EOS Australia Pty Ltd v Expo Tomei Pty Ltd

[1998] FCA 1044

FEDERAL COURT OF AUSTRALIA

TRADE  MARKS – Trade Marks Act 1995 (Cth) – whether right to apply for cancellation of registration inconsistent with infringement – when registered trade mark not infringed by use of identical mark – whether party estopped from relying on its continuous use of a trade mark – extent of the Court’s discretion to order rectification of the Registrar

PASSING OFF – elements of the tort – use of trade mark – necessity that mark be recognised by public as distinctive of applicant’s goods – relationship to claim of contravention of s 52 of the Trade Practices Act 1974

Trade Marks Act 1995 (Cth) ss 17, 20, 27, 58, 60, 72, 88, 89, 90, 120, 122, 124, 126, 134

Trade Marks Act 1955 (Cth) s 58
Trade Practices Act 1974 (Cth) ss 52, 53, 82

The Commonwealth v Verwayen (1990) 170 CLR 394 at 500 cited
Ritz Hotel Ltd v Charles of the Ritz Ltd (1988) 15 NSWLR 158 at 193-195 cited
Settef SpA v Riv-Oland Marble Co (Vic) Pty Ltd (1987) 10 IPR 402 at 413 cited
Commissioner of State Revenue (Victoria) v Royal Insurance Australia Limited (1994) 182 CLR 51 at 84-85 cited
Vieright Pty Ltd v Myer Stores Ltd (1995) 31 IPR 361 at 369 followed
ConAgra Inc v McCain Foods (Aust) Pty Ltd (1992) 33 FCR 302 cited
Reckitt & Colman Products Ltd v Borden Inc (1990) 17 IPR 1 cited

EOS AUSTRALIA PTY LTD v

EXPO TOMEI PTY LTD
NG 336 of 1998

BRANSON J
SYDNEY
28 AUGUST 1998

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	NG 336  of   1998

BETWEEN:

EOS AUSTRALIA PTY LTD (ACN 064 051 056)
APPLICANT

AND:

EXPO TOMEI PTY LTD (ACN 052 884 652)
RESPONDENT

EXPO TOMEI PTY LTD   (ACN 052 884 652)  
CROSS-CLAIMANT

EOS AUSTRALIA PTY LTD  (ACN 064 051 056)                  
CROSS-RESPONDENT

JUDGE(S):

BRANSON J

DATE OF ORDER:

28 AUGUST 1998

WHERE MADE:

SYDNEY

THE COURT ORDERS THAT:

1. The application be dismissed.

1. The Register be rectified by the cancellation of Trade Mark No. 717018.

1. The cross-claim otherwise be dismissed.

Note:Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	NG 336 of 1998

BETWEEN:

EOS AUSTRALIA PTY LTD (ACN 064 051 056)
APPLICANT

AND:

EXPO TOMEI PTY LTD (ACN 052 884 652)
RESPONDENT

EXPO TOMEI PTY LTD  (ACN 052 884 652)  
CROSS-CLAIMANT

EOS AUSTRALIA PTY LTD  (ACN 064 051 056)                 
CROSS-RESPONDENT

JUDGE(S):

BRANSON J

DATE:

28 AUGUST 1998

PLACE:

SYDNEY

REASONS FOR JUDGMENT

INTRODUCTION

By an application dated 17 April 1998 the applicant claims relief under various heads in respect of alleged infringement by the respondent of its registered trade mark LOOK-C.  The application has been heard on the question of liability but not on the issue of damages, if any.  By cross-claim, the respondent claims, amongst other things, the cancellation of the registration of the applicant’s trade mark.

THE PARTIES

The applicant and cross-respondent (“the applicant”) is a company incorporated in New South Wales.  It markets, sells and distributes video intercom systems, closed circuit television sets, video equipment, video phones and cameras in Australia.  It has done so since 1995.  Yeong Ik Cha (“Mr Cha”) is a director of the applicant.  Tooma Chong (“Mr Chong”) is the National Marketing Manager of the applicant.

The respondent and cross-claimant (“the respondent”) is also a company incorporated in New South Wales.  Its principal activity is importing and selling goods in Australia by wholesale.  The goods which it sells are telecommunication products, electronic security appliances, video intercom systems, closed circuit television video equipment, videos, cameras and “innovative home appliances”.  The principal shareholder of the respondent is Renzco Pty Limited of which Mervyn Renz (“Mr Renz”) is the majority shareholder.  Raphaela Maretta Rose, the daughter of Mr Renz, is the only director of the respondent.

ISSUES

There is little dispute between the parties as to the primary facts.  There is some dispute as to their legal significance.

The applicant is the owner of Trade Mark No. 717018 (“the Trade Mark”) which is registered for  “video intercom system, closed circuit TV, video equipments, video phones, cameras being goods in class 9” for a period of ten years commencing 11 September 1996. The Trade Mark is “LOOK-C”. The applicant claims a declaration that the respondent has infringed the Trade Mark and orders that the respondents cease to infringe the Trade Mark and deliver up to the applicant all materials and goods which infringe or use the Trade Mark. The applicant further seeks relief pursuant to s 82 of the Trade Practices Act 1974 (Cth) (“the TPA”) for misleading and deceptive conduct in contravention of s 52 of the TPA and false representation in contravention of s 53 of the TPA, and relief pursuant to s 7 of the Contracts Review Act 1980 (NSW) for unjust conduct. In addition the applicant seeks relief at common law for passing-off.

The respondent admits that it has sold goods bearing the Trade Mark since 14 November 1997 as alleged by the applicant.  Indeed, the respondent asserts that it has continuously used the mark  LOOK-C in respect of door video intercom devices (“door videos”) in the course of trade from at least 30 November 1994. The respondent claims by cross-claim that it, and not the applicant, is the owner of the Trade Mark, and it seeks an order restraining the applicant from dealing in goods bearing the Trade Mark. The respondent further claims by its cross-claim that the applicant has contravened ss 52 and 53 of the TPA, and claims relief pursuant to s 82 of the TPA The respondent also seeks relief at common law for passing-off.

Slightly curiously, in view of its own pleas that the respondent has since 11 September 1996, and since 14 November 1997, marketed, sold and distributed goods bearing the Trade Mark, the applicant pleads in its reply that if the respondent has continuously used the Trade Mark, then such continuous use ceased on 14 November 1997.  In the alternative, the applicant pleads that the respondent is estopped from asserting a continuous use since 14 November 1997.

THE EVIDENCE

The evidence establishes that the respondent began importing door videos bearing the mark LOOK-C into Australia in late 1994.  The respondent purchased the door videos from the Korean company Yong Whan Electrical Co Ltd (“Yong Whan”).  There is no evidence of any use in Australia by Yong Whan of the mark LOOK-C.

The respondent first used the mark LOOK-C when it sold a door video to “J H Distribution” of Hallam, Victoria, on 25 October 1994.  Thereafter, in the course of its business, it sold door videos imported from Yong Whan bearing the mark LOOK-C.  In early 1995 the respondent had brochures printed which advertised the “LOOK-C Door Vision, Video Intercom Security System”.  It has since that time distributed 10,000 copies of the brochure at trade shows and by mailing them to wholesalers, retailers and architects.  It has also advertised door videos bearing the mark LOOK-C in trade publications and, to a limited degree, on television.

The applicant first ordered goods bearing the mark LOOK-C from Yong Whan in June 1995.  Such goods were shipped to it in July 1995.  Mr Cha was aware at this time that another company in Australia, namely a company trading as Dick Smith Retailers, was selling door videos bearing the mark LOOK-C which were identical to those which the applicant had ordered from Yong Whan.  On 17 October 1995, the applicant signed an exclusive sales contract for the Australian and New Zealand market in respect of Yong Whan’s products.  Such contract was to be effective from 1 January 1996.

In October 1995, Yong Whan ceased trading.  Its business, however, was carried on by Aron Hi-Tech Co Ltd (“Aron Hi-Tech”), another Korean company.

After Yong Whan ceased to trade, the respondent ordered door videos, similar to those that it earlier imported from Yong Whan, from Tong Hae Co Ltd (“Tong Hae”) and S J Corporation, both apparently Korean companies.  In April 1996 the respondent received delivery of its first shipment of door videos from Tong Hae.  Thereafter the respondent imported 1,500 door videos bearing the mark LOOK-C from Tong Hae and sold them to retailers and wholesalers.  The respondent again had brochures printed, and I assume distributed, to advertise its door videos.

The applicant has imported from Aron Hi-Tech and distributed goods bearing the mark LOOK-C from 1995 until the present.  By an agreement dated 12 December 1996, Aron Hi-Tech granted an exclusive sales contract to the applicant in respect of the sale of Aron Hi-Tech’s product in Australia and New Zealand.

On 11 September 1996, the applicant filed an application for the registration of the Trade Mark, which was accepted on 25 May 1997.  Meanwhile, sometime in early 1997, Mr Renz became aware that the applicant was selling door videos bearing the mark LOOK-C.  No action was taken by the respondent at that time to challenge the applicant’s entitlement to use such mark.

In late March 1997, Mr Chong became aware of the respondent’s use of the mark LOOK-C.  He took no immediate action to challenge the respondent’s entitlement to use the mark.  However, after receiving advice of the acceptance of the applicant’s application for registration of the Trade Mark, Mr Chong instructed the applicant’s solicitors to write to the respondent requiring it to desist from using the mark LOOK-C.  By letter dated 17 June 1997 from the applicant’s solicitors to the respondent, the applicant’s solicitors asserted that their client was the “holder of the trademark known as “Look-C” in this jurisdiction”.  The letter went on to refer to the respondent’s promotional material and asserted that such material was “in breach of the Trade Practices Act (1974)”.  The letter threatened the commencement of proceedings in this Court if the respondent failed to give an undertaking to withdraw all products and promotional material bearing the “LOOK-C name”.

The respondent’s solicitors replied to the above letter by letter dated 7 July 1997.   They requested “a copy of your client’s trademark together with the registration number”.   The applicant’s solicitors did not respond to this letter (other than to advise that they were obtaining their client’s instructions) until 2 October 1997, by which time they were able to enclose a copy of the certificate of registration dated 19 September 1997.  In the meantime, on 13 August 1997, the respondent had filed an application to register the trade mark   LOOK-C.

On 13 November 1997 there was a telephone conversation between the respective solicitors for each of the parties.  By letter dated 14 November 1997 the solicitors for the respondent, on the instructions of Mr Renz, wrote to the solicitors for the applicant in the following terms:

“We advise that our client has instructed us to convey to you that it agrees to no longer have manufactured or imported, goods bearing the trademark ‘Look-C’.  As you may be aware, our client is in the business of selling stock to both wholesalers and retailers.  It may be the situation that those distributors still hold stock of the goods bearing the trademark and are currently selling those goods to the public.”

Mr Renz acknowledged in evidence that it was his understanding, as at the date of the letter of 14 November 1997, that thereafter the applicant would continue to sell goods bearing the mark LOOK-C, and that he intended the letter to convey to the applicant that the respondent would not respond negatively to its doing so.  Mr Renz stated that, at the time that he gave instructions for the letter of 14 November 1997 to be sent, it was his intention to avoid litigation and legal costs.

By letter dated 18 November 1997 the solicitors for the applicant wrote to the solicitors for the respondent in the following terms:

“Thank you for your letter of 14 November 1997.

Whilst we appreciate that there is little your client can do in relation to distributors already holding “Look-C” products, we are instructed that our client seeks the following measures be undertaken to protect its interests:

1.That all stock held by your client bearing the “Look-C” trademark be “rebadged” immediately so as to not represent any affiliation with “Look-C”.

2.That all promotional material (brochures ect) [sic] bearing the “Look-C” trademark be discarded immediately, and proof thereof be provided.

3.That all denigration of our client’s product (by way of your client’s claims that such products are “inferior”, “outdated” etc) cease immediately.

4.Please advise as to the quantities of residual stock held by your client’s wholesalers/retailers.  We also request a memorandum be circulated to all wholesalers/retailers detailing the following:

(a)That the brand name “Look-C” is our client’s registered trademark.

(b)That all supplies held by those parties are not permitted to be “passed off” as “Look-C”.

(c)That the product “Look-C” is only available from our client.

We look forward to your reply.” (emphasis in original)

I find that the respondent did not provide instructions to its solicitors to respond to the above letter until about 2 December 1997.  A letter of response dated 2 December 1997 was prepared by the respondent’s solicitors, but I find that it did not reach the applicant’s solicitor until after this proceeding was commenced.  I am satisfied that the respondent and its solicitors intended the letter to reach the applicant’s solicitors in the ordinary course of post.  However, I find that it did not do so.  This may have been because it was accidentally not posted or because it was lost in the course of post.

The respondent did not after 14 November 1997, or at any time, desist from using the mark LOOK-C, although its sales of door videos bearing such mark were not high in late 1997 and early 1998.  I am satisfied that the evidence supports a finding, and I so find, that the respondent was engaged in continuous trading of door videos bearing the mark LOOK-C from 25 October 1994 until the date of the commencement of these proceedings, namely 17 April 1998.

STATUTORY BACKGROUND

A trade mark is defined by s 17 of the Trade Marks Act 1995 (Cth) (“the Act”) as follows:

“17.A trade mark is a sign used, or intended to be used, to distinguish goods or services dealt with or provided in the course of trade by a person from goods or services so dealt with or provided by any other person.”

Section 20 of the Act is concerned with the rights given by a trade mark registered under the Act. So far as is here relevant, s 20 is in the following terms:

“20(1)If a trade mark is registered, the registered owner of the trade mark has … the exclusive rights:

(a)to use the trade mark;  and

(b)to authorise other persons to use the trade mark;

in relation to the goods and/or services in respect of which the trade mark is registered

(2)The registered owner of a trade mark has also the right to obtain relief under this Act if the trade mark has been infringed

(3)The rights are taken to have accrued to the registered owner as from the date of registration of the trade mark.”

A person may not apply for the registration of a trade mark in respect of goods and/or services unless he or she claims to be the owner of the trade mark. (s 27(1)(b) of the Act). It is a ground of opposition to the registration of a trade mark under Division 2 of Part 5 of the Act that the applicant is not the owner of the trade mark (s 58 of the Act).

It is also a ground of opposition to the registration of a trade mark under s 60 of the Act that, in effect, it is similar to a trade mark that has acquired a reputation in Australia. Section 60 of the Act provided as follows:

“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 and 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.

Section 88 of the Act, so far as is here relevant, provides as follows:

“88(1)Subject to subsection (2) and section 89, a prescribed court may, on the application of an aggrieved person, order that the Register be rectified by:

(a)cancelling the registration of a trade mark; or

…

(2)An application may be made on any of the following grounds, and on no other grounds:

(a)any of the grounds on which the registration of the trade mark could have been opposed under Division 2 of Part 5;

...”

Section 89 provides as follows:

“89(1)The court may decide not to grant an application for rectification made:

(a)       under section 87;  or

(b)on the ground that the trade mark is liable to deceive or confuse (a ground on which its registration could have been opposed, see paragraph 88(2)(a));  or

(c)       on the ground referred to in paragraph 88(2)(c);

if the registered owner of the trade mark satisfies the court that the ground relied on by the applicant has not arisen through any act or default of the registered owner.

(2)In making a decision under subsection (1), the court:

(a)must also take into account any matter that is prescribed;  and

(b)may also take into account any other matter that the court considers relevant.”

Part 12 of the Act, which is comprised of ss 120-130, is concerned with the infringement of trade marks. Section 120(1) provides as follows:

“120(1)A person infringes a registered trade mark if the person uses as a trade mark a sign that is substantially identical with, or deceptively similar to, the trade mark in relation to goods or services in respect of which the trade mark is registered.

Section 122 provides for certain circumstances which limit the operation of s 120. For present purposes only s 122(1)(e) is of relevance. It provides as follows:

“122(1)In spite of section 120, a person does not infringe a registered trade mark when:

…

(e)the person exercises a right to use a trade mark given to the person under this Act;

...”

Section 124 is, in my view, to be understood as giving a right to use a registered trade mark where there has been prior use of the mark. It provides as follows:

“124(1)A person does not infringe a registered trade mark by using an unregistered trade mark that is substantially identical with, or deceptively similar to, the registered trade mark in relation to:

(a)goods similar to goods (“registered goods”) in respect of which the trade mark is registered;  or

(b)services closely related to registered goods;  or

(c)services similar to services (“registered services”) in respect of which the trade mark is registered;  or

(d)goods closely related to registered services;

if the person, or the persons and the person’s predecessor in title, have continuously used in the course of trade the unregistered trade mark in relation to those goods or services from a time before:

(e)the date of registration of the registered trade mark;  or

(f)the registered owner of the registered trade mark, or a predecessor in title, or a person who was a registered user of the trade mark under the repealed Act, first used the trade mark;

whichever is earlier.

(2)   If the unregistered trade mark has continuously been used only in a particular area of Australia, subsection (1) applies only to the use of the trade mark by the person in that area.”

CONSIDERATION

It is clear that the respondent has used in Australia the mark LOOK-C as a trade mark (s 17 of the Act). It is not disputed that such mark is identical with the Trade Mark (ie. the trade mark registered by the applicant) and that each party has used such mark as a trade mark in relation to goods in respect of which the Trade Mark is registered (s 120 of the Act).

The respondent will therefore have infringed the Trade Mark unless, in using the mark LOOK-C after the filing date in respect of the applicant’s application for registration (s 72 of the Act), it was exercising a right to use the trade mark given to the respondent under the Act (ss 120 and 122(1)(e) of the Act).

Under the Trade Marks Act 1955 (Cth) (“the 1955 Act”) the registration of a trade mark gave to the registered proprietor of that trade mark the right of exclusive use of the trade mark in relation to the goods and services in respect of which it was registered, and the right to obtain relief for infringement of the trade mark, only if the registration of the trade mark was valid (s 58 of the 1955 Act). Section 120 of the Act contains no such limitation. The restrictions on the operation of s 120 of the Act are found in the other provisions of Part 12 of the Act. Only s 124 has been evoked by the respondent. In my view, the fact that a person may be entitled to apply to a prescribed court for an order that the Register be rectified by the cancellation of the registration of a trade mark (s 58 of the Act), does not of itself operate to restrict the operation of s 120 of the Act. It may, however, be of significance in respect of the relief which a court might grant in an action for infringement of the registered trade mark (s 126 of the Act). By way of contrast, it may be noted that s 122(1)(f) has the effect that a person does not infringe a registered trade mark if the court is of the opinion that the person would obtain registration of the trade mark in his or her own name if the person were to apply for it. No reliance has been placed on s 122(1)(f) of the Act in this proceeding.

Section 124 of the Act is, in my view, to be understood as a provision which gives to a prior user of a trade mark certain rights to use such trade mark within the meaning of s 122(1)(e) of the Act. It is for this reason, I conclude, that in contrast with other sections within Part 12 of the Act which operate directly to limit the operation of s 120, s 124 does not commence with the words “In spite of section 120 …”.  Section 124 operates to restrict the operation of s 120 indirectly via s 122(1), which itself commences with the words “In spite of section 120 …”.

I am satisfied that the respondent, in using the mark LOOK-C, was exercising a right to use a trade mark given to the person under s 124 of the Act. The mark LOOK-C was being used by the respondent as an unregistered trade mark in relation to the same types of goods as those in respect of which the Trade Mark is registered.  The respondent had, as I have found above, been continuously using such unregistered trade mark in the course of trade in relation to such goods from a time before the date of registration of the Trade Mark, and before the applicant, or any predecessor in title of the applicant, first used the trade mark LOOK-C.

The applicant’s claim for infringement of the Trade Mark must be dismissed unless, as the applicants contend, the respondent is estopped, by reason of the letter of 14 November 1997, from asserting reliance on its continuous use of the mark LOOK-C.  The estoppel asserted by the applicant is presumably either estoppel by representation or promissory estoppel. 

The applicants, by their written submissions, contend that the letter of 14 November 1997 contains a representation.  They identify the representation as follows:

“The representation is that after 14 November 1997, apart from the possibility of any distributor who happens to hold stock currently selling those goods, that the Respondent will no longer be in the “Look-C” market.”

Such representation, assuming it may be derived from the letter of 14 November 1997, is, in my view, one of intention rather than fact.  As a representation as to the future, it is to be considered under the equitable doctrine of promissory estoppel (The Commonwealth v Verwayen (1990) 170 CLR 394 per McHugh J at 500).

The first issue to be considered in this regard is whether the letter of 14 November 1997 is to be understood as making the asserted representation.  Plainly it does not do so in terms.  It may be thought to have been carefully worded to avoid making the asserted representation.  The letter does represent that the respondent agrees no longer to  have manufactured or imported goods bearing the trade mark LOOK-C.  It may be that, by reason of its reference to distributors still holding stock bearing the trade mark, it impliedly represents that the respondent will not supply further goods bearing the trade mark to distributors.  I do not accept, however, that the letter is to be understood as containing the broader representation that the respondent will depart the LOOK-C market.  In particular it says nothing on the question of the amount of stock bearing the trade mark held by the respondent.  It contains no representation that the respondent will not trade in such stock. The limitations on the “agreement” contained in the letter were plainly appreciated by the applicant and its solicitors, as is disclosed by the letter from the applicant’s solicitors to the respondent’s solicitors dated 18 November 1997, to which no response had been received at the time that this proceeding was initiated.

It is not necessary for me to express a firm view on whether the applicant has, in any event, established relevant reliance by the applicant to its detriment on the representation allegedly made by the letter of 14 November 1997.  I am, however, doubtful that relevant reliance has been established.  Mr Cha gave affidavit evidence, on which he was not cross-examined as follows:

“It was in reliance on the letter from Carneys dated 14 November 1997 that EOS Australia Pty Ltd continued to import, advertise and distribute products bearing the mark “Look-C”.  We did so in the belief that “Look-C” was our trade mark.  I did not provide further instructions to enforce these rights to my solicitors on the basis that I believed the Respondent had agreed to cease and desist from importing and selling products bearing the mark “Look-C”.

I understand Mr Cha, by his above evidence, to be saying that, by reason of the letter of 14 November 1997, the applicant believed that LOOK-C was its trade mark and for this reason continued to import, advertise and distribute products bearing that mark.  As at 14 November 1997, the applicant was the registered owner of the Trade Mark.  Its status as the registered owner of the Trade Mark had nothing to do with the letter of 14 November 1997.  It is true that the applicant’s registration of the Trade Mark was open to be challenged by an application to rectify the Register.  However, the respondent was not the only party who could make such an application.  Another party’s right to do so would be unaffected by any undertaking by the respondent to cease importing or selling products bearing the mark LOOK-C.

Moreover, I am not satisfied that the applicant has suffered any detriment as a result of delay in the institution of these proceedings.  I reject the contention that the respondent is estopped, by reason of its letter of 14 November 1997, from asserting reliance on its continuous use of the mark LOOK-C.

The applicant’s claim for infringement of the Trade Mark must be dismissed. So must its claims at common law for passing-off, and its claims and pursuant to the TPA, so far as they relate to the respondent’s use of the mark LOOK-C.  It was not suggested that these claims could be maintained independently of the claim for infringement of the Trade Mark.  There is insufficient evidence before me to establish that the mark LOOK-C is, or has been, recognised by the public as distinctive of the applicant’s goods (see Vieright Pty Ltd v Myers Stores Ltd (1995) 31 IPR 361, discussed below).

I am satisfied that the respondent, by the letter of 14 November 1997, in trade or commerce, engaged in conduct that was misleading or deceptive, or likely to mislead or deceive within the meaning of s 52 of the TPA. Mr Renz acknowledged that it was his expectation that the applicant would continue to use the Trade Mark after receipt of the letter of 14 November 1997. I am satisfied that the letter was calculated to, and did in fact, convey to the applicant the impression that the respondent had no intention of challenging its right to do so. Yet, on 13 August 1997, the respondent had filed an application to register the Trade Mark LOOK-C.  I am satisfied that the respondent intended, as at 14 November 1997, to press its application for registration and, if successful, to challenge the right of the applicant to continue to use the Trade Mark.  However, it has not been established that the applicant suffered any loss or damage by reason of the conduct of the respondent in providing to it the letter of 14 November 1997.  In the circumstances I am not satisfied that it would be an appropriate exercise of the Court’s discretion to make a declaration in respect of the respondent’s conduct.

The applicant did not press its claim under the Contracts Review Act 1980 (NSW).

CROSS-CLAIM

The respondent seeks an order pursuant to s 88(1)(a) of the Act cancelling the registration of Trade Mark No. 717018.

Section 88(1) of the Act gives this Court, which is a prescribed court within the meaning of the Act, power to order, on the application of an aggrieved person, that the Register be rectified by cancelling the registration of a trade mark. I am satisfied that, in the circumstances of this case, the respondent is an aggrieved person within the meaning of s 88(1) of the Act. (Ritz Hotel Ltd v Charles of the Ritz Ltd (1988) 15 NSWLR 158 at 193-195). Indeed, the applicant did not suggest otherwise.

An application for an order under s 88(1) that the Register be rectified may only be made on one of the grounds specified in s 88(2). The respondent relies upon the ground specified by s 88(2)(a), namely “any of the grounds on which the registration of the trade mark could have been opposed under Division 2 of Part 5”. Section 58 of the Act, which is within Division 2 of Part 5 of the Act, provides that the registration of a trade mark may be opposed on the ground that the applicant is not the owner of the trade mark.

The Act does not displace the common law concerning trade marks,  it merely supplements it.  The test of ownership of an unregistered trade mark is a common law test.  A person who publicly uses a trade mark acquires at common law, as an adjunct to the goodwill of his or her business, the right to preclude others from using that mark; and the first person who uses a trade mark within a country becomes the proprietor of the mark there (Settef SpA v Riv-Oland Marble Co (Vic) Pty Ltd (1987) 10 IPR 403 at 413). The evidence suggests that Yong Whan may have made the first use of the mark LOOK-C.  There is, however, no evidence which suggests that Yong Whan used that mark in Australia.  Nonetheless, the evidence demonstrates that the applicant was not the first person to use the trade mark in Australia.  The evidence does not disclose who was the first person to use the mark LOOK-C in Australia, but it does establish that “Dick Smith Retailers” was selling door videos bearing the mark LOOK-C before the applicant commenced to use that mark in Australia.  The respondent had also been selling door videos in Australia bearing the mark LOOK-C before the applicant commenced to use that mark in Australia.

I find that the applicant was not entitled to claim to be the owner of the mark LOOK-C when it filed its application for registration.

The applicant contends that the respondent is estopped from asserting that it is the true owner of the Trade Mark. Provided that an applicant under s 88(1) of the Act is an aggrieved person within the meaning of the section, it is not necessary for the purposes of that section that the applicant be the owner of the Trade Mark.

In the alternative, the applicant contends that the respondent has acted so as to represent to the applicant that the applicant is entitled as owner to use the Trade Mark, or in the further alternative, that the respondent has consented to the applicant using the Trade Mark as the owner thereof. In the yet further alternative, the applicant contends that the respondent has taken no action to prevent the applicant from continuing to use the Trade Mark. The asserted relevance of these pleas, as I understand it, is to invoke the equitable concepts of acquiesence, delay and consent as defences to the respondent’s application under s 88(1) of the Act.

It is necessary to give consideration to the relevance, if any, of such equitable notions in the context of s 88(1) of the Act. Section 88 is concerned with the integrity of a public register, and not merely with the respective rights of parties inter se. In my view, s 88(1) does not itself give to a court a true discretion to order, or not to order, rectification of the Register where a ground of rectification specified in s 88(2) is established. The word “may” is used in the subsection, in my view, in the facultative sense and not so as to create a true discretion.  As Brennan J pointed out in Commissioner of State Revenue (Victoria) v Royal Insurance Australia Limited (1994) 182 CLR 51 at 84-85:

“The question whether the repository of a discretionary power is under a duty to exercise the power depends upon the intention of the legislature as revealed in the language of the statute and, in ascertaining that intention, there is a prima facie presumption ‘that permissive or facultative expressions operate according to their ordinary natural meaning’.  Therefore, if the facultative term ‘may’ is used in the creation of a power, it does not in itself impose a duty to exercise the power but such a duty may be found in the statutory context in which the power is created.  Thus, where a power is conditional upon the existence of an event or upon the formation of a particular opinion by the repository of the power, the condition may sometimes be taken to specify the circumstances in which the power must be exercised.”

The power created by s 88(1) is conditional upon the existence of facts or events, or upon the formation of a particular opinion by a prescribed court. Moreover, the terms of s 89 of the Act tend to suggest that s 88(1) does not vest a true discretion in a prescribed court, in that s 89 gives to such a court discretion, in limited circumstances only, not to grant an application for registration. Such a limited discretion would seem to be consistent with a statutory intention to protect the integrity of the Register, and would seem to be inconsistent with an unlimited discretion being created by s 88(1).

I therefore proceed on the basis that, as the respondent has established to my satisfaction that the applicant was not the owner of the mark LOOK-C at the time of the registration of the Trade Mark, it is entitled to an order that the Register be rectified by cancellation of the registration of the Trade Mark, unless the Court has a discretion under s 89 of the Act to refuse to grant the application. There is, in my view, no room for the operation in this statutory context of the equitable concepts of acquiescence, delay and consent - even assuming that they could be made out on the evidence before me.

The terms of s 89 of the Act are set out above. Section 89 gives to a prescribed court a discretion not to grant an application for rectification in only three circumstances. The first circumstance is where the application for rectification is made under s 87 of the Act. That is not this case. The second circumstance is where the application is made on the ground that the trade mark is liable to deceive or confuse (s 88(2)(a) of the Act). That is not a ground upon which reliance has been placed by the applicant. The third circumstance in which s 89 of the Act gives a prescribed court a discretion not to grant an application for rectification is where the application is made on the ground referred to in s 88(2)(c). Again that is not this case.

I find that the respondent is entitled to an order under s 88(1) that the Register be rectified by the cancellation of the registration of the Trade Mark. It is not necessary for me to consider whether the respondent has established any further ground upon which the Register should be rectified.

The respondent claims against the applicant for passing-off at common law.  The elements of the tort of passing-off were examined by the Full Court of this Court in Vieright Pty Ltd v Myer Stores Ltd (1995) 31 IPR 361. The Court there observed at 369:

“In a frequently cited passage (see, eg Lockhart J in ConAgra Inc v McCain Foods (Aust) Pty Ltd (1992) 33 FCR 302; 23 IPR 193 (ConAgra) at FCR 327; IPR 218; Gummow J at FCR 355; IPR 247). Lord Oliver, in Reckitt & Colman Products Ltd v Borden Inc (1990) 17 IPR 1 (Reckitt & Colman) pointed out (at 7) that, in this area, the questions which arise are, in general, questions of fact.  In establishing that a trader has passed off goods as those of another, Lord Oliver considered that three elements have to be demonstrated:

(1)that the trader’s get-up, including any brand name, is recognised by the public as distinctive specifically of the plaintiff’s goods;

(2)that there has been a misrepresentation by the defendant to the public (whether or not intentional) leading or likely to lead the public to believe that the goods offered by the defendant are the plaintiff’s goods (whether the public is aware of the plaintiff’s identity as the manufacturer or supplier of goods is immaterial, provided they are identified with a particular source, eg by means of a brand name which is in fact the plaintiff’s);

(3)that the plaintiff suffers or, in a quia timet action is likely to suffer, damage by reason of the erroneous belief engendered by the defendant’s misrepresentation that the source of the defendant’s goods is the same as the source of those offered by the plaintiff.

There is, in my view, insufficient evidence before me to support a finding that the mark LOOK-C is, or has been at any relevant time, recognised by the public as distinctive specifically of the respondent’s goods.  No attempt was made to establish that the mark LOOK-C had become associated in the minds of substantial numbers of the purchasing Australian public specifically and exclusively with the respondent’s goods generally or with the respondent’s door videos (Reckitt and Colman Products Ltd v Borden Inc (1990) 17 IPR 1 at 7). Indeed, there is evidence before me, such as the evidence concerning the sale by Dick Smith Retailers of door videos bearing the mark LOOK-C, which suggests against the mark being distinctive specifically of the respondent’s goods.

The respondent’s claim for passing-off at common law must fail.

The respondents also claim relief for contraventions of ss 52 and 53 of the TPA. The Full Court pointed out in Vieright v Myer at 373 that:

“The settled course of authority holds that, as in the passing off claim, the crucial question here is largely one of fact: is, in all the circumstances, the respondent’s conduct likely to mislead? In the present kind of case, it will usually be the situation that if a passing off claim is established, it will be so by reason of a finding of a misrepresentation of the type discussed in the authorities. Such a misrepresentation will usually constitute a contravention of s 52, and possibly s 53 of the Trade Practices Act.  Conversely, if no misrepresentation is found, it will basically follow that the Trade Practices Act claim will also fail.”

This is, in my view, a case of the usual kind. The respondent’s claims under the TPA will be dismissed, as will its claim for an order restraining the applicant from dealing in goods bearing the mark LOOK-C.

The orders of the Court will be that:

(a)the application be dismissed;

(b)the Register be rectified by the cancellation of Trade Mark No. 717018; and

(c)the cross-claim otherwise be dismissed.

The respondent must give to the Registrar of Trade Marks a copy of the order of the Court granting rectification of the Register (s 90(3) of the Act).

I certify that this and the preceding eighteen (18) pages are a true copy of the Reasons for Judgment herein of the Honourable Justice Branson

Associate:

Dated:             28 August 1998

Counsel for the Applicant:	Mr G Underwood
Solicitor for the Applicant:	McLachlan Chilton
Counsel for the Respondent:	Mr T J Hancock
Solicitor for the Respondent:	Carneys
Date of Hearing:	3 June 1998, 5 June 1998
Date of Judgment:	28 August 1998