Mascot Valves Pvt. Ltd v Mascot IP Holdings Pty Ltd

[2019] ATMO 64

TRADE MARKS ACT 1995

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

Re:Opposition by Mascot Valves Pvt. Ltd. to registration of trade mark application 1775345 (6) – MASCOT BETTER VALUE. FASTER DELIVERY. ANY PROCESS. (Figurative) – in the name of Mascot IP Holdings Pty Ltd

Delegate:	Nicholas Smith
Representation:	Opponent: Madderns Applicant:  Maddocks
Decision:	2019 ATMO 64 Trade Marks Act 1995 (Cth) - Section 52 opposition: ss 42(b), 60 and 62A considered – none established – trade mark to proceed to registration

Background

1. This decision concerns an opposition brought by Mascot Valves Pvt. Ltd. (‘Opponent’) pursuant to s 52 of the Trade Marks Act 1995 (Cth) (‘Act’) to the registration of the trade mark which is the subject of the application detailed below in the name of Mascot IP Holdings Pty Ltd (‘Applicant’): 

Application Number:	1775345
Filing Date:	7 June 2016
Goods:	Class 6: Valves and cocks made from metal (‘Applicant’s Goods’)
Trade Mark:	(‘Trade Mark’)

1. Following the advertisement on 27 October 2016 in the Australian Official Journal of Trade Marks of the Trade Mark’s acceptance for possible registration, the Opponent filed a Notice of Intention to Oppose on 3 January 2017.  The Opponent then filed a Statement of Grounds and Particulars on 2 February 2017 (‘SGP’). The SGP raised grounds of opposition under ss 42(b), 58, 60 and 62A of the Act. The Applicant filed a Notice of Intention to Defend on 14 March 2017.

   Evidence

2. The Opponent filed Evidence in Support of its opposition (‘EIS’) on 21 June 2017.  This evidence consists of a declaration by Harish Patel, Managing Director of the Opponent, made on 20 June 2017 with Exhibits 1 to 8 (‘Patel 1’).

3. The Applicant filed Evidence in Answer (‘EIA’) on 27 September 2017.  This evidence consists of a declaration made on 1 March 2018 by Paul De Man, Managing Director of the Applicant, with Exhbits 1 to 9 (‘De Man Declaration’).

4. The Opponent filed Evidence in Reply (‘EIR’) on 4 December 2017.  This evidence consists of a declaration made on 3 December 2017 by Harish Patel with exhibits HP1 to HP6 (‘Patel 2’). 

5. Once the time allowed for filing evidence had ended the parties were given an opportunity to request a hearing or to file written submissions.  By letter issuing from IP Australia on 31 January 2018 the parties were notified that as neither party had requested a hearing the matter would be given to a delegate of the Registrar for a decision based on the written record.  The letter indicated that the parties had one month from the date of the letter to file any written submissions upon which they wished to rely.  On 28 February 2018 the Applicant filed its submissions (‘Applicant’s Submissions’).  On the same day the Opponent filed its submissions (‘Opponent’s Submissions’). 

6. I am a delegate of the Registrar of Trade Marks and I am to decide the opposition as required by s 55 of the Act which provides that, unless the proceedings are discontinued, dismissed, or have lapsed under s 54A the Registrar must, at the end, decide:

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

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

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

   In doing so I take account of the written record comprised of the materials mentioned in the preceding paragraphs.

   The Opponent

7. The Opponent is an Indian company, established in 1972 that manufactures control valves, shut-off values, desuperheaters and related products (‘Opponent’s Goods’).    

8. In summary, Patel 1 and 2 contains the following information:

   ·     The Opponent operates out of the city of Ahmedabad but maintains and extensive network.  It is the owner of the website at 2006 the Opponent has continuously used the trade mark depicted below (‘Mascot Mark’) for the Opponent’s Goods, which are clearly branded with the Mascot Mark.  The Trade Mark is registered in a large number of jurisdictions internationally.

   ·     The Opponent sells its products in Australia through a number of resellers, including, since 2003, Mascot Industrial Pty Ltd (‘Mascot Australia’), which is a related entity to the Applicant, with Paul De Man being the sole director, company secretary and shareholder of both entities.  Since 2006, all goods sold in Australia, including valves have been sold by reference to the Mascot Mark.  This includes goods sold by Mascot Australia.  The annual turnover by the Opponent in Australia since 2003 is highly significant.

   ·     The Opponent has engaged in global promotion of the Mascot Mark, through the Internet, Social media, advertisements and reviews in industry journals and participation in industry conferences.  It has a significant global reputation.

   ·     The Opponent authorised Mascot Australia to distribute its products in Australia and could use the name ‘mascot’ as a company name but did not agree to allow the Applicant to register at trade mark containing the word ‘mascot’.  The decision of the Applicant to apply for the Trade Mark was made in bad faith.

9. Patel 2 supplies internal corporate records of meetings held in 2003-2004 in which Mascot Australia (then known as Flotech) offers to sell Valflo products in Australia and change its business name to Valflo (Aust) Pty Ltd.  It also exhibits a letter from Paul De Man in which Paul De Man seeks the Opponent’s permission to change its company name to Mascot Australia.  It exhibits numerous retail invoices dated from October 2007 from the Opponent to Mascot Australia in respect of the sale of the Opponent’s Goods.  This invoice bears the Mascot Mark and identifies the Opponent as Mascot Valves Pvt. Ltd.

10. Patel 2 also states that the De Man Declaration contains a number of omissions.  In particular:

    ·     Mascot Australia is closely involved with the Opponent and has re-sold the Opponent’s products for many years, since at least 2003.

    ·     Prior to 2006 both Mascot Australia and Opponent used the name and branding VALFLO.  The decision of both parties to change their name to ‘mascot’ occurred as a result of a settlement of litigation in which both Mascot Australia and the Opponent were parties.

    ·     Following the settlement of litigation the Deponent and Mr De Man had discussions in which they agreed that they would both engage creative companies to design a new logo and then the parties would jointly decide which logo would be used going forward.

    ·     In 2007 Mascot Australia offered to purchase any IP the Opponent had in the Trade Mark MASCOT, amounting to a recognition of the rights of the Opponent in the Mascot Mark.

    ·     The Opponent sells fully assembled valves to Mascot Australia under the MASCOT Mark which are then re-sold by Mascot Australia.

    The Applicant

11. The Applicant is a company based in Australia incorporated in 2012.  It is a related entity to Mascot Australia and holds all its intellectual property. 

12. In summary, the De Man Declaration contains the following information:

    ·     Since 2003 Mascot Australia has manufactured and supplied in Australia and internationally control valves, choke valves and desuperheaters and related products.

    ·     In 2006 Mascot Australia applied for and became the registered owner of Trade Mark 1102623 for MASCOT (‘Word Mark’) (later assigned to the Applicant).  At the same time the Opponent engaged a marketing and branding company to design a logo, which became the Trade Mark.  Mascot Australia has continuously used the Trade Mark for the Goods since 2006.  Mascot Australia assigned any rights it had in the Trade Mark to the Applicant in 2016, with Mascot Australia being the exclusive licensee of the Word Mark and Trade Mark.

    ·     The statements in Patel 1 are completely false:  The Opponent has never used the Mascot Mark in Australia.  It has not sold goods into Australia using the Mascot Mark.  Mascot Australia has never been a reseller of the Opponent’s Goods.  To the extent the Opponent has sold goods in Australia, it has been as a supplier of parts to Mascot Australia.

    ·     The Opponent has supplied some valves to Mascot Australia however such equipment is supplied without branding.  On 3 occasions only Mascot Australia provided the Opponent with directions to apply the Trade Mark to the valves to be supplied to Mascot Australia, which were subsequently sold by Mascot Australia.

    ·     The Opponent first traded under the Mascot name in 2011 and did not start to use the Mascot Mark, which is similar to the Trade Mark, then.

13. The De Man Declaration provides as exhibits, copies of a document, apparently dated from 2006 showing the design of the Trade Mark, and purchases orders dated from 7 August 2006 in which Mascot Australia, using a device similar to the Trade Mark, orders products from the Opponent (then known as Valflo Private Limited).

    Grounds of Opposition, Onus and Standard of Proof

14. As indicated above in the SGP the Opponent nominated grounds of opposition under ss 42(b), 58, 60 and 62A of the Act however in its submissions indicated that it was only pursuing the ss 42(b), 60 and 62A grounds. To successfully oppose the application the Opponent needs to establish one of the nominated grounds.

15. The onus of proof in an opposition rests upon the Opponent.[1]  The relevant standard of proof is the ordinary civil standard based on the balance of probabilities.[2]  The date at which the rights of the parties are to be determined is 7 June 2016 (‘relevant date’), being the priority date of the application in Australia.[3]

    [1] Food Channel Network Pty Ltd v Television Food Network GP [2010] FCAFC 58, [32].

    [2] Following Pfizer Products Inc v Karam (2006) 70 IPR 599, [6]-[26], and Telstra Corporation Limited v Phone Directories Company Pty Ltd [2015] FCAFC 156, [133].

    [3] Southern Cross Refrigerating Co v Toowoomba Foundry Pty Ltd (1954) 91 CLR 592, 595, see also s 29(1) Trade Marks Act 1995 (Cth).

    Discussion

16. This present case presents a direct clash of evidence as to the ownership of the Trade Mark.  The Opponent’s case is that the Applicant is the reseller of the Opponent’s Goods bearing the Mascot Mark/Word Mark/Trade Mark and all use by the Applicant is authorised use of these marks.  The Applicant’s case is that the Opponent supplies parts for the Applicant’s Goods assembled by the Applicant and sold under the Mascot Mark/Word Mark/Trade Mark and to the extent the Mascot Mark/Word Mark/Trade Mark is applied, it is either by the Applicant or, on a few occasions, the Opponent under the instruction of the Applicant.

17. Having reviewed the particulars of the grounds of opposition and the Opponent’s submissions, I consider that the question of ownership is ultimately determinative of all grounds of this Opposition. If I find that the Applicant is the owner of the Trade Mark in Australia then (for the reasons set out under the s62A ground below) its application to register the Trade Mark was not in bad faith (s62A) and the s42(b) and s60 grounds are not maintainable, given all use and reputation in the Trade Mark in Australia was held by the Applicant at the Relevant Date. As such it is somewhat surprising that the Opponent, in its submissions, chose not to press the ground of opposition pursuant to s 58 of the Act or to make any submissions on the question of ownership of the Trade Mark.

18. While each of the parties has produced considerable evidence supporting its claim, neither party has produced any definitive documents that establish the nature of the relationship between them.  A distinct possibility is that the parties entered and continue to engage in a commercial relationship that each party characterises differently and that that characterisation may have changed over the 16 year relationship between the parties.  Indeed the difference between a supplier/reseller relationship can be difficult define conclusively when, as is the case here, the evidence of the relationship consists of competing testimony supported by inconclusive documents that are over 10 years old.

19. In the present case; the Applicant has applied for the Trade Mark, and as such is the presumptive owner unless the Opponent can establish prior ownership of the mark.  That evidentiary burden is on the Opponent and I find the evidence before me is not sufficient to satisfy that burden. It follows that I find the Applicant to be the owner of the Trade Mark.  I make that finding by reason of the following matters:

    -There is no definitive documentary evidence before me, such as a reseller agreement or a licence agreement to establish that the Applicant merely resells the Opponent’s products branded with the Mascot Mark/Word Mark/Trade Mark.

    -Prior to 2006 neither party was referred to as ‘Mascot’, however due to the settlement of litigation with a third party, the respective parties were required to change their names.  The Applicant provides evidence that it created the Trade Mark, being the material supplied by design company Hypercromatics to the De Man Declaration.  I find that this dated material establishes the Applicant’s authorship of the Trade Mark in 2006.  The Opponent provides a competing explanation for the creation of the Trade Mark, namely that the parties would separately design trade marks and then jointly decide on a trade mark going forward.  However even if I were satisfied that this were the case that would not satisfy me that the Opponent was the author of the Trade Mark.  In the likely event that the Applicant was the author of the Trade Mark, it is probable that the first use of the Trade Mark was by the Applicant in its own right, not under license from the Opponent.

    -The De Man Declaration asserts first use of the Trade Mark from 2006, which is supported with evidence in the form of a purchase order dated 7 August 2006 in respect of the Applicant’s Goods. I accept this to be the earliest use of the Mascot Mark and the Trade Mark (being a mark with alterations that do not substantially affect the identity of the Trade Mark[4]).  Conversely, there is no clear evidence of use by the Opponent of the Mascot Mark/Word Mark/Trade Mark prior to late 2007/early2008.  Again, were the Applicant merely a reseller of the Opponent’s Goods it is unlikely that the Applicant’s first use would predate the Opponent’s first use of the Trade Mark.

    [4] s 7 of the Act.

20. In summary I find that the evidence before me establishes, on the balance of probabilities, that the Applicant was the author of the Trade Mark in 2006 and that it was the first user of the Trade Mark in Australia in respect of the Applicant’s Goods.  I am not satisfied by the evidence before me that the Applicant was merely a reseller or licensee of the Opponent, such that any use of the Applicant of the Trade Mark was in fact authorised use of a trade mark owned by the Opponent.

    Section 60

21. Section 60 of the Act is reproduced below:

    Section 60 - Trade mark similar to trade mark that has acquired a reputation in Australia

    The registration of a trade mark in respect of particular goods or services may be opposed on the ground that:

    (a)another trade mark had, before the priority date for the registration of the first‑mentioned trade mark in respect of those goods or services, acquired a reputation in Australia; and

    (b)because of the reputation of that other trade mark, the use of the first‑mentioned trade mark would be likely to deceive or cause confusion.

22. To establish a ground of opposition under s 60 an opponent must demonstrate that as at the relevant date there was another trade mark which had acquired a reputation in Australia amongst a significant or substantial number of persons in the relevant market such that use of the trade mark would be likely to deceive or cause confusion.[5]

    [5] The present paragraph and the following paragraphs summarizing the requirements under s 60 of the Act are paraphrased from the decision of the Registrar’s Delegate in Australian Boutique Markets Pty Ltd v Rachael Zelensky and Jeffrey Zelensky [2013] ATMO 97.

23. The Opponent has particularised the ground of opposition in the SGP in the manner set out below: 

    As detailed in the Particulars for Ground 2 above, as a result of Mascot Valves’ long standing use and promotion of the ‘MASCOT’ and Mascot Valves’ ‘MASCOT & Device’ marks internationally and in Australia, Mascot Valves has established a significant reputation in the ‘MASCOT’ and Mascot Valves’ ‘MASCOT & Device’ marks in Australia.

    As a result of this reputation, any unauthorised use of the Opposed Trade Mark by the Applicant would be likely to deceive or cause confusion.

24. The Opponent does not provide any details of any significant use of the respective ‘mascot’ marks referred to in its particulars prior to the relevant date in Australia, separate from its relationship to the Applicant. For the reasons set out in paragraphs 16 to 20 above, I am satisfied that essentially all use of the Mascot Mark/Word Mark/Trade Mark in Australia prior to the relevant date identified by the Opponent in its evidence as use by the Opponent, was in fact use by the Applicant. As such the requirement under s 60(a), namely that there was another trade mark that had established a reputation in Australia before the relevant date, has not been satisfied.

25. I find that the Opponent has failed to establish the ground of opposition pursuant to s 60 of the Act.

    Section 42

26. Section 42 of the Act is reproduced below:

    42 - Trade mark scandalous or its use contrary to law

    An application for the registration of a trade mark must be rejected if:

    (a) the trade mark contains or consists of scandalous matter; or

    (b) its use would be contrary to law.

27. The Opponent pressed this ground of opposition solely on the basis that the use of the Trade Mark would be contrary to law (s 42(b)).  The onus is on the Opponent to establish that use of the Trade Mark by the Applicant would be, rather than could be, contrary to law on the balance of probabilities.[6]  The relevant time for assessing whether an application is contrary to law is at the relevant date but ‘looking forward to prospective conduct after registration’.[7]

    [6] Advantage Rent-a-Car Inc v Advantage Car Rental Pty Ltd [2001] FCA 683.

    [7] Time Warner Entertainment Co LP v Stepsam Investments Pty Ltd [2004] 59 IPR 343, 353.

28. The Opponent has particularised the ground of opposition in the SGP as follows: 

    Mascot Valves (and its predecessors in title) have used the ‘MASCOT’ mark in respect of valves since 1973 and Mascot Valves’ ‘MASCOT & Device’ mark since 2006. Mascot Valves has its headquarters in India and has a global presence, distributing its products to an extensive number of countries throughout the world.

    As detailed in the Particulars for Ground 1 above, products of Mascot Valves have been sold, marketed and promoted, and distributed in Australia under and by reference to the ‘MASCOT’ and Mascot Valves’ ‘MASCOT & Device’ marks since 2006.

    As a result of Mascot Valves’ longstanding use and promotion of the ‘MASCOT’ and Mascot Valves’ ‘MASCOT & Device’ marks internationally and in Australia, Mascot Valves has established a significant reputation in Australia. Consequently, any unauthorised use of the Opposed Trade Mark by the Applicant would constitute misleading and/or deceptive conduct in contravention of the Australian Consumer Law 2010 (Cth) and would also constitute passing off.

    Further, Mascot Valves is the owner of the copyright in Mascot Valves’ ‘MASCOT & Device’ mark and any unauthorised use of the Opposed Trade Mark by the Applicant would infringe that copyright.

29. As previously stated the Opponent has failed to establish a ground of opposition under s 60 of the Act. The test for misleading or deceptive conduct under s 18 of the Australian Consumer Law (‘ACL’) is a more stringent one than that for deception or confusion under s 60,[8] and consequently I find that the Opponent has also failed to establish that the Applicant’s use of the Trade Mark would be contrary to s 18 of the ACL.

    [8] See, e.g.: Ownit Homes Pty Ltd v Ownit Conveyancing Pty Ltd [2005] ATMO 47, [36]; Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd (1982) 149 CLR 191, 198.

1. Hill J in Re Equity Access Pty Ltd v Westpac Banking Corporation also addressed the relationship between s 52 of the TPA and passing off. His Honour considered that:

   The scope for the operation of s 52 will thus be broader than that involved in the tort of passing off so that in a case such as the present where the claim is for the protection of the reputation in a name against the use of that name by another, failure to succeed under s 52 or s 53 will invariably mean that proceedings for passing off would likewise fail.[9]

   [9] [1989] FCA 506, [40] (citations omitted).

2. Finally I note that I am not satisfied on the evidence before me that the Opponent has used “MASCOT” since 1973; the Opponent’s own evidence only shows use since 2007, and for the reasons set out above, I am not satisfied that that its use (in Australia) was use by the Opponent.  Nor does the Opponent’s evidence satisfy me that it holds any copyright in the Trade Mark, indeed the evidence of the creation of the Trade Mark supplied by the Applicant is far more persuasive.

3. For these reasons I am not satisfied that use of the Trade Mark by the Applicant would be contrary to law. Therefore, the Opponent has failed to establish the ground of opposition under s 42(b).

   Section 62A

4. Section 62A of the Act is reproduced below:

   62A Application made in bad faith

   The registration of a trade mark may be opposed on the ground that the application was made in bad faith.

5. The Explanatory Memorandum to the Trade Marks Amendment Bill 2006 provided some non-exhaustive examples of applications made in bad faith:

   ·persons who monitor new property developments, register the names of new developments as trade marks for a number of services and then threaten the property developers with trade mark infringement proceedings unless the developers licence or buy the trade marks;

   ·persons who have a history of applying for trade marks that are deliberate misspellings of other registered trade marks;

   ·persons who identify trade marks used overseas but with no Australian use as yet who then apply to register the trade marks in Australia for the express purpose of selling them to the overseas owners.

6. The case of Fry Consulting Pty Ltd v Sports Warehouse Inc (No 2) is a current leading Australian authority on s 62A. In that case, Dodds-Streeton J made the following comments, quoting from Harrison’s Trade Mark Application[10]:

   Clearly the court, when considering bad faith, cannot apply a purely subjective test, called by Lord Hutton ‘the Robin Hood test’. The dishonest person or one with low standards cannot be permitted to obtain trade mark registrations in circumstances where a person abiding by a reasonable standard would not. The registration of a trade mark is designed to enable bona fide proprietors to protect their proprietary rights without having to prove unfair trading. Registration is not provided to help those with low moral standards.

   … The words ‘bad faith’ suggest a mental state. Clearly when considering the question of whether an application to register is made in bad faith all the circumstances will be relevant. However the court must decide whether the knowledge of the applicant was such that his decision to apply for registration would be regarded as in bad faith by persons adopting proper standards.[11]

   [10] [2004] EWCA Civ 1028; [2005] FSR 10.

   [11] [2012] FCA 81, [147].

7. Her Honour continued later in the same decision:

   The formulation in United Kingdom authority of bad faith as falling short of the standards of acceptable commercial behaviour observed by reasonable and experienced persons in a particular area is, in my view, an apt touchstone. An overly literal application may, however, tend to negate the relevance attributed to the applicant’s mental state in the combined test preferred in Harrison.

   Further, in my view, mere negligence, incompetence or a lack of prudence to reasonable and experienced standards would not, in themselves, suffice, as the concept of bad faith imports conduct which, irrespective of the form it takes, is of an unscrupulous, underhand or unconscientious character.[12]

   [12] Ibid [165]-[166].

8. The Opponent has particularised this ground of opposition in the SGP as follows:

   Prior to the filing date of the Opposed Trade Mark, the Applicant had been, and continues to be, an authorised distributor of Mascot Valves’ products, namely valves, in Australia and is an authorised user of Mascot Valves’ ‘MASCOT & Device’ mark in Australia.

   At the time of filing the Opposed Trade Mark, the Applicant knew, or ought to have known, that Mascot Valves was the owner of the Opposed Trade Mark and that Mascot Valves objected to registration by the Applicant (or a related party) of Mascot Valves’ ‘MASCOT & Device’ mark (or any mark that is substantially identical, or deceptively similar, to it).

   In these circumstances, and with such knowledge, the filing of the Opposed Trade Mark by the Applicant constitutes an application made in bad faith.

9. The onus is on the Opponent to establish bad faith and it will not be found easily given the serious nature of the allegation.[13] Based on the evidence before me I cannot conclude that the decision of the Applicant to seek to register the Trade Mark was anything more an application to register a trade mark that it had used in Australia for almost 10 years. I am not satisfied the Applicant’s conduct in filing the application was unscrupulous, underhanded or unconscientious in character. Consequently I find that the Opponent has failed to establish the ground of opposition under s 62A.

   [13] Hard Coffee Pty Ltd v Hard Coffee Main Beach Pty Ltd [2009] ATMO 26, [12].

   Decision

10. The Opponent has failed to establish any of the grounds of opposition it nominated in the SGP.  Trade mark application no. 1775345 may proceed to registration not less than one month from the date of this decision.  If the Registrar has been served with a notice of appeal before that time, I direct that registration shall not occur until either the appeal is withdrawn or discontinued.  Otherwise the disposition of the application should be in accordance with the Court’s order or direction.

    Costs

11. The Applicant has sought an award of costs in its favour. I see no reason to depart from the general rule that costs follow the event. I accordingly award costs against the Opponent under section 221 of the Act in the relevant amounts under Schedule 8 of the Trade Mark Regulations 1995.

    Nicholas Smith
    Hearing Officer
    Oppositions and Hearings
    24 April 2019