Malibu Boats West Inc v Catanese

[2000] FCA 1141

FEDERAL COURT OF AUSTRALIA

Malibu Boats West, Inc v Catanese [2000] FCA 1141

INTELLECTUAL PROPERTY – trade marks – foreign mark – refusal to register – appeal from Registrar – nature of appeal – right of Registrar to appear on appeal – evidence on appeal – proprietorship – use in Australia – use by advertisement – abandonment

Federal Court Rules  O 58 rr 3, 8
Trade Marks Act 1955 (Cth) ss 6(1), 51, 53, 115, 115A
Trade Marks Act 1995 (Cth) ss 196, 241

A & F Pears Ltd v PearsonSoap Company Ltd (1925) 37 CLR 340 followed
Agatha Diffusion SRL v Cozzolino (1998) 43 IPR 436 approved
Aston v Harlee Manufacturing Co (1960) 103 CLR 391 applied
Blackadder vGood Roads Machinery Co Inc (1926) 38 CLR 332 cited
Commissioner of Taxation v Finn (1960) 103 CLR 165 cited
Country Traders Distributors Ltd and the Companies Act, Re [1974] 2 NSWLR 135 cited
Eclipse Sleep Products Inc v The Registrar of Trade Marks (1957) 99 CLR 300 followed
Elle Trade Marks [1997] FSR 529 cited
FederalCommissioner of Taxation v Lewis Berger & Sons (Aust) Ltd (1927) 39 CLR 468 cited
Flagstaff Investments Pty Ltd v Guess ? Inc (1989) 16 IPR 311 approved
Hudson’s Trade Marks, In Re (1886) 32 ChD 311 applied
Jafferjee v Scarlett (1937) 57 CLR 115 followed
Kaiser Aluminium & Chemical Corporation vReynolds Metal Co (1969) 120 CLR 136 referred to
Moorgate Tobacco Co Ltd v Philip Morris Ltd (No 2) (1984) 156 CLR 414 applied
Mouson & Co v Boehm (1884) 26 Ch D 398 applied
Nissan Motor Co (Australia) Pty Ltd v VectorAeromotive Corporation (1993) 27 IPR 296 approved
Rael Marcus v Sabra International Pty Ltd (1995) 30 IPR 261 cited
Registered Trade Mark “Yanx”, Re; Ex parte Amalgamated Tobacco Corporation Ltd (1951) 82 CLR 199 applied
Registrar of Trade Marks v Muller (1980) 144 CLR 37 applied
Riv-OlandMarble Co (Vic) Pty Ltd v Settef SpA (1988) 19 FCR 569 considered
Settef SpA v Riv-Oland Marble Co (Vic) Pty Ltd (1987) 10 IPR 402 followed
Seven-Up Co v O T Ltd (1947) 75 CLR 203 applied
Shell Co of Australia Ltd v Rohm & Haas Co (1949) 78 CLR 601 applied
Shell Co of Australia Ltd v Esso Standard Oil (Australia) Ltd (1963) 109 CLR 407 applied
Stylesetter International CoPty Ltd v Le Sportsac Inc (1989) 17 IPR 59 approved

MALIBU BOATS WEST, INC v SAM CATANESE

VG 672 of 1997

JUDGE:         FINKELSTEIN J
DATE:           18 AUGUST 2000

PLACE:         MELBOURNE

IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY	VG 672 of 1997

On Appeal from the Registrar of Trade Marks

BETWEEN:	MALIBU BOATS WEST, INC Appellant
AND:	SAM CATANESE Respondent
JUDGE:	FINKELSTEIN J
DATE OF ORDER:	18 AUGUST 2000
WHERE MADE:	MELBOURNE

THE COURT ORDERS THAT:

1.   The appeal be allowed.

2.   The appellant’s trade mark be accepted for registration.

3.   The parties shall, within five days, file and exchange written submissions on the question of costs.

IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY	VG 672 of 1997

On appeal from the Registrar of Trade Marks

BETWEEN:	MALIBU BOATS WEST, INC Applicant
AND:	SAM CATANESE Respondent

JUDGE:	FINKELSTEIN J
DATE:	18 AUGUST 2000
PLACE:	MELBOURNE

REASONS FOR JUDGMENT

1. This is an appeal by Malibu Boats West Inc, a company incorporated in the United States of America, from a refusal by the Registrar of Trade Marks (in fact the refusal was by a delegate but it is convenient to refer to him as the Registrar) to register the word MALIBU as a trade mark under the provisions of the Trade Marks Act 1955 (Cth) (the 1955 Act) in class 12 in respect of boats, parts and accessories for boats, boat hulls and all other goods in that class. The appellant applied for registration of the mark under s 40 of the 1955 Act on 16 August 1994. The application was opposed by Mr Sam Catanese on a number of grounds, one being that he, and not the appellant, was the proprietor of the mark. Both the appellant and the opponent adduced evidence before the Registrar. On that evidence the Registrar found that neither the appellant nor the opponent was the proprietor of the mark because it had been used first in Australia by Fibremaster Pty Ltd. For this reason the application was refused.

2. The 1955 Act has been repealed and replaced by the Trade Marks Act 1995 (Cth) (the 1995 Act) which came into force on 1 January 1996. The transitional provisions of the 1995 Act have the effect, however, that the 1955 Act continues to apply in relation to both the application for registration and the appeal: see s 241 of the 1995 Act.

3. Although the application was refused the opponent was dissatisfied with the reasons for refusal, because a number of grounds of opposition were rejected by the Registrar.  As a result, the opponent also appealed the decision.  It is not necessary to consider whether a successful opponent can appeal a decision that operates in his favour, as the opponent has discontinued his appeal and does not oppose that of the appellant.

4. Notwithstanding the non-appearance of the opponent, the appellant is not the only party who appears. The Registrar has intervened for the purpose of making submissions. The Registrar is entitled to take this course. Section 115 of the 1955 Act provides that the court may grant the Registrar leave to intervene in an appeal to the court from a decision, direction or order of the Registrar. Further, O 58 r 3 of the Federal Court Rules provides that the Registrar may appear and be heard in any proceeding from a decision of the Registrar in which there is no party in opposition. The position is different under the 1995 Act. Now the Registrar may appear as of right: see s 196. Presumably he may do so even when there is a party in opposition, notwithstanding O 58 r 3.

5. The Registrar indicated that his appearance in this appeal was for the purpose of providing assistance to the Court because of the absence of opposition.  This was a proper course for the Registrar to take.  Often the Court is greatly assisted by the appearance of the Registrar in such circumstances.  It is to be expected, as has occurred in this case, that the Registrar will make submissions in a non-partisan fashion. 

6. Although the proceeding is styled an “appeal” (see s 51) it is not a proceeding in the appellate jurisdiction of the Court, but in its original jurisdiction: A & F Pears Ltd v PearsonSoap Company Ltd (1925) 37 CLR 340; Jafferjee v Scarlett (1937) 57 CLR 115; Eclipse Sleep Products Inc v The Registrar of Trade Marks (1957) 99 CLR 300. Accordingly, the appeal must be determined as if it were an original application. Thus, it is not necessary to decide whether the decision of the Registrar was correct in law. However, his decision should be taken into account, being the decision of a skilled and experienced person.

7. On what evidence does the Court determine an appeal from the Registrar? There are two possible approaches. One is that the evidence comprises all that was before the Registrar, together with any additional evidence that the parties seek to adduce. That the evidence should include all that was before the Registrar arises by implication. Originally the only provision deaing with evidence was s 114 of the 1955 Act which provided that on the hearing of an appeal the High Court (then the only court with jurisdiction) could “admit further evidence”. When the Federal Court was vested with jurisdiction to entertain appeals, it was given an identical power: s 115A. By permitting a party to adduce “further evidence”, the implication was that the material before the Registrar must necessarily be before the court hearing the appeal. This is the position that pertained in England where it was expressly provided that appeals shall be heard on the material before the Registrar although in some cases that material may be supplemented: see s 17(4) and (6) of the Trade Mark Act 1938 (UK).  These provisions are not to be found in the recent Trade Marks Act 1994 (UK) where the evidence to be led on appeal is governed by the rules of court:  see Elle Trade Marks [1997] FSR 529, 535.

8. The second possibility is to adopt the principles stated by Kitto J in Kaiser Aluminium & Chemical Corporation vReynolds Metal Co (1969) 120 CLR 136 for appeals from the Commissioner of Patents. Similar principles are also applied to appeals from the Taxation Board of Appeal and its successor the Board of Review: see FederalCommissioner of Taxation v Lewis Berger & Sons (Aust) Ltd (1927) 39 CLR 468 and Commissioner of Taxation v Finn (1960) 103 CLR 165. On that approach the position will be as follows. In the first place, the material that was before the Registrar should be brought before the court. If the parties agree, that evidence can be used on the appeal. However, if the parties are not in agreement about the use of the evidence that was before the Registrar, the evidence, or so much of it as a party wishes to adduce, must be tendered again. In addition, further evidence can be led. The appeal must then be decided on the evidence before the court even if it presents a case that is different from that which was before the Registrar.

9. It is necessary to mention O 58 r 8 which provides that material that had been before the Registrar is, with the leave of the Court and saving all just exceptions, admissible on the appeal.  That rule might be inconsistent with the 1955 Act and the 1995 Act to the extent that it denies to a party the ability to adduce evidence that was before the Registrar.  For reasons that will become clear, it is not necessary to decide which of the competing approaches is correct and whether the rule is invalid for inconsistency. 

10. In this appeal the appellant led a good deal of evidence that had not been before the Registrar, in addition to tendering some evidence that had been before him.  The appellant did not, however, seek to rely upon all of the evidence that had been before the Registrar.  Such a course might present difficulty in a case where there is no opponent, and the Registrar does not appear, because the court may be asked to make findings that it would not make if all the material that had been before the Registrar were before the court.  It is in just such a case that the court will be assisted by the intervention of the Registrar.  Here the Registrar invited the Court to have regard to all the material that had been before the Registrar and this occurred without objection. 

11. I turn now to the facts.  In May 1982, Mr Robert Alkema of Merced, California, formed a partnership with his father and an associate to build boats under the business name of “Malibu Boats”.  The partnership was dissolved in 1983 and the partners became the founding shareholders in the appellant which was incorporated in California under the name Malibu Boats, Inc.  The shareholders of the company have changed since that time and at present Mr Alkema is the majority shareholder.  The appellant changed its name to Malibu Boats West, Inc in December 1988.  Currently the appellant has annual sales in excess of US$50 million and produces just over 2700 boats per year.  The appellant sells and markets boats in the United States and in other countries, with international sales accounting for more than 10% of production.   The trade mark MALIBU for boats was first registered in the United States in 1985 by Dixie Fiberglass Products, Inc, another boat manufacturer.  The mark was purchased by the appellant in 1989.

12. In 1985, the appellant entered into an agreement with Mr Bob Engelbrecht to establish a distributorship for its boats in midwestern United States.  In September 1987, Mr Engelbrecht met Mr David Telling and Mr Peter Kent at the Chicago Boat Show.  Mr Telling was employed by an Australian boat manufacturer named Flightcraft and Mr Kent was employed by an Australian boat retailer and distributor named Regal Marine Pty Ltd.  They discussed the establishment of a distributorship for the Australian manufactured Flightcraft boats in the United States.  In the course of their meetings, the importation of Malibu branded boats into Australia was also discussed.  According to Mr Kent, Mr Alkema was a party to the discussions regarding the distribution of Malibu branded boats in Australia.  On the other hand, Mr Alkema says that he was only aware of and approved of the discussions, but did not participate in them.  However, both Mr Kent and Mr Alkema assert that the negotiations led to the formation of a distributorship agreement under the terms of which Mr Telling was to initially handle the importation of Malibu branded boats into Australia and Mr Kent was to provide the retail outlet for the boats.  Whether an agreement was concluded is not clear.  In his evidence before the Registrar, Mr Telling did not say that the negotiations led to an agreement.  Nor was this alleged by Mr Alkema in what he said to the Registrar.

13. Following the negotiations, Mr Kent returned to Australia with coloured brochures advertising Malibu branded boats.  Mr Kent proceeded to show these brochures to “dozens of people” who came to his retail premises inquiring about ski boats between 1987 and 1989, and also relied upon “word-of-mouth” publicity to advertise the boats.  Mr Telling also brought Malibu literature back to Australia with the intention of importing certain Malibu models into Australia.  Around the same time advertisements for Malibu branded boats could be found in specialist United States boating magazines circulating in Australia, such as “Water Ski”, “Powerboat” and “Spray”.

14. The first two sales of Malibu branded boats to Australian customers occurred nearly two years later in 1989.  While there are no records of these sales, Mr Kent states that “it took a long time to complete the sale to [the first purchaser]”.  The primary reason identified by Mr Kent for the difficulty in effecting sales was the stock market crash in 1987, after which it became difficult to sell any kind of ski boat in Australia.  Boats manufactured in the United States were particularly difficult to sell as exchange rate fluctuations, import costs and government duties and taxes made the boats very expensive for Australian purchasers.  By the time the first sales were made, Regal Marine Pty Ltd had taken over from Mr Telling the direct importation of the boats from the United States.

15. Regal Marine and the appellant subsequently decided that sales might be more successful if Malibu branded boats were manufactured in Australia under licence.  On 22 August 1994, the appellant granted a licence to 21st Century Boats Pty Ltd, an Australian company, to manufacture Malibu branded boats in Australia.

16. The appellant argues that its conduct in setting up a distributorship to supply Malibu branded boats in Australia in September 1987, together with the attempts to sell boats by reference to the brochures which were shown to potential customers, was sufficient use to establish its proprietorship of the trade mark MALIBU from that date.  It was alleged that this was fortified by the advertisements in the American boating publications that were in circulation in Australia.

17. The mark Malibu was also used by Fibremaster Pty Ltd.  Fibremaster was a company that designed, manufactured and sold boats.  It was incorporated in Victoria on 21 September 1988.  Mr Brian Neal and Mr Eric Tattersall were the two directors of the company.  Shortly after the incorporation of the company, Mr Neal and Mr Tattersall decided to use the name “Malibu” in relation to its boats.  They were aware of the use of the trade mark Malibu in relation to ski boats in the United States and of its use in relation to an alcoholic beverage.  Mr Neal said that “Malibu seemed to me to be a good trendy name”.  While Mr Neal said that both he and Mr Tattersall knew that the trade mark was used in relation to boats in the United States he said that they were not aware of anyone else using the mark in Australia.

18. Fibremaster proceeded to manufacture and sell two models with the Malibu name: the Malibu Skier and the Malibu Tournament.  The name Malibu was not impressed in the boat moulds, but was painted on the boats subsequent to the moulding process.  The first sale of a boat under the name Malibu occurred on 28 October 1988.

19. Mr Neal resigned as a director of Fibremaster on 31 July 1991.  At that time he and his wife held an unregistered charge over the assets of the company.  The charge secured a debt of approximately $60,000.  Despite the existence of the charge, by a written agreement dated 9 August 1991 Fibremaster agreed to sell the boat moulds for the Malibu Skier and other assets, without the consent of Mr Neal and his wife, to Mr Robert Boyle, Mr Tattersall’s father-in-law.  The agreement set out in a schedule the list of the property that was sold.  That list made no reference to a trade mark or to rights in respect of a trade mark.  Clause 5 of the agreement was in the following terms:

    “That it is agreed between the parties that the Purchaser reserves the right to use the names ‘Fibremaster Malibu Skier’ and ‘Fibremaster Playmate’ in its dealings with the goods.”

    I treat this provision as one by which Fibremaster agreed to the use by Mr Boyle of the names Malibu and Playmate, but not as an agreement by which proprietorship in the names passed to Mr Boyle. 

20. By agreement made on 1 October 1991 Mr Boyle sold some of the assets that he had purchased from Fibremaster to Stejcraft Pty Ltd, a company controlled by Mr Catanese.  Pursuant to that agreement Mr Boyle warranted that the purchaser “shall be lawfully entitled without restriction to use the business names, trademarks and/or patents referred to in clause 11”.  Clause 11 read:

    “Upon the execution hereof Boyle shall forthwith make available to the Company all Trade Marks, Business Names, Patents and any other registrable interests in the Boat Moulds.”

    No specific trade mark was identified.  Mr Catanese said that he believed that by this agreement  Stejcraft acquired the Malibu trade mark and, over the next three years, Stejcraft built and sold approximately sixty boats under the name “Malibu”.  Stejcraft also made extensive use of the Malibu mark in its advertising.  It seems to me, however, that Mr Boyle had not acquired any rights in respect of the Malibu mark and thus he could not confer on Stejcraft any rights to that mark:  nemo dat qui non habet.

21. By mid-1991, if not earlier, Fibremaster was hopelessly insolvent. It had assets to the value of approximately $20,000 and liabilities in the order of $185,000. The company was wound up on 12 September 1991 by resolution of its creditors. According to his filed reports, the liquidator realised approximately $4,500 on the sale of assets and recovered $15,000 as a preferential payment. As soon as the affairs of the company were fully wound up, the liquidator convened a meeting of the creditors and members for the purpose of laying his final accounts before that meeting and giving an explanation of those accounts: see s 509 of the Corporations Law.  The meeting was held on 12 December 1992 and the accounts were passed.  Later the company was dissolved.

22. In making my findings, I had regard to the evidence of Mr Telling that had been before the Registrar.  What occurred in relation to that evidence is unusual.  The evidence had been received in the form of a statutory declaration tendered by the appellant.  After the hearing a firm of patent attorneys, acting on behalf of Mr Telling, wrote to the Registrar advising that Mr Telling “resiles” from his declaration.  As a result, the Registrar said that in making his decision he would not take the evidence of Mr Telling into account.  

23. This course was the subject of criticism by the appellant.  Perhaps the criticism is one of the reasons that motivated the Registrar to intervene in the appeal.  In all events, although it had no bearing on the outcome of the appeal, submissions were made concerning the propriety of the Registrar’s conduct.  In particular, on the appellant’s part it was said, in conformity with well-established principles in curial proceedings, that once evidence has been led it could not be ignored otherwise than with the consent of the party who adduced that evidence and, in some cases, with the consent of both parties.

1. It should be borne in mind, however, that the proceeding before the Registrar was not a curial proceeding and many of the rules that are applicable to courts have no application.   That proceeding was an administrative proceeding before a person exercising a statutory function.  The only question that arises in relation to the rejection of evidence is whether the decision maker acted with procedural propriety or fairness having regard to the task at hand.  Generally speaking, it would not be proper or fair for an administrative decision maker to ignore relevant material while discharging his or her statutory duty.  As a result, when the Registrar is required to decide whether a mark qualifies for registration, the Registrar is not entitled to disregard evidence which bears upon that question.  In some cases, however, for one reason or another, the material that is placed before the decision maker will be so unreliable that reliance on the material could lead to a wrong decision being made.  In such a case the material can properly be disregarded in the sense that the failure to take that material into account will not be an error of law.  For example, if a person were to give evidence before a decision is taken and later informs the decision maker that the evidence was false, the decision maker would be at liberty to ignore that evidence.  I think that is what happened in this case.  It is true that the Registrar described what he did as refusing to take into account Mr Telling’s evidence.  But the Registrar had received the evidence and was later informed that Mr Telling wished to resile from that evidence.  In those circumstances, the Registrar should be understood as saying that he took into account the evidence but declined to place any weight on it.  When the conduct of the Registrar is properly understood, it does not demonstrate that he departed from proper standards of administrative decision making. 

2. What is the law that is to be applied to the facts as I have found them?  The appellant is entitled to registration of the trade mark if, at the time of its application, it was the proprietor of the mark within the meaning of the 1955 Act.  Proprietorship can arise in one of two ways.  In the case of a mark that has never been used, the proprietor is the person who is the “author” of the mark and who has applied for its registration with the intention of using the mark:  In Re Hudson’s Trade Marks (1886) 32 ChD 311, 319; Seven-Up Co v O T Ltd (1947) 75 CLR 203; Shell Co of Australia Ltd v Rohm & Haas Co (1949) 78 CLR 601, 626. Authorship in this context is not confined to the person who originated the mark. A person may be the author even if he has copied a foreign mark; he or she need only be the first person to have applied the mark in Australia: Aston v Harlee Manufacturing Co (1960) 103 CLR 391 at 400 citing Re Registered Trade Mark “Yanx”; Ex parte Amalgamated Tobacco Corporation Ltd (1951) 82 CLR 199 at 202. A person is also the proprietor of a mark if, at the time of application for registration, he or she is entitled to the exclusive use of that mark under the common law: Shell Co of Australia, at 625, 627.  At common law that is the person who first used the mark.

3. Upon the facts as outlined, the appellant claims to be the proprietor of the mark in one of two ways.  First it says that it first used the mark in Australia.  It accepts that its use of the mark in the United States and in other countries, which was quite an extensive use, is irrelevant for the purpose of establishing proprietorship in Australia:  Blackadder vGood Roads Machinery Co Inc (1926) 38 CLR 332; Seven-Up Co at 211; Riv-OlandMarble Co (Vic) Pty Ltd v Settef SpA (1988) 19 FCR 569 at 570-571. Second, it is submitted that if Fibremaster was the proprietor of the mark because of prior use then, by the time the appellant’s application for registration was made, Fibremaster had abandoned its common law title leaving the appellant as the proprietor by virtue of its application.

4. This takes me first to the nature of use that is required for a person to be regarded as the proprietor of a mark at common law. The use must be 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: see the definition of “trade mark” in s 6(1) of the 1955 Act; Moorgate Tobacco Co Ltd v Philip Morris Ltd (No 2) (1984) 156 CLR 414 at 432; Re Registered Trade Mark “Yanx” at 204-205.  While the mark must be used for the purpose of indicating a connexion in the course of trade, this does not mean that any actual trade or dealing in the goods is required.  It is sufficient if there is an offer to trade in the goods, or an existing intention to offer or supply goods bearing the trade mark.  In Moorgate Tobacco Deane J (with whom Gibbs CJ, Mason, Wilson and Dawson JJ agreed), after referring to earlier authorities, said (at 433-434):

   “The cases establish that it is not necessary that there be an actual dealing in goods bearing the trade mark before there can be a local use of the mark as a trade mark.  It may suffice that imported goods which have not actually reached Australia have been offered for sale in Australia under the mark (Re Registered Trade Mark ‘Yanx’; Ex parte Amalgamated Tobacco Corporation Ltd (1951) 82 CLR at 204-205) or that the mark has been used in an advertisement of the goods in the course of trade: Shell Co of Australia v Esso Standard Oil (Australia) Ltd (1963) 109 CLR at 422.  In such cases, however, it is possible to identify an actual trade or offer to trade in the goods bearing the mark or an existing intention to offer or supply goods bearing the mark in trade.  In the present case, there was not, at any relevant time, any actual trade or offer to trade in goods bearing the mark in Australia or any existing intention to offer or supply such goods in trade.  There was no local use of the mark as a trade mark at all; there were preliminary discussions and negotiations about whether the mark would be so used.”

   It follows that the goods themselves need not be in Australia. In Settef SpA v Riv-Oland Marble Co (Vic) Pty Ltd (1987) 10 IPR 402 at 416 McGarvie J said:

   “It is not necessary that the goods be in Australia at the time the mark is used.  It is enough if the mark is used in Australia at a time when its proprietor intends to supply goods of that mark in Australia, in the sense of being ready and willing to respond to orders for the goods.”

   To like effect is Re Registered Trade Mark “Yanx” where Williams J said (at 204-205):

   “On principle and as a matter of commonsense, however, it would seem that a mark is used as a trade mark in Australia if it is used here to designate the goods of a particular trader which are offered for sale in Australia under that mark whether the goods are actually in Australia or not.  The goods are put upon the Australian market whether they are in Australia awaiting delivery upon sale or they may have to be imported for delivery after sale.  They are in either case actually a vendible article in the Australian market …”

   And later (at 205) his Honour added:

   “Since, however, a mark need only be used in connection with the goods, it seems to me that a mark is so used if the goods that are offered for sale in Australia whether they are actually in Australia or not.”

5. While a local trader can deliberately adopt a foreign trade mark not previously used in this country, such action described by Williams J in Re Registered Trade Mark “Yanx” (at 202) as “sharp business practice”, the court is inclined to regard this practice with suspicion and to “frown on these borrowings from abroad” (Aston v Harlee Manufacturing Co at 400 per Fullagar J). This is especially so where one of the local trader’s motives in adopting the foreign mark is to prevent the foreign owner’s use in this country. The corollary is that courts will regard a small amount of use, or slight use, of a mark in Australia by an overseas proprietor as sufficient to establish proprietorship of the trade mark in Australia: Aston v Harlee Manufacturing Co at 400; Moorgate Tobacco at 432; Riv-Oland Marble Co v Settef SpA at 353-354.  As Williams J said in Seven-Up Co at 211:

   “The court frowns upon any attempt by one trader to appropriate the mark of another trader although that trader is a foreign trader and the mark has only been used by him in a foreign country.  It therefore 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.”

6. The first question is whether the appellant should succeed on the ground that it is the common law owner of the mark.  To make good its claim the appellant relies upon its conduct in setting up a distributorship in September 1987 for Malibu branded boats in Australia, Mr Kent showing the appellant’s brochures to “dozens” of people who entered his store and the advertisements in American boating magazines which were circulated in Australia before and after September 1987.

7. I have said that this issue is to be determined by the Court on the evidence before it and not on the evidence that was before the Registrar.  However, in arriving at its decision, the Court should attach “great weight” to the opinion of the Registrar:  Eclipse Sleep Products Inc v Registrar of Trade Marks at 321-322; Registrar of Trade Marks v Muller (1980) 144 CLR 37 at 41. The evidence that was before the Registrar led him to say that upon the material before him “there [was] no evidence of any trade or offer to trade in the goods in Australia by the applicant.” In relation to the magazines containing the advertisements for the appellant’s boats the Registrar said that “there is no evidence in this material of an offer to trade in the goods directed to an Australian audience”. In relation to the first finding the evidence that is before me, meagre though it may be, leads me to a different conclusion, but only because of the additional evidence. I come to the same conclusion as the Registrar on the second finding. Let me explain how I have arrived at these views.

8. While I accept the evidence of Mr Kent and Mr Alkema that negotiations took place at the Chicago Boat Show in September 1987 regarding the distribution of Malibu branded boats in Australia, I am far from satisfied that an actual distributorship agreement was reached.  Mr Kent and Mr Alkema say that an agreement was finalised.  However they provide no detail of its terms and there is no written record of the agreement, nor are there any documents to show that it was put into effect.  On the basis of this evidence, or more correctly this lack of evidence, I would not conclude that there was an appointment of an Australian distributor to sell Malibu branded boats.  I think this is what the Registrar had in mind when he said that there was no evidence of any trade or offer to trade in goods in Australia.

9. However, I have Mr Kent’s evidence that he brought with him to Australia coloured brochures advertising Malibu branded boats and that he either showed or handed brochures to “dozens of people” who entered his store between 1987 and 1989.  Mr Kent also spoke of “word of mouth” publicity that was given to Malibu branded boats over this period.  I have no reason to reject this evidence.  First, it is sworn evidence.  Second, there is nothing before me to contradict the evidence.  Third, what Mr Kent said is not inherently improbable.  Finally, the evidence is, in a practical sense, confirmed by the two sales of Malibu branded boats that occurred in 1989.  The stock market crash of 1987, together with the other economic factors referred to by Mr Kent, could well explain why it took so long to sell a Malibu branded boat.  Cumulatively, this evidence is sufficient for me to conclude that in 1987 there were offers to sell Malibu branded boats which the appellant was willing to supply.  Though minimal, the use of the mark in Australia in 1987 was, to adopt the words of McGarvie J in Settef SpA at 416, use by “its proprietor [who intended] to supply the goods of that mark in Australia, in the sense of being ready and willing to respond to orders for the goods.” It was the first use of the mark in Australia, being prior to the use of the name “Malibu” by Fibremaster in October 1988. Accordingly the appellant is entitled to be registered as the proprietor of the mark under s 53(1) of the 1955 Act.

10. Strictly it is unnecessary to consider the effect of the advertisements in the American magazines that were in circulation in Australia  But because this was the subject of some argument I should state my views.

11. A use of a mark in an advertisement of goods is a use in the course of trade, and is use in relation to the goods advertised:  Shell Co of Australia Ltd v Esso Standard Oil (Australia) Ltd (1963) 109 CLR 407 at 422; Moorgate Tobacco at 205. This is because an advertisement is a common method of indicating that certain goods are available for sale and that the vendor is soliciting orders for those goods. That is not necessarily the case when the advertisement is in a foreign publication in circulation in Australia. Many foreign magazines are available in this country covering a wide range of interests. Some of these magazines contain advertisements while others do not. Whether an advertisement is intended to solicit custom in Australia will depend upon a number of things including the nature of the magazine in which the advertisement appears, the contents of the advertisement, the type of goods that are advertised and the location of the vendor. Here I have advertisements that are clearly directed to the United States market, not to the Australian market. In the absence of further evidence, of which there is none, those advertisements do not amount to an offer to trade in the goods in Australia. This conclusion is consistent with the views of the Registrar to the effect that advertising in foreign publications will not, without more, constitute sufficient use to support a claim for proprietorship of a trade mark: see eg Flagstaff Investments Pty Ltd v Guess ? Inc (1989) 16 IPR 311; Stylesetter International CoPty Ltd v Le Sportsac Inc (1989) 17 IPR 59; Nissan Motor Co (Australia) Pty Ltd v VectorAeromotive Corporation (1993) 27 IPR 296; Agatha Diffusion SRL v Cozzolino (1998) 43 IPR 436.

12. If I am wrong about the appellant being the first user in Australia of the trade mark Malibu and rather Fibremaster was the first user, I should consider whether Fibremaster had abandoned the mark by the time the appellant applied for its registration.  Proprietorship of a trade mark “can … be lost upon some established general basis such as estoppel, acquiescence or abandonment.”:  Riv-Oland Marble Co (Vic) Pty Ltd v Settef SpA at 571 per Bowen CJ.

13. It is not suggested that proprietorship of the mark was lost before the liquidation of Fibremaster.  Thus, the appellant does not argue that by the agreement of 9 August 1991, Fibremaster had disposed of the mark to Mr Boyle.  Even if that had been the appellant’s contention, I agree with the Registrar that all the agreement did was to pass title in the goods mentioned in the schedule, and that clause 5 (set out earlier) does no more than grant a licence to Mr Boyle to use the names therein referred to, including Malibu.

14. Nor was it suggested that Fibremaster lost any right it had in the trade mark by the act of going into liquidation.  In the first place, when a company is placed in liquidation that does not bring to an end its trading activities.  On a winding up the board of directors of a company cease to hold office and their powers are assumed by the liquidator:  Re Country Traders Distributors Ltd and the Companies Act [1974] 2 NSWLR 135 at 138. But the business of the company may be allowed to continue, if the liquidator thinks this is appropriate for the purposes of the winding up. Second, even when a company ceases to trade, there may be a residual goodwill of the business which is not automatically destroyed: Rael Marcus v Sabra International Pty Ltd (1995) 30 IPR 261.

15. The principal duties of a liquidator are, speaking generally, to take possession of and protect the assets of a company, to make out the requisite list of contributories and of creditors, to realise the assets of the company and to apply the proceeds in payment of the company’s debts and liabilities and then to divide the surplus among the contributories.  In this case the appellant says that it should be inferred that the liquidator abandoned any right in relation to the trade mark because he failed to sell or to attempt to sell the mark when there was a shortfall in the liquidation. 

16. 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.

17. 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.

18. This decision was referred to with approval by Bowen CJ in Riv-Oland Marble Co(Vic) Pty Ltd v Settef SpA 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.”

19. By the time the appellant lodged its application for registration of the mark, Fibremaster had ceased to carry on business.  The boat moulds for the Malibu skier boat had been sold before liquidation and it appears that the liquidator had realised all of the realisable assets of the company.  The liquidator made no attempt to sell the trade mark.  Is that sufficient evidence from which to infer that Fibremaster had abandoned any right to the mark?  I do not believe it is.  I would not be prepared to infer such an intention unless it was shown, directly or by inference, that the liquidator knew of the existence of the mark so that it can be said that by engaging in particular conduct there was an intention to abandon the mark.

20. The liquidator was not called to give evidence so I have no direct means of ascertaining whether he knew of the existence of the trade mark.  I do have the report as to affairs of Fibremaster prepared by its former directors.  That report, which was before the Registrar, describes the assets on hand as at the date of liquidation.  The trade mark is not mentioned in that report.  There is also nothing to suggest that the liquidator was told that the trade mark was an asset which he might realise.  Nor are there any facts from which it might be concluded that the liquidator, whose duties are to discover the assets of the company, could have become aware of the trade mark in the course of his administration.  Can it be said then that the liquidator (whose acts for this purpose will be attributed to the company) intentionally abandoned the trade mark?  I do not see how a person can intentionally abandon property when that person does not know of the existence of that property.  I leave out of account a case where a person evinces an intention to abandon all of his known and unknown property.  This is not such a case and it is difficult to conceive how this could occur in the case of a company under the control of a liquidator acting in conformity with his duties. 

1. A final matter that I should mention is that on 27 February 1998 Fibremaster was reinstated by order of the Supreme Court of Victoria so that it could sell the trade mark.  An agreement to that effect was made between the liquidator (who regained his former position) and 21st Century Boats Pty Ltd.  In turn that company assigned whatever rights it received from the liquidator to the appellant.  Although these facts were proved, they concern events that occurred after the making of the application for registration of the mark.  Strictly speaking, therefore, this evidence was inadmissible because it is irrelevant.  Accordingly I will not express any opinion on the effect of these agreements.

2. I order that the appeal be allowed and that the appellant’s trade mark be accepted for registration.  The parties have asked that the matter of costs be reserved until publication of my reasons.  The parties shall have five days within which to file and exchange written submissions on the question of costs.

I certify that the preceding forty-five (45) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Finkelstein.

Associate:

Dated:             18 August 2000

Counsel for the Applicant:

Mr B J Hess

Dr L J Duncan

Solicitor for the Applicant:

Callinan Lawrie Solicitors

Counsel for the Registrar of Trade Marks:

Mr G Clarke

Solicitor for the Registrar of Trade Marks:

Australian Government Solicitor

There was no appearance on behalf of the Respondent

Date of Hearing:

13 December 1999

Date of Judgment:

18 August 2000