Dr Steven Nearhos v Baseline Consulting Pty Ltd

[2003] ATMO 2

TRADE MARKS ACT 1995

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

Re:Opposition by DR STEVEN NEARHOS to registration of trade mark application 768323(42) - BASELINE - filed in the name of BASELINE CONSULTING PTY LTD.

Background

Trade mark application 768323 was filed by Baseline Consulting Pty Ltd (the applicant) on 24 July 1998.  The trade mark is as follows:

Registration is sought for "Consulting engineering (civil, structural and environmental)", being services in class 42 of the International (Nice) Classification of Goods and Services.

The application was examined at the Trade Marks Office. An examiner found it to be deceptively similar to a prior one by Dr Steven Nearhos, of whose application I will have more to say below. Despite this, the present application was able to proceed under the provisions of s 44(4) of the Trade Marks Act 1995 (the Act).  This was because the applicant was able to show that it had used its trade mark before the date on which Dr Nearhos had filed his own application.  The present application was therefore duly advertised as having been accepted for registration.  Registration is now opposed by Dr Nearhos.

The parties have served and filed evidence to support their positions, as provided for by Part 5 of the Trade Mark Regulations.  This is as follows:

Dr Nearhos's evidence in support

Declaration by	Capacity	Annexures
Peter Maslen	Director, environmental and engineering consultancy
Keith Nix	Principal, chemical, mechanical and environmental consultancy
Peter Kozionas	Scientific instrument supplier
William Gabiola	Sugar cane farmer
Andrew Newton	Director, water treatment company
Jaroslav Kucka	Plant chemist, vehicle transmission manufacturer
Steven Nearhos	Opponent	SPN 1 to 50

Applicant's evidence in answer

Declaration by	Capacity	Annexures
John Koek	Applicant's managing director	JK 1 to JK 60
Allan Carr	Principal, environmental consultants
Pat Crilly	Employee of firm of surveyors
James Campbell	Production manager, land development company

Dr Nearhos's Evidence in reply

Declaration by	Capacity	Annexures
Steven Nearhos	Opponent	SPN 51 to 60

Subsequently, I was assigned to hear the parties and to decide the opposition under delegation from the Registrar of Trade Marks.  At that hearing, the applicant appeared, represented by its patent attorney, Paul Davis of the attorney firm Fisher Adams Kelly.  Dr Nearhos relied on written submissions.

Since then, I have written to the parties and required the applicant to amend the application by restricting the scope of the services specified.  This has been done and I am now prepared to register the application.  What follows are my reasons for this.

Evidence in detail

Dr Nearhos asserts that he has traded under the trade mark BASELINE since 1981.  The fact of trade mark usage falls to me for my determination on the evidence and this critical question cannot be reduced to reliance on assertion.  Dr Nearhos has relied on exhibits such as SPN-4 to support his assertion but the earliest evidence that I can see confirming an unambiguous offer to trade under the trade mark BASELINE in relation to relevant services is the 1983 Brisbane Yellow Pages.  The services offered in trade were, in general terms, bacteriological testing, bioassays, chemical analyses, environmental rehabilitation, minesite rehabilitation and pollution control.

Exhibit SPN-27 shows that Dr Nearhos relocated his business from Brisbane to Dalby, some 2.5 hours drive from the state capital, in the period 1991-93.  In November of 1993, Dr Nearhos learned that a company with the name Baseline Consulting Pty Ltd was engaged in a similar field, and accordingly he filed an application to register his own trade mark.  It is application 616190, to which I will come later.  In December of that year, he instructed his solicitors to write to Baseline Consulting Pty Ltd, which is the applicant in the present matter, and seek from them certain undertakings as to cessation of their use of the trade mark BASELINE.

The applicant refused to agree to Dr Nearhos's demands.  I note that, in its solicitor's letter of 24 January 1994, the applicant made, among others, two points:

• There is a sufficient distinction between Dr Nearhos's business name and the applicant's corporate name to avoid any confusion

• The applicant operated in a field different from Dr Nearhos's.  It was "principally involved in consultancy relating to engineering, project management and contaminated land assessments”.

Consistent with this, I note that the applicant's evidence that, at that time, John Koek, the Managing Director, had a sincere belief that Dr Nearhos did not have any reputation in the field of "development consultant and engineers".

Dr Nearhos did not take court action to protect his position.  He did, however, write to various firms, either actual or potential customers, to alert them to the coexistence of two unrelated entities with similar names and trade marks.  This was in January 1994 and the evidence shows that the applicant quickly became aware of this letter.  The evidence also shows that the applicant was aware of a complaint Dr Nearhos made in 1998 to the Queensland Office of Consumer Affairs.  This was in response to an advertisement that the applicant had placed in The Courier Mail as follows:

The applicant responded to the Office of Consumer Affairs.  So far as may be seen, its response was reminiscent of its reply of January 1994, apparently drawing a distinction between the company logo and the company name.  The Office of Consumer Affairs replied to Dr Nearhos as follows: (their italics and quote marks)

A response was received from Baseline Consulting Pty Ltd advising that the word "Baseline" is used as a logo only and that the company does not carry on business under this name in Queensland...

Supporting Dr Nearhos's claims to a reputation are a total of six supporting declarations.  One is from a cane farmer, another is from a supplier of scientific equipment.  Others appear to be in the fields of manufacturing, water treatment or engineering consultancy.  They all indicate that, in one context or another, they are aware of Dr Nearhos's firm.  Only one has known of Dr Nearhos's firm since 1982, another since 1984 and the remainder first encountered it in the mid to late 90's.  All but one have experienced some form of confusion, or allege their own customers have admitted to confusing the two Baselines.

Dr Nearhos has exhibited some instances of confusion on the part of his insurance company.  He also brings into evidence examples of confusion on the part of the applicant's sub-contractors, who have approached Dr Nearhos's firm for payment.

The applicant's evidence shows that the present firm is a successor to one that was incorporated under an identical name in 1992.  I say "successor" in something of a loose sense.  Dr Nearhos has, in his evidence, been quite critical of the imprecision with which various manifestations of the applicant have used their ACN details, sometimes quoting these inaccurately.  Again, quite clearly, Mr Koek has from time to time inaccurately shortened the name of the applicant to Baseline Pty Ltd.  Finally, I accept that there is no detail of the assignment of the goodwill in the trade mark in question from the original company to the later one.  I put these details to one side, since it is clear that Mr Koek has, at all material times, been one of the driving forces behind the trade mark.  To lose sight of that fact, as the price for tracking down ACN details or stamp duty payments on assignments, would, I think, be an error. 

However, I note that, at the time of adoption of the trade mark, Mr Koek states that "we decided that we did not only provide consulting engineering services but development consulting".  Mr Koek has stated that he is not aware of any confusion in the marketplace between Dr Nearhos's trade mark and that of his company.  However, he does not actually state that he is unaware of any confusion between BASELINE and BASELINE CONSULTING.

Through all this there is a puzzling element of imprecision.  Mr Koek seems to shift very readily between reference to Baseline on one hand and Baseline Consulting on the other.  "Our business is built around the Baseline Consulting corporate identity of which Australian Trade Mark application No 768323 forms a part.  Baseline Consulting is very conscious of its image and, as such, a majority of the staff wear Baseline clothing." ... "Baseline Consulting have used Australian Trade Mark application No 768323 in relation to development consulting and engineering services since 1992.  All of our clients associate our mark with Baseline Consulting.

Consistent with this, Dr Nearhos has produced two letters, SPN-25 and SPN 34.  These are both signed by Mr Koek, in November 1992 and January 2000.  In both instances Mr Koek has, despite the clear and prominent letterhead of Baseline Consulting Pty Ltd, wrongly referred to his company as Baseline Pty Ltd.

The applicant relies among other things on the evidence of the initial formulation of the trade mark by Pat Crilly in February 1992.  I note, however, that the trade mark suggested by Mr Crilly was in fact:

base   line

consulting engineers

rendered with a graphic device that is immaterial to the present matter.  There is no explanation of the change in rendition, from Base Line to Baseline, or the deletion of the descriptive term. 

Issues and decision

Dr Nearhos relied initially on several grounds of opposition.  These were subsequently, in his written submissions, narrowed down as follows:

• s 43 based on a misleading connotation within the mark

• s 60 based on a prior reputation in a deceptively similar trade mark

• s 58 based on ownership

• s 44 based on the blocking effect of Dr Nearhos's own registration

The first of these causes some difficulty, because that head of opposition is simply not able to be argued in the present context.  Section 43 lays down that:

An application for the registration of a trade mark in respect of particular goods or services must be rejected if, because of some connotation that the trade mark or a sign contained in the trade mark has, the use of the trade mark in relation to those goods or services would be likely to deceive or cause confusion.

This provision is confined to situations where the connotation, or meaning, either direct or implicit, is inherent in the mark.  See, in that respect T.G.I. Friday's Australia Pty Ltd v TGI Friday's Inc, [2000] FCA 720, 48 IPR 512, at 43. "Connotation" for the purposes of s 43, does not extend to proprietorial conflicts between conflicting business names.

I will therefore consider the first head as relating to s 60, with which I will now deal. 

Section 60:

Trade mark similar to trade mark that has acquired  a reputation in Australia

60. The registration of a trade mark in respect of particular goods or services may be opposed on the ground that:

(a) it is substantially identical with, or deceptively similar to, a trade mark that, before the priority date for the registration of the first-mentioned trade mark in respect of those goods or services, had acquired a reputation in Australia; and
(b) because of the reputation of that other trade mark, the use of the first-mentioned trade mark would be likely to deceive or cause confusion.

Essentially, Dr Nearhos argues that there is evidence of confusion and that all of the other necessary elements are present.  However, with due respect to his opinion, the evidence of reputation in the trade mark BASELINE is somewhat lacking.  I have little doubt that Dr Nearhos is a man of repute in some scientific circles but I have not been shown that this translates into the trade mark in question having a reputation.  Details of turnover and advertising expenditure are not given.  I am left to infer that a reputation exists, and exists in the trade mark as distinct from its originator, from a sampling of documents, a handful of declarations and a selection of submissions to various scientific bodies or government groups.  Moreover, there is an onus on an opponent to establish, positively, the necessary extent of reputation.  An opponent cannot leave this to inference.  Accordingly, the s 60 ground is not established and I turn to the ownership ground, s 58. 

Ownership - s 58.

This states:

Applicant not owner of trade mark

58. The registration of a trade mark may be opposed on the ground that the applicant is not the owner of the trade mark.

Note:  For applicant see section 6.

Put as simply as possible, the first use of a trade mark can block the registration, by another person, of the same trade mark for "the same kind of thing".  See Shanahan's Australian Law of Trade Marks and Passing Off, p 157-159.

I think it would be idle to say that the trade mark in suit is not substantially identical to the trade mark BASELINE, used by Dr Nearhos.  Accordingly, where Dr Nearhos's use has preceded that of the applicant for specific services, Dr Nearhos, not the applicant, is the owner.  Conversely, where the services in question are not the same kind of thing, the applicant's claim is not affected.  However, the issue here is not about similarity of services.  S 58 goes to issues of identical claims, and the services in dispute must be the same, not simply share some nexus sufficient to lead to confusion.

Neither party made convincing submissions on the extent to which Dr Nearhos's business, prior to the filing date of the application, was in the same field as the applicant.  It appears that Dr Nearhos's consultancy services, while rendered to a range of customers, were essentially in the field of water quality analysis and management.  The applicant, on the other hand, was essentially a civil engineering consultancy operating in relation to property development.  However, the services claimed by the applicant were, at the time of the hearing, broader than the area of initial use. Therefore it is be sufficient to say, for the moment, that the ownership ground was established for some, but only some, of the services originally specified for application 768323. 

Section 44:

The relevant portion commences at subsection 44(2).  It provides;

Identical etc. trade marks

(2) Subject to subsections (3) and (4), an application for the registration of a trade mark (applicant's trade mark) in respect of services (applicant's services) must be rejected if:

(a) it is substantially identical with, or deceptively similar to:

(i) a trade mark registered by another person in respect of similar services or closely related goods; or
(ii) a trade mark whose registration in respect of similar services or closely related goods is being sought by another person; and

(b) the priority date for the registration of the applicant's trade mark in respect of the applicant's services is not earlier than the priority date for the registration of the other trade mark in respect of the similar services or closely related goods.

Note 1: For deceptively similar see section 10.

Note 2:  For similar services see subsection 14(2).
Note 3:  For priority date see section 12.

(3) If the Registrar in either case is satisfied:

(a) that there has been honest concurrent use of the 2 trade marks; or
(b) that, because of other circumstances, it is proper to do so;

the Registrar may accept the application for the registration of the applicant's trade mark subject to any conditions or limitations that the Registrar thinks fit to impose. If the applicant's trade mark has been used only in a particular area, the limitations may include that the use of the trade mark is to be restricted to that particular area.

Note:  For limitations see section 6.

(4) If the Registrar in either case is satisfied that the applicant, or the applicant and the predecessor in title of the applicant, have continuously used the applicant's trade mark for a period:

(a) beginning before the priority date for the registration of the other trade mark in respect of:

(i) the similar goods or closely related services; or
(ii) the similar services or closely related goods; and

(b) ending on the priority date for the registration of the applicant's trade mark;

the Registrar may not reject the application because of the existence of the other trade mark.

Note 1:  An authorised use of the trade mark by a person is taken to be a use of the trade mark by the owner of the trade mark (see subsection 7(3)).

Note 2:  For predecessor in title see section 6.
Note 3:  For priority date see section 12.

For the purposes of this provision, Dr Nearhos relies on his own registered trade mark.  This is more elaborate than the simple word mark BASELINE at issue in terms of s 58.  The trade mark is registered as a series (s 51) of two marks, under registration number 616190.  The statement of services for that application is detailed, and reads as follows:

Environmental (Resource Management) consultancy offering services including bacteriological testing, bioassays, bioaugmentation, bioremediation, chemical analyses, environmental surveys, surveys of mine leachates and other leachates, surveys of ground-water contamination, surveys of ballast water, surveys of air-conditioner cooling towers, minesite rehabilitation and pollution control, aquaculture services including aquatic and fish disease diagnosis and control, water quality management, bio-filter management, depuration monitoring and control and post-harvest evaluations of fish and shellfish

Fairly obviously, the second version in the series, shown below right, exacerbates any potential confusion with the applicant's services.  Equally, I note that Dr Nearhos was apparently content, at the time of filing, to accept that "Environmental (resource management) consultancy", with or without brackets, was an apt description of his services.

 

Mr Davis conceded, quite correctly, that Dr Nearhos's trade marks are deceptively similar to that of the applicant.  Dr Nearhos's priority date is earlier than the present application.  The services in question are similar, for the purposes of s 44(2).  Therefore, the provisions of that subsection are triggered. 

If the present application is to proceed, given this, it can only be by way of either s 44(3) or (4).  If either of those provisions is established, I believe that I have the discretion under s 55 to put the mark onto the register, should the facts justify it, notwithstanding an adverse finding under s 58.  Consistent with this, it was here that the applicant's attorney, Mr Davis, deployed his arguments.

As to s 44(3), he noted that there are five issues to consider.  These are conveniently set out and discussed in Shanahan's Australian Law of Trade Marks and Passing Off, p 202-203.  Mr Davis addressed these in the order listed by the author.

• honesty or otherwise of the concurrent use

• extent of use in duration, area and volume

• degree of confusion likely to ensue between the trade marks in question

• whether instances of confusion have in fact occurred

• relative inconvenience that would be caused to the respective parties if the applicant's trade mark should be registered or not registered

Mr Davis said that the Trade Marks Office Manual of Practice and Procedure says that an applicant's account of the adoption of a trade mark will usually be taken at face value.  That is so in examination, but I do not think that, once registration is opposed, the original decision is immune to question, argument and re-evaluation. 

In this instance, Dr Nearhos has argued that, whatever the circumstances of adoption, the subsequent pattern of use was, at least, questionable.  He casts the applicant as, at best, heedless of Dr Nearhos's own claims, first put to it in November 1992.  Moreover, Dr Nearhos notes that the mark that the applicant regularly uses as a trade mark is not the one coined by Pat Crilly.  The changes made, he says, increase the level of deceptive similarity.  While I think he is correct there, he draws adverse inferences from this, something that I decline to do as it seems to be mere speculation. 

Mr Davis argued that, at the time of adoption, Mr Koek was unaware of Dr Nearhos's trade mark.  Dr Nearhos asserts that this was unlikely.  Mr Koek, argues Dr Nearhos, would inevitably have learned of Dr Nearhos's operations if he had applied to incorporate a company name Baseline Pty Ltd.  However, there is no evidence that Mr Koek has ever tried to do this, and Dr Nearhos's assertion is not so prima facie likely as to place any onus on the applicant to rebut any such inference on my part.

Where I am far from satisfied is in the use, as opposed to the adoption, of the trade mark.  Dr Nearhos had, quite clearly, threatened the applicant with court proceedings.  Of this, Mr Koek declares that:

... as there was no further correspondence on this matter I therefore assumed that the matter was over and I could continue with business as usual, particularly as it appeared that Mr Nearhos' Baseline business did not operate in the same geographical location as Baseline Consulting.

From this, it is clear that Mr Koek had no positive basis for assuming that the conflict was at an end.  Secondly, from this explanation of the state of affairs, it appears to me that the applicant wishes to be seen as Baseline when it is at work, but Baseline Consulting when it wishes to be distinguished from (the other) Baseline.  I do not suggest that this amounts to dishonesty, nor do I imply it.  However, it shows recklessness towards the possibility of deception and confusion, such that the applicant is not, in my view, entitled to the exercise of this discretionary provision.

As to the remaining factors, I also have some doubt about the applicant's claim that the discerning nature of the client bases of the firms concerned would minimise confusion.  Likewise, I think that the instances of confusion disclosed by Mr Nearhos, while they may post-date the filing of the opposed application, are at least illustrative of the possibility that existed at earlier times, and should be given weight on that basis.

Therefore, while I am aware that the extent of the applicant's business favours registration, I am, on balancing the relevant factors, not inclined to agree that the discretion should be exercised here, having particular regard to the apparent disregard the applicant has paid to Dr Nearhos's rights.

As to s 44(4), I have already found that the evidence, at the examination stage, showed the necessary prior use. I have already said that I am satisfied that the evidence of Mr Koek is sufficient to allow the original user to be seen as a predecessor of the current applicant. Similarly, I am not convinced by Dr Nearhos's submissions about the importance of changes that the applicant has made to get-up over time. These amount to trivial variations in colour and in the proportions of border applied to what has been, when used, the BASELINE trade mark.

However, the terms of the application at the time it was accepted for registration are broader than is necessary to define the scope of the original acts of prior use. The services have been framed to include the applicant's somewhat broader current and future business interests. There is no statutory basis for this. Therefore, the application of s 44(4) was not fully justified, on the facts as disclosed in opposition, in relation to the application at the time it was opposed.

Conclusion:

I have found that Dr Nearhos, the opponent, has established, to an extent, the grounds under s 44 and s 58.  Dr Nearhos has not shown a breadth of right under s 58 that would justify the outright refusal of the application for all of the services the applicant claimed.  However, he has shown that the present application was too broad in scope to be registered.  Accordingly, I allowed the applicant one month to amend the application to relate to a narrower subset thereof, "consulting engineering services in relation to property development".  If the application was so amended, I said that I would register it but that, if not, I would refuse it. 

As I have already said, a suitable amendment was proposed and the application has been appropriately restricted. Given the availability of s 44(4), I now direct that registration proceed unless, within the time prescribed under the Federal Court rules, the Registrar of Trade Marks is served with a copy of a notice of appeal.

I make no award of costs.  Each side must bear its own.

Terry Williams

Hearing Officer

Trade Marks Hearings

9 January 2003