Karoun Dairies S.A.L. v Karoun Dairies Inc

[2013] ATMO 28

TRADE MARKS ACT 1995

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

Re:Opposition by Karoun Dairies S.A.L. to application under section 92 of the Act by Karoun Dairies Inc. to remove trade mark number 1000910(29) - KAROUN - in the name of Karoun Dairies S.A.L.

Delegate:	Debrett Lyons
Representation:	Opponent: Khajaque Kortian of Spruson & Ferguson, Patent & Trade Mark Attorneys. Applicant:  Michael Hall of Counsel instructed by Clayton Utz, Solicitors.
Decision:	2013 ATMO 28 Application under section 92(4)(b) of the Act – no use in the 3-year period and no obstacles to use found. Trade mark to be removed from the Register. Costs ordered against Opponent

Outline facts

1. On 17 June 2009 Karoun Dairies Inc. (‘the Applicant’) filed an application under section 92 of the Trade Marks Act 1995 (‘the Act’) for removal from the register of the following registered trade mark:

Trade Mark Registration No:   1000910

Trade Mark:   KAROUN            (‘the Trade Mark’)

Specification of Goods:              Class 29 “Milk, powdered milk, flavored jellied milk and buttermilk; milk products, namely: milk desserts, yoghurt, drinking yoghurt, yoghurt based drinks and food stuffs, laban, drinking laban and labneh, creams, dessert creams, fresh cream, butter, cheese pastes, cheese, matured cheese, matured cheese with mould, fresh cheese and cheese in brine, cream cheese, cheese made in perforated containers, fresh cheese sold as a paste or a liquid, natural or flavored; beverages made mainly from milk or milk products, beverages made mainly from milk ferments, milk beverages containing fruit; fermented natural or flavored milk products”

(‘the Goods’)

1. The removal application was made in relation to all the Goods of the registration.  The application was advertised for opposition purposes in the Australian Official Journal of Trade Marks on 16 July 2009.  On 16 October 2009 a Notice of Opposition to the removal application was filed by the owner of the registration, Karoun Dairies S.A.L. (‘the Opponent’).

2. The parties later filed and served the following evidence:

Evidence in Support

• Statutory declaration of Ara Baghdassarian made on 16 July 2010

Evidence in Answer

• Statutory declaration of Brett Chapman Doyle made on 12 April 2011

• Statutory declaration of Breton Bocchieri made on 19 July 2011

• Statutory declaration of Breton Bocchieri made on 14 September 2011

Evidence in Reply

• Statutory declaration of Khajaque Kortian made on 20 March 2012

• Statutory Declaration of Wajeh Demirjian made on 19 April 2012

• Statutory declaration of Khajaque Kortian made on 20 April 2012 

1. As a delegate of the Registrar of Trade Marks, I heard the opposition to the application for removal in Sydney on 13 February 2013.  The Opponent was represented by Khajaque Kortian of Spruson & Ferguson, Patent & Trade Mark Attorneys.  The Applicant was represented by Michael Hall of Counsel instructed by Clayton Utz, Solicitors.  In attendance was Brett Doyle, solicitor, from that same firm.

Background to the dispute

1. A family business producing dairy products was established in Lebanon in 1931 under the trading name “Karoun Dairies”.

2. The founder of that business, Ohannes Baghdassarian (‘Ohannes’), had two sons Ara Baghdassarian (‘Ara’) and Antranik Baghdassarian (‘Anto’), whose current businesses are the protagonists to this dispute and the parties in this opposition.

3. In 1972 Karoun Dairies was incorporated as Karoun Dairies S.A.L., the Opponent.

4. From 1972 the Opponent sold KAROUN marked dairy products in Lebanon and other countries not including Australia until 2006 when there was political instability in Lebanon at which time production and business activity ceased.

5. In 1990, after the death of Ohannes, Anto sold his interest in the Opponent business to Ara and emigrated to the United States where, in 1992, he established the Applicant, a Californian company.

6. Ara remained in Lebanon with the Opponent company of which he is now described as Chairman and Chief Executive Officer.

7. In 2004 Ara visited Australia, it is said, with the intention of finding an Australian distributor for the Opponent’s Goods and developing sales to Lebanese expatriates who had settled in Australia.

8. That same year Ara applied for state sponsorship by the Victorian Government for a Business Owner Visa.

9. The registration the subject of the removal application was filed in May 2004 and it is said that the filing was part of that initiative.

10. In 2006 hostilities between Israel and Hezbollah forces erupted in Lebanon and in July that year Ara and his family emigrated to the United States.

11. The following year Ara formed a Canadian company with the same name as the Applicant (but not connected with the Applicant company in any way) which, to this day as I understand it, produces and sells the same type of Middle Eastern diary products as did the Opponent.

12. The Applicant has filed an Australian trade mark application for KAROUN which is prevented from registration by reason of the registration under threat from the removal application.

The legislative framework

1. The removal application has been brought under section 92(4)(b) of the Act. It provides that:

Section 92: Application for removal of trade mark from Register etc.

(4) An application under subsection (1) or (3) (non‑use application) may be made on either or both of the following grounds, and on no other grounds:

(a)…

(b)that the trade mark has remained registered for a continuous period of 3 years ending one month before the day on which the non‑use application is filed, and, at no time during that period, the person who was then the registered owner:

(i)used the trade mark in Australia; or

(ii)used the trade mark in good faith in Australia;

in relation to the goods and/or services to which the application relates.

1. Section 100(1)(c) concerns the onus of proof in such applications which are opposed and it provides that:

Section 100:  Burden on opponent to establish use of trade mark etc.

(1)In any proceedings relating to an opposed application, it is for the opponent to rebut:

…

(c)any allegation made under paragraph 92(4)(b) that the trade mark has not, at any time during the period of 3 years ending one month before the day on which the opposed application was filed, been used, or been used in good faith, by its registered owner in relation to the relevant goods and/or services.

1. Section 100(3)(c) provides that the Opponent is taken to have rebutted the section 100(1)(c) allegation that the Trade Mark has not been used in the relevant 3 year period if:

   the opponent has established that the trade mark was not used … during that period because of circumstances (whether affecting traders generally or only the registered owner of the trade mark) that were an obstacle to the use of the trade mark during that period.

2. Finally, section 101(3) reserves with the Registrar discretion whether or not to remove a trade mark even where there has been no relevant use. It provides that:

   If satisfied that it is reasonable to do so, the Registrar or the court may decide that the trade mark should not be removed from the Register even if the grounds on which the application was made have been established.

Discussion

Submissions

1. The parties’ submissions are simple. The Opponent relies (a) on alleged use in the relevant period, (b) on circumstances that were allegedly an obstacle to use within the relevant period, and (c) on the registrar’s discretion under section 101(3).

2. The Applicant’s position is that (a) the evidence filed on behalf of the Opponent does not assert use of the trade mark in Australia before, during or after the relevant period, (b) on the facts, non-use cannot be attributed to obstacles to trade within section 100(3)(c), and (c) the circumstances of non-use do not support exercise of the section 101(3) discretion in the Opponent’s favour. It petitions for complete removal of the Trade Mark.

Section 92(4)(b) use

1. Since the application for removal was filed on 17 June 2009, then for the purposes of section 92(4)(b), the relevant non-use period (‘the relevant period’) is the three years ending 17 May 2009.

2. In his declaration Ara states that his 2004 visit to Australia was for the purposes of establishing a local distributor for the Goods but that “due to having to flee the political and military turmoil in Lebanon in 2006, my ability to locate documentation relating to those potential Australian distributors has been seriously hampered.”

3. He declares that the Opponent has maintained a website at since 1999.  In spite of the documentary difficulties just described the Opponent relies on what Mr Kortian describes as “a trade enquiry for the KAROUN Dairy Products” on 11 September 2006 from Lion Nathan “through the Opponent’s websites ‘contact page’ enquiring as to whether the Opponent had a distributor of its products in Australia and if not would we export it to Australia.”

4. I note here that a single bona fide use of the Trade Mark on the Goods during the relevant period may be sufficient to rebut an application for removal.[1]  In such a case, however, the use of the Trade Mark should be established by "if not conclusive proof, at any rate, overwhelmingly convincing proof."[2]  In relation to the capacity of a single invoice to rebut the allegation of non-use, I refer to the cases of Prosimmon Golf (Aust) Pty Ltd v Dunlop Australia Ltd[3] and Geo W. McPherson Nominees Pty Ltd v Remington Arms Company, Inc.[4]  It was observed by the Hearing Officer in the latter case that:

   …there seems to be no reason why the opposition could not succeed in the present case if the opponent satisfies me that the sole invoice to the Overseas Distributors was "overwhelmingly convincing proof" contemplated by Wilberforce J in "Nodoz" case, supra.

   [1] Woolly Bull Enterprises Pty Ltd v Reynolds [2001] FCA 261; 51 IPR 149 at [17]

   [2] Nodoz Trade Mark (1962) RPC 1 [at 7] per Wilberforce J.

   [3] Prosimmon Golf (Aust) Pty Ltd v Dunlop Australia Ltd (1987) 9 IPR 425

   [4] Geo W. McPherson Nominees Pty Ltd v Remington Arms Company, Inc [1999] ATMO 101

5. The “trade enquiry” is Exhibit AB-8 to Ara’s declaration.  It does not reach that standard.  The exhibit is an email sent from the address “[email protected]”.  The body of the email simply states:

   Hi I would like to know if you have a distributor of your products in australia, and if not do you export to Australia? Thank you Carol

6. Given the level of informality of the message, the inattention to punctuation, and the fact that the sender has a Middle Eastern family name, the balance of probability would in my opinion favour a construction that the enquiry was made privately by Carol and not in a capacity as representative of that company.  I am not persuaded to regard it as a trade enquiry.  In any event, there is no mention of the Trade Mark or to the relevant products.  There is no better or further evidence surrounding the email and certainly no evidence that it resulted in the sale of any Goods.  In short, Exhibit AB-8 does not constitute use in the relevant period.

7. For the sake of completeness and giving latitude to the possibility that certain actions might be regarded as preparations to use the Trade Mark in Australia, I nonetheless find that there is no other evidence that satisfies section 92(4)(b). Establishment of a website in Lebanon does not constitute use in Australia of the Trade Mark without more evidence than what is before me. The application in 2004 for Victorian Government sponsorship of a visa to operate a dairy operation in Victoria (i) was not granted, (ii) makes no mention of the Trade Mark, and (iii) did not result in any business activity in Australia.

8. I find that there has been no use at all of the Trade Mark in the relevant period. 

Reasons for non-use

1. The Opponent argues that there were two obstacles to use of the Trade Mark in Australia during the relevant period.  In Mr Kortian’s words,

   The Opponent’s plans to set up operations and to export KAROUN Dairy Products to various other countries, and in particular, Australia were initially blocked and subsequently delayed because of circumstances outside of the Opponent’s control, in particular, the political turmoil in Lebanon during the Relevant Period, despite the best of the Opponent’s intentions.

In addition, the plans of expansion beyond Canada of the Opponent with respect to KAROUN Dairy Products have been also impeded by on-going litigation initiated by Anto in the Unites States of America which are still ongoing.  The Opponent submits that, were the operations of the Opponent in Lebanon not forced to close down essentially throughout most of the Relevant Period, and for his family to be forced to flee for their lives from a war zone and re-establish themselves and their operation in a new country, the Opponent clearly would have extensively used its Trade Mark in Australia during the Relevant Period.

1. Circumstances constituting an obstacle to the use of a trade mark within the meaning of s 100(3)(c) of the Act were considered by Drummond J in the case of Woolly Bull Enterprises Pty Ltd and Another v Reynolds [2001] FCA 261; (2001) 107 FCR 166. Drummond J stated that:

   In my opinion, circumstances within s 100(3)(c) will only exist when events arise that are capable of disrupting trade in the area of commercial activity in which goods bearing the registered owner’s mark are traded. For the statutory excuse to be made out, those circumstances must cause (in a practical business sense) non-use of the particular mark by the owner, whether or not they have an impact on any persons other than the owner of that mark who are also involved in that same area of commercial activity. There must be a causal link shown between the relevant circumstances and the mark’s non-use. This requirement arises from the fact that s 100(3)(c) creates an excuse only where the mark has not been used by the registered owner “because of” circumstances etc. It will not assist the opponent to removal to show the existence of an impediment to use of the kind referred to in s 100(3)(c) if he does not also establish that, but for that impediment, he would have used the mark.

   Circumstances that do not have a trade character but which only affect a mark owner in his personal character, such as illness afflicting the owner of the mark that is sufficiently disabling to prevent the owner using the mark, can never therefore found an answer within s 100(3)(c) to an application for removal of the mark for non-use.

2. I will deal with the US litigation firstly for the reason that it exemplifies an area of ambiguity in the Opponent’s evidence and submissions as a whole, being events, actions and intentions expressed either in submission, or by Ara himself, which can only be attributed to Ara personally or ascribed to the Canadian company he controls, but not to the Opponent.

3. So, part of the evidence in support comprises sworn evidence from the US court proceedings.  That litigation is said to be ongoing.  From the evidence I have seen, the Opponent is not party to those proceedings which are between the Applicant and Ara’s Canadian company.  At that level it is not relevant to the enquiries before me.  At another, the proceedings might be said to be indirect evidence of the time and energy they have absorbed of one of the Opponent’s officers which might have otherwise been given to the affairs of the Opponent.  In that case it falls into the same class of reasons – which includes illness and impecuniousness – which the courts have said are not sufficient to excuse non-use.  Only recently, in Austin Nichols & Company Inc and Another v Lodestar Anstalt (No 1) 2012 FCR 490, 287 ALR 221, [2012] AIPC 92-435, [2012] FCAFC 8 at 496 (FCR), Cowdroy J. found that involvement in worldwide litigation did not excuse non-use in the relevant period in that case.

4. I find that the US litigation does not excuse the non-use.

5. Turning then to the claim that the strife in Lebanon, to use the Opponent’s words, “initially blocked and subsequently delayed” use of the Trade Mark in Australia, I note that the Opponent’s evidence in reply is unresponsive to the extracts attached to Mr Doyle’s declaration from The Arab-Israeli Conflict by T. G. Fraser and a second book by the same title, The Arab-Israeli Conflict, this time authored by Kirsten E. Shultz.  Those authors describe a state of continuous war in Lebanon from 1975 to 1978.  Later hostilities in 2006 are described but these are of relatively short duration.  The Opponent’s evidence is that Ara left Lebanon for the United States in “about July 2006”.  The Applicant’s evidence is that the 2006 trouble ended on 14 August 2006.  The Applicant’s objection is that a state of war existed in Lebanon for only one month of the relevant period and there is no evidence that the non-use of the Trade Mark in Australia was causally related to those 2006 hostilities.  The Applicant submitted that “no explanation is given of why that conflict continued to prevent use for a further two years and eight months after peace was restored.”

6. Drummond J’s reasoning that section 100(3)(c) is only engaged when events arise that are capable of disrupting trade in the area of commercial activity in which goods bearing the registered owner’s mark are traded must, to my mind, contemplate the likely scenario that civil war of the kind described in the books appended to the Doyle declaration would be disruptive on a wholesale scale with no exception to the trade in the production of dairy products from a Beirut located business.

7. Additionally, the Applicant’s objection assumes a level of clairvoyance on the part of the Opponent which, after surviving the extended conflict in the 1970s, is presumed to know that the eruption in 2006 would settle by August. 

8. If the “but for” test propounded by Drummond J were turned into the question – “But for the renewed hostilities in early 2006 would Ara have emigrated?” – then it is not possible to reach a satisfactory answer.  The Applicant bore down on sworn statements made by Ara in the US litigation that he was free to return to Lebanon at any time.  So he might be, but that does not mean that he did not emigrate because of the 2006 fighting. 

9. Put another way, if the question is – “But for the hostilities in 2006 would the Opponent have made use of the Trade Mark in Australia in the relevant period?” – then a clearer answer is possible.  Until 2006 the Opponent was an exporter of goods.  There is no reason to doubt that the Opponent’s production in Lebanon ceased in 2006 when the last family member of the business left the country.  There must be some recognition of a link between the relevant circumstances and the Trade Mark’s cessation of use in foreign markets. 

10. Whether that accounts for non-use (i) in Australia (ii) up to May 2009 is another matter.  Australia has never been a market for the Opponent’s goods.  The evidence of attempts in 2004 (or afterwards) to find an Australian distributor is largely missing.  What exists is de minimus.  There has been no use in Australia since the end of the relevant period.  Before the end of the relevant period Ara had a productive business in the same Goods in Canada.  There is no evidence of renewed attempts to find an Australian distributor.  As the Applicant points out, there is no evidence of war-related damage to the Opponent’s plant and equipment in Lebanon which would explain its failure to resume business activities after the conflict subsided and “there is nothing in the evidence to suggest that what Mr Ara Baghdassarian did in Canada could not have been done in Australia.”

11. Taking those factors into account, I think that there must be something more by way of proof of a causal link between he 2006 hostilities and non-use in Australia, perhaps not that the flare-up was the sole cause for non-use, but at least proof that the civil turmoil was the single most important contributory factor in the non-use. In that respect it must be remembered that the Opponent bears the onus of proof and in this instance I do not find that it has provided the type of evidence to excuse the non-use within the meaning of the Act.

Discretion of the Registrar

1. In Pioneer Computers Australia Pty Ltd v Pioneer KK (2009) 80 IPR 38, Justice Bennett said:

   The discretion under Section 101(3) is a broad discretion to decide not to remove a trade mark from the Register or not to carve out some of the goods and services for which the mark is registered, even if Section 92 grounds have been made out, if the Court is satisfied that it is reasonable to do so. Irrespective of the lack of use of the trade marks on the removal of goods and the removal of services in the relevant period, there is a discretion not to alter the registrations.

   In Kowa Company [1998] Lander J rejected the submission that a party seeking the exercise of the discretion needs to show “exceptional circumstances”. In E&J Gallo at [198] Flick J agreed with Lander J that there is no requirement to establish exceptional circumstances. With respect, I also agree with Lander J that there is no warrant to read a requirement for exceptional circumstances into Section 101(3).

2. The Opponent’s submissions largely repeat what has been said already.  Distilled to its essential form, the submission is that it is reasonable for the registrar to exercise discretion in the Opponent’s favour because:

§  “The Opponent has a legitimate business in its KAROUN dairy products and has sold such products in a number of countries around the world including for many decades.”

§  “The Opponent has made legitimate attempts to sell its KAROUN dairy products in Australia.”

§  “The Opponent’s attempts to distribute its KAROUN dairy products in Australia were frustrated due to circumstances outside the control of the Opponent.”

§  There is no public interest in removing the trade mark from the Register … given the Opponent’s clear reputation in Australia in the niche market for such products … and the use by anyone other than the Opponent of the trade mark KAROUN in Australia associated with respect to dairy products is likely to lead to deception or confusion in the relevant market.”

1. For reasons already given, much of that cannot be given serious weight.  To the extent that the public interest remains an important factor in this assessment, there was no use of the Trade Mark in Australia at any time and to justify exercise of the discretion there must be sufficient evidence to support the proposition that the Trade Mark has a reputation in Australia such that its removal from the Register may lead to confusion.  Whilst the evidence includes a series of “stock” declarations from persons who know of the Opponent’s Goods either from their time living in or visiting Lebanon, that material does not in any serious manner prove a wider reputation in the Trade Mark in Australia.  Moreover, use of the Trade Mark by the Opponent ceased altogether in 2006.

2. The Trade Mark has not been used in Australia since it was filed in 2004 and there is no evidence of certain plans to use the mark in Australia now.  Ara remains involved in the US litigation (a reason given for non-use) and shows no inclination to return to Lebanon to rejuvenate the business operations there.

3. I can think of no reason to evoke the Registrar’s discretion.

Decision

1. Section 101 of the Act relevantly provides:

101Determination of opposed application—general

(1)Subject to subsection (3) and to section 102, if:

(a)the proceedings relating to an opposed application have not been discontinued or dismissed; and

(b)the Registrar is satisfied that the grounds on which the application was made have been established;

the Registrar may decide to remove the trade mark from the Register in respect of any or all of the goods and/or services to which the application relates.

(2)Subject to subsection (3) and to section 102, if, at the end of the proceedings relating to an opposed application, the court is satisfied that the grounds on which the application was made have been established, the court may order the Registrar to remove the trade mark from the Register in respect of any or all of the goods and/or services to which the application relates.

(3)If satisfied that it is reasonable to do so, the Registrar or the court may decide that the trade mark should not be removed from the Register even if the grounds on which the application was made have been established.

(4)Without limiting the matters the Registrar may take into account in deciding under subsection (3) not to remove a trade mark from the Register, the Registrar may take into account whether the trade mark has been used by its registered owner in respect of:

(a)similar goods or closely related services; or

(b)similar services or closely related goods;

to those to which the application relates.

1. The Opponent has failed to prove use or provide sufficient reasons for non-use. I direct that the Trade Mark be removed for all of the Goods. In the event of an appeal from this decision, I direct that the Trade Mark will not be removed until that appeal has been discontinued or dismissed, or in the event of a decision from the court, that the Trade Mark be subject to that order.

Costs

1. The Applicant has been successful in the proceedings and so I award costs against the Opponent to the extent allowed under Schedule 8 of the Trade Marks Regulations 1995.

Debrett Lyons
Hearing Officer
Trade Marks Hearings
14 May 2013