FREDDY S.P.A. v Guangzhou Royal Wolf Supply Chain Co., Ltd

[2023] ATMO 96

TRADE MARKS ACT 1995

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

Re:Opposition by FREDDY S.P.A. to registration of trade mark application number 2170730 (25) – stylised buttocks device (Figurative) - in the name of Guangzhou Royal Wolf Supply Chain Co., Ltd.

Delegate:

Louise Tuohy

Representation:

Opponent: Chris Sgourakis and Melissa Chuong of Corrs Chambers Westgarth

Applicant: Not represented

Decision:

2023 ATMO 96

Trade Marks Act 1995 (Cth) – opposition under section 52 – sections 42(b), 58, 60 and 62A pursued – section 62A established – trade mark refused

Background

1.     This decision concerns an opposition brought by FREDDY S.P.A. (‘Opponent’) under s 52 of the Trade Marks Act 1995 (Cth) (‘Act’) to the registration of the following trade mark application (‘Application’) in the name of Guangzhou Royal Wolf Supply Chain Co., Ltd. (‘Applicant’):

Trade Mark Number:  2170730

Trade Mark:  (‘Trade Mark’)

Filing Date:  13 April 2021

Specification:  Class 25: Sweatpants; Shoes; Hats; Jackets (clothing); Shirts; Stockings; Pants (clothing); Leggings (trousers); Panties; Shorts; Briefs; Vests; Bras; Bodices; Jeans (‘Goods’)

2. The Application was examined as required by s 31 of the Act and advertised as accepted for possible registration on 14 September 2021.

3.     On 29 October 2021 the Opponent filed its Notice of Intention to Oppose the registration of the Trade Mark, followed by its Statement of Grounds and Particulars (‘SGP’) on 5 November 2021. The Applicant filed a Notice of Intention to Defend the registration on 5 January 2022.

4.     Thereafter the parties filed evidence in accordance with the provisions of the Trade Marks Regulations 1995 (Cth) (‘Regulations’).

5.     Once the time for filing evidence had ended, the Opponent requested to be heard. As a delegate of the Registrar of Trade Marks, I heard the matter on 31 May 2023, by way of video conference. Chris Sgourakis and Melissa Chuong of Corrs Chambers Westgarth, appeared for the Opponent. Oral submissions were supplemented by the Opponent’s written submissions filed prior to the hearing. The Applicant was not represented at the hearing and did not file written submissions.

Grounds of Opposition, Relevant Date and Onus

6. In the SGP the Opponent nominated grounds of opposition under ss 42(b), 58, 60 and 62A of the Act. To successfully oppose the application the Opponent needs to establish one of the nominated grounds.

7.     The date at which the rights of the parties are to be determined is the filing date 13 April 2021 (‘Relevant Date’) which is also the priority date for the purposes of s 60.

8.     The Opponent bears the onus of establishing at least one of the grounds of opposition.[1] The standard of proof is the ordinary civil standard of the balance of probabilities.[2]

[1] Food Channel Network Pty Ltd v Television Food Network GP [2010] FCAFC 58, [32] (Keane CJ, Stone and Jagot JJ).

[2] Telstra Corporation Ltd v Phone Directories Co Pty Ltd [2015] FCAFC 156, [132] (Besanko, Jagot and Edelman JJ).

Evidence

Evidence in Support

·Declaration of Luca Meregalli, Director of the Opponent, made on 5 April 2022, with Annexures LM-1 to LM-38 (‘Meregalli 1’).

Evidence in Answer

·Declaration of Xiao Xiuzhu, Chief Executive Officer of the Applicant, made on 8 July 2022, with Exhibits XX01-XX18 (‘Xiao’).

Evidence in Reply

·Declaration of Luca Meregalli, made on 17 August 2022, with Annexures LM-39 to LM-43 (‘Meregalli 2’).

The Opponent

9.     In Meregalli 1, Mr Meregalli declares that the Opponent is an Italian company founded in 1976 by Carlo Freddi. The Opponent began as a company specialising in the manufacturing, marketing and sale of rhythmic gymnastics and half pointe classical ballet shoes. Since then the Opponent has established itself globally in the production, distribution and sale of sportwear and sport inspired leisure apparel. The Opponent’s products are now distributed worldwide in more than 50 countries across five continents.

10.   Mr Meregalli declares that the Opponent’s products have featured one or more of the following trade marks:

Opponent’s trade marks

Opponent’s FREDDY trade mark

FREDDY

Opponent’s logo trade mark

11.   In late 2011, Mr Meregalli attests that a team was assembled by the Opponent’s founder to assist with the creation of a jersey pant designed specifically to emphasise shape and define the buttocks. The final design included innovative shaping technology for which the Opponent obtained a patent.[3]

[3] European Patent Number 2666377A1 with a priority date of 24 May 2012 based on Italian Patent Number 1412116. Meregalli 1, [26] to [27], Annexure LM-6. Note that the Opponent’s Patent has been validated in numerous European countries and has also been examined and granted Patent rights in China, United States, South Korea and Canada.

12.   Mr Meregalli declares that the Opponent launched its new product category under the name WR.UP in or around October 2012. The WR.UP product has been sold in Australia since as early as 2013.[4]

[4] Meregalli 1, Confidential Annexures LM-12-13.

13.   Mr Meregalli attests that since 2012 the Opponent’s WR.UP products have featured the following trade marks (collectively ‘Opponent’s stitching trade marks’):

Opponent’s logo stitching trade mark Opponent’s plain stitching trade mark

14.   The Opponent filed a trade mark application in Australia for its logo stitching trade mark on 8 June 2021, with an endorsement describing a stitching pattern applied to a pair of pants or jeans. This application has encountered an objection based on the Trade Mark. An image of the Opponent’s logo stitching trade mark applied to the backside area of the WR.UP product is shown below: 

15.   The Opponent’s logo stitching trade mark includes the Opponent’s logo trade mark in an enamel cameo style of brooch which is sewn into place as illustrated below:

16.   Mr Meregalli claims that since 2012 the Opponent has carried out extensive promotional activities and dedicated significant financial resources to promoting the WR.UP products worldwide including Australia. Moreover the Opponent’s adverting campaigns and media releases have often focused on its stitching trade marks. I have reproduced three examples of the Opponent’s advertsing below:

17.   Mr Meregalli declares that the Opponent filed trade mark applications in the following jurisdictions for its stitching trade marks prior to the Relevant Date[5]:

[5] Meregalli 1, Annexure LM-4.

Region/Country	Application Number	Filing Date	Class	Applicant Name	Representation
CHINA	CN 36885151	18.03.2019	25	FREDDY S.P.A.	Plain stitching trade mark
EUIPO	EM 018046013	2.04.2019	25	FREDDY S.P.A.	Plain stitching trade mark
EUIPO	EM 018404374	22.02.2021	25	FREDDY S.P.A.	Logo stitching trade mark
USPTO	US 88671801	29.10.2019	25	FREDDY S.P.A.	Plain stitching trade mark
USPTO	US 90563238	5.03.2021	25	FREDDY S.P.A.	Logo stitching trade mark
UKIPO	UK 3624684	12.04.2021	25	FREDDY S.P.A.	Plain stitching trade mark

The Applicant

18.   In Xiao, Mr Xiao cites the Opponent’s evidence in Annexure LM-31 to Meregalli 1 and declares that Applicant is one of a number of affiliated companies registered in 2016 with common shareholders and refers to them as the Royal Wolf Group (‘RWG’).

19.   Mr Xiao declares that RWG operates garment manufacturing and supply facilities in Guangzhou China. One operation, the Dongguan Shascullfites Gym and Shaping Wear Ltd which is a 100% owned subsidiary company of Guangzhou Royal Wolf Standard Denim Garment Ltd (‘GRWS’), manufactures and supplies gym and shaping wear to consumers.  

20.   Mr Xiao claims that on 18 November 2017, one of its customers, Ms Devan Glisson emailed the Applicant. The email included a sketch outline of a crotchless shaping pant.[6] Inspired by the concept of a crotchless shaping pant the Applicant started exploring options for its design. The Applicant’s design team created a pant and also devised the Trade Mark to represent the concept of butt-lifting stitching in a graphic trade mark.

[6] Xiao, [32] Exhibit XX01.

21.   Mr Xiao attests that the Applicant supplies its new category shaping pant under the brand SHASCULLFITES with which the Trade Mark is associated. The Applicant applies the Trade Mark to clothing labels and on product packaging.

22.   Around April 2021, RWG began offering items of clothing bearing the Trade Mark to Australian based customers using an Australian focused portal on eBay.

23.   On 6 February 2018 the Applicant’s subsidiary GWRS applied to register a trade mark with the China National Intellectual Property Administration (‘CNIPA’) which was subsequently refused. The trade mark shown in Chinese trade mark application number 29168971 is reproduced below:

24.   The Applicant and its subsidiary GRWS then applied to register the Trade Mark in the following jurisdictions before the Relevant Date:

Region/Country	Application Number	Filing Date	Class	Applicant Name	Representation
EUIPO	EM 018382690	25.01.2021	25,28	GWRS	Trade Mark
USPTO	US 90489638	26.01.2021	25	GWRS	Trade Mark
UKIPO	UK 3623919	9.04.2021	25	Guangzhou Royal Wolf Supply Chain Co., Ltd.	Trade Mark

25.   On 27 February 2021 the Applicant also applied to register SHASCULLFITES FREDDY as a trade mark with the CNIPA.

Section 62A

26. Section 62A of the Act provides:

62A  Application made in bad faith

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

27.   The Explanatory Memorandum to the Trade Marks Amendment Bill 2006 (Cth) provided some illustrations of applications made in bad faith:

·     persons who monitor new property developments, register the name of new developments as trade marks for a number of services and then threaten the property developers with trade mark infringement proceedings unless the developers licence or buy the trade marks;

·     persons who have a history of applying for trade marks that are deliberate misspellings of other registered trade marks; and

·     persons who identify trade marks used overseas but with no Australian use as yet who then apply to register the trade marks in Australia for the express purpose of selling them to the overseas owners.

28.   These illustrations are not exhaustive. In DC Comics v Cheqout Pty Ltd Bennett J observed that all of the circumstances surrounding the application to register a trade mark are relevant.[7] Moreover, conduct after the priority date can be used to shed light on the Applicant’s subjective intent at the filing date.[8]

[7] [2013] FCA 478, [62].

[8] Ibid [71].

29.   The test for bad faith incorporates subjective and objective elements. That is, I must consider what the Applicant actually knew at the filing date, and then consider whether, armed with that knowledge its decision to file the Trade Mark would be considered to be in bad faith by persons who adopt proper standards of behaviour in business. In Fry Consulting Pty Ltd v Sports Warehouse Inc (No 2) (‘Fry’)[9] Dodds-Streeton J made the following comments, quoting from Harrisons’s Trade Mark Application:

[9] [2012] FCA 81.

Clearly the court, when considering bad faith, cannot apply a purely subjective test, called by Lord Hutton “the Robin Hood test”. The dishonest person or one with low standards cannot be permitted to obtain trade mark registrations in circumstances where a person abiding by a reasonable standard would not. The registration of a trade mark is designed to enable bona fide proprietors to protect their proprietary rights without having to prove unfair trading. Registration is not provided to help those with low moral standards.

… The words “bad faith” suggest a mental state. Clearly when considering the question of whether an application to register is made in bad faith all the circumstances will be relevant. However the court must decide whether the knowledge of the applicant was such that his decision to apply for registration would be regarded as in bad faith by persons adopting proper standards.[10]

[…]

The formulation in United Kingdom authority of bad faith as falling short of the standards of acceptable commercial behaviour observed by reasonable and experienced persons in a particular area is, in my view, an apt touchstone. An overly literal application may, however, tend to negate the relevance attributed to the applicant’s mental state in the combined test preferred in Harrison.

Further, in my view, mere negligence, incompetence or a lack of prudence to reasonable and experienced standards would not, in themselves, suffice, as the concept of bad faith imports conduct which, irrespective of the form it takes, is of an unscrupulous, underhand, or unconscientious character.[11]

[10] Harrison’s Trade Mark Application [2004] EWCA Civ 1028.

[11] Fry Consulting Pty Ltd v Sports Warehouse Inc (No 2) [2012] FCA 81, [147], [165]-[166].

30. In the SGP the Opponent particularises the s 62A ground of opposition as follows:

Since at least about 2019, the Applicant has been manufacturing and offering for sale counterfeits of the Opponent’s Goods bearing the Stitching Mark. Since the Opponent became aware of such conduct, the Opponent has commenced several trade mark, design and patent proceedings in China to restrain the Applicant (or related parties) from engaging in conduct inconsistent with the Opponent’s rights in respect of the Stitching Mark. In addition, the Opponent has defended several proceedings filed by the Applicant (or related parties) seeking to prevent the Opponent from exercising such rights.

By reason of the matters referred to above, at the priority date of the Opposed Mark, the Applicant knew or should have known of the Opponent’s rights and reputation in the Stitching Mark and, in these circumstances, the Applicant’s application to register the Opposed Mark in class 25 was made in bad faith.

Circumstances Surrounding the Application for Registration

31. For the purposes of considering the s 62A ground of opposition it is necessary to look at the circumstances surrounding the filing of the Application. This includes the relevant actions of each party. There is no other way that I can determine the Applicant’s subjective intention as referred to by Dodds-Streeton J in Fry.

32.   Mr Meregalli declares that from 2018, the Opponent became aware that the Applicant had begun either itself or though affiliated companies, promoting and selling products that mimicked or were substantially identical to its WR.UP products by using a similar stitching design to the Opponent’s stitching trade marks. According to Mr Meregalli the Applicant promotes and sells its shaping wear products under or by reference to the brand name SHASCULLFITES. I have reproduced images of advertising for the Applicant’s SHASCULLFITES product with which the Trade Mark is associated (left) and Opponent’s WR.UP product (right) below:

33.   In Meregalli 1, Mr Meregalli identifies a number of other instances where, in addition to use of a similar stitching trade mark, the Applicant has appeared to trade on the Opponent’s reputation by associating its goods with the Opponent’s FREDDY trade mark without its authorisation or consent. I have reproduced an image from showing the brand name FREDDY alongside the Applicant’s SHASCULLFITES brand name:

34.   Mr Meregalli declares that on the Applicant’s official company profile on the Applicant states that it was offering “free sample develop service” for a range of “world famous brands” including FREDDY.[12] Again Mr Meregalli declares that the Applicant has not, at any time, been licensed or otherwise authorised by the Opponent to use its FREDDY trade mark or the name FREDDY for any purpose, nor is it associated or affiliated with the Opponent. 

[12] Meregalli 1, [71].

35.   In response Mr Xiao declares that the Opponent is trying to claim trade mark rights to functional features of a garment structure, whereas the Trade Mark is a graphic trade mark or logo affixed to a clothing item as a label or printed on the product packaging. Mr Xiao also declares that the Applicant’s shaping pant differs markedly from the images contained in the Opponents Patent Application.  

Disputes between the parties

36.   The parties filings for intellectual property rights in overseas jurisdictions has led to a number of disputes between the parties and the parties were well known to each other before the Relevant Date.

37.   On 8 February 2021 the Applicant filed an invalidation action with the CNIPA against the Opponent’s plain stitching trade mark and this matter is still pending.

38.   On 9 February 2018, the Applicant applied for a Chinese Design Patent which resembled the design of its WR.UP product.[13]  On 20 May 2019, the Opponent filed an invalidation request with the CNIPA on the basis of lack of novelty and its prior rights. On 31 October 2019 the CNIPA issued a decision and declared the Applicant’s Chinese Design Patent invalid as it was not significantly different from the combination of existing design features.[14] 

[13] Meregalli 1, [75] to [77], Chinese Design Patent Number 2018300642223.

[14] Meregalli 1, [77], Annexure LM-33.

39.   On 19 August 2020, the Applicant filed an invalidation action with the CNIPA against the Opponent’s Chinese Patent Number 20131096893.7. Upon examination the CNIPA decided to maintain the validity of the Opponent’s Patent.

Discussion

40.   In my consideration the Applicant’s argument that the Opponent is trying to claim trade mark rights to functional features of a garment structure does not hold as I refer to and affirm the following comments of delegate Thompson in Levi Strauss & Co v Vivat Holdings Plc:

I must state now that I have no difficulty with the concept of some stitching on pockets, or in cloth generally, functioning as a trade mark if it is capable of distinguishing the goods: Winterbottom Book Cloth Co Ltd's Appn (1925) 42 RPC 450.[15]

[15] [2000] ATMO 68.

41.   In terms of the Opponent’s position I am satisfied that in 2012 it had designed a shaping pant named WR.UP and that the Opponent’s logo stitching trade mark is applied to the backside area of the WR.UP product. The WR.UP products have been sold and promoted globally since that time.

42.   In terms of the Applicants position, the evidence before me demonstrates that in February 2018 Applicant filed a trade mark application with the CNIPA which is a graphic representation of the backside area of the pants shown in the Opponent’s EU Patent Number 2666377A1 having a priority date of May 2012. I have reproduced images of the Applicant’s February 2018 trade mark (left) and the backside area of the Opponent’s pants as it appears on the front page of its patent (right):

43. Since then, the Applicant has sought to register the Trade Mark in the same jurisdictions as the Opponent’s applications for its stitching trade marks as per para [17]. The Trade Mark and the Opponent’s logo stitching trade mark are deceptively similar and the Trade Mark and the Opponent’s plain stitching trade mark are substantially identical as both depict a scalloped heart shape created from the yoke and curved seams and the curved pockets within the scalloped heart shaped area with a box for placement of a logo in an identical position. I have reproduced the respective trade marks below:

Trade Mark	Opponent’s stitching trade marks
Opponent’s logo stitching trade mark
Opponent’s plain stitching trade mark

44.   Moreover, the stitching on the backside of the Applicant’s SHASCULLFITES pants is similar to the stitching on the backside of the Opponent’s WR.UP pants and both products include a brooch style logo. I have reproduced the backside area of the Applicant’s SHASCULLFITES pant (left) and the Opponent’s WR.UP pant (right) below:

45.   The Applicant also advertises it’s SHASCULLFITES shaping wear product under the name SHASCULLFITES FREDDY with the word FREDDY being the principal brand of the Opponent.

46.   I am satisfied that at the Relevant Date, the Applicant was engaged in a number of disputes with the Opponent and was well aware of the Opponent’s stitching trade marks as applied to its WR.UP product. Furthermore the Applicant should have known, or undertaken cursory online searches to check whether the Opponent was selling its WR.UP product in Australia.

47.   On the evidence before me, I am satisfied that the Applicant had engaged in conscious copying of the Opponent’s stitching trade mark and WR.UP product design. Moreover, the Applicant advertises its shaping wear product, with which the Trade Mark is associated, under its SHASCULLFITES trade mark and the Opponent’s FREDDY trade mark which demonstrates the Applicant’s deliberate attempt to associate its product with the Opponent.  

48.   I find that a person standing in the Applicant’s shoes should have known that it should not apply for the registration of the Trade Mark. The Applicant’s conduct falls short of the ‘standards of acceptable commercial behaviour observed by reasonable and experienced persons’.[16] Hence the s 62A ground for opposition is successful.

Decision

[16] [2013] FCA 478, [77].

1. Section 55 of the Act provides:

   55  Decision

   (1)  Unless subsection (3) applies to the proceedings, the Registrar must, at the end, decide:

   (a)  to refuse to register the trade mark; or

   (b)  to register the trade mark (with or without conditions or limitations) in respect of the goods and/or services then specified in the application;

   having regard to the extent (if any) to which any ground on which the application was opposed has been established.

   50. The Opponent has established the ground of opposition under s 62A of the Act. Accordingly, I refuse to register Trade Mark 2170730. If the Registrar of Trade Marks is served with a notice of appeal within one month from the date of this decision, I direct that the disposition of the application be in accordance with the Court’s order or direction.

   Costs

   51. Both parties have sought an award of costs. As the successful party, the Opponent is so entitled. I award costs against the Applicant as per Schedule 8 of the Regulations.

   Louise Tuohy

   Hearing Officer

   Delegate of the Registrar of Trade Marks

   13 July 2023