Haddonstone Ltd v Haddonstone Pty Ltd

[1994] ATMO 74

TRADE MARKS ACT 1955

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

Re:      Opposition by Haddonstone Pty Ltd to the registration of application no. 544564 in the name of Haddonstone Ltd.

This opposition is about the dealings between two former business associates, an English company named Haddonstone Ltd and an Australian one called Haddonstone Pty Ltd.  Given the similar names of the two companies I will refer to the trade mark applicant, the English company, simply as "the applicant" and to the opponent as "the Australian company".

The matters which I consider below were the subject of a hearing before me in Sydney on 5.7.94.  The applicant was represented by Ms Julia Baird, instructed by Mr Ray Walton, a patent attorney of the firm of Griffith Hack and Co.  The Australian company was represented by Mr David Yates of counsel, instructed by Mr Peter Marsh, of the attorney firm of F B Rice and Co.  Some aspects of the evidence in this matter are fairly clear, and I have had the assistance of the counsel representing the parties in assembling the relevant facts.  These are:

The applicant is the manufacturer in England of various artificial stone products for use in landscaping and architectural work.  The products are sold under the trade mark HADDONSTONE.  Such products were advertised in English magazines such as Country Life, The World of Interiors and House and Garden.  Those magazines had a circulation in Australia of 3000, 4250 and 8000 copies per issue for the years 1986, 1985 and 1982 respectively. 

In 1983, a consignment of various stone ornaments, sold under the trade mark HADDONSTONE, was ordered from the applicant by a Mr J.B. Hawkins of Moss Vale, New South Wales.  Mr Hawkins stated that he was a partner of Mr Max Herford who, earlier in 1983, had written to the applicant on the basis of advertisements in "various magazines", and sought a copy of the applicant's catalogue.  In his order Mr Hawkins stated that he wished the products to be delivered to a firm of shipping agents in the United Kingdom.  From the applicant's reply, it is clear that shipping of the goods from Britain to Australia was the responsibility of Mr Hawkins.  Be that as it may, the goods were paid for and sent.

Later in 1983 Mr Herford requested more catalogues (56 in total) in the course of a letter which makes it plain that the goods then on order from the applicant were for re-sale in Australia.

There were further orders and by January 1984 Mr Herford was able to say that , despite the cost of freight, "our third container load has been sold while the goods are still in England".  Messrs Hawkins and Herford were, at that stage, trading in Australia as "Chilstone Garden Ornaments" although they indicated, in a letter to Mr Barrow, the principal of the applicant, that they had no connection with the English firm of the same name, from which at the time they were buying much of their stock.  ("We are using the Chilstone name because this was our initial contact in the industry", and, in another part of the Australian company's evidence, "with the permission of the owner").

In 1985, Mr Herford proposed, in a letter to the applicant, "to buy rights or moulds from you".  However, that suggestion appears to have been one of licences for the designs of various cast products:  Mr Herford refers, in the same letter, to "bad unauthorised copies of your original designs".  Nothing came of that particular proposal.

In 1986 a partnership was established.  The partners in this business were Messrs Hawkins and Herford, Ms Jenny Herford and Mr Barrow.  The partnership agreement states that 'the style or name of the partnership shall be "Haddonstone"', the business of which was "to be carried on under such name or other names as shall be mutually agreed on".  As a partnership agreement it simply provides that certain individuals will join together under the name specified for the purpose of "the manufacture and sale of architectural and garden ornaments".  The agreement states that the name of the business was to be registered under the relevant State legislation.  Mr Barrow had a one third share of the business, as did Mr Hawkins, with the remaining third divided equally between Mr and Mrs Herford.  The firm produced artificial stone products in Australia, selling them under the trade mark HADDONSTONE.

Initially, the brochures which the applicant uses to promote its goods in England were distributed in Australia by Messrs Hawkins and Herford.

In 1987 a shelf company was acquired and took over the business of the partnership.  The shareholders were the applicant, Mr and Mrs Herford, Mr Hawkins and members of his family.  Messrs Hawkins, Herford and Barrow were directors. 

Mr Barrow's view of dealings at that stage is:

No formal agreement was made concerning the respective rights and obligations of the shareholders in (the Australian company) but it was at all times my understanding that my company's trade mark HADDONSTONE was to be used ... by way of an implied licence.  ... at all times I perceived (the Australian company) as a vehicle for manufacturing and selling products that originated (either directly or indirectly) from my company. ... I did at all times expect and intend that the trade mark would remain the property of my company.

It is this shelf company which changed its name to become the present opponent, and its business was substantial at the outset and has increased steadily.  Since the acquisition and re-naming of the shelf company, sales of product have risen from some $577,000 in 1987 to just short of a million dollars in 1988.  It is not clear from the evidence if all of those sales were under the trade mark HADDONSTONE but, of those which were, nearly all of the goods sold were made in Australia.  Mr Herford has conceded that goods made by the applicant in England have been sold here under the trade mark HADDONSTONE.  He does not dispute the evidence, in the form of invoices, to the effect that at least some of these sales were prior to the date of application.  He does, however, assert that the value of all of the English-made goods is only the equivalent of one week's work for the Australian factory. 

In 1989, sales were $1.8 million, and $1.5 million in 1990.  Those sales were accompanied by spending on promotion, mainly the production of price lists and catalogues - some $5,500 in 1987 rising steadily to $46,000 in 1990.  The lists and documents produced in Australia do not mention the applicant.  However, it is not clear, as Ms Baird noted at the hearing, if all of the expenditure claimed as above was on Australian-produced material.  It does appear likely that the 75 page brochure sold by the Australian company in 1989 was the 75 page one produced in England by the applicant. 

The Australian company does, however, assert that it advertised in Vogue Australia, Australian House and Garden and the Sydney Morning Herald.

It is necessary to look carefully at the catalogues produced in England by the applicant and distributed in Australia by the partnership, and later by the Australian company up until at least mid-1987.  I note at this point that the number of brochures of English origin printed and distributed after the acquisition of the Australian company is not clear, but that they were still being despatched from England as late as August '89, and Mr Herford appears to accept that at least some of them were distributed.

The declaration of Mr Herford makes an implicit admission that later material used by the Australian company included at least some items based on the drawings and artwork in the English versions.  None the less, as I have said, the brochures produced by the Australian company omit any reference to the applicant.  This should be contrasted with some of the brochures distributed by the former partnership in the period 1983 to mid 1987 and subsequently.  Those brochures were printed in England and the earliest versions do not mention any Australian firm.  However, the 1987/88 edition is different.  The inside back cover page of this brochure shows the trade mark HADDONSTONE, followed, immediately below this, by the name and address of the applicant.  That is the format used the year before but the new element is below this.  A fine horizontal line is printed below the details of the applicant and, under that line, in type of exactly the same size and font as that above the line, is the name "Haddonstone Australia Pty Ltd" followed by an address in Mossvale (sic), New South Wales.  I note, however, that there has never been a company named Haddonstone Australia Pty Ltd.

The evidence in support, relied on by the Australian company, also refers to this non-existent firm.  Mr Herford has noted that "the Australian company has been referred to improperly as Haddonstone Australia Pty Limited.  This was done partly in error and partly to reinforce the Australian origin of the products".  Thus, this "partly in error" reference turns up in material printed at the behest of both the Australian company and of the applicant. 

Of the Australian company's brochures, price lists, advertisements etc. in evidence, eight use the company name Haddonstone Australia Pty Ltd in addition to featuring what is apparently trade mark use of the word HADDONSTONE simpliciter.  A further five use the forms HADDONSTONE AUSTRALIA and HADDONSTONE, apparently as trade marks.  Seven more use simply the word HADDONSTONE, mostly with an â symbol, and only one, a single A4 sheet with a hand-written amendment that suggests it is only a draft, uses the actual company name Haddonstone Pty Ltd.

Apparently, the exact form of the company name is not something of which buyers take particular care.  The Australian company has lodged five declarations, all made in late 1992, by people in the building, landscaping or architecture fields, plus three others, from a dealer in art and antiques, a printer and an accountant.  Despite the brochures in circulation, all of the declarants associate the mark with Haddonstone Pty. Ltd., the correct form of the Australian company's name, "and with no other".  The views of the first five are particularly relevant, and all but one of them attest to knowing of that mark for six years.  However, for reasons which follow, and in the light of the confusion about the name under which the Australian company actually operated, I do not believe these declarations are definitive of what the market in general would necessarily have understood and expected at the relevant date, the date of application.

HADDONSTONE products were advertised at two trade shows in Australia, Interbuild Australia 87 and Interbuild Australia 89.  On the evidence, it was the applicant, not the Australian company, which participated.  At about this time, the applicant was in the habit of referring, in answer to correspondence sent to it in England in relation to matters in Australia, to Messrs. Herford and Hawkins as "our colleagues", "our representative" and our agent".

In 1988 and 1989, the applicant became increasingly concerned at the levels of productivity being achieved by the Australian company.  While there is some dispute about the extent of the technical assistance provided to the Australian company, it appears that the day to day management of that company was a cause of real concern to the applicant, and both parties agree that the applicant was not in a position to provide "strong management".  In October 1990, the applicant decided to withdraw from the company of which it was then a shareholder, and a share transfer was arranged.  As Mr Barrow puts it in his declaration:  "Having decided to withdraw from Haddonstone Pty Limited I realized that I should take urgent steps to secure rights in the HADDONSTONE trade mark in Australia in the name of my company and I instructed that (the present) application be lodged...".  The present application was in fact lodged on 24.10.90.

After the Trade Marks Office advertised the acceptance of the application for registration, the Australian company wrote to the applicant, seeking acknowledgment of, "our rights to continue to trade in Australia under our share transfer agreement as a continuing business using our name as our trade mark", and of, "our right to use the trademark 'Haddonstone Australia' in Australia in respect of our range of goods fabricated in Australia."  It suggested that the applicant consent to the registration of an application, by the Australian company, for the registration of that trade mark.  It is also said that, in January 1991, the Australian company had declined to enter into what is described as a distributor agreement - "the reason being that we were buying the business and purchasing the right to use the name Haddonstone".

The applicant has replied, in a letter in evidence, that it would "not allow" the application of the Australian company to proceed, but that it was prepared to appoint the Australian company as a registered user.  Mr Barrow argues, in the evidence in answer, that the reference to the Australian company "buying" the trade mark is fatal.  He argues that, if the claim to ownership by way of user was valid, the Australian company would not need to buy that which was already theirs, and that they have not demonstrated that they have, in fact, bought the mark, as distinct from the business.

Mr Herford has countered that this was not the correct interpretation of what was simply an offer to settle the dispute and avoid the opposition.  In a letter written in May 1992, Mr Herford described the position in which the present application has put the Australian company as "inconsistent with our position coming out of a joint venture, not an agency arrangement".

Submissions.

Both sides rely on the principles emerging from Riv-Oland, 10 IPR 402, and 12 IPR 321 on appeal.

It is the essence of the case made by the Australian company that, as from the date on which the partnership was established, 23.2.86, a discrete business existed here in Australia.  That business was acquired by the Australian company, which, as a company, has rights which are entirely distinguishable from the rights of one of its former shareholders.  The applicant, on the other hand, is said to have had no trade in Australia or, if it did have a business in Australia, to have passed its title in the trade mark to the partnership.

It is argued that, subsequently, the applicant sold its interest in the Australian company.  That being so, and since the applicant cannot support its claim that there was ever any implied licence, the use of the trade mark HADDONSTONE in Australia is said to be beyond any control of the applicant. 

Alternatively, it is argued that the applicant's own conduct estops it from now preventing the Australian company from doing precisely what it has done with the clear acquiescence of the applicant.

Finally, it is argued that the trade mark is one which, if used by the applicant at the date of the application, would have resulted in deception or confusion in view of the reputation that the Australian company had by that time built up.  Mr Yates noted that this is an argument under s 28 of the Act, and that the Registrar's present practice is to apply the terms of that section conjunctively, as per the Practice Note in the Journal of 12.9.91.  Mr Yates submitted that the applicant had actively participated in the dealings whereby this had come about.  It cannot be said, he argued, that the Australian company was any sort of assiduous infringer, and thus the applicant must be held responsible for the present state of affairs to the extent that, in the applicant's hands, the present mark is not entitled to protection in a court of justice.

For the applicant, it is argued simply that, as first user of the mark, it became the proprietor and that it has never assigned, abandoned or acquiesced to the use of the mark by anyone else, particularly the Australian company.  The partnership, it is said, was the vehicle by which the applicant used its mark and, although the partnership permitted and produced a trading style, this does not equate to common law rights in the goodwill of the trade mark.  If there was an implied licence in any of these dealings, then the decision of the applicant to end any involvement with the Australian company ended that licence.

As to the opposition, Ms Baird argued that if the Australian company thinks that it too has a proprietorship claim then it should concentrate on making its own application under the honest concurrent user provisions of s 34 of the Trade Marks Act, rather than attempting to defeat the entirely legitimate claim of the present applicant. Here she relied on Riv-Oland, per Bowen CJ in the appeal case, supra, at 326.

Decision.

Proprietorship.

It is clear that there is an evidentiary onus on an opponent to make a case that there is some defect in the application. That is not to say that the ultimate onus ever shifts from the trade mark applicant. It does not, of course, and in the event of doubt the application must be refused. In the first instance, the question to be decided is who was the proprietor of the mark at the date of application. If the applicant was not the proprietor then the terms of s 40 stipulate that the application cannot be registered, unless by way of the honest concurrent user provisions of s 34.

At the outset, in the years before the applicant entered into partnership with Messrs Herford and Hawkins, there can be no doubt on this evidence that the applicant was conducting a trade in this country.  Messrs Herford and Hawkins were distributors of the applicant's goods, the goods they were importing were in trade quantities and, on the evidence, these goods were for re-sale in Australia.

In approaching this, the law is as stated in Estex Clothing v Ellis and Goldstein (1966) 116 CLR 254. I note the decision of Justice Windeyer at pp. 266 and 267:

After the goods have been sold by [the proprietor] his mark may still, using the definition of trade mark in the Act, be used in relation to those goods for the purpose of indicating a connection in the course of trade between them and him, the registered proprietor of the mark.  The manufacturer who sells goods, marked with his mark, to a warehouseman, wholesaler or retailer does not, in my view, thereupon cease to use the mark in respect of those goods.  The mark is his property although the goods are not; and the mark is being used by him so long as the goods are in the course of trade and it is indicative of their origin, that is as his product.  Goods remain in the course of trade so long as they are upon a market for sale.  Only when they are bought for consumption do they cease to be in the course of trade.  The concept upon which the case turns are economic, commercial, business concepts concerning the marking and marketing of goods, rather than the provision of the Sale of Goods Act concerning the passing of property."

The full court of the High Court per Barwick CJ, McTiernan, Taylor and Owen JJ at p.271, said:

[A trade mark's] denotation is not limited by any concept of the physical use of a tangible object and we have no doubt that when an overseas manufacturer projects into the course of trade in this country, by means of sales to Australian retail houses, goods bearing his mark and the goods, bearing his mark, are displayed or offered for sale or sold in this country, the use of the mark is that of the manufacturer."

Thus, the applicant has not forfeited its right to proprietorship simply because it did not, itself, sell goods to the ultimate consumer.  The applicant was not selling goods in England for subsequent export for private use in Australia. Its use was distinguishable from the sort of non-use of a trade mark found in WD & HO Wills (Australia) Ltd v Rothmans Ltd (1956) 94 CLR 182.

So be it, but did this change with the formation of the partnership?  It is not entirely clear if the forming of a partnership between Mr Barrow and Messrs Herford and Hawkins has changed the relationship between the applicant, a company, and Messrs Herford and Hawkins.  Mr Yates argued that a company must be distinguished from its shareholders, but I do not see that this is necessarily so of partnerships. 

If forming a partnership with Mr Barrow created a new entity, then the applicant was no longer in the same class as the Italian company in Riv-Oland Marble Co v Settef SpA, 12 IPR 321.  In Riv-Oland, the Italian company was able to substantiate its proprietorship claim while at all times being a remote source of a small amount of imported product.  In the present instance, the advent of an Australian partnership may have muddied the waters.  In the present case, the foreign company was no longer a remote exporter using its mark on goods sent to Australia in the course of trade.  It, or at least the partnership involving Mr Barrow, was here and doing business directly in Australia. 

However, that is not the only enquiry.  Even if it is shown that the partnership was some new entity, distinguishable from the parties who comprised it, it remains to be seen if proprietorship passed from the applicant to either that new entity or to the individuals behind it.  If, on the other hand, neither the partnership nor anything in the applicant's dealings with its other partners affected the applicant's ownership of its trade mark, then the applicant's title is not impugned unless there is some positive evidence that it has since parted with its title, by assignment, acquiescence or abandonment, or that it is estopped.

I do not see in the present evidence sufficient ground to find that the applicant has parted with possession of its property, the common law ownership that is its by right of first user.  It is clear that the applicant, or at least Mr Barrow, its principal, joined in the making of artificial stone goods in Australia, and that the partners all acknowledged some relationship to each other.  The applicant has referred to the Australian company as its agent, and both parties have made very free reference to the non-existent "Haddonstone Australia".  None the less, there is no documentation of anything which might suggest that the applicant has passed on its title. 

Equally, the present facts do not appear to me to be acquiescence or abandonment.  The applicant has used its mark, staked its claim and is defending it.

I turn therefore to the legal principle of estoppel, a principle that is not easily applied by an administrative tribunal such as is constituted by the Registrar of Trade Marks.  The only published decision of this office in which estoppel was considered, and of which I am aware, is Kraft General Foods Inc. v Gaines Pet Foods Corp., 1993 AIPC 91-030. In that decision, the deciding officer, Senior Examiner Ian Thompson, said that, "such an argument is out of my sphere of competence: R v Quinn; Ex parte Consolidated Foods Corp. (1977) 138 CLR 1". The matter with which the Senior Examiner was concerned was one under s 23 of the Trade Marks Act, which involves the exercise of the discretion to remove a trade mark from the Register on certain grounds. Mr Thompson went on to look at the public policy question affecting the exercise of the Registrar's discretion, but that is a discretion which does not apply in a standard opposition matter. Here, an objection must be based on lawful grounds, which are equally applicable before an application is accepted. (D. R. Shanahan's Australian Law of Trade Marks and Passing Off pp 79 - 80).  In the lack of any authority to the contrary, it seems to me that these lawful grounds must be the same in opposition as they were before acceptance, though obviously the process by which the existence of such grounds can be explored is an ex parte one prior to acceptance and an inter parte one subsequently.

Estoppel is a principle of fairness.  There appear to be several aspects of that question, but Mr Yates was quite specific.  He relied on estoppel in pais, which, per the decision to which he explicitly referred me, Waltons Stores (Interstate) Ltd v Maher, 1987-88 CLR 387 at 413, is this:

A party who induces another to make an assumption that a state of affairs exists, knowing or intending the other to act on that assumption, is estopped from asserting the existence of a different state of affairs as the foundation of their respective rights and liabilities if the other has acted in reliance on the assumption and would suffer detriment if the assumption were not adhered to.

That is all very well, but deciding disputed claims of estoppel in pais, or its related forms (estoppel by record, estoppel by deed and such other forms of equitable estoppel as may exist) is entirely outside my province as an administrative official.  Jacobs J, in Quinn's case, supra, made the point that "there are some matters which so clearly and distinctively appertain to one branch of government as to be incapable of exercise by another".  The question of estoppel is not one "capable of being viewed in different aspects, that is, as incidental to legislation, or to administration, or to judicial action, according to its circumstances." 

It seems to me, therefore, that I do not have any real jurisdiction on matters of estoppel.  It is simply not one falling within my role, "the determination of the facts, the existence of which Parliament has prescribed as a condition of the exercise of the administrative function of registration".  There may be simple cases, perhaps where the law and the facts are undisputed, or those which amount to fraud, where the Registrar can decide that, as a matter of fact, one of the parties was estopped, but that is not something I am prepared to do in the present instance.

Accordingly, all of the avenues by which the Australian company may stake a claim to proprietorship, or prevent the applicant from staking one, lead nowhere.  I find that there is no case for the applicant to answer under s 40 of the Act.

Section 28.

Applying the tests of Southern Cross Refrigerating v Toowoomba Foundry, 91 CLR 593, would the use of the mark, by the applicant, have resulted in deception or confusion at the date of application? In my opinion it would not have. That was precisely what was happening, albeit that the connection in the course of trade involved a company with Australian shareholders and also involved a fictitious "Haddonstone Australia". If the company was happy to sell English-made goods as part of the range, I cannot see how there would be any deception or confusion caused by the selling of more of the same by the applicant direct.

It seems to me that, in this case, the two parties had effectively provided a single source of HADDONSTONE goods, most made here but some made in England.  There is no evidence that any of the Australian company's customers would have seen Australian, rather than English, production as a critical factor in the goods they were buying.  In any case, the Australian company was quite liberal with its borrowings from UK brochures and designs.

It is true that the local designs were plainer, and that the Australian company has worked hard - sometimes with the applicant - to adapt the English product to local conditions.  However, there is no evidence that the Australian company's customers had any significant degree of belief that the trade mark in question denoted an Australian firm or its products to the exclusion of the applicant.  I give very little weight to the trade declarations relied on by the Australian company, as they do not go to the specific question of Australian or English origin, and are perhaps influenced by what the declarants now know, or have been told by the Australian company.  It is remarkable that all of the declarants managed to correctly identify the name of the Australian company when even the company was getting it wrong at the relevant time.

It is true that the Australian firm had greatly increased the standing of the trade mark, but they had not supplanted the signification of that mark as a source of English goods.  Rather, they themselves, with the assistance of the applicant, had aided the establishment of the mark as an indication of either UK or Australian products, all having some sort of English connection.

If I am wrong in this, then it seems to me that the cause of the deception or confusion was the action of the Australian company in seeking to misappropriate that which was not theirs.  Such a course should not, per Riv-Oland, supra, be allowed to succeed.

I am not able to consider how, if at all, the applicant's conduct could be said to be blameworthy.  This is a requirement in upholding an opposition based on s 28, as per the practice spelt out in the Official Journal of 12.9.91.  As that practice note states, such conduct would probably amount to conduct that would be disentitled to protection in a court of justice, and the Registrar will often be in a difficult situation in being asked to make such an assessment.  The Registrar's role is, in such a case, not clear, nor is it clear to me how the provisions of section 28 are to function in a matter where the Registrar is unable to venture an opinion.

In the present case estoppel is a matter for the courts, as is the ultimate determination of rights between the parties.  The Registrar's role is in determining facts such as might authorise a registration and, on the face of it, those facts are present and the opposition is either groundless or is beyond the Registrar's competence.

I therefore dismiss the opposition and award costs to the applicant.

T. E. Williams
Hearing Officer
20 September 1994