Inventions Marketing Pty Ltd v Aqualoc Pty Ltd

[2002] ATMO 57

TRADE MARKS ACT 1995

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

Re:Opposition by Inventions Marketing International Pty Ltd to registration of trade mark 787994(11) –AQUALOC – in the name of Aqualoc Pty Ltd.  And Opposition by Aqualoc Pty Ltd to registration of trade mark 785919 (11) –AQUALOC – in the name of Inventions Marketing International Pty Ltd.

Background

These matters are cross-oppositions where both parties have filed opposition to registration of each other’s trade mark.  As the issues in relation to each are almost identical under the Trade Marks Act 1995, it is convenient to deal with the principles of the matters as a unity and make two separate decisions at the end of the Reasons.  It should also be convenient to focus, in the main, on the first application, 785919, as, not only are the issues identical, but the priority date of the first application is the date at which one of the issues, ownership, must initially be decided.  Whatever my decision in relation to the first application as regards its ownership should also resolve the opposition to the second.

Application 785919 (‘the first application’) was filed 19 February 1999 (‘the first priority date’) by Inventions Marketing International Pty Ltd.  The first application seeks registration of the word AQUALOC as a trade mark in respect of “tap valves” in Class 11 of the International (Nice) Classification of Goods and Services.

The first application was advertised as accepted on 5 October 2000.  On 22 December 2000, Aqualoc Pty Ltd filed Notice of Opposition to the registration of the first application.

Application 787994, (‘the second application’) was filed on 11 March 1999 (‘the second priority date’) by Aqualoc Pty Ltd.  The second application also seeks registration of the word AQUALOC as a trade mark in respect of “valves as used in plumbing taps and watering systems”.  The application was accepted under the provisions of subsection 44(4) and advertised as such on 21 December 2000.  On 21 March 2001 Inventions Marketing International Pty Ltd filed Notice of Opposition to the registration of the trade mark.

The hearing of the issue was before me as a delegate of the Registrar of Trade Marks in Canberra on 29 May 2002.  Mr Simon Finch of Victor A Bizannes, Solicitors, represented Aqualoc Pty Limited.  Inventions Marketing International Pty Ltd did not appear or put in written submissions.

Grounds

The grounds of opposition to the first application are very loosely stated.  However, it emerges that Aqualoc Pty Ltd claims that they are the rightful owner of the trade mark (section 58) and it makes general claims that go to sections 42(b) and section 60.  I observe that Inventions Marketing International Pty Ltd appears to have prepared its evidence on the understanding that these grounds were being pursued.  This evidence is, however, subject to further qualification, below.

The grounds of opposition to the second application are under sections 58, 60 and 62 of the Act.

Evidence

Aqualoc Pty Ltd’s evidence in support and answer respectively, comprises two statutory declarations by Jean Hillary Morrison, a director of Aqualoc Pty Ltd and of Beckett Pumps Pty Ltd. 

Mr Finch, for Aqualoc Pty Limited, objected to both the form of Inventions Marketing International Pty Ltd’s evidence in terms of regulation 21.6 (in relation to both oppositions) and, in relation to the first opposition, for the following reason.  While Inventions Marketing International Pty Ltd has served and filed evidence in support in relation to its opposition to the second application, it has not served and filed evidence in answer in relation to its own application which is the first application and, as I have observed, has the priority date at which the issue of ownership of the trade mark AQUALOC should logically be decided.  Instead, Richard Clarke, who is a director of Inventions Marketing International Pty Ltd wrote to the Trade Marks Office on 14 January 2002 and said, “Our company believes that all of the information needed to assess our case is contained in the information already filed with your office.”  And, on 16 January 2002, Richard Clarke wrote to the Trade Marks Office saying, “We advise that we have lodged four volumes of material supporting our application 785919 and in opposition to the Morrison’s application 787994.  The information is relevant to both our application and our opposition to their application.  Where one matter may not have information in respect of an issue, the other file should be referenced in support of our case.”

On 23 January 2002, Ms Deirdre O’Brien, a Senior Examiner in Trade Marks Hearings, wrote to Inventions Marketing International Pty Ltd and advised Mr Clarke:

I refer to your letters dated 14 and 16 January 2002 in respect of the above opposition.

In your letters you said you did not intend serving evidence in answer to the opponent's evidence in support. You wished to rely on material already filed with the Trade Marks Office. However that is not sufficient for the purposes of the Trade Marks Act. For evidence to be taken into account when the matter is heard by the Registrar, it must have been properly served within the time allowed. In other words, within the time allowed for you to serve evidence in answer, you should have informed the opponent that you intended your evidence in answer to be the evidence in support of your opposition to application 787994.

It is not necessary for you to re-serve the evidence as the opponent already has a copy.  However, in opposition matters, each party must inform the other in sufficient time of their intentions. That enables the other party to decide whether they wish to serve evidence in reply to the evidence in answer. It also has adequate notice of what evidence to take into account when preparing its submissions.  The period for serving evidence in answer expired on 22 December 2001. That means, if you wish the evidence in support of your opposition to application 787994 to be taken into account in these proceedings, you will have to file a late application for an extension of time. There is a one off late fee of $85 plus a fee of $65 per month applied for. You will have to apply for at least 2 months as a 1 month extension would only take the period to 22 January 2002, which date has already passed. You will need to provide a supporting statutory declaration giving reasons why the application is late. You also have to serve a copy of the extension application on the opponent.

Mr Clarke has declined to take the course outlined by Ms O’Brien, above, as he did not undertake any of the suggested steps. 

Further, the evidence in answer in relation to the second application is in the form of four statutory declarations by Richard Ernest Clarke who is a director of Inventions Marketing International Pty Ltd.  Each of these declarations is dated 16 June 2001.  However, as observed by Mr Finch, they do not comply with regulation 21.6(2) which provides:

21.6     Declarations

…

(2)A declaration required by the Act or these regulations must:

(a)be headed with the title of the matter in respect of which the declaration is made; and

(b)be expressed in the first person; and

(c)state:

(i)the name and address of the declarant; and

(ii)if the declaration is made on behalf of another person — the name and address of the other person; and

(d)if the declaration is made for the purposes of a business the details of which are set out in the declaration — state:

(i)the office or position held by the person by whom the declaration is made; and

(ii)the address of the place where the business is conducted or principally conducted; and

(e)be divided into paragraphs, each of which must be numbered consecutively and, as far as practicable, be confined to 1 subject.

For convenience, I have underscored the sub-paragraphs of regulation 21.6 with which Mr Clarke’s statutory declarations do not comply.  I also observe that none of the individual exhibits to Mr Clarke’s declarations are sequentially numbered nor are they sworn and witnessed.

At the hearing, while reserving my decision on the status Mr Clarke's evidence, I mentioned to Mr Finch that the effects of a total exclusion of the evidence could, on the one hand, potentially result in an appeal and consequent inconvenience and expense to his client.  On the other hand, exclusion as evidence in answer could mean that the issue would be considered by focussing primarily on the second application and second priority date.  I also observed that while some of Mr Clarke’s evidence is of great relevance, much of the balance is peripheral to the central issues of subsection 42(b) and sections 58 and 60.  I explained that this forum is, in effect, a tribunal and not as such bound by strict rules of evidence providing procedural fairness is preserved.  Mr Finch agreed that I not exclude Mr Clarke’s evidence in relation to the second application.  However, I consider that I am bound, in the circumstances, to exclude Mr Clarke's evidence as evidence in answer in relation to the first opposed application.

I add that much of Mr Clarke’s declaratory material appears to refer to matters unrelated to these proceedings.  Mr Clarke, for example, discusses the formal Quality Assurance (QA) regime in Australia at some length and makes allegations about the other party’s QA accession and compliance.  As QA, whether formal or informal, on the Morrisons' goods appears to have been the exclusive domain of the Morrisons, the immediate relevance of this portion of Mr Clarke’s allegations to these proceedings is not apparent.  Mr Clarke also makes remarks in his evidence which I take as being intended to reflect adversely on the competence of the other party’s legal representation.  I disregard such portions of Mr Clarke’s declarations except insofar as any argument could be construed as submission that directly relate to these proceedings.

Issues

The central issue is a simple one.  This is a dispute between a manufacturer and a distributor/marketer over the ownership of a trade mark.  As such, the considerations inherent in Re: Riv-Oland Marble Company (Vic.) Pty. Ltd. And: Settef S.P.A. Nos. Vg 1 And 2 of 1988 and Thunderbird Products Corporation v. Thunderbird Marine Products Pty. Ltd. (1974) 131 CLR 592 should apply. However, a major factor that complicates the issues here is that the marketer, Inventions Marketing International Pty Ltd, claims both to have devised the trade mark and to have undertaken much, if not all, of the advertising and promotional costs in relation to goods sold under the trade mark. Consequently, much hinges on what the evidence shows of the relationship between the parties, how the trade mark came into being and who actually first used the trade mark.

The parties’ assertions about what the evidence shows are diametrically opposed.

The Factual Background

Jean Morrison and Walter Morrison are directors of a number of companies.  One of these companies most relevant to these proceedings is Aqualoc Pty Limited and its predecessor in business, Accu-Track Pty Limited.  There are some other companies mentioned in the evidence which are, or were at the relevant time, controlled, or part controlled, by Jean and Walter Morrison.  These are Beckett Pumps Pty Ltd, which trades as Beckett O Rings, and Inventors Finance Pty Ltd.  For convenience’s sake, I will refer to Jean and Walter Morrison and their companies as ‘the Morrisons’, except where it is necessary to distinguish between them.

In 1994, the Morrisons had a business relationship with Mr Trevor Esplin who is an inventor.  I understand from the evidence that Mr Esplin required finance to undertake legal action in relation to an alleged infringement of the patent of one of his inventions.  In return for the promise of this finance, the Morrisons received a 50% share in the invention and the prospect of future collaboration with Mr Esplin.  (The invention is the device whose trade mark this dispute concerns and is registered in Australia under patent number 641620; Mr Finch advised me at the hearing that the Morrisons are now, or shortly to become, registered owners of the patent).  It seems that Mr Esplin invented various devices related to water and gas supply and the Morrisons’ part in this relationship was to develop, manufacture, or, occasionally, to arrange for the manufacture of components for the devices.  Beckett Pumps Pty Limited was to make this tap-valve device, Accu-Track Pty Ltd was to distribute it and, for the marketing of this particular device, the Morrisons looked elsewhere.

Dealings between the Parties

Inventions Marketing International Pty Ltd is Brisbane based and is a marketer and distributor.  The evidence does not elaborate on the scope or nature of its operations.

In January 1994, the Morrisons met with a representative of Inventions Marketing International Pty Ltd, whose name is not stated, in Sydney to discuss the marketing of a gas-supply device.  In June 1994, Trevor Esplin telephoned Inventions Marketing International Pty Ltd to ask if it would also be interested in marketing the water valve which is now at the centre of this dispute.  The Morrisons and Inventions Marketing International Pty Ltd began negotiating an agreement for the supply and distribution of the device. 

The device was previously called SILENT-EZE, but neither party appears to have been entirely satisfied with this.  There were, apparently, telephone discussions[1] between the parties concerning the name of the product which are referred to in the evidence but details of these discussions are not clear and are in dispute.  Aqualoc Pty Ltd allege that the renaming was at their instigation and Inventions Marketing International Pty Ltd are silent on whose the initiative was – it is, however, clear that the trade mark SILENT-EZE is the one that had been associated with goods at the centre of Mr Esplin’s patents dispute and was regarded by both parties as being ‘tainted’.  On 7 September 1994, Richard Clarke of Inventions Marketing International Pty Ltd sent a facsimile letter to Walter Morrison saying in part, “We have decided on the name AQUALOC.  Do you have any adverse reactions to that?”  On 8 September 1994, Walter Morrison sent a facsimile letter in response to Richard Clarke saying, “We wish to advice [sic] that we like the name “Aqualoc”.  It sounds good.  We have all the items ordered.  Trevor [Esplin] is currently manufacturing the assembly machine.  We will give you a firm delivery date within a few days.”  Mr Morrison goes on to say, “We have read the draft agreement and will be looking at a few changes.”

[1] Trevor Esplin mentions these in his letter which I quote, below.

The tap-valve devices, made by the Morrisons, were delivered to Inventions Marketing International Pty Ltd and invoice 001 referencing the trade mark was issued to Inventions Marketing International Pty Ltd by Accu-Track Pty Ltd on 31 October 1994.  A further three invoices referencing the trade mark AQUALOC were issued by Accu-Track Pty Ltd to Inventions Marketing International Pty Ltd but subsequent invoices did not reference the trade mark.  By the date of issue of the first invoice, a written agreement between the parties had not been entered into and it appears doubtful that it ever was.

I will mention one further piece of correspondence here as it goes to the Inventions Marketing International Pty Ltd argument, apparently pursued in Mr Clarke’s declarations, concerning abandonment of the trade mark by the Morrisons.  In an undated facsimile letter responding to a letter Mr Clarke wrote to Aqualoc Pty Ltd on 17 February 1999, Mr Morrison wrote, inter alia:

Richard, I have about reached the end of my patience with all this to and from with letters backwards and forward.

I do not intend to answer any more faxes.  This is definitely the last so let me be blunt but factual.

The current packaging of the Aqua valves reads:

Manufactured by

Beckett Pumps P/L

Distributed by

Aqualoc P/L

We have no intention of marketing the valve under the name of Aqualoc.  There is a completely different name for this product.

We have registered the name Aqualoc P/L to protect the name.  Your company [has] not registered the name for approximately three years.

Imagine the problems if somebody took this name now.  You may continue to use the name Aqualoc but all of our information will not be calling the valve Aqualoc.

I note that, contextually, Mr Morrison’s letter was written at a time when, according to the evidence, Nylex Corporation had licensed the use of the trade mark from Accu-Track Pty Ltd and distributors (other than Inventions Marketing Pty Ltd) of Aqualoc Pty Ltd goods were using the trade mark.

The Agreement

It is not clear if a written agreement was entered into but there is in evidence a copy of the agreement signed by Kenneth Lau, a director of Inventions Marketing International Pty Ltd and bearing the seal of that company.  There is also mention in correspondence between Trevor Esplin and Victor A Bizannes (who is a solicitor for the Morrisons) that the Agreement that was drafted to be signed by Inventors Finance Pty Ltd had in fact been ratified by Accu-Track Pty Ltd and counter-signed signed by Walter and Jean Morrison, directors of that company.  When this allegedly occurred is not stated.  The latter agreement is not in evidence.

There are two draft agreements, including the one signed by Kenneth Lau, in evidence, which both deal with the Intellectual Property in the device the following manner:

1.1     “The Owner’s Products” shall mean the invention described in the First Schedule hereto;

1.4     “the Owner” and “the Agent” shall where the context so permits include their representative successors and assigns and the persons respectively deriving title under them;

1.5     "the Intellectual Property" shall mean any trade marks names design applications, patents or other forms of intellectual property protection belonging to or used by the Owner or any Associated Company in respect of the Owner's Products;

4.1.11           In the event that the Agent learns of any infringement or threatened infringement of any of the Intellectual Property of the Invention or rights pertaining thereto in the Territory or any common law passing off by reason of imitation or get up or otherwise or that any third party alleges or claims that the Invention is liable to cause deception or confusion to the public, the Agent shall forthwith notify the Owner in writing giving particulars thereof and provide all information and assistance to the Owner in the event that the Owner decides that proceedings should be commenced or defended.

4.1.15           [The Agent]  Will not seek to register, or apply for the registration for patent copyright and/or design protection of any improvements or modifications to any of the Owner Products which are the subject of this agreement. The Agent also agrees that any such improvements or modification which it becomes aware of and which could require intellectual property protection will be referred to the Owner for them to protect in their name.  Such improvements or modifications will then form part of this Agreement. If this improvement or modification adds to the manufactured cost of the tap valve, such cost will be added to the Agents Buying Price and shall be considered as a “percentage increase of the … manufactured components” as hereinafter defined.  Providing that the Owner declines in writing to the Agent that they will not proceed with the intellectual property protection of the improvements or modifications, the Agent may apply for such protection in their own right.

7.3     Upon the valid termination of this agreement for any or all of the Owner’s Products in any or all of the territories for any cause, the Agent shall transfer to the Owner any registered trademark, registered trade name or the copyright to any of the words associated with either the packaging, the instructions and/or any of the promotional material associated with the Products which are the subject of the termination.

The First Schedule defines the owner’s products as ‘the valve previously known as “Silent-Eze” and detailed in PCT/AUS89/00251 and Australian Patent 641620’.

It appears from the evidence that the device was supplied at a discount to Inventions Marketing International Pty Ltd, which discount took account of the advertising and promotional expenses which are, at 4.1.2 to the draft agreement, acknowledged to be the sole responsibility of the agent.

At Enclosure 3 to the first Clarke declaration, there is a copy of a letter Richard Clarke wrote to the Morrisons on 31 January 1995:

2.      If there are a number of suppliers in the marketplace, the product will lose its integrity.  We have been holding ourselves out to be the exclusive marketeer in Australia, in accordance with our verbal agreement. (Of course we all know that a contract to be binding does not require commission to paper, unless it relates to land.  We had agreement on the main principles and were merely working out the fine detail. Now you seek to change the main principles.) If a changed story is released to the marketplace again, there will be significant resistance developed against the product. Already there has been one change from Enware, another would be fatal.

3.      We own the name “AquaLoc”. No one else has the right to use that name. You would have the same product being marketed under different names. Again, that goes to reduction of the credibility of the product.

[Emphasis in original]

On 23 February 1995, Trevor Esplin replied to Mr Clarke’s letter on behalf of Accu-Track Pty Ltd:

2.      We agree that the verbal agreement you refer to was in fact actually in written form and was, and is in fact binding and yes, we were working out the fine detail. It is therefore puzzling that, even after numerous requests covering several months you did not progress the agreement to the point where it was suitable for signing. Also you mention a "changed story ... (for) ... the marketplace ..." but we are the manufacturer and will remain so.

3       You do not own the name AquaLoc!  If you care to re-read the agreement between us, that is the document which you claim "we had agreement on in the main principles", you will find that if for any reason the agreement is terminated, the registration of any trade name is to revert to us.  At no time during our negotiations was this clause ever raised by you as one which caused you any concern. Therefore before the name AquaLoc was registered both you and your partner Mr. Ken Lau spoke to Walter Morrison to obtain his approval to register and use this name for our product.  At that time you were both informed that as the agreement was close to signature and, as we all believed that it was effectively in place, that name for this product could be registered.  I am aware of these conversations personally as they were conducted by Walter in my presence using his new speaker telephone.

[Emphasis in original]

In a statutory declaration, which is appended to the third Clarke declaration, Mr Esplin avers that he wrote the above under the direction of Mr Morrison and that both he and Mr Morrison were aware that the Morrisons did not own the trade mark.

A similar exchange occurred later.  The Morrisons sought on 1 February 1999 to vary the price which they charged Inventions Marketing International Pty Ltd for the device and to “sell direct to everyone … and to allow you 10% of all sales for five years.”  Inventions Marketing International Pty Ltd thus lost the exclusivity of agency that had been a part of the purported agreement.

In response, on 4 February 1999, Mr Clarke wrote, “I.M.I. owns the name Aqualoc, and any sale by you under that name, or using copyright material, testing, testimonials etc,. is illegal, and will result in an action by us.  You cannot use the name Aqualoc without first obtaining our approval in writing.”  In the same letter, Mr Clarke writes, at page 2, “Let me clear up a misunderstanding.  The only time you may have a right to question price is if contractually you have a right to do so, and then you would probably breach Trade Practices law in regard to price controls.”  [My emphasis]  I add, in passing, that the cause of Mr Clarke’s reference to the Trade Practices Act1974 is not apparent.  The letter that the Morrisons wrote to Inventions Marketing International Pty Ltd does not appear to me to be one that attempts to fix a retail price of the device to the public, but rather to charge all of their agents the same wholesale price of $4.20 per unit.

It appears that both parties accept the major provisions of the paper version of the agreement as being enforceable and binding in early 1999.  Confirmation that this may be so appears to be in the Morrisons’ agreement to pay Inventions Marketing International Pty Ltd – I would infer at the latter company’s insistence - a royalty of 10% of all wholesale sales as a compensation for the alleged breach of the purported agreement.  The ostensible breach appears to have been loss of exclusivity for Inventions Marketing International Pty Ltd in their agency.  In both versions of the draft agreements in evidence, the provisions that deal with Intellectual Property are identical.

Discussion

Section 42(b)

Section 42 of the Act provides:

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.

Subsection 42(b) provides a ground of opposition to registration of a trade mark which may be established if an opponent's evidence satisfies the Hearing Officer that the use of the opposed trade mark would be contrary to law.  Thus, subparagraph 42(b) may bring into consideration the contractual relations that might have, in law, existed between the parties.  If, for example, the evidence clearly showed that one of the parties had agreed not to use the trade mark, or to transfer the ownership of the trade mark on expiration of a contract, its continued use or ownership of the trade mark could be caught by the provisions of subparagraph 42(b).

Historically, Hearing Officers have been slow to look at such issues in proceedings before the Registrar of Trade Marks.  However, in Advantage-Rent-A-Car Inc v Advantage Car Rental Pty Ltd [2001] FCA 683 (8 June 2001), at paragraph 26, Madgwick J said:

However, in my opinion the fact that the existence of any contrariety to law is to be exercised in some circumstances by an administrative body and, in other circumstances, by a judicial body does not mean that the phrase "if its use would be contrary to law" should have an ambulatory meaning, depending upon what kind of tribunal is to apply it. Nor can any reticence on the part of an administrative decision-maker to express an opinion on a matter of law be encouraged. The idea that "contrary to law" in the context of judicial proceedings means contrary to all laws, whilst in the context of proceedings before the Registrar it means contrary to laws which are easy for the Registrar to determine or which are "clear cut", is not sustainable.

And, at paragraph 28, His Honour said:

I acknowledge the claim made by counsel for the Registrar that such an approach requires the Registrar to look at questions of law outside his or her expertise and that this can be difficult and may place a large and onerous responsibility upon the Registrar. However, the Registrar has the comfort that the criterion is that the use "would" not "could" be contrary to law. Further, there is no reason why the Registrar could not seek legal advice before forming his/her opinion. It should also be noted that what is required is that the Registrar form a view as to whether the use of a trade mark would be contrary to law. Such opinion does not have a similar effect to say, a judicial conclusion of law as to breach of copyright in copyright proceedings; the effect is limited to the refusal of registration. In any case, an appeal de novo lies from the Registrar's decision to this Court where any error of the Registrar may be corrected

In my view, the draft agreement in evidence, insofar as it could be claimed to express any verbal terms agreed by the parties concerning Intellectual Property, does not determine the ownership of common law trade marks that either party might have used.  Further, while it is clear that Inventions Marketing International Pty Ltd is one of the parties to the purported agreement, it is not clear to me whether the other party is Aqualoc Pty Ltd or Inventors Finance Pty Ltd.

Therefore, I am not satisfied that verbal agreement between the parties before me had been reached, or that the paper draft agreement in evidence contains the embodiment of the terms of any verbal agreement.  It also appears to me that if such agreement had been reached, its terms do not encompass the situation in which the parties find themselves as the agreement only mentions registered trade marks.

On the other hand, while not in itself sufficient to found the opposition under section 42, the advanced state of the draft agreements sheds considerable light on the question of ownership as arising below.

Section 58

Section 58 of the Act provides:

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.

Note:For applicant see section 6.

The word ‘owner’ in the Act, is equivalent in meaning to the word ‘proprietor’ used in the preceding Trade Marks Acts. 

In a nutshell, the argument of Inventions Marketing International Pty Ltd is, “we thought of the name AQUALOC – therefore we own it”.  The Morrisons’ argument is, “Inventions Marketing International Pty Ltd thought of the name for us.  Accu-Track Pty Ltd first used the trade mark on receipts issued to Inventions Marketing International Pty Ltd.”

The first user of a trade mark in Australia becomes the owner of the mark at common law, and may become the owner of the registered trade mark.  This is shown in Shell Co. of Australia Ltd. v. Rohm and Haas Co (1949) 78 CLR 601 at 627 with Dixon J's frequently quoted passage:

... [I]t is clear enough from the course of legislation and of decision that an application to register a trade mark so far unused must, equally with a trade mark the title to which depends on prior user, be founded on proprietorship. The basis of a claim to proprietorship in a trade mark so far unused has been found in the combined effect of authorship of the mark, the intention to use it upon or in connection with the goods and the applying for registration.

The ‘use’ on which ownership can be established is discussed by the High Court in Moorgate Tobacco Co. Limited v. Philip Morris Limited and Another (1984) 156 CLR 414 at 432. The Court says:

The prior use of a trade mark which may suffice, at least if combined with local authorship, to establish that a person has acquired in Australia the statutory status of proprietor" of the mark, is public use in Australia of the mark as a trade mark, that is to say, a use of the mark in relation to goods for the purpose of indicating or so as to indicate a connexion in the course of trade between the goods with respect to which the mark is used and that person ... The requisite use of the mark need not be sufficient to establish a local reputation and there is authority to support the proposition that evidence of but slight use in Australia will suffice to protect a person who is the owner and user overseas of a mark which another is seeking to appropriate by registration under the Trade Marks Act. In such a case, the court "seizes upon a very small amount of use of the foreign mark in Australia to hold that it has become identified with and distinctive of the goods of the foreign trader in Australia" (see The Seven Up Co. v. O.T. Ltd. (1947) 75 CLR 203, at p 211; Aston v. Harlee Manufacturing Co. (1960) 103 CLR 391, at p 400).

There are, therefore, in terms of the above, two aspects to this consideration: ‘authorship’ and ‘first use’.  Co-mingled with these questions is the overarching definition used in the above quotation, ‘a use of the mark in relation to goods for the purpose of indicating or so as to indicate a connexion in the course of trade between the goods with respect to which the mark is used and that person.’  A very similar expression is used in section 17 of the Act which defines a trade mark:

17  What is a trade mark?

A trade mark is a sign used, or intended to be used, to distinguish goods or services dealt with or provided in the course of trade by a person from goods or services so dealt with or provided by any other person.

Note:For sign see section 6.

I am therefore not looking at authorship or first use of the word AQUALOC.  I am considering those issues in relation to the trade mark AQUALOC.

Authorship

"Authorship", said Dixon J in Shell, above, "involves the origination or first adoption of the word or design as and for a trade mark."

Having considered the material submitted as evidence, I do not think that Inventions Marketing International Pty Limited is the author of the trade mark, notwithstanding the fact that it may have 'thought of it first'.  'Authorship' means the origination and first adoption of the word as a trade mark.  The evidence establishes, I consider, that the Morrisons had the last word on whether the word AQUALOC was to be used as a trade mark and were looked to as the arbiters of this decision.  The expression used in Mr Clarke’s facsimile letter of 7 September 1994, “Do you have any adverse reactions to that?” invites the further question, ‘What if the Morrisons had said they did not like it?’  It thus appears that it was open to the Morrisons to have said ‘No,’ in response to the Inventions Marketing International Pty Ltd letter suggesting the ‘name’ AQUALOC. 

The evidence establishes that, at the time that Inventions Marketing International Pty Ltd proposed the word AQUALOC to the Morrisons, the former had not, and indeed could not have, used the word as a trade mark nor had it the means to do so.  Inventions Marketing International Pty Ltd had no goods on which to use the word as a trade mark; and, more importantly, absent any agreement from the Morrisons as to the appropriateness of the word as a trade mark, Inventions Marketing International Pty Ltd would have either presumably remained without the goods, or, another trade mark more agreeable to the Morrisons would have been devised.  The true genesis or authorship of this word as a trade mark therefore does not lie with Inventions Marketing International Pty Ltd, it rests with the Morrisons.  It is also quite unlikely, in my consideration, that Inventions Marketing International Pty Ltd could have independently come to a conclusion that the product needed re-naming: the Morrisons are the obvious logical source of the information that the trade mark SILENT-EZE was 'tainted'.  Such an analysis is consistent with the nascent terms of the agreement between Inventions Marketing International Pty Ltd and the Morrisons

As observed by Fullagar J in Aston v. Harlee Manufacturing Co. (1960) 103 CLR 391 at 399:

I do not think that an opponent of an application for registration of a trade mark could succeed by saying merely "I thought of it first", or even " I thought of it first, and communicated it to the applicant."  It is otherwise if the opponent has used the mark in relation to goods [or services].

The letter of John Esplin to Inventions Marketing International Pty Ltd of 23 February 1995, quoted above, supports this conclusion.  Mr Esplin says in his letter, “Before the name AquaLoc was registered both you and your partner Mr. Ken Lau spoke to Walter Morrison to obtain his approval to register and use this name for our product.”  He also says, “I am aware of these conversations personally as they were conducted by Walter [Morrison] in my presence using his new speaker telephone.” 

Mr Esplin has later declared that Mr Morrison in fact knew that the trade mark did not belong to Accu-Track Pty Ltd and that he wrote the letter at Mr Morrison’s behest.  I note that the Esplin letter of 23 February 1995 has the evidentiary benefit that it was written close to the event when Mr Esplin’s memory was fresh – it has the look of currency and detail; it also has the ring of true conviction.  I also observe that Mr Esplin’s more recent memory may be coloured by the fact that he is now a director of Inventions Marketing International Pty Ltd.  Further, if it is possible that he wrote the former letter at Mr Morrison’s behest, it is equally likely that he made the latter statement at Mr Clarke’s command.  The former recollection of events is therefore to be preferred as it is recent to the event and it is detailed.  It is also, of course, true that even if Mr Morrison might at any time have held such a view, it was not necessarily a correct one – both parties have shown themselves to be inexpert in trade mark matters in their dealing with each other and to have made assumptions which are not correct.

Use in trade

It appears to be the contention of Inventions Marketing International Pty Ltd that the invoices showing the use of the trade mark AQUALOC by Accu-Track Pty Ltd are confidential documents and cannot therefore be evidence of use of the trade mark AQUALOC in trade.  I do not agree.  The invoices are commercial documents which were provided by Accu-Track Pty Ltd to Inventions Marketing International Pty Ltd with the goods, or at the time of sale of the goods, and could be used by either party in this or any other forum to establish that the transactions took place.  In Thunderbird Products Corporation v. Thunderbird Marine Products Pty. Ltd. (1974) 131 CLR 592, the goods concerned were a loosely assembled boat accompanied by some paperwork: the use was not ‘public’ in the sense that it might have established even a limited reputation – indeed, public knowledge of the transaction in Thunderbird appears to have been as similarly limited as it is here.  Here the documents establish that that the transactions did take place and that they took place in relation to approximately 5000 items sold in relation to the trade mark AQUALOC by Accu-Track Pty Limited to Inventions Marketing International Pty Ltd.

It is most noteworthy that, at the time the invoices issued, Inventions Marketing International Pty Limited did not challenge Accu-Track Pty Ltd's right to use the trade mark.

The number of invoices issued bearing the trade mark is not high.  However, the precedents show that even slight use is sufficient to establish ownership: Blackadder v. Good Roads Machinery Co. Incorporated (1926) 38 CLR 332; Thunderbird Products Corporation v. Thunderbird Marine Products Pty. Ltd. (1974) 131 CLR 592.

In his evidence, Mr Clarke states that Mrs Morrison telephoned Mr Ken Lau in late 2001 and asked how much it would cost to purchase the trade mark from Inventions Marketing International Pty Ltd.  This is obviously hearsay evidence.  However, I observe that while Mr Clarke construes this alleged conversation as an acknowledgement by the Morrisons of Inventions Marketing International Pty Ltd’s true ownership of the trade mark, it can also be construed as an attempt to ascertain how much a settlement of these disputes would cost.  Such information would have given the Morrisons the basis for a rational business decision whether to settle or to pursue these matters.

Abandonment

It appears to be a leg of the Inventions Marketing International Pty Ltd argument that the undated letter, quoted above, that Mr Morrison wrote to Inventions Marketing International Pty Ltd can be seen as establishing an abandonment of the trade mark.  In Malibu Boats West, Inc v Catanese [2000] FCA 1141 (18 August 2000) Finkelstein J said, at paragraph 39:

The question of abandonment in the context of a trade mark application was discussed by Chitty J in Mouson & Co v Boehm (1884) 26 Ch D 398. The defendant was a German soap manufacturer who adopted a trade mark for soap in 1874. For a period of around two years this soap was manufactured and exported, however, from 1876 to 1882 the manufacture and sale diminished until it practically ceased. In ignorance of the defendant's mark, the plaintiff adopted an almost identical mark in relation to soap manufactured for export and, in 1880, applied for its registration in England. Proceedings were brought in 1882 by the plaintiff to restrain the defendant from using the mark. After the commencement of these proceedings, the defendant applied to have its mark registered. The plaintiff argued that the defendant had abandoned the mark by non-use.

On the question of abandonment Chitty J held that an intention to abandon must be shown and that such intention may be inferred in an appropriate case. However, his Lordship said that mere non-use did not amount to an abandonment of the mark. In finding that there had been no abandonment of the mark in that case, Chitty J noted that the defendant had not ceased to carry on his business, had not broken up the mould for the soap, the trade mark was not erased from his books nor price lists and, importantly, he had not given up the business to which the trade mark belonged.

This decision was referred to with approval by Bowen CJ in Riv-Oland Marble Co (Vic) Pty Ltd v Settef SpA (1988) 19 FCR 569 in the course of discussing the question of abandonment of a trade mark. Counsel for the appellant argued that the respondent had abandoned its trade mark through disuse as there had been only one sale of the goods associated with the trade mark in a period of six years. Bowen CJ said that this was not sufficient to constitute abandonment of the mark. His Honour stated (at 572):

"... in my opinion, to show abandonment of the mark in circumstances such as the present it would be necessary to demonstrate more than slightness of use. There would have to be some evidence indicating an intention to abandon the trade mark to result in the right to proprietorship being lost."

It appears to me that the letter does not constitute an abandonment of the trade mark or a stated intention to do so.  The letter is obviously not clearly expressed and written in apparent heat and frustration and should be viewed in that context.  However, it is evident that the Morrisons continued in their business, they continued to assemble and supply tap-valves and variants of the device – in short, they fulfilled the requirements outlined by Chitty J in the above quotation.  Several of the Morrisons agents, other than Inventions Marketing International Pty Ltd, apparently continued to use the trade mark on either the tap-valve or on variants or on related goods.  The letter was written at a time when Inventions Marketing International Pty Ltd was a distributor only of the tap-valve device in respect of which the trade mark had been used in its dealings with the Morrisons.  All Mr Morrison appears to be saying is that Inventions Marketing International Pty Ltd may use the trade mark on the devices supplied to it by Aqualoc Pty Ltd if it wishes but that Aqualoc Pty Ltd would not use the trade mark on that particular device (whether this is in relation to its supply to Inventions Marketing International Pty Ltd or to all distributors is not clear).  The letter says nothing of other goods that the trade mark was, by then, apparently used on.

Moreover, in this letter Aqualoc Pty Limited deals with the trade mark as if it was its own (even though it is clear that Mr Morrison did not realise that rights to a trade mark do not arise through the incorporation of a company via its name).  Aqualoc Pty Ltd also treats the use of the trade mark as if the use would be a continuing one.  I also note it is apparent that a company referred to in evidence as Nylex Corporation was, at the time of the letter, licensed by Aqualoc Pty Ltd (or its predecessor in business) to be a user of the trade mark AQUALOC on goods falling within Class 11.  Under such circumstances, it appears to be very unlikely that the trade mark was abandoned by Aqualoc Pty Ltd.

Decisions

Section 55 of the Act stipulates:

55  Decision

Unless the proceedings are discontinued or dismissed, the Registrar must, at the end, decide:

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

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

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

Note:For limitations see section 6.

Section 202 of the Act provides:

202  Registrar’s powers

The Registrar may, for the purposes of this Act:

(a)       summon witnesses; and

(b)       receive written or oral evidence on oath or affirmation; and

(c)       require the production of documents or articles; and

(d)award costs against a party to proceedings brought before the Registrar; and

(e)       notify, as he or she considers fit, any person of any matter that, in his or her opinion, should be brought to the person’s notice.

Note:For the awarding of costs see section 221.

Section 221 of the Act provides:

221Costs awarded by Registrar

(1)       The Registrar may award costs in respect of the matters, and in the amounts, provided for in the regulations against any party to proceedings brought before him or her.

(2)A party desiring to obtain costs must apply to the Registrar in accordance with the regulations.

(3)       If a party is ordered to pay the costs of another party, the costs may be recovered in a court of competent jurisdiction as a debt due by the first party to the other party.

I therefore now decide these applications and the issues of costs.

Application 785919
This is the Inventions Marketing International Pty Ltd application to register the trade mark AQUALOC in Class 11, filed on 19 February 1999. I note that the non-service of the evidence relied on by Inventions Marketing International Pty Ltd does not materially affect the outcome below.  In terms of grounds in the Notice of Opposition filed by Aqualoc Pty Ltd: 

Subparagraph 42(b) – Contrary to Law

The disposition of common law rights to trade marks under the terms of the alleged agreement is not spelt out.  Therefore Aqualoc Pty Ltd ’s opposition to registration of the trade mark on this ground is not established to my satisfaction, irrespective of whether an agreement in fact existed.

Section 58 - Ownership

The evidence establishes that Aqualoc Pty Ltd, through its predecessor in business, was the author and first user of the trade mark AQUALOC in relation to ‘tap valves’.  Aqualoc Pty Limited has therefore established this ground of opposition.

Section 60 Reputation

I have already found that the opposition to registration of 785919 succeeds under section 58.  While it appears that use of the trade mark by Inventions Marketing International Pty Ltd should be considered to be an authorised user of Aqualoc Pty Ltd’s trade mark (and therefore in terms of subsection 7(3) of the Act taken to be a use of Aqualoc Pty Ltd’s trade mark) the evidence of neither party appears to be specifically addressed to the provisions of section 60.  There are no consolidated retail or wholesale figures and no consolidated figures that deal with the expenditure on advertising and promotion.  Aqualoc Pty Ltd has therefore not established this ground of opposition.

Decision

I refuse to register application 785919.

Costs – 785919

Aqualoc Pty Ltd has requested its costs in relation to this matter if successful.  I order that Inventions Marketing International Pty Ltd pay these costs at the scale nominated at Schedule 8 to the regulations.  Attendance may be claimed at 50% of scale as both matters were heard concurrently.

Application 787994

This is the Aqualoc Pty Ltd application to register the trade mark AQUALOC in Class 11 filed on 19 February 1999.  In terms of the grounds in the Notice of Opposition:

Section 58 – Ownership

The evidence filed by Inventions Marketing International Pty Ltd has not displaced Aqualoc Pty Ltd’s claim to the ownership of the trade mark.  The evidence establishes that, in fact, Aqualoc Pty Ltd, via its predecessor in business, had authorship and first use of the trade mark.

Inventions Marketing International Pty Ltd has therefore not established this ground of opposition.

Section 60 – Reputation

As success under this ground of opposition is dependent on Inventions Marketing International Pty Ltd establishing that it was the owner of the trade mark (and it has not) the opposition must fail under this ground.

Section 62 – false representations

While some of the statements made by Jean Morrison in her declarations are vague or open to interpretation, the evidence and outcome in these proceedings do not show them to be false.

Inventions Marketing International Pty Ltd has therefore not established this ground of opposition.

Decision

If there has been no appeal filed and notified to the Registrar against these reasons within the requisite period, application 787994 may proceed to registration after the elapse of four weeks from the date of these reasons. 

Costs

Aqualoc Pty Ltd has requested its costs if successful.  I order that Inventions Marketing International Pty Ltd pay Aqualoc Pty Ltd’s incurred costs at the scale at schedule 8 to the regulations in relation to this opposition with the exception of attendance which the latter may claim at 50% of the scale.

Other

It is obviously inappropriate that the Aqualoc Pty Ltd application 787994 proceeds to registration carrying the present endorsement applying the provisions of subsection 44(4).  I therefore direct that this endorsement be removed from the application on the elapse of four weeks from the date of these reasons and prior to registration, if no appeal has been filed.

Ian Thompson
Hearing Officer

1 July 2002