Kraft General Foods Inc v Gaines Pet Foods Corporation

[1995] FCA 531

CATCHWORDS

TRADE MARKS - application for removal of mark from the Register - whether mark should be expunged for non-use - standing - whether applicant "person aggrieved" - whether use or intended use of trade mark - Trade Marks Act 1955 (Cth) s23.

Trade Marks Act 1955 (Cth): ss23, 33, 40

NSW Dairy Corp v Murray Goulburn Co-Operative (1989) 14 IPR; applied.

Australian Institute of Marine and Power Engineers v Secretary, Department of Transport (1986) 13 FCR 134; applied.

Re Powell's Trademark (1893) 11 RPC 4; approved.

Farley (Aust) Pty Ltd v JR Alexander & Sons (Qld) Pty Ltd (1946) 75 CLR 487; referred to.

Shell Company of Australia Ltd v Rohm & Haas Co (1949) 78 CLR 601; referred to.

Continental Liqueurs Pty Ltd v GF Heublein & Bro Inc (1960) 103 CLR 422; referred to.

KRAFT GENERAL FOODS INC v GAINES PET FOODS CORPORATION

No NG 737 of 1993

CORAM:    HILL J

PLACE:    SYDNEY

DATED:    28 JULY 1995

IN THE FEDERAL COURT OF AUSTRALIA     )

)

NEW SOUTH WALES DISTRICT REGISTRY     )    No NG 737 OF 1993

)

GENERAL DIVISION   )

BETWEEN:      KRAFT GENERAL FOODS INC.

Applicant

AND:      GAINES PET FOODS CORPORATION

Respondent

CORAM:    HILL J

PLACE:    SYDNEY

DATED:    28 JULY 1995

MINUTES OF ORDER

THE COURT ORDERS THAT:

(1)  The application be dismissed.

(2)  The applicant pay the respondent's costs of the hearing and half the respondent's other cost.

Note:     Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA     )

)

NEW SOUTH WALES DISTRICT REGISTRY     )    No NG 737 OF 1993

)

GENERAL DIVISION   )

BETWEEN:      KRAFT GENERAL FOODS INC.

Applicant

AND:      GAINES PET FOODS CORPORATION

Respondent

CORAM:    HILL J

PLACE:    SYDNEY

DATED:    <>

REASONS FOR JUDGMENT

Kraft General Foods Inc ("Kraft"), the applicant, appeals, pursuant to s23(7) of the Trade Marks Act 1955 ("the Act") from a decision of the Registrar of Trade Marks declining to order that three trademarks of the respondent Gaines Pet Foods Corporation ("Gaines") be removed from the Register in respect of the goods in respect of which those marks were registered.

The facts giving rise to the present appeal can be shortly stated.  They are not in dispute.  The evidence of Kraft consisted of an affidavit sworn by its solicitor exhibiting certain documentary material.  No affidavit or evidence at all was led on behalf of Gaines although it tendered by consent certain other documents.

On 22 June 1989 Kraft applied to the Registrar of Trademarks to register the trademark "Gaines" in Part A of the

Register in respect of all goods in Class 31 of Schedule 4, including pet foods.  A statement of user was not lodged at the time of application but followed in a letter addressed to the Registrar dated 11 August 1989.  That statement was by a Mr Nevins, said to be of General Foods Corporation in the United States of America, and declared as follow:

"2.       That General Foods Corporation is at present using or intends in the near future to use its trade mark in relation to the goods in respect of which registration is sought."

The statement showed that Mr Nevins was Assistant Secretary.

Before that application was dealt with and indeed on the day after it was lodged, Kraft applied to the Registrar of Trademarks pursuant to s23(1) of the Act that trademarks registered numbers A171085, B197204 and B198943 registered in the name of Gaines Foods Inc be removed from the Register. The three trademarks in question were in respect of Gaines-Rally, Gaines-Burgers and the words Gaines-Burgers in conjunction with a device being a representation of a dog.

On 30 December 1989 General Foods Corporation merged with and became Kraft General Foods Inc, the applicant.

On 4 January 1990 Gaines was entered on the Register as the proprietor of the three marks.  Thereafter Gaines filed a notice of opposition to the application brought by Kraft and the matter proceeded to hearing and decision in 1993.  That decision was unfavourable to Kraft.  In the result Kraft appealed to this Court.

There was evidence before me of a chain of title of the trademarks which counsel for Gaines submitted led to the result that the respondents were the owners of the trademark.  This chain of title begins with a document between General Foods Corporation of the United States of America (ie the successor corporation of Kraft) and a company called Gaines Foods Inc where by the applicant assigned various trademarks including the marks in suit to Gaines Foods Inc.  The next document is a certified copy of what is referred to as a "certificate of ownership" issued by the State of Delaware in the United States of America.  The certificate is a certificate issued by Anderson Clayton & Co and is headed "Merging Foods Resources, Inc. with and into Anderson, Clayton & Co".  It recites that Anderson, Clayton & Co owns one hundred percent of Foods Resources Inc and that it had determined to merge Food Resources Inc and certain of that company's subsidiaries with and into Anderson Clayton & Co.  There is a recital which identified among other companies Gaines Foods Inc as being a subsidiary to be so merged.  The document then certifies to a resolution that the mergers and liquidations of which the certificate of ownership speaks be accomplished on or before a certain date, the merge to be effective upon filing of the certificates of ownership and merger with the Secretary of the State of Delaware.

The next document is a certification by the Secretary of the State of Delaware of a certificate of merger of Anderson Clayton & Co with and into Gaines Pet Foods Corporation.  The document makes no reference to Gaines Food Inc.

It will be observed that what is missing to demonstrate that the respondent acquired ownership of the trademarks through this chain of title is some evidence that the plans of liquidation and merger so far as they involved Gaines Foods Inc were in fact carried out.  I should say that there was no reason to supposed that they were not and the Register of Trademarks showed an entry registering an assignment of the marks from Gaines Foods Inc to Gaines Pet Foods Corporation.

Before the Registrar and before me it was submitted on behalf of Gaines that Kraft had no standing to make an application under s23(1) of the Act because it was not "a person aggrieved". This submission was elaborated by reference to ss33 and 44 of the Act. Gaines cross-claimed, raising questions involving implied terms, misrepresentation, s52 of the Trade Practices Act 1974 (Cth) and estoppel. However, it did not proceed with its cross-claim and at the hearing before the parties agreed that the cross-claim should be dismissed and that an order of costs should be made against the cross-claimant.

Section 23(1) of the Act confines the right to apply to the Registrar for an order removing trademarks from the Register, to applications made "by a person aggrieved".  The words "person aggrieved" are words not unique to trademark appeals.  They are to be found in various statutes where the purpose is to identify those persons who are to be afforded standing:  NSW Dairy Corp v Murray Goulburn Co-Operative Co (1989) 14 IPR 75 at 76-7; Australian Institute of marine and Power Engineers v Secretary, Department of Transport (1986) 13 FCR 124 at 131. Clearly one consequence at least of the use of the words "persons aggrieved" is that they will exclude persons whose interest is no grater than that of an officious bystander.  So much was made clear by the House of Lords in Re Powell's Trademark (1893) 11 RPC 4 in a passage which has been quoted from time to time with approval by the High Court in cases such as Farley (Aust) Pty Ltd v JR Alexander and Sons (Qld) Pty Ltd (1946) 75 CLR 487 at 491-2; Shell Company of Australia Limited v Rohm & Haas Co (1949) 78 CLR 601 at 606-7, 616; Continental Liqueurs Pty Ltd v GF Heublein & Bro Inc (1960) 103 CLR 422 at 427-8; (1962) 109 CLR 153 at 158.

Lord Hershall in Re Powell's Trademark said (at 7):

"My Lords, I should be very unwilling unduly to limit the construction to be placed upon these words; because although they were no doubt inserted to prevent officious interference by those who had no interest at all in the Register being correct, and to exclude a mere common informer, it is undoubtedly of public interest that they should not be unduly limited, inasmuch as it is a public mischief that there should remain upon the Register a Mark which ought not to be there, and by which many persons may be affected, who, nevertheless, would not be willing to enter upon the risk and expense of litigation."

Because matters of standing inevitably involve issues of fact, the cases which have considered whether in particular circumstances an applicant under s23(1) is a person aggrieved ultimately turn on their particular facts. Care must be taken to resist turning conclusions of fact into principles of law. Thus for example if the applicant to expunge a trademark from the Register is a person engaged in the same class of business as the owner of the mark, that person will have little trouble in satisfying the Registrar, or on appeal the Court, that he or she is a person aggrieved. But it does not follow from that there is necessarily a requirement that to be a person aggrieved the applicant for expungement must engage in the same class of business as the registered proprietor.

I was taken by the counsel for the respondent to a number of English authorities on the corresponding provision in support of a proposition that an applicant for expungement

would only be a person aggrieved if the person had, prior to making the application for expungement, exploited the mark in Australia in respect of the relevant goods or was a rival trader.  It was submitted that it was insufficient to qualify an applicant for expungement as a person aggrieved that person had merely applied for registration of the same mark.

Reference was made to "In re The Apollinaris Company's Trade-Marks (1891) 1 ChD 1; Lever Bros, Port Sunlight Ltd v Sunniwite Products Ltd (1949) 66 RPC 84 and Wills Fargo Trade Mark (1977) RPC 503. While these cases provide valuable analogies they are merely examples of factual determinations reached.

The view I take can be shortly stated. Where an applicant for a trademark in fact uses that trademark despite the registration of the trademark of another or intends to use that mark in business the applicant will be a person aggrieved within the meaning of s23(1). If, however, a person is merely an applicant for a trademark but neither uses that mark nor intends to use it in the future, the mere fact that the person is an applicant would not result in the conclusion that the person was a person aggrieved. It follows that the submission made on behalf of Kraft that an applicant for a trademark will always be a person aggrieved could not be accepted in such wide terms. It is not the application per se for registration of a new mark which makes the applicant the person aggrieved in an expungement applicant, it is the fact that the applicant must, to obtain registration of the mark, either use it or propose to use it.  So much is clear from the definition of "trademark" is s6(1) of the Act and the reference in that definition to "used or proposed to be used".

For Gaines it is submitted that Kraft has not adduced sufficient evidence to satisfy the burden of proving either that it has used the mark at the relevant time or that it proposed or intended to use it in the future.  The only evidence of proposed or intended use is to be found in the statement of user of Mr Nevins, to which reference has already been made.

It must be accepted that the onus of showing that it is a person aggrieved lies upon Kraft.  The relevant time at which the onus must be satisfied is the date of the application of expungement which is the present case was 23 June 1989.  No evidence on oath either or actual or proposed use has been provided, no witness put forward who could be cross-examined on the matter.  it was submitted by counsel for Gaines that I should, in the circumstances, draw an adverse inference from the fact that the evidence is silent on the matter.

I should say that during the course of the hearing I indicated to counsel for Kraft that if his client was taken by

surprise as the submission that the evidence before me was insufficient to satisfy the burden of proof of showing that his client either used or proposed to use the mark, I would be prepared to entertain an application for adjournment.  However, counsel for Kraft confirmed that he was not taken by surprise and was perfectly content with the evidence as it stood.

To the lack of evidence on the part of Kraft should be added the fact that the evidence disclosed, at the very least, that the mark had originally been owned by Kraft but had been assigned by it to a third party.  I do not think that it is necessary for me to determine whether the evidence suffices to allow me to conclude on the balance of probabilities that, in due course, the chain of title brought the ownership of the trademark to the hands of the respondent.  The point is that at the very least it is known that the applicant had the trademark initially and assigned it.

It is interesting to note that when the parties were directed at an early stage to set out in pleadings their cases, Kraft alleged in the pleading filed by it that it carried on business, inter alia, as a supplier of foodstuffs for animals and it wished to promote and supply its products using the trademark "Gaines".  That allegation was not admitted by Gaines and subsequent thereto no evidence was adduced.  In all circumstances I am not satisfied, on the balance of probabilities in the present case, that Kraft either used the mark or proposed or intended to use it.  From this it would follow and I would conclude, there being no other evidence other than the mere making of an application, that Kraft was not a person aggrieved.

I do not need, in the light of this conclusion, to do more than note the submissions put by counsel for Kraft raising ss33 and 40 of the Act respectively. The submission under s33 was that as at the date of the application for expungement the application for the trademark Gaines made by Kraft would, of necessity, have been incapable of success for the simple reason that as at that date Gaines was the registered proprietor of the three marks in suit. With respect I do not think this is a relevant matter. Had Kraft demonstrated that it proposed in the future to use the mark in respect of the goods the subject of its application, it would clearly have been "a person aggrieved", notwithstanding that any application it made to register its own mark could not have been granted immediately.  Perhaps it would have been necessary for a new application to have been lodged once the application for expungement had been dealt with, but that is a matter of form not substance.

The submission under s40, so far as I understood it, was that the applicant must demonstrate, before it can be accepted as a person aggrieved, that it is the rightful proprietor of a trademark within the meaning of s40. Specifically, it was said that by reference to comments made by Dixon J in the Shell Co case (supra) at 624, that authorship of the mark must be demonstrated as well as intention to use and the act of applying for registration.  In reply authorship was said to have been proved by the fact that Kraft was the original owner of the mark prior to the assignment.

It is unnecessary for me to comment further on this submission.

I would dismiss the application. It thus becomes necessary to deal with the question of costs. Counsel for Kraft submitted that even if his client were to fail in the application I should make an order that the respondent pay the applicant's costs of certain issues raised in the pleading but not in fact proceeded with. These issues, like the cross-claim, raised matters such as implied terms, misrepresentation and breaches of s52 of the Trade Practices Act.  The ordinary rule is that the party who loses will pay the costs of the winning party and this rule will follow even if there are a number of issues some of which the winning party has either not raised or has lost.  Of course, awards for costs are in the discretion of the Court and it is clear that in exercising that discretion the Court must act judicially.  However, the present is a case where the issues actually fought were simple and required a minimum of evidence.  Indeed the hearing of the case and argument was over in half a day.  This may be compared with the estimates of the party when all issues were thought to be involved and it was estimated the hearing would take two days.  Although the evidence filed in respect of the issues nominated by counsel for Kraft was largely documentary, it was undoubtedly complicated and it seems to me that a great deal of time was wasted by issues being raised by the respondents in their defence and evidence but not ultimately being argued.  To accommodate this but to avoid the complexity of an order for costs being given in favour of both parties, it seems to me that justice can be achieved by ordering the applicants to pay half of the costs of the respondents other than the costs of the hearing when the applicant would be responsible for paying the whole of the respondent's cost.

I certify that this and the

preceding eleven (11) pages

are a true copy of the Reasons

for Judgment herein of his Honour

Justice Hill.

Associate:

Date:     28 July 1995

Counsel and Solicitors       D Yates with R Alkadamani

for Applicant:               instructed by Sprusons

Counsel and Solicitors       B Caine instructed by

for Respondent:              Davies Ryan DeBoos

Date of Hearing:             12 July 1995

Date Judgment Delivered:          28 July 1995