Enagic Australia Pty Ltd and Enagic Co., Ltd v Horizons (Asia) Pty Ltd

TRADE MARKS ACT 1995

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

Re:Opposition by Enagic Australia Pty Ltd and Enagic Co., Ltd to registration of trade mark application 1280502 (11, 32) - KANGEN - in the name of Horizons (Asia) Pty Ltd

Delegate:	Heath Wilson
Representation:	Opponents: Written submissions from Fisher Adams Kelly, Patent & Trade Mark Attorneys. Applicant: Ms Shirley Penson of the Applicant.
Decision:	2014 ATMO 72 Opposition under section 52 of the Trade Marks Act 1995 – grounds pursued under sections 42(b), 58, 60 and 62A of the Act – none established – opposition unsuccessful.

Background

Horizons (Asia) Pty Ltd (‘the Applicant’) applied under the Trade Marks Act 1995 (‘the Act’) for the registration of a trade mark, the current details of which are:
Trade Mark No. 1280502
Filing Date: 10 January 2009
Trade Mark: KANGEN (‘the Trade Mark’)
Specification of Goods:
Class 11: Apparatus for lighting, heating, cooking, refrigerating, drying, ventilating and sanitary purposes; apparatus for purifying, namely an ioniser

Class 32: Beers, waters including mineral water, aerated water and ionized water, other non-alcoholic drinks, fruit drinks and fruit juices, syrups and other preparations for making beverages
The Trade Mark was examined under section 31 of the Act and amendments to the specification of goods were made, resulting in the specification seen above. On the basis of those amendments, the examiner was of the view that an objection under section 44 of the Act (due to prior conflicting trade mark no. 1235000: Kangen) could be withdrawn. The citation was withdrawn and on 16 September 2010 the Trade Mark was advertised as accepted for possible registration in the Australian Official Journal of Trade Marks.
Towards the end of the period allowed for filing an opposition (on 15 December 2010) a notice of opposition was filed by Enagic Australia Pty Ltd and Enagic Co., Ltd (hereafter ‘the Opponents’). The notice of opposition nominated grounds under sections 58, 59, 60, 61, 62, 39, 41, 42, 43, 58A and 62A of the Act. I note that section 44 of the Act was the only ground not nominated in the notice of opposition.
I also note that, at the time of writing, the Trade Mark is the subject of a second opposition by Mr Ian Hamilton, owner of trade mark no. 1235000 Kangen in Class 7. That opposition is on foot and specifically cites registration no. 1235000 under the nominated ground of opposition under section 44 of the Act.
In addition, I am aware that another trade mark owned by the Applicant (registration no. 1280503: ENAGIC) is currently subject to an application for removal by one of the Opponents (Enagic Australia Pty Ltd) under paragraphs 92(4)(a) and 92(4)(b) of the Act.
Those other oppositions are not relevant for the purposes of the issues here, but they are noted in the following material.

Evidence

The evidence filed in these proceedings comprises:

Evidence in Support

· Statutory declaration of Danielle Jepson (attorney for the Opponents) made 15 September 2011 with exhibits DBJ-1 to DBJ-4 (‘Jepson 1’).

Evidence in Answer

· Statutory declaration of Shirley Penson (Director of the Applicant) made 17 August 2012 with exhibits A to Z (‘Penson 1’).

Evidence in Reply

· Statutory declaration of Danielle Jepson made 20 February 2013 with exhibits DBJ-1 to DBJ-12 (‘Jepson 2’).

Further Evidence

· Statutory Declaration of Shirley Penson made 15 April 2013 with exhibits SP1 and SP2 (‘Penson 2’).
· Statutory declaration of Danielle Jepson made 18 February 2014 with exhibits 1 to 3 (‘Jepson 3’).

The Opponents and then the Applicant requested (and paid for) a hearing on the opposition. The matter was later allocated to me as a delegate of the Registrar of Trade Marks and I made directions in relation to written submissions to be relied upon by the parties at the hearing.
Both parties provided written submissions and I heard the opposition in Canberra on 24 June 2014. The Applicant was personally represented by its director Ms Shirley Penson. The Opponents ultimately did not appear, preferring instead to rely on the written submissions previously given.
The abovementioned written submissions of the Opponents made clear that the grounds of opposition pursued were those under sections 42(b), 58, 60 and 62A of the Act. In opposition proceedings under the Act, the onus is not on the Applicant to justify its entitlement to register the Trade Mark. Instead it is the Opponents that bear the onus of establishing one of the grounds stated in the notice of opposition on the balance of probabilities.[1] I find for the sake of completeness that the remaining grounds of opposition not specifically pressed by the Opponents have not been established on the evidence before me.
[1] See Pfizer Products Inc v Karam [2006] FCA 1663; 237 ALR 787; (2006) 70 IPR 599; [2006] AIPC 92-146; Chocolaterie Guylian N.V. v Registrar of Trade Marks [2009] FCA 891; (2009) 180 FCR 60; (2009) 258 ALR 545; (2009) 82 IPR 13; [2009] AIPC 92-355 at [22] to [26] and NV Sumatra Tobacco Trading Company v British American Tobacco Services Limited [2011] FCA 1051; DC Comics v Cheqout Pty Ltd [2013] FCA 478; (2013) 101 IPR 334 at [13].
I will now address the grounds that have been pressed.

Reasons

Section 58: Applicant not owner of trade mark

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.

Under section 58 of the Act, the first person to apply to register a trade mark will, in most cases, be entitled to claim to be the owner in relation to the goods/services of the application and also goods/services constituting the “the same kind of thing”.[2]
[2] Re Hicks' Trade Mark (1897) 22 VLR 636.
An exception to the above statement is if a trade mark has been used before the filing date for particular goods or services. In that event (and in the absence of fraud) the owner of a trade mark in Australia is taken to be the first person to use it (“first user”) in the course of trade in relation to those goods or services. The first user need not have invented or first thought of the trade mark[3], provided it is the first party to use it as a trade mark in Australia.
[3] Aston v Harlee Manufacturing Co (1960) 103 CLR 391 at 399 per Fullagar J.
In addition, the application of section 58 requires that a “total impression of similarity (emerges) from a comparison between the two marks. In a real sense a claim to proprietorship of the one extends to the other. But to go beyond this is, in my view, not possible.”[4] In other words, a finding that the trade marks are deceptively similar will not satisfy the test, they must be the same or, at least, “substantially identical”.
[4] Carnival Cruise Lines Inc v Sitmar Cruises Ltd [1994] FCA 936; (1994) 120 ALR 495 per Gummow J at [62].
The written submissions from the Opponents’ attorney assert that the trade mark KANGEN WATER was first used in Japan in 1974. However, there is no evidence (including in any of the Opponents’ declarations) to support this assertion. On the contrary, the Opponents’ declaration provides that the water alkalizing and filtration operation of Enagic Co., Ltd began in Okinawa in 1974 but that the goods were marketed under its trade mark KANGEN WATER in Japan in 2000. In terms of use, KANGEN branded water appears to be the name of the product of the Opponents’ water ionizing machine known as the “Leveluk DX.”[5]
[5] Jepson 1 at paragraph 10.
In August 2005, the term KANGEN WATER was registered as a trade mark in the United States by Enagic Co., Ltd. The US registration states that “The English translation of KANGEN, a Japanese word, is reduction or deoxidation.” However, in its promotional materials, the Opponents’ interpretation of the word is “Return to Origin”.
The other Opponent Enagic Australia Pty Ltd was incorporated in February 2010, a year after the Trade Mark was filed. In April 2010, Enagic Australia applied for registration in Australia of the trade mark KANGEN WATER (trade mark application no. 1356924). Ms Jepson further declares[6] that over a twelve year period the Opponents actively advertised and marketed the trade mark in relation to ionized water and water ionizing machines. Jepson 1 is unclear as to whether the Opponents’ advertisements and marketing occurred in Australia before the priority date of the Trade Mark.
[6] Jepson 1 at paragraph 27.
The Hong Kong office of Enagic HK Co. Limited (a company related to the Opponents) exported water ionizing machines to Australia and Jepson 1 at paragraphs 31-32 states that it sold machines to Australian consumers and had a reputation “well prior to the 10 January 2010 filing date the opposed trade mark” (sic). However, as set out earlier, the priority date of the Trade Mark is in fact 10 January 2009.
Evidence of the abovementioned exports appear in Jepson 1[7] comprising a number of customer order forms. Ms Jepson asserts that the forms are evidence of Enagic HK’s prior use and reputation of the KANGEN WATER trade mark. However, the actual content of the forms reveals inadequacies.
[7] Exhibit DBJ-4.
The order forms/distributor agreements are dated before the priority date and while they appear to refer to a product named either “Leveluk SD501” or “SD 501”, not one of the order forms mentions the trade mark KANGEN WATER or anything similar. These items were apparently marketed to produce the ionized water to be on-sold under the KANGEN WATER trade mark in Australia but crucially there is no evidence (beyond broad assertions) to support that submission. This leads me to the conclusion that either there had been no use of the words ‘KANGEN WATER’ at that date or that the words ‘KANGEN WATER’ are not being used by the Opponents as a badge of origin, but rather to describe the water that may result from the product they are selling (i.e. the water ionization machines). Neither of these conclusions assists the Opponents’ position under section 58 of the Act.
In terms of use as a trade mark, the related US Company Enagic USA, Inc has a webpage asking the question “What is Kangen Water®?”It appears to be ionized alkaline water and distinguished from tap water, bottled water and reverse osmosis water. The answer given on its website is:
Kangen Water® is delicious water created from Enagic’s Innovative water technology. Not only do these devices filter your tap water, but they also produce ionized alkaline and acidic waters through electrolysis. These waters can be used for various purposes, including drinking, cooking, beauty and cleaning.[8]
[8] Penson 1, exhibit C.
Turning to Jepson 2, examples of marketing materials of the Opponents to advertise and sell KANGEN WATER branded water are supplied.[9] These examples are undated and I am unable to determine from the declaration or the exhibits themselves whether the marketing materials were used in Australia or another jurisdiction (such as the U.S).
[9] Jepson 2 at DBJ1 to 3.
The Opponents later refer to the website operated by Enagic USA Inc. The declaration asserts that the extracts from the website show “offers for sale of Kangen Water producing, water ionization and electrolysis”. However, notwithstanding their capitalization, the examples instead use the words “Kangen Water” in an apparently descriptive manner, by stating that the Opponent’s product for sale (i.e. ‘the LeveLuk SD-501’ machine) is:
Capable of producing 5 types of water:

Kangen Water
Clean Water
Acidic (beauty) water
Strong Kangen water
Strong Acidic water

Even if those above examples did contain a date (which they do not), use on a website originating overseas is not use in Australia unless there is evidence that it is targeting the Australian market:
[U]se of a trade mark on the Internet, uploaded on a website outside of Australia, without more, is not a use by the website proprietor of the mark in each jurisdiction where the mark is downloaded. However, as explained above, if there is evidence that the use was specifically intended to be made in, or directed or targeted at, a particular jurisdiction then there is likely to be a use in that jurisdiction when the mark is downloaded.[10]
[10] Ward Group Pty Ltd v Brodie & Stone Plc [2005] FCA 471 per Merkel J
The Applicant was registered as a company on 18 April 2007 and it trades under the name Aquarian Water Online Australia. It is clear from Penson 1 that the Applicant intends to apply the trade mark to bench–top water dispensers and bottled water products, along with air purifiers and reverse osmosis water purifiers. However, in The Seven Up Company v. O.T. Limited[11] it was made clear that:
[I]n the absence of fraud it is not unlawful for a trader to become the registered proprietor under the Trade Marks Act [1995] of a mark which has been used, however extensively, by another trader as a mark for similar goods in a foreign country, provided the foreign mark has not been used at all in Australia at the date of the application for registration. But the position is different if at that date the mark has become identified with the goods of the foreign trader in Australia because those goods have been brought into Australia by the foreign trader himself or by some importer or in some other manner. The court frowns upon any attempt by one trader to appropriate the mark of another trader although that trader is a foreign trader and the mark has only been used by him in a foreign country. It therefore seizes upon a very small amount of use of the foreign mark in Australia to hold that it has become identified with and distinctive of the goods of the foreign trader in Australia. It is not then a mark which another trader is entitled to apply to register under the Trade Marks Act [1995] because it is not his property but the property of the foreign trader.
[11] (1947) 75 CLR 203 at 211.
Many of the exhibits to Penson 1 relate to the business activities of the Opponents or the related U.S. or Hong Kong companies. As a result, the declaration provides further information about the Opponents’ previous business activities that have little bearing on the issues before me.
Penson 2 sheds further light on the Opponents’ activities and refutes claims from the Opponents in the evidence in reply. Jepson 3 provides examples at exhibit 3 of advertising and marketing materials depicting the trade mark KANGEN WATER. Ms Jepson describes this material as being “available to all of the Opponent’s International and Australian distributors.”[12]
[12] Jepson 3 at paragraph 9.
Once again, the examples are undated and Jepson 3 provides no indication of when and to whom they may have been circulated in Australia. The advertising material simply appears to consist of templates to be filled in by prospective distributors. There is no indication of whether those documents progressed from being “available” to the Opponents Australian distributors to actually being sent to them.
Ultimately, I am not satisfied from the material before me that there has been use of the Opponents KANGEN WATER trade mark before 10 January 2009 in Australia. As a consequence, the Opponents have not rebutted the presumption that the Applicant is the owner of the Trade Mark in Australia, and the ground of opposition under section 58 of the Act has not been established.
Section 60: Trade mark similar to trade mark that has acquired a reputation in Australia
The registration of a trade mark in respect of particular goods or services may be opposed on the ground that:
(a)another trade mark had, before the priority date for the registration of the first-mentioned trade mark in respect of those goods or services, 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.
Under section 60, the Opponents firstly bear the onus of establishing a reputation in a trade mark amongst a significant or substantial number of purchasers[13] as at 10 January 2009. Secondly, the Opponents must show that deception or confusion is likely to result from the use of the Trade Mark in the face of that established reputation.
[13] Re Smith Hayden & Co Ltd’s Application (1946) 63 RPC 97.
The requisite reputation can be established in a number of ways and what is significant or substantial depends on the relevant market for the goods and services.[14] As I have already observed, actual use of the Opponents’ trade mark in Australia before the priority date of the Trade Mark has not been established on the evidence before me. It is clear, however, that the Opponent’s trade mark KANGEN WATER has been used overseas (in Japan and the United States) before January 2009.
[14] Le Cordon Bleu BV v Cordon Bleu International Ltee (2001) 50 IPR 1; [2000] FCA 1587 at 20.
In that regard, Justice Lockhart commented in Conagra Inc v McCain Foods (Australia) Pty Ltd[15]:
It is no longer valid, if it ever was, to speak of a business having goodwill or reputation only where the business is carried on. Goods and services are often preceded by their reputation abroad. They may not be physically present in the market of a particular country, but are well known there because of the sophistication of communications which are increasingly less limited by national boundaries, and the frequent travel of residents of many countries for reasons of business, pleasure or study.
[15] Conagra Inc v McCain Foods (Australia) Pty Ltd (1992) 33 FCR 302; 23 IPR 193 (at 233-4).
This form of ‘spillover’ reputation can form the basis for reputation in Australia if the Opponents’ trade mark has ‘become associated in the minds of the Australian public’[16] with its goods.
[16] Seven Up Co v OT Ltd (1947) 75 CLR 203 at 211.
There is no evidence of sales and advertising figures in the Opponents’ evidence either in Australia or overseas. The Opponents assert that there was a rapid growth in reputation leading to established overseas offices but there is no evidence to support an argument that the purported reputation has spilled over into the Australian market.
The Opponent has not established the existence of a reputation in Australia as at 10 January 2009 and this ground fails at the threshold. The ground of opposition under section 60 of the Act has not been established.

Section 42(b): Trade mark use contrary to law

An application for the registration of a trade mark must be rejected if:
(b) its use would be contrary to law.

The Opponents’ argument relies on the (now repealed) section 52 of the Trade Practices Act 1974 (Cth) (‘the TPA’), namely:
(1)A corporation shall not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead of deceive.
In relying on the argument that the use of the Trade Mark would contravene the above section, the Opponents again makes the assertion that the Opponents’ adopted the trade mark KANGEN WATER in Japan in 1974. There is further reference to an international reputation (which I have already addressed under the section 60 ground of opposition) and a submission about prior use in Australia of the Opponents’ trade mark (which I have also addressed under section 58).
In short, there is not sufficient evidence before me to be satisfied that the use of the Trade Mark would amount to misleading or deceptive conduct under the TPA. Accordingly, I cannot be satisfied that the use of the Trade Mark “would” rather than “could” be contrary to law. [17]
[17] See Advantage Rent-A-Car Inc v Advantage Car Rental Pty Ltd (2001) 52 IPR 24 at 32.
The ground of opposition under section 42(b) of the Act has not been established.

Section 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.

In relation to the opposition ground under section 62A of the Act, Dodds-Streeton J in Fry Consulting Pty Ltd v Sports Warehouse Inc(No 2)[18] said:
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.
The proposition advanced by Sports Warehouse, that mere awareness that an overseas company owning the mark is already operating or intending to operate in Australia would amount to bad faith, is unduly absolute. The question is whether, in all the particular circumstances, the applicant’s knowledge was such that his decision to apply for registration at the relevant date would be regarded as in bad faith by persons adopting proper standards.
[18] Fry Consulting Pty Ltd v Sports Warehouse Inc (No 2) [2012] FCA 81 at 165 -167 (‘Sports Warehouse’)

As can be seen above, a mere awareness of the Opponents intending to operate in Australia would not be enough by itself to establish bad faith on the part of the Applicant. In addition to that awareness there may be other factors that inform a finding under section 62A. The intention of the section can be seen from examples provided at its introduction in the Explanatory Memorandum to the Trade Marks Amendment Bill 2006 (Cth):
In Jepson 2, the Opponents point out that the Applicant applied to register the trade mark ENAGIC (1280503) for goods in classes 9, 11 and 32 on the same day as the current application (that is, 10 January 2009). The Opponents consequently argue that both the Trade Mark and the ENAGIC registration were filed in bad faith.
For her part, Ms Penson declares:[19]
I say that back when the Applicant filed its applications on 10 January 2009, I was unaware of any earlier registrations in the same or similar mark in Australia or Hong Kong for the same classes of goods sought, namely, classes 11 and 32.
.…
At no time before or after the immediately following period of the Applicant’s filing on 10 January 2009 was I aware of any earlier registerations by any Enagic entities in Australia of Hong Kong (sic).
It had been some 24 months after the Applicant’s filing on 10 January 2009 that I was made aware of the presence of Enagic Co Ltd and Enagic Aust Pty Ltd in Australia when these parties filed an application to oppose the Applied mark KANGEN.
[19] Penson 2 at paragraphs 10 and 13-14.
Even if I had cause to doubt the veracity of Ms Penson’s statements or even draw attention to the careful wording (i.e. It is true that there were no earlier ‘registrations’ in those classes in Australia, but that does not preclude an awareness by the Applicant of the Enagic Co., Ltd and its prior use in Japan and/or use by the related company in the United States), that would not be the end of the matter.
The Opponents further argue that the Applicant’s adoption of both the Trade Mark and the ENAGIC trade mark must be for the purposes of appropriating the trade and business reputation of the Opponents. I am not satisfied in that regard. I find that the Opponents have not demonstrated a reputation in Australia in the trade mark KANGEN WATER existing as at the priority date from which the Applicant would stand to gain. It is further evident that the Applicant has taken definitive steps towards using the Trade Mark in Australia (registering domain names, creating product pamphlets and selling trial orders of the product to its Hong Kong Agent). Once again, in the absence of questionable conduct, Sports Warehouse (above) indicates that mere knowledge of another trader’s trade mark used overseas is not sufficient for a finding of bad faith.
Finally, the Opponents dispute the Applicant’s explanation of the adoption of the Trade Mark. Ms Penson indicates that the Applicant invented the Trade Mark after visiting a trade show in China in 2008. She further asserts that the Chinese (Mandarin) word for ‘healthy’ is pronounced “KANG-GEN” which she has shortened to KANGEN.
The Opponents state that the pronunciation of the two Chinese characters for ‘healthy’ in Mandarin is actually “KANG JIAN” and annexes the relevant certified translations as proof. The implication from the Opponent is that Ms Penson (and the Applicant) is being disingenuous regarding the origins of the Trade Mark. Ms Penson makes submissions regarding the aural differences in regional Chinese pronunciations in her response.
It may be the case that a combination of circumstances (e.g. the timing of the filing of ENAGIC as a trade mark and the similarity between KANGEN and KANGEN WATER) creates an inference regarding the Applicant’s motives for filing the Trade Mark. While the relevant standard of proof for the opposition is the balance of probabilities, Hearing Officer Nancarrow observed in Hard Coffee Pty Limited v Hard Coffee Main Beach Pty Limited[20]: “That said, the allegation of ‘bad faith’ is a very serious one and a finding of bad faith should not be taken lightly.” It has also been said that “the more serious the allegation, the more cogent the evidence required to support it.”[21]
[20] Hard Coffee Pty Limited v Hard Coffee Main Beach Pty Limited [2009] ATMO 26
[21] See DC Comics v Cheqout Pty Ltd [2013] FCA 478 at [62]. I also observe that this case was decided on a unique set of facts that are distinguishable from the facts presented to me in the current matter.
At most, I have before me a possible inference of bad faith which has been (at least partially) explained by the Applicant. In the end, I am not satisfied on the Opponents arguments and evidence that the Applicant’s decision to apply to register the Trade Mark was one of “an unscrupulous, underhand or unconscientious character” (see Sports Warehouse (supra)). The onus of bad faith rests on the Opponents and I find in this particular case, the onus of proof has not been discharged. On the balance of probabilities, I find that the Trade Mark was not filed in bad faith.
The ground of opposition under section 62A of the Act has not been established.

Decision

At the relevant time, section 55 (1) of the Act provided:
(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.
Note: For limitations see section 6.
The Opponents have not established a ground of opposition under the Act. As a result, the Opponents are unsuccessful and the opposition fails. Subject to the outcome of the other opposition to the Trade Mark mentioned in paragraph 4 above, I direct that trade mark application no. 1280502 may otherwise proceed to registration after one month from the date of this decision.
If the Registrar is served with a notice of appeal on or before that time, I direct that registration shall not occur until the appeal has been discontinued, or in the event of a decision from the court, that the application be subject to that order.

Costs

The Applicant has been successful and is entitled to costs. However, I note that the Applicant is self-represented and the amounts it can claim will therefore be very limited. Having said that, I award costs against the Opponents to the extent allowed under Schedule 8 of the Trade Marks Regulations 1995.

Heath Wilson

Hearings Officer
Trade Marks Hearings & Opposition
18 August 2014

[2014] ATMO 72

18 August 2014

Key Legal Topics

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Contract Law

Civil Procedure

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Breach

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Offer and Acceptance

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