Harcourts WA Pty Ltd v Roy Weston Nominees Pty Ltd (No. 4)
[2016] FCA 138
•24 February 2016
FEDERAL COURT OF AUSTRALIA
Harcourts WA Pty Ltd v Roy Weston Nominees Pty Ltd (No 4) [2016] FCA 138
File numbers: SAD 224 of 2012
WAD 167 of 2013Judge: MCKERRACHER J Date of judgment: 24 February 2016 Catchwords: INTELLECTUAL PROPERTY – trade marks – application for removal of trade marks for non-use successful under s 92 of the Trade Marks Act 1995 (Cth) (Act) – whether allegation of non-use rebutted by the production of evidence of use in good faith during relevant period – whether abandonment of trade marks during rebranding – exercise of discretion under s 101(3) of the Act – whether affected by repudiation of agreement – whether trade mark used by award of medal – whether trade mark used by listing in the telephone book
INTELLECTUAL PROPERTY – trade marks – whether infringement of trade mark under s 120(1) of the Act – whether breach of franchise agreement leads to conclusion that application for registration of trade mark is ‘contrary to law’ under s 42 of the Act – determining the owner of trade mark in connection with finding under s 58 of the Act – whether registration of trade mark was ‘likely to deceive or cause confusion’ under s 60 of the Act – whether trade mark was accepted for registration on the basis of evidence of representations that were false in material particulars under s 62(b) of the Act – whether application for registration of trade mark was made in bad faith under s 62A of the Act – whether use of trade marks constitutes passing off – whether use of trade marks constitutes misleading and deceptive conduct in breach of s 18 of the Australian Consumer Law – whether time limitation precludes the claim – whether trade marks should be removed or cancelled pursuant to s 88(1) of the Act
Legislation: Trade Marks Act 1995 (Cth) ss 10, 17, 42, 44(2), 58, 60, 88(1), 92(4), 94, 100(3)(a), 101(3), 120, 122, 127, 190
Federal Court Rules 2011 (Cth) r 16.5
Cases cited: Accor Australia & New Zealand Hospitality Pty Ltd v Liv Pty Ltd [2015] FCA 554
Advantage-Rent-A-Car Inc v Advantage Car Rental Pty Ltd [2001] FCA 683
Aldi Stores Ltd Partnership v Frito-Lay Trading Company GmbH (2001) 190 ALR 185
Re Application by Eltham Woodwind (Importing) Pty Ltd (1996) 34 IPR 668
Anheuser-Busch, Inc v Budějovický Budvar [2002] FCA 390
Aston v Harlee Manufacturing Co (1960) 103 CLR 391
C A Henschke & Co v Rosemount Estates Pty Ltd [1999] FCA 1561
C A Henschke & Co v Rosemount Estates Pty Ltd [2000] FCA 1539
Cadbury Schweppes Pty Ltd v Wal-Mart Stores, Inc (2004) 61 IPR 596
CSR Ltd v Resource Capital Australia Pty Ltd (2003) 128 FCR 408
E. & J. Gallo Winery v Lion Nathan Australia Pty Limited (2010) 241 CLR 144
Edgetec International Pty Ltd v Zippykerb (NSW) Pty Ltd [2012] FCA 281
Re Hicks Trade Mark (1897) 22 VLR 636
Holland v Wiltshire (1954) 90 CLR 409
King Par LLC v Brosnan Golf Pty Ltd [2014] FCA 795
Kowa Company Ltd v N V Organon (2005) 223 ALR 27
Lift Shop Pty Ltd v Easy Living Home Elevators Pty Ltd (2014) 311 ALR 207
Maier v ASOS Plc [2015] EWCA Civ 220
Mantra Group Pty Ltd v Tailly Pty Ltd (No 2) (2010) 183 FCR 450
Marcus v Sabra International Pty Ltd [1995] FCA 35
Matzka v The Mind Gym Ltd (2006) 68 IPR 339
Mayne Industries Pty Ltd v Advanced Engineering Group Pty Ltd (2008) 166 FCR 312
Neumann v Sons of the Desert SL [2008] FCA 1183
New South Wales Lotteries Commission v Novamedia BV (2001) 52 IPR 638
Parkside Towbars Pty Ltd v Tow-Safe Pty Ltd (2011) 91 IPR 416
Sargent v ASL Developments Ltd (1974) 131 CLR 634
Shell Company of Australia Ltd v Esso Standard Oil (Australia) Ltd (1963) 109 CLR 407
Smith & Nephew Plastics (Australia) Pty Ltd v Sweetheart Holding Corporation (1987) 8 IPR 285
Solahart Industries Pty Ltd v Solar Shop Pty Ltd (2011) 281 ALR 544
Southern Cross Autoglass Pty Ltd v Protector Glass Industries Pty Ltd [2014] NSWSC 261
Sports Warehouse Inc v Fry Consulting Pty Ltd (2010) 186 FCR 519
Two Men and a Truck Australia Pty Ltd v Three Men and a Truck Removals and Storage Pty Ltd [2008] FMCA 1333
VIP Australia Pty Ltd v Bates (1998) 43 IPR 209
Woolworths Ltd v BP plc (No 2) (2006) 154 FCR 97
Date of hearing: 13-17 October 2014 Registry: Western Australia Division: General Division National Practice Area: Intellectual Property Sub-area: Trade Marks Category: Catchwords Number of paragraphs: 312 Counsel for the Applicant/Cross-Respondent: Mr T Duggan SC with Mr P Britten-Jones Solicitor for the Applicant/Cross-Respondent: Thomson Geer Counsel for the Respondent/Cross-Claimant: Mr A Musgrave Solicitor for the Respondent/ Cross-Claimant: Elevation Legal ORDERS
SAD 224 of 2012
BETWEEN: HARCOURTS WA PTY LTD ACN 009 120 227
Applicant/Cross-RespondentAND: ROY WESTON NOMINEES PTY LTD ACN 073 213 920
Respondent/Cross-Claimant
JUDGE:
MCKERRACHER J
DATE OF ORDER:
24 FEBRUARY 2016
1.The parties file a consent minute as to orders and other relief reflecting these reasons within 21 days.
2.Absent agreement as to such orders:
(a)within 28 days the applicant/cross-respondent file a minute as to the appropriate relief to reflect these reasons, supported by submissions.
(b)within 10 days thereof the respondent/cross-claimant file corresponding material in response.
(c)within 7 days thereof the applicant/cross-respondent file any reply material.
(d)a directions hearing to address resolution of remaining issues as to relief, if any, be listed within two months.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
ORDERS
WAD 167 of 2013
BETWEEN: ROY WESTON NOMINEES PTY LTD ACN 073 213 920
Applicant/Cross-RespondentAND: HARCOURTS WA PTY LTD ACN 009 120 227
Respondent/Cross-Claimant
JUDGE:
MCKERRACHER J
DATE OF ORDER:
24 FEBRUARY 2016
1.The parties file a consent minute as to orders and other relief reflecting these reasons within 21 days.
2.Absent agreement as to such orders:
(a)within 28 days the respondent/cross-claimant file a minute as to the appropriate relief to reflect these reasons, supported by submissions.
(b)within 10 days thereof the applicant/cross-respondent file corresponding material in response.
(c)within 7 days thereof the respondent/cross-claimant file any reply material.
(d)a directions hearing to address resolution of remaining issues as to relief, if any, be listed within two months.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
REASONS FOR JUDGMENT
MCKERRACHER J:
1 THE DISPUTE
[1]
2 KEY BACKGROUND FACTS
[9]
3 THE CENTRAL ISSUES
[45]
4 KEY STATUTORY PROVISIONS
[50]
5 EVIDENCE FROM KEY WITNESSES ON THE CENTRAL ISSUES
[62]
5.1 M/s Musca
[64]
5.2 M/s Furse
[101]
5.3 Mr Green
[106]
5.4 Messrs Honey and Massam
[118]
5.5 M/s Birrell
[120]
5.6 Mr Moore
[125]
5.7 Mr Taylor
[127]
5.8 Mr Johnson
[154]
5.9 Mr Kempton
[172]
5.10 Mr Wellstead
[175]
6 CONSIDERATION
[176]
6.1 RWN’s claim
[176]
6.1.1 Removal of the ‘Roy Weston’ trade mark from the Register
[177]
6.1.1.1 Non-use
[177]
6.1.1.2 The websites
[187]
6.1.1.3 The White pages
[201]
6.1.1.4 The Roy Weston Medal
[210]
6.1.1.5 Exercise of discretion to determine non-use application
[221]
6.1.1.6 Abandonment
[225]
6.1.2 Removal of ‘The House Sold Word In Real Estate’ trade mark from the Register
[231]
6.1.3 RWN’s cross-claim for removal of Harcourts Trade Marks pursuant to ss 42, 58, 60, 88(2)(c) TMA
[232]
6.1.4 Repudiation
[239]
6.2 Harcourts WA’s claims
[253]
6.2.1 Limitation defences
[254]
6.2.2 Cancellation of the RWN Trade Marks
[261]
6.2.3 ‘Contrary to law’ (s 57 TMA)
[263]
6.2.4 Ownership of the RWN Trade Marks (s 58 TMA)
[272]
6.2.5 Confusion (s 60 TMA)
[275]
6.2.6 Application for the registration of the RWN Trade Marks based on representations false in material particulars (s 62(b) TMA)
[277]
6.2.7 Bad faith (s 62A TMA)
[284]
6.2.8 Infringement of the Harcourts Trade Marks
[287]
6.2.9 Passing off or misleading and deceptive conduct on the part of RWN
[291]
6.2.10 Defences raised by RWN
[294]
6.2.10.1 Entitlement to use its company name (s 122(1)(a) TMA)
[294]
6.2.10.2 Prior use of identical trade marks (s 124 TMA)
[304]
6.3 Relief and delay
[308]
7 CONCLUSION
[309]
ANNEXURE a
1. THE DISPUTE
In this regrettable litigation the parties are fighting over entitlement to the use of the name ‘Roy Weston’ in various forms as a trade mark. ‘Roy Weston’ has been a well-known real estate brand in Western Australia.
The position of Roy Weston Nominees Pty Ltd (RWN) is that it lawfully acquired the entitlement to use the name when its shareholders acquired ownership of all of the shares in the company, the title of which incorporates the name. Thereafter it obtained registration of a trade mark incorporating the name. From Harcourts WA Pty Ltd’s perspective, it claims entitlement to the intellectual property rights in the ‘Roy Weston’ name as having acquired all the shares in the company owning the business formerly trading under that name which name it franchised to numerous other real estate agents including RWN. It says further that its primary public persona then changed to Harcourts but it did maintain some trade usage of the name Roy Weston.
Demands concerning the respective entitlements of both Harcourts and RWN have been exchanged over a number of years. Regrettably, it appears that the parties are unable to reach a compromise.
Harcourts WA (as it is now called) has operated a franchised real estate network in Western Australia since 30 January 1985. It has also operated international networks since 2004. Harcourts is the registered owner of the trade marks ‘Roy Weston’ (Trade Mark 921651) and ‘The House Sold Word in Real Estate’ (Trade Mark 921677) (together, the Harcourts Trade Marks).
RWN still operates a real estate business in Western Australia and is the registered owner of the trade marks ‘Roy Weston Real Estate’ (Trade Mark 1336120) and ‘Roy Weston Nominees the Trusted Name in Real Estate’ (Trade Mark 1154742) (together, the RWN Trade Marks).
On 22 July 2011, RWN filed an application pursuant to s 92 of the Trade Marks Act 1995 (Cth) (TMA) with the Registrar of Trade Marks for removal of the Harcourts Trade Marks from the Register by reason of non-use. Application WAD 167 of 2013 in this Court commenced when the Deputy Registrar of Trade Marks referred RWN’s application to this Court on 14 March 2013 pursuant to s 94 TMA (the Federal Court of Australia being a ‘prescribed court’ under s 190(a) TMA (the RWN non-use proceedings). RWN contends in this Court that there is no evidence to demonstrate usage of the Harcourts Trade Marks and, consequently, that each of the Harcourts Trade Marks should be expunged from the Register.
A second proceeding, SAD 224 of 2012, was commenced in the South Australia Registry of this Court by Harcourts WA on 6 September 2012. Harcourts WA allege that RWN, which is controlled by Mr and Mrs Taylor (its shareholders and directors), infringed the Harcourts Trade Marks by use of the Harcourts Trade Marks without authority, and by registering the RWN Trade Marks. Harcourts WA also argues the RWN Trade Marks are substantially identical or deceptively similar to the Harcourts Trade Marks. There are numerous other claims including those under s 18 of Sch 2 to the Competition and Consumer Act 2010 (Cth), the Australian Consumer Law (ACL), breach of a franchise agreement and common law claims of passing off. Harcourts WA seeks relief, including rectification of the Register to reflect the cancellation of the RWN Trade Marks and injunctive relief restraining RWN from infringement and passing off. It also seeks declaratory relief, delivery up, damages or an account of profits, damages or equitable compensation for passing off and various other orders. In relation to relief, as I understand the parties accept, I propose to deliver these findings and reasons on liability first, before hearing from the parties in relation to relief, if any, including quantum of loss, if any.
RWN contends that the RWN Trade Marks do not infringe the Harcourts Trade Marks. By cross-claim, RWN seeks declarations that Harcourts repudiated a franchisee agreement between the parties, that RWN owns the RWN Trade Marks and that RWN has not infringed the Harcourts Trade Marks. RWN’s defence and cross-claim again raise the assertions of non-use and abandonment of the Harcourts Trade Marks by Harcourts.
2. KEY BACKGROUND FACTS
The background discussed in this section is mostly common ground.
From about 1957, Mr Roy Weston commenced using the trade mark ‘Roy Weston’ in respect of real estate affairs on his own account and later with various partners in the business of Roy Weston and Co. In 1983, Roy Weston and Co commenced franchising. On 30 January 1985, Roy Weston and Co was incorporated to become ‘Roy Weston Limited’ to carry on the business of Roy Weston and Co. Roy Weston Limited then became ‘Roy Weston Pty Ltd’ on 18 June 1999. On 31 January 2004, the holding company of Harcourts WA, Harcourts Group (Australia) Pty Ltd became the owner of Roy Weston Pty Ltd by acquiring 100% of the issued share capital in Roy Weston Pty Ltd. The company name was then changed from Roy Weston Pty Ltd to ‘Harcourts WA Pty Ltd’ on 27 March 2007. It is in issue whether Harcourts WA has relevantly used the Harcourts Trade Marks since this time.
Harcourts WA contend that by acquiring all of the shares in Roy Weston Pty Ltd, in turn, has owned the trade mark ‘Roy Weston’ since 30 January 1985. It has also provided real estate services, operated a franchised real estate network in Western Australia since incorporation, and operated businesses under or by reference to the Harcourts Trade Marks.
Challenge Realty Pty Ltd commenced a real estate business trading as ‘Roy Weston Bassendean’ in January 1988. The Taylors were the directors and shareholders of Challenge Realty.
On 31 January 1996, an agreement was entered into by Challenge Realty to purchase LJ Hooker Morley (a competing real estate firm) from 1 April 1996. Challenge Realty then operated the ‘Roy Weston Morley’ real estate agency business (Morley Business). There is some controversy as to the mechanics of this exercise. I will deal with that in more detail below.
There were three franchise agreements between Roy Weston Limited (now Harcourts WA) and RWN (as franchisee): the first dated 1 April 1996, the second dated 1 May 1997, and the third dated 1 April 1996 between JA Bryce Pty Ltd and Roy Weston Limited (relevantly known as the 2002 Franchise Agreement).
LJ Hooker Morley had been operated by JA Bryce Pty Ltd. Mr John Bryce was a director of JA Bryce Pty Ltd and personally became a director of RWN from 8 March 1996 until 1 October 1996 (although this is incidental). RWN did not commence operating the Morley Business until after 1 April 1996 probably because it did not hold the necessary approvals from the Real Estate Business Agents Supervisory Board to do so until after that date.
Harcourts WA advanced RWN $230,000 by way of a loan to commence the Morley Business in 1996. The loan was repaid in April the following year. At this time, Mr David Pilling, then Chief Executive Officer (CEO) of Harcourts WA, ceased to be a director of RWN. A Mr Watson, a solicitor, also transferred two shares he held in RWN to Mr and Mrs Taylor. Harcourts, at the same time, also transferred all its shares in RWN (49 shares) to the Taylors. So, from April 2007, RWN was wholly controlled by the Taylors.
In the meantime, on 29 July 2002, Harcourts WA filed an application for the trade mark ‘Roy Weston’ in a class relating to real estate affairs. It obtained trade mark registration with that priority date.
On 30 April 2004, Harcourts WA held a ‘Roy Weston loyalty recognition dinner’ at a restaurant in Western Australia. It registered the domain name ‘royweston.com.au’ and the business name ‘Roy Weston’. The Taylors listed ‘Roy Weston Morley’ in the Yellow Pages on 15 July 2004. Later, it listed ‘Roy Weston’ and ‘Harcourts’ in the 2006/2007, 2007/2008 and 2008/2009 editions of the White Pages telephone book.
In or around March 2006, Harcourts WA informed its franchisees that Harcourts intended to rebrand its franchise network from ‘Roy Weston’ to ‘Harcourts’. The change took effect from on or around 2007. The use of ‘Roy Weston red’ changed to blue – the corporate colour of the Harcourts Group, which is referred to as the change from ‘red to blue’.
A number of meetings and exchanges occurred between the Roy Weston franchisees and Roy Weston Pty Ltd (as Harcourts WA then was). The meetings and exchanges of import are examined in detail below.
At the time of the rebrand, Roy Weston Pty Ltd had agreements with around 50 franchisees. RWN confirmed that it would not continue as a franchisee under the Harcourts’ brand in December 2006. In total, around 20 franchisees elected to leave the franchise network of Harcourts WA as a result of the rebrand.
On 21 December 2006, Mr Michael Corboy SC, as his Honour then was, provided an opinion in relation to the contractual entitlements of certain Roy Weston franchisees following the Harcourts rebrand. The advice is discussed in further detail below. The advice suggested that the rebranding constituted a repudiation of the 2002 Franchise Agreement. But it did not suggest that RWN (and other franchisees) could therefore use the name ‘Roy Weston’ as a trade mark.
In 2007, Harcourts WA first introduced the ‘Roy Weston Medal’ on which a deal of evidence was given, particularly by M/s Adrienne Musca, in connection with the ongoing use by Harcourts of the ‘Roy Weston’ name, as contended for by Harcourts WA.
On 9 January 2007, RWN applied for the registration of a word trade mark in the terms ‘Roy Weston Nominees the Trusted Name in Real Estate’. There were some important consequential exchanges in early 2007. By letter dated 24 January 2007:
…
Dear Mr and Mrs TaylorRoy Weston
We act for Roy Weston Pty Ltd.
We refer to the franchise agreement between our client, Roy Weston Nominees Pty Ltd and [Mr] Taylor and [Mrs] Taylor dated 16 May 2002 (Franchise Agreement).
It has come to our client’s attention that on 9 January 2007 you lodged an application to register the words “Roy Weston Nominees the Trusted Name in Real Estate” as a trade mark for use in connection with the management of real estate and real estate services (Trade Mark Application).
We advise as follows:
1. Breach of Franchise Agreement
1.1The lodgement of the Trade Mark Application constitutes a breach of clause 7.11 of the Franchise Agreement which provides as follows:
“The Franchisee will not adopt nor apply to register any mark or business name which would incorporate any feature of or which might be confusingly similar to the Roy Weston Identifications.” [our emphasis]
1.2“Roy Weston Identifications” is defined in clause 1.1 of the Franchise Agreement as follows:
“Roy Weston Identifications” means the Business Name and the distinctive names, signs, designs, logos, Trade marks, business marks, commercial symbols and colours of the Franchisor including but not limited to the Roy Weston name and each and every one of them.” [our emphasis]
1.3Pursuant to clause 14.1(c) of the Franchise Agreement, if you fail to remedy a breach of the Franchise Agreement, our client is entitled to terminate the Franchise Agreement and sue you for damages.
2. Trade Mark Infringement
2.1Our client is also the owner of registered Australian trade mark number 921551 “Roy Weston” (Trade Mark)
2.2By virtue of that ownership, our client has an exclusive, Australia-wide monopoly to use the Trade Mark in connection with real estate affairs and other similar goods and services. The use by any person of the Trade Mark or any mark that is either substantially identical to, or deceptively similar to the Trade Mark in connection with the goods or services referred to above or similar goods and services without our client’s consent, constitutes an infringement of our client’s rights relating to the Trade Mark.
2.3The lodgement of the Trade Mark Application without our client’s consent constitutes an infringement of our client’s rights relating to the Trade Mark.
3. Required Action
3.1In the circumstances, we require that by no later than 5:00pm on 29 January 2007 you provide undertakings that:
(1)before 5:00pm on 29 January 2007 you will withdraw the Trade Mark Application; and
(2)you will refrain from applying to register a trade mark that is either substantially identical to, or deceptively similar with the Trade Mark in connection with the management of real estate and real estate services or similar services.
3.2These undertakings can be provided by signing a copy of this letter and returning it to us.
We look forward to your prompt response.
Our client reserves all of its rights.
…
(emphasis added)
Deacons, then solicitors for Harcourts WA, wrote to RWN on 24 January 2007 drawing attention to the 2002 Franchise Agreement between Roy Weston Pty Ltd (which later became Harcourts WA), Roy Weston Nominees Pty Ltd and the Taylors saying that the application lodged on 9 January 2007 to register the words ‘Roy Weston Nominees the Trusted Name in Real Estate’ as a trade mark for use in connection with the management of real estate and real estate services was in breach of the 2002 Franchise Agreement. Clause 7.11 of the 2002 Franchise Agreement provided that the franchisee would not adopt, nor apply to register, any mark or business name which would incorporate any feature of or which might be confusingly similar to the ‘Roy Weston Identifications’. ‘Roy Weston Identifications’ was defined in cl 1.1 of the 2002 Franchise Agreement as meaning:
[T]he Business Name and the distinctive names, signs, designs, logos, Trade marks, business marks, commercial symbols and colours of the Franchisor including but not limited to the Roy Weston name and each and every one of them.
Deacons drew attention to the fact that cl 14.1(c) of the 2002 Franchise Agreement provided that if the Taylors failed to remedy a breach of the 2002 Franchise Agreement, Roy Weston Pty Ltd was entitled to terminate the 2002 Franchise Agreement and sue for damages.
Deacons additionally pointed out that their client was the registered owner of the ‘Roy Weston’ trade mark and, by virtue of that ownership, Harcourts WA had an exclusive Australia-wide monopoly to use the trade mark in connection with real estate affairs and other similar goods and services. Deacons asserted that there had also been an infringement of the ‘Roy Weston’ trade mark by virtue of RWN’s lodgement of the trade mark application for ‘Roy Weston Nominees the Trusted Name in Real Estate’. Deacons required undertakings that the trade mark application would be withdrawn and that RWN would refrain from applying to register a trade mark either substantially identical to, or deceptively similar to, the trade mark ‘Roy Weston’ in connection with the management of real estate and real estate services or similar services. A duplicate letter was enclosed setting out an undertaking. RWN was advised that the undertaking could be given by executing the duplicate letter and forwarding it to Deacons.
On 14 February 2007, Deacons, through M/s Seaton, wrote again to RWN referring to the 24 January 2007 letter.
In the 14 February 2007 letter, Deacons confirmed that it was advised by Mr Taylor of RWN that the Trade Marks Office had notified Mr Taylor that the trade mark application for ‘Roy Weston Nominees the Trusted Name in Real Estate’ had not been accepted, and that RWN did not propose to proceed with its application. Deacons noted, however, that, notwithstanding Mr Taylor’s assurance, the trade mark application had not been withdrawn at that stage. Deacons repeated the requirement to withdraw the application and give the undertaking, as contained in the 24 January 2007 letter. That undertaking was never given.
By an email two days later, on 16 February 2007, from M/s Musca, a long term Harcourts WA employee, to Mr Shane Kempton, then CEO of Harcourts WA, and others, M/s Musca confirmed that she had received a call from ‘Judith’ of The Sunday Times newspaper raising a query as to the trading name ‘Roy Weston Nominees Pty Ltd’. The email continued:
I’m aware we have legal action pending. At this stage can we stop [Mr Taylor] from setting up a new logo and account under that name, at The Sunday Times – and also everywhere else?
On 27 March 2007, ‘Roy Weston Pty Ltd’ was renamed ‘Harcourts WA Pty Ltd’ and the commencement of the rebrand of the Harcourts WA office and business owner offices continued from March through to April with the official rebrand date being 2 April 2007. The ‘Roy Weston Medallist “Wall of Fame”’ was set up in the reception area of the Harcourts WA office in May 2007.
Mr Kempton ceased to be employed by Harcourts WA in January 2008. Mr Andrew Moore replaced Mr Kempton as CEO in March 2008. In addition, on 1 January 2008 M/s Jennifer Birrell commenced the role of General Manager of Harcourts WA, which continued until she ceased employment with Harcourts WA in July 2008.
Deacons wrote to RWN again on 14 January 2008. In this letter, further reference was made to the 24 January 2007 letter, Deacons noting that, despite their demand, the trade mark application for ‘Roy Weston Nominees the Trusted name in Real Estate’ had not been withdrawn, and raising the following other matters:
14 January 2008
…1.As you are aware, our client is the registered owner of trade mark no. 921651, being the word “Roy Weston”, in class 36, being real estate affairs. The trade mark was registered on 29 July 2002 and is currently in force. We are instructed that our client has traded under the name “Roy Weston” since 1957 in relation to real estate affairs and, as a result, has built up a substantial reputation in the Roy Weston name throughout Australia.
2.Since our letter dated 24 January 2007 it has come to our client’s attention that Roy Weston Nominees Pty Ltd, and Mr and Ms Taylor, as shareholders and directors, are using trade marks either substantially identical or deceptively similar to trade mark no. 921651. In this respect, we refer to:
(1)the advertisement placed on page 52 of the real estate section in the West Australian on 25 November 2007;
(2)the use of the company name Roy Weston Nominees Pty Ltd; and
(3)the use of the Business Name Roy Weston Nominees.
3.Our client is still investigating the extent of such and will provide further details, including the use of signage, letterheads, business cards and other advertising material if it should become necessary.
…
14/01/2008
4. Such conduct constitutes:
(1)an infringement of our client’s rights as registered owner of trade mark no. 921651;
(2)misleading or deceptive conduct in contravention of s52 of the Trade Practices Act 1974 (Cth) (TPA), as the use of the infringing mark may cause the general public to be misled as to there being some connection or relationship with our client;
(3)a false representation in that you have the sponsorship approval or affiliation with our client which you do not have, in contravention of s53(a)(d) of the TPA; and
(4)the tort of passing off,
which has resulted in our client suffering loss and damage and which it will continue to suffer
5.Further, such conduct is in breach of the Franchise Agreement dated 16 May 2002 (Franchise Agreement), by which your company admitted that our client was the owner of the Roy Weston mark and that provides that upon termination the company shall cease immediately and forever desist from using such marks.
6.As guarantors under the Franchise Agreement, Mr and Ms Taylor are obliged to ensure compliance of these obligations and are liable for any breach.
7.Our client demands that by no later than 5pm, Wednesday, 23 January 2008 both the company and Mr and Mrs Taylor provide us with their written undertakings that they will from 14 days of the date of the undertaking:
(1)cease trading under, advertising, using or displaying the Roy Weston name or mark and remove all such names and marks form the business including, but not limited to:
(a) signs, letterheads, business cards or advertisements;
(b) change the name of Roy Weston Nominees Pty Ltd;(c)assign the business name Roy Weston Nominees to our client;
(d)withdraw trade mark application no. 1154742;
(e)provide us with satisfactory evidence that they have taken the above steps;
(f)continue to refrain from trading under, advertising, using or displaying the Roy Weston name or mark or any other name or mark that is deceptively similar to or otherwise infringing our client’s rights in the mark “Roy Weston” including as registered owner of trade mark no. 921651; and
(g)confirm that our client is entitled to all the rights, titles and benefits in and associated with the Roy Weston mark and brand and that they have relinquished any claim to that name or mark or any similar name or mark in connection with the conduct of their business.
8. Our client further requires before they commence:
(1) trading under any other name or mark;
(2) using any other company name; or
(3) using any other business name,
they provide us with a copy of the proposed mark or name for our client’s approval.9.If we do not receive from you the required undertaking at the time stipulated above and satisfactory evidence that the above demands have been carried out, then our client will have no choice but to commence appropriate proceedings to restrain the company and Mr and Mrs Taylor from using the Roy Weston mark and otherwise trading under or by reference to that name. In such proceedings, our client will also seek damages or alternatively an account of profits that the company or Mr and Mrs Taylor have gained from using the mark in breach of our client’s rights, together with interest and costs.
We look forward to receiving the required undertakings by 23 January 2008. Our client reserves all its rights.
…
(emphasis added)Deacons sent further similar demands to the Taylors significantly later, on 11 June and 14 October 2008 in these terms:
…
11 June 2008
…
Roy Weston trade markWe refer to our previous correspondence regarding the above matter.
We note that, after 15 months, you have still been unable to satisfy the Trade Marks Office’s requirements in relation to registration of trade mark application no. 1154742.
We also note that, despite that fact that you have been unable to register the trade mark, you continue to use the trade mark. We enclose copies of the pages of the Real Estate Section of the West Australian which contain our advertisements which include the trade mark.
As we have previously advised you, such conduct constitutes:
1.an infringement of our client’s rights as registered owner of trade mark no. 921651;
2.misleading or deceptive conduct in contravention of section 52 of the Trade Practices Act 1974 (Cth) (Act), as the use of the infringing mark may cause the general public to be misled as to there being some connection or relationship with our client;
3.a false representation in that you have the sponsorship approval or affiliation with our client which you do not have, in contravention of section 53(a)(d) of the Act; and
4.the tort of passing off,
which has resulted in our client suffering loss and damage which it will continue to suffer.
The conduct is also a clear breach of the Franchise Agreement dated 16 May 2002 (Franchise Agreement) in which you acknowledged our client as the owner of the Roy Weston trade mark and agreed to ceased immediately and forever desist from using such trade mark upon termination of the Franchise Agreement.
In the circumstances and now that you have been unable to register the trade mark, our client has advised that it intends to pursue its rights in relation to the trade mark and proceed with further action in this matter if you do not confirm by 5:00pm on Wednesday 18 June 2008 that you agree to cease using the trade mark or use a different trade mark.
Please also note that in the unlikely event that you are able to satisfy the Trade Marks Office’s requirements in relation to your trade mark application no. 1164742, our client intends to then oppose registration of the trade mark by lodging a notice of opposition to registration of the trade mark.
…14 October 2008
…
Roy Weston Trade MarkWe refer to our letters dated 24 January 2007, 14 February 2007 and 14 January 2008 in relation to your continuing use of the Roy Weston brand and your trade mark application no. 1154742 (infringing conduct).
While we anticipate receiving instructions to commence proceedings against you for the infringing conduct in any event, the outcome of application no. 1154742 will determine whether that includes opposition proceedings. In this respect, we note that the acceptance date for the application was originally in April 2008 but has been extended to 16 October 2008.
We expect that those proceedings will issue soon after the application has been determined.
Our client reserves all its rights in relation to your infringing conduct including to commence proceedings seeking damages, an account of profits and final injunctive relief an opposition proceedings (to the extent they become necessary).
…
(emphasis added)On 30 October 2008, IP Australia informed RWN’s solicitors that the final date for acceptance of trade mark application for ‘Roy Weston Nominees the Trusted Name in Real Estate’ by RWN had been extended to 16 January 2009.
On 12 February 2009, Mr Taylor filed a statutory declaration in support of RWN’s application for the registration of the trade mark ‘Roy Weston Nominees the Trusted Name in Real Estate’ in his capacity as director of RWN. There was a deal of evidence and argument about the content of Mr Taylor’s important statutory declaration. Relevantly, it reads as follows:
…
4.Roy Weston Nominees is a Western Australian based, owned and operated real estate agency registered under the Corporations Act 2001. Roy Weston Nominees commenced trading under its current company name in March 1996.
5.In 1996 Roy Weston Limited (later renamed Roy Weston Pty Ltd and now named Harcourts WA Pty Ltd) informed me that it intended to establish a new WA Morley office and asked if I would like to be a part-owner of that business. I accepted Roy Weston Limited’s offer to be a part owner and manager of the business.
6.As a result of this arrangement in March 1996 the existing business of L.J. Hooker Morley was purchased by Roy Weston Limited and thereafter Roy Weston Nominees was formed and Roy Weston Morley was transferred from Roy Weston Limited to Roy Weston Nominees. At this stage Roy Weston Limited owned 51% of the shares in Roy Weston Nominees and I held 49% of the shares in my name. The two directors of Roy Weston Nominees were the then Managing Director of Roy Weston Limited David Pilling, and myself.
7.After the purchase of L.J. Hooker Morley the business’s name was changed to Roy Weston Morley (“Business”) and ‘Roy Weston’ (“Name”) was utilised in marketing and promoting the Business.
8.From March 1996 to May 1997 Roy Weston Nominees used the Name to promote the Business but the Business was not part of the Roy Weston franchise and not otherwise restricted in its use of the Name.
9.In March 1997 I acquired Roy Weston Limited’s 51% shareholding in Roy Weston Nominees for the sum of $214,041.67 and thereafter owned 100% of the Business.
10.On or about May 1997 Roy Weston Nominees entered into a franchise agreement with Roy Weston Limited to franchise the Business commencing 1 May 1997. The term of the franchise agreement was five years and included as part of this agreement a clause that attempted to license the use of the Name.
11.On 16 May 2002 Roy Weston Nominees entered a replacement franchise agreement with Roy Weston Pty Ltd commencing 1 May 2002 extending the terms of the franchise. The term of this agreement was for a further five years.
12On 29 July 2002 Roy Weston Pty Ltd applied to IP Australia for the name trade mark “ROY WESTON” (“the Trade Mark No 921651”). On 26 August 2004 the Registrar published in the Australian Official Journal of Trade Marks, an acceptance of Trade Mark Application No 921651 for registration.
13.Annexed hereto and marked with the letters “T-1” is a true copy of the details of this Trade Mark as given by IP Australia.
14.In 2004 the entire Roy Weston franchise (owned by Roy Weston Pty Ltd) including the Trade Mark, was purchased by Harcourts International Ltd (“Harcourts”).
15.In January 2008 Harcourts announced that it intended, effective 1 March 2008, to change the franchise name from Roy Weston to Harcourts and to cease its use of the Trade Mark and all associated branding and livery.
16.On or about February 2008 Harcourts WA Pty Ltd proposed that Roy Weston Nominees and other ‘Roy Weston’ franchisees execute a Deed of Amendment to the existing franchise agreement between Roy Weston Nominees, each of the other franchisees and Harcourts WA Pty Ltd that would have the substantive effect of altering the name, style and get-up of the franchise.
17.This substantive alteration of the name, style and get-up was rejected by Roy Weston Nominees and a number of other franchisees as being a fundamental breach of the franchise agreements entitling Roy Weston Nominees and a number of other franchisees to terminate their franchise agreements and walk away from the Harcourts franchise.
18.The Deed of Amendment remains unsigned by Roy Weston Nominees as at the date of execution of this Statutory Declaration.
19.In or about March 2008 the Applicant’s Trade Mark was developed out of and based on the Name and used in the Business.
20.On or about March 2008 Roy Weston Pty Ltd Chief Executive Officer Mr Shane Kempton informed me that Roy Weston Pty Ltd would not stop me trading under the name Roy Weston Nominees.
21.On or about March 2008 the [sic] Harcourts ceased all trading under the Roy Weston trading name except for reference in Yellow Pages advertisements which had been published prior to the name change; and redirection on the Internet from Roy Weston’s web site to the Harcourts web site.
22.In the 2009 Yellow Pages I notices [sic] that there is no advertising utilising the Trade Mark No 921651.
TRADE MARK USAGE
23.Roy Weston Nominees has traded utilising the Name, being the substantive part of the Applicant’s Trade Mark, for more than 12 years from March 1996 when the company was established through to the present day (“Usage Period”).
24.The Usage Period is comprised of the following tracts of time:
•Roy Weston Nominees used the Name prior to entering into a franchise agreement with the franchisor Roy Weston Limited from March 1996 until May 1997.
•Roy Weston Nominees use of the Name (prior to registration of Trade Mark No 921651 with IP Australia by Roy Weston Pty Ltd) from March 1996 through to 29 July 2002 (registration date).
•Roy Weston Nominees used the Name and Trade Mark No 921651 from the date of its registration with IP Australia on 29 July 2002 to 1 March 2008 when Roy Weston Pty Ltd repudiated the franchise agreement by proposing to unilaterally amend the franchise agreement so that all franchisees were required to cease trading under the Name, cease use of Trade Mark No 921651 and adopt the name and style of ‘Harcourts’.
•Roy Weston Nominees has continuously (without interruption) used the Name since 1996 and has used the Applicant’s Trade Mark from March 2008 and was still doing so as at the date of this Statutory Declaration.
THE BUSINESS
25.Roy Weston Nominees has continuously used the Name, the Trade Mark (prior and subsequent to its registration with IP Australia) and since March 2008 used the Applicant’s Trade Mark to promote and market the Business on marketing flyers, real estate banners, newspaper and magazine advertising, letterhead, clothing, signage, giveaway pens, fridge magnets, the Internet etc.
26.The Name was used in 1996 by the Business to promote and market the Business on marketing flyers, real estate banners, newspaper and magazine advertising, letterhead, clothing, signage, giveaway pens and fridge magnets.
Annexed hereto and marked with the letters “T-2” are true copies of various marketing materials carrying the Name as utilised by the Business in or about 1996.
27.The Name was used by the Business, subsequent to Roy Weston Nominees entering a franchise agreement with Roy Weston Limited in May 1997, to promote and market the Business on marketing flyers, real estate banners, newspaper and magazine advertising, letterhead, clothing, signage, giveaway pens and fridge magnets.
Annexed hereto and marked with the letters “T-3” are true copies of various marketing materials carrying the Name as utilised by the Business in or about 2000 and 2001.
28.Trade Mark No 921651 was used by the Business, subsequent to Roy Weston Nominees entering a franchise agreement with Roy Weston Limited on 16 May 2002, to promote and market the Business on marketing flyers, real estate banners, newspaper and magazine advertising, letterhead, clothing, signage, giveaway pens and fridge magnets.
Annexed hereto and marked with the letters “T-4” are true copies of various marketing materials carrying the Trade Mark No 921651 as utilised by the Business in or about 2003 & 2005.
29.In 2009 the Applicant’s Trade Mark is used by the Business to promote and market the Business on marketing flyers, real estate banners, newspaper and magazine advertising, letterhead, clothing, signage and the Internet.
Annexed hereto and marked with the letters “T-5” are true copies of various marketing materials carrying the Applicant’s Trade Mark utilised by the Business in 2008 and 2009.
30.As at the date of this Statutory Declaration the Applicant’s Trade Mark and the Trade Mark No 921651 are being used by Roy Weston Nominees to promote and market the Business.
31.Roy Weston Nominees has used the Name, Trade Mark No 921651 and Applicant’s Trade Marks to promote and market the Business (including to promote the sale and leasing of real estate properties) in the following suburbs of Perth, Western Australia: Morley, Dianella, Noranda, Bayswater, Embleton, Bedford, Beechboro, Kiara, Greenwood, Bassendean, Belmont. Carlyle, Victoria Park, West Perth, Ballajura, Middle Swan, Ellen Brook and Midland.
32.Use of the Roy Weston Name both prior and subsequent to its incorporation into the Applicant’s Trade Mark and its registration with IP Australia has assisted in the growth of the Business.
33.In 1996 the Business rent roll consisted of 130 properties under management. This has since grown to 250 properties under management in 2008-2009.
34.Roy Weston Nominees spent approximately AUD$100,000.00 in the 2007-2008 financial year on advertising and marketing the Business utilising the Applicant’s Trade Mark.
35.From 1996 to the end of the 2007-2008 financial year Roy Weston Nominees spent more than AUD$1,000,000.00 on advertising and marketing the Business utilising the Name, Trade Mark and Applicant’s Trade Mark.
36.In 2008 and 2009 Roy Weston Nominees advertised in the Yellow Pages using the Applicant’s Trade Mark.
Annexed hereto and marked with the letters “T-6” are true copies of Yellow Pages advertisements for Roy Weston Nominees advertising the Business in 2008 and 2009.
37.Use of the Name, Trade Mark No 921651 and Applicant’s Trade Mark from 1996 to the present has assisted in growth of the Business revenues from approximately AUD$600,000.00 in 1996-1997 to AUD$900,000.00 for the 2007-2008 financial year.
HONEST CONCURRENT USE
38.From March 1996 to May 1997 Roy Weston Limited permitted Roy Weston Nominees to use the Name without licence and without restriction to promote the Business.
39.From May 1997 to March 2008 Roy Weston Nominees used the Name and the Trade Mark No 921651 (subsequent to its registration with IP Australia on 29 July 2002) under the licence via two successive franchise agreements.
40.From March 2008 after Harcourts repudiated the franchise agreement dated 16 May 2002 and the CEO of Roy Weston Pty Ltd gave me a verbal assurance that Roy Weston Pty Ltd would not oppose me trading under the name Roy Weston Nominees, I applied to IP Australia for registration of the Applicant’s Trade Mark.
…
(emphasis added)
On 22 June 2009, ‘Roy Weston Nominees the Trusted Name in Real Estate’ was registered as a trade mark in the name of RWN with effect back to 9 January 2007.
Later that year, on 10 December 2009, RWN filed a word trade mark application for ‘Roy Weston Real Estate’, supported by a statutory declaration declared by Mr Taylor and dated 27 July 2010 (the content of which was substantially to the same effect as the earlier statutory declaration). It confirmed that ‘the CEO of Roy Weston Pty Ltd [had given] Mr Taylor a verbal assurance that [RWN] could trade using the Name and company name, Roy Weston Nominees’. ‘Roy Weston Real Estate’ was entered on the Trade Mark Register on 6 December 2010 with effect from 10 December 2009.
On 30 March 2011, RWN requested the Western Australian Department of Commerce to cancel Harcourts WA’s registered business name ‘Roy Weston Real Estate’. The Department of Commerce subsequently cancelled the business name on 24 June 2011.
Harcourts WA sought and obtained a time extension to prepare evidence of use. In due course, no evidence of use was submitted by Harcourts WA, which led to its business name being removed pursuant to s 18 of the Business Names Act 1962 (WA). RWN subsequently applied for and obtained registration of that business name ‘Roy Weston Real Estate’ on 10 July 2011.
RWN applied to the Registrar of Trade Marks 12 days later to remove the Harcourts Trade Marks because of non-use.
On 7 September 2011, Harcourts WA opposed RWN’s application for removal of the Harcourts Trade Marks from the Register.
In correspondence around this time, Minter Ellison, the solicitors by then acting for Harcourts WA, wrote to RWN on 15 September 2011 and repeated the demands of Harcourts WA. Relevantly, the 15 September 2011 letter said:
…
In 2004, Harcourts took ownership of the Roy Weston Group (Group) and associated trade marks and goodwill. The company name Roy Weston Pty Ltd was changed to Harcourts WA Pty Ltd in 2007 with the ‘Roy Weston’ branding remaining a key component to the Harcourts business. Mr Roy Weston was a founder of the Group and an icon within the real estate industry.1.1 Roy Weston trade marks
The Roy Weston branding owned by Harcourts includes the following Australian registered trade marks:
(a) Roy Weston - registered trade mark number 921651; and(b)The House Sold Word in Real Estate - registered trade mark number 921677,
(together, Roy Weston Marks).
As their owner and proprietor, Harcourts has exclusive rights to use the Roy Weston Marks in connection with real estate affairs. As such, any unauthorised third party use of the Roy Weston Marks, or any other mark that is substantially identical or deceptively similar to the Roy Weston Marks, will breach Harcourts' rights under the [TMA].
1.2 Harcourts' reputation in the Roy Weston name and marks
In addition to being the owner of the Roy Weston Marks, our client has built up over time and continues to enjoy, a significant reputation in Western Australia in relation to the name and style of the Roy Weston Marks, and associated 'Roy Weston' names and branding, including the distinctive Roy Weston logo:
(Roy Weston Logo)
Harcourts is the registered proprietor of the following registered business names:
(a) royweston.com.au Western Australia BN10017756 Registered 08/06/2004 (b) Roy Weston State Support Western Australia BN10513036 Registered 09/05/2006 (c) Roy Weston Real Estate Queensland BN6449402 Registered 08/04/1997 (d) Roy Weston Rural Western Australia BN09449115 Registered 05/03/2002 Given Harcourts' extensive reputation and goodwill associated with the 'Roy Weston' name, the Roy Weston Logo and each of the Roy Weston Marks (together, the Roy Weston Intellectual Property), any unauthorised third party use of the Roy Weston Intellectual Property in connection with real estate services in Western Australia is likely to constitute misleading or deceptive conduct and/or a false representation within the meaning of, and in breach of, the Australian Consumer Law (as set out in Schedule 2 of the Competition and Consumer Act 2010 and equivalent State and Territory Fair Trading Legislation, including the Western Australian Fair Trading Act 2010).
2. Roy Weston Nominees Pty Ltd
We have recently been made aware Roy Weston Nominees Pty Ltd (RWN) has been trading under the 'Roy Weston' name, using a number of trade marks, domain names and trading names containing the name 'Roy Weston'. This use includes:
(a)application for, and/or registration, and use of the following Australian trade marks:
(i)Roy Weston Real Estate, pending trade mark application number 1419012:
(ii)Roy Weston Real Estate. registered trade mark number 1336120; and
(iii)Roy Weston Nominees The Trusted Name In Real Estate, registered trade mark number 1154742,
(together, the Infringing RWN Marks);
(b) use of the name and image of Mr Roy Weston, as depicted below:
(c) registration and use of the domain names:
(i)roywestonnom.com.au; and
(ii)royweston.net.au,
(together, the Infringing RWN Domain Names); and
(d) registration and use of the following business and company names:
(i)'Roy Weston Real Estate', Western Australia registered business name BN11905281 (registered 10/07/2011);
(ii)'Roy Weston Nominees', Western Australia registered business name BN10634046 (Registered 04/10/2006); and
(iii)the company name 'Roy Weston Nominees Pty Ltd' (ACN 073 213 920), since 2007.
(together, the Infringing RWN Names).
Each of the above uses constitutes an unauthorised use of the Roy Weston Intellectual Property.
Each such use has occurred in trade or commerce, within the meaning of the Australian Consumer Law.
3. Infringement of Harcourts' rights
Your registration and/or use of the 'Roy Weston' name and branding as described in point 2 of this letter amounts to a clear and flagrant breach of our client's rights.
Moreover, your conduct is likely to represent to consumers that:
(a)you are a supplier of our client's services, when this is not the case; and/or
(b)you are sponsored, approved or endorsed by, or affiliated with, our client, when this is not the case.
Indeed, your misrepresentations could not be more flagrant. The home page of your website, operated at the Infringing RWN Domain Names, even includes the statement:
'Welcome to Roy Weston Real Estate. For over fifty years the name Roy Weston has been the trusted name in real estate in Western Australia'.
This statement is correct, but the 'trusted name' and associated goodwill clearly and unequivocally is owned by our client.
In the circumstances, we have advised our client that your conduct:
(a)breaches section 120 of the [TMA];
(b)constitutes misleading and deceptive conduct within the meaning of, and in breach of section 18 of the Australian Consumer Law;
(c)makes a number of false representations, in breach of sections 29(b), 29(e), 29(f), 29(g), 29(h) and 30(l)(a) of the Australian Consumer Law; and
(d)constitutes a tortious passing off of our client's 'Roy Weston' name and brand.
We have advised our client as to the range of options available to it. These options include:
(a)obtaining an urgent interlocutory injunction preventing the ongoing breach of our client's legal rights;
(b)seeking compensation for loss and damage suffered by our client (including damage to its reputation and brand); and/or
(c)seeking an order that you account to our client for any profits that you make through your unauthorised use of the Roy Weston Marks.
RWN's conduct may also constitute a criminal offence by virtue of:
(a)Section 146 of the [TMA]; and
(b)Sections 151(b), (e), (f), (g) and (h) of the Australian Consumer Law.
4. Demand
Our client requires that RWN undertake to:
(a)immediately cease and forever desist from using the 'Roy Weston' name, the Roy Weston Logo, any of the Roy Weston Marks, or any substantially identical or misleadingly or deceptively similar name or logo;
(b)cancel the registrations of each of the Infringing RWN Marks within 14 days;
(c)cancel the registrations of each of the Infringing RWN Names (or change the Infringing RWN Names so that they no longer comprise or include the name 'Roy Weston', the Roy Weston Logo or any substantially identical or misleadingly or deceptively similar name or logo) within 7 days;
(d)cancel the registrations of each of the Infringing RWN Domains within 7 days;
(e)deliver up to our client within 14 days (or, with the consent of our client, which shall not be unreasonably withheld, destroy) all promotional or marketing material in your possession or control which includes the 'Roy Weston' name, the Roy Weston Logo, any of the Roy Weston Marks, or any substantially identical or misleadingly or deceptively similar name or logo,
(together, Required Undertakings).
5. Confirmation
Our client requires that you provide it with the Required Undertakings within 7 days of the date of this letter, failing which our client will take further action against RWN without further notice.
We note that, if action is required to be taken by our client to enforce its rights against RWN, in addition to orders to the effect of the Required Undertakings, our client will seek additional relief from RWN, including:
(a) damages for your breaches of the Australian Consumer Law;(b)damages or an account of profits for your breaches of the [TMA];
(c)corrective advertising and/or adverse publicity orders pursuant to the Australian Consumer Law;
(d) interest; and
(e) costs.We note that our client’s investigation of RWN’s conduct is continuing, and Harcourts otherwise reserves it rights.
…
In response, on 30 September 2011, RWN’s solicitors informed Minter Ellison relevantly as follows:
…
Our client is not, at this stage, willing to give the undertakings sought by your client for the reasons set out below.Background
We are instructed that:
1.On or about 8 March 1996, Roy Weston Nominees was registered with shares being held by Roy Weston Limited and Desmond Taylor.
2.On or about 8 March 1996, Roy Weston Nominees commenced trading in relation to real estate affairs throughout Western Australia by reference to ROY WESTON.
Between April 1996 to May 1997, Roy Weston Nominees continued to trade in relation to real estate affairs in Western Australia using the ROY WESTON name without any conditions, and without being part of the Roy Weston Limited franchise.
3.On or about 31 March 1997, Desmond Taylor and his wife, Georgina Taylor, purchased the shares held by Roy Weston Limited in Roy Weston Nominees and thereafter, owned 100% of the shares in Roy Weston Nominees.
Roy Weston Nominees continued to trade in relation to real estate affairs in Western Australia using the ROY WESTON name without any condition upon the use of ROY WESTON by Roy Weston Limited, and without being part of the Roy Weston Limited franchise.
4.On or about May 1997, Roy Weston Nominees entered a franchise agreement with Roy Weston Limited to join the franchise that Roy Weston Limited was developing, commencing 1 May 1997. The period of the franchise agreement was five years expiring on 30 April 2002. None of its terms survive.
5.On 16 May 2002, Roy Weston Nominees entered a second franchise agreement with Roy Weston Pty Ltd commencing 1 May 2002 extending the term of the franchise. The period of this franchise agreement was for five years expiring on 30 April 2007. None of its terms survive.
6.On 29 July 2002, the successor to Roy Weston Limited, Roy Weston Pty Ltd, sought and subsequently received Australian trade mark registration for marks "ROY WESTON" (Trade Mark No. 921651) and "The House Sold Word in Real Estate" (Trade Mark No. 921677). Your letter of 20 September 2011 alleges that these trade marks have been infringed ("Allegedly Infringed Trade Marks").
7.In 2004, your client, Harcourts International Ltd ("Harcourts") purchased Roy Weston Pty Ltd and its business (the "RW Business"). (Our client is not in a position to confirm or deny whether this validly conferred all of the RW Business' intellectual property rights to Harcourts.)
8.In January 2007, Harcourts announced that it intended, effective 1 March 2007, to change the franchise name from 'Roy Weston' to 'Harcourts' and to cease its use of the Allegedly Infringed Trade Marks and all associated branding and livery.
We are instructed that this process was completed with remarkable speed and efficiency.
We are further instructed that a number of Roy Weston franchisees (at least twenty) were opposed to the change in name and brand and refused to sign new franchise agreements with Harcourts and walked away from the franchise.
Our client has continued to trade using ROY WESTON before, during and after the existence of the Roy Weston franchise.
9.On 9 January 2007, Roy Weston Nominees sought and subsequently received registration of the mark "ROY WESTON NOMINEES THE TRUSTED NAME IN REAL ESTATE" (Trade Mark No 1154742). Your client did not oppose the registration of this trade mark.
10.Harcourts has been aware all along of our client's continued use of ROY WESTON. In or about March 2007, Harcourts' Chief Executive Officer Mr Shane Kempton made an express and unequivocal verbal statement to Roy Weston Nominees that Roy Weston Nominees could trade using ROY WESTON and its own name.
(emphasis added)
11.From on or about March 2007, Harcourts ceased all trading by reference to the Allegedly Infringed Trade Marks except for a residual reference in Yellow Pages advertisements which had been published prior to the name change; and redirection on the Internet from Roy Weston's web site to the Harcourts' web site.
12.On 10 December 2009, Roy Weston Nominees sought and subsequently received registration of the mark "ROY WESTON REAL ESTATE" (Trade Mark No 1336120). Your client did not oppose the registration of this trade mark.
Notably, from 8 March 1996 to the present, Roy Weston Nominees has continued to use the name ROY WESTON in relation to real estate affairs throughout Western Australia without interruption.
Alleged Trade Mark Infringement
13.Your client claims that our client has breached your client's rights in the Allegedly Infringed Trade Marks registered from 29 July 2002.
14.Our client has a number of defences to your client's claims, given the stated above background and in particular that:
a.Roy Weston Nominees has continuously used ROY WESTON since 8 March 1996, which predates the Allegedly Infringed Trade Marks;
b.the mark ROY WESTON substantially comprises the name of our client's business, "Roy Weston Nominees";
c.Roy Weston Nominees has honestly and concurrently used ROY WESTON;
d.Roy Weston Nominees exercises a right to use a trade mark given to Roy Weston Nominees under the [TMA]; and
e.your client has acquiesced to Roy Weston Nominee's use of ROY WESTON.
15.Consequently, our client has not infringed the Allegedly Infringed Trade Marks.
Allegations of Passing Off
16.There are a number of elements which your client must prove in order to succeed in a claim of passing off.
Reputation
17.You have asserted that your client "has built up over time and continues to enjoy, a significant reputation in Western Australia in relation to the name and style of the Roy Weston Marks, and associated 'Roy Weston' names and branding, including the distinctive Roy Weston logo."
18.However Harcourts has taken every effort to divest itself of any goodwill that might have been associated with the Allegedly Infringing Trade Marks. Consequently, it is unclear who in the public, if anyone, would associate Harcourts with the Allegedly Infringing Trade Marks.
19.In any event, any recent awareness of the brand will more likely be shown as being due to our client's promotional activities.
Misrepresentation
20.Your client must prove that, in the course of trade or commerce, our client's conduct actually deceived or confused a significant portion of the relevant reasonable public or could have reasonably foreseeably have [sic] lead to such confusion.
21.However, it is not possible for there to be any confusion as Harcourts does not provide any services using the mark ROY WESTON.
22.In any event, our client has continued to supply the same services in respect of ROY WESTON since 8 March 1996. The real issue is the effect on the consumer. There has been no conduct by our client which would confuse the public into believing that the services provided by Roy Weston Nominees are those of Harcourts.
Loss and Damage
23.To succeed in passing off, you must show that show that our client's conduct has caused actual damage or threatened damage to Harcourts' reputation or goodwill.
24.You have not established that there has been any damage suffered by your client. You will appreciate that damage is a key element of passing off.
25.In fact your client will be unable to demonstrate that it has suffered any loss on the basis that your client has ceased to use the Allegedly Infringing Marks. That is, as your client does not use the Allegedly Infringing Marks to promote real estate sales and services, then it has not suffered any loss by our client's use of the ROY WESTON mark.
26.Similarly, it is unclear what damage or devaluation could result to your client's brand as a result of our client's trading activities. Roy Weston Nominees has continued to conduct its real estate affairs in a manner maintaining its own highly regarded reputation and goodwill.
Allegations of Breaches of the Australian Consumer Law
27.Your client has claimed that our client's conduct contravenes a number of sections of the Australian Consumer Law relating to misleading and deceptive conduct and misrepresentation.
28.Your client would not succeed in any cause of action based on these claims. The reasons are substantially as set out above in respect of your client's claim of passing off.
29.Our client notes your client's reference to potential criminal offences which, given the present context of a civil dispute, is an extraneous detriment.
Miscellaneous Claim to Name and Image of Mr Roy Weston
30.It is interesting that your client has also claimed the right to the name and image of Mr Roy Weston as depicted in a photograph. You have not provided any evidence of how it is that your client came to own the rights in the photograph. In fact, our client was provided with the photograph by a Mr Stuart Weston, the son of the late Mr Roy Weston. ·
31.Consequently, we require further information from you which might justify your client's claim to ownership of the copyright in the photograph and the basis upon which your client threatens proceedings of our client's alleged infringement of that copyright.
Roy Weston Real Estate - Business Name
32.We advise that our client owns the business name ROY WESTON REAL ESTATE and is licensed as a real estate agent in Western Australia under this trading name.
33.We note that the ROY WESTON REAL ESTATE business name (Business Number 820906X7) was previously owned by your client until it was cancelled by the Department of Commerce (Consumer Protection) (the "Department") in June 2011 on the basis that your client was not carrying on business under the business name.
34.In this regard, we note that your client was:
a.notified by the Department in May 2011 that a s 18 Notice of Cessation of Use of Business Name ("s 18 Notice") had been filed with respect to its business name and that unless your client was able to demonstrate use of the business name in commerce, the business name would be deregistered; and
b.given one month (until 13 June 2011) to respond to the s 18 Notice and provide evidence that it was using the ROY WESTON REAL ESTATE business name in trade. Your client requested an extension of time to respond to the s 18 Notice, and this was granted by the Department; however
c.unable to satisfy the Department that it was carrying on business under the Roy Weston REAL ESTATE business name.
35.Your client's business name was therefore deregistered on or about 24 June 2011.
36.Our client subsequently registered the ROY WESTON REAL ESTATE business name in July 2011.
37.As your client should be aware, any company that wishes to operate as a real estate agent in Western Australia must obtain a license from the Real Estate and Business Agents Supervisory Board ("REBA") in accordance with the Real Estate and Business Agents Act 1978 (WA).
38.REBA requires a company to licence its trading name if the trading name is different from the company's name. REBA is unlikely to allow a company to register a trading name which is owned by an entity other than the company wishing to licence the trading name.
39.Therefore, it is difficult to understand how your client can maintain that it intended to carry on business as a real estate agent in Western Australia given that:
a.it allowed its business name to become deregistered, or it was otherwise unable to demonstrate to the Department that it was using the name in trade; and
b.once the business name ROY WESTON REAL ESTATE was registered by another entity, your client would not be able to obtain a real estate agent licence using the business name as its trading name.
…
3. THE CENTRAL ISSUES
The broad allegations were introduced at the commencement of these reasons. The further refinement of them is apparent in the exchanged correspondence. It is now necessary, however, to identify the precise issues arising from the pleadings and falling for consideration.
Some of the pleaded matters were either not developed in argument, fell away on the evidence, or, in substantive content, duplicated other pleaded matters. I have attempted to reduce them to the following in the RWN case:
(a)whether, by requesting that RWN rebrand from ‘Roy Weston’ to ‘Harcourts’, Harcourts WA breached or repudiated the 2002 Franchise Agreement. In relation to the repudiation, if any, whether there was acceptance of the repudiation, thus terminating the 2002 Franchise Agreement. In relation to acceptance of the repudiation, whether such acceptance was pleaded;
(b)in any event, even if the 2002 Franchise Agreement was terminated, whether RWN’s covenant and agreement to cease using any of the ‘Roy Weston Identifications’ on termination of the 2002 Franchise Agreement (pursuant to cl 7.4(g)), survived termination;
(c)whether a key letter of 7 December 2006 (not referred to above due to the controversy) was in fact sent at all or existed in the form now contended by RWN;
(d)in relation to the alleged oral statement by Mr Kempton to Mr Taylor of RWN to the effect that RWN’s ‘new logo and trading style was acceptable to Harcourts [WA]’:
(i)whether Mr Kempton did in fact make a statement to that effect in a discussion with Mr Taylor;
(ii)if so, whether Mr Kempton had authority from Harcourts WA to make such a statement to Mr Taylor, and whether Mr Taylor could have understood Mr Kempton to have the authority to so confirm; and
(iii)the significance of the statement, given that it allegedly occurred prior to the expiry of the 2002 Franchise Agreement, and in light of the correspondence sent by Deacons on 24 January 2007, 14 February 2007, 14 January 2008, 11 June 2008; 14 October 2008 and correspondence from Minter Ellison dated 15 September 2011;
(e)whether, for the purpose of s 92(4)(b) TMA, Harcourts WA used the RWN Trade Marks in Australia during the alleged non-use period between 22 June 2008 and 22 June 2011;
(f)whether Harcourts WA ‘used’ (in the requisite sense):
(i)the Harcourts Trade Marks, by organising and hosting the award ceremony during which the ‘Roy Weston Medal’ is awarded and transcribed with the words ‘The House Sold Word in Real Estate’ on the medal, (the ‘most prestigious’ award of the night), following which, the winner is promoted as having won the medal; and
(ii)the ‘Roy Weston’ trade mark, by contracting with the White Pages to list the name ‘Roy Weston’ which cross-refers to Harcourts WA and thereby uses the name ‘Roy Weston’ as a referral to those franchisees which are listed under Harcourts WA;
(g)whether the Harcourts WA proceeding was ‘contrary to law’:
(i)within the meaning of s 42 TMA; or
(ii)on the basis that Harcourts was ‘not the owner’ within the meaning of either s 58 TMA; or
(iii)the trade mark was ‘similar to another trade mark with a prior reputation’ within the meaning of s 60 TMA; and
(h)whether the current state of discovery may preclude a hearing being conducted into loss and damage or an account of profits.
The issues arising in relation to the Harcourts WA cancellation proceeding are:
(a)given that the proceedings were commenced on 6 September 2012, whether time limitation precludes the RWN claim and, if so, whether that has been adequately pleaded;
(b)whether RWN has breached a restrictive covenant contained in cl 7.4(g) of the 2002 Franchise Agreement, which required that RWN cease use of the ‘Roy Weston Identifications’ on termination;
(c)whether RWN breached a clause of the 2002 Franchise Agreement under which RWN covenanted and agreed that it would not attach to or use any ‘Roy Weston Identifications’ as part of any company name, business name, trade mark or logo, other than in accordance with the agreement, or as authorised by Harcourts WA, pursuant to cl 7.4(b);
(d)whether RWN has infringed the Harcourts Trade Marks, contrary to s 120 TMA;
(e)whether RWN’s applications for registration of the RWN Trade Marks should have been rejected on the basis that:
(i)the use of the RWN Trade Marks by RWN was ‘contrary to law’, specifically s 42 TMA, as usage of the Trade Marks was a breach of the 2002 Franchise Agreement; and
(ii)pursuant to s 44(2) TMA, on the grounds that the RWN Trade Marks were substantially identical and therefore deceptively similar to the Harcourts Trade Marks;
(f)whether the application for the registration of the RWN Trade Marks would have been successfully opposed on the grounds that RWN was not the owner of the RWN Trade Marks for the purpose of s 58 TMA. More specifically, and significantly, whether, as Harcourts WA contends, it was not open to RWN to assert ‘ownership’ of the RWN Trade Marks, given that it was a franchisee and had only been granted a licence to use the ‘Roy Weston identifications’ under the 2002 Franchise Agreement;
(g)whether the application for the registration of RWN Trade Marks would have been successfully opposed by Harcourts WA on the grounds that the Harcourts Trade Marks had acquired a reputation in Australia such that registration or usage of the RWN Trade Marks ‘would be likely to deceive or cause confusion’ within the meaning of s 60 TMA;
(h)whether Mr Taylor made a ‘false suggestion or misrepresentation’ within the meaning of s 88(2)(e) TMA or acted in ‘bad faith’ (s 62A TMA) by stating in his statutory declaration that:
(i)from March 1996 to May 1997 ‘Roy Weston Limited’ permitted RWN to use the ‘Roy Weston’ name without licence and without restriction to promote the business or RWN;
(ii)Harcourts WA repudiated the 2002 Franchise Agreement; and
(iii)Mr Kempton provided RWN with an oral assurance that RWN could trade using the ‘Roy Weston’ name;
(i)whether the RWN Trade Marks should be removed or cancelled pursuant to s 88(1) TMA;
(j)whether, in relation to the passing off and misleading or deceptive conduct claims:
(i)at the time of the allegedly contravening conduct by RWN, Harcourts WA had a reputation of or goodwill as a provider of franchise and real estate services;
(ii)RWN had engaged in misleading or deceptive conduct by misleading potential customers into believing either that RWN’s services were Harcourts WA services, or that there was a connection between RWN’s services and Harcourts WA services; and
(iii)the extent to which the rebranding of the name ‘Roy Weston’ to Harcourts WA is relevant to the passing off claim and/or to the misleading and deceptive conduct claim;
(k)whether RWN’s usage of the RWN Trade Marks constitutes passing off;
(l)whether RWN’s usage of the RWN Trade Marks was in breach of s 18 ACL;
(m)whether Harcourts WA has suffered any loss and damage; and
(n)whether Harcourts WA is entitled to injunctive relief to restrain RWN from ongoing breaches of the 2002 Franchise Agreement.
In summary, while there is a substantial collection of issues on the pleadings, the central questions are:
(1)Has Harcourts WA established use of the Harcourts Trade Marks during the relevant period sufficient to rebut the allegation by RWN of non-use?
(2)Even if the 2002 Franchise Agreement was repudiated, does that affect the rights established and agreed under the 2002 Franchise Agreement?
(3)Was RWN authorised to lodge an application to register the RWN Trade Marks?
These are the three substantive issues which recur in the evidence and their resolution will be central to resolving the majority of the other detailed issues discussed above.
4. KEY STATUTORY PROVISIONS
The case raises for consideration a number of areas of the TMA, conspicuously, the following.
Section 42 TMA, dealing with rejection of a trade mark where registration would be contrary to law, relevantly reads:
42 Trade mark scandalous or its use contrary to law
An application for the registration of a trade mark must be rejected if:
(a) the trade mark contains or consists of scandalous matter; or
(b) its use would be contrary to law.Section 44 TMA, dealing with substantial similarity, relevantly reads:
44 Identical etc. trade marks
…(2)Subject to subsections (3) and (4), an application for the registration of a trade mark (applicant’s trade mark) in respect of services (applicant’s services) must be rejected if:
(a)it is substantially identical with, or deceptively similar to:
(i)a trade mark registered by another person in respect of similar services or closely related goods; or
(ii)a trade mark whose registration in respect of similar services or closely related goods is being sought by another person; and
(b)the priority date for the registration of the applicant’s trade mark in respect of the applicant’s services is not earlier than the priority date for the registration of the other trade mark in respect of the similar services or closely related goods.
…
Section 58 TMA, addressing ownership, relevantly reads:
58 Applicant not owner of trade mark
The registration of a trade mark may be opposed on the ground that the applicant is not the owner of the trade mark.
Section 60 TMA, addressing deception or confusion through the use of a trade mark of repute, relevantly reads:
60Trade mark similar to trade mark that has acquired a reputation in Australia
The registration of a trade mark in respect of particular goods or services may be opposed on the ground that:
(a)another trade mark had, before the priority date for the registration of the first-mentioned trade mark in respect of those goods or services, acquired a reputation in Australia; and
(b)because of the reputation of that other trade mark, the use of the first-mentioned trade mark would be likely to deceive or cause confusion.
Section 88 TMA, on cancellation of trade marks, provides:
88 Amendment or cancellation-other specified grounds
(1)Subject to subsection (2) and section 89, a prescribed court may, on the application of an aggrieved person or the Registrar, order that the Register be rectified by:
(a)cancelling the registration of a trade mark; or
(b)removing or amending an entry wrongly made or remaining on the Register; or
(c)entering any condition or limitation affecting the registration of a trade mark that ought to be entered.
(2)An application may be made on any of the following grounds, and on no other grounds:
(a)any of the grounds on which the registration of the trade mark could have been opposed under this Act;
(b)an amendment of the application for the registration of the trade mark was obtained as a result of fraud, false suggestion or misrepresentation;
(c)because of the circumstances applying at the time when the application for rectification is filed, the use of the trade mark is likely to deceive or cause confusion; [sic]
(e)if the application is in respect of an entry in the Register - the entry was made, or has been previously amended, as a result of fraud, false suggestion or misrepresentation.
Section 92 TMA, dealing with non-use, provides:
92 Application for removal of trade mark from Register etc.
(1)Subject to subsection (3), a person may apply to the Registrar to have a trade mark that is or may be registered removed from the Register.
(2)The application:
(a)must be in accordance with the regulations; and
(b)may be made in respect of any or all of the goods and/or services in respect of which the trade mark may be, or is, registered.
(3)An application may not be made to the Registrar under subsection (1) if an action concerning the trade mark is pending in a prescribed court, but the person may apply to the court for an order directing the Registrar to remove the trade mark from the Register.
Note: For prescribed court see section 190.
(4)An application under subsection (1) or (3) (non-use application) may be made on either or both of the following grounds, and on no other grounds:
(a)that, on the day on which the application for the registration of the trade mark was filed, the applicant for registration had no intention in good faith:
(i)to use the trade mark in Australia; or
(ii)to authorise the use of the trade mark in Australia; or
(iii)to assign the trade mark to a body corporate for use by the body corporate in Australia;
in relation to the goods and/or services to which the non-use application relates and that the registered owner:
(iv)has not used the trade mark in Australia; or
(v)has not used the trade mark in good faith in Australia;
in relation to those goods and/or services at any time before the period of one month ending on the day on which the non-use application is filed;
(b)that the trade mark has remained registered for a continuous period of 3 years ending one month before the day on which the non-use application is filed, and, at no time during that period, the person who was then the registered owner:
(i) used the trade mark in Australia; or
(ii) used the trade mark in good faith in Australia;
in relation to the goods and/or services to which the application relates.Note 1:For file and month see section 6.
Note 2:If non-use of a trade mark has been established in a particular place or export market, then instead of the trade mark being removed from the Register, conditions or limitations may be imposed under section 102 on the registration of the trade mark so that its registration does not extend to that place or export market.
(5)If the right or interest on which a person relied to make an application (under subsection (1) or (3)) to obtain the removal of a trade mark from the Register becomes vested in another person, the other person may, on giving notice of the relevant facts to the Registrar or the court (as the case requires), be substituted for the first mentioned person as the applicant.
Section 101 TMA, dealing with removal of a trade mark, provides:
101 Determination of opposed application-general
(1) Subject to subsection (3) and to section 102, if:
(a)the proceedings relating to an opposed application have not been discontinued or dismissed; and
(b)the Registrar is satisfied that the grounds on which the application was made have been established;
the Registrar may decide to remove the trade mark from the Register in respect of any or all of the goods and/or services to which the application relates.
(2)Subject to subsection (3) and to section 102, if, at the end of the proceedings relating to an opposed application, the court is satisfied that the grounds on which the application was made have been established, the court may order the Registrar to remove the trade mark from the Register in respect of any or all of the goods and/or services to which the application relates.
(3)If satisfied that it is reasonable to do so, the Registrar or the court may decide that the trade mark should not be removed from the Register even if the grounds on which the application was made have been established.
(4)Without limiting the matters the Registrar may take into account in deciding under subsection (3) not to remove a trade mark from the Register, the Registrar may take into account whether the trade mark has been used by its registered owner in respect of:
(a)similar goods or closely related services; or
(b)similar services or closely related goods;
to those to which the application relates.
Section 120 TMA, dealing with infringement, provides:
120 When is a registered trade mark infringed?
(1)A person infringes a registered trade mark if the person uses as a trade mark a sign that is substantially identical with, or deceptively similar to, the trade mark in relation to goods or services in respect of which the trade mark is registered.
(2)A person infringes a registered trade mark if the person uses as a trade mark a sign that is substantially identical with, or deceptively similar to, the trade mark in relation to:
(a)goods of the same description as that of goods (registered goods) in respect of which the trade mark is registered; or
(b)services that are closely related to registered goods; or
(c)services of the same description as that of services (registered services) in respect of which the trade mark is registered; or
(d)goods that are closely related to registered services.
However, the person is not taken to have infringed the trade mark if the person establishes that using the sign as the person did is not likely to deceive or cause confusion.
(3) A person infringes a registered trade mark if:
(a)the trade mark is well known in Australia; and
(b)the person uses as a trade mark a sign that is substantially identical with, or deceptively similar to, the trade mark in relation to:
(i)goods (unrelated goods) that are not of the same description as that of the goods in respect of which the trade mark is registered (registered goods) or are not closely related to services in respect of which the trade mark is registered (registered services); or
(ii)services (unrelated services) that are not of the same description as that of the registered services or are not closely related to registered goods; and
(c)because the trade mark is well known, the sign would be likely to be taken as indicating a connection between the unrelated goods or services and the registered owner of the trade mark; and
(d)for that reason, the interests of the registered owner are likely to be adversely affected.
(4)In deciding, for the purposes of paragraph (3)(a), whether a trade mark is well known in Australia, one must take account of the extent to which the trade mark is known within the relevant sector of the public, whether as a result of the promotion of the trade mark or for any other reason.
Section 122 TMA, addressing non-infringement, provides:
122 When is a trade mark not infringed?
(1)In spite of section 120, a person does not infringe a registered trade mark when:
(a)the person uses in good faith:
(i)the person’s name or the name of the person’s place of business; or
(ii)the name of a predecessor in business of the person or the name of the predecessor’s place of business; or
(b)the person uses a sign in good faith to indicate:
(i)the kind, quality, quantity, intended purpose, value, geographical origin, or some other characteristic, of goods or services; or
(ii)the time of production of goods or of the rendering of services; or
(c)the person uses the trade mark in good faith to indicate the intended purpose of goods (in particular as accessories or spare parts) or services; or
(d)the person uses the trade mark for the purposes of comparative advertising; or
(e)the person exercises a right to use a trade mark given to the person under this Act; or
(f)the court is of the opinion that the person would obtain registration of the trade mark in his or her name if the person were to apply for it; or
(fa)both:
(i)the person uses a trade mark that is substantially identical with, or deceptively similar to, the first mentioned trade mark; and
(ii)the court is of the opinion that the person would obtain registration of the substantially identical or deceptively similar trade mark in his or her name if the person were to apply for it; or
(g)the person, in using a sign referred to in subsection 120(1), (2) or (3) in a manner referred to in that subsection, does not (because of a condition or limitation subject to which the trade mark is registered) infringe the exclusive right of the registered owner to use the trade mark.
(2)In spite of section 120, if a disclaimer has been registered in respect of a part of a registered trade mark, a person does not infringe the trade mark by using that part of the trade mark.
As to the allegation of falsity, Harcourts WA submit that the following matters stated by Mr Taylor on behalf of RWN in the statutory declarations were inaccurate:
(a)from March 1996 to May 1997, Roy Weston Limited permitted RWN to use the ‘Roy Weston’ name without a licence and without restriction to promote the business of RWN;
(b)during that time, RWN was not part of a Roy Weston franchise; and
(c)the CEO of Harcourts at the time, Mr Kempton, had given a verbal assurance that Roy Weston could trade using the Roy Weston name.
Harcourts WA says further that these statements are inaccurate because:
(a)it was always intended that Roy Weston Limited and RWN would have a relationship of franchisor and franchisee;
(b)Mr Taylor, as a guarantor, signed a franchise agreement between Roy Weston Limited and RWN, which commenced on 1 April 1996. This franchise agreement contained the conferral of a licence by cl 2(3) and an acknowledgement by RWN that Harcourts had exclusive ownership of the Roy Weston Identifications. Contrary to the RWN submission, these included the Roy Weston name. In particular cl 5(10) of the franchise agreement dated 1 April 1996 reads:
The Franchisee acknowledges the Franchisor’s exclusive ownership of the Roy Weston Identifications and the Know-How and that the copyright in any part of the Roy Weston Identifications and/or Know-How shall remain the property of the Franchisor.
(c)no such assurance was ever given by Mr Kempton. Any discussion which Mr Taylor had with Mr Kempton had to be subject to approval from Mr Green, which I infer was expressed to be so having heard the evidence of both Mr Kempton and Mr Green. Mr Kempton himself made it clear that he would need authority from Mr Green about the matters raised by Mr Taylor in respect of the rebrand; and
(d)the letter sent by Deacons on 24 January 2007 makes plain that the opposite position was taken by Harcourts WA at the time, namely, that Harcourts WA opposed the very applications which Mr Taylor was seeking to register on the grounds that to do so was in breach of the 2002 Franchise Agreement and infringement of the Harcourts Trade Marks.
Harcourts also stress that the trade mark over ‘Roy Weston Real Estate’ was not an application to register a trade mark in respect of RWN’s company name (on which much emphasis was placed by RWN), but rather to register the name ‘Roy Weston Real Estate’. While it had been frequently asserted by RWN that it had a right to use its company name (which Harcourts WA disputes), it had never asserted that it was entitled to use any Roy Weston name other than its company name. In order to achieve the registration, RWN provided information which was false and misleading, Harcourts WA contend.
I agree with the contentions of Harcourts WA and the resulting argument that the statutory declarations of Mr Taylor filed in support of RWN’s applications for both RWN Trade Marks contained material inaccuracies.
The only conclusion available is that, absent these misrepresentations by RWN, the RWN Trade Marks would not have been accepted for registration, particularly viewed against the history which preceded the statutory declarations of Mr Taylor.
Accordingly, I find that RWN’s application for registration of both RWN Trade Marks was based on representations, false in material particulars, contrary to s 62(b) TMA.
6.2.7Bad faith (s 62A TMA)
In support of the bad faith argument, Harcourts WA contend that RWN’s application to register the trade mark over ‘Roy Weston Nominees the Trusted Name in Real Estate’, which was lodged with IP Australia on 9 January 2007, was at a time when there was a dispute between RWN and Harcourts WA regarding its use of the name ‘Roy Weston’. The other RWN Trade Mark, ‘Roy Weston Real Estate’, was lodged with IP Australia on 10 December 2009. By this time, RWN had received five notices of demand from Deacons disputing RWN’s entitlement to register the RWN Trade Marks.
I reject this contention.
I am not satisfied that Harcourts WA has discharged the evidentiary onus that it bears in proving bad faith on the part of RWN in applying for registration of the RWN Trade Marks. I have found that the information provided was not accurate and, therefore, it was misleading. I am not prepared to eliminate as a reasonable probability that, at some level, there was a genuine misunderstanding. There was a good foundation for a belief that the 2002 Franchise Agreement had been repudiated. There was the acquisition of the Morley Business. A combination of these factors led Mr Taylor to the view that despite the demands being made, he was probably entitled to proceed with the registration.
6.2.8Infringement of the Harcourts Trade Marks
In my view, Harcourts WA has established that RWN has infringed a trade mark by its use of the Harcourts Trade Marks without authority.
In CSR Ltd v Resource Capital Australia Pty Ltd (2003) 128 FCR 408 it was held (at [38]) that:
the act of obtaining registration of… domain names constituted conduct that was misleading and deceptive or was likely to mislead and deceive persons and breached s 52 of the TPA.
The RWN Trade Marks are undoubtedly deceptively similar to the trade mark held by Harcourts WA over ‘Roy Weston’. Section 10 TMA defines ‘deceptively similar’ as follows:
For the purposes of this Act, a trade mark is taken to be deceptively similar to another trade mark if it so nearly resembles that other trade mark that it is likely to deceive or cause confusion.
There has, therefore, been a breach of s 120(1) and (2).
6.2.9Passing off or misleading and deceptive conduct on the part of RWN
Once again, the acknowledgments under the 2002 Franchise Agreement as to the chain of ownership of the relevant trade marks makes it difficult for RWN to resist these claims. It is not necessary that Harcourts WA demonstrate any subjective intent on the part of RWN to mislead consumers. It is sufficient that Harcourts WA demonstrate that by RWN’s conduct using the ‘Roy Weston’ name since the expiry of the 2002 Franchise Agreement, it has misled consumers into believing that it is associated with the Harcourts WA business. For example, in November 2014, on the website, RWN stated:
Welcome to Roy Weston Real Estate. For over 50 years the name Roy Weston has been the trusted name in real estate in Western Australia…
As Harcourts WA correctly submits, this is a direct reference to the very same business acquired by Harcourts WA. RWN commenced using the Roy Weston name to conduct its business immediately after RWN ceased as a long standing franchisee and licensee of the ‘Roy Weston’ name. If it be necessary, this is further supported by use of the photograph and signature of the founder of the Harcourts WA business, Mr Royer Weston. The evidence in the case clearly enables Harcourts WA to make out these contentions. The fact that Harcourts WA rebranded is not a defence. Depending on the facts, it may support claims of abandonment and non-use (not in this case), but it is not a defence to these contentions. Harcourts WA case succeeds on these points. RWN has sought to exploit this by granting sub-licences in correspondence in 2013.
Accordingly, in my view, RWN’s conduct in respect of the Harcourts Trade Marks constitutes both passing off and misleading and deceptive conduct contrary to s 18 ACL.
6.2.10Defences raised by RWN
6.2.10.1Entitlement to use its company name (s 122(1)(a) TMA)
Although this issue is relevant to RWN’s defence to Harcourts WA’s claims, it also underlies the RWN position generally, including its cross-claims. In essence, it is at the heart of RWN’s attack and defence. It is clear that Mr Taylor is very much of the view that as he acquired the shares in the company bearing the name Roy Weston Nominees Pty Ltd, he was entitled to use that name. This, he contends, both as a matter of commonsense and fairness, but also in support of a defence under s 122(1)(a)(i) TMA. I accept that usage of ‘Roy Weston Nominees’, if it is made in good faith, would give rise to the defence, but I do not accept that the defence extends beyond the company name.
However, I accept Harcourts WA’s submission that the defence under s 122(1)(a)(i) TMA would only apply to RWN in respect of use of its own company name ‘Roy Weston Nominees Pty Ltd’. This, in turn, would require good faith which presents a further difficulty to RWN. See, for example, ‘Sweetheart Plastics Inc’ cf ‘Sweetheart Holding Corp’ in Smith & Nephew Plastics (Australia) Pty Ltd v Sweetheart Holding Corporation (1987) 8 IPR 285.
Harcourts WA contend that RWN’s proposed defence of using its own name in good faith (s 122(1)(a)(i) TMA) is not available in the present case because the use of the Harcourts Trade Marks was not in good faith.
RWN was at all relevant times aware of the existence of the Harcourts Trade Marks and of the fact that the marks which RWN has used, including the registered RWN Trade Marks, are substantially identical. This was apparent from the adverse reports issued by IP Australia. RWN has always been aware that it was only permitted to use the ‘Roy Weston’ name for so long as it was a franchisee and was required to desist when the franchise came to an end. On that basis, Harcourts WA contends that the applications to register the RWN Trade Marks were made in bad faith. I have already indicated that I would not be prepared to reach this finding (at [285]-[286]) above.
However, an absence of fraud does not lead to a positive finding of good faith. The determination that a registration was not proceeded with in bad faith does not necessarily mean that the registration was pursued in ‘good faith’ as that expression is understood in the section. A misapprehension of rights based on selective viewing of the effect of either a franchise agreement, the effect of a company name or advice in relation thereto may deprive a registrant of the good faith defence. See the analysis in Anheuser-Busch, Inc v Budějovický Budvar [2002] FCA 390 per Allsop J (as his Honour then was) (at [217]-[218]):
217 The satisfaction of the requirements of good faith is not concluded by a conclusion of lack of fraud or lack of conscious dishonesty: Johnson & Johnson v Sterling Pharmaceuticals [(1991) 30 FCR 326] at 355-56 per Gummow J, with whom Lockhart J agreed on this point. In Adrema Ltd v Adrema-Werke GmbH [1958] RPC 323, 334, in a passage referred to with approval by Gummow J in Johnson & Johnson v Sterling Pharmaceuticals, supra, Danckwerts J said at 334:
I think that the defendants knew that such use was likely to cause confusion, and they were determined to make use of the goodwill in connection with the machines which was associated with the word ‘Adrema’. It may be that the German Company resented the loss of the trade marks and the claim that the goodwill in the United Kingdom associated with the name ‘Adrema’ was the property of an English Company which they had formed and of which they had lost control as a result of the war. But, in my view, these motives do not justify what the Defendants have done or make that bona fide.
218 Whilst the findings which I have made do not quite reach what Danckwerts J said – that Mr Bocek and the first respondent knew that it was likely that confusion would result from the use of the company name ‘Budweiser Budvar’, they have, I think, the same consequence. This is especially so when one considers the undermining of the benefits and protections intended to be afforded to registration which would occur if the facts, as I have found them, were to be characterised as exhibiting good faith: cf Re Bali Brassiere Co Inc’s Registered Trade Mark and Berlei Ltd’s Application (1968) 118 CLR 128, 133. There was an element of risk taking (cf Riv-Oland Marble Co (Vic) Pty Ltd v Settef SpA (1988) 19 FCR 569, 573, per Bowen CJ), probably as much a function of the strongly felt claim of right to which I have referred as anything else, not entirely dissimilar to the feelings of the German company referred to by Danckwerts J in Adrema, supra at 334 (see [217] above), which is not sufficient to damn the conduct as dishonest or fraudulent, but which is sufficient to deny the conduct the blessing of the characterisation of good faith.
See also Mayne Industries Pty Ltd v Advanced Engineering Group Pty Ltd (2008) 166 FCR 312, where Greenwood J said (at [105]):
Section 122(1) of the [TMA] like s 64(1) of the 1955 Act, assumes infringing conduct on the part of the respondent that is excused when the person uses a sign in good faith to indicate one or more of the identified characteristics. Section 64(1)(b) contemplated use in good faith by a person ‘of a description of the character or quality of his goods’ whereas s 122(1)(b)(i) concerns use in good faith to indicate a broader range of characteristics. The essential concern going to good faith in s 122(1) is that the use be honest. Something less than fraudulent intention in the common law sense will suffice to prevent use being in good faith (Johnson & Johnson v Sterling (supra), per Gummow J at p 356). There must be however, identified conduct on the part of the respondent that demonstrates use of the sign in circumstances where Mr Hastie has engaged in conscious and deliberate acts to undermine the registered owner or the integrity of the trade mark. Has the respondent sought to undermine the trade mark by the ‘assiduous efforts of an infringer? (Johnson & Johnson v Sterling per Gummow J at p 355 adopting the phrase used by Windeyer J in Re Bali Brassiere Co Inc Registered Trade Mark: An Application by v Berlei Limited (1968) 118 CLR 128 at 133). A conscious decision to try and render generic, a trade mark which on advice from reputable patent and trade mark attorneys would be infringed by use is an example (Sterling Pharmaceuticals Pty Ltd v Johnson & Johnson Australia Pty Ltd (1990) 96 ALR 277 at 311 per Hill J). In that case, the decision by Johnson & Johnson to use the trade mark was made with ‘full knowledge’ of the registration with advice that use would constitute infringement of the mark; and in circumstances where use was part of an international strategy to undermine the mark by rendering it generic. Since those ulterior motives subsisted, the use was found not to be honest. In this case, Mr Hastie had worked with and had been responsible for manufacturing S shaped wire droppers since 1978. He knew of the licence agreement between National Nail and Cyclone and knew that the improved dropper was the subject of a patent in New Zealand. He knew that royalties had been paid under the licence until the expiry of the prolongation period of the patent in New Zealand in 1986. Before entering the New Zealand market in 1996, Mr Hastie sought advice as to the patent position in that country. He understood that any patent had expired for the S shaped dropper. He assumed that there was no patent protection for it in Australia. He sought advice in 1996 from patent attorneys and he says he at least asked about the position in Australia. There is no independent written advice to Mr Hastie going to the position in Australia. I accept that Mr Hastie assumed in 2003 that there was no patent on foot in Australia but that he did not seek advice in 2003 as to the intellectual property position in Australia concerning the S dropper.
In fact, RWN went well beyond use of its own company name and engaged, and continues to engage in, use of a range of other marks which infringe Harcourts WA’s trade mark for ‘Roy Weston’, including at least one or more of the following:
(a)Roy Weston;
(b)Roy Weston Real Estate;
(c)the logo for Roy Weston Real Estate; and
(d)the image which contains the superimposed suggested signature of Roy Weston.
These marks are not the company name of Roy Weston Nominees Pty Ltd. While an abbreviation would permit the usage of Roy Weston Nominees made in good faith, it is doubtful whether that would apply in this case as the use of ‘Roy Weston’ or ‘Roy Weston Real Estate’ could not be characterised as simply the use of the name ‘Roy Weston Nominees Pty Ltd’.
In the email belatedly sent to chambers, the solicitors for RWN sought to draw attention to Maier in connection with the ‘own name’ defence. No submissions were developed as to how this English and European legislation and authority was relevant to the law in Australia. In light of my findings above, particularly in relation to whether the trade marks were registered in good faith, Maier does not influence my conclusion.
Although RWN may have, giving it a generous benefit of the doubt, believed it was entitled to pursue the registration, that belief was misconceived. The registration was in breach of Harcourts WA’s rights and against Harcourts WA’s wishes, which had been the subject of five letters of demand from Deacons. Therefore, I do not consider the defence under s 122(1)(a)(i) TMA is available to RWN.
6.2.10.2Prior use of identical trade marks (s 124 TMA)
I deal, finally, with s 124 TMA (there being no separate submissions in relation to s 127).
RWN relies upon the defence under s 124 and s 127 TMA. Its submissions on this topic read as follows:
[RWN] also relies upon the defence available at section 124 of the [TMA].
In particular section 127 provides a defence where a mark is eroded pursuant to section 92(3). Note that in connection with this defence the “critical period” referred to in section 127 is not the same as the period of non-use proved under section 92.
Where two trade marks are registered which are substantially identical or deceptively similar neither has the right to control or prevent the registered owner of the other from using the trade mark other than might be endorsed on the trade mark.
Note also there is no endorsement on any of the trade marks as anticipated by [TMA] section 23.
The respondents have pleaded by way of defence and have cross claimed seeking declarations consistent with, section 120(2), section 122(1)(b) and section 124(1) (which operates as a defence via section 122(1)(e)).
The respondents’ principal position is that one does not need to rely upon these defences in any event. The primary answer to the allegation of trade mark infringement is that, the Harcourts’ [sic] trade marks are liable to removal in every case.
In relation to this provision of the TMA, the submissions for RWN are as follows:
62By section 124(1) of the TMA a person does not infringe a registered trade mark by using an unregistered mark in relation to closely related or similar services if that person, or their predecessor in title, have continuously used the unregistered mark in relation to those goods and services from a time before the date of registration of the registered marks.
63This section operates to protect a prior user from liability for infringement under section 120. The section acts to restrict the operation of section 120. Section 124 operates to confer positive rights within its terms on the prior use of the trade mark (see EOS Australia Pty Ltd v Expo Tomei Pty Ltd (1998) 42 IPR 227).
64Section 124 therefore operates to create a statutory right to use the trade mark which constitutes a statutory right envisaged by section 122(1)(e) which itself is a defence to section 120 TMA. The grounds relied upon are those relied upon with the ground of opposition under section 58.
65The declarations sought in connection with sections 120, 122 and 124 are in each case true defences to the allegation of infringement.
Nothing in this discussion of principles links anything said to any of the evidence in this case or the facts as found. There is no satisfactory argument and there is no place for any application in favour of RWN of s 124(1) TMA.
6.3 Relief and delay
As discussed with the parties, I do not propose to deal in these findings and reasons with relief, save to observe that Harcourts WA has delayed in pursuing its rights. It is not sufficient for Harcourts WA to respond that the proceedings have been issued within the limitation period. RWN argues there was a ‘legitimate’ basis (I infer, subjectively) to believe there was no foundation in the threats originally made on behalf of Harcourts WA. Furthermore, it is not apparent that Harcourts WA has suffered loss or any damage by reason of RWN’s conduct. In my view, Mr Taylor took the chance that Harcourts WA would not press its position, feeling perhaps fortified by the corporate name of RWN. That was, as matters transpired (albeit belatedly), a dangerous gamble. But, in my view, consideration of the relief, if any, to which Harcourts WA may be entitled would have to take into account its own delay. In light of this, while there has been no sign of it so far, the parties might both benefit by approaching a mediated resolution.
7. CONCLUSION
It will be apparent from the foregoing that, in most respects (but not all), Harcourts WA has succeeded in its claim. The parties are agreed, as I understand it, that I should not make orders as to relief until the parties have had the opportunity to consider their positions and make submissions, should that be necessary.
These reasons will be delivered in open court. The parties will have an opportunity to file a consent minute as to proposed directions and orders which may follow as to completion of argument, if any, concerning relief. If the parties are unable to agree on these, I will relist the matters.
The following orders are made. In relation to SAD 224 of 2012:
1.The parties file a consent minute as to orders and other relief reflecting these reasons within 21 days.
2.Absent agreement as to such orders:
(a)within 28 days the applicant/cross-respondent file a minute as to the appropriate relief to reflect these reasons, supported by submissions.
(b)within 10 days thereof the respondent/cross-claimant file corresponding material in response.
(c)within 7 days thereof the applicant/cross-respondent file any reply material.
(d)a directions hearing to address resolution of remaining issues as to relief, if any, be listed within two months.
In relation to WAD 167 of 2013:
1.The parties file a consent minute as to orders and other relief reflecting these reasons within 21 days.
2.Absent agreement as to such orders:
(a)within 28 days the respondent/cross-claimant file a minute as to the appropriate relief to reflect these reasons, supported by submissions.
(b)within 10 days thereof the applicant/cross-respondent file corresponding material in response.
(c)within 7 days thereof the respondent/cross-claimant file any reply material.
(d)a directions hearing to address resolution of remaining issues as to relief, if any, be listed within two months.
I certify that the preceding three hundred and twelve (312) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice McKerracher. Associate:
Dated: 24 February 2016
ANNEXURE a
Annexure A shows:
9
9
2