Flexsteel Australia Pty Limited v Flexsteel Industries, Inc

[2010] ATMO 80

TRADE MARKS ACT 1995

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

Re:Opposition by Flexsteel Australia Pty Limited to application under section 92 of the Act by Flexsteel Industries, Inc to remove trade mark number 627632(20) - FLEXSTEEL - in the name of Flexsteel Australia Pty Limited

Delegate:

Claudia Murray

Representation:

Opponent: Eric Ziehlke, solicitor, of Chrysiliou Law, Sydney.

Applicant: Simon Williams, legal practitioner, of Spruson & Ferguson, Sydney.

Decision:

2010 ATMO 80

Section 92 opposition – paragraph 92(4)(b) not rebutted – trade mark to be removed from the Register – costs awarded against opponent.

Background

1.     Trade mark number 627632 is registered for the plain word trade mark:

FLEXSTEEL

2.     The registration is in Class 20 of the International (Nice) Classification of Goods and Services, for:

Furniture, mirrors, picture frames; goods (not included in other classes) of wood, cork, reed, cane, wicker, horn, bone, ivory, whalebone, shell, amber, mother-of-pearl, meerschaum and substitutes for all these materials, or of plastics

3.     The trade mark was registered from 19 April 1994 and the trade mark owner is Flexsteel Australia Pty Limited.

Application for removal

4. Flexsteel Industries, Inc (‘the removal applicant’), made application under section 92 of the Trade Marks Act 1995 (‘the Act’), for removal of the trade mark from the Register for non-use, on 20 June 2008. The removal application sought removal for all of the goods covered by the subject registration and cited grounds for removal under paragraphs 92(4)(a) and (b)of the Act. These provide:

(4)      An application under subsection (1) or (3) (non‑use application) may be made on either or both of the following grounds, and on no other grounds:

(a)      that, on the day on which the application for the registration of the trade mark was filed, the applicant for registration had no intention in good faith:

(i)           to use the trade mark in Australia; or

(ii)          to authorise the use of the trade mark in Australia; or

(iii)         to assign the trade mark to a body corporate for use by the body corporate in Australia;

in relation to the goods and/or services to which the non‑use application relates and that the registered owner:

(iv)        has not used the trade mark in Australia; or

(v)         has not used the trade mark in good faith in Australia;

in relation to those goods and/or services at any time before the period of one month ending on the day on which the non‑use application is filed;

(b)      that the trade mark has remained registered for a continuous period of 3 years ending one month before the day on which the non‑use application is filed, and, at no time during that period, the person who was then the registered owner:

(i)           used the trade mark in Australia; or

(ii)          used the trade mark in good faith in Australia;

in relation to the goods and/or services to which the application relates.

Note 1: For file and month see section 6.

Note 2: If non‑use of a trade mark has been established in a particular place or export market, then instead of the trade mark being removed from the Register, conditions or limitations may be imposed under section 102 on the registration of the trade mark so that its registration does not extend to that place or export market.

5. For the purposes of paragraph 92(4)(b), the relevant three-year period ended on 20 May 2008.

Notice of opposition

6.     Notice of opposition to the removal application was filed by the trade mark owner, Flexsteel Australia Pty Limited (‘Flexsteel Australia’ or ‘the opponent’) on 3 October 2008.

Evidence

7.     The evidence in relation to this removal opposition comprises:

Evidence in Support

ØStatutory declaration of Enrique Gregorio Ferreira, with Exhibits EGF-1 to EGF-8, dated 2 February 2009 (‘First Ferreira Declaration’).

Evidence in Answer

ØStatutory declaration of Michael Anthony Rumore, dated 4 June 2009.

Evidence in Reply

ØStatutory declaration of Enrique Gregorio Ferreira, dated 29 January 2010 (‘Second Ferreira Declaration’).

8.     Mr Ferreira’s first declaration is made as the Managing Director of the opponent company. He attests to having held that role and having directly managed all of the opponent’s activities since 1998. Further, he attests to having arranged, ‘on behalf of the opponent’, the filing of the subject trade mark registration in 1994. Mr Ferreira then declares that the opponent had an intention to use or to authorise use of the trade mark on the day the application for registration was filed, and that it has used its trade mark on the goods covered by its trade mark registration during the relevant period of 20 May 2005 to 20 May 2008. Specifically, declares Mr Ferreira, the opponent has used the trade mark on the following goods, which I note are a subset of all the goods covered by the registration, as listed above:

Furniture, furniture accessories, and associated household products including, but not limited to armchairs, sofas, settees, beds, office furniture, commercial seating and related accessories.

9. The declaration provides substantial and increasing sales figures for the financial years 2005 to 2008 of several hundreds of thousands of dollars. It also lists twelve different ways in which promotion of the trade mark is claimed to have been undertaken during the relevant period, including in-store signage, web-based directories and trade shows. Relevantly, Mr Ferreira declares he has been advised by his solicitors and verily believes that the words FLEXSTEEL AUSTRALIA or FLEXSTEEL AUSTRALIA PTY LIMITED are substantially identical under the Act to the FLEXSTEEL trade mark subject of the opponent’s registration. Perusal of Exhibits EGF-1 to EGF-8 attached to the declaration immediately reveals the reason for this observation. These exhibits are of a very limited nature, comprising mainly small advertising cards. Only Exhibit EGF-8, which does not show use by the opponent, but which comprises two somewhat ambiguous purchase orders by the Fanuli Furniture Group of ‘BANC’ and ‘VINCE’ sofas and ottomans from ‘FLEXSTEEL’, shows any reference to that latter word by itself. All the remaining documentation shows use of the opponent’s full name in very small font, especially in relation to the stylized ‘Sofaworks’ trade mark and trade marks relating to specific sofa designs which dominate the material. The following example is representative of this use. It is part of a two-sided advertising brochure, reproduced close to actual size. The word ‘Flexsteel’ is barely apparent as part of the phrase ‘a division of Flexsteel Australia Pty Ltd’, directly below the words ‘Made in Australia by Sofaworks’ in the bottom right-hand corner:

10.   The removal applicant’s evidence in answer comprises a single declaration by Michael Anthony Rumore, who is the Principal of Rumore Associates Pty Limited, a firm of private investigators operating in New South Wales. The purpose of his declaration is to relate the details of a visit he made to the opponent’s place of business, on 6 September 2007. He describes the premises as a ‘commercial warehouse/factory-style building’, apparently not set up to attract retail customers. He observes that the word ‘Sofaworks’ was prominently displayed on the front door of the building and on other signage, but that he did not observe any signage displaying either the opponent’s company name, or the word ‘Flexsteel’. He describes the only items he observed in the showroom as ‘upholstered furniture in the nature of sofas’. He attests that he then had a conversation with Mr Ferreira, to this effect:

I said: I'm looking for a company called Flexsteel Australia. I've done some searches and got this address but it doesn't look like the place. Have you been here a while?

Mr Ferreira said: Yes, this is the right address but we don't use the name much. We trade under the name Sofaworks. Flexsteel Australia is the holding company. We've been here about 4 years.

I said: What do you do here?

Mr Ferreira said: We mainly manufacture sofas and lounges under our Sofaworks brand. We ship the sofas to resellers around Australia.

I said: Do you use the name Flexsteel at all or anything like it?

Mr Ferreira said: Every now and then we do one-off custom lounges for architects to fit a lounge into an unusual shaped lobby or reception area. We've also made lounges from spec for local councils and hospitality venues. In those cases, the company name [by which I understood Mr Ferreira to mean Flexsteel Australia Ply Limited] appears on the contracts.

We've trade marked the word "Flexsteel" and also the word "Steelflex" but we're trying to grow the main business under the Sofaworks name rather than Flexsteel Australia.

I said: Do you have a business card with Flexsteel on it?

Mr Ferreira said: No. We don't even have one for prosperity sake [sic].

I said: Is there anyway that the general public would be aware of the name Flexsteel?

Mr Ferreira said: No. It's not a name we promote. We don't even have it on the lounges. We don't have promotional material with the name on it. The public probably wouldn't even be aware of Flexsteel Australia.

I said: Is there any other company Flexsteel or something like Flexsteel?

Mr Ferreira said: There's a US company called Flexsteel and they make recreational vehicle seating.

11.   Mr Ferreira’s brief declaration comprising the opponent’s evidence in reply addresses some aspects of the Rumore declaration. He explains that he recalls the conversation reported in that declaration, but that he had been ‘less forthcoming’ than he might have been with a potential customer, as Mr Rumore had couched his enquiry in terms of investigations being made about an ‘alleged accident between a Flexsteel vehicle and another vehicle’. Mr Ferreira specifically denies that he stated to Mr Rumore that ‘we don’t use the name [Flexsteel] much’. He also denies that he said: ‘We don't even have it on the lounges. We don't have promotional material with the name on it. The public probably wouldn't even be aware of Flexsteel Australia.’ Instead, Mr Ferreira declares:

Although the opponent uses the mark SOFAWORKS on its labels, the name FLEXSTEEL also appears as a separate mark on such labels, usually in the format ‘Flexsteel Australia Pty Limited’…

In reality, at the time of the visit by Mr Rumore and up to the present day, the Opponent has used the name FLEXSTEEL, generally in the format ‘Flexsteel Australia Pty Limited’ as a trade mark on its labels, business cards, promotional material and commercial stationery in relation to furniture and related products.

Hearing

12.   The removal applicant requested a hearing at the completion of the evidence stages, and this was held in Sydney before me, as delegate of the Registrar, on 13 May 2010. Mr Eric Ziehlke, solicitor, of Chrysiliou Law, Sydney, represented the opponent. The removal applicant was represented by Mr Simon Williams, legal practitioner, of Spruson & Ferguson, Sydney.

Discussion

Burden on opponent to establish use of trade mark or otherwise make its case

13.   The provisions of section 100 place the burden squarely upon an opponent to rebut the removal applicant’s allegations made under paragraph 92(4)(a) and (b). Section 101 provides for the Registrar’s delegate, should they find they have been convinced by the opponent’s evidence that circumstances exist making this reasonable, to decide not to remove the trade mark from the Register, even though the grounds on which the removal application was made have been established.

14.   At the hearing, Mr Williams sought to press both grounds of removal raised in the removal application. He also sought, at that late stage, to introduce material relating to opposition to registration proceedings against the opponent’s later filed trade mark application number 1158408. That matter was heard on 17 March 2010 and decided on 14 April. The removal applicant had unsuccessfully requested that the two oppositions be heard together, the parties and the trade marks being the same in both cases. Unsurprisingly, the opponent had not agreed. Mr Williams argued that:

Given the identity of parties and the relationship of the dispute the subject of the Removal Proceeding and the Opposition Proceeding for the identical mark “FLEXSTEEL” for furniture services in Class 35, it is submitted that the Hearing Officer should have regard not only to the Opposition Decision but to the evidence in the Opposition Proceeding. It is further submitted that a formal application pursuant to Regulation 15.5(3) is not necessary (although such application is made if a determination to the contrary is made by the Hearing Officer) and that the Registrar may, and should in the public interest, adopt the findings of the Opposition Decision and use the evidence in the Opposition Proceeding as is appropriate (being information available to the Registrar and relevant to this Removal Proceeding) pursuant to Regulation 21.15(8). It is further submitted that as the information concerned is well known to the (common) parties of this and the previous proceeding, Regulation 21.19 has no application.

15.   I informed Mr Williams that, in making my decision, I did not intend to give weight to, or indeed consider evidence which had come before the Office in relation to a separate matter and which had not been properly filed and served in relation to the case before me. However, I did agree that the hearing officer’s published decision upon the opposition to registration[1] was in the public domain, and I therefore believed it appropriate to hear his brief submissions upon that topic. Mr Williams chose not to pursue his earlier suggestion that he would be making a case for an application for admission of further evidence, should this be necessary.

[1] Flexsteel Industries Inc v Flexsteel Australia Pty Limited [2010] ATMO 28 (18 April 2010)

16.   The decision of Hearing Officer Iain Thompson deals with ownership of the trade mark FLEXSTEEL in relation to the retailing and wholesaling of furniture, which he suggests is the ‘same kind of thing’[2] as the furniture itself. That furniture, bearing the FLEXSTEEL trade mark, had been purchased from the US company which is the removal applicant in this opposition, and imported for resale by Flexsteel Australia, the opponent here. The hearing officer found against Flexsteel Australia in that matter, and registration of its trade mark application was refused. Mr Williams submitted that this was relevant to the present removal opposition in relation to both the opponent’s intention to use its trade mark at the filing date of April 1994, and also to whether the use (if any) it may have made of the trade mark was in good faith. Mr Ziehlke argued to the contrary that the hearing officer’s earlier decision was of absolutely no relevance, as services in class 35 were ‘radically different’ from goods in class 20.

[2] Ibid, para 19

17. The majority of removal applications are pursued under paragraph 92(4)(b) of the Act, which creates a relevant non-use period of 3 years ending a month before the non-use application is lodged. By virtue of subsection 93(2), such an action may not be brought before a period of 5 years has passed from the filing date in respect of the application for the registration of the trade mark. The emphasis under that provision (in opposition) is squarely upon determining the true extent and nature of a removal opponent’s actual use of what, by that time, should be a well-established trade mark registration. The emphasis in paragraph 92(4)(a) is quite different, and its unpopularity with removal applicants is testament to their very limited prospects for success under it, should the application be opposed. A removal applicant relying upon paragraph 92(4)(a) is forced to gamble upon the unlikely possibility that a prospective opponent will be unable to rebut an allegation that it never really intended to use its trade mark, at the very point at which it had gone to the trouble of filing an application for its registration.

18. Here, the removal applicant attempted to press at the hearing both the grounds for removal originally specified in its notice. However, Flexsteel Australia had initially addressed both grounds in its evidence in support of its opposition, and the removal applicant’s response at the hearing in relation to paragraph 92(4)(a) was to attempt to rely heavily upon evidence neither properly served nor filed in relation to this removal opposition. This was not the case with the ground of removal under paragraph 92(4)(b), and the significance of the evidence relevant to that ground was keenly debated between the parties at the hearing. In any event, an opponent’s inability to rebut just one ground of removal is sufficient for a removal applicant’s success. It is not necessary for me to examine the 92(4)(a) ground any further in this decision.

Use as a trade mark in good faith

19. Mr Ziehlke argued in support of the opponent’s case under paragraph 92(4)(b) that it had provided significant evidence of use of the trade mark FLEXSTEEL within the relevant period. Further, he argued that for the opponent to rebut the ground of removal, it was only necessary to prove a single normal commercial use in good faith, and in this case, a ‘surrounding accumulation’ of use of FLEXSTEEL as an ‘umbrella trade mark’ demonstrated its use as a badge of origin. Mr Ziehlke submitted that the removal applicant had provided no evidence that any of the opponent’s use was not in good faith, in the terms discussed recently by the Full Federal Court in Liquideng Farm Supplies Pty Ltd v. Liquid Engineering Pty Limited 79 IPR 437 (2009) (the Liquideng case). He pointed out that Mr Ferreira has disputed the veracity of parts of Mr Rumore’s account of their meeting, and also said:

The Mark is presented in the evidentiary material in the exhibits to the First Ferreira Declaration as “Flexsteel Australia Pty Limited”. It is submitted that the words “Flexsteel Australia Pty Limited” do not represent significant alterations to the mark FLEXSTEEL as filed and hence represent use of the mark FLEXSTEEL as filed, under the terms of Section 7(1) of the Act. It is submitted that the word “Australia” is geographic and the words “Pty Limited” are generic.

20.   Mr Wilson, for his part, also cited the Liquideng case. He argued:

Liquideng relevantly concerned the intended use (or perhaps more accurately, use to improve its “bargaining position”) by the applicant for registration (an ex-employee of the predecessor in title to the removal applicant and established trade mark owner) of the trade mark in respect of his goods, not the goods of the removal applicant (as would apply on the present facts). Further, the comments of the single judge and the Full Court decision in Liquideng concerning the above are entirely obiter as they relate to later (separate) expungement and Section 52 proceedings brought before the Court by the same applicant for removal and to issues of costs thrown away in the appeal proceedings from the Trade Marks Office (which appeal was dismissed). In the removal proceedings before the Trade Marks Office, the Hearing Officer (whose decision remained in place on appeal) removed the registration pursuant to the principles of trade mark ownership in Re Hicks’ Trade Mark (1897) 22 VLR 639. Although, on appeal, both Courts discussed the relevance, in terms of Section 92(4) of the “genuineness of actual use as opposed to motives or conduct leading to or concerning that use”, the case nonetheless remains distinguishable on the basis referred to above.

21.   Mr Williams also cited a case from the UK High Court of Justice:

The Hearing Officer is referred to the decision of Mummery J of the UK High Court of Justice – Chancery Division in Orient Express Trade Mark. In that decision, the Court held that the use there of “Orient Express Trading Company Limited” on one side of a “ticket” or tag (the other side bearing the trade mark “Hunting World” and elephant device), did not constitute use of the trade mark “ORIENT EXPRESS” for the purpose of non-use removal proceedings pursuant to Section 26(1) of the UK Trade Marks Act 1938 concerning a UK trade mark registration for “ORIENT EXPRESS” in Class 25. This was despite the 1938 UK Act including a presumption of validity under Section 46. Not only does such presumption not exist under the Trade Marks Act 1995 in Australia, the Court found, with respect to the above use, that:

“Prima facie, the words “Orient Express Trading Company Limited” on the ticket are used to identify and refer to the appellant company by its proper name. It is the corporate name of the appellant. On the authority of Pompadour Laboratories Limited v Stanley Frazer [1966] R.P.C. 7, 12, a case the correctness of which was not questioned in the later case of Duracell International Inc. v Ever Ready Ltd [1989] F.S.R. 71, 80 to 83, the Registrar was entitled to conclude from the evidence before him that the words “Orient Express” were used as part of the corporate name to identify the appellant company and were not used as a trade mark ORIENT EXPRESS. On that view of the facts, there was no use of the mark in a trade mark sense. In my judgment, it is a question of fact in every case whether words are used as a trade mark or in a trade mark sense or whether they are used as part of the corporate name or business name of a registered proprietor. As the hearing offer observed, there was no evidence before him that the words “Orient Express Trading Company Limited” were accepted in the trade as a trade mark indicating the goods of the appellant. I am not prepared to infer that it was used in a trade mark sense, simply from the facts that the words “Orient Express” were in bigger, bolder and more prominent type than the rest of the words and were arranged in an order that did not read either clockwise or anti-clockwise in a continuous manner as “Orient Express Trading Company Limited”.

Here, the evidence does not approach that of the “ORIENT EXPRESS” trade mark as there is no evidence (other than by way of bare assertion not supported by independent evidence despite an opportunity to do so) of the use of “FLEXSTEEL AUSTRALIA” in respect of any “tickets”, tags, labels or the like attached to the products.

Further, or in the alternative, the use by FLEXSTEEL AUSTRALIA of its corporate name (or a business name-like foreshortening thereof) does not constitute good faith use of the Trade Mark because such use in the circumstances is mere token use in a commercial sense.

22.   I have discussed in detail elsewhere[3] the conclusions about how the expression ‘use in good faith’ in section 92 should be understood, which I believe can be drawn from the words of Justices, Tamberlin, Sundberg and Besanko in the Liquideng case. Suffice to say here that, despite its attractions, I can not entirely agree with Mr Williams’ interpretation of the case quoted above. I have also noted Mr Ziehlke’s observations that the findings in the Orient Express case cited by Mr Williams were arrived at in the context of old (Trade Marks Act 1938) United Kingdom legislation. And I am mindful of the body of case law suggesting that, in some instances, use evidenced by a single invoice may be sufficient for the purposes of rebutting an application for removal.[4] However, despite these reservations, I find that I have not been persuaded by either the opponent’s evidence, or its submissions, that it has actually been using (during the relevant period) the word FLEXSTEEL in connection with its goods as a trade mark. Further, I am inclined to find that the ‘surrounding accumulation’ (to borrow Mr Ziehlke’s expression) of information about the opponent’s supposed use of its trade mark weighs not in its favour, but very much against it.

[3] Michael John Pawlyshyn v Novatech SA [2010] ATMO 17 (26 February 2010)

[4] See, for example: ‘Nodoz’ Trade Mark [1962] RPC 1 at 7; Prosimmon Golf (Aust) Pty Ltd v Dunlop Australia Ltd, 9 IPR 425 at 431, Woolly Bull Enterprises Pty Ltd v Reynolds, (2001) 51 IPR 149 at 17.

23.   Not all use of a particular sign will constitute use ‘as a trade mark’. A majority of the High Court in E. & J. Gallo Winery v Lion Nathan Australia Pty Limited[5] recently approved the following definition of trade mark use set out by the Full Federal Court in Coca-Cola Co v All-Fect Distributors Ltd:[6]

Use 'as a trade mark' is use of the mark as a 'badge of origin' in the sense that it indicates a connection in the course of trade between goods and the person who applies the mark to the goods ... That is the concept embodied in the definition of 'trade mark' in s 17 – a sign used to distinguish goods dealt with in the course of trade by a person from goods so dealt with by someone else.

[5] [2010] HCA 15

[6] 1999] FCA 1721

24.   Despite the opponent’s claims to the contrary, I am not satisfied that it has used the word FLEXSTEEL as a badge of origin at all. Context is all important in determining whether a sign has been used as a trade mark or for some other purpose.[7] In Aldi Stores Ltd Partnership v Frito-Lay Trading Company GmbH,[8] Hill J said:

In most, if not all cases, the question whether there has been use as a trade mark will be determined by an objective examination of the use in the context in which it appears.

[7] Shell Co of Australia v Esso Oil (Aust) Ltd (1963) 109 CLR 407

[8] [2001] FCA 1874

25. As the example from the opponent’s evidence depicted earlier clearly shows, the context of the opponent’s use is as an indicator of the company name only. Further, the name is represented in the most minimalist of font size, and always dominated by the ‘Sofaworks’ and/or other furniture trade marks. And as the removal applicant has pointed out, it is significant that even when the Rumore declaration challenged the veracity of Mr Ferreira’s claims about the opponent’s use of the trade mark, he did not take the opportunity to answer that challenge by supporting those claims with convincing evidence in reply. I find that the opponent has not rebutted the ground of removal under paragraph 92(4)(b)

Discretion not to remove trade mark from the Register

26.   For completeness, there remains a consideration of the discretion available to the Registrar not to remove a trade mark from the Register, even if a ground of removal has been established. The opponent has not attempted to make a case, via evidence or submissions, for the exercise of the Registrar’s discretion under subsections 101(3) or (4). The removal applicant has, however, argued emphatically against such a possibility. I could not be satisfied, in all the circumstances of this case, that it would be in any way reasonable to exercise my discretion not to remove the trade mark from the Register.

Decision

27.   The opponent has not discharged the onus upon it to rebut the removal applicant’s allegation of non-use. The opposition is therefore not established. I direct that registration number 627632 be removed from the Register one month from the date of this decision. If the Registrar has been served with a notice of appeal before then, I direct that removal shall not occur until the appeal has been discontinued or, in the event of a decision from the Court, that the registration be dealt with as the Court sees fit.

Costs

28.   The removal applicant is the successful party and is entitled to its costs. Accordingly, I award costs against the opponent, Flexsteel Australia, as per Schedule 8 of the Trade Marks Regulations 1995.

Claudia Murray

Hearing Officer

Trade Marks Hearings

27 August 2010