Horizons (Asia) Pty Ltd v Enagic Co., Ltd

[2020] ATMO 42

TRADE MARKS ACT 1995

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

Re:Opposition by Horizons (Asia) Pty Ltd to extension of protection under regulation 17A.33 of the Trade Marks Regulations 1995 of application number 1756433 (International Registration No. 1186118) (class 11) – KANGEN WATER – in the name of Enagic Co., Ltd

Delegate:

Debrett Lyons

Representation:

Opponent: no appearance at hearing; written submissions only.

Holder: Khajaque Kortian of Spruson and Ferguson, Patent & Trade Mark Attorneys.

Decision:

2020 ATMO 42

Trade Marks Act 1995 (Cth) – Opposition to extension of protection to Australia – reg 17A.33 of the Trade Marks Regulations 1995 – grounds under ss 42(b), 43, 44, 58, 58A, 60 and 62A considered – none established and opposition unsuccessful – protection of IRDA to be extended to Australia.

Background

1. The parties are known to each other, having engaged in related disputes.  Some of those matters have been decided already by this office, some of those decisions have been appealed to the Federal Court and are in motion, still other cases before this office are undecided.  Where relevant in what follows reference is made to those matters.

2. Enagic Co., Ltd (‘the Holder’) has applied for extension of protection to Australia of International Registration no. 1186118.  Current details of the resulting International Registration Designating Australia (‘the IRDA’) are:

Trade Mark:      

KANGEN WATER

IRDA No:

1756433

Filing Date:

3.     11 February 2016

Priority Date

4.      11 February 2016

Specification:

Class 11: Electrolytic water generators for electrically decomposing tap water to generate electrolytic water and for removing chlorine odor from tap water

(‘the Goods’)

Endorsement

The applicant has advised that the English translation of the word KANGEN appearing in the trade mark is REDUCTION or DEOXIDATION.

1. The IRDA was examined as required by regulation 17A.12 of the Trade Marks Regulations 1995 (‘the Regulations’).  No ground of refusal was raised and IP Australia advertised its intention to extend protection to Australia in the Australian Official Journal of Trade Marks on 25 January 2018.                  

2. Horizons (Asia) Pty Ltd (‘the Opponent’) filed a Notice of Intention to Oppose the extension of protection to Australia of the IRDA on  23 March 2018.  Thereafter a Statement of Grounds and Particulars (‘the SGP’) was filed by the Opponent and the Holder filed a Notice of Intention to Defend.

3. The parties each filed evidence after which they were invited to be heard in Canberra on 1 October 2019.  I was delegated by the Registrar to take the hearing and I sent directions to the parties to ensure the orderly conduct of the hearing.  The Opponent was ambivalent as to whether it would appear in person or not and in the result relied on written submissions prepared by Ng Lee, making no appearance.  The Holder provided a written outline of its submissions and advised that it would attend the hearing by telephone.  It did so and was represented by Khajaque Kortian of Spruson & Ferguson, Patent and Trade Mark Attorneys.

   Grounds of Opposition, Onus and Standard of Proof

4. Regulations 17A.28 and 17A.34 extend the grounds for rejection of and opposition to a trade mark under Part V of the Trade Marks Act 1995 (‘the Act’) to IRDAs. The opposition is brought pursuant to s 52 of the Act and the SGP nominated grounds of opposition under ss 41, 42(b), 43, 44, 58, 58A, 59, 60 and 62A of the Act.

5. The onus of proof to establish one of those grounds rests upon the Opponent.[1] In its written submissions, the Opponent withdrew the grounds of opposition under ss 41 and 59 of the Act and so they have not been considered herein.

   [1] Food Channel Network Pty Ltd v Television Food Network GP [2010] FCAFC 58, [32].

6. The relevant standard of proof is the ordinary civil standard based on the balance of probabilities.[2]  The date at which grounds are to be determined is 11 February 2016, being the filing (and priority) date of the IRDA.[3]

   [2] Telstra Corporation Limited v Phone Directories Company Ltd [2015] FCAFC 156, [132]-[133].

   [3] Southern Cross Refrigerating Co v Toowoomba Foundry Pty Ltd [1954] HCA 82, [2].

   Evidence

7. The parties filed evidence in accordance with the Regulations. The Opponent’s Evidence in Support of its opposition comprises a declaration of Ng Lee with exhibits NL1 to NL17 made on 28 August 2018.

8. The Holder’s Evidence in Answer comprises a declaration of Kenso Matsuoka (‘Matsuoka’) with exhibits 1 to 8 made on 4 December 2018.

9. The Opponent’s Evidence in Reply comprises a further declaration of Ng Lee with exhibits NL18 to NL27 made on 13 February 2019.

   Consideration

10. Before turning to the particulars of the grounds of opposition, it is my general observation that in its written submissions the Opponent has frequently lost grasp of the legal requirements of the grounds or has misunderstood how the case law informs those grounds.  It is my further observation that the Opponent’s frequent reference to other disputes between the parties, open and closed, has the tendancy to obfuscate rather than clarify the critical questions before me in these proceedings.

    Section 44

11. Section 44(1) of the Act provides:

    Identical etc. trade marks

    (1)Subject to subsections (3) and (4), an application for the registration of a trade mark (applicant's trade mark) in respect of goods (applicant's goods) must be rejected if:

    (a)the applicant's trade mark is substantially identical with, or deceptively similar to:

    (i)              a trade mark registered by another person in respect of similar goods or closely related services; or

    (ii)             a trade mark whose registration in respect of similar goods or closely related services 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 goods is not earlier than the priority date for the registration of the other trade mark in respect of the similar goods or closely related services.

    Note 1: For deceptively similar see section 10.

    Note 2: For similar goods see subsection 14(1).

    Note 3: For priority date see section 12.

    Note 4: The regulations may provide that an application must also be rejected if the trade mark is substantially identical with, or deceptively similar to, a protected international trade mark or a trade mark for which there is a request to extend international registration to Australia: see Part 17A.

12. So far as s 44 is concerned, the Opponent relies upon its registration, and application to register, the trade mark KANGEN. The details of both are set out below.

Reg. No.	Priority date	Trade mark	Goods
1280502	10 Jan 2009	KANGEN	Class 11: Apparatus for lighting, heating, cooking, refrigerating, drying, ventilating; apparatus for sanitary purposes excluding apparatus for water filtration; apparatus for purifying air, namely an air ioniser Class 32: Beers, waters including mineral water, aerated water and ionized water, other non-alcoholic drinks, fruit drinks and fruit juices, syrups and other preparations for making beverages
App. No.	Priority date	Trade mark	Services
1798917	24 Sep 2016	KANGEN[4]	Class 35: Distribution of goods (not being transport services) (agent, wholesale, representative services, by any means); wholesale; retail; sales by any means; advertising, marketing, promotion and public relations; operation, supervision and management of loyalty programs, sales and promotional incentive schemes; discount services (retail, wholesale, or sales promotion services); customer support services; compilation and maintenance of directories, mailing lists including such lists compiled and maintained via the global computer network; conferences and exhibitions for commercial purposes; business administration; business development; dissemination of commercial information; distribution of prospectus; importing services; exporting services; providing information, advisory and consultancy services, including by electronic means, for all of the aforesaid services

[4] Curiously, this application carries a translation endorsement seemingly at odds with the endorsement attaching to the Trade Mark.  It reads: The applicant has advised that KANGEN is a coined word and the English translation of the word KANGEN appearing in the trade mark is HEALTHY.

1. By way of example of my preliminary comments at [14], the priority date of the Trade Mark is 11 February 2016 and so it predates that of the Opponent’s application 1798917. Whilst the Opponent appears to recognize this it petitions me to give “any attributable weight that may be drawn” from its existence. Since s 44 is premised on an opponent showing an earlier priority date I can attach no significance to application 1798917. Accordingly, ongoing consideration of s 44 is confined to the comparison of the Trade Mark with registration 1280502.

2. I note here that registration 1280502 is currently the subject of an application made to this Office by the Applicant for removal from the Register on the basis of non-use. That application is still pending a decision.

3. It is customary to compare the parties’ goods before comparing their trade marks and I find that none of the Goods are the same, or of the same description[5], as the class 32 goods of registration 1280502.  In this respect I am unwilling to accept the Opponent’s submissions that:

   Based on the reports of official regulatory bodies, and in tune with the global trend of healthy living, gone is the past era where differences may be drawn by examiners between a machine that produces water for drinking and the packaged water sold as a finished product promoted a healthy hydration, and any such difference existed in the past are diminishing to the extent that examination of trade marks would look hard to prevent classifications of such goods and services as un-related. 

   [5] See section 14 of the Act.

4. The issue reduces to whether the class 11 goods of registration 1280502 are the same, or of the same description, as the Goods, set out again for convenience hereunder:

   Electrolytic water generators for electrically decomposing tap water to generate electrolytic water and for removing chlorine odor from tap water

5. Again, I find that they are not. It is noteworthy that in September 2010, during examination of the application resulted in registration 1280502, amendments were made to address an objection under s 44 of the Act arising from prior conflicting third-party registration 1235000 for Kangen.  Registration 1235000 has now been removed for non-use on the application of the Holder but it had been registered in class 7 for “water filtration machines”.   The amendment requested by the Opponent to the class 11 specification in response to the adverse examination report[6] is shown below:

   Apparatus for lighting, heating, steam generating, cooking, refrigerating, drying, ventilating, filtering, softening, purifying, ozonating, reducing, de-oxidating, water supply and sanitary purposes; apparatus for purifying, namely an ioniser

   [6] The mark was examined under s 31 of the Act and those amendments were requested to address the s 44 ground for refusal.

6. In that form, the class 11 goods were accepted for possible registration.  However, in December 2010 the Holder brought opposition proceedings which resulted in the reported decision of  Enagic Australia Pty Ltd and Enagic Co., Ltd v Horizons (Asia) Pty Ltd [2014] ATMO 72 (‘the earlier opposition’).  Albeit that the opposition was unsuccessful, in December 2014 the Opponent sought to further amend the class 11 specification in the manner shown below (being the form now appearing on the register):

   Apparatus for lighting, heating, cooking, refrigerating, drying, ventilating and ;  apparatus for sanitary purposes excluding apparatus for water filtration; apparatus for purifying air, namely an air ioniser.

7. These amendments affirm my finding that anything in the nature of the Goods (that is, anything the same, or of the same description, as the Goods) has already been considered and excised from registration 1280502.

8. With that finding questions of whether or not the compared marks are substantially identical or deceptively similar become redundant. I find that the Opponent has not established its ground of opposition under s 44 of the Act.

   Section 58

9. Section 58 provides that:

   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.

   Note:For applicant see section 6.

10. The owner of a trade mark for particular good/services is the person who first uses it in Australia, or first files a trade mark application in Australia, whichever is the earlier.  It is well established that in order to succeed under this ground of opposition the Opponent must establish that the Trade Mark is identical, or substantially identical, to the Opponent’s trade mark[7] and that the Goods are the ‘same kind of thing’ as the goods in respect of which the Opponent lays claim[8].   

    [7] Carnival Cruise Lines Inc. v Sitmar Cruises Limited (1994) 31 IPR 375.

    [8] Re Hicks’ Trade Mark (1897) 22 VLR 636.

11. The Holder submits that “[i]t is plain from the evidence … that the [Holder] was the first to use the [Trade] Mark in Australia in 2007”[9]. It then reasons that s 58 must fail since that “predates the alleged first use by the Opponent of its KANGEN trade mark from January 2009, and also the priority date of [registration] 1280502”.

    [9] Matsuoka [16 - 17].

12. The Opponent’s reply is that the Holder’s evidence in these proceedings attempts to rewrite history and indeed I am mindful that in the earlier opposition the Holder had relied, inter alia, on s 58 and Hearing Officer Wilson found that the Holder demonstrated prior use of trade mark KANGEN WATER in the United States but was unable to establish any use in Australia before the relevant (filing) date in that case, being 10 January 2009. However, I am not required to examine the evidence of first use more closely for the reason that the Opponent makes it clear that its “keys goods” are bottled water and, on any reasoning, I am unwilling to find that bottled water is the same kind of thing as the Goods.

13. Having failed to prove one element of s 58, I find that the Opponent has not established this ground of opposition.

    Section 58A

14. The Opponent has misunderstood the nature of this ground of opposition. Section 58A applies only to a trade mark the application for registration of which has been accepted because of s 44(4) of the Act. Section 44(4) has no application in this case.

    Section 43

15. The Opponent’s s 43 submissions are that:

    … there appears activities of an emerging and evolving trend from the [Holder] claiming to sell or are selling water generated by the machines for bottling and sale by the [Holder] under brand names similar to the Trade Mark or are identical to the Opponent’s registered trade mark No. 1280502  in Australia… .

    …

    In light of the increasing reliance on on-line selling, which is borderless and has no boundary limitation as to the audience it is capable of targetting and capturing,  it is not difficult to see that unless the abovementioned activities of the Trade Mark is stopped, at least in Australia, it would not be a matter of “if” but “when” the general public becomes confused or deceived by a connotation misleadingly formed that  the goods and services of the [Holder] and the goods and services of the Opponent are related in some ways and/or emanated from the same source. 

16. As with s 58A, the Opponent has misunderstood the nature of this ground of opposition. Section 43 provides that an application can be opposed on the basis that, because of some connotation that the Trade Mark entails, its use in relation to the Goods would be likely to deceive or cause confusion. The ground of opposition is concerned with the inherent qualities of the Trade Mark and not with the reputation of some other mark or with the Holder’s actions. In any event, the products of apparent concern to the Opponent, bottled water, are not included in the Goods.

17. The Opponent has not established a ground of opposition under s 43 of the Act.

    Section 60

18. Section 60 of the Act provides:

    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.

    Note:For priority date see section 12.

19. Accordingly, the Opponent needs to establish to my satisfaction that:

    ·     the trade mark upon which it relies had a reputation in Australia at the priority date; and

    ·     because of that reputation the use of the Trade Mark would deceive or cause confusion.

20. In McCormick & Co Inc v McCormick[10] (‘McCormick’) Kenny J asked:

    What is intended by the word “reputation” in s 60? The word is defined in The Macquarie Dictionary as follows:

    reputation ... 1. the estimation in which a person or thing is held, esp. by the community or the public generally; repute ... 2. favourable repute; good name ... 3. A favourable and publicly recognised name or standing for merit, achievement, etc. ... 4. The estimation or name of being, having done, etc, something specified.

    Cf. The Oxford English Dictionary. In s 60, the word is, I think, apt to refer to “the recognition of the McCormick & Co marks by the public generally”.

    [10] [2000] FCA 1335; (2000) 51 IPR 102; [2000] AIPC 38-192 at [81].

21. In Le Cordon Bleu B.V. v Cordon Bleu International Ltee[11] Heerey J said that the reputation required to be demonstrated (albeit in relation to section 28(a) of the repealed Trade Marks Act 1955)[12] was to be:

    ... one of which a significant number of persons were aware...What is ‘significant’ or ‘substantial’ will depend on the nature of the goods or services in question. For some highly specialised products, awareness among a few thousand persons, or even less, might be sufficient.

    (Implicitly approved by the Full Federal Court (Moore, Tamberlin and Goldberg JJ) on appeal in Renaud Cointreau & Cie v Cordon Bleu International Ltee). ^[13]

    [11] [2000] FCA 1587; (2000) 50 IPR 1.

    [12] The word ‘reputation’ was not used in subparagraph 28(a) of the superseded Act. All that was required for subparagraph 28(a) was that use of the mark “be likely to deceive or cause confusion” and Heerey J imported the word “reputation” into his quoted remarks because he was following Gummow J’s judgment in Johnson & Johnson v Kalnin [1993] FCA 210; (1993) 26 IPR 435 at 438.

    [13] [2001] FCA 1170; (2001) 52 IPR 382 at [71] to [76].

22. Regarding the measurement of reputation, in McCormick Her Honour went on to state:[14]

    In practice, it is commonplace to infer reputation from a high volume of sales, together with substantial advertising expenditures and other promotions, without any direct evidence of consumer appreciation of the mark, as opposed to the product: see, e.g., Isuzu-General Motors Australia Ltd v Jackeroo World Pty Ltd (1999) 47 IPR 198; Marks & Spencer plc v Effem Foods Pty Ltd (2000) AIPC 91-560; Photo Disc Inc v Gibson (1998) 42 IPR 473; and RS Components Ltd v Holophane Corp (1999) 46 IPR 451. This Court has followed this approach as well, acknowledging that public awareness of and regard for a mark tends to correlate with appreciation of the products with which that mark is associated, as evidenced by sales volume, amongst other things. Thus, in Toddler Kindy Gymbaroo Pty Ltd v Gymboree Pty Ltd [2000] FCA 618 (“Gymboree”), Moore J accepted at [94] that the applicant had established a reputation for the purposes of s 60 solely on the basis of use and promotion of the relevant mark. Another example of this approach is Nettlefold Advertising Pty Ltd v Nettlefold Signs Pty Ltd (1997) 38 IPR 495 (“Nettlefold”), in which Heerey J relied upon the public visibility of the applicant’s marks over approximately two decades as well as a $100,000 promotional campaign in finding that a reputation for the purposes of s 28 of the 1955 Act existed.

    [14] Op cit at [86].

1. In brief, the Opponent’s evidence of alleged reputation is very limited and its own submissions are telling.  It writes that:

   The Opponent’s operation is of a typical, down-to-earth SME business …Whilst not large in size and scope and certainly does not claimed to be internationally famous …, the Opponent has steadfastly built and accumulated a trustworthy and reliable reputation for its branded goods and services, originated and sold in Australia and occasionally exported to overseas.  The Opponent spent no less than an estimated sum of $25,000 in the initial launch of its goods and services branded with the registered trade mark No. 1280502.  Although the Opponent has not made claims of any colossal amounts of marketing expenditures, it is obvious that the Opponent’s branded goods and services have been supported with ongoing maintenance and development in the past approximately 10 years and such has incurred, in the nature of registrations and digital development alone, an estimated expenditures exceeding $50,000 since the initial launch. 

2. The Holder has, with good reason in my view, been critical of the Opponent’s evidence which taken as a whole fails to provide any sort of compelling case of a reputation (as described above) in the Opponent’s mark in Australia at the priority date.  Whilst there is evidence that the mark KANGAN has been used overseas, namely in Japan and in the United States, before the priority date there is nothing to cause me to think with any certainty that any foreign reputation has spilt over to Australia.

3. I find that the Opponent has not shown the requisite reputation in Australia and that finding is determinative of the s 60 ground which I find has not been established.

   Section 42

4. Subparagraph 42(b) of the Act relevantly provides:

   42Trade mark scandalous or its use contrary to law

   An application for the registration of a trade mark must be rejected if:

   […]

   (b)its use would be contrary to law.

5. The onus is on the Opponent to establish on the balance of probabilities that use of the Trade Mark would, rather than could, be contrary to law.[15] The Opponent has failed to establish the ground of opposition under s 60 of the Act and it is well recognised that the test for “misleading or deceptive conduct” under s 18 of the Australian Consumer Law (‘the ACL’) is a more stringent test than that for “deception or confusion” under s 60.[16] Accordingly, I find that the Opponent has also failed to establish that use of the Trade Mark would be contrary to s 18 of the ACL.

   [15] Advantage Rent-a-Car Inc v Advantage Car Rental Pty Ltd [2001] FCA 683.

   [16] See, e.g.: Ownit Homes Pty Ltd v Ownit Conveyyancing Pty Ltd [2005] ATMO 47, [36]; Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd [1982] HCA 44; (1982) 149 CLR 191, 198 (Gibbs CJ).

6. I find that the Opponent has not established the ground of opposition under section 42 of the Act.

   Section 62A

7. Section 62A of the Act states that the registration of a trade mark may be opposed on the ground that the application was made in bad faith. As stated already, the parties are well-known to each and have been and continue to be engaged in other proceedings in connection with the Trade Mark. That background informs to a large extent how the Holder’s behaviour should be characterised.

8. The earlier opposition included a ground of opposition under s 62A, on that occasion brought by the Holder. The ground failed because Hearing Officer Wilson considered that “at most, I have before me a possible inference of bad faith which has been (at least partially) explained by the Applicant. In the end, I am not satisfied on the Opponent’s arguments and evidence that the Applicant’s decision to apply to register the Trade Mark was one of ‘an unscrupulous, underhand or unconscientious character’.”

9. I would now have to somehow find on the evidence in this matter that the circumstances were different enough for me to consider that the Holder acted unconscionably in making the application for the Trade Mark.  Suitably redacted, the Opponent’s submissions are that:

   [the Federal Court appeal] in conjunction with the various other activities concurrently brought by the [Holder], can be for no other purposes but an intentional attack to place a commercial competitor, i.e. the Opponent, under pressure to meet and overcome the multiple proceedings brought. … Furthermore, by way of the [Holder’s] concurrent actions in bringing the other proceedings, it is obvious the Applicant’s overall intent and purpose, at the time of applying the Trade Mark, was to be part of an intimidation strategy, serving no other purpose than to bully a trade competitor to the extent of giving up on a business it has established and built for approximately 10 years under its own properly registered trade mark in Australia, such conduct and behavior of the [Holder] should not be condoned and as prescribed under the opposition ground under Section 62A, the application to register the Trade Mark was in bad faith and should be refused.

10. It has been said that bad faith is a serious allegation requiring clear and persuasive evidence.  The touchstone of bad faith is “conduct falling short of the standards of acceptable commercial behaviour observed by reasonable and experienced persons”[17].   There is no clear and cogent evidence to show that the Opponent’s use of KANGAN had any bearing on the Holder’s decision to register the Trade Mark.  Albeit use overseas, the Holder asserts first use of Trade Mark well before the Opponent’s adoption of its mark, but in any case, even where the parties and their trade marks are known to each other at the time of filing, bad faith requires, as stated by Hearing Officer Wilson, the act of application for the Trade Mark to have been of  “an unscrupulous, underhand or unconscientious character’[18].  Unless or until the Australian courts choose to reset the moral compass of business dealings, it is not bad faith for competitors to act in their own interests and exert commercial pressure on each other by legal means.  I do not find bad faith here.

    [17] Fry Consulting Pty Ltd v Sports Warehouse Inc (No 2) [2012] FCA 81 at [165]; DC Comics at [63]

    [18] Id.

11. I find that the s 62A ground of opposition has not been established.

    Decision

12. Reg. 17A.34N of the Regulations provides:

    (1) Unless the opposition proceedings are discontinued or dismissed, the Registrar must decide:

    (a) to refuse protection in respect of all of the goods or services listed in the IRDA; or

    (b) to extend protection in respect of some or all of the goods or services listed in the IRDA (with or without conditions or limitations);

    having regard to the extent (if any) to which the grounds on which the IRDA was opposed have been established.

    (2) The Registrar must notify the International Bureau of the Registrar's decision.

13. I have found that the Opponent has not established any of its grounds of opposition. I therefore direct that protection of the Trade Mark be extended to Australia one month from the date of this decision in respect of all of the Goods.

14. If the Registrar has been served with a notice of appeal before that time, I direct that extension of protection shall not occur until the appeal has been decided or discontinued or, if this decision be successfully appealed, that the IRDA be dealt with as the Court sees fit. If there is no appeal the International Bureau will be notified of this decision as soon as practicable after the appeal period has ended, in accordance with reg. 17A.34N(2).

    Costs

15. The Holder sought its costs in the event it was successful in this matter and I accordingly award costs against the Opponent at the official scale set out in Schedule 8 to the Regulations.

    Debrett Lyons

    Hearing Officer

    Hearings and Oppositions

    24 March 2020