Footwear Industries Pty Ltd v PT Alasmas Berkat Utama

[2014] ATMO 41

TRADE MARKS ACT 1995

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

Re:Opposition by FOOTWEAR INDUSTRIES PTY LTD to registration of trade mark application 1512012(9, 25) - HEELA - filed in the name of PT Alasmas Berkat Utama.

Delegate:	Hearing Officer: Nicole Worth
Representation:	Opponent: David Stewart, Wrays Intellectual Property, Trademark & Patent Attorneys Applicant: Not present
Decision:	2014 ATMO 41 Section 52 opposition – grounds of opposition under sections 42, 44, 58, 60 and 62A pursued – section 62A established – registration refused.

Background

1. This decision is pursuant to proceedings under section 52 of the Trade Marks Act 1995 (‘the Act’) wherein Footwear Industries Pty Ltd (‘the Opponent’) has opposed registration of trade mark application 1512012, detailed below, filed in the name of PT Alasmas Berkat Utama (‘the Applicant’).

   Trade mark:             (‘the Trade Mark’)

   Priority date:          12 September 2012

   Goods:Class 9: Boots (protective footwear); protective footwear for the prevention of accident or injury; protective footwear including boots and shoes (reinforced); protective shoes (against accident or injury); rubber shoes for protection against accident or injury; shoes for protection against accidents, irradiation and fire; shoes for protection against injury; working shoes (protective against accident or injury).

   Class 25: Heel protectors for boots and shoes; men's shoes; reinforcements of metal for shoes; reinforcements of non-metallic materials for shoes; safety shoes (non-slip, non-reinforced); shoes; working shoes (other than for the prevention of accident or injury)

2. The application was examined and the Trade Mark was advertised as accepted for possible registration in the Australian Official Journal of Trade Marks on 10 January 2013. The Opponent filed a notice of opposition to the registration on 25 March 2013, citing grounds of opposition under sections 42, 43, 44, 58, 60 and 62A of the Act. The Opponent then filed its evidence in support of its opposition on 25 June 2013.

3. Subsequent to the statutory period in which the Applicant could file evidence in answer, and in the absence of such evidence, the Opponent requested a hearing. I heard the matter in Canberra on 19 February 2014. David Stewart of Wrays Intellectual Property, Trademark & Patent Attorneys represented the Applicant. The Applicant did not participate in the hearing or provide written submissions for my consideration.

Evidence

1. The evidence comprises a statutory declaration of Gary Michael Johnson, chief executive officer of the Opponent, with exhibits GMJ-1 to GMJ-139, dated 25 June 2013.

2. The evidence sets out that the Opponent is a manufacturer and distributor of safety and occupational footwear including for the industrial, construction, mining, chemical, oil and gas, hiker and electrical hazard sectors, and it also produces them in ladies, “executive” and “lifestyle” styles. It commenced business in Western Australia in 1995 and has since grown to a multinational company, expanding into countries in Asia, Europe, Africa, the Middle East and the Americas. The principal brands of its footwear are STEEL BLUE, HOWLER and KRUSHERS which target the premium, mid-price and budget market segments respectively.

3. The STEEL BLUE premium footwear range is sold through numerous distributors in Australia and New Zealand, and has been sold in multiple countries around the world. The Opponent claims STEEL BLUE (which it declares is “for all intents and purposes a reference to the Opponent itself”) is now Australia’s largest supplier of safety and occupational footwear. Sales figures for the STEEL BLUE brand for the period 2006 to March 2013 are impressive[1], as are annual advertising and promotional figures (although these are not broken down to brand specific figures). The evidence shows that the STEEL BLUE brand is commonly used with a device of a dog’s head (shown in two examples below), in which the Opponent claims to have acquired a substantial reputation and which it describes as “synonymous” with the STEEL BLUE brand. The device, the combination of the device with the words STEEL BLUE, and variations of these have been registered in Australia as trade marks from 1995, and significant evidence of their continuous use is provided. They have also been registered as trade marks in numerous other jurisdictions.

   [1] Sales figures for the period 1996 to 2005 are also provided and they are substantial, however they are not brand specific.

4. The Opponent uses a form of character merchandising in respect of the STEEL BLUE range, being “BLUEY”, a blue heeler dog. Images of a blue heeler dog appear alongside information pertaining to the footwear, such as “Bluey’s Promise” which is a 30 day money back guarantee, “Bluey’s Tip 1 [or 2 or 3 etc]” which contains short pieces of advice relating to shoe care or proper fit, and the slogan “Blueys are man’s best friend” which appears to be an allusion relating to the character “BLUEY” and the STEEL BLUE range of footwear. It is not stated when the Opponent first adopted this character merchandising, although one of the examples in evidence is from a catalogue created on 7 May 2009. Examples of such are below.

1. A model of the STEEL BLUE range is the HEELER boot, shown below. The HEELER boot has been manufactured and sold by the Opponent continuously since the commencement of the business. Archived web pages in the Internet Archive[2] show use since 1997 of the trade mark HEELER in respect of boots, and sales figures for the HEELER boot for the period 2006 to March 2013 are significant, particularly from 2010 on. The Opponent has filed for registration of the trade mark HEELER in several countries, including in Australia on 8 February 2013.

Although difficult to see in the images above, the Opponent declares that the dog head image appears upon the boots themselves (which I take to be the imprint on the outer side of the boot near the heel).

[2] The Internet Archive is a non profit digital library that aims to archive, amongst other things, web pages as they appear over time, and then to make such material available via its electronic search tool, the ‘Wayback Machine’.

1. The HOWLER mid-price footwear range has been manufactured and sold by the Opponent since 1997 in Australia, New Zealand and Papua New Guinea. Since 2000, it has also expanded into numerous Asian countries under license agreements with the Applicant (discussed in more detail further on). Although not as sizeable as STEEL BLUE, sales figures for the HOWLER brand from 2006 to March 2013 are nonetheless substantial. The HOWLER brand is used often with a device of a howling dog, and in association with a red and black colour scheme (as per the examples below). The device of the howling dog in combination with the word HOWLER has been registered as a trade mark in Australia from 1996, and variations of HOWLER solus and HOWLER with a howling dog device have since been registered in Australia and numerous other jurisdictions. Evidence of continuous use of these trade marks is also provided.

2. For the purposes of this decision it is not necessary to discuss the KRUSHERS budget range of footwear.

3. Significant advertising and promotional activities have been undertaken by the Opponent, including by way of websites, television advertising, print media, trade shows and celebrity endorsement.

4. On 12 June 2000 the Opponent entered into a 10 year licence agreement with the Applicant (‘the 2000 licence agreement’). The Applicant is based in Indonesia and via this agreement the Opponent granted the Applicant a licence to both manufacture and sell the HOWLER and KRUSHER ranges of footwear in Indonesia, Singapore, Malaysia, Hong Kong, Thailand, the Philippines, Brunei, Taiwan, Vietnam and South Korea. The agreement explicitly provided that the intellectual property associated with the products was exclusively the property of the Opponent. The Opponent declares that also on 12 June 2000 it entered into an informal agreement with PT Berkat Niaga Dunia, which it understands is owned by the same principals as the Applicant, who sold the Opponent’s STEEL BLUE range of boots in Indonesia.

5. At the expiration of the 2000 licence agreement the Opponent and the Applicant entered into a further licence agreement in 2010 (‘the 2010 licence agreement’) whereby the Opponent granted the Applicant a licence to manufacture and sell HOWLER branded footwear in Indonesia, Singapore, Malaysia, Hong Kong, Thailand, Philippines, Brunei, Taiwan, Vietnam, South Korea, Sri Lanka and the Maldives. It too contained explicit provision that the intellectual property associated with the products remained the exclusive property of the Opponent. The initial term of the agreement was 2 years and it was extended first to 30 September 2012 and then to 30 June 2013. The 2010 licence agreement was terminated on 27 March 2013, as explained below.

6. Early in 2013, on or about 24 January, the Opponent received a catalogue from one of its customers in Papua New Guinea. The catalogue had been sent to the customer and is for a range of safety and occupational footwear branded HEELER, and it displays a Blue Heeler dog, a stylized image of a dog’s head, and both the plain and stylised word HEELER. The front page of the catalogue and two of the logos depicted within it are shown below.

I note the imprint upon the outer side of the boot near the heel, which in the copy in evidence appears to be the same stylised image of a dog’s head as that depicted immediately above.

1. In the same manner, the Opponent came into possession of another brochure promoting HEELER safety footwear, as depicted below.

1. The Opponent declares that it has since ascertained the Applicant has sought, and in some cases been granted, trade mark registration of the word HEELER in either plain text, in stylised form, or in combination with the stylised image of a dog’s head (examples shown below) in Malaysia, New Zealand, the Philippines, Singapore and China, and trade mark registration of HEELA (being the subject mark) in Australia.

1. The catalogue and brochure, and the trade mark applications above, led the Opponent to believe that the Applicant launched its own mid-price safety footwear range under the name(s) HEELER and/or HEELA. To that end, on or about 18 February 2013 the Opponent, via its lawyers, sent a letter of demand to the Applicant that it withdraw or cancel all trade mark applications and registrations incorporating the words HEELER, HEELA or the image of a blue heeler dog, and that it cease using all such words or images in association with footwear.

2. The Applicant responded, via its lawyers, asserting that HEELER and HEELA were not deceptively similar to HOWLER (the Applicant did not address the Opponent’s HEELER model of boot), and that, notwithstanding that the Opponent did not have monopoly rights over the general notion of a “dog head” image, the respective images used by the parties were different.[3] The Applicant made its own demand that the Opponent cease use of HEELER in respect of footwear and withdraw all applications for registration of the word as a trade mark.

   [3] I have somewhat paraphrased the Applicant’s response because the translation into English is at times difficult to understand. In doing so I acknowledge the possibility that a slightly different meaning was intended.

3. On 27 March 2013 the Opponent wrote to the Applicant terminating the 2010 licence agreement in respect of the HOWLER brand and cancelling the distribution agreement in respect of the STEEL BLUE range in Indonesia. The Applicant acknowledged the termination and cancellation on 28 March 2013. In the meantime on 25 March 2013 the Opponent opposed registration of the Trade Mark and proceeded with the opposition.

4. A further factor is raised by the Opponent in its declaration, being that a Mr Robert DeBarro was employed by the Opponent from 1997 to 2010 in roles including product development assistant, product development manager and senior product manager. Mr DeBarro resigned from the Opponent in August 2010 and, it is understood by the Opponent, took up employment with the Applicant approximately five months later. However nothing further is made of this and there is no evidence upon which I could base any potential inference. As such, other than for the sake of acknowledging the submission, I do not take it into consideration.

Grounds and onus

1. At the hearing the Opponent pressed the grounds of opposition under sections 44, 58, 62A, 60 and 42 of the Act. It advised that it would not be relying upon the ground under section 43, and for completeness I find this ground is not established.

2. I proceed on the basis that the Opponent bears the onus of establishing at least one of the grounds on the ordinary civil standard of the balance of probabilities[4] and that the date at which the rights of the parties are to be determined is the date the application was filed[5].

   [4] Pfizer Products Inc v Karam [2006] FCA 1663; (2000) 70 IPR 599 per Gyles J at [6] to [26]. See also Chocolaterie Guylian N.V. v Registrar of Trade Marks [2009] FCA 891; (2009) 82 IPR 13 per Sundberg J at [22] to [26] and NV Sumatra Tobacco Trading Company v British American Tobacco Services Limited [2011] FCA 1051; (2011) 198 FCR 435 per Greenwood J at [16] to [32].

   [5] Southern Cross Refrigerating v Toowoomba Foundry Pty Ltd (1954) 91 CLR 592 at 595.

3. I have found it only necessary to discuss the ground under section 62A, for the reasons that follow.

Section 62A

1. Section 62A of the Act provides:

   The registration of a trade mark may be opposed on the ground that the application was made in bad faith.

2. Bennett J in DC Comics v Cheqout Pty Ltd[6] considered bad faith and endorsed the approach taken by Dodds-Streeton J in Fry Consulting Pty Ltd v Sports Warehouse (No 2) (‘Sports Warehouse’)[7], wherein her Honour commented:

   Bad faith, in the context of s62A, does not, in my opinion, require, although it includes, dishonesty or fraud. It is a wider notion, potentially applicable to diverse species of conduct.

   The formulation in the 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 [Harrison’s Trade Mark Application [2005] FSR 10, in which the “combined test” of bad faith was said to involve both subjective and objective elements].

   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 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.

   [6] [2013] FCA 478; (2013) 101 IPR 334.

   [7] [2012] FCA 81; (2012) 94 IPR 551, at [164].

3. I note also that the Applicant has elected to remain silent throughout these proceedings. Whilst I bear in mind that an applicant may choose to remain silent for a number of reasons, including that it believes the case against it is not strong enough to require a response, I am mindful too of the principles in Jones v Dunkel[8], explained by Owen J in Bell Group Ltd (in liq) v Westpac Banking Corporation (No 9)[9]:

   The unexplained failure by a party to give evidence or call a witness or tender certain documents, may, in appropriate circumstances, lead to an inference that the uncalled evidence would not have assisted the party’s case…

   The failure to call a witness or tender documents can allow evidence that might have been contradicted by such witness or document to be more readily accepted. Further, where an inference is open from facts proved, the absence of the witness or document may be taken into account as a circumstance in favour of the drawing of the inference…

   But the absence of a witness or document cannot be used to make up any deficiency in the evidence. Thus it cannot be used to support an inference that is not otherwise sustained by the evidence. The rule cannot fill gaps in the evidence or convert conjecture and suspicion into inference.

   [8] [1959] HCA 8; (1959) 101 CLR 298.

   [9] [2008] WASC 239; (2008) 225 FLR 1.

4. It is for me to determine, therefore, whether the Applicant applied for the Trade Mark in bad faith based upon the unrefuted circumstances and events outlined in the Opponent’s evidence, bearing in mind that I may draw certain inferences where the Opponent’s evidence properly supports them.

5. There are a number of circumstances that I consider weigh into this determination. They are:

• The Applicant and the Opponent previously shared a business relationship whereby the Applicant gained intimate knowledge of the Opponent’s HOWLER products and the way in which they were branded.

• Although not deceptively similar, there is nonetheless a level of visual and aural similarity between HEELA and HOWLER.

• There is a likelihood that the Applicant had a degree of awareness of the Opponent’s use of HEELER due to the distribution in Indonesia of the Opponent’s STEEL BLUE range of footwear, which included the HEELER boot, by PT Berkat Niaga Dunia (an entity owned, directed or controlled by the same principals as the Applicant[10]).

  [10] I am prepared to infer that PT Berkat Niaga Dunia was so connected with the Applicant because the Applicant’s acknowledgement of termination of the licence agreement, at exhibit GMJ-139, also acknowledged immediate cancellation of the distribution agreement with PT Berkat Niaga Dunia.

• Australia appears to be the only jurisdiction in which the Applicant applied for registration of the spelling variation HEELA, whereas it applied for registration of HEELER in five other jurisdictions.

• Both parties use what is arguably the stylised image of a blue heeler’s head upon their footwear and in promotional material associated with it.

• Both parties utilise imagery of an actual blue heeler in promotional material associated with their footwear.

• Both parties imprint a stylised image of a dog’s head upon their footwear, in the same position on the outer side of the boot near the heel.

• The colour red features prominently in the promotion of both the Opponent’s HOWLER range and the Applicant’s HEELER range.

1. In isolation, none of these circumstances would be likely to lead to an inference of bad faith. In totality, however, they paint a picture which indicates that the Applicant has engaged in a degree of imitation and that it was aware, by virtue of its application for the spelling variation HEELA, that applying for registration of HEELER would be problematic.

2. I consider it would be ingenuous to believe the Applicant chose the Trade Mark and associated indicia independent of its knowledge of the Opponent’s marks, gained by virtue of the licence agreements. Rather I consider it likely that the Applicant consciously adopted trade marks and associated indicia for which there was some prospect of association with the Opponent’s. There are too many similarities for me to be persuaded otherwise. The circumstances amount to more than what could be considered “sharp business practice”[11] but rather to exploitive behaviour that is “of an unscrupulous, underhand or unconscientious character”[12].

   [11] Amalgamated Tobacco Corporation Ltd [1951] HCA 28; (1951) 82 CLR 199.

   [12] Sports Warehouse, above n. 7.

3. In particular I consider that the Applicant adopted this Trade Mark precisely because it was close enough to the HEELER trade marks it used in other jurisdictions to be considered part of that family of marks, and yet (as it seemed to have mistakenly believed) different enough to the Opponent’s trade marks to escape conflict.

1. I am satisfied that, per Dodds-Streeton J in Sports Warehouse and in all of the particular circumstances here, the Applicant’s knowledge was such that its decision to apply for registration of the Trade Mark on 12 September 2012 would be regarded as in bad faith by persons adopting proper standards. Accordingly the ground of opposition under section 62A is established.

Decision and costs

1. Section 55 of the Act provides:

   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.

2. The Opponent has established a ground of opposition under the Act. I therefore refuse to register trade mark application 1512012.

3. Costs generally follow the event, and given there is no apparent reason to depart from this principle I award costs against the Applicant.

Nicole Worth
Hearing Officer
Trade Marks Hearings
12 May 2014