Guardian Family Care Chemists Australia Ltd v Kellog Company

[1998] ATMO 7

TRADE MARKS ACT 1955

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

Re:Objection by KELLOG COMPANY to application by GUARDIAN FAMILY CARE CHEMISTS AUSTRALIA LTD for extension of time to serve evidence in support of its opposition to registration of trade mark application no. 570577.

Background
Application number 570577 was lodged on 13 January 1992 by Kellog Company (the trade mark applicant) for the trade mark GUARDIAN. The mark was advertised accepted on 17 March 1994 for “All goods in this class” in class 30. On 17 June 1994 a notice of opposition was lodged by Guardian Family Care Chemists Australia Ltd (the opponent) under section 49 of the Act.

In accordance with regulation 43, evidence in support of the opposition was due on 17 September 1994. However, on 16 September 1994, the applicant applied for an extension of time until 17 December 1994, within which to file and serve its evidence in support. In their letter applying for the extension, the agents for the opponent explained:

The extension is required in order to enable the opponent to explore the possibility of resolving its dispute with the applicant by settlement negotiations. More time is required for the purpose, and, if necessary, for arranging for the execution and service of formal evidence in support.

We have already received extensive instructions regarding matters to form part of the opponent’s evidence in support. The evidence in support may be finalised shortly.

Then followed a long succession of requests for extension of time, unchallenged by the trade mark applicant, citing as their justification the possibility of resolving the dispute by way of settlement negotiations. These continued until 16 January 1997, when the agents for opponent advised that negotiations had stalled. The trade mark applicant had informed them that, having already restricted its statement of goods as a result of the opposition, it was not prepared to restrict the statement further. An additional three months was therefore required by the opponent, within which to finalise the collection of its evidence in support, and put it in declaratory form. The agents for the opponent also advised that, as with the previous extension requests, they believed that the trade mark applicant would not object to the extension.

Then followed a request for a further two months’ extension, until 17 June 1997. After that, a late application, filed on 18 June 1997, for a further single month, until 17 July 1997.

The application was accompanied by a statutory declaration by Mr Keith Callinan, explaining the circumstances of the error or omission which occurred in his office, causing him to miss by one day the deadline for the application for extension of time. The declaration also explained that a draft declaration had been forwarded to the opponent for consideration in April 1997, and that at that time it had been envisaged that the evidence in support would be able to be completed within two months. However, after meeting with the opponent’s general manager in early May 1997, Mr Callinan realised that much more information relating to prior use was available, and that the declaration would require considerable expansion to include that additional information.

By letter of 9 July 1997, the agents for the trade mark applicant objected to that extension, observing that the opponent had now had in excess of three years within which to prepare evidence in support of the opposition, and that “as long ago as September 1994” the attorneys for the opponent had indicated that the evidence may be finalised shortly.

On 17 July 1997, the opponent’s complete evidence in support was served and filed.

The matter of the trade mark applicant’s objection to the extension until 17 July 1997 was set down for a hearing in Canberra before me, as a delegate of the Registrar. The trade mark applicant was represented by Ms Kate Johnston of Spruson and Ferguson, Sydney, who made written submissions. The opponent was represented by telephone by Mr Keith Callinan of Freehill Hollingdale & Page, Melbourne.

Written submissions by the trade mark applicant objecting to the extension of time
Ms Johnston’s arguments against the granting of the extensions of time were, in summary, as follows:

• that the opponents had had more than adequate time to prepare their evidence in support

• that they had indicated to the Office in September 1994 that they were in a position to finalise the evidence in support “shortly”

• that although it was true that there had been settlement negotiations between the parties, the first formal settlement proposal was not received from the opponent until June 1995, one year after the opposition had been lodged

• that, despite settlement not having been reached by May 1996, the trade mark applicant took certain actions unilaterally, including withdrawing its co-pending application no. 570841 in class 5, and amending the statement of goods for the current application

• that it had been clear to the opponent since January 1997 that the applicant was making no further concession

• that the Registrar should not consider the extension in dispute as merely a small percentage of the total delay, but should consider the total delay when making a decision

• that, as the evidence had now been filed and served, it was possible to determine that it was not of a complexity that warranted three years of preparation

• that the balance of convenience between the parties, despite the inconvenience to the opponent in not being able to rely on its evidence if the extension was not granted, should still be determined in the trade mark applicant’s favour, as it had already waited three years from the date of acceptance for the opposition to be progressed.

Ms Johnston did not object to the extension application on the basis of its lateness, but only on the basis of the total time elapsed so far.

Opponent’s evidence in support of its application for extension of time
Prior to the hearing, the opponent filed with the Office and served on the trade mark applicant a statutory declaration by Keith William Callinan, dated 1 August 1997, with six exhibits. Mr Callinan’s declaration traced the progress of the settlement negotiations between the parties, noting his belief that they had begun with the covering letter of 23 June 1994 for the notice of opposition sent by the opponent to the trade mark applicant. This letter contained a statement of what was required by the opponent for the opposition to be withdrawn. The main requirement was that the trade mark applicant withdraw its present application, together with its co-pending application (also opposed) in class 5. The opponent had subsequently “restated the proposal for settlement but with substantive grounds and a full explanation” by letter of 22 June 1995. I note that this was the letter referred to by Ms Johnston as marking the start of the negotiation process, from the trade mark applicant’s point of view.

Mr Callinan also attested to the fact that, despite two earlier warnings by the trade mark applicant, on 24 May 1996 and 14 January 1997 that they would consent to the extension request before them, but no more, the fact that they had not objected to subsequent extensions on each occasion had led him to believe that the notification of potential objection had “lapsed”. Further, he indicated his belief that there was a possibility of “a softening in the attitude of the Applicant to provide a compromise solution” had continued until he received a facsimile on 21 April 1997, finally making clear to him that settlement was impossible.

In response to the trade mark applicant’s complaints about the long delay in the serving and filing of the evidence in support, Mr Callinan observed:

From the lodgement of the Notice of Opposition the total time taken by the Applicant to respond to proposals for settlement was 25½ months. Up to the date of service of evidence in support, the total time taken by the opponent was 11½ months. For the Applicant to object to the extension of time on the basis of the considerable delays by the opponent is to misstate the facts...

From the date of lodgement of the Notice of Opposition to the service of the evidence in support is a period of three years and one month. That extra one month represents less than 2.7% of the total time.

Telephone submissions by the opponent in support of the extension of time
Mr Callinan’s hearing submissions in support of the application for extension relied heavily upon the arguments that approximately two-thirds of the delay in the serving of the opponent’s evidence in support was caused by the trade mark applicant’s delay in responding to settlement proposals. This, he said, was clearly evidenced by the material in his statutory declaration.

Mr Callinan explained that he and his client were always prepared to allow the applicant “a lot of leeway” in responding to the opponent’s proposals. This was because they believed that, where possible, a negotiated settlement was by far preferable to a fully pursued opposition, as it represented an amicable agreement between the parties, rather than an enforced settlement as a result of a hearing decision. However, neither Mr Callinan or his client considered it appropriate or fair or just for the applicant to object to the extension sought when the delay in negotiations was “almost entirely” the fault of the trade mark applicant.

Mr Callinan said he believed that the opponent had pursued its opposition diligently, and that it had at all times provided full and frank disclosure of its reasons. He also drew my attention to the fact that the opponent has been using its trade mark GUARDIAN on a large range of goods for a substantial period of time. Many of those goods involve health care products on sale to the general public, some of those products being relatively strong non-prescription medications. Therefore, according to Mr Callinan, the possibility of deception and confusion raises serious issues of public health and safety, and the public interest would best be served by ensuring that all the relevant material is before the Registrar for the purpose of deciding the opposition.

Mr Callinan cited much relevant case law, such as Jonathan Sceats Design Pty Ltd v Jonathan Ross Sceats 15 IPR 59, in support of his case that the delegate of the Registrar should favourably take into account the existence and breakdown of negotiations between the parties when determining whether to grant an application for extension such as the application in question here. In conclusion, he asked that costs be awarded in favour of his client.

Discussion
As provided for in the transitional provisions of Part 22 of the Trade Marks Act 1995, the provisions of the Trade Marks Act 1955 continue to govern this opposition. Before exercising my discretion as a delegate of the Registrar, under regulation 69 and section 130 of the Trade Marks Act 1955, I must weigh up the relative merits of the arguments presented by the parties for and against the granting of the extensions of time. Guidelines upon the issues to be determined have been laid down in cases such as Vangedal-Nielsen v Commissioner of Patents (1980) 3 ALR 140 and Lyons (trading as Mitty’s Authorised Newsagency) v Registrar of Trade Marks (1983) 1 IPR 416. I must consider: whether sufficient reasons have been provided and whether a proper case has been made out justifying the extension, the relative inconvenience to the parties concerned, and the public interest.

To take the question of whether sufficient reasons have been provided and whether a proper case has been made out justifying the late application for extension, I believe that the opponent has fully discharged the onus upon it in this regard. A detailed explanation of the office error which resulted in the opponent missing the deadline for making the application for extension of time by one day was provided by Mr Callinan in his declaration supporting the application. In D'Urban Inc v Canpio Pty Ltd (1990) AIPC 90-658, the delegate of the Registrar formed the conclusion that regulation 69 of the Trade Marks Act 1955 could be applied to remedy the consequences of “errors or omissions made by the applicant for extension, or by their agent”. Regulation 69 allows late extensions of time under that Act to be made:

if the Registrar is satisfied that special circumstances existed which prevented the application from being made before [the expiration of the time sought to be extended], within such time as the Registrar allows.

The validity of the opponent’s grounds for making a late application has not been challenged by the trade mark applicant, and I am satisfied that special circumstances do apply to the late aspect of the opponent’s extension application. I therefore do not intend to pursue the matter of regulation 69 any further, but instead I will return to the question of the overall acceptability of the extension application in terms of section 130.

As I have previously described, Mr Callinan’s declaration also gave an admittedly shorter, but still relatively detailed explanation of how, in discussing the draft declaration for the evidence in support with the general manager of the opponent, Mr Callinan had realised that just one more month would be required, in order to enable him to expand the declaration to incorporate some significant additional information, the existence of which had only just come to light.

In his declaration of 1 August 1997, and at the hearing, Mr Callinan gave a much more comprehensive account of the circumstances surrounding not just the present extension application of one month, but of the whole lengthy period of 37 months which had passed since the notice of opposition was filed. Ms Johnston’s submissions clearly highlight differences in interpretation between the parties as to when their negotiations properly began, and when they were finally abandoned. Nevertheless, I am satisfied that for the greater part of the period in question, both parties were involved in a serious attempt to overcome their differences and settle the opposition. As is often the case in such proceedings, the negotiation process was apparently hampered by the long communication chain through which the US trade mark applicant’s instructions were passed to Ms Johnston.

Lengthy periods of negotiation were important factors in the Sceats case (supra), and also Bundy American v Rent-A-Wreck 5 IPR 307. In both these cases, Senior Assistant Registrar Farquhar accepted negotiations as a mitigating circumstance for long delays in the service of evidence. In these cases, as apparently in the present situation, a considerable period of time had elapsed during which negotiations between the parties were progressing, and “it was obviously hoped that the final preparation of evidence would not be necessary” (Sceats, supra, page 62). Mr Callinan pointed out at the hearing that, if it is accepted that negotiations did irretrievably break down in January of this year, as Ms Johnston has argued, then the time the opponent has taken from then to prepare and serve its evidence has only been six months.

Having accepted that the opponent has discharged the onus upon it to make a proper case, supported by sufficient reasons, justifying the extension, I now turn my attention to the relative inconvenience to the parties concerned. Ms Johnston has said in her submissions:

Although, presumably, the Opponent will be at a disadvantage if it is unable to rely on the evidence it has filed, this disadvantage is, we submit, outweighed by the disadvantage suffered to date by the Applicant in encountering a delay of three years from acceptance of its application before any steps have been taken to further the progress of the Opposition.

This is the only indication I have been given of the inconvenience suffered by the trade mark applicant as a result of the protracted nature of these proceedings. Further, the trade mark applicant must accept that it bears some responsibility for the delay. It has chosen to allow all but the last extension application - for a single month - to go formally unchallenged, and has allowed considerable periods of time to elapse before responding to the opponent’s correspondence. During all the time that negotiations were proceeding, the opponent bore the responsibility and cost of maintaining the status quo until the hoped-for settlement was reached.

The trade mark applicant has asked me to consider not simply the length of time of the extension before me, “on a percentage basis” but to consider the total delay. I believe it would be inequitable for me to do this, under the circumstances I have described. Ms Johnston herself has alluded to a presumed disadvantage to the opponent if it was unable to rely on the evidence it has filed. The relative, unquantified, inconvenience to the trade mark applicant, if I allow this final extension, cannot outweigh what must be certain inconvenience to the opponent if I do not allow it. Having paid for so many extensions of time, and failed in its attempt for amicable settlement, the opponent is now faced with the prospect of the ultimate failure of its opposition because the evidence in support it has gathered may not be allowed.

The question of whether or not an additional extension of time should be granted to allow evidence to be disclosed is discussed by D.R. Shanahan at page 70 of Australian Law of Trade Marks and Passing Off (Second Edition). He states that, “every effort should be made to enable the Registrar to consider the circumstances with the assistance of as much documentary evidence as possible.” The opponent is clearly committed to what it perceives to be a serious opposition, and the parties have failed to reach a mutually satisfactory settlement, even after protracted negotiations. The evidence in support was ultimately served and filed within the extended period now at issue. In light of all these circumstances, I believe that it is in the interest of both the trade mark applicant, and the opponent, that this opposition should now be decided in a manner allowing both parties to fully explain their positions.

Finally, I must deal with the question of public interest. In Rollbits Pty. Ltd. v Rowntree Macintosh plc (1986) AIPC 90-291, it was held that the public interest is paramount in matters in which deception is likely, and that this is best served if both parties are able to present their evidence and arguments fully. Claims of potential deception and confusion were made in the notice of opposition to registration of this trade mark, and these were elaborated by Mr Callinan at the hearing as raising serious issues of public health and safety. I believe that, under the circumstances, the public interest will best be served by a full and open disclosure of the facts and evidence from both sides. It is desirable that all of the relevant material collected in support of the opponent’s case be available to the Registrar when the matter is fully tested at a hearing.

Decision
Having considered all the facts surrounding this case, I have decided to grant the opponent’s application for extension of time of one month, until 17 July 1997. Its evidence in support, served and filed on that day, was therefore served and filed within time. Now that the matter of the service of evidence in support is resolved, I hereby set the final date for service of the trade mark applicant’s evidence in answer at three months from the date of this decision.

I award costs in this matter to the opponent.

Claudia Murray
Senior Examiner
27 February 1998