Darley Stud Management Company Limited v Kevin Francis Darley

[2018] ATMO 55

TRADE MARKS ACT 1995

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

Re:Opposition by Darley Stud Management Company Limited to application by Kevin Francis Darley for removal of trade mark number 952147 (44) – DARLEY - in the name of Darley Stud Management Company Limited

Delegate:	Nicholas Smith
Representation:	Opponent: Tracey Berger of Spruson & Ferguson Pty Ltd Applicant: Written Submissions by Walsh & Associates
Decision:	2018 ATMO 55 Trade Marks Act 1995 (Cth) - section 96 opposition to s 92(4)(b) application for removal - Removal Opponent’s evidence does not show use of the Trade Mark during the relevant period or obstacle to use – exercise of Registrar’s discretion appropriate – Trade Mark to remain on the Register

Background

1. This decision is pursuant to an application made on 5 October 2016 under s 92(4)(a) and (b) of the Trade Marks Act 1995 (‘Act’) by Kevin Francis Darley (‘Applicant’) to remove the trade mark detailed below from the Register of Trade Marks.  The application is made in respect of all of the services for which the trade mark is registered, that is, the application is for complete removal of the trade mark.

Registration No.	952147
Lodgement date	10 March 2003
Services	Class 44: Horse stud services, breeding of thoroughbred horses (‘Registered Services’)
Owner	Darley Stud Management Company Limited
Trade Mark	DARLEY (‘Trade Mark’)

1. Darley Stud Management Company Limited (‘Opponent’) has opposed the application to remove the Trade Mark, filing a Notice of Intention to Oppose removal on 29 November 2016 and a Statement of Grounds and Particulars (‘SGP’) on 21 December 2016.  The Applicant filed a Notice of Intention to Defend on 10 January 2017.

2. The Opponent subsequently filed evidence in support of its opposition to removal.  The Applicant chose not to file any evidence in answer.  The Opponent’s evidence will be discussed in more detail below. 

   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.  On 7 September 2017 the Applicant requested an oral hearing. The matter was set down for a hearing in Canberra on 14 March 2018. I was allocated to decide the matter as a delegate of the Registrar of Trade Marks.  In line with usual practice, an email was sent to the parties on 13 December 2017 which contained a schedule for the provision of written summaries of submissions to be filed prior to the hearing.  The Opponent filed written submissions on 27 February 2018 (‘Opponent’s Submissions’) and the Applicant filed written submissions on 6 March 2018 (‘Applicant’s Submissions’).  At the hearing Tracey Berger of Spruson & Ferguson Pty Ltd represented the Opponent, appearing by video conference.  The Applicant chose not to appear but to rely on its written submissions. 

   5. I am a Delegate of the Registrar and the matter has been allocated to me to decide, which I have done, on the basis of the following relevant material and the oral submissions made at the hearing on 14 March 2018:

   ·The Application for Removal;

   ·The Notice of Opposition and SGP;

   ·The Opponent’s Evidence in Support;

   ·The Opponent’s Submissions; and

   ·The Applicant’s Submissions.  

   The Law

   6. Part 9 of the Act deals with removal of trade marks from the Register on account of non-use. In respect of the matter s 92 of the Act relevantly provides:

   92  Application for removal of trade mark from Register etc.

   (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.

   7. Under s 92(4)(b) the relevant period during which the Opponent must establish use of the Trade Mark is the three year period ending on 5 September 2016 (‘relevant period’).

   8. I note that an application under s 92(4)(b) may not be made before a period of five years has passed from the filing date of the application,[1] and I confirm that five years since filing the application have in fact passed.

   [1] Per s 93(2) of the Act.

   9. The onus of rebutting an allegation of non-use lies with the Opponent. This onus is articulated in s 100 of the Act which provides, relevantly to this matter:

   100  Burden on opponent to establish use of trade mark etc.

   (1) In any proceedings relating to an opposed application, it is for the opponent to rebut:
   [...]

   (c) any allegation made under paragraph 92(4)(b) that the trade mark has not, at any time during the period of 3 years ending one month before the day on which the opposed application was filed, been used, or been used in good faith, by its registered owner in relation to the relevant goods and/or services.

   […]

   (3) For the purposes of paragraph 1(c), the opponent is taken to have rebutted the allegation that the trade mark has not, at any time during the period referred to in that paragraph, been used, or been used in good faith, by its registered owner in relation to the relevant goods and/or services if:

   (a) the opponent has established that the trade mark, or the trade mark with additions or alterations not substantially affecting its identity, was used in good faith by its registered owner in relation to those goods or services during that period; or
    (b)  in a case where the trade mark has been assigned but a record of the assignment has not been entered in the Register:

   (i)  the opponent has established that the trade mark, or the trade mark with additions or alterations not substantially affecting its identity, was used in good faith by the assignee of the trade mark in relation to those goods or services during that period and that that use was in accordance with the terms of the assignment; and
   (ii)  the Registrar or the court is of the opinion that it is reasonable, having regard to all the circumstances of the case, to treat the use of the trade mark by the assignee during that period as having been a use of the trade mark in relation to those goods or services by the registered owner; or

   (c) the opponent has established that the trade mark was not used by its registered owner in relation to those goods and/or services during that period because of circumstances (whether affecting traders generally or only the registered owner of the trade mark) that were an obstacle to the use of the trade mark during that period.

   10.     The burden of proof is the ordinary civil standard of the balance of probabilities.[2]

   11.     In accordance with s 101 the Registrar may decide to remove the Trade Mark from the Register for all or some of the goods identified in the application for removal, or if satisfied it is reasonable to do so, decide not to remove the Trade Mark even if the grounds under which the application for removal was made are established.

   12. I further note that a single bona fide use of the Trade Mark in the course of trade during the relevant period may be sufficient to rebut the allegation under s 92(4)(b),[3] but if a single act of use is relied upon then it should be established by ‘if not conclusive proof, overwhelmingly convincing proof’.[4]

   Opponent’s Evidence

   [2] Pfizer Products Inc. v Karam [2006] FCA 1663 and more recently: Telstra Corporation Limited v Phone Directories Company Pty Ltd [2015] FCAFC 156.

   [3] Woolly Bull Enterprises Pty Ltd v Reynolds [2001] FCA 261, [17].

   [4] Nodoz Trade Mark (1962) RPC 1, 7.

3. The Opponent’s evidence in this matter consists of a declaration made on 12 April 2017 by Henry Bridges Plumptre, Director of Godolphin Australia Pty Ltd (ACN 093 921 021) formerly known as Darley Australia Pty Ltd (‘Godolphin’) (‘Plumptre Declaration’) with annexures 1 to 16. 

4. The Plumptre Declaration contains the following claims/statements:

   ·On 1 February 2006 the Applicant applied to register the trade mark DARLEY in classes 41 and 44 for various animal breeding and training services.  The Opponent successfully opposed such a registration.  The decision of the Registrar of Trade Marks issued in 2009[5] was appealed to the Federal Court but the Applicant’s appeal was dismissed on 8 December 2010. 

   ·Godolphin is one of a number of companies within the broader Darley Group of companies that operates as His Highness Sheikh Mohammed bin Rashid Al Maktoum’s thoroughbred stud and breeding operation.  The Opponent is also part of the Darley Group.  The Darley Group is engaged in thoroughbred stud and breeding operations along with horseracing.  The racing arm of the Darley Group is branded as Godolphin, while the stud stallion operation is branded under the Trade Mark.

   ·The Trade Mark is a house trade mark used by different companies in the Darley Group.  Godolphin has an unwritten license from the Opponent to use the Trade Mark in Australia for its stud stallion services.

   ·The Darley Group, including the Opponent, has since 1984 provided horse stud services and breeding of thoroughbred horses from its headquarters in the UK and in various other countries, including Australia, the United States of American and Japan.

   ·Godolphin has provided horse stud services in Australia since its incorporation on 27 July 2000.  Its initial operation involved leasing a property in the Hunter Valley of NSW and importing stallions from other entities in the Darley Group to fill these stables.  It has since established two additional stud farms in NSW and Victoria. It presently has the most stallions (23) and mares (approximately 200) of any thoroughbred stud and breeding operation in Australia.  It receives fees in relation to each of its stallions ranging from $5000 to $110,000.

   ·From July 2000, Godolphin has extensively promoted its services by reference to the Trade Mark, including through marketing materials such as a brochure displaying the Trade Mark and various social media.  This marketing of the Registered Services using the Trade Mark continued in the Relevant Period.  Godolphin also maintains a sales and marketing team of 10-12 full-time people and organises various promotional events including parades of its stallions.

   ·In the opinion of the Declarant, the Trade Mark has a significant reputation both internationally and in Australia through its use by the Opponent, Godolphin and the Darley group.  The Declarant is unaware of any use by the Applicant of the Trade Mark in relation to any services connected with horse breeding or racing.

   [5] Darley Stud Management Company Limited v Kevin Francis Darley [2009] ATMO 91.

   Applicant’s Evidence

5. The Applicant has filed no evidence in this matter. 

   Discussion

6. Sections 92(4)(a) and 92(4)(b) provide distinct and alternative grounds for removal. Because of the specifics of these provisions paragraph (a) is considered to effectively merge with paragraph (b) once a trade mark has been registered for five years.[6] As the Trade Mark had been registered for more than five years as at the date of the Application I need only consider the application for removal under s 92(4)(b) in this case. Therefore, to successfully oppose the Application the Opponent must establish that it has used the Trade Mark pursuant to s 100 of the Act (either through use or circumstances that were an obstacle to use) or, in the event that the Opponent fails to establish such use, the Registrar exercises its discretion under s 101(3) to decide that the Trade Mark should not be removed from the Register.

   [6] M Davison Shanahan’s Australian Law of Trade Marks and Passing Off online edition, 2016 Thomson Reuters, [70.510].

   Use of the Trade Mark in the relevant period

7. Having reviewed the EIS, I find no evidence that the Opponent has directly used the Trade Mark in Australia in the relevant period. At the hearing this was conceded by the Opponent’s representative who relies instead on authorised use of the Trade Mark under ss 7 and 8 of the Act.

8. I find evidence of use of the Trade Mark in Australia for the Registered Services by Godolphin during the relevant period.  While I note the absence of invoices and turnover figures in the EIS (a matter raised by the Applicant in its submissions), this is not determinative since there is clear and highly significant evidence of the use of the Trade Mark by Godolphin for the promotion of its Registered Services, not to mention the unlikelihood of Godolphin maintaining 23 stallions and 200 mares and not providing the Registered Services under the Trade Mark in the non-use period.  The question is whether this use of the Trade Mark by Godolphin is authorised use.

9. The EIS states that Godolphin is a member of the same corporate group as the Opponent and has received an unwritten license from the Opponent to use the Trade Mark in Australia for its stud stallion services operation. Under s 8 of the Act, authorised use requires use under the control of the trade mark owner. In the 2016 Full Federal Court decision in Lodestar Anstalt v Campari America LLC[7], Basenko J summarises the law at paragraph 63:

   Section 8(1) of the Act defines a person who is an authorised user of a trade mark and the key concept in the subsection is that the trade mark is used in relation to goods or services under the control of the owner of the trade mark. Section 8(2) makes it clear that an authorised use only applies to the extent that the trade mark is used under the control of the owner of the trade mark. By reason of s 7(3) an authorised use is taken to be a use of the trade mark by the owner of the trade mark. Subsections 8(3) and (4) provide for two cases where the use of a trade mark is taken to be use under the control of the owner of the trade mark: the owner of the trade mark exercises quality control over the relevant goods or services or the owner exercises financial control over the other person’s relevant trading activities. Section 8(5) makes it clear that the meaning of the expression under the control of is not limited to the two cases identified in s 8(3) and (4) of the Act.

   [7] [2016] FCAFC 92

10. Basenko J later stated that:

    98.        … actual control will be a question of fact and degree. A licence agreement may contain a term that sets in detail a quality standard to be achieved. The details in the agreement may be such that it is not necessary for the registered owner to give directions or instructions from time to time. The licensee, aware of its obligations, may faithfully comply with those obligations without any entreaties or demands from the licensor. The primary judge had such a situation in mind when he referred to cases where there was obedience to the trade mark owner “so instinctive and complete that instruction was not necessary”.

11. In that same case, Katzmann J commented on the construction of section 8 as follows:

    169. Section 8 provides that whether a person is an authorised user of a registered mark and whether the use of the mark by that person is an authorised use depend on whether the person uses the mark under the control of the registered owner (subss (1) and (2)). Subsections (3)–(4) reveal that use will be taken to be use under the control of the owner where, for example, the owner “exercises quality control over goods or services ... dealt with or provided in the course of trade by another person ... and ... in relation to which the mark is used” or “exercises financial control over the other person’s relevant trading activities”. Subsection (5) states that subss (3)–(4) do not limit the meaning of the expression “under the control of” but this statement is ambiguous. It might signify that “control” is not limited to quality control or financial control. On the other hand, it might signify that control is not limited by the context provided by subs (3)–(4). The former construction is the preferable one. In my opinion, the examples given in subss (3) and (4) give colour to the concept of control in s 8. The language used in the two subsections strongly suggests that — regardless of the form control might take — it is the exercise of control that matters, not merely the right to do so.

    …

    184. In my opinion, under the 1995 Act the use of a registered trade mark by an authorised user will only be taken to be use by the registered proprietor of the mark if the registered proprietor exercises control over the use of the mark during the period in question so as to maintain a connection in the course of trade between the goods or services and the registered proprietor. In a case where a registered proprietor of a trade mark is relying on use by an authorised user, it is still necessary to demonstrate that the trade marks indicate a connection in the course of trade with the registered proprietor. The purpose of s 8 is to identify the means by which that is done. …
    185. A bare licence to use a trade mark, particularly a perpetual licence, would not be sufficient. Without more, it would amount to a divestment of control. But there is no reason in principle why control might not be exercised through conditions imposed by agreement on the use to which the trade marks might be put and, in the event of an application to cancel the registration for non-use, proved by evidence that the authorised user is complying with those conditions. Whether or not that is sufficient in any particular case, however, will depend on the terms of the agreement, most importantly whether the control is such as to maintain the registered proprietor’s connection with the marks. As the Act makes clear, that can be achieved if either quality control or financial control is exercised. If it is not, the registered proprietor (upon whom the burden of proof rests), must show that it has exercised some other form of control in the relevant period which maintains its connection with the marks.

    22. The Opponent provides no evidence of the terms of the unwritten licence. At best it is a bare licence, which Katzmann J above specifically noted was insufficient to show authorised use. The Opponent has provided no evidence of any control it maintains over Godolphin and its use of the Trade Mark. In the absence of any evidence of control, the mere fact that Godolphin is part of the same broader group of companies as the Opponent does not show authorised use of the Trade Mark under s 8 of the Act.

    23. I find that the Opponent failed to establish that the Trade Mark was either used directly in Australia by the Opponent or that Godolphin was an authorized user of the Trade Mark under s 8 of the Act. The Opponent has failed to satisfy its onus under s 100(3)(a) of the Act.

    Obstacles to use

    24. The Opponent does not submit, nor does its evidence raise matters which could be regarded as obstacles to use of the Trade Mark in the relevant period, pursuant to s 100(3)(c) of the Act. It is therefore necessary to consider whether the Registrar should exercise her discretion to allow the Registered Services to remain on the Register.

    Registrar’s Discretion

    25.     As noted in Shanahan’s Australian Law of Trade Marks and Passing Off the policy of the Act is to facilitate the removal of an unused trade mark, and the public interest of the integrity of the Register will generally demand the removal of an unused trade mark.[8] However, as indicated at paragraph 11, above, s 101(3) provides the Registrar with a discretion, which, in the words of Bennett J, is:

    [8] M Davison, I Horak Shanahan’s Australian Law of Trade Marks and Passing Off online edition, 2016 Thomson Reuters, [70.2505].

    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 [or Registrar] 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.[9]

    [9] Pioneer Computers Australia Pty Limited v Pioneer KK [2009] FCA 135, [167].

    Her Honour also noted:

    By amendment in 2006, s 101(4) was added to provide that without limiting the matters that the Registrar may take into account in deciding under s 101(3) not to remove a trade mark from the Register, the Registrar may take into account whether the trade mark has been used by the registered proprietor in respect of (a) similar goods or closely related services; or (b) similar services or closely related goods. …

    There is no limitation within s 101(3) on the discretion, nor any indication of the factors to be taken into account.[10]

    [10] Ibid [171]-[172].

1. While considering the discretion in E & J Gallo Winery v Lion Nathan Australia Pty Limited Flick J stated:

   Although the ‘guiding principle behind the discretion is public interest, particularly in the integrity of the register’,[11] the private commercial interests of both [parties] remain matters which may be taken into account when exercising the discretion. Trade mark law, it has been recognised, is more complex than is suggested by the proposition that the supreme—or at least—a predominant interest is the maintenance of the integrity of the Register.[12] Speaking of the 1955 Act, Gleeson CJ, Gaudron, McHugh, Kirby, Hayne and Callinan JJ there pointed out the balance struck by the legislation between various interests. Both the interests of the consuming public and the interests of traders have to be recognised.[13]

   [11] Kowa Co Ltd v Organon [2005] FCA 1282, [92].

   [12] Campomar Sociedad Limitada v Nike International Ltd [2000] HCA 12, [40].

   [13] E & J Gallo Winery v Lion Nathan Australia Pty Limited [2008] FCA 934, [210].

   27.     Factors that have been found relevant to the consideration of whether to exercise the discretion include:

   ·There had been no abandonment of the trade mark;

   ·The registered proprietor of the mark still had a residual reputation in the mark;

   ·There had been sales by the registered proprietor of goods for which removal was sought since the relevant period ended;

   ·The applicant 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;

   ·The registered proprietor was not aware of the applicant’s sales under the mark.[14]

   [14] Pioneer Computers Australia Pty Ltd v Pioneer KK [2009] FCA 135 at [169] citing E & J Gallo Winery v Lion Nathan Australia Pty Ltd [2008] FCA 1005 [202]-[203].

2. In the present case the Trade Mark has been used in Australia during the non-use period for the Registered Services, by a related entity of the Opponent. While I am not satisfied that the use was authorised in the manner required by the Act I am satisfied that the Trade Mark retains a considerable reputation in Australia in respect of the Relevant Services and that the reputation is connected to the broader Darley Group, to which the Opponent has been a part of.

3. I consider that considerable consumer confusion would arise were I to remove the mark and the mark be registered to an entity unconnected to the Darley Group.  I am satisfied that removal would cause some commercial damage to the Opponent and/or Godolphin, notwithstanding that there would be no obstacle to Godolphin registering the Trade Mark in Australia in reliance on their use.  I note the comments in CA Henschke & Co v Rosemont Estates Pty Ltd in which the Court, in contemplating whether to exercise its discretion found that ‘no useful purpose was to be served by removing the Trade Mark from the Register simply for the purpose of, in effect, compelling a fresh application’[15].  In Ritz Hotel Ltd v Charles of the Ritz Ltd, where the trade marks had been used by a company related to the registered proprietor, the Court stated:

   [15] (1999) 47 IPR 63, [170].

   …it would be potentially conducive to public confusion, and tend to undermine the policy of the Act, to remove the existing monopoly by expunging the entries.[16]

   [16] (1988) 12 IPR 417, 485.

4. In the alternative I have been provided with no evidence establishing how the Applicant’s private commercial interests would be affected were I allow the mark to remain on the Register.  It is insufficient, as the Applicant seeks that I do, to simply refer to a decision issued in 2009[17] as providing evidence of the Applicant’s present commercial interests.

   [17] Darley Stud Management Company Limited v Kevin Francis Darley [2009] ATMO 91.

5. While I have considerable regard for the public interest of the integrity of the Register, I am satisfied that it is reasonable in the circumstances to exercise the discretion available to the Registrar pursuant to s 101(3) in favour of the Opponent to allow the Trade Mark to remain on the Register for the Registered Services..

   Decision

6. I decide that the Opponent has established its opposition to removal and the Trade Mark should not be removed from the Register. Accordingly, I decide not to remove trade mark registration 952147 from the Register in relation to any of the goods for which it is registered.

   Costs

   33. The Opponent has been successful in relation to its opposition to the application for removal of the Trade Mark and has requested its costs. I direct that costs in relation to trade mark registration no. 952147 be awarded against the Applicant in accordance with Schedule 8 of the Trade Marks Regulations 1995.

   Nicholas Smith
   Hearing Officer
   Hearings and Oppositions
   18 April 2018