Flexsteel Industries Inc v Flexsteel Australia Pty Limited

[2010] ATMO 28

TRADE MARKS ACT 1995

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

Re:Opposition by Flexsteel Industries Inc to registration of trade mark application 1158408(35) - FLEXSTEEL - filed in the name of Flexsteel Australia Pty Limited.

Delegate:	Ian Thompson
Representation:	Opponent:  Simon Williams of Spruson & Ferguson Applicant:  Eric Ziehlke of Chrysiliou Law
Decision:	2010 ATMO 28 S52 opposition; section 58 – ownership of a trade mark by an overseas company for services performed in Australia. Registration refused Costs to opponent

Background

1.In this matter, Flexsteel Australia Pty Limited, of Peakhurst, NSW, (‘the applicant’) has applied to register a trade mark, current details of which appear below:

Application No:           1158408
Priority Date:               25 January 2007

Services:Class: 35 Retailing and wholesaling services including retailing and wholesaling of furniture, sofas, divans, seats, chairs, stools, pillows, bolsters, settees, bedding other than linen and accessories for the forgoing products; business management; business consultancy; demonstration of goods; sales promotion (for others)

Trade Mark:                FLEXSTEEL

(‘the opposed trade mark’)

2.Following examination the application was accepted for possible registration and advertised in the Australian Official Journal of Trade Marks on 24 May 2007.  On 24 August 2007, Flexsteel Industries, Inc of Dubuque, Iowa, (‘the opponent’) filed Notice of Opposition (‘the Notice’) to the registration of the application.  The Notice cites several grounds of opposition under the Trade Marks Act 1995 (‘the Act’) including section 58 of the Act under which I will decide this matter. As a delegate of the Registrar of Trade Marks I heard submissions from the parties in Sydney on 17 March 2010. Simon Williams of Spruson & Ferguson represented the opponent. Eric Ziehlke of Chrysiliou Law represented the applicant.

Evidence

3.The service and filing of evidence was as prescribed by the Act and regulations thereto and comprises a declaration in support by Kevin Fury Crahan, Senior Vice President of Sales and Marketing Commercial of the opponent and one by Michael Anthony Rumore, Principal of Rumore Associates Pty Limited who is holder of a master and operator investigator’s licence issued by the New South Wales Police Service under the Commercial Agents and Private Inquiry Agents Act 2004 (NSW). Evidence in answer comprises a declaration by Enrique Gregorio Ferreira, Managing Director of the applicant. Evidence in reply comprises a declaration by Rohan Charles Singh, an employee of Spruson & Ferguson.

4.For the sake of brevity and clarity in these reasons – and because it is the ground under which the opposition most obviously and straightforwardly succeeds – I have confined my discussion of the evidence to that relevant to section 58 of the Act which concerns the ownership of the trade mark.

5.The evidence of Mr Crahan and Mr Ferreira shows that there has been a course of dealings between Mr Ferriera (and/or companies of which he has been a principal) and the opponent company since about 1991.  Mr Crahan describes these dealings in his declaration.  The opponent exhibits its furniture at an exhibition in the USA called the High Point furniture market:

At the High Point furniture market in October 1991, Mr. Enrique Ferreira visited Flexsteel Industries’ exhibition space and introduced himself to me as the Managing Director of an Australian company which he identified as “McCann & Co”. Between the time of that visit and about March 1992 Mr. Ferreira ordered from Flexsteel Industries a container of recliner chairs to which labelling and hang-tags bearing the FLEXSTEEL Trade Mark were attached, which was duly shipped to Australia. In or about March or April 1992, Mr Ferreira visited the offices of Flexsteel Industries in Riverside, California where he also met Mr. James Adamson, who was part of the Flexsteel Industries sales team at that time. As I have noted in paragraph 8 above, McCann & Co Australia Pty Ltd (ACN 001 803 050) first become known as “McCann & Co Pty Limited” in 13 February 1996.

During the California visit referred to in paragraph 22 above, Mr Adamson delivered a sales presentation to Mr Ferreira in respect of various products then being manufactured and sold by Flexsteel Industries under the FLEXSTEEL Trade Mark and the various distribution channels used by Flexsteel Industries for those products.

Following Mr Ferreira’s visit to the Flexsteel Industries’ California facility as referred to above, I received a letter on or about 15 May 1992 from Mr Ferreira which was signed in his capacity as Managing Director of “Laauser McCann”, a copy of which is now exhibited to me and marked “Exhibit KFC-7” (“15 May 1992 letter”).

6.The letter to the opponent from Mr Ferreira referred to immediately above relevantly states:

Now back home Down Under, I would like to take this opportunity to thank you and Jim for the welcome I received when I visited your office in L.A.

Since returning I have been in Melbourne, where I visited Bill at Guest Furniture, Anderson, Os Designs and Myers, (the largest single to middle up market group, 54 stores). Whilst there, I attempted to emulate Jim Adamson’s sales presentation and carried out a survey in regard to marketing the recline chairs, the Flexsteel suspension unit, and design concept of some of the lounge furniture models in your catalogue.

The reception has been more than encouraging, in fact the concept has been well received.

7.The private investigator, Mr Rumore, says that on 6 September 2007 he attended the applicant’s premises which were a commercial warehouse – there was no signage bearing the opposed trade mark visible outside the warehouse or within the reception area.  Mr Rumore reports that he had the following encounter with Mr Ferriera:

[I] spoke with the director, who introduced himself to me as Enrique Ferreira, from the doorway off the office and had a conversation with Mr Ferreira in words to the following 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 Pty 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].

8.I gather that the evidence of the above conversation is intended to establish that (for the purposes of section 58) the applicant is alleged not to have used the opposed trade mark in the past and that (for the purposes of section 59) the applicant is alleged to have no intention to use the opposed trade mark.

9.In his evidence in answer, Mr Ferreira relevantly says:

In 1991 Bunjot [Pty Ltd of which Mr Ferriera was a director] commenced importing into Australia from Flexsteel Industries, Inc (“Opponent”) various furniture products and accessories. No formal distribution agreement was executed between Bunjot and the Opponent in 1991 or thereafter.

Bunjot continued to import furniture products and parts from the Opponent from 1991 to August 1998. Mr Singh’s declaration exhibits some correspondence between the parties which is not relevant to this decision and need not be discussed.

Discussion

10. Section 58 provides:

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.

11.  The first person to use a trade mark in relation to particular goods or services or to apply to register it as a trade mark, whichever is the earlier, is the owner of the trade mark in Australia in relation to those goods or services.

12. The word “owner” is not defined in the Act, although there are numerous decisions where courts have considered its meaning. It is well established that in the absence of fraud the owner of a trade mark in Australia for particular goods or services is taken to be the first person to use it in the course of trade in Australia in relation to those goods or services.[1]  

[1] Seven Up Co v OT Ltd (1947) 75 CLR 203

13. To succeed in an opposition under section 58, an opponent must demonstrate use by a person other than the applicant, before the priority date of the opposed application (or before the first use of the trade mark, whichever is the earlier), of a trade mark which is at least substantially identical in relation to goods or services which are the same as, or the same kind of thing as the goods and/or services in respect of which registration of the opposed trade mark is sought.[2]

[2] See Shell Co. Of Australia Ltd. v. Rohm & Haas Co. [1948] HCA 27; (1949) 78 CLR 601; Carnival Cruise Lines Inc v Sitmar Cruises Limited [1994] FCA 936; (1994) AIPC 91-049; (1994) 120 ALR 495; Hicks ‘s Trade Mark (1897) 22 VLR 636;

14.  The trade mark on which the opponent relies and the opposed trade mark are identical and the alleged use of the trade mark on which the opponent relies occurred before the priority date of this opposed application.

15.  The question is whether the first use in Australia in 1992 of the opposed trade mark in relation to the nominated services was use by the applicant or the opponent – and hence who is the owner of the trade mark.

16.  If the specification of goods or services of the opposed application nominated the goods ‘furniture’, the decision facing me would be straightforward – the applicant states that Bunjot Pty Ltd[3] imported furniture from the opponent: the opponent states that this furniture bore swing tags and labels bearing its FLEXSTEEL trade mark.  The situation would be similar to that in Thunderbird Products Corporation v Thunderbird Marine Products Pty Ltd [1974] HCA 51; (1974) 131 CLR 592 or Re Riv-Oland Marble Company (Vic) Pty Ltd v Settef SPA [1988] FCA 344 and the opponent would be the owner of the trade mark.

[3] Mr Crahan reports that the company was McCann & Co and Mr Ferreira states it was Bunjot Pty Ltd but the distinction is not relevant to this decision.  (According to ASIC ‘Bunjot Pty Ltd’ was the former name of ‘McCann & Co Pty Ltd’, which was then changed to ‘McCann Flexsteel Pty Ltd’ (all with ACN 001 803 050) and which was then deregistered on 9 October 2005.)

17.  But, Mr Ziehlke, for the applicant, submits that this application is in respect of, inter alia, the services or retailing and wholesaling furniture and the services are not the same kind of thing as the goods in question.

18.  I note, however, the parties agree that in 1991 Mr Ferriera:

• Visited the opponent’s stand at the High Point Furniture Market in the USA;

• Spoke with the opponent’s representatives on the stand;

• Consequently ordered a container load of furniture bearing the FLEXSTEEL trade mark;

• Attended the opponent’s offices at Riverside, California for a sales presentation by an employee of the opponent;

• Subsequently “emulated” that presentation in a similar sales presentation to Australian retailers.

19.  On one level, it is apparent that the opponent is the owner of the trade mark in relation to the retail and wholesale services in Australia since it is the opponent’s services under the trade mark which Bunjot Pty Ltd or its representative emulated in relation to goods brought into Australia bearing the trade mark.  On another level, it would (as Mr Williams observed at the hearing) be unusual if Australian traders might, under similar circumstances, become registered owners in relation to wholesale and retail services performed in relation to the goods of interest under the questionable trade marks but not in relation to the goods themselves.  It seems, on the face of it, that retail and wholesale services performed in relation to such imported goods should be taken to be retail or wholesale services performed on behalf of the person who is the true owner of the trade mark in relation to the goods or else to be the ‘same kind of thing’ as the goods.[4]  However, there is no reason for me to closely consider those propositions since because the American opponent’s services have been emulated in Australia by Bunjot Pty Ltd in relation to the opponent’s goods sold under the trade mark, the opponent is obviously the owner in relation to those services.

[4] As distinct from the ‘closely related’ criterion under section 44.

20.  I do not consider it is relevant to these proceedings that Bunjot Pty Ltd no longer exists – the opponent’s ownership of the trade mark in relation to the services did not arise relative only to Bunjot Pty Ltd (or, indeed, McCann & Co), the opponent’s ownership of the trade mark in relation to those services arose relative to every other person in Australia.

21.  Neither do I consider that the applicant’s claim that “at no stage during the foregoing period did Bunjot (under this name or its subsequent names) wholesale or retail any of its products under the FLEXSTEEL or FLEXSTEEL AUSTRALIA names” is relevant since it is not the products of the applicant sold under the trade mark which are of concern in these proceedings – it is the products and services of the opponent.

22. The opponent has established its opposition under section 58 of the Act.

Decision

23. Section 55 of the Act provides:

Decision

55. Unless the proceedings are discontinued or dismissed, 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.

24.  I refuse to register application 1158408.

25.  Having been successful, the opponent is entitled to its costs at the official scale, which I award against the applicant.

Iain Thompson
Hearing Officer
Trade Marks Hearings
14 April 2010