Ellice Whichello and Daniel Conn v Combine Air International Pty Ltd

[2022] ATMO 196

TRADE MARKS ACT 1995

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

Re:Oppositions by Ellice Whichello and Daniel Conn to registration of trade mark application numbers 2092407 COMBINEAIR TRAINING (figurative) in class 41, 2099459 Goat Head Device and 2099460 CA (figurative) both in classes 28 and 41, all in the name of Combine Air International Pty Ltd

Delegate:

Tracey Berger

Representation:

Opponent: Self-represented

Applicant: Self-represented

Decision:

2022 ATMO 196

Trade Marks Act 1995 (Cth) – opposition under section 52 – grounds of opposition pressed under ss 42(b), 58 and 62A – no grounds found – trade marks to proceed to registration

Background

1. This is a decision on the oppositions by Ellice Whichello and Daniel Conn (‘Opponents’) to registration of the Australian trade mark applications (collectively the ‘Applications’) filed on 1 July 2020 (‘Relevant Date’) in the name of Combine Air International Pty Ltd (‘Applicant’) for:

Trade Mark Number	Trade Mark (collectively ‘Trade Marks’)	Specification
2092407	Class 41:  Conducting fitness classes; Conducting fitness classes (aerobics); Fitness and exercise clinics, clubs and salons; Health club services (health and fitness training); Instruction in physical fitness; Personal trainer services (fitness training); Physical fitness centre services; Physical fitness instruction; Physical fitness training services; Physical fitness tuition; physical fitness assessment services for training purposes
2099459	Class 28:  Fitness apparatus; Fitness exercise appliances; Fitness exercise machines; Indoor fitness apparatus (other than for medical purposes) Class 41:  Boot camp services (fitness training); Conducting fitness classes; Conducting fitness classes (aerobics); Fitness and exercise clinics, clubs and salons; Health club services (health and fitness training); Instruction in physical fitness; Lifestyle counselling and consultancy (health and fitness training); Personal trainer services (fitness training); Physical fitness centre services; Physical fitness instruction; Physical fitness training services; Physical fitness tuition; physical fitness assessment services for training purposes
2099460

The services of application number 2092407 are essentially the same as applications 2099459 and 2099460.  Accordingly, the goods and services of the Applications are herein after referred to as the ‘Goods and Services’.

1. The Applications were examined as required by s 31 of the Trade Marks Act 1995 (Cth)[1], accepted for possible registration and subsequently advertised for opposition purposes on 2 December 2020.  The Opponents filed a Notice of Intention to Oppose the Applications on 26 January 2021[2], followed by its Statement of Grounds and Particulars (‘SGP’) on 25 February 2021.  The Applicant filed a Notice of Intention to Defend the oppositions on 14 April 2021.

   [1] Unless otherwise stated, each reference to a section or regulation is a reference to a section of the Trade Marks Act 1995 (Cth) ( ‘Act’) or regulation of the Trade Marks Regulations 1995 (Cth) (‘Regulations’).

   [2] It appears that there is a typographical error in the spelling of Ellice Whichello’s name in the Notice of Intention to Oppose where it is spelt Wichello.

2. The parties then filed their evidence in accordance with the timetable set out in reg 5.14.  The Opponents filed evidence in support of the oppositions (‘EIS’) on 19 July 2021 and the Applicant filed its evidence in answer (‘EIA’) on 19 October 2021.  The Opponents did not file evidence in reply.

3. Following the conclusion of the evidence stage, the parties were given the opportunity to request a hearing.  The Applicant requested a hearing by written submissions and filed its submissions on 22 August 2022.  The Opponents did not request to be heard.  This matter has been allocated to me, a delegate of the Registrar of Trade Marks, to decide based on the SGP, evidence of the parties and written submissions of the Applicant.

   Grounds of opposition, onus and relevant date

4. In its SGP, the Opponents nominated grounds of opposition under ss 42(b), 58 and 62A.

5. The Opponents bears the onus of establishing at least one of the nominated grounds of opposition[3] on the balance of probabilities.[4] 

   [3] Food Channel Network Pty Ltd v Television Food Network GP [2010] FCAFC 58, [32] (Keane CJ, Stone and Jagot JJ).

   [4] Pfizer Products Inc v Karam [2006] FCA 1663, [22] (Gyles J); Telstra Corporation Limited v Phone Directories Company Pty Ltd [2015] FCAFC 156, [133] (Besanko, Jagot and Edelman JJ).

6. The date at which the rights of the parties are to be determined is the Relevant Date.[5]

   [5] Southern Cross Refrigerating Co v Toowoomba Foundry Pty Ltd (1954) 91 CLR 592, 595 (Kitto J).

   Evidence

7. The following evidence was filed:

   EIS

   Declaration of Ellice Whichello made on 20 July 2021 with Attachments A-F (‘Whichello Declaration’).

   EIA

   Declaration of Peter Hickey, director of the Applicant, made on 19 October 2021 with Annexures A-X (‘Hickey Declaration’).

   Summary of Dispute

8. In February 2020, the Opponents and AirGroup Pty Ltd, the majority shareholder of the Applicant, discussed setting up a franchise of gyms based on the F45 group training model combined with altitude training. 

9. The basis of the dispute is the ownership of the Trade Marks.  The Opponents allege that Ellice Whichello invented the name ‘Combine Air’ and owns the Trade Marks as an independent contractor to the Applicant.  The Applicant asserts that they are the owner of the Trade Marks and any input from Ms Whichello was in her capacity as the Applicant’s employee.

   Opponents’ Evidence

10. Ms Whichello declares that on 17 February 2020, the Opponents approached Scott Reynolds, a shareholder of AirGroup and Peak Altitude, and discussed transforming the existing Peak Altitude gyms and establishing new franchised gyms to offer fitness classes based on the F45 group training model combined with altitude training (‘New Business’).  The next day, the Opponents followed up the discussion by email with suggestions on the potential setup and process for franchising the New Business.

11. On 19 February 2020, the Opponents received offers of employment by email.  A number of emails are included in the EIS showing the negotiations between the parties on the Opponents’ roles and compensation package.

12. Ms Whichello declares that she met with Daniel Conn on 18 March 2020 and proposed the name ‘Combine Air Training’ for the New Business.  The next day, Ms Whichello sent an email to the Applicant with recommendations on building the franchise and including the suggested name ‘Combine Air’.

13. On 22 and 23 March 2020, the Applicant engaged in further negotiations with Daniel Conn on his potential package and wages.  In this discussion, the Applicant refers to the proposed name ‘Combine Air’. 

14. The Opponents received their first pay from the Applicant on 31 March 2020 even though no employment agreements had yet been signed.

15. On 3 April 2020, the Opponents gave a presentation to the Applicant on the concept of the proposed gym franchise business including two potential brand names (one being ‘Combine Air’), brand colours, identity direction and mock-ups. Ms Whichello followed up this presentation in subsequent emails with the progress on creation of the brand identity, website copy, marketing, social media, training concept and proposed fitness classes.

16. On 4 May 2020, Ms Whichello signed a contract in her personal name with Crea Crea designs to develop the Trade Marks.  A copy of this contract is annexed to the Whichello Declaration.

    Applicant’s Evidence

17. Mr Hickey attests that he is a director of Combine Air Holdings Pty Ltd (‘CA Holdings’) and each of its subsidiaries which include the Applicant, Combine Air Franchising Pty Ltd (‘CA Franchising’) and Combine Air Operations Pty Ltd (a shareholder of the Applicant).  Mr Hickey is also the majority shareholder of AirGroup Pty Ltd which is the majority shareholder of CA Holdings.

18. Since 2014, Mr Hickey and his business partner, Scott Reynolds, had been operating an altitude training business called Peak Fitness Altitude Training (‘Peak Fitness’) with several locations in Sydney.

19. In February 2020, Mr Hickey and Mr Reynolds met with the Opponents regarding their potential involvement in the New Business.  A number of emails dated between 17 February 2020 and 1 March 2020 are annexed to the Hickey Declaration covering a potential rebranding of Peak Fitness and the nature and terms of the Opponents’ involvement in the New Business.

20. Mr Hickey attests that each of the Opponents was paid fortnightly by a company called Fitness Local Mortlake Pty Ltd (‘FLM’).  Mr Hickey is a director and the sole shareholder of FLM.  FLM issued pay slips to each of the Opponents, paid PAYG withholding tax, made compulsory superannuation payments and recorded leave accruals for each of the Opponents.  Pay slips for Ms Whichello from 1 March 2020 to 28 September 2020 are included as annexures to the EIA.  Mr Hickey declares that FLM paid the Opponents because the New Business was not yet generating revenue.  However, FLM charged the Applicant for the Opponents’ costs.  Invoices issued by FLM to the Applicant are annexed to the EIA.  The Opponents did not invoice FLM or the Applicant for their services as might be expected of a contractor.

21. In July 2020, Mr Hickey instructed his solicitors to draft employment agreements for the Opponents.  These solicitors sent draft employment agreements to each of the Opponents on 18 August 2020.

22. Mr Hickey attests that at this time he was engaged in negotiations with the Opponents regarding the terms on which each would be issued shares in Combine Air Holdings Pty Ltd.  As the Opponents would be minority shareholders, they wanted their employment agreements to specify that they had delegated authority to carry out the day to day business in their respective roles in the New Business.  The extent of this delegated authority also formed part of the negotiations after 18 August 2020.

23. No agreement was reached and the Opponents did not execute the employment agreements but the Opponents continued to perform their roles both before and after 18 August 2020.

24. Mr Hickey disputes Ms Whichello’s assertion that she owns the Trade Marks because she commissioned their preparation and declares that she did so in her capacity as an employee of the Applicant.  All costs incurred in connection with the design of the Trade Marks were paid by the Applicant and most invoices were issued to the Applicant.  On a few occasions, Ms Whichello paid the graphic designers directly and sought reimbursement from the Applicant.  Emails regarding these invoices and reimbursements are included in the EIA.

25. On 10 March 2020, Mr Hickey sent an email to Mr Reynolds and the Opponents attaching a document called “Peak rebranding options” with potential names for discussion and agreement by the team.  This email and document are annexed to the EIA as are various other emails between Mr Hickey, the Opponents and other team members regarding potential names, branding and website copy. In particular, Mr Hickey annexes an email of 3 May 2020 where Ms Whichello seeks approval from Mr Hickey and Mr Reynolds to engage Crea Crea.

26. In around July 2020, Ms Whichello engaged a new graphic designer to finalise the Trade Marks and the invoices issued by this graphic designer to Combine Air Training are annexed to the EIA.

27. Further emails were exchanged between Ms Whichello, Mr Reynolds and Mr Hickey on 15 and 16 May 2020 regarding branding, logos and the intellectual property.

28. Mr Hickey corresponded with Ms Whichello about submitting trade mark applications and the marks which would be the subject of the Applications. 

29. On 16 July 2020, Mr Hickey received an email from Ms Whichello enquiring about payment to a third graphic designer and Mr Hickey informed Ms Whichello that the invoice had been paid. 

30. On 11 December 2022, the Applicant entered into a deed with Combine Air Franchising Pty Ltd (‘CA Franchising’) granting CA Franchising a licence to use the Trade Marks for the Combine Air gym franchises.  This deed includes warranties and representations as to the Applicant’s ownership of the Trade Marks.  Mr Conn executed that deed in his capacity as a director of each of the companies.  A copy of the deed executed by Mr Conn is included in the EIA.

31. The Opponents are both directors of Wellilux Pty Ltd (‘Wellilux’) which company was a minority shareholder of CA Holdings.  On 21 January 2021, Mr Conn sent Mr Hickey an email insisting that Wellilux be issued further shares in CA Holdings.  This proposal was rejected and shortly thereafter, Mr Conn resigned as a director of CA Holdings.  The next day, the Notice of Intention to oppose the Applications was filed by the Opponents.

32. On 1 February 2021, a directors meeting was held and the Opponents’ employment was terminated for cause.

    Discussion

    Section 42(b)

33. Section 42(b) provides that an application for registration of a trade mark must be rejected if its use would be contrary to law.

34. In its SGP, the Opponents claims:

    Under the Copyright Act 1968 (Cth), copyright in works created in the course of employment will generally be owned by the employer. However, for those provisions to apply, there needs to be an employment relationship and the works need to have been created in the course of employment. At the time the logo designs were created, Ellice was not an employee and commissioned the works as an independent contractor. As this is the case, pursuant to the Crea Crea agreement, and in the absence of an express assignment by Ellice to Combine Air, it is evident that Ellice owns the copyright in logo designs created by Crea Crea Design.

35. In order to establish that use of the Trade Mark would be in breach of the Copyright Act 1968 (‘Copyright Act’), it is necessary to establish that the Trade Marks are or contain subject matter in which copyright subsists in Australia, and that use of the Trade Marks by the Applicant would constitute an infringement of that copyright.

36. Section 32 of the Copyright Act provides that copyright subsists in an unpublished original artistic work, or an artistic work first published in Australia, where the author was a qualified person (being an Australian citizen or resident) when the work was made. Under s 31 of the Copyright Act, copyright includes the rights to reproduce an artistic work in material form and publish the work. Under s 36 of the Copyright Act, the reproduction or publication of an artistic work without licence from the owner constitutes an infringement of the copyright. Section 10 of the Copyright Act defines an ‘artistic work’ to include a drawing, whether the work is of artistic quality or not. The threshold for what constitutes an artistic work is low.[6]

    [6] Advantage-Rent-A-Car Inc v Advantage Car Rental Pty Ltd [2001] FCA 683, [17] (Madgwick J).

37. It does not appear to be in dispute that copyright subsists in the Trade Marks.  For the purposes of this decision, I have assumed that copyright subsists in each of the Trade Marks and focussed on whether Ms Whichello owns copyright in the Trade Marks by virtue of having authored the Trade Marks as an independent contractor to the Applicant.

38. In Australia, there is no legal requirement to have a written contract of employment between an employer and employee.  It is possible to work under an implied employment contract where the general terms of employment are determined by state and federal laws, and previous court cases.  Therefore, the fact that Ms Whichello did not enter a written employment contract with the Applicant does not necessarily mean that she was acting as an independent contractor. 

39. In simple terms, an employee is hired by an employer to carry out work as the employer directs, whereas an independent contractor works for themselves and hires out their services.

40. In my opinion, on an assessment of the evidence, it is clear that Ms Whichello was an employee of the Applicant.  From as early as February 2020, the Opponents indicated that they wanted to be part of the New Business ‘team’ and on 23 February 2020 confirmed to the Applicant that they were both looking for full time roles in the New Business. 

41. Ms Whichello asserts that the email of 21 May 2020 between Ms Whichello and Mr Hickey confirms her status as a contractor.  The email chain relied on by Ms Whichello commences with an email from Mr Hickey to formalise a discussion they had about Ms Whichello taking the position of Head of Sales and Marketing before moving to Head of Business Development and Marketing once the New Business is set up.  That email specifically offers Ms Whichello a salary package (including base salary and superannuation) and refers to her status as “an employee (v contractor)” which entitles her to various leave.  Ms Whichello replied to the next day (21 May 2020) and whilst that email states “thank you for allowing me to work as a contractor to under mortlake”, Ms Whichello then proceeds to negotiate the salary package (including superannuation) with 3 monthly salary reviews.  Mr Hickey’s emails continually refer to the Opponents’ salary packages including superannuation and refer to the Opponents as part of the team.

42. From at least 1 March 2020, Ms Whichello was paid in the capacity of an employee by the Applicant (through FLM) paying her a salary (less PAYG) and superannuation, and recording her leave accruals as evidenced by the pay slips in the EIA.  Some of these payments including JobKeeper top-up payments which were only available to employees and not contractors.

43. In early April 2020, Mr Reynolds confirmed that he would secure the ‘Combine Air Training’ domain names and Mr Hickey replied confirming that he would work on the trade marks which would be finalised as a group.  Mr Hickey’s email of 17 April 2020 confirms his responsibility for the trade marks. 

44. On 3 May 2020, Ms Whichello emailed Mr Hickey, Mr Reynolds, Mr Conn and another team member about Crea Crea creating the design for “our branding” and providing Crea Crea’s quote for approval.

45. It is clear from the various emails provided in the EIS and EIA that Ms Whichello was an employee of the Applicant and carried out her role, including working with graphic designers on the various trade marks, under the direction of the Applicant[7].  It is evident that Mr Hickey directed Ms Whichello to have changes made and organised changes himself to the Trade Marks during the course of their creation.  The fact that Ms Whichello entered into the contract with Crea Crea in her personal name does not detract from the fact that she did so in her capacity as the Head of Marketing on behalf of the Applicant who paid for the design of the Trade Marks and had ultimate approval of the Trade Marks. 

    [7] For example, Hickey Declaration, Exhibits P and Q.

46. I am satisfied that Ms Whichello is not the owner of copyright in the Trade Marks and that her involvement in the creation of the Trade Marks was carried out in her capacity as an employee of the Applicant and under the Applicant’s direction and approval.  Accordingly, the s 42(b) ground of opposition is not established.

    Section 58

47. To establish this ground, the Opponents must show use in Australia, by some person other than the Applicant, of a trade mark(s) that is substantially identical to each of the Trade Marks,[8] in relation to goods or services that are the ‘same kind of thing’ as the Applicant’s Goods and Services.[9]  The trade marks relied on by the Opponents must have been used in the course of trade prior to the Relevant Date, or prior to the date of first use of the Trade Marks, whichever is earlier.

    [8] Carnival Cruise Lines Inc v Sitmar Cruises Ltd [1994] FCA 936; (1994) 120 ALR 495, 513 (Gummow J).

    [9] Re Hicks's Trade Mark [1897] VicLawRp 118; (1897) 22 VLR 636, 640 (Holroyd J).

48. The Opponents claim that they are the owners of the Trade Marks which are the subject of the Applications and there does not appear to be any dispute that the parties are interested in the same goods and services.  Accordingly, the only question is whether the Trade Marks have been used in the course of trade by either party before the Relevant Date.  If there has been no use of the Trade Marks in the course of trade before the Relevant Date, the owner of the Trade Marks is the first to file an application for each of the Trade Marks which in this case is the Applicant.

1. The type of use sufficient to establish ownership of a trade mark is “public use in Australia of the mark as a trade mark”.[10]  Use as a trade mark means that there must be an actual offer to trade in the Goods and Services under each of the Trade Marks and mere “preliminary discussions and negotiations” is insufficient.[11]

   [10] Moorgate Tobacco Co Ltd v Philip Morris Ltd (No 2) (1984) 156 CLR 414, 432-433 (Deane J).

   [11] Ibid, 434.

2. The Opponents have not filed any evidence that they have used the Trade Marks in connection with fitness apparatus or the provision of fitness services or otherwise used the Trade Marks in the course of trade.  In fact, the Opponents admit in their SGP that they have not used the Trade Marks for the Goods and Services but claim that any use of the Trade Marks by the Applicant is under an implied licence from the Opponents. 

3. There is no evidence that the Applicant used the Trade Marks in the course of trade for the Goods and Services before the Relevant Date.  Although Mr Hickey attests that the Applicant operates COMBINE AIR gyms in Rozelle and Concord, it is not apparent when these gyms began operating under the Trade Marks.  An email of 20 January 2021 from Mr Conn to Mr Hickey[12] states:

   As mentioned, it’s been an amazing achievement that we’ve managed as a group, to deliver to your investors, 2 x amazing clubs that have exceeded forecasts and are looking to be profitable.

   As the new year starts, we have been spending time over the break reviewing the last 6 months and now looking forward to what lies ahead for the rollout of the franchise business. As we have discussed on and off over the last couple of months, we are dedicated to making this a success.

   Whilst it is apparent that the gyms were operating by January 2021, this email does not disclose when the Trade Marks were first used for these gyms.  Given the Trade Marks were still being finalised in mid-June 2020[13], it seems improbable that it was before that time.  Further, this email suggests to me that the Opponents accept that they are part of the team and the Applicant is operating the gyms under the Trade Marks. 

   [12] Hickey Declaration, Annexure U.

   [13] Hickey Declaration, Annexure Q.

4. On my assessment of the evidence, neither the Applicant nor the Opponents have publicly used the Trade Marks in the course of trade in connection with the Goods and Services before the Relevant Date.  The parties were still engaged in the preliminary stages of preparing to launch the New Business and had not made public use of the Trade Marks for the Goods and Services before the Relevant Date. Hence the owner of the Trade Marks is the first to file the Applications, namely the Applicant.

5. Accordingly, the s 58 ground of opposition is unsuccessful.

   Section 62A

6. Section 62A provides that the registration of a trade mark may be opposed on the ground that the application was made in bad faith.

7. Bad faith is not defined in the Act.  However, the following principles which are relevant to the present oppositions have emerged from the Federal Court decisions in Fry Consulting Pty Ltd v Sports

   Warehouse Inc (No 2)[14] and DC Comics v Cheqout Pty Ltd:[15]

   ·    Bad faith for the purposes of s 62A must be [as at the Priority Date] and must relate to the making of the subject of the application.[16]

   ·    While bad faith is a serious allegation that “impugns the character of an individual or collective character of a business” requires correspondingly cogent evidence, the standard of proof is the balance of probabilities, rather than that of beyond reasonable doubt.[17]

   ·    Conduct that falls short of the standards of acceptable commercial behaviour observed by reasonable and experienced persons in the particular area is sufficient. Bad faith does not require dishonesty.[18]

   ·    The registration of a trade mark is designed to enable bona fide proprietors to protect their proprietary rights without having to prove unfair trading.[19]

   ·    All the circumstances surrounding the application to register the mark are relevant.[20]

   [14] (2012) 201 FCR 565 (Dodds-Streeton J) (‘Fry Consulting’).

   [15] (2013) 212 FCR 194 (Bennett J) (‘DC Comics’).

   [16] Fry Consulting (n 12) 593-4, [145].

   [17] Ibid.

   [18] Ibid 594-5 [147]-[148], 597, [165].

   [19] DC Comics (n 13) 206 [62].

   [20] Ibid.

8. Determining whether an application was filed in bad faith requires a subjective assessment of what the Applicant knew at the Relevant Date and then objectively assessing whether in light of that knowledge, would a person adopting proper standards of commercial behaviour consider the act of filing the trade mark to be in bad faith?

9. In the SGP, the Opponents claim that the Applicant was aware it was not the owner of the Trade Marks and filed the applications in bad faith.

10. As I have already determined above, the Opponents are not the owner of the Trade Marks.  The evidence filed by the parties demonstrates that at all times, the Applicant directed the Opponents, approved and paid for the development of the Trade Marks.  Mr Hickey nominated himself on more than one occasion, which was conveyed to the Opponents, as the team member with ultimately responsibility for the Trade Marks.

11. Further, Ms Hickey corresponded with Ms Whichello in May[21] and June 2020[22] about the Trade Marks and filing of the Applications.  It is evident from these emails that the Applications would be filed by the Applicant and from the June email chain, that a preliminary assessment request (‘Headstart’) had already been lodged by the Applicant.  Ms Whichello had no objection and made no claim to own the Trade Marks for 6 months after the filing of the Applications when the Notice of Intention to Oppose was filed following the dispute between Wellilux and the Applicant.

    [21] Hickey Declaration, Annexure O.

    [22] Hickey Declaration, Annexure Q.

12. I am satisfied that the Opponents have not established that the Applications were filed in bad faith and the s 62A ground fails.

    Decision

13. Section 55 relevantly provides:

    55  Decision

    (1)  Unless subsection (3) applies to the proceedings, the Registrar must, at the end, decide:

    (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.
    
    

14. The Opponents have not established a ground of opposition nominated in the SGP.  I direct that trade mark application numbers 2092407, 2099459 and 2099460 may proceed to registration not less than one month from the date of this decision.

15. If the Registrar is served with a notice of appeal before that time, I direction that registration shall not occur until the appeal is either withdrawn or discontinued.  Otherwise the disposition of the Applications should be in accordance with the Court’s order or direction.

16. The Applicant has sought an award of costs in its favour. I see no reason to depart from the general rule that costs follow the event. Accordingly, in respect of trade mark number 2092407, I award costs against the Opponents under s 221 in accordance with the relevant amounts detailed in Schedule 8 of the Regulations. In respect of trade mark numbers 2099459 and 2099460, I award reduced costs against the Applicant in the same manner as indicated in Hume Industries (Malaysia) Berhad v James Hardie & Coy Pty Ltd.[23]

    [23] [2001] ATMO 78.

Tracey Berger

Hearing Officer

Delegate of the Registrar of Trade Marks

8 November 2022