MB Holdings (Australia) Pty Ltd v B2 Import & Export SA CC

[2001] ATMO 100

TRADE MARKS ACT 1995

DECISION OF A DELEGATE OF THE REGISTRAR OF TRADE MARKS,

WITH REASONS

Re:Opposition by MB HOLDINGS (AUSTRALIA) PTY LTD to registration of trade mark application 753533(18) - WBA and DISC- filed in the name of B2 IMPORT & EXPORT SA CC.

Background

Trade mark application 753533 was filed by B2 Import & Export SA CC ("B2"), a South African company, on 28 January 1998, claiming a right of priority by virtue of a South African filing on 13 October 1997.  B2 seeks to register the following trade mark, which I reproduce in black and white for the purposes of this decision, as follows: 

The goods set out in B2's application, in class 18 of the International (Nice) Classification of Goods and Services, are specified as:

Leather and imitations of leather, and goods made from these materials and not included in other classes; animal skins; hides; trunks and travelling bags; umbrellas, parasols and walking sticks; whips, harnesses and saddlery

The Trade Marks Office has examined this application and advertised it as accepted for registration.  MB Holdings (Australia) Pty Ltd ("MB") opposes registration and has filed a notice of opposition with the Trade Marks Office.  I am now to decide the opposition, under delegation from the Registrar of Trade Marks.  Both parties have served and filed evidence to support their positions, and this is as follows. 

Evidence in support

Declaration by	Dated	Annexures
Andrew White	27.7.99
Duncan Beauchamp	27.7.99	DB1, DB2.

Evidence in answer

Declaration by	Dated	Annexures
Suet Bing (Amy) Lai	26.7.00	A1 - A7

Evidence in reply

Declaration by	Dated	Annexures
Duncan Beauchamp (Beauchamp 2)	24.11.00	A and B[1]

[1] I note that Mr Beauchamp has subsequently advised that there is an error in Beauchamp 2, an annexure of which mistakenly includes a version of the mark subsequently used by MB. I do not think this error affects the current matter at all, and I refer to the matter only to avoid any suggestion of error. Any reference I make to "the trade mark" in this decision is a reference to the original form.

Factual Background

MB, the opponent to registration, has supplied luggage items of various sorts to Australian retailers.  MB, through those retailers, has sold goods bearing a trade mark that is, so far as I can tell, entirely identical to the one sought to be registered by B2.

Hip Hing Handbag Co Ltd ("Hip Hing") manufactures bags in Hong Kong.  B2 claims to have an exclusive distribution agreement with Hip Hing.  If an agreement exists - and the material originating from Hip Hing tends to bring this into question - there is no clear evidence as to its terms.  What is clear is that in Hong Kong it is Hip Hing who is the registered owner of the trade mark in question, while in South Africa the registered owner is B2.

In South Africa, B2 licences the trade mark to another South African company, ABA International ("ABA"), which distributes the bags in question in that country and, according to the declaration of Suet Bing Lai, also in Australia.  Ms Lai is a director of B2 and the manager of ABA.  The bags distributed by ABA are, in all instances, made by Hip Hing.

There is undisputed evidence from B2 that ABA has supplied goods bearing the mark in question to Morley Brothers Travel Goods ("Morley") in South Africa.  The directors of Morley are Mr Colin Morley and Mr Duncan Beauchamp, who are also the directors of MB, the present applicant.  That same Duncan Beauchamp has provided a declaration in support of the opposition.

There is also undisputed evidence that ABA sold bags bearing the trade mark in question to MB in Australia in July 1997, the goods being despatched in late August of that year.  Those goods were apparently made by Hip Hing.

There is some common ground in the evidence.  MB agrees that the trade mark has been applied to backpacks, daypacks and hiking bags, sports bags and folios sold by it in Australia and that it has previously sold the same goods in South Africa under the same mark. 

At an early stage, it was apparently contemplated by MB and Ms Lai that MB would be some form of distributor for ABA in Australia.  There has since been a dispute about the exclusivity of the distribution, with MB initially keen to preclude the direct sale of goods, by B2/ABA, to chain stores. 

There is other evidence that such bags were first ordered by MB from a supplier in Hong Kong, Kongburg International Co, ("Kongburg") as early as 25 June 1997.  The manufacturer of those goods is unidentified.  There is no solid basis for an inference that they came from Hip Hing.

Issues and decision

I have been assigned, under delegation from the Registrar of Trade Marks, to decide the opposition.  When the matter came on for hearing, MB was represented by its patent attorney, Trevor Stevens, of the attorney firm of Davies Collison Cave.  Paul Sumpter, a patent attorney of the firm of Spruson and Ferguson, represented B2.

At the outset, Mr Stevens invited me to allow for the fact that the opponent, MB, faced a case that had been complicated by B2's filing of an application that did not actually reflect the goods of interest, which are essentially back packs, of the sort used by students and casual travellers rather than dedicated hikers; and overnight travelling bags.  I reject this.  For the purposes of this application, I believe that the words "travelling bags" are broad enough to include the various bags, including back-packs, for which the mark has been used.

Turning firstly to the various grounds of opposition, Mr Stevens said that the grounds on which his client relied were:

• Ownership (s 58)

• Misrepresentation prior to acceptance (s 62).

I will deal with the latter first, in order to dispose of it.  It comes from s 62 of the Act.  This provision reads:

62. The registration of a trade mark may be opposed on any of the following grounds:

(a) that the application, or a document filed in support of the application, was amended contrary to this Act;
(b) that the Registrar accepted the application for registration on the basis of evidence or representations that were false in material particulars.

Mr Stevens suggested that a claim to ownership was implicit in the making of an application, that the Act required the owner to apply and that B2, in applying, had made a representation that it was the owner of the trade mark.  I agree with this.  However, prior to acceptance, issues of ownership cannot normally be dealt with by the Trade Marks Office.  No ground of rejection on such a basis exists in Part 4 of the Act.  It is unlikely, in the lack of something more, that the extent of the representation as to ownership present in the making of an application can be "the basis of" the decision to accept the application.  If MB is to win its opposition on ownership grounds, given the facts that follow, it will do so under s 58. 

As to the question of ownership, both sides agree that first use, if before the filing date of this application, will decide the ownership of the trade mark.

Mr Stevens argued that the matter of ownership itself could therefore be simply resolved.  He characterised the matter as being of the competing claims of a manufacturer versus those of an importer-distributor.  Mr Stevens' primary argument was that Hip Hing was the owner, and that B2 is a mere distributor of goods that bear the mark in question to indicate their originator as being Hip Hing.  He noted that Shanahan, at p 41 of Australian Law of Trade Marks and Passing Off, puts the matter as follows:

A manufacturer who has applied a mark to goods to indicate that he or she is the "origin" of the goods is most unlikely to be denied proprietorship because of the activity of some dealer in those goods.

In support of this, Mr Stevens noted that the courts traditionally seize on any small degree of use in Australia to found a claim of ownership, and that, as Shanahan notes, the  manufacturer's own sales to the dealer may be enough.

Mr Sumpter, for his part, argued that the triangular relationship between B2, MB and Hip Hing was enough of a special circumstance to justify registration of MB as the owner.

Mr Sumpter noted that there is uncontradicted evidence that MB has at all relevant times known that B2 is registered in South Africa as the owner of the trade mark.  He argued that there is a reasonable inference that B2 had rights to the trade mark.

Mr Sumpter noted that the applicant, B2, had been responsible for selecting the goods for sale in Australia, that the goods so selected were manufactured in Hong Kong at B2's instigation and that they were not supplied, at any time, directly to MB, which obtained its stocks from ABA, a company associated with the applicant.

Mr Sumpter also noted that there was clear evidence in the correspondence to the effect that, had a relatively small sum of money been paid to MB, the opposition would have been withdrawn.  He said that there was implicit acknowledgement by MB, in some of the faxes copied in the evidence, that the trade mark belonged to entities (B2 and ABA) controlled by Suet Bing Lai.

Those things are all very well.  I certainly agree with Mr Sumpter on two points.  There is law to the effect that sharp business practice in registering here a mark used elsewhere by another person will not, in itself, block registration.  And I agree, again, that there is arguably what Mr Sumpter called the "whiff" of bad faith on the part of the opponent.

There is scope for considerable confusion about what rights Hip Hing has in this matter.  Consistent with this, B2 has registered the mark in South Africa.  B2 "licences" the trade mark to ABA, which Ms Lai none the less says is as an "exclusive distributor" of Hip Hing's products.  In South Africa, where these events take place, MB seems to be aware of the rights (be they as distributor or as registered owner of a registered trade mark) exercised by B2, but appears to be taking the stance that, in Australia, it can acquire rights as good as those of B2.

A person identified in the evidence only as Colin, who was acting on behalf of MB and whom I take to be Colin Morley, said, in a fax to Ms Lai: (italicised material added)

It will not matter to you if we register WBA (the shorthand identifier for the trade mark in question) because firstly you are not in Australia, secondly we will still purchase WBA product from you. 

The fax goes on to make the point that it is MB that has done the hard work, and incurred the expenses, to introduce and promote the WBA goods.  It concludes:

... We have been selling and promoting the name for more than 14 months in Australia now and don't believe it fair for someone else to register something they have not even sold here in Australia.  I hope you understand our situation.

The legal situation is more complex than this:  Estex Clothing Manufacturers Pty. Limited v. Ellis and Goldstein Limited, the Estex case, 116 CLR 254 at 271:

[W]hen an overseas manufacturer projects into the course of trade in this country, by means of sales to Australian retail houses, goods bearing his mark and the goods, bearing his mark, are displayed or offered for sale or sold in this country, the use of the mark is that of the manufacturer.

There is no evidence to suggest that the mark is applied to the goods by Hip Hing at the instigation of B2.  The declaration of Suet Bing Lai is to the contrary.  Leaving aside the confusing situation in South Africa, Ms Lai has declared, and repeated, that "B2 has an exclusive distribution agreement with Hip Hing...". 

When it comes to the supply of goods to MB in Australia, at least some of the bags were supplied under the direct control of ABA.  Those were Hip Hing products, of which Ms Lai declares:

I am informed by the manager of (Hip Hing) and verily believe that the bags manufactured by that company... have at no time been supplied to (MB) to distribute in Australia or elsewhere.

I will accept the veracity of Ms Lai's statement, since, had it wished to do so, MB was in a position to counter it.  However, I do not think that Ms Lai is correct when she argues that proprietorship is constrained by whether or not Hip Hing positively intended the sale of its goods to be in Australia.  The goods were in international trade, the trade ended in Australia and, in the lack of evidence that Hip Hing had intended anything else, it seems to me that this is sufficient "projection" for present purposes.

However, that does not allow for the uncertain origin of the earliest shipment of bags, those supplied by Kongburg and sold by MB in July 1997, apparently before it bought similar bags from ABA.  If those bags were produced initially by Hip Hing and then sold to MB by Kongburg, acting as some sort of wholesaler, clearly MB is not the owner of the trade mark.  More significantly for the purposes of deciding the fate of this application for registration, neither is B2 the owner.  In such a case my proper course is to find that a ground of opposition has been established.

Alternatively, it is just possible that MB had the initial shipment of bags manufactured, by or through Kongburg and to MB's own specification, by a firm that had no relevant connection with Hip Hing or B2.  If so, MB is arguably the proprietor.  Consequently it will still be the case that the owner of the mark is not B2 and, again, a ground of opposition will have been established.

Accordingly, while I am not able to say, on the present evidence, just who is the owner of the trade mark in Australia, I am able to say that it is not the applicant, B2.

Conclusion

I refuse to register the application.  I award costs, in accord with the official scale, to the opponent, MB.

Terry Williams
Hearing Officer
22 October 2001