 September 1994 the delegate dismissed the opposition proceedings.

A Notice of Appeal was filed by the applicant on 4 October 1994.

I now turn to the specific questions in suit.

Proprietorship - s40.

Section 40 of the Act provides:

"40(1)A person who claims to be the proprietor of a trade mark may make application to the Registrar for the registration of that trade mark in Part A or Part B of the register.

(2) The application: (a) shall specify the goods or services in respect of which registration is sought; and

(b) ..."

The relevant part of Part 1 of Schedule 4 to the Trade Marks Regulations is:

"14. Precious metals .... ; jewellery, precious stones; horological and chronometric instruments"

In considering this issue a useful starting point is the statement by Deane J in Moorgate Tobacco Co Ltd v Philip Morris Ltd(No 2) (1984) 156 CLR 414 at 432-433:

"The prior use of a trade mark which may suffice, at least if combined with local authorship, to establish that a person has acquired in Australia the statutory status of "proprietor" of the mark, is public use in Australia of the mark as a trade mark, that is to say, a use of the mark in relation to goods for the purpose of indicating or so as to indicate a connextion in the course of trade between the goods with respect to which the mark is used and that person: ... The requisite use of the mark need not be sufficient to establish a local reputation and there is
authority to support the proposition that evidence of but slight use in Australia will suffice to protect the person who is the owner and user overseas of the mark which another is seeking to appropriate by registration under the Trade Marks Act." (Emphasis added)

In Moorgate (supra), the Court held that the plaintiff's prior activities had not been use but mere preparations for use.

Essentially the applicant's submission is that the respondents have not shown, the onus being on them, that they are proprietors of the mark in respect of the goods, the subject of the application, because:

(a)The applicant has a superior claim to proprietorship; or,

(b)The evidence discloses that some person other than the applicant also has a superior claim to that of the respondents as to proprietorship.

The relevant principles as to proprietorship were examined by Dixon J in The Shell Co of Australia Ltd v Rohm and Haas Co (1949) 78 CLR 601 at 627 ff. At 628 his Honour applied the principles set out by Holroyd J in Re Hick's Trade Mark (1897) 22 VLR 636 at 639-640 as follows:

"In order to substantiate his application to be placed on the register for this word he must have claimed to be the proprietor, and the word 'proprietor' must be taken to mean the person entitled to the exclusive use of that name. If there is anyone else who would be interfered with by the registration of the word "Empress" in the exercise of a right which such person has already acquired to use the same word in application to the same kind of thing, then Hicks ought not to have been put on the register for that trade mark, ..." (Emphasis added)

The evidence relied on by Canon to support its prior use can be summarised as follows. As at 10 June 1987, Canon sold and serviced in Australia, a range of photographic, video and business equipment manufactured by it which included photocopiers, calculators, desk top computers, and other products. On 27 February 1979 Canon registered trade mark No. A329416 for the Canon house mark in respect of "clock with calculator."  Included among these products as at 10 June 1987 was a calculator, described as an "8 digit with clock".  The accounting records of Canon did not permit a dissection of sales, values or volumes on a product by product basis, so it is not possible to know the details. In evidence are a range of calculators and organisers incorporating clocks currently sold in Australia. Among these items are a compact alarm clock calculator, and a world travel alarm clock calculator.

The evidence is that Canon Australia has since about 1973 promoted its Canon brand products in Australia by way of
various promotional items which are given away by Canon and its representatives at various wholesale and retail trade shows and exhibitions and at various sponsored public events. A copy of the 1991 catalogue of Canon shows travel clocks and a clip clock. The evidence is that these items which are promotional items were distributed, among others, as at 10 June 1987 and bore the mark Canon. From about June 1983 to 1987 the Canon brand "8 digit calculator with clock" was said to be available in Australia for supply by Canon Australia Pty Ltd and was sold by it. Mr Redmond, the General Manager of Corporate Services and the Company Secretary of Canon Australia Pty Ltd, gave evidence that a wrist watch was used to promote Canon colour copiers in 1988. Since about 1983, the applicant gave promotional watches to staff, agents and dealers. It is therefore said that it has used its mark Canon in connection with goods of the same description as those in respect of which it is clearly the proprietor, namely clocks. Further, it is said that the use of the trade mark Canon, in connection with the supply of the promotional watches constituted supply of items of the same description as those goods which it supplied through trade channels and is therefore evidence of the use of the trade mark Canon by the applicant in the course of trade.

In addition it is submitted that there is no significant difference in character between clocks, supplied as parts of calculators, and watches. It is submitted that watches and clocks, including clocks with built-in calculators, are by nature the same, the only difference being simply size, shape or design. Further, it is said that they are used to measure time and they occupy the same trade channels. They are simply different types of time-pieces.

On the other hand, the respondents point out that Birmingham, which is said to be the predecessor in the business of the respondents, trading as ATC, imported and sold watches at least from 1970.

Mr Brook sold CANNON watches direct to the public as a commercial traveller, at commercial and private premises, from at least about 1970 to about 1972 and thereafter sporadically in the early eighties. These watches were supplied to him Mr Holecek, who carried on business as ATC.  During the period 1972 to 1983, Mr Brook had a stall at Paddy's Market in Sydney, from which he sold a number of different brands of watches including CANNON, purchased from Mr Holecek. They were only of relatively minor importance among the broad range of watches sold. In 1983 Mr Brook became associated with Mr Vic Bogan and they were fifty percent shareholders in a company named Mayvic Pty Ltd. They carried on a wholesale business of general importers, wholesalers and traders and sold CANNON watches supplied by ATC through Mr Holecek.

There was evidence from a Ms Svoboda that between 1970 and 1978 she stamped thousands of watches with the CANNON mark. The watch components were obtained from Mr Holecek, trading as ATC and then the assembled watches were returned to him. From 1974 onwards Ms Svoboda was directly employed by Mr Holecek and she continued to carry on her work which included applying the CANNON brand name to the watch faces. The watch faces were imported from Switzerland with the other watch components and Ms Svoboda stamped various brand names on the watch faces. She testified that she applied the CANNON brand to "thousands" of watch faces over that period. She left the employ of Mr Holecek on 7 November 1988. I accept her evidence as true and accurate.

The evidence by Mr Gleiber, for the respondents, is that there were advertisements of CANNON watches by Harris Scarfe, a customer of ATC in 1978 and 1980. There are purchase invoices which show further use by ATC of the trade mark through 1982.

On 5 February 1982, Birmingham, trading as ATC, through Mr Holecek applied for registration of the trade mark "CANNON". This was not pursued. In December 1982 the business of ATC was purchased by BJB Warehouse (later 'Dunbosa') and the new owner, BJB Warehouse, trading as ATC applied for the mark CANNON in class 14 for watches. This was subsequently withdrawn and ATC continued to sell CANNON watches from 1983 to 1984 when it went into liquidation. At that time, Hennan purchased the stock of Canon watches and acquired the business of ATC including the name and continued to import and sell CANNON watches thereafter. During the period 1983 to 1987, the respondents were the sole directors and shareholders of the companies BJB Wholesale and Hennan. The present application was made on 10 June 1987.

I accept the submission that the name CANNON was bona fide in use since about 1970 in relation to wrist watches. The evidence of the use by the respondents between 1980 to the present is strong.

On the evidence, I am satisfied that the respondents have shown sufficient use by them or their predecessors in respect of the mark CANNON for wrist watches up to and beyond 10 June 1987 and I am also satisfied that they come within the description of persons who claim to be proprietors within s40 of the Act with respect to the mark.

I am not persuaded by the scant evidence presented by Canon that the applicant had a superior or prior claim to be the proprietor of that mark.

I do not accept the submission that because the respondents selected to use the mark through a corporation that there was no use, or intention to use by them for the purpose of establishing proprietorship. As Whitford J pointed out in the "Astronaut" Trade Mark (1972) RPC 655 the mere fact that business is done through a company does not rule out use of the mark by the proprietors of that company.

At 672, the learned judge said:

"On the facts of this case, during the period throughout which it was alleged there was no use the public was able to buy watches branded ASTRONAUT which came from some source, and I doubt whether the public ever thought to enquire what that source was. Even if there had been some failure in legal formality, what the public were always getting was a watch which had been selected by Mr. or Mrs. Astor, whether it was in their capacity as officers of the one company or the other...."

In that case, the proprietor of the mark was a company, Astronaut Ltd, which had not traded for some years and had no employees. Its sole directors and shareholders were Mr and Mrs Astor. Another company, Charles Astor and Co Ltd, of which Mr and Mrs Astor were also majority shareholders and directors, used the mark during the relevant period. The Court held that use by the individual was use by the registered proprietor corporation.

Canon had no superior or prior claim to be the proprietor of the mark and I do not accept that some person other than the applicants, had a prior or superior claim to be the proprietor of the mark at the relevant date.

Furthermore, I do not accept that use of the mark Canon on  calculators with clocks is a use of the mark in application to the "same kind of thing" as wrist watches. The fact that there is an additional feature in the case of a calculator with
clock, does not mean that a calculator is substantially the same type of article as a wrist watch.

For the above reasons, I consider that the applicant's claim in relation to absence of proprietorship must fail.

In my view, the respondents have made good their submission that there was a prior use by them of the CANNON mark in relation to watches, before use by the applicant of its mark in relation to clocks with calculators or with clocks or watches for promotional purposes.

Prior Registration - Section 33 -
Registered Trade Mark No A329416

Section 33 of the Act provides:

"33(1)Subject to this Act, a trade mark is not capable of registration by a person in respect of goods if it is substantially identical with or deceptively similar to a trade mark which is registered, or is the subject of an application for registration, by another person in respect of the same goods, of goods of the same description as those goods ... unless the date of registration of the first-mentioned trade mark is, or will be, earlier than the date of registration of the second-mentioned trade mark."  (Emphasis added)

This section creates a number of issues. The first question is whether the two marks are substantially identical or deceptively similar.
The relevant principles for determining whether marks are substantially identical are set out in TheShell Company (Australia) Ltd v Esso Standard Oil (Australia) Ltd (1961) 109 CLR 407 per Windeyer J. ( An appeal was allowed by the Full High Court but that decision did not cast doubt on the principles set out by the trial judge). At 414 Windeyer J said:

"In considering whether marks are substantially identical they should, I think, be compared side by side, their similarities and differences noted and the importance of these assessed having regard to the essential features of the registered mark and the total impression of resemblance or dissimilarity that emerges from the comparison ... whether there is substantial identity is a question of fact:" (Emphasis added)

In the present case there is no difference in sound or pronunciation between the two marks, so that one could readily be identified with the other in speech. Moreover, visually and notwithstanding the use by the applicant of a particular colour (red) in most instances (over seventy percent), the differences in spelling and the lower case print, I consider that the two marks are identical in substance. Any difference in dictionary meanings which might be conveyed by the different spellings, is in my view, of no importance. It is unlikely that anyone would pause to consider the meaning of the words, as distinct from their effect as an identifying mark. It is even more unlikely that anyone would pause to analyse the words in any detail or in such a way as to appreciate different meanings as between a "gun" and a "rule". The two marks are in my view substantially identical.

In the Shell case (supra) at 415, Windeyer J, in relation to "deceptive similarity" said:

"On the question of deceptive similarity a different comparison must be made from that which is necessary when substantial identity is in question. The marks are not now to be looked at side by side. The issue is not abstract similarity, but deceptive similarity. Therefore the comparison is the familiar one of Trade Mark law. It is between on the one hand, the impression based on recollection of the plaintiff's mark that persons of ordinary intelligence and memory would have; and on the other hand the impressions that such persons would get from the defendant's television exhibitions." (Emphasis added)

On the same page, his Honour quoted Lord Radcliffe in Cordova v Vick Chemical Co (1951) 68 RPC 103 at 106 as follows:

"Likelihood of confusion or deception in such cases is not disproved by placing the two marks side by side and demonstrating how small is the chance of error in any customer who places his order for goods with both the marks clearly before him ... It is more useful to observe that in most persons the eye is not an accurate recorder of visual detail and that marks are remembered rather by general impressions or by some significant detail than by any photographic recollection of the whole." (Emphasis added)

The question which arises is whether, if the applicant uses its mark in a normal and fair manner, on any of their clocks
and calculators, and if the respondents also use their mark, normally and fairly in respect to the goods covered by their proposed registration, namely watches, the Court is satisfied that there will be no reasonable likelihood of deception and confusion among a substantial number of persons.

Section 6(3) of the Act provides that:

"... a trade mark shall be deemed to be deceptively similar to another trade mark if it so nearly resembles that other trade mark as to be likely to deceive or cause confusion."

Confusion is an inherently different state of mind from that of being deceived or misled. See McWilliams Wines Pty Ltd v McDonald's System of Australia Pty Ltd (1980) 49 FLR 455 at 459-460, 467-476. It does not matter that confusion is unlikely to persist up to the point of sale and be a factor in introducing actual sale. See Kitto J in Southern Cross Refrigerating Company v Toowoomba Foundry Pty Ltd (1954) 91 CLR 592 at 595.

The difference of script or printing format is of no significance because use of the mark CANNON would permit it to be rendered in any kind of script and colour on the present application. I find that the CANNON mark taken alone is deceptively similar to the Canon mark.

However, I do not consider that the CANNON wrist watches can be said to be the "same class of goods" or "goods of the same description" as calculators with clocks or even small free-standing clocks. The promotional wrist watches, distributed by the respondents and the clocks and clock-calculators distributed by the applicant are, in my view not related in such a way that they would be likely to be perceived by buyers as having the same trade origin. See Shanahan, Australian Law of Trade Marks and Passing Off, (2nd ed) at page 191. The classification in the Schedule to the Trade Marks Regulations has no direct bearing on the question. The question is one of fact to be looked at from a business and commercial point of view.

In John Crowther and Sons (Milnsbridge) Ltd's Appn: (1948) 65 RPC 369 at 372, it was said:

"In arriving at a decision on this issue the reported cases show that I have to take account of a number of factors, including in particular the nature and characteristic of the goods, their origin, their purpose, whether they are usually produced by one and the same manufacturer or distributed by the same wholesale houses, whether they are sold in the same shops over the same counters during the same seasons and to the same class or classes of customers, and whether by those engaged in their manufacture and distribution they are regarded as belonging to the same trade. In the case of Jellinek's Application (1946) 63 RPC 59, Romer J. classified those various factors under three heads, viz., the nature of the goods, the uses thereof and the trade channels through which they are bought and sold. No single consideration is conclusive in itself," (Emphasis added)

The above quotation is taken from a decision of an Assistant Comptroller, and was adopted by the High Court in Southern Cross Refrigerating Co v Toowoomba Foundry (supra).

In the present case, the wrist watches are instruments for the measurement of time. They are small in size and are worn on the wrist. Clock calculators on the other hand may vary greatly in size but they are not normally worn by the owner or user. A clock calculator is directed to performing a business or commercial function, whereas a wrist watch is not. Wrist watches are often used as jewellery or as accessories whereas clocks with calculators or clocks are not. Wrist watches are often sold at jewellery counters or in jewellery stores whereas calculators and clocks are not in many instances. Calculators are often sold in business or office equipment stores. Common sense indicates that a person who wanted to buy a wrist watch would not normally find a calculator with clock, or indeed a clock, to be an acceptable substitute.

In my view, a free standing clock or a calculator with a clock do not come within the category of "the same goods" or "goods of the same description". Therefore, I do not consider that the provisions of s33(1) are attracted in the present case. In relation to this issue the respondents also rely on s34(2) to which I now turn.

Prior Continuous User - Section 34(2)

Section 34(2) provides:

"Where a person has, by himself or his predecessors in business, continuously used a trade mark before the use, or before the date of registration, whichever is the earlier, of another registered trade mark by the registered proprietor of that other trade mark, by his predecessors in business .... the Registrar shall not refuse to register the first mentioned trade mark by reason of the registration of that other trade mark." (Emphasis added)

The above subsection prohibits refusal by the Registrar and provides a bar to an objection based on s33(1). As Shanahan (supra) points out at 209-210, the section applies only to objections arising from the earlier registration and does not preclude objections under s28 based on the use of the registered mark.

The use required must be more than that which might suffice to avoid showing abandonment. There must also be a continuous user which is more than an occasional user. In Smith Bartlett & Co v British Pure Oil Grease & Carbide Co Ltd (1934) 51 RPC 157, Maugham J held that a use on three occasions in six years was not continuous.

The relevant date for the purposes of s34(2) in the present case was 27 February 1979, when the applicant was registered in respect of a "clock with calculator".

For reasons given earlier, I am of the view that there was an extensive use of the mark CANNON in relation to wrist watches, prior to the registration of Canon's mark in 1978. I am satisfied that particularly on the evidence of Ms Svoboda, that that use was continuous. Moreover, I am also satisfied that the use by the respondents has been shown to have been made by their predecessors in business and that Mr Brook has had an association with that mark since the early part of the nineteen seventies.

The term "predecessors in business" is of course, a wider term than "predecessor in title" and it is not essential to establish the precise devolution of a chain of title to the mark. On the evidence, I am satisfied that the business of selling and distributing wrist watches bearing the mark CANNON in the period up to and well beyond February 1979 was carried on by Mr Brook and/or the predecessors in business of the respondents including Mr Holecek through to the purchase by Hennan.

Deception and Confusion in Use whether a need to show blameworthy conduct - Section 28(a) and (d)

Section 28 of the Act reads:

"28. A mark:

(a)the use of which would be likely to deceive or cause confusion;

(b)the use of which would be contrary to law;

(c)which comprises or contains scandalous matter; or

(d)which would otherwise be not entitled to protection in a court of justice;

shall not be registered as a trade mark."

The respondents submit that in order to successfully oppose an application for registration of a trade mark based on s28(a) of the Act, it is necessary to show, not only that the use of the mark applied for is likely to deceive or cause confusion but also that the mark is not entitled to protection in a court of justice. In other words, the operation of subs 28(a) is limited by subs 28(d) which imports a requirement of "blameworthiness" on the part of the applicant for the mark.

This is said to be the result of the decision of the High Court in New South Wales Dairy Corporation v Murray Goulburn Co-operative Company Limited (1990) 171 CLR 363.

Reliance is placed by the respondents on the statement of Mason CJ at 383-384 where after referring to the judgment of Lord Diplock in General Electric Co v General Electric Co Ltd (1972) 1 WLR 729, he said:

"As I have already noted, in GE Trade Mark, [1972] 1 WLR 729 Lord Diplock, (with the concurrence of Lord Simon ... and Lord Kilbrandon) concluded that a lawfully registered trade mark is only liable to be expunged under s.11 of the Trade Marks Act (1938) by reason of supervening likelihood of deception or confusion if that likelihood is the result of some blameworthy conduct on the part of the registered proprietor. In reaching that conclusion his Lordship regarded the counterpart of s. 28(a) as being governed by the equivalent of our s. 28(d) so that an applicant seeking removal of a mark on the ground that it infringed s. 28(a) would be required to show not only likelihood of deception or confusion but also that the mark was disentitled to protection in a court of justice. That interpretation of s.11 depended very largely on the legislative history of the statutory provisions ... which has its counterpart in Australia. But the interpretation also depended on the presence of the provisions permitting identical or similar marks to remain in the register. The presence of those provisions is inconsistent with the existence of a statutory intention that likelihood of deception or confusion ipso facto leads to disentitlement to protection in a court of justice or to liability to expungement. To my mind, those provisions, particularly ss 34 and 58(3), justify an implication that s 28(a) looks to supervening likelihood of deception or confusion only if that likelihood is the result of blameworthy conduct on the part of the proprietor." (Emphasis added)

However, his Honour went on to say (at 384):

"But I should say it may not be necessary to read s. 28(a) as though it were governed by s.28(d). So to read s.28(a) is a difficult exercise as a matter of construction. It may be sufficient to say that in the context of the entire statutory scheme a trade mark is only liable to be expunged under s.28(a) if the use of it becomes likely to deceive or cause confusion and that likelihood is due to false or blameworthy conduct of the registered proprietor. However, for the purpose of this appeal, I am content to accept that the fault or blameworthy conduct must be such as to disentitle the mark to protection in a court of justice." (Emphasis added)

It is clear that his Honour is speaking of an expungement of a trade mark which was lawfully registered.

Brennan J at 389, drew a distinction between pre and post registration, in relation to the operation of s28(a) as follows:

"... Paragraph (a) of the s. 28 prohibits the original registration of a mark the use of which would be likely to deceive or cause confusion ... but, after registration, par. (a) operates in a different regime. Upon registration, the proprietor acquires the statutory right to the exclusive use of the mark 'subject to any conditions or limitations to which the registration is subject:' s. 58(2). In that regime, to hold that a registered trade mark is 'wrongly ... remaining in the Register' whenever the use of the mark becomes likely to deceive or to cause confusion would be to expose the registered proprietor's statutory right to destruction at the hands of any person who creates the likelihood of deception or confusion .... to hold that a trade mark, validly registered, can never be expunged if its use becomes likely to deceive or cause confusion by reason of circumstances occurring since registration would empower the registered proprietor himself to create that likelihood with impunity. Neither of these constructions accords with the objects of the Act which seeks both to give some protection to the public against the deceptive or confusing use of trade marks ... and to confer on a registered proprietor at the time being a species of property trade mark (see ss.57, 82) entitling him to the rights conferred by s.58 and allowing permitted users the derivative benefits to which s.77 refers."

His Honour in referring to a different regime appears to indicate that the position could be a different where s28(a) is relied on before registration.

Brennan J went on to point out that:

"In an application for original registration, there is only one object to which effect must be given but, in an application after registration, effect must be given to both objects." (Emphasis added)

His Honour indicated that the operation of s28(a) depended on whether it applied to an application for original registration or to application for expungement of an entry which is misleading or deceptive. The rationale, in relation to expungement, was that the Act did not contemplate that a registered proprietor should continue to enjoy the rights which s58 confers where the proprietor has produced the circumstances which make further use of the mark likely to deceive or cause confusion. He said that a similar view would
be reached if paragraphs (a) and (d) were so read as to make para (d) govern para (a), but he did not rest his view on para (d) of s28.

Deane J considered that, as a matter of language, the direct operation of s28 was confined to the act of registration. He considered that the four paragraphs of s28 were clearly disjunctive. He did not consider that paragraph (a) could be read so as to require blameworthy conduct. (see 398-399).

Dawson and Toohey JJ were of opinion that s28(a) must be read together with s28(d) so that the reference in s28(a) to a "use ... which would be likely to deceive or cause confusion" was a reference to a use which would not only be likely to deceive or cause confusion but would not be entitled to protection in a court of justice. (see 406).

This view directly supports the respondents' submission.

Gaudron J agreed at 414, with Dawson and Toohey JJ that the operation of s28(a) must be, "confined by a requirement of blameworthy conduct". However, her Honour did not adopt any proposition which governed the case of an application for registration. Rather, her Honour was concerned with the case before her which involved the application of s28(a) in the context of an expungement application.

McHugh J was clearly of the view that subss (a) and (d) of s28 must be read disjunctively. At 427-428 he said:

"In my opinion, an interpretation of s28 which holds that a mark does not offend its provisions even though the use of the mark is 'likely to deceive or cause confusion' ignores the wording and structure of s28."

In my view, the factual position in the New South Wales Dairy Corporation case is distinguishable and not controlling in the present matter which relates to opposition proceedings. That case was concerned with expungement of a registered mark. There is an important and relevant distinction between applications for registration of a mark and expungement of a mark already on the register as indicated in the reasoning of the majority in that case. In my view, the reasons for judgment delivered by the members of the High Court leave the matter open as to whether there is a need to find blameworthy conduct in opposition proceedings based on s28(a) as opposed to expungement proceedings.

In Australian Securities Commission v Marlborough Gold Mines Ltd (1993) 177 CLR 485 at 492 the court held that:

"Although the considerations applying are somewhat different from those applying in the case of Commonwealth legislation, uniformity of decision in the interpretation of uniform national legislation such as the Law is a sufficiently important consideration to require that an intermediate appellate court - and all the more so a single judge - should not depart from an interpretation placed on such legislation by another Australian intermediate appellate court unless convinced that that interpretation is plainly wrong."

I note that Sheppard J has recently applied the "blameworthy conduct" requirement, and applied the decision of the High Court and the Full Federal Court in the New South Wales Dairy Corporation case in Nike International Ltd v Campomar Sociedad Limitada (unreported, 8 August 1996 at 48). However, that was an expungement application.

Notwithstanding the diverse opinions expressed by members of the High Court in New South Wales Dairy Corporations case, I consider that I should follow the views expressed by the Full Federal Court in that case, with the result that in the case presently before me the opponent to the application for registration is required to demonstrate "blameworthy conduct".

The Full Federal Court in the New South Wales Dairy Corporations case, concluded that, as a matter of interpretation, s28(a) was qualified by s28(d) and that "blameworthy conduct" was one, but not the only, circumstance which could render a mark "not entitled to protection in a court of justice". (see 86 ALR 549 per Gummow J), (24 FCR 370 Lockhart, Pincus and von Doussa JJ).

In the instant case, Canon has not established any "blameworthy" conduct or any other matter on the part of the respondents in relation to the present application, which would disentitle the mark to protection in the courts and as a result the challenge under this provision must fail. There was evidence that in August 1980 Mr Brook, on behalf of Mayvic Pty Ltd had applied for a number of trade marks including one with respect to the name CANNON. However, these applications were either withdrawn or lapsed. They were remote in time and in my view there is no relevant nexus between this conduct and the present application to warrant a finding of conduct which would disentitle the respondents under s28.

In the present matter, the delegate of the Registrar, when considering the s28(a) ground, relied on what was described as the "fully settled" practice of the Registrar developed from the Murray Goulburn case and dismissed the opposition on this ground because in her view there was "no hint of blameworthy action". See also Titan Manufacturing Company Pty Ltd v John Terence Coyne (1991) 22 IPR 613; Unidrive Pty Ltd v Dana Corporation (1995) 32 IPR 155. Cf Johnson & Johnson v Kalnin (1993) 26 IPR 435 per Gummow J where the point was apparently not raised.

I now turn to the question whether the use of the CANNON mark, as at 10 June 1987, was likely to deceive or cause confusion within the meaning of s28(a).

The test is whether a significant number of persons would be caused to wonder whether it might not be the case that the two products come from the same source. See Southern Cross Refrigerating Co (supra) at 594-595.  It is also necessary to take account of whether the mark is special or general in character and to ascertain the extent of its reputation. Again, it may be important to see whether the goods in respect of which it is registered constitute a narrow or wide class of goods and whether the goods of the applicant and the respondents will be likely to find markets substantially in common areas among the same classes of people.

Visually the applicant's mark is distinctive and special in character, has a stylised lettering and in most cases is coloured red. To be weighed against this consideration is the fact that the application is for the use of the word CANNON with reference to no particular script or style.

Although the spoken words give the same aural impression, there is no evidence that they are purchased over the telephone or without seeing the goods. Moreover, the likely buyers for the applicant's goods are persons who will use them in an office environment or in a market where persons wish to perform calculations. The purposes of the two products, namely a wrist watch and a clock with calculator or a free standing clock as a promotional item are in my view, fundamentally different uses. Wrist watches are in demand by almost every member of the community. They include a different market to that of clocks and calculators. Wrist watches are worn by individuals sometimes as items of adornment, sometimes in a manner akin to jewellery as prestige items or as a fashion item and at other times for purely functional purposes. There is a strong element of trendiness, design and fashion or even "fun" in watches which is not usually found with calculators which embody clocks. The evidence from Canon as to its sales figures for 1983 and 1987 were made up entirely of cameras and office equipment. There was no evidence whatsoever of significant sales of watches or clocks under the Canon mark and the evidence of circumstances surrounding any give-away of promotional wrist watches was vague and generalised. There was no evidence, for example, as to the number of watches or the areas of distribution of watches which had markings with the name Canon.

It is significant that no action was taken by Canon to restrain the marketing of the CANNON watches on the basis that it infringed the applicant's trade marks, amounted to passing off, was deceptive, or was in breach of the Trade Practices Act 1974 (Cth). The marketing by CANNON had been tolerated for a considerable period of time. This is consistent with a view that the applicant did not regard the respondents use of the mark CANNON on watches as sufficiently likely to deceive customers as to warrant taking action. This inaction is evidence of the fact that the respondents' use of the mark on the watches was not likely in the applicant's opinion to deceive or cause confusion in the market place.

Given the long standing marketing of wrist watches and the relatively minor role which wrist watches played at relevant times in the distribution process by Canon, I am of the opinion that there was not sufficient likelihood of confusion or deception for the purposes of s28(a) as at 10 June 1987. There is some specific evidence of confusion in a few instances but in my view, this evidence is very limited and I am not satisfied that the applicant has made out its case. I have given consideration to the argument raised by the evidence of Mr Blanket, called by the applicant, in relation to the question of "brand extension". The suggestion is that brand reputation can extend to other unrelated products. For example, the "Porsche" brand has been extended from sports cars to sunglasses. The affidavit evidence was that the Canon brand had undergone a brand extension from cameras and calculators to business equipment such as photocopiers and facsimile machines prior to June 1987. While I have taken brand extension into account, I do not consider that it assists Canon to any significant extent. I am prepared to accept that distribution of promotional wrist watches and the use of the word Canon in relation to them is relevant. Nevertheless, I think that the evidence as to the supply of some promotional wrist watches should not be given substantial weight when considered in relation to the strong case advanced as to the marketing of CANNON watches.

Conclusion:

For the above reasons I am of the view that the application should be dismissed with costs.

I certify that this and
the preceding thirty-five (35)
pages are a true copy of the
Reasons for Judgment herein of
his Honour Justice Tamberlin.

Associate:

Date:  28 August 1996  

Counsel for Applicant:  Mr D Yates
  Mr D Sibtain  

Solicitor for Applicant:  Sprusons Solicitors

Counsel for Respondent:  Ms S Goddard  

Solicitor for Respondent:                  Gibsons Solicitors

Date of Hearing:  15 & 16 April 1996 and
  6 May 1996

Date Judgment Delivered:  28 August 1996