Colin Segal v Comfort Concepts Pty Ltd
[2004] ATMO 76
•20 December 2004
TRADE MARKS ACT 1995
DECISION OF A DELEGATE OF THE REGISTRAR OF TRADE MARKS WITH REASONSRe:Opposition by Colin Segal to application under section 92 of the Act by Comfort Concepts Pty Ltd to remove trade mark number 670872(10) in the name of Colin Segal and Joan Weisz.
Background
In this matter the trade mark, details of which appear below, is registered in the names of Colin Segal and Joan Weisz:
Appn Number 670872 (‘the trade mark’)
Priority date: 28 August 1995
Goods : Class: 10 - Lumbar support
Trade Mark: archiComfort Concepts Pty Ltd ('the applicant'), of Villawood, New South Wales, filed application in terms of section 92 of the Trade Marks Act 1995 on 11 December 2002 to remove the trade mark from the Register. The relevant ‘non-use’ period is thus 11 November 1999 to 11 November 2002. Accompanying the application was a statutory declaration by Peter Francis Maxwell, patent attorney, stating that he had conducted an investigation into the use of the trade mark which had revealed that the owner had not used the trade mark in good faith during three years ending one month before the removal application was filed.
On 8 April 2003, Colin Segal (‘the owner’) filed Notice of Opposition ('the Notice') to the application. The Notice cites one ground of opposition, this being:
The registered proprietor did use the trade mark in good faith in the relevant three year period
Colin Segal has served and filed a statutory declaration in support of the opposition to the application. David Wornell, a Director of the applicant, has served and filed a statutory declaration as evidence in answer and both Colin Segal and Joan Naiun (nee Weisz) have each served and filed a declaration as evidence in reply.
Mr Warnell, as well as being a director of the applicant, was a director of Archi Air Pty Ltd. Colin Segal and Joan Naiun were both directors of Archi Air Pty Limited.
I heard the matter in Sydney as a delegate of the Registrar of Trade Marks. James Maxwell of Maxwell & Associates represented the applicant. The opponent represented himself.
The Evidence
The owners of the trade mark were both involved, as shareholders and/or directors, with a company, Archi Air Pty Limited, which produced an inflatable back support under the trade mark ARCHI. My understanding of the evidence is that this company found itself in financial difficulties and had a liquidator appointed. The removal applicant entered into an agreement with the liquidator of Archi Air Pty Limited whereby it gained the ownership and rights over the assets of Archi Air Pty Limited, including the packaging and right to use the trade mark. This agreement is not in evidence; however, it is clear that the trade mark was not an asset of Archi Air Pty Limited and the terms of any agreement between the liquidator and the applicant should be of great relevance to these proceedings or any appeal therefrom.
In an earlier legal dispute between Archi Air Pty Limited and Mr Segal, Mr Segal agreed by Deed of Settlement to transfer the trade mark and any other intellectual property to Joan Weisz (‘the joint owner’) or her nominee.
Strangely, Mrs Naiun (nee Weisz), who was present at the hearing, does not appear to have received this transfer of intellectual property or to expect it. On the contrary: her submissions were that there is still joint ownership of the trade mark. The reasons for this are unclear but the most obvious explanation is that Mr Segal was/is Mrs Weisz’s nominee.
Use of the Trade Mark by the owners
Mr Segal contends that he used the trade mark during the relevant period – he states that he retained some of the product bearing the trade mark in his garage and sold the product to some three people, each of whom have corroborated this in statutory declarations exhibited to his first declaration.
Mrs Naiun claims that she has used the trade mark during the relevant period via her shareholding and directorship of Archi Air Pty Ltd.
The Evidence – Commentary
The opponent’s evidence contains many allegations about the conduct of the applicant or its officers that are not appropriate in this forum. My considerations, in the context of this application under section 92 concern the use, in good faith, of the trade mark in question.
However, I note that this application for removal has various curious features. Chief amongst these is David Warnell’s sworn statement that the applicant entered into an agreement with the liquidator whereby it gained the “ownership and rights over the assets of My Company’s Predecessor including the right to use the trade mark”. It will be observed that ownership of the trade mark is not mentioned. Clearly, the ownership of the trade mark was not in question – it belonged then, as it belongs now, to the opponent. If the applicant acquired anything, it claims to have acquired only Archi Air Pty Limited’s “right to use the trade mark”.
Another curious feature is Mr Wornell’s claim that in defending the application for removal, Mr Segal is in breach of clause 3.3(c) of the Deed of Settlement which provides that Mr Segal:
Covenants and agrees that he will not at any time hereafter bring any action, suits or proceedings or make any claims of demands or exercise any right against Archi Air arising by virtue of his being a director or employee of Archi Air or otherwise.
It is not clear to me that Mr Segal initiated these proceedings – he is opposing a removal application that was initiated by the applicant. Further, it is not clear to me that Mr Segal’s ownership of the trade mark arose through his position as a director or employee of Archi Air Pty Limited – in fact, it would seem that his position as director and/or employee might just as reasonably be seen to have arisen through his ownership of the trade mark.
Another curious feature that I will now mention is that it is the applicant’s contention that the filing of the application for registration of the trade mark by Mr Segal and Mrs Weisz was for and on behalf of Archi Air Pty Limited who, the applicant alleges, was always the owner of the trade mark.
In my reasons, below, I will first address the opponent’s claim that he used the trade mark in person, then I will address the applicant’s claim enlisted at paragraph 16, above, under the heading ‘Other’.
Reasons
Section 92 of the Act provides:
92 Application for removal of trade mark from Register etc.
(1)A person aggrieved by the fact that a trade mark is or may be registered may, subject to subsection (3), apply to the Registrar for the trade mark to be removed from the Register.
(2)The application:
(a)must be in accordance with the regulations; and
(b)may be made in respect of any or all of the goods and/or services in respect of which the trade mark may be, or is, registered.
(3)An application may not be made to the Registrar under subsection (1) if an action concerning the trade mark is pending in a prescribed court, but the person aggrieved may apply to the court for an order directing the Registrar to remove the trade mark from the Register.
Note:For prescribed court see section 190.
(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: For file see section 6.
One of the owners, in his Notice, states that he has used the trade mark in good faith within the period specified by the Act. The other owner, who has not formally opposed the removal, alleges that she too has used the trade mark.
The relevant period for the purposes of these reasons is from 11 November 1999 to 11 November 2002.
The Deed of Release between Archi Air Pty Limited and Mr Segal is dated 5 May 2000. My understanding of the situation is that any use of the trade mark that Mr Segal made between 11 November 1999 and 5 May 2000 should be bona fide use of the trade mark by Mr Segal as owner of the trade mark[1] – viz: that period of time falls within the relevant non-use period and is prior to the agreement that Mr Segal executed by which he undertook to transfer all of his intellectual property rights elsewhere. There is one such instance of use – Cha-Da Ritronasak, in a declaration annexed to Mr Segal’s first declaration, attests to purchasing an item of the goods bearing the trade mark in April 2000.
[1] Subject, of course, to my finding under the heading’ Other’.
Accordingly, the opponent has established his own use in good faith of the trade mark during the relevant period – depending, of course, on the outcome of my considerations under the heading ‘Other’.
Other
I return to my comments at paragraph 11, above. While Mr Segal’s ownership of the trade mark may (in terms of the Deed of Agreement) be subject to some sort of challenge by Joan Naiun (Weisz), it is apparently not. The Deed of Agreement refers to a transfer of intellectual property to Joan Weisz or her nominee – it could be, as I have mentioned, that Mr Segal was himself the nominee.
In his declaration, Mr Wornell attests to similarity of product and modes of advertising, packaging, promotion and so forth in the use of the trade mark by Archi Air Pty Limited through to 22 January 2003. He gives sales figures for goods sold under the trade mark by Archi Air Pty Limited. Mr Wornell exhibits letters written by Mr Segal on behalf of Archi Air Pty Limited. In the light of all of this, he states, it is clear that any use of the trade mark in relation to the goods by Mr Segal was for and behalf of Archi Air Pty Limited. Mr Segal, attests Mr Wornell, applied for the trade mark on behalf of Archi Air Pty Limited and has no rights in relation to the trade mark registration independent from Archi Air Pty Limited.
This also was a theme of submissions by Mr Maxwell at the hearing however I agree with the opponents that there are a number of problems with arriving at such a conclusion.
An initial problem with this thesis is that at the time that the trade mark was authored by the opponent and Mrs Weisz they, according to Mr Segal’s second declaration, deliberately decided to retain ownership of the trade mark – paragraphs 4 and 5 of Mr Segal’s second declaration refers to a verbal agreement between him and Joan Weisz. I would infer that they effectively decided to authorise the use of the trade mark by Archi Air Pty Limited.
Secondly, the Deed of Release, between Archi Air Pty Limited and Mr Segal, treats the trade mark as property belonging to Mr Segal (or at least Mrs Weisz) and not belonging to itself. In fact, the Deed appears to acknowledge that Mr Segal (or at least Mrs Weisz) were the rightful owners of all intellectual property associated with, or used by, Archi Air Pty Limited. Presumably, the solicitors of Archi Air Pty Limited drew up this Deed under instructions from that company’s officers – thus, on 5 May 2000 when the Deed was executed, the relevant officers of Archi Air Pty Limited were of the belief that the trade mark belonged to the owners. Presumably, the solicitors who advised Archi Air Pty Limited at that time and drew up the Deed were also of that opinion or they would have otherwise advised their client.
This belief of the Archi Air Pty Limited’s officers at 5 May 2000 (who included Mr Wornell) is inconsistent with Mr Wornell’s present claim that the opponents created the trade mark for or on behalf of Archi Air Pty Limited. It is not in evidence why Mr Warnell has seemingly changed his mind about this.
Mr Wornell became a director of Archi Air Pty Limited on 4 May 2000, whereas the owners of the trade mark were both directors of Archi Air Pty Limited from 1995, when the trade mark was authored by them. It appears to me that they are both better placed to know what was then in their minds and how the trade mark was to be owned and used. What they say is a logical and coherent explanation, but obviously they are most inexpert in trade mark matters – what they say is also consistent with Mr Wornell’s account of the purported transfer of the right to use the trade mark.
Thus, the situation appears to be that in at least the period between 5 May 2000 and 22 January 2003, the officers of Archi Air Pty Limited (who included some present officers of the applicant), the liquidator, a firm of solicitors and the owners were all of the belief that the trade mark belonged to the owners. The applicant’s own actions in seeking, and receiving, the right to use the trade mark (rather than its ownership) are also consistent with this belief even if the acquisition of the right was not technically possible.
There appears to me to be nothing in evidence which would signal any transfer of ownership from the owners to either Archi Air Pty Limited or the applicant.
To find otherwise would be, in my consideration, to effectively find that the owners filed their application in bad faith, or with a lack of intention to use, in relation to what was then their own company. There does not appear to me to be any evidence that would support such a conclusion.
It is thus apparent that the removal applicant ‘acquired’ only the right to use the trade mark from the liquidator – the ownership of the trade mark and the goodwill therein was not an asset of Archi Air Pty Limited for the liquidator to dispose of and this was, I infer, recognised by the liquidator. Hence, it would appear that all that the liquidator purported to assign was the right to be the user of the trade mark. Such right could only exist via an authorised user agreement or license between the owners and the user. It would seem that the liquidator must have realised this but did not know that it is not possible to assign such a right.
It is not normal (or possible) to assign authorised user agreements because of problems with privity: it is not possible to bind a third party to an agreement. My assessment is that the applicant (who was incorporated on 18 November 2002) could not have been a party to any such agreement between the opponents and Archi Air Pty Limited. But the applicant’s apparent belief that such right was validly assigned by the liquidator might explain Mr Wornell’s repeated references in evidence to Archi Air Pty Limited as being his company’s “predecessor in business”.
I note that subsection 8(5) of the Act implies that control of the authorised use of the trade mark by an owner might be slight – it states:
(5)Subsections (3) and (4) do not limit the meaning of the expression under the control of in subsections (1) and (2).
In Pioneer Electronic Corp v Registrar of Trade Marks (1977) 137 CLR 670, Aickin J stated at 683:
“the essential requirement for the maintenance of the validity of a trade mark is that it must indicate a connection in the course of trade with the registered proprietor, even though the connection may be slight, such as selection or quality control or control of a user in a sense in which a parent company controls a subsidiary”. [Emphasis added]
The applicant appears to confirm that the goods sold under the trade mark by Archi Air Pty Limited until January 2003 are the same goods of the same standard as those previous sold, bearing the same trade mark and advertised and promoted in the same way. In short – Archi Air Pty Limited appears to have adhered to a set of standards in relation to the use of the trade mark. This set of standards could only have been dictated by the owners through their earlier association with Archi Air Pty Limited since 1995.
If the true situation was that Archi Air Pty Limited was an authorised user of the trade mark, and this appears to me to be the case, any use of the trade mark by Archi Air Pty Limited should be taken to be an authorised use by the opponent (section 7(3) of the Act).
In summary, Mr Wornell attests that Archi Air Pty Limited used the trade mark between February 1998 and 22 January 2003 which extends before and after the non-use period of 11 November 1999 to 11 November 2002. Mr Worrell also implicitly avers that this use was via a right. This accords with the account of Mr Segal who states that he and Mrs Weisz decided to own the trade mark but it was to be used by the company. Such use must have been by a right, granted by the owners of the trade mark, as Mr Wornell also attests that the liquidator attempted to transfer that right to the applicant on 22 January 2003 – if there had been no such right, the liquidator could not have purported to dispose of it in this way. In my consideration, it is appropriate to infer that this ‘right’ could only exist via a formal or informal authorised user agreement between the owners and Archi Air Pty Limited.
This raises immediate problems for the applicant which are outside the scope of this decision – if an authorised user agreement has been assigned to it by the liquidator, there is seemingly no privity between it and the owners in the agreement. As this is so, the transfer of the right is of dubious validity which might reflect adversely on any user of the trade mark by the applicant, including the honest concurrent user of the trade mark.
As any user of the trade mark by Archi Air Pty Limited was a user which should be taken to be on behalf of the registered owners, and it falls within the relevant period, the opponent has established his opposition.
Decision
The opponent has established his opposition to my satisfaction.
Costs
If the opponent has incurred costs which are mentioned in Schedule 7 to the regulations in his conduct of this matter, he is entitled to them, which I order against the applicant.
Ian Thompson
Hearings Officer
Trade Marks Hearings
20 December 2004
Key Legal Topics
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Commercial Law
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Intellectual Property
Legal Concepts
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Breach
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Intention
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Offer and Acceptance
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Costs
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Statutory Construction
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