Ceravolo Premium Wines Pty Ltd v Ma Kirkby TRPL Pty Ltd

[2018] ATMO 43

TRADE MARKS ACT 1995

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

Re:Opposition by Ceravolo Premium Wines Pty Ltd to registration of trade mark application 1729957(33) - OCHRE EARTH CHILD - filed in the name of MA KIRKBY (TRPL) PTY LTD.

Delegate:	Aaron Walters
Representation:	Opponent: Written submissions by Halfords IP Patent and Trade Mark Attorneys Applicant: Written submissions by Lesicar Maynard Andrews Patent and Trade Mark Attorneys
Decision:	2018 ATMO 43 Opposition under section 52 of the Trade Marks Act 1995­ – grounds under sections 44, 58, 60, 62A of the Act – Section 62A established – trade mark registration refused.

Background

1. On 22 October 2015, MA KIRKBY (TRPL) PTY LTD (‘the Applicant’) filed an application for the following trade mark:

   Application number: 1729957

   Trade Mark: OCHRE EARTH CHILD

   (‘the Trade Mark’)

   In respect of the following goods:

   Class 33:  Alcoholic beverages in this class, including wines, red wines, white wines, sparkling wines and fortified wines; wine products in this class

   (‘the claimed goods’)

2. The Trade Mark was examined as required under s 31 of the Trade Marks Act 1995 (Cth) (‘the Act’), and advertised as having been accepted for possible registration in the Australian Official Journal of Trade Marks on 17 March 2016.

3. On 19 April 2016, Ceravolo Premium Wines Pty Ltd (‘the Opponent’) filed a Notice of Intention to Oppose registration of the Trade Mark. A Statement of Grounds and Particulars (‘SGP’) followed on 17 May 2016 which outlined four grounds of opposition under ss 44, 58, 60 and 62A of the Act. The Applicant filed a Notice of Intention to Defend on 27 June 2016. Evidence in Support, Answer and Reply were filed between September 2016 and March 2017.

4. No request to be heard was made by either party and they were given the opportunity to provide written submissions. The Opponent relies on written submissions from Lesicar Maynard Andrews, Patent and Trade Mark Attorneys (‘the Opponent’s submissions’) received 15 June 2017. The Applicant relies on written submission from Halfords IP (‘the Applicant’s submissions’) received 20 December 2017. 

Authority to hear the matter

1. As a delegate of the Registrar of Trade Marks,[1] I provide the following reasons and the decision that follows is made under s 55(1) of the Act based on the evidence and submissions provided by the parties in this matter.

   [1] Pursuant to s 206(2) of the Act.

Evidence

1. The evidence filed in this opposition consists of the following:

Evidence in Support

• Statutory declaration made by Giuseppe Ceravolo, Director of the Opponent, on 28 September 2016 and attaching exhibits JC-1 to JC-10 (‘Ceravolo 1’).

Evidence in Answer

• Declaration made by Mark Kirkby, Company Director of the Applicant, on 5 January 2017 and attaching exhibits MK-1 to MK-4 (‘Kirkby’).

Evidence in Reply

• Statutory Declaration made by Giuseppe Ceravolo on 8 March 2017 and attaching exhibits GC-1 and GC-2 (‘Ceravolo 2’).

Grounds of Opposition and Onus

1. The Opponent relies upon all of the nominated grounds seen in the SGP, being those under ss 44, 58, 60 and 62A of the Act. To succeed in an opposition, the Opponent need only establish one of the nominated grounds in relation to all the claimed goods.[2] As will be seen below, I have determined the Opponent has successfully established their opposition under s 62A of the Act. Accordingly, I have found it only necessary to address this ground. Should this decision be appealed to a prescribed court, it is the prerogative of the Opponent to pursue this ground or any other ground available to it under the Act.

   [2] Section 55(1), Trade Marks Act 1995 (Cth)

2. The onus of proof rests with the Opponent.[3] The standard being the civil standard on the balance of probabilities.[4] The rights of the parties are to be determined as at the date of filing of the Trade Mark, being 22 October 2015 (‘the relevant date’).[5]

Discussion

[3] Food Channel Network Pty Ltd v Television Food Network GP [2010] FCAFC 58, [32].

[4] Pfizer Products Inc v Karam (2006) 219 FCR 585, 591-4; Telstra Corporation Limited v Phone Directories Company Pty Ltd [2015] FCAFC 156, [132].

[5] Southern Cross Refrigerating Co v Toowoomba Foundry Pty Ltd [1953] HCA 73; (1954) 91 CLR 592, 595.

Section 62A

1. Section 62A of the Act provides:

   Application made in bad faith

   The registration of a trade mark may be opposed on the ground that the application was made in bad faith.

2. A determination of bad faith in filing a trade mark application will arise in circumstances where “persons adopting proper standards would regard the decision to register as in bad faith, or that reasonable and experienced persons in the field would view such conduct as falling short of acceptable commercial behavior.”[6] This determination is made as at the date of filing, although events occurring after the date may be relevant in drawing an inference as to the Applicant’s knowledge and intention at the time.

History between the Parties

[6] Fry Consulting Ltd v Sports Warehouse Inc. (No 2) [2012] FCA 81, [174].

1. Paragraphs 12 to 19 of Ceravolo 1 provide an overview of the history between the parties and the Applicant disputes the Opponent’s allegations made in paragraph 17 and 19.[7] However, the Applicant does not appear to dispute or expand upon the following circumstances otherwise described by the Opponent. As such, I am satisfied they represent an accurate account of the events leading up to this opposition.   

   [7] I discuss these allegations later in my decision.

2. In September 2015, the Opponent became aware of wine featuring the mark RED EARTH CHILD (‘the REC Mark’) being sold within Australia and also exported to South Korea. Wine goods bearing The REC Mark were produced by a business known as Topper’s Mountain Wines (‘Topper’s’) and made available online via (‘the Topper’s website’).[8] Exhibit JC-4 shows two screen-captures taken from the Topper’s website. The first, dated 14 September 2015 confirms wine bearing the REC Mark was available for sale, while the second, dated 21 September 2016, shows ownership of Topper’s belongs to Mark and Stephanie Kirkby.

   [8] Ceravolo 1, paragraph 12-13.

3. On 16 September 2015, the Opponent caused its attorneys to issue a letter to Toppers. Exhibit JC-5 is a copy of this letter. As it will become pertinent to my decision, I have reproduced the relevant content here:

   Dear Sirs

   …

   It has come to our client’s attention that you are offering for sale, both in Australia and overseas particularly South Korea wine under the name RED EARTH CHILD as per your website (extract attached). Therefore, your export of this wine from Australia and sale at any of the countries where our client has registered Trade Mark Rights including South Korea is a breach of our client’s rights both here in Australia and overseas.

   Accordingly our client demands within 14 days of the date of this letter the following undertakings:

   1.   You will immediately cease any or all use of the Trade Mark READ EARTH CHILD or any variation of the Trade Mark RED EARTH.

   2.   You will destroy any or all labels containing the Trade Mark RED EARTH CHILD or any variation of the Trade Mark RED EARTH.

   3.   You will not in the future make any use of the Trade Mark of RED EARTH CHILD or any variation.

   If you do not comply with the above undertakings our client reserves the right to take appropriate action against you without further notice.   

   (‘the ceasing letter’)

4. Following the ceasing letter, both Ceravolo 1 and Kirkby indicate various communications took place between Mr. Ceravolo and Mr. Kirkby. What specifically was said has not been put forward by either party. However, as a result, Mr. Kirkby entered into a Deed of Undertaking (‘the Deed’) with the Opponent, which was signed by Mr. Kirkby on 30 November 2015.[9] I would note in Ceravolo 1, Mr. Ceravolo states the matter to have been settled amicably between himself and Mr. Kirkby. 

   [9] Ceravolo 1, paragraph 14; Kirkby, paragraph 7.

5. Exhibit JC-6 is a copy of the Deed. Relevantly, the Deed provides:

   In consideration of Ceravolo Premium Wines Pty Ltd agreeing not to take any action or seek any damages, costs or other compensation from me or my business (or any related entity), in relation to my business’ previous use of the term, ‘RED EARTH CHILD’, in relation to certain alcoholic beverages, I, Mark Kirkby, on behalf of myself and my business ‘Topper’s Mountain Wines’, hereby undertake that:

   1.   I will, within 14 days, cease all use of the term, RED EARTH CHILD, or any other term which is deceptively similar to the trade mark, RED EARTH, in relation to wines and/or products in Class 33;

   2.   …

   3.   I will in future not make use of the term, RED EARTH CHILD, or any other term which is deceptively similar to the trade mark, RED EARTH, in relation to wines and other alcoholic products in class 33 of the ‘International Classification of Goods and Services for the Purposes of the Registration of Marks’.           

6. Purportedly unbeknownst to the Opponent, on 22 October 2015, the Applicant filed the application for the Trade Mark. In early February 2016, Mr. Ceravolo was ‘surprised to learn’ of the Trade Mark’s acceptance.[10]   

   [10] Ceravolo 1, paragraph 16.

7. After instructing its attorneys to investigate, the Opponent became aware Mr Kirkby was a director of the Applicant. Exhibit JC-7 is company information obtained from ASIC which evidences this fact. Kirkby also confirms the Applicant trades in wine products under the business name Topper’s Mountain Wines.[11]

   [11] Kirkby, paragraph 2.

8. On 29 March, the Opponent’s attorneys sent a letter to the Applicant’s listed address for service, Halfords IP. I have not been provided with the details of this correspondence. However, exhibit JC-8 features an email response from Halfords IP, sent 18 April 2016, which restated the Opponent’s assertion that the filing of the Trade Mark constituted a breach of the Deed and an attempt to circumvent the trade marks process. Halfords IP confirmed it had discussed with the Applicant the Opponent’s assertions and its intention to oppose the Trade Mark application should it not be withdrawn by 17 April 2016. Halfords IP further indicated it was preparing a response to the letter, which it proposed to provide to the Opponent early in the following week.

9. Whilst waiting for a response from Halfords IP, which I note, no response was ever received, Mr. Ceravolo instructed a Notice of Opposition to be filed to preserve the Opponent’s position.[12]    

Legal Principles

[12] Ceravolo 1, paragraph 18.

1. In her seminal decision, Dodds-Streeton J in Fry Consulting Pty Ltd v Sports Warehouse Inc (No 2) (‘Sports Warehouse’), after noting (at the time) a lack of Australian judicial consideration on the matter, considered the following United Kingdom authority as relevant when considering bad faith in the context of s 62A:

   Clearly the court, when considering bad faith, cannot apply a purely subjective test, called by Lord Hutton “the Robin Hood test”. The dishonest person or one with low standards cannot be permitted to obtain trade mark registrations in circumstances where a person abiding by a reasonable standard would not. The registration of a trade mark is designed to enable bona fide proprietors to protect their proprietary rights without having to prove unfair trading. Registration is not provided to help those with low moral standards.

   Lord Hutton went on to conclude that the true test for dishonesty was the combined test. He said:

   36. ... Therefore I consider ... that your Lordships should state that dishonesty requires knowledge by the defendant that what he was doing would be regarded as dishonest by honest people, although he should not escape a finding of dishonesty because he sets his own standards of honesty and does not regard as dishonest what he knows would offend the normally accepted standards of honest conduct.

   For my part, I would accept the reasoning of Lord Hutton as applying to considerations of bad faith. The words “bad faith” suggest a mental state. Clearly when considering the question of whether an application to register is made in bad faith all the circumstances will be relevant. However the court must decide whether the knowledge of the applicant was such that his decision to apply for registration would be regarded as in bad faith by persons adopting proper standards.[13]

   [13] [2012] FCA 81, [147]. Her Honour here considering Harrison’s Trade Mark Application [2004] EWCA Civ 1028; [2005] FSR 10.

2. Her Honour continued to quote in Sports Warehouse:

   ... Bad faith impugns the character of an individual or collective character of a business, as such it is a serious allegation. The more serious the allegation the more cogent must be the evidence to support it. However, the matter still has to be decided upon the balance of probabilities. The issue has to be considered as at the date of application for registration. An act of bad faith cannot be cured by an action after the date of application.[14]

   [14] Ibid, [149]. Her Honour discussing Maslyukov v Diageo Distilling Ltd [2010] EWHC 443

3. Thus, the test for bad faith is one which combines both subjective and objective elements and a consideration of all circumstances surrounding the application to register are relevant. Necessarily, and irrespective of the form it takes, bad faith is not conduct which merely neglects or lacks prudence for reasonable standards, but is of an unscrupulous or underhanded character.[15]

   [15] Ibid, [166].

4. In DC Comics v Cheqout Pty Ltd (‘DC Comics’), Bennett J endorsed the approach taken by Dodds-Streeton J, stating:  

   Bad faith is a combined test that involves subjective and objective elements. The subjective element refers to the knowledge of the relevant person at the time of making the application. The objective element requires the decision-maker to decide whether, in the light of that knowledge, the relevant person’s behaviour fell short of acceptable commercial standards.

   The question is whether the conduct falls short of the standards of acceptable commercial behaviour observed by reasonable and experienced persons in the particular area. It is whether the knowledge of the applicant was such that the decision to apply for registration would be regarded as in bad faith by persons adopting proper standards.[16]

   [16] [2013] FCA 478, [62]

5. Further, Bennett J in DC Comics did not consider it necessary to establish that use of the Trade Mark would result in confusion or deception for the purposes of s 62A. His Honour relevantly notes:

   That aspect is the subject of other grounds of opposition, such as ss 43 and 60. Such a requirement would, in my view, contradict the legislative intent in introducing a new ground of opposition by limiting its application to circumstances provided for by existing grounds. Evidence that the use of a mark is likely to cause confusion or deception may be persuasive in considering whether the application to register a mark was in bad faith. However, it is neither determinative of that finding, nor a prerequisite for it.[17] [My emphasis added]

   [17] [2013] FCA 478, [62].

6. With these principles in mind, and accounting for the circumstances outlined earlier, I turn now to whether the application to register the Trade Mark was made in bad faith.

Application made in bad faith?

1. As mentioned, the onus is on the Opponent to establish the Trade Mark was filed in bad faith.[18] The SGP particularizes the ground as:

   The Applicant through its company Director had knowledge of the Opponent’s use of the trade mark RED EARTH and in 2015 a dispute arose between the Opponent and a related company of the Applicant regarding the mark RED EARTH CHILD. The dispute was resolved by the Applicant ceasing use of the marks and providing an undertaking not to make use of any mark similar to RED EARTH. Filling of the mark OCHRE EARTH CHILD was therefore in bad faith and contrary to this undertaking.

   [18] Hard Coffee Pty Ltd v Hard Coffee Main Beach Pty Ltd [2009] ATMO 26, [12]

2. In Ceravolo 1, Mr. Ceravolo alleges the Trade Mark was applied for in bad faith as it was made in the knowledge of the Opponent’s rights and in an attempt to circumvent any agreement that would have been reached pertaining to the REC Mark.[19] Mr. Ceravolo further alleges the simple replacement of the word RED with OCHRE, alongside concealing the filing of the Trade Mark during negotiation of the Deed, is an act of bad faith.[20]

   [19] Paragraph 17.

   [20] Ceravolo 1, paragraph 19.

3. The Opponent’s submissions point to the ceasing letter, demanding the Applicant not make future use of any variation of the REC Mark, as the Opponent would likely consider such a variant unacceptable. Accordingly, it is submitted ‘a reasonable and honest person would not in the circumstances choose to file a trade mark application for such a variant.’[21]

   [21] The Applicant’s submissions, paragraph 29.

4. I accept the date at which the ceasing letter was sent, being 16 September 2015, as the date at which the Applicant had knowledge of the Opponent’s likely objection to any variations of the REC Mark. I further accept this as the date at which the Applicant became aware of the Opponent’s readiness to commence ‘appropriate action’ with regards to enforcing its rights in the RED EARTH trade mark.   

5. However, in Emanuela Elia v Oz Derma Pty Ltd (‘OzDerma’),[22] the opponent in that matter issued a ‘cease and desist’ letter to the applicant after becoming aware of its business through various online medium. In response, the applicant filed an application for registration of its OZDERMA trade mark. Relevantly, in lodging the application, the applicant considered its services to be different from those of the opponent.

   [22] [2018] ATMO 27.

6. The opponent opposed the registration of the trade mark, pursuing a number of grounds including s 62A of the Act. The opponent contended the applicant’s decision to file the trade mark application in the face of the ‘cease and desist’ letter amounted to an act of bad faith.[23]

   [23] Ibid, [66].

7. The Delegate, in deciding the issue, did not consider such circumstances amounted to bad faith. Relevantly, the Delegate stated:

   I do not consider that, under such circumstances, the mere filing of an application to register the Trade Mark in relation to the Services, without more, constitutes an act of bad faith. On the face of it, what has happened here is that the Applicant (who had no prior relationship with the Opponent) has received a letter of demand, has thought that the Services are unrelated to those offered or performed by the Opponent and has sought to establish its rights in the Trade Mark. The actions of the Applicant in relation to this application appear to me to be prudent, well-measured, natural, and innocent, reactions to the ‘cease and desist’ letter from the Opponent.[24]

   [24] Ibid, [71].

8. In the present matter, I accordingly do not consider the Opponent’s act of filing the Trade Mark in the face of the ceasing letter as the sole basis upon which bad faith may be established. Unlike the circumstances before the Delegate in OzDerma, there are additional relevant circumstances before me.      

9. Noted above, a finding of bad faith must be determined at the time the application is lodged. Shortly following the ceasing letter, the Applicant filed an application to register the Trade Mark, being an obvious variation of the REC Mark. This filing took place approximately one month prior to Mr. Kirkby executing the Deed on behalf of himself and Topper’s, the relevant details of which I have discussed earlier.

10. Commonplace in the law of evidence is that later events may cast light upon the true position of an earlier date.[25] The date at which the parties commenced negotiation of the terms of the Deed has not been established, though I note Mr. Kirkby’s statement as to the adoption of the Trade Mark:

    The Opposed Trade Mark was adopted for inclusion in the Trade Mark Application because, in my very firm opinion (both then and now), the trade mark, OCHRE EARTH CHILD, is not deceptively similar to ‘RED EARTH’.[26]  [My emphasis added]

    [25] Conde Nast Publications Pty Ltd v Virginia Taylor [1998] FCA 864; (1998) 41 IPR 505, 509

    [26] Kirkby, paragraph 12.

1. These words closely mimic the terms of the Deed and are suggestive of Mr. Kirkby’s mental state at the time of filing the Trade Mark. As Company Director,[27] that mental element is attributable to the Applicant.[28] Further, I consider it relevant to mention that on 11 November 2015 a Notice of Early Acceptance issued by the Office to the Applicant. Consequently, it is likely Mr. Kirkby was aware at the time of executing the Deed, that the Trade Mark would be advertised as accepted for possible registration.

   [27] Exhibit JC-7.

   [28] DC Comics, [73].

2. Taking into account Mr. Kirkby’s statement and in absence of evidence to the contrary, I think it reasonable to conclude the Trade Mark application was filed concurrently with negotiations. That Mr. Kirkby negotiated terms of the Deed with knowledge of the Trade Mark application, and its status of ‘accepted – awaiting advertisement’ is relevant as the Opponent alleges the application was concealed from negotiations and was an attempt to circumvent any subsequent agreement that could have been reached.

3. Mr. Kirkby denies the Trade Mark application was an attempt to circumvent the agreement and states his company was under no obligation to inform the Opponent of its future marketing and/or branding plans, including any trade mark application.[29]  Regardless, in Sports Warehouse, Dodds-Streeton J considered bad faith may include dishonesty or fraud, though it is not required, and “is a wider notion, potentially applicable to a diverse species of conduct.”[30] Her Honour further suggested conduct which is “exploitative and designed to acquire a springboard or advantage” may well be regarded as in bad faith according to proper or ordinary standards.[31] I find the timing of the Trade Mark application, the conceptual closeness of the Trade Mark to the disputed REC Mark and scarcity of evidence demonstrating any marketing or branding plans featuring the Trade Mark supports the Opponent’s allegation.

   [29] Kirkby, paragraph 11.

   [30] At [164].

   [31] At [170].

4. I consequently view the deliberate choice not to disclose his actions during negotiations as indicative of Mr Kirkby’s (and therefore the Applicant’s) insincere motivations for filing the Trade Mark. I acknowledge the Applicant’s choice to file the Trade Mark was that it was not, in Mr. Kirkby’s opinion, considered to be deceptively similar to the trade mark RED EARTH. However, as provided for in DC Comics, it is not a requirement that a trade mark deceive or confuse for it to be lodged in bad faith. Rather, of paramount concern is the knowledge of the person filing the trade mark application, and whether in light of that knowledge, the Applicant knew that it ought not to apply for registration of the Trade Mark. 

5. I note the Applicant provides no substantive explanation for the decision to replace the word ‘Red’ with ‘Ochre’ in the Trade Mark, nor how this variation has been reconciled with conditions contained in the ceasing letter. The Opponent’s submissions identify the similarity in meaning between the words ‘red’ and ‘ochre’ and conclude “the Applicant would be able to retain the essence and connotation of the [REC Mark] by rebranding under the [Trade Mark].”[32] I am inclined to agree with the Opponent’s submissions on this point. Absent such an explanation for the Trade Mark, the decision to proceed with ‘Ochre Earth Child’ may be seen as ‘sailing close to the wind’ to the disputed ‘Red Earth Child’ without necessarily attracting liability.[33]  

   [32] Paragraph 34.

   [33] See for example,  Wingate Marketing Pty Limited and Eileen Mary Woolley v Levi Strauss and Co and Levi Strauss (Australia) Pty Limited [1994] FCA 1001; Red Bull Australia Pty Limited v Sydneywide Distributors Pty Limited [2001] FCA 1228

6. Nevertheless, I consider the Applicant, at the time of filing the Trade Mark, was cognizant of the likelihood that future use of the REC Mark, or variant thereof, would be objected to by the Opponent. Despite this, the Applicant proceeded to apply for the Trade Mark and, possessing knowledge of the Opponent’s likely objection, chose not to disclose the application while concurrently negotiating for the Opponent to desist from legal action for the previous use of the REC Mark.

7. The registration of a trade mark is designed to enable bona fide proprietors to protect their proprietary rights without having to prove unfair trading.[34] I am satisfied, in proceeding to file the Trade Mark in the circumstances outlined above, a reasonable and experienced observer would consider such conduct falls short of acceptable commercial standards.

   [34] Sports Warehouse, [147]; DC Comics, [62].

8. Therefore, I consider the Opponent has, on the balance of probabilities, established its ground under s 62A of the Act.

Decision

1. Section 55 of the Act provides:

   Decision

   (1) Unless subsection (3) applies to the proceedings, the Registrar must, at the end, decide:

   (a) to refuse to register the trade mark; or

   (b) to register the trade mark (with or without conditions or limitations) in respect of the goods and/or services then specified in the application;

   having regard to the extent (if any) to which any ground on which the application was opposed has been established.

   Note:   For limitations see section 6

2. I have found the Opponent has established the ground of opposition it raised pursuant to s 62A of the Act. Section 55(3) does not apply and as the Delegate of the Registrar I refuse to register the trade mark application.

Costs

1. The Opponent has sought its costs and I see no reason to depart from the general rule that costs follow the event. I award costs against the Applicant under s 221(1) of the Act in accordance with the amounts in Schedule 8 of the Trade Marks Regulations 1995.

Aaron Walters
Hearing Officer
Oppositions and Hearings
29 March 2018