James Hardie & Co Pty Ltd v Hume Industries (Malaysia) Berhad

[2001] ATMO 78

TRADE MARKS ACT 1995

DECISION OF A DELEGATE OF THE REGISTRAR OF TRADE MARKS,

WITH REASONS

Re:Costs in the matter of opposition by Hume Industries (Malaysia) Berhad to registration of trade mark applications 704191, 704192(19) - COLOURS PINK AND BLUE- filed in the name of James Hardie & Coy Pty Ltd.

Background

James Hardie & Coy Pty Ltd ("the applicant") had applied to register two trade marks for building products in class 19.  The trade marks consisted of particular hues and tones of the colours pink and blue, to be used as trade marks in respect of fibre-reinforced cement material in the form of boards or sheets.  The Trade Marks Office ("TMO") accepted the applications for registration but Hume Industries (Malaysia) Berhad ("the opponent") opposed registration. 

The opponent followed the steps of the opposition process set out in the Trade Mark Regulations 1995, ("the regulations").  It filed, and served the applicant with a copy of, evidence in support of its opposition.  the applicant relied on evidence in answer and the opponent then served evidence in reply.  However, at that point the applicant withdrew the opposed applications. 

The opponent had therefore, at least on the face of it, been successful in its opposition.  It sought, and has been granted, an award of costs.  There is no dispute about the actual making of the award, but the opponent's solicitors, Baker & McKenzie, have made written submissions about an alleged shortfall in the quantum proposed to be awarded under the scale of costs set out in the regulations. 

The final figure, after submissions by the opponent, has been taxed by a Taxing Officer at the TMO.  The opponent continues to maintain that the award is deficient and has asked that the Registrar of Trade Marks review that taxing, as allowed by reg 21.13(4).  I am now, under delegation from the registrar, to conduct that review.

Evidence

The opponent's evidence in support consists of declarations by Neal Butter with annexure 'a' and exhibits NB-1 and NB-2; Kenneth James Taylor with annexures 'A' and 'B' and exhibits KJT-1 to 4; Gary Phillip May; Celina Creek and Saw Phaik Ai.  It relied on this evidence for the purpose of both oppositions.

The detail of the applicants' evidence in answer is immaterial to the taxing.  There is no question that it was bona fide evidence setting out the views of certain traders about the trade marks in question.

The opponent therefore served and relied upon evidence in reply, the declarations of Koay Chee Seng with annexures A to E, and Ian Hogbin with annexures A to F.  Again, it relied on this evidence for the purpose of both oppositions.

The amounts proposed.

The taxing of costs in cases where one set of evidence is used for the simultaneously conducted opposition to the registration of two or more trade marks ("multiple oppositions") is a vexed issue.  The TMO initially took a view that, since the evidence was relied on in two matters, no additional costs were incurred in preparing it for the second or subsequent oppositions.  Therefore, the TMO initially taxed the costs of such an opponent on the basis that extra TMO fees are the only additional costs incurred by a party in conducting multiple oppositions.

I have been called on, twice, to review the taxing of such matters.  This has seen some change in practice.  The questions involved have drawn some, though not much, comment from practitioners but have not been the subject of any submission by either the Law Council or IPTMA, the two bodies that represent external legal advisers and agents dealing with the TMO.

As matters now stand, TMO practice, in relation to the taxing of costs where the same evidence is relied on by a party in conducting two co-pending oppositions, is as follows.  This practice is set out in Latrobe Brewing Co v Simmons (1996) 34 IPR 346. An asterisk * in the following table indicates that, in the matter with which I am now concerned, the opponent has claimed for a relevant item.  In respect of that item, in relation to the taxing of costs for the second opposition, the Taxing Officer proposes to apply the amounts currently shown in the right hand column of the table.  The opponent disputes all such marked items for the second opposition, arguing that, in all instances, the scale item is payable in full for the second case also.

First case	Second and subsequent co-pending matters using same evidence
Opponent: Prepare and file notice of opposition, incl TMO fees	At scale	At scale
Applicant: Receive and peruse Notice of Opposition	At scale	At scale
*Opponent: Serving evidence in support	At scale	*Nil
Applicant: Receiving and perusing evidence in support	At scale	20% of scale item, per application
Applicant:  serving evidence in answer	At scale	Nil
*Opponent: Receiving and perusing evidence in answer	At scale	*20% of scale item, per application
*Opponent: Serving evidence in reply	At scale	*Nil
Applicant: Receiving and perusing evidence in reply	At scale	20% of scale item, per application
Preparing for hearing	At scale	Nil "where matters can be decided as one"
Hearing fee(s)	At scale	Only if TMO requires multiple fees
Hearing time, travel expenses etc	At scale	Nil
Taxing fee	At scale	Nil - fee not charged for subsequent cases

Review

Section 221 of the Trade Marks Act 1995 limits recoverable costs in an opposition to the amounts set out in the scale.  That restriction is a deliberate departure from the terms of the 1955 legislation, where costs in excess of the amount were recoverable in some cases. 

Before reviewing the taxing of costs, I put to the opponent some matters that I think are relevant.  I did this by letter to its solicitors on 9 May 2001.  I copied this to the attorneys for the applicant and allowed time for both sides to comment.  The opponent's solicitor subsequently rang me to make a point that I will address below.

In my letter to the opponent, I set out some of the basic factors that I considered needed to be acknowledged.  I said that I believed that some of the opponent's concern about the award in the second opposition may have been given added impetus by the fact that the actual costs incurred by the parties in oppositions in general may sometimes exceed the amounts set in the scale.  However, the general quantum of the scale is something that I cannot and would not vary, as it reflects a deliberate policy decision of the TMO in conjunction with the other business units of IP Australia.  Therefore, taxing must proceed on the basis that the individual scale items are appropriate.  If they do not fully redress likely costs, then the decision to create a potential for a shortfall is deliberate.  It follows that it would not be a proper exercise of the taxing function to use the award of multiples of the scale amount to attempt to redress any possible shortfall.

My review of the taxing must also acknowledge that, for their own good reasons, the parties conducted the two matters in tandem.  There will probably be economies for both parties in doing so.

My review must, those things being so, attempt to address any costs that:

• were incurred and would not be recovered if the two oppositions were taxed as one; and

• should be recoverable.

The keystone of the opponent's argument is, I think, set out in point three of a letter from its solicitors.  They argue that there is no authority for the Taxing Officer to depart from the schedule set out in the regulations.  The letter says, "The award of costs is itself discretionary, but if costs are awarded the amounts to be taxed are fixed - regulation 21.13". 

The regulation says, so far as is relevant:

(2) For the purposes of section 221 of the Act (which deals with costs), costs may only be awarded in respect of a matter set out in Schedule 8.

(3)   The amount of costs must be taxed, allowed and certified by a trade marks officer appointed by the Registrar for that purpose, in accordance with:

(a)in the case of an item in Part 1 of Schedule 8—the amount specified in that item; or

(b)in the case a matter set out in a clause in Part 2 of Schedule 8—that clause.

(4)   The Registrar may review the taxation of costs by a trade marks officer.

This might suggest that the taxing of costs is simply a matter of mathematics, with no scope for the exercise of discretion.  I believe this is an erroneous argument, one that I have dealt with before, in Joosse v Great White Shark Enterprises Inc, 49 IPR 193, albeit only in relation to preparation of cases for hearing. In relation to that issue, I said:

Obviously, the award of costs is discretionary.  The registrar may award them or - depending on the merits - he or she may not.  I think that at least some of that discretion carries over into the subsequent review, post taxing, of the amounts.  There would be little point in making the taxing subject to review otherwise.  Equally clearly, however, in conducting this review of taxing, I do not have the discretion to reverse the award, or to tax all the amounts at zero.  The hearing officer, Mr Forno, has determined that it is reasonable to expect the opponent to pay the applicant’s costs, and it is now up to me to carry this through in detail.  Within that limit, I have the authority, under reg 21.13 (4), to assess reasonable amounts where, in my opinion, there are factors that the scale cannot deal with appropriately.

Taking the above principles as a starting point, I must disagree with Mr Doyle’s argument that I have neither discretion nor warrant to interfere with the taxing of these costs.  Where the facts of the case warrant it, the discretion exists.

I noted that, in the table above, the Taxing Officer has in fact correctly applied the 20 % formula, so far as its extent has been laid down in TMO decisions to date.  This practice is as set out in Latrobe Brewing Co v Simmons and Joosse, both supra.  Latrobe deals entirely with costs incurred by an applicant in receiving and perusing documents and materials prepared by the opponent.  In Latrobe, this consisted of notices of opposition to the registration of one trade mark in three separate classes.  (Under the old legislation, this could be done only by way of separate applications, one per class.)  Also involved was the opponent's evidence in relation to all three oppositions.  The decision results in what the opponent has called "more generous costs in multiple oppositions".  I directed, in that case, that the applicant's costs for receiving identical notices of opposition in relation to the three applications all be taxed at the full scale item.  I also directed that the applicant's costs for receiving the evidence in support in relation to the second and third cases be taxed at only 20% of the item in question.  However, it is not applicable to other costs.  I believe that I made this clear in the subsequent Joosse case.  I noted that the 20% factor set in Latrobe was, at least in part, an acknowledgement of the administrative costs in maintaining an opposition on foot. 

Not all costs in conducting an opposition are what I have just referred to as "the administrative costs of maintaining an opposition on foot".  In Joosse at p 196, I said:

... each opposition requires time-clocks to be set up and monitored.  This is so that the steps set out in the regulations are followed by each side and that its adversary knows they have been complied with.  In the lack of any external evidence, I can only compare these costs to the work done, in the Trade Marks Office, to monitor the time-clocks and procedures. Such administrative costs are not specifically mentioned in the scale, but I presume that the step-by-step elements in the scale carry, as part of each item, some notion that each step is underpinned by such processes.

The present case adds another dimension to that situation.  In preparing a case for a hearing, the administrative component that I referred to in Latrobe v Simmons is not significant.  Administration, of course, underpins the opposition process.  But it does not, from what I can see from my own perspective, play a big part in the hearing, or in the preparation for this.  The monitoring is done, the time-clocks all complied with - or not - and the documents themselves are all pieces of history.  The major component in the preparation of cases for a hearing is the bringing together of established law with factual evidence: in short, the analytical exercise of preparing an argument.

Common sense suggests that whatever the administrative costs in recording, sorting and analysing evidence that is served, the serving party will be likely to have incurred a significantly higher administrative burden than the recipient.  I believe that the administrative component for the receipt of the evidence is also likely to be less variable, as between different oppositions, than any of the components involved in locating, surveying, drafting and refining the evidence.  This suggests that the latter costs, those in preparing and serving evidence, require, when compared to the costs in receiving and perusing the prepared evidence, a greater amount of assessment on a case by case basis. 

It should, in principle, be for the Hearing Officer to determine, as part of the decision of the opposition, the extent to which a second opposition was travelling on the coat-tails of a body of evidence reasonably necessary for the first matter.  The present matters, however, were settled without a hearing.  This makes it somewhat difficult to see how the evidence would ultimately have been used.  Perhaps more importantly, I am not privy to the way it was used to support whatever background discussions there were between the parties. 

While the exhibits have been returned to the opponent, I have inspected the declarations themselves.  It seems to me that the declarations were prepared with a general theme in mind - to illustrate that colours per se are not good trade marks for construction boards and wall-linings.  There is nothing that would prevent any of the declarations being used to illustrate and support this principle in relation to either trade mark application.  I note that two declarants have been somewhat more explicit about the industry-wide role of blue and had less to say about the colour pink.  However, the opponent saw fit to use those declarations for opposing both applications, so presumably it saw them as relevant, to some degree, to both. 

There is simply no basis for me to say that any one part of the evidence needed to be prepared, or was prepared, simply because there were two trade marks to oppose.  It is probably fairer to say that, having decided on the scope of its evidence, the opponent was lucky enough to be able to use it twice.  I therefore have to assume, in the lack of any detailed explanation of how the evidence was prepared, that the only additional costs incurred in relying on that evidence for the second opposition were administrative.  I am therefore not inclined to put much weight on the opponent's argument that the scale amount should be awarded twice - once for each opposed application. 

The opponent has drawn support from the fact that the applicant, in filing at the TMO evidence of use of its marks to gain acceptance, initially drew this evidence up as separate declarations.  However, such evidence is, of necessity, generally specific to the trade mark in question in each case.  Once registration was opposed, however, the applicant's evidence in answer to the opposition was prepared to address both trade marks, in that a single body of declarations addressed the common issues raised by the oppositions and by the evidence in support.  Therefore, I think the Taxing Officer was correct in applying the Latrobe factor to the opponent's costs in the receipt and perusal of that evidence in answer.

Finally, I note the opponent's reference to a factor that can, in principle, affect the apportioning of costs as a discretionary exercise.  The opponent asserts that the applicant was at fault because it did not withdraw its application until the evidence in reply was served.  Implicitly, therefore, the opponent invites me to exercise my discretion against the applicant when it comes to apportioning costs.  However, that is not appropriate here.  It is equally arguable that the opponent could have served the final declarations, the material in reply, sooner.  In general, where the evidence was served in two stages, the decision to do so should not, in my opinion, be penalised at the taxation stage for any but obvious cases of abuse of process.  In this instance, I see no reason to attribute blame to either party in particular.  The fact that it was open to the opponent to do differently is not sufficient to deprive it of its subsequent costs.  There may well be good reason for its electing, for its own tactical reasons, to launch its evidence as two salvoes rather than one.  But if that be so, there is nothing to criticise the applicant for in any perceived slowness in conceding defeat.  In summary, no blame is attributable to either party.

I have already said that it appears to me that no extra costs were incurred in actually preparing the evidence, even though it was to be relied on in two oppositions instead of one.  That being so, the administrative component, the costs in using the evidence in relation to a second co-pending trade mark opposition, is all that the opponent is entitled to receive for the second case. 

The 20% Latrobe factor remains the TMO's best approximation of the administrative aspect of the costs of an opposition that arise from the receipt and perusal of evidence.  I suggested, when I first wrote to the parties, that the purely administrative costs for using the evidence for the second opposition should be apportioned using, as a base, the scale item for receiving and perusing the evidence in question.  I proposed that this apply, irrespective of whether the evidence in the second case was being received or served.

The opponent's solicitor telephoned me about this.  He argued that, in this case, the opponent had done a significant amount of work in preparing the evidence.  If I was minded, despite the opponent's submissions, to apply an apportioning factor to the second case, he argued that it should be applied to the scale item for preparing, not receiving and perusing, the evidence. 

This has some merit.  The cost item for receiving and perusing evidence is a good starting point for apportioning any multiple receipts and perusals. I have to agree, however, that there is no immediately obvious reason to assume that the scale item for receiving and perusing evidence is a good starting point for assessing any part of the costs of a party in the administrative component of preparing and serving that evidence. 

It is possible to look at the existing cost items for signs or portents that might guide me.  However, I doubt that any unambiguously correct answer can arise from such analysis.  In the lack of any comment from the trade mark applicant in this case, I think I should accede to the suggestion of the opponent's solicitor. 

I accept, in so doing, that I may be resetting the balance imperfectly, simply because of a lack of hard information.  Even so, I think it must be an improvement on our present practice.  If further improvement is possible, it must wait for the future, when additional information may be made available to the TMO.  In the meanwhile, I think I should set a formula that is, as well as being fairer than at present, also as simple as possible.  My decision is therefore that the scale items will, for the second co-pending opposition using the same evidence, be taxed at:

·For the serving party: 20% of the figure for preparing and serving the relevant evidence in question,

·For the receiving party: As per Latrobe, 20% of the relevant figure for receiving and perusing the evidence in question.

I anticipate that, where there are no reasons for any other decision by the Taxing Officer, or the Registrar of Trade Marks in reviewing the taxing - and such there well may be - this formula will be applied forthwith to all comparable cases.  For the convenience of readers of this decision, I set out, as an attachment, the resultant practice.

Terry Williams
Hearing Officer
23 August 2001.

Taxing of costs in multiple oppositions, that is,

co-pending opposition matters relying on same evidence

As revised in August 2001	First case	Second and subsequent cases
Opponent: Prepare and file notice of opposition, incl TMO fees	At scale	At scale
Applicant: Receive and peruse Notice of Opposition	At scale	At scale
Opponent: Serving evidence in support	At scale	20% of scale item, per application
Applicant: Receiving and perusing evidence in support	At scale	20% of scale item, per application
Applicant:  serving evidence in answer	At scale	20% of scale item, per application
Opponent: Receiving and perusing evidence in answer	At scale	20% of scale item, per application
Opponent: Serving evidence in reply	At scale	20% of scale item, per application
Applicant: Receiving and perusing evidence in reply	At scale	20% of scale item, per application
Preparing for hearing	At scale	Nil "where matters can be decided as one"[1]
Hearing fee(s)	At scale	Only if TMO requires multiple fees
Hearing time, travel expenses etc	At scale	Nil
Taxing fee	At scale	Nil - fee not charged for subsequent cases

[1] See Joosse v Great White Shark Enterprises Inc (2001) 49 IPR 193