Caprice Australia Pty Ltd v MG Icon LLC

[2015] ATMO 8

TRADE MARKS ACT 1995

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

Re:Opposition by Caprice Australia Pty Ltd to application under section 92 of the Act by MG Icon LLC to remove trade mark number 901355 (25) – MATERIAL GIRL- in the name of Caprice Australia Pty Ltd

DELEGATE:

Bianca Irgang

REPRESENTATION:

Opponent: Mr Tim Allen of Corrs Chamber Westgarth

Removal Applicant: Mr Ed Heerey of counsel instructed by Wadeson

DECISION:

2015 ATMO 8

S 92 application for removal: trade mark used; cause for exercise of Registrar’s discretion – Trade Mark to remain on Register.

Background

1. Brag Distributors Pty Ltd (‘Brag’) registered a trade mark in Australia, relevant details of which are shown below:

Trade mark:  MATERIAL GIRL

Trade mark number:             901355

Date of registration:             24 January 2002 (being also the date from which registration

took place)

Goods:  Class 25: Clothing

1. On 16 March 2012, MG Icon LLC (‘the removal applicant’) filed an application to have the trade mark removed from the Register of Trade Marks (‘the Register’). The application was made pursuant to section 92 of the Trade Marks Act 1995 (‘the Act’) and specified grounds pursuant to paragraphs 92(4)(a) and 92(4)(b).

1. Casco Blue Pty Ltd (‘Casco’) was the original exclusive licensee of the above trade mark. Casco filed a notice of opposition to the application on 29 June 2012. The notice asserted that the grounds on which the removal applicant relied were not relevant because the original owner had the intention to use the trade mark for all relevant goods at the time of its filing and there had in any event been actual use of the trade mark in good faith for relevant goods during the relevant period. The parties then commenced filing evidence in accordance with the Trade Mark Regulations 1995. On 14 March 2013 Casco assigned the trade mark registration to Wildcard Pty Ltd (‘Wildcard’) and this assignment was recorded by IP Australia later that month. Subsequently, on the 11 April 2013 Casco advised the Office that the right or interest which caused Casco to oppose the opposed the non-use removal application had become vested in Wildcard who then became the opponent in these proceedings.

1. Then, on or about 26 July 2013 Wildcard assigned the trade mark registration to Caprice Australia Pty Ltd (“the opponent”) and this assignment was recorded by IP Australia later that month. Caprice Australia Pty Ltd then took carriage of the opposition and I will refer to it in these reasons as ‘the opponent’.

1. The matter came before me, as a delegate of the Registrar of Trade Marks, at a hearing in Melbourne on 11 November 2014. Mr Ed Heerey of counsel instructed by Wadeson appeared on behalf of the removal applicant. The opponent was represented by Mr Tim Allen of Corrs Chamber Westgarth.

Evidence

1. The evidence in this matter consists of the following declarations:

Declarant	Position	Date Made	Exhibits
Evidence in Support
Lynette Hayward (‘Hayward 1’)	Director  of  Casco  Blue Pty Ltd	8.10.12	LH-1 to LH-2
Brian Kilbey	Director        of        Brag Distributors Pty Ltd	8.10.12	-
Evidence in Answer
William Pinnell	Host  of Talkback  Radio program for 3AW	18.4.13	BP-1 to BP-8
Leanne Drew	Company Director and retail, marketing and design consultant	24.5.13	LD-1 to LD-2
Andrew Tarshis	Executive Vice President and General Counsel of Iconix Brand Group, Inc	30.6.13	AT-1  to  AT- 19
Andrew Weinstein	Senior Trade Mark Manager employed by Oblon Spivak	7.10.13	-
Evidence in Reply
Mark Hansky	Director      of      Caprice Australia Pty Ltd	14.11.13	MH-1
Further Evidence in Support
Angela Skrinos	Owner of Candy Stripes Australia	15.11.13	AS-1
Lynette Hayward (‘Hayward 2’)	Director  of  Casco  Blue Pty Ltd	29.11.13	LH-3  to  LH- 12
Further Evidence in Answer
William Pinnell	Host  of Talkback  Radio program for 3AW	19.8.14	-
Belinda Wadeson	Principal of Wadeson	19.8.14	BW-1 to BW- 4
Leanne Drew	Company Director and retail, marketing and design consultant	21.8.14	-

Legal Framework

1. Part 9 of the Act governs the removal of trade marks from the Register for non-use. The sections of that part which are most relevant to the case in hand are sections 92, 96, 100 and 101.

1. Section 92 provides that a person may apply to the Registrar to have a trade mark removed from the Register. The removal application must be made in accordance with the Regulations1 and may be made in respect of any or all of the goods and/or services in respect of which the trade mark is or may be registered. The grounds for removal are stated in paragraphs 92(4)(a) and 92(4)(b) which relevantly provide:

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

(a)   that, on the day on which the application for the registration of the trade mark was filed, the applicant for registration had no intention in good faith:

(i)   to use the trade mark in Australia; or

(ii)    to authorise the use of the trade mark in Australia; or

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

in relation to the goods and/or services to which the non-use application relates and that the registered owner:

(iv)    has not used the trade mark in Australia; or

(v)   has not used the trade mark in good faith in Australia;

in relation to those goods and/or services at any time before the period of one month ending on the day on which the non-use application is filed;

(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.

1 Regulations 9.1 to 9.4

1. In the present matter the application is based on both grounds and is in respect of all the goods for which the trade mark is registered.

1. Section 96 makes provision for a person to oppose any application made under section 92 by filing a notice of opposition with the Registrar. This notice must be in an approved form and must be filed in accordance with the Regulations2.

2. Section 100 specifies that the burden is on the opponent to a non-use application to rebut allegations of non-use or lack of intention to use as the case may be. The opponent needs to establish that the applicant for, or registered owner of the trade mark has used it (or used it with additions or alterations not substantially affecting its identity) in good faith in respect of the relevant goods and/or services, and that this use occurred within the relevant periods as specified in the Act.

1. Section 101(1) provides the Registrar with the discretion to remove the trade mark from the Registrar “in respect of any or all of the goods … to which the application relates”. Section 101(3) explicitly provides that if the Registrar is satisfied it is reasonable to do so the discretion may be exercised in the trade mark owner’s favour even if the grounds on which the application was made have been established.

Discussion

1. The trade mark under attack in this case had been registered for approximately 9 years by the time the application for its removal was made. According to Shanahan’s Australian Law of Trade Marks and Passing Off  (4th ed, 2008), at paragraph 70.510:

   Section 92(4)(a) and (b) provide distinct and alternative grounds for removal. Under para (a) it is necessary to establish: first, that the trade mark was registered without the necessary intention in good faith that it should be used; and secondly, that there had in fact been no use, or no use in good faith, earlier than one month before the application for removal. Under para (b) it is necessary to establish only that there had been no use, or no use in good faith, in the three-year period extending up to one month before the application for removal, subject to s 93(2) which provides that five years must have passed since the application for the registered trade mark was filed.

   Paragraph (a) thus merges with para (b) once the trade mark has been registered for five years, though it should be noted that the defence of "circumstances that

2 Regulation 9.3

were an obstacle to the use of the trade mark" which applies to para (b) is not available under para (a).

1. In order to defeat the removal application the opponent needs to establish that it, or its predecessor in title, has used the trade mark in good faith within the three year period ending one month prior to filing of the application for removal on 16 March 2012 (‘the relevant period’), in accordance with the test in Imperial Group Ltd v Philip Morris & Co Ltd [1982] FSR 72. Even a single bona fide use of the mark in the relevant period is sufficient to resist an application for removal - Woolly Bull Enterprises Pty Ltd v Reynolds (2001) 51 IPR 149. The trade mark owner’s intentions at the time it applied for registration are not relevant to my considerations.

1. The Hayward 1 declaration states that in March 2011, Brag granted Casco a licence to use MATERIAL GIRL as a trade mark in Australia in relation to clothing. This initial licence agreement was informal but the parties understood it to include the following terms:

·The clothing to be marketed by Casco under the MATERIAL GIRL trade mark was required to be of a standard acceptable to major retailer such as Target and Myer;

·If a major retailer placed orders with Casco to purchase MATERIAL GIRL clothing, a more formal agreement would take effect.

1. Hayward 2 states that pursuant to the licence granted by Brag, Wild Card acted as Casco’s sale agent and sold bulk lots of goods bearing the MATERIAL GIRL trade mark to Australian fashion wholesaler and retailer Candy Stripes Australia, Petite Maison and a person called “Sam”. Exhibit LH-1 accompanying Hayward 1 contains copies of four invoices made out to Petite Maison, “Sam” and Candy Stripes Australia for the purchase of a small number of clothing items. These invoices are dated 14 December 2011, 23 December 2011 and 29 May 2012. Mr Heerey, counsel for the removal application, pointed out that the date on the third invoice relating to Candy Stripes Australia actually reads 23 December 2012 and the year ‘2011’ has been written in pen over it. I note that this does appear to be the case and I also note that the final invoice to Candy Stripes Australia is dated 29 May 2012 which is outside the relevant period.

1. In considering the ‘corrected’ date on the invoice I turn to the declaration of Angela Skrinos, the owner of Candy Stripes Australia. Ms Skrinos declares that she ordered a shipment of clothing from Wild Card which bore the MATERIAL GIRL trade mark in December 2011

and again in May 2012. She states that she had sold most, if not all, of the MATERIAL GIRL branded clothing by February 2012 and that she had cleared the entire stock of the December 2011 and May 2012 shipments of MATERIAL GIRL branded clothing by August 2012. Ms Skrinos declares that all the clothing bore the MATERIAL GIRL trade mark. Exhibit AS-1 accompanying her declaration contains an undated poor quality photograph of a shirt with a tag bearing the MATERIAL GIRL trade mark.

1. Mr Heerey argued that Wild Card was not ‘authorised’ by Brag to use the MATERIAL GIRL trade mark within the meaning of section 8 of the Act. He points to a number of exhibits and statements in the evidence such as:

·The covering letter to the Registrar dated 29 June 2012 in which Casco’s solicitors stated “We act for Casco Blu Pty Ltd the exclusive licensee …”;

·The Hayward 1 declaration where it was stated that Casco was the “exclusive licensee” of the MATERIAL GIRL brand in relation to clothing; and

·The Hayward 2 declaration where it was stated that from March 2011 to March 2013, Casco Blu held an “exclusive licence” granted by Brag to use the MATERIAL GIRL trade mark in Australia in relation to clothing, and that in early March 2013, the licence agreement was novated to substitute Wildcard for Casco.

1. He argues that:

…This evidence points invariably to the conclusion that Wildcard did not have any licence from Brag when Wildcard made the sales in question in December 2011. This conclusion arises for several different reasons:

a)Under s 20(1)(b) of the Act, Brag had the exclusive right to authorize other persons to use the trade mark – Casco had no right to authorize another person to use that trade mark;

b)The fact that the licence held by Casco was an “exclusive licence” means that it was exclusive to Casco and thus excluded Wildcard; and

c)The fact that the licence agreement was novated in March 2013 to substitute Wildcard for Casco as a licensee reflects an acknowledgement by each of Wild Card and Casco that, until March 2013, Wildcard was not a licensee and required such novation to become a licensee.

1. I am not persuaded by this reasoning. Hayward 1 and Hayward 2 explain the situation saying that Casco held the exclusive licence and that it sold MATERIAL GIRL branded clothing during the relevant period. When asked to explain further Ms Hayward did so by explaining that Casco sold the goods via its sales agent Wildcard. Mr Heerey stated that the evidence

provided by Ms Hayward is unreliable as he believes the information provided in Hayward 2 is an attempt to correct information provided in Hayward 1. However, I believe that Hayward 2 attempts to explain and clarify the information provided in Hayward 1 in direct response to the evidence provided by the removal applicant. Additional information does not invalidate the earlier evidence provided and I note that the vast majority of Hayward 2 details the activities of the various parties and their use of the MATERIAL GIRL trade mark after the relevant period. I note that this use is extensive and considerable.

1. Mr Heerey also attempts to cast doubt on the evidence provided by Ms Skrinos because she did not provide tax invoices to support her claims of having sold MATERIAL GIRL branded clothing. However, the evidentiary standard is ‘balance of probabilities’ which means that I must be satisfied it is more likely than not that the trade mark was used in the appropriate period.

1. The MATERIAL GIRL trade mark has been registered since 2002 and while the evidence does not show how many sales of clothing have occurred since then, Ms Hayward stated that sales of MATERIAL GIRL branded clothing took place during the relevant period. As discussed previously, exhibit LH-1 provides copies of tax invoices from December 2011 which show the MATERIAL GIRL trade mark in the description of the clothing goods being sold by Casco, the party licenseed by Brag to use the trade mark, through the former’s sales agent Wildcard. Ms Skrinos is an unrelated third party trader listed on one of the aforementioned tax invoices who declares that she purchased MATERIAL GIRL branding clothing for sale in her retail store. These receipts, taken together with the declarations, satisfies me that while the evidence is not determinative or overwhelming in any sense, it illustrates a sporadic but genuine pattern of usage of the MATERIAL GIRL trade mark in the relevant period.

1. While one may question why proof in the form of dated newspaper advertisements or more dated invoices were not provided, It is clear from the evidence that the traders involved at the time were small and not particularly sophisticated businesses. The opponent’s claim that the trade mark was used the trade mark during the relevant period, has been corroborated by a third party declarant. I therefore do not draw any negative inference from the absence of the aforementioned documents.

1. However, even if I were not satisfied that there had been authorized use of the MATERIAL GIRL trade mark during the relevant period, section 101(3) of the Act concerns the Registrar’s discretion which I may apply to this case.

Registrar’s Discretion

1. Subsection 101(3) of the Act provides:

(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.

1. In Pioneer Computers Australia Pty Ltd v Pioneer KK [2009] FCA 135; (2009) 176 FCR 300; (2009) 80 IPR 38; [2009] AIPC 92-354 Bennett J said at [167]:

The discretion under s 101(3) is a broad discretion to decide not to remove a trade mark from the Register or not to carve out some of the goods and services for which the mark is registered, even if s 92 grounds have been made out, if the Court is satisfied that it is reasonable to do so. Irrespective of the lack of use of the trade marks on the removal goods and the removal services in the relevant period, there is a discretion not to alter the registrations.

In Kowa Company3at [98], Lander J rejected the submission that a party seeking the exercise of the discretion needs to show “exceptional circumstances”. In E & J Gallo4at [198], Flick J agreed with Lander J that there is no requirement to establish exceptional circumstances. With respect, I also agree with Lander J that there is no warrant to read a requirement for exceptional circumstances into s 101(3).

In E & J Gallo5at [202]-[203], Flick J stated that the following factors set out by Falconer J in Hermes Trade Mark [1982] RPC 425 were of assistance in considering the exercise of the discretion:

there had been no abandonment of the trade mark;

the registered proprietors of the mark still had a residual reputation in the mark;

there had been sales by the registered proprietors of goods for which removal was sought since the relevant period ended;

the applicants for removal had entered the market without having taken steps to ascertain from the Register whether anyone had a right to exclude their use of the mark;

3 Kowa Co Ltd v NV Organon [2005] FCA 1282; (2005) 66 IPR 131; [2005] AIPC 92-131; (2005) 223 ALR 27

4 E & J Gallo Winery v Lion Nathan Australia Pty Ltd [2008] FCA 934; (2008) 77 IPR 69; [2008] AIPC 92-293

5 Op Cit.

the registered proprietors were not aware of the applicant’s sales under the mark.

1. The parties have provided significant comment on how I should apply the Registrar’s discretion.

1. The opponent has requested the Registrar’s discretion to leave the trade mark registration on the Register due to the current use and success of the MATERIAL GIRL trade mark on the opponent’s clothing goods and the confusion which would result from anyone apart from the opponent using the MATERIAL GIRL trade mark on clothing. In considering the opponent’s arguments and evidence it is clear that since the opponent became the owner of the MATERIAL GIRL trade mark registration there have been significant sales of clothing bearing the MATERIAL GIRL trade mark.

1. It is also clear from the evidence and exhibits that the opponent has invested significant funds into advertising and repositioning its MATERIAL GIRL clothing into the Australian marketplace and has commenced developing a reputation in the trade mark.

1. In contrast, the removal applicant has requested the Registrar not to exercise discretion to leave the trade mark registration on the Register. It argues that that the opponent’s evidence is unreliable and that if the trade mark remains on the Register it will cause confusion in the marketplace because of the long-standing reputation of the singer Madonna as the “MATERIAL GIRL”. Use of a MATERIAL GIRL trade mark on clothing by anyone not authorized by Madonna to do so would result in confusion apart from the removal applicant using the MATERIAL GIRL trade mark.

1. The declaration of Andrew Tarshis (‘the Tarshis declaration’) outlines the removal applicant’s history with its own MATERIAL GIRL trade mark which began in 2009. Mr Tarshis states that he was involved in the discussions and negotiations with Madonna and her management regarding the development of a line of junior women’s clothing under the MATERIAL GIRL label in 2009. He sates that the company MATERIAL GIRL Brand, LLC was incorporated on 4 December 2009 and changed its name to MG Icon LLC on 1 March 2010. According to Mr Tarshis, Purim LLC (owned by Madonna Louise Ciccone and Guy Oseary) was the original owner of MG Icon LLC.

1. On 9 March 2010, Purim LLC sold 50% of its interest in MG Icon LLC to Iconix and transferred to MG Icon any and all of its class 25 trade mark rights to MATERIAL GIRL and TRUTH OR DARE. Subsequently, Mr Tarshis states that Macy’s and MG Icon entered into an agreement to produce and sell MATERIAL GIRL junior’s clothing endorsed by and/or associated with Madonna. Annexure AT-1 accompanying the Tarshis declaration contains copies of media articles which announce that development. I note that annexure AT-2 contains a table of trade mark applications and registration for the trade mark MATERIAL GIRL in respect of clothing and other products in 30 countries. The removal applicant currently has its MATERIAL GIRL trade mark registered in class 25 in 18 countries plus the European Union.

1. Mr Heerey has argued that the removal applicant’s extensive trade mark registrations for MATERIAL GIRL and the strong reputation of Madonna and her long standing relationship with the phrase “MATERIAL GIRL” are likely to cause confusion in the marketplace if the opponent is able to maintain its trade mark registration for MATERIAL GIRL particularly where there is also evidence that Madonna commenced a clothing line for young women under a MATERIAL GIRL trade mark. The first declaration of William Pinnell outlines the significant reputation that Madonna has in the music industry and her image as a music artist and entertainer. He states that Madonna portrays a strongly independent, sexual image which is closely linked to her flamboyant choice of clothing and accessories.

1. In his second declaration Mr Pinnell states that after viewing the opponent’s MATERIAL GIRL branded clothing that he considers much of the clothing to be eye catching and consistent with Madonna’s image as he described in his first declaration. He states that he was surprised that the clothing bearing, advertised, described or pictured in the exhibits LH-4, LH-5, LH-6, LH-7 and LH-9 was not authorized by Madonna and that he would have assumed that Madonna receives payment for this use of the trade mark MATERIAL GIRL on clothing. Mr Pinnell declares that he believes the public is very likely to share this view given Madonna’s reputation as the MATERIAL GIRL.

1. While the removal applicant has demonstrated a strong reputation for the MATERIAL GIRL trade mark within the music industry there is limited evidence before me that shows such a long-standing and significant reputation in the fashion industry. Indeed, the removal applicant’s evidence shows that the removal applicant only recently commenced a line of

clothing for young women under the MATERIAL GIRL trade mark and none of that use has been in Australia.

1. On the other hand, the opponent has demonstrated considerable and growing use in its MATERIAL GIRL trade mark for clothing in Australia from 2012 and I take guidance from the E & J Gallo case. I am satisfied that even if the opponent had not been able to establish use of its MATERIAL GIRL trade mark during the relevant period that it would have been reasonable on the basis of their current use and sales not to remove the trade mark from the Register.

Decision

1. I find the opponent has rebutted the allegation of non-use. I am satisfied on the balance of probabilities that there was authorised use of the trade mark MATERIAL GIRL in good faith during the three year period ending one month before the day on which the non-use application was made. That use was in relation to goods covered by the registration. I direct that trade mark no. 901355 remain on the Register.

Costs

1. It is usual for costs to follow the event, and I see no reason to depart from that principle here. I award costs against the removal applicant as allowed by Schedule 8 of the Regulations.

Bianca Irgang Hearing Officer

Trade Marks Hearings 2 February 2015