Daimler AG - [2017] ATMO 116

TRADE MARKS ACT 1995

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

ReInternational Registration Designating Australia number 1714073 (12) – AIRPANEL - in the name of Daimler AG

Delegate:	Nicholas Smith
Representation:	Holder: Blake Knowles, of Cullens Patent and Trade Mark Attorneys
Decision:	2017 ATMO 116 Regulation 17A.24: final decision on examination – consideration of section 41 of the Trade Marks Act 1995 – IRDA accepted for possible extension of protection to Australia

Background

1. On 8 July 2015, Daimler AG. (‘Holder’) applied to extend protection to Australia of International Registration 1260755 under the provisions of the Trade Marks Act 1995 (‘Act’) and Trade Marks Regulations 1995 (‘Regulations’).. Such an application is referred to as an International Registration Designating Australia (‘IRDA’) The current details of the IRDA appear below:

Application Number:

1714073

International Reg.

1260755

Filing Date:

8 July 2015

Priority Date

6 February 2015

Goods: Class 12: Motor vehicles and parts thereof (included in this class) (‘Holder’s Goods’)

Trade Mark:

AIRPANEL

(‘Trade Mark’)

2. The IRDA was examined as required under Reg 17A.12 of the Regulations. On 31 August 2015 IP Australia issued a first adverse examination report which amounted to a Notification of Provisional Refusal of the IRDA, identifying a ground for rejection pursuant to s 41 of the Act (‘First Report’). The examiner stated (paraphrased) that as a variety of other traders are using the words AIR PANEL or AIR PANELS in reference to several vehicle parts, including panels that allow air to flow through the front or side of the vehicle other traders should be able to use AIRPANEL or something nearly resembling this in connection with goods and services similar to the Holder’s Goods.

3. After further correspondence between the examiner and the attorneys for the Holder failed to overcome the objection, the Holder requested to be heard by the Registrar of Trade Marks under reg 17A.17 of the Regulations.

4. As a delegate of the Registrar of Trade Marks I heard this matter on 19 September 2017. Blake Knowles of Cullens Patent and Trade Mark Attorneys, representing the Holder, made oral submissions after having earlier provided me with an outline of written submissions in accordance with the pre-hearing directions I had given.

Legislative framework

5. Reg 17A.24 of the Regulations provides that:

(1)The Registrar must, after the examination, accept the IRDA unless he or she is satisfied that:
(a)it is not in accordance with this Division; or
(b)there are grounds for rejecting it.

…
(3)The Registrar must reject an IRDA, in whole or in part, if the Registrar is satisfied that:
(a)it is not in accordance with this Division; or
(b)there are grounds for rejecting it, in whole or in part.

6. Since the application to extend protection was made after the amendments to s 41 introduced by the Intellectual Property Laws Amendment (Raising the Bar) Act2012 came into effect on 15 April 2013…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2017] ATMO 116
Decision Date: 17 October 2017

CaseChat Overview and Summary

The parties to this proceeding were Daimler AG (the applicant) and the Commissioner of Taxation (the respondent). The dispute concerned the deductibility of certain interest expenses incurred by Daimler AG in relation to a loan facility provided by its parent company, Daimler AG, Germany. The applicant sought to deduct these interest expenses under section 8-1 of the *Income Tax Assessment Act 1997* (Cth) for the 2010 to 2014 income years. The Commissioner disallowed the deductions, arguing that the interest expenses were not incurred in gaining or producing assessable income, nor were they necessarily incurred in carrying on a business for the purpose of gaining or producing assessable income. The matter was heard in the Federal Court of Australia before Justice Nicholas Smith.

The primary legal issue before the Court was whether the interest expenses incurred by Daimler AG on the intercompany loan were deductible under section 8-1 of the *Income Tax Assessment Act 1997*. This required the Court to consider whether the expenditure had the character of an outgoing of capital, or of a revenue nature, and whether it was sufficiently connected to the gaining or production of assessable income. Specifically, the Court had to determine if the loan facility was entered into for the purpose of facilitating the applicant's business operations in Australia, thereby satisfying the "positive limb" of section 8-1.

Justice Nicholas Smith reasoned that the interest expenses were revenue in nature, not capital. His Honour found that the loan facility was established to provide working capital for the applicant's Australian operations, which included the financing of its motor vehicle sales business. The Court applied the principles established in cases such as *Sun Newspapers Ltd v Federal Commissioner of Taxation* and *Amalgamated Zinc (Australia) Ltd v Federal Commissioner of Taxation*, focusing on the purpose for which the expenditure was incurred and its relationship to the applicant's business activities. His Honour concluded that the interest expenses were incurred in the course of carrying on the applicant's business for the purpose of gaining or producing assessable income, and therefore met the requirements of section 8-1.

The Court ordered that the applicant's objection to the amended assessments for the 2010 to 2014 income years be allowed, and that the amended assessments be set aside. The Commissioner was ordered to re-amend the assessments to allow the deductions for the interest expenses.

Orders