Critical Health Products Pty Ltd v Westcoast Surgical and Medical Supplies Pty Ltd

[2017] ATMO 80

TRADE MARKS ACT 1995

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

Re:Opposition by Critical Health Products Pty Ltd to registration of trade mark application 1714389 (5) - HEMOSTYP - in the name of Westcoast Surgical and Medical Supplies Pty Ltd

Delegate:	Nicholas Smith Decision on the Written Record
Decision:	2017 ATMO 80 Trade Marks Act 1995 (Cth) - Section 52 opposition: s 62A considered – ground established – registration refused

Background

1. This is an opposition brought by Critical Health Products Pty Ltd (‘Opponent’) pursuant to s 52 of the Trade Marks Act 1995 (Cth) (‘Act’) to the registration of the trade mark which is the subject of the application detailed below in the name of Westcoast Surgical and Medical Supplies Pty Ltd (‘Applicant’): 

Application Number:	1714389
Filing Date:	11 August 2015
Goods:	Class 5: Plasters and materials for dressings; Haemostatic products including haemostatic gauze; Absorbable haemostat (‘Applicant’s Goods’)
Trade Mark:	HEMOSTYP	(‘Trade Mark’)

2. Following the advertisement on 14 January 2016 in the Australian Official Journal of Trade Marks of the application’s acceptance for possible registration, the Opponent filed a Notice of Intention to Oppose on 5 February 2016.  The Opponent then filed a Statement of Grounds and Particulars (‘SGP’) on 3 March 2016. The SGP was assessed by this office as adequate. The Applicant filed a Notice of Intention to Defend on 18 April 2016. The SGP raised grounds of opposition under ss 58 and 62A of the Act.

Evidence

3. The Opponent filed Evidence in Support on 13 July 2016.  This evidence consists of a declaration made on 7 July 2016 by Ian French, Managing Director of the Opponent, with Attachments IF-01 to IF-08 (‘French Declaration’).  The Applicant chose not to file any evidence in answer.

4. Once the time allowed for filing evidence had ended the parties were given an opportunity to request a hearing or to file written submissions.  Neither party chose to avail themselves of these opportunities.  By letter issuing from IP Australia on 11 January 2017 the parties were notified that as neither party had requested a hearing the matter would be given to a delegate of the Registrar for a decision based on the written record.  The letter indicated that the parties had one month from the date of the letter to file any written submissions they wished to reply upon.  The Opponent filed its submissions (‘Opponent’s Submissions’) on 10 February 2017.  The Applicant did not file any submissions.

5. I am a delegate of the Registrar of Trade Marks and I am to decide the opposition as required by s 55 of the Act which provides that, unless the proceedings are discontinued, dismissed, or have lapsed under s 54A the Registrar must, at the end, decide on the basis of the written record, comprised of the materials mentioned in the preceding paragraphs:

(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.

The Opponent

6. The Opponent is a company established in 2008 that, amongst other things, distributes health care products imported from the United States. 

7. The French Declaration contains the following claims/statements:

·    From late 2012 Opponent has imported and distributed a haemostatic gauze product known as HEMOSTYP.  The HEMOSTYP product is produced by United Health Products, a company based in Nevada, United States of America.

·    The Opponent’s use of the Trade Mark in respect of haemostatic gauze product prior to the filing date includes:

o   On 11 December 2012, the provision of documents to a potential client that use the Trade Mark as a badge of origin for the HEMOSTYP product;

o   In December 2012 and throughout 2013, the sending of e-mails promoting the HEMOSTYP Product to various potential clients in Australia.  In each case the Trade Mark is used as a badge of origin for the HEMOSTYP product; and

o   Between June and August 2013 the Opponent held meetings with potential customers in which it discussed the HEMOSTYP product, which included providing the customer with documents that referred to the HEMOSTYP product.

·    In December 2013, the Opponent appointed the Applicant as its exclusive distributor of the HEMOSTYP product in Australia.  This agreement was terminated on 7 April 2015.  The application to register the Trade Mark was filed in the knowledge that the Opponent had used the Trade Mark prior to the Applicant and the Applicant had distributed the HEMOSTYP product using the Trade Mark under license of the Opponent.

The Applicant

8. The Applicant has provided no information about it or its origins, with the only information about the Applicant being provided in the EIS. 

Grounds of Opposition, Onus and Standard of Proof

9. As indicated above the SGP nominates grounds of opposition under ss 58 and 62A of the Act. To successfully oppose the application the Opponent needs to establish at least one of those grounds. As will become apparent, the Opponent has successfully established a ground of opposition pursuant to s 62A. Consequently, it is unnecessary that I consider the s 58 ground of opposition. Of course, should the decision be appealed, it would remain open to the Opponent to plead any ground available to it under the Act in proceedings before the Court.

1. The onus of proof in an opposition rests upon the Opponent.[1]  The relevant standard of proof is the ordinary civil standard based on the balance of probabilities.[2]  The date at which the rights of the parties are to be determined is 11 August 2015, being the filing date of the application in Australia (‘relevant date’) (except in circumstances, not present here in which a different priority date is provided for in the Act).[3]

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

   [2] Following Pfizer Products Inc v Karam (2006) 70 IPR 599, [6]-[26], and Telstra Corporation Limited v Phone Directories Company Pty Ltd [2015] FCAFC 156, [133].

   [3] Southern Cross Refrigerating Co v Toowoomba Foundry Pty Ltd (1954) 91 CLR 592, 595, see also s 29(1) Trade Marks Act 1995 (Cth).

Discussion

Section 62A

1. Section 62A of the Act is reproduced below:

   62A 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. The Explanatory Memorandum to the Trade Marks Amendment Bill 2006 provided some non-exhaustive examples of applications made in bad faith:

• persons who monitor new property developments, register the names of new developments as trade marks for a number of services and then threaten the property developers with trade mark infringement proceedings unless the developers licence or buy the trade marks;

• persons who have a history of applying for trade marks that are deliberate misspellings of other registered trade marks;

• persons who identify trade marks used overseas but with no Australian use as yet who then apply to register the trade marks in Australia for the express purpose of selling them to the overseas owners.

1. The case of Fry Consulting Pty Ltd v Sports Warehouse Inc (No 2) is a current leading Australian authority on this section.  In that case, Dodds-Streeton J made the following comments, quoting from Harrison’s Trade Mark Application[4]:

   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.

   … 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.[5]

   [4] [2004] EWCA Civ 1028; [2005] FSR 10.

   [5] [2012] FCA 81, [147].

2. Her Honour continued later in the same decision:

   The formulation in United Kingdom authority of bad faith as falling short of the standards of acceptable commercial behaviour observed by reasonable and experienced persons in a particular area is, in my view, an apt touchstone. An overly literal application may, however, tend to negate the relevance attributed to the applicant’s mental state in the combined test preferred in Harrison.

   Further, in my view, mere negligence, incompetence or a lack of prudence to reasonable and experienced standards would not, in themselves, suffice, as the concept of bad faith imports conduct which, irrespective of the form it takes, is of an unscrupulous, underhand or unconscientious character.[6]

   [6] Ibid [165]-[166].

3. Her Honour also noted with approval a number of cases in which bad faith were found in specific circumstances as set out below:

   In William Leith New Century Marquees (SRISO/018/00, UK Registry), the applicant applied to register a trade mark in respect of marquees, tents and related goods, although aware that NEW CENTURY was the opponent’s trade mark in the United States of America and that the opponent had started to trade in the United Kingdom under the trade mark. He was himself a customer and the delegate found that he should have been aware that the opponent could be expected to expand that trade, if it had not already done so. He had previously proposed a licence arrangement with the opponent although its terms were not clear. The delegate of the Registrar concluded:

   Mr Leith subsequently adopted the sign NEW CENTURY MARQUEES as his own trade mark, and he used it in the UK. When he was challenged about this he sought to register the mark in combination with his own name. In my view, the mark he has applied to register is confusingly similar with the mark NEW CENTURY.
   ...
   It is difficult to see how a person who applies to register a mark in his own name which he has previously recognised as the property of a potential overseas principal can be said to be acting in accordance with acceptable standards of commercial behaviour. I do not believe that combining the mark with the applicant’s own name is any answer to that criticism.[7]

   …

   In Hard Coffee Pty Ltd v Hard Coffee Main Beach Pty Ltd [2009] ATMO 26, Hearing Officer Nancarrow held that applications to register the trade marks HARD COFFEE MAIN BEACH and HARD COFFEE were made in bad faith within the meaning of s 62A, where a company controlled by the applicant’s controller had previously obtained a licence from the opponent’s predecessor in title to use the HARD COFFEE MAIN BEACH trade mark, acknowledging in that context that it had not purchased any right, title or interest in the names and that the vendor retained title to all related intellectual property rights. The Hearing Officer considered that in the circumstances, the director clearly understood that the trade mark in question remained the property of the opponent in respect of coffee shops.[8]

   …

   In Pritchard Pacific Pty Ltd Baltimore Aircoil (Australia) Pty Ltd v Brendan McCarrison and Breezewater Pty Ltd [2011] ATMO 46, the delegate upheld opposition to the registration of a trade mark for, inter alia, cooling towers and like apparatus and related services, on grounds including bad faith under s 62A of the Act. The delegate found that the applicant’s controller had a prior business connection with and knowledge of the opponent, such that a person standing in his shoes should have known that he should not apply for the registration of a trade mark deceptively similar to that used by his former business partner (at [42]).[9]

   [7] Ibid [151].

   [8] Ibid [153].

   [9] Ibid [156].

4. The ground of opposition pursuant to s 62A of the Act was particularised in the SGP as follows:

   The Opposed Mark is substantially identical with, or deceptively similar to, the Opponent’s Marks.

   The Opposed mark specifies goods which are identical to the Opponent’s Goods.

   At the Application Date, the Applicant was aware of the Opponent’s earlier use of the Opponent’s Marks in connection with the Opponent’s Goods.  In particular the Applicant had been introduced to the Opposed Mark by the Opponent and used the Opposed Mark under the Licence from the Opponent.

   The application for the Opposed Mark was made in bad faith.  For this reason the Opposed Mark should not be registered.  

5. While the absence of the written distribution agreements between the Applicant and Opponent from the EIS is concerning, in the absence of any evidence or submissions to the contrary, the evidence establishes that the Applicant was a former distributor of the Opponent’s HEMOSTYP wound dressing product sold under the HEMOSTYP Trade Mark.  Shortly after the termination of the distribution relationship between it and the Applicant, which would have resulted in the Applicant losing the right to distribute the HEMOSTYP products, the Applicant sought to apply to register the Trade Mark in Australia for goods that are the same or the same kind of thing as the HEMOSTYP product, which at the minimum would have had the practical effect of creating legal complications for the Opponent seeking to continue to distribute the HEMOSTYP product.  While the fact that the Applicant was aware of the Opponent’s business and its trade mark is not of itself fatal[10], the act of applying to register a trade mark that an applicant has previously recognised, through the signing of a distribution/licence agreement as the property of another has previously been held to support a finding that s 62A has been established.[11] 

   [10] Next Group Plc v Nexcorp Australia Pty Ltd [2016] ATMO 34, [77].

   [11] Bombala Council v Peter Wilkshire [2009] ATMO 33, [35]. See also the cases referred to in [15] above.

6. In the present case the Applicant was distributing the Opponent’s HEMOSTYP wound dressing product and, following termination, sought to register an identical trade mark to the HEMOSTYP Trade Mark for the same goods as the HEMOSTYP wound dressing product.  I have been provided with no explanation of the Applicant’s actions, nor is there an obvious reason for the Applicant to seek to register the Trade Mark.  The Opponent has submitted that ‘when it applied to register the Opposed Mark, [the Opponent] knew that [the Applicant] owned that mark, and that the mark was a coined word; and intended to usurp for itself the Opposed Mark and [the Applicant]’s reputation in respect of it.’  In the absence of any alternative explanation and on the balance of probabilities, I accept the Opponent’s submission.  I am satisfied that a person standing in the Applicant’s shoes should have known that it should not apply for the registration of a trade mark deceptively similar to that used by its former business partner and that the Applicant’s conduct falls short of the ‘standards of acceptable commercial behaviour observed by reasonable and experienced persons’.[12] I find that the Opponent has established the ground of opposition under s 62A.

   [12] DC Comics v Cheqout Pty Ltd [2013] FCA 478, [77].

Decision

1. I have found the Opponent has established the ground of opposition it raised pursuant to s 62A of the Act. As the Delegate of the Registrar I accordingly refuse to register the Trade Mark.

Costs

1. The Opponent has sought an award of costs in its favour. I see no reason to depart from the general rule that costs follow the event. As the Opponent has established a ground of opposition, I award costs against the Applicant under s 221 of the Act in accordance with the amounts in Schedule 8 of the Trade Marks Regulations 1995.

Nicholas Smith
Hearing Officer
Trade Mark and Designs Hearings
2 August 2017