Michael John Pawlyshyn v Novatech SA

[2010] ATMO 17

TRADE MARKS ACT 1995

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

Re:Opposition by Michael John Pawlyshyn to application under section 92 of the Act by Novatech SA to remove trade mark number 892697(5) - STERITALC - in the name of Michael John Pawlyshyn.

Delegate:	Claudia Murray
Representation:	Opponent: Michael Pawlyshyn represented himself. Applicant: Jurgen Bebber, lawyer, of Griffith Hack, Patent and Trade Mark Attorneys and Lawyers, Melbourne.
Decision:	2010 ATMO 17 Section 92 opposition – paragraph 92(4)(b) not rebutted – trade mark to be removed from the Register – costs awarded against opponent.

Background

1. Trade mark number 892697 is registered for the plain word trade mark:

   Steritalc

2. The registration is in Class 5 of the International (Nice) Classification of Goods and Services, for ‘A sterile talc spray in a cannister used for lung pleurodesis’. The trade mark was registered from 22 October 2001 and the trade mark owner is Michael John Pawlyshyn.

3. A French company, Novatech SA (‘Novatech’, or ‘the removal applicant’), made application under section 92 of the Trade Marks Act 1995 (‘the Act’), for removal of the trade mark from the Register for non-use, on 31 July 2007. Notice of opposition was filed by the trade mark owner, Michael John Pawlyshyn (or, ‘the opponent’) on 23 October 2007.

   Application for removal

4. The removal application cited grounds under paragraphs 92(4)(a) and (b) of the Act. These provide:

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

   (a)     that, on the day on which the application for the registration of the trade mark was filed, the applicant for registration had no intention in good faith:

   (i)        to use the trade mark in Australia; or

   (ii)       to authorise the use of the trade mark in Australia; or

   (iii)      to assign the trade mark to a body corporate for use by the body corporate in Australia;

   in relation to the goods and/or services to which the non‑use application relates and that the registered owner:

   (iv)      has not used the trade mark in Australia; or

   (v)       has not used the trade mark in good faith in Australia;

   in relation to those goods and/or services at any time before the period of one month ending on the day on which the non‑use application is filed;

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

   (i)        used the trade mark in Australia; or

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

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

5. The removal application sought removal for ‘all the goods’ covered by the subject registration, which is a single item, in any event. For the purposes of paragraph 92(4)(b), the relevant three-year period ended on 30 June 2007.

   Notice of opposition

6. In his notice of opposition, the opponent asserted that the trade mark was in active use ‘as a trade mark tool for our products’. He indicated that evidence would be provided to that effect, and referred to the fact that the removal applicant had previously filed an earlier application to remove his trade mark. That application, made in June 2006, was also opposed by Mr Pawlyshyn and was subsequently withdrawn.

   Evidence

7. The evidence in relation to this removal opposition comprises:

   Evidence in Support

   ØStatutory declaration of Michael J Pawlyshyn, with Exhibits 1 to 8, dated 14 January 2008.

   Evidence in Answer

   ØStatutory declaration of Zdenko Racic, with Annexures A to G, dated 12 June 2008.

   ØStatutory declaration of Bruno Ferreyrol, with Annexures A and B, dated 8 July 2008.

   Evidence in Reply

   ØStatutory declaration of Michael John Pawlyshyn, with Annexures 1 to 4, dated 13 October 2008.

   Further Evidence

   ØStatutory declaration of Michael John Pawlyshyn, with Annexures I to IV, dated 5 October 2009.

   Hearing

8. The removal applicant requested a hearing at the completion of the normal evidence stages, and this was held in Melbourne before me, as delegate of the Registrar, on 20 July 2009. Mr Jurgen Bebber, of Griffith Hack, Patent and Trade Mark Attorneys and Lawyers, Melbourne, represented the removal applicant. The opponent, Mr Pawlyshyn, represented himself.

9. During the course of the hearing, each party raised issues which called into question the veracity of documents included in the other’s evidence. At the conclusion of the exchange of submissions, Mr Pawlyshyn urgently requested that proceedings be briefly adjourned in order to allow him time to make an application to file and serve further evidence. Taking into account the surrounding circumstances, I agreed to his request.

10. Then followed what transpired to be a quite lengthy interlude, during which the removal applicant exercised its rights under the Trade Marks Regulations 1995 to make submissions concerning the filing of Mr Pawlyshyn’s further evidence. My decision at the end of the process was to allow the new declaration in. That matter being finally settled, I may now decide the opposition.

    Discussion

    Burden on opponent to rebut grounds for removal

11. The provisions of section 100 place the burden squarely upon an opponent to rebut with evidence the removal applicant’s allegations made under paragraphs 92(4)(a) or (b). Section 101 provides for the Registrar’s delegate, should they find they have been convinced by the opponent’s evidence that circumstances exist making this reasonable, to decide not to remove the trade mark from the Register, even though the grounds on which the removal application was made have been established.

History between the parties

12.  A clear picture which emerges from the parties’ evidence and submissions in this case is that of a business relationship which has soured. Mr Pawlyshyn and Mr Racic (the removal applicant’s primary declarant) were, between 1990 and 1998, joint directors of a company named Technology For Life Pty Ltd (‘TFL’). Following Mr Racic’s departure from the company, after a ‘lengthy dispute’ with Mr Pawlyshyn, the former partners have become, (to borrow the latter’s description) ‘disgruntled business opponents’.

13.  The purpose of TFL was, according to Mr Racic, ‘to import medical products into Australia and distribute these to a local market’.[1] It is common ground between the parties that one of those products was sterile aerosol talc for the treatment of lung pleurodesis, manufactured by the removal applicant. In hot dispute between the parties is how that product was identified for the Australian market, both at the time it was being distributed by TFL and subsequently, when Novatech withdrew its business from TFL, and granted Mr Racic’s new company, Medical Vision Australia Pty Ltd (‘MVA’), the exclusive right to distribute its product. According to the removal applicant, its sterile aerosol talc was first sold in Australia, bearing the trade mark MUCOSOL, in 1994. The product was then rebranded as STERITALC in 1996, and was sold as such in Australia, firstly by TFL, and then later, from 1999, by MVA. The declaration in evidence by Mr Bruno Ferreyrol, Novatech’s Executive Director, states unequivocally that MVA ‘has continuously been selling Novatech’s STERITALC product in Australia since 1999 to date’. He declares, ‘In my view, Mr Pawlyshyn’s conduct in registering the trade mark in Australia can only be interpreted as an attempt to damage Novatech’s sales and reputation in its STERITALC product in Australia.’[2]

[1] Statutory declaration of Zdenko Racic dated 12 June 2008, paras 1-5.

[2] Statutory declaration of Bruno Ferreyrol, dated 8 July 2008, paras 8 and 9.

14.  Mr Pawlyshyn does not accept this claim, responding that Novatech and MVA in fact wish to capitalize on the success of TFL’s product branding, by attempting to ‘poach’ the STERITALC trade mark. He argues instead that while TFL initially distributed the product in Australia as MUCOSOL, this was later changed to the ‘generic branding Sterile Aerosol Talc’. Annexed to his declaration in reply[3] is a photocopy of a canister of Novatech’s product marked in that manner, which appears to give some support to this argument. However, also annexed to that declaration is a document headed ‘Novatech Price List’ dated June 2002, which clearly identifies two products, ‘Steritalc 3g pressurized canister’ and Steritalc 4g vial presentation’ available in Australia (‘ex Adelaide warehouse’) as at that date.[4] Mr Pawlyshyn later muddies the waters still further by observing in his declaration submitted as further evidence that, ‘The evidence supplied by the [removal] applicant does not show in any form the significant use of the wording Sterilac (sic) as a singular entity identifying it as specific Trade Mark brand,’ but that, prior to the filing of his trade mark application, the ‘wording Steritalc’ was used by both his company and the removal applicant as a ‘generic term’.[5]

[3] Statutory declaration of Michael John Pawlyshyn, dated 13 October 2008, Annexure 2.

[4] June 2002 being after both the date (1999) on which Novatech switched the distribution of its goods to MVA, and also the date when Mr Pawlyshyn filed his trade mark application (22 October 2001).

[5] Statutory declaration of Michael John Pawlyshyn, dated 5 October 2009, paras 2 and 5.

15.  So, it is Mr Pawlyshyn’s position that he was the first to wish to use and hence apply for the word ‘Steritalc’ as a trade mark. He claims to have then applied that trade mark to an alternative pleural talc product which he also sourced from overseas, because, as he explained at the hearing, despite his company being a manufacturer of medical products, he found it to be impossible to produce that particular item in Australia. I will discuss later the shortfalls in Mr Pawlyshyn’s evidence in relation to this claim.

Use in good faith

16.  I would observe at the outset that the evidence presented in this opposition by both parties leaves much to be desired, in terms of painting a definitive picture of the full extent of either party’s use in Australia, at any time, of STERITALC as a trade mark on the relevant goods. Given the highly specific nature and purpose of a sterile talc spray used in the treatment of lung disease, I find this ambiguity of information about its availability to the Australian medical profession both puzzling and more than a little disturbing. However, as I have commented above, the onus here is squarely upon the opponent to rebut with his evidence the removal applicant’s allegations of non-use.

17. Novatech’s submissions at the hearing were directed towards the ground of removal under paragraph 92(4)(b) of the Act. Mr Bebber began by raising the question of whether, even if there had been any use by the opponent of the STERITALC trade mark during the relevant period, (which he did not concede), any of that use could have been in good faith, as required by sections 92 and 100. He began by quoting Drummond J in Woolly Bull Enterprises Pty Ltd v Reynolds[6] who described ‘use in good faith’ as having a well understood meaning in the context of section 92 of ‘real, as opposed to token, use in a commercial sense’. He then cited cases decided against opponents to removal by delegates of the Registrar, where the ‘plain meaning’ of the expression ‘use in good faith’ was found to be ‘somewhat broader than “genuine commercial use”’.[7] In short, the expression was found to specifically exclude what was described as ‘use in bad faith’, such as use by a party knowingly intent upon acquiring for itself, rights properly belonging to another.

18.  Mr Bebber particularly relied upon the decision by the Registrar’s delegate in Edwards v Liquid Engineering 2003 Pty Ltd[8]. That decision related to opposed removal applications relating to the trade marks EXIT RUST and FUEL SET. The trade marks were already in use by a company, but were applied for and subsequently registered by one of its employees, just prior to the company going into liquidation. In the decision, Hearing Officer Iain Thompson found that use by the purported owner of the trade marks could not save them from being removed from the Register, because, knowing as he did who was the true owner of the trade marks, he could not have intended to use them in good faith at the time he filed his applications, and could not actually have used them in good faith since that time.

19. Mr Bebber also mentioned in his submissions that the case had been appealed to the Federal Court. However, he put it to me that, despite her decision to recommend to the removal applicant that what it really needed to make was an application for cancellation of the trade mark (with which it ultimately succeeded), Gordon J did not overturn the findings of the delegate, because she did not determine the issue of whether ‘good faith’ in section 92(4) involves enquiries as to honesty or subjective intentions. He attributed this interpretation to her comments that:

Having considered the evidence led, and submissions made, I was poised to answer that question in the affirmative and uphold the appeal, on the basis that “good faith” for the purposes of s 92(4) requires no more than genuine intent to use a mark for commercial purposes; it does not involve any element of honesty or subjective good intentions: see generally E & J Gallo Winery v Lion Nathan Australia Pty Ltd (2008) 77 IPR 69 ; [2008] FCA 934 at [187]–[192] (Gallo) (examining the meaning of “good faith” under related provisions of the TMA).[9]

[6] (2001) 51 IPR 149, page 153.

[7] KD Rausch Pty Ltd v Oettinger Brauerei GmbH (2003) 60 IPR 461 at page 464.

[8] (2008) 77 IPR 115

[9] Edwards v Liquid Engineering 2003 Pty Ltd (2008), ibid. at page 119.

1. Mr Bebber’s interpretation of where Gordon J’s words left the question of what is really meant by the term ‘good faith’ in section 92, while debatable even in isolation, does not survive the clear observations which had at that time already been made upon the matter by the Full Federal Court, on appeal, in Liquideng Farm Supplies Pty Ltd v Liquid Engineering 2003 Pty Ltd.[10] Mr Bebber did not refer in his submissions, to the words of Justices Tamberlin, Sundberg and Besanko. They began, at para 9:

   The appeal before her Honour first came on for hearing on 3 May 2007. Her Honour noted that the principal question then presented in those proceedings was whether evidence of a bona fide intention to use a mark for trading purposes was sufficient to demonstrate good faith within the meaning of s 92(4) of the Act, even when the applicant for registration gained knowledge of the mark as an employee of the owner of the unregistered mark, in circumstances tending to suggest a breach of fiduciary duty. Her Honour stated that, having considered the evidence, she would have upheld the appeal on the basis that, contrary to the submissions of the respondent, "good faith" for the purposes of s 92(4) required no more than a genuine intent to use the mark for commercial purposes as opposed to a token use or use for an ulterior purpose, and did not involve any element of honesty or subjective good intention. See Edwards v Liquid Engineering 2003 Pty Ltd [2008] FCA 970 at [8].

   [10] [2009] FCAFC 7 (13 February 2009).

2. Then, at paras 50-57, they continued:

   LE2003 submits that, on accepted principles, it should have been awarded the costs of the s 92(4) proceeding because the application had been dismissed as moot and was considered inappropriate to resolve the real questions between the parties. LE2003 submits that her Honour erred on her construction of s 92(4) of the Act because the use of the trade marks in question was "not in good faith", since those words are wide enough to cover the present circumstances in which Mr Edwards intended to appropriate the marks of LE2003 by using them in relation to the same goods in order to take advantage of the positive association between those goods and LEL, and where the activity began while Mr Edwards was still employed by LEL.

   Dr Dean, on behalf of LFS and Mr Edwards, submitted that s 92(4) of the Act is concerned with non-use of a trade mark and that provided there was a genuine use of a mark, that was sufficient to constitute a use in good faith as opposed, for example, to a token use in order to prevent or hinder use by another person or entity. He referred to the fact that s 92 appears in Part 9 of the Act dealing with removal of trade marks for "non-use". He submitted that s 92(4) requires a lack of intention in good faith to use the trade mark at the time of registration, and that the emphasis is on the intention to make use of the mark and not on the circumstances surrounding the application for use, and this had not been satisfied. The removal of a trade mark may be achieved under Part 8 by way of cancellation or amendment of the register and the emphasis is primarily on the time of application or entry of the mark on the grounds existing at the time of registration. Part 9 of the Act on the other hand is concerned with events that occur after registration, relating to the manner and reasons for which the mark has been or is being used. It is concerned with a different time period and a different set of circumstances post-entry. This context supports the conclusion that the main concern of Part 9, s 92(4) is with genuineness of actual use as opposed to motives or conduct leading to or concerning that use.

   There are a number of authorities which bear on this question. In Woolly Bull Enterprises Pty Ltd v Reynolds [2001] FCA 261; [2001] 107 FCR 166 at [153]- [154] Drummond J observed that the expression "use in good faith" has a well understood meaning in terms of s 92 of the Act, namely "real" as opposed to token use in a commercial sense.

   In the case of Electrolux Ltd v Electrix Ltd & Anor (1953) 70 RPC 127, Lloyd-Jacob J rejected a submission that the use in question could not be bona fide if commenced with knowledge that the product "Electrix" was in the market and that there may be deception. On appeal Lord Evershed MR (1954) 71 RPC 23 said at [36]:

   [T]he use here shown does not seem to me in any real sense capable of being described as a pretended use. There is...no evidence which would justify the conclusion that the use was merely spasmodic or temporary. Commercially speaking, it is not shown that the use made by the Plaintiffs of this mark was not an ordinary and genuine use, and it certainly was substantial. If that is so, then it seems to me that the use is not disqualified...

   Gummow J considered the meaning of the expression "use in good faith" as a criterion for infringement in Johnson & Johnson Australia Pty Ltd v Stirling Pharmaceuticals Pty Ltd (1991) 30 FCR 326 at 354, pointing out that:

   There is, in relation to the comparable provisions in the British Act of 1938, authority to the effect that in order to qualify as such use there must be a real or genuine use in a commercial sense, rather than colourable activity and "token" use designed to lead trade rivals to think that the registered proprietor was using its mark in a way which gave it the protection of the legislation.

   See also E & J Gallo Winery v Lion Nathan Australia Pty Ltd [2008] FCA 934; [2008] 77 IPR 69 at [99]- [707] and the authorities there referred to.

   We were directed to several other authorities which took a broader view of the expression but insofar as they conflict with the above authorities we do not consider they were correct.

   In the present case having regard to the above authorities, we do not consider that her Honour erred when she observed at [8] of her reasons that s 92(4) of the Act requires no more than a genuine intent to use the mark for commercial purposes, and that the reference to bona fide intention to use is not sufficiently wide to encompass the circumstances of the present case.

   In our view the conclusion of her Honour on this issue was correct.

1. Given the above, despite Mr Bebber’s submissions to the contrary, I believe it is clear that I would not be entitled to make any findings in relation to whether Mr Pawlyshyn has used the STERITALC trade mark in good faith, other than those based upon whether he has demonstrated genuine commercial, as opposed to token, use.

   Proof of use

2. Leaving aside the question of ‘use in good faith’, I must now focus on the quality of the evidence at hand. The totality of Mr Pawlyshyn’s evidence in support of his opposition is slim, at best, and of the limited information he has provided, much of it is undated or clearly outside the relevant period. And I agree with Mr Bebber’s assessment that there is also material that is ‘otherwise irrelevant or inconclusive or contradictory’. Photocopies of canisters and canister labels and other documentation supposedly showing the trade mark in use during the relevant period have had pertinent details blacked out, without explanation. Indeed, explanation is missing across the board, the declarations being essentially small and eclectic collections of documents, from which one is apparently intended to infer a scenario favourable to the opponent. Mr Pawlyshyn has also directed much of his energy towards attempting to discredit in his evidence Novatech’s own claims of use of STERITALC as a trade mark, and questioning its motives for attempting to remove his registration. In essence, it seems that, rather than seeking to conclusively demonstrate his actual commercial use (during the relevant period) of the trade mark he registered in his own name after his distributorship of Novatech’s product was terminated, instead Mr Pawlyshyn was relying upon a misplaced assumption that this result would be achieved simply because Novatech’s evidence would not be able prove otherwise. However, as I have discussed above, the onus here is not upon the removal applicant to make its case, but upon the opponent to rebut the allegation of non-use.

3. Having said this, I am also mindful of the fact that the body of case law on this topic[11] suggests that, in some instances, use evidenced by a single invoice may be sufficient for the purposes of rebutting an application for removal. In Geo W McPherson Nominees Pty Ltd v Remington Arms CompanyInc[12], Hearing Officer Vija Zars said:

   Although the onus is now on the person who opposes the removal of the mark to rebut the removal applicant's allegations, there seems to be no reason why the opposition could not succeed in the present case if the opponent satisfies me that the sole invoice to the Overseas Distributors was "overwhelmingly convincing proof" contemplated by Wilberforce J in "Nodoz" case, supra. Indeed, in Prosimmon Golf (Aust) Pty Ltd v Dunlop Australia Ltd 9 IPR 425, the hearing officer, Mr T. Williams, said at p. 431:

   Ms Lennon argues that on the basis of the Nodoz and Trina cases [1962] RPC 1 and [1977] RPC 131 respectively, this sale, or rather the evidence of use which the proprietor asserts it constitutes, is not demonstrated in an "overwhelmingly convincing" manner. That is an argument which I do not accept, since in both of those cases the words "overwhelmingly convincing" are used not to stipulate a level of documentation but as a liberalisation of "conclusive" proof, which Wilberforce J would otherwise have required. In the present instance, I have in front of me a copy of what the applicant concedes to be a genuine invoice, supported by the statutory declaration of a responsible officer of the proprietor company, who has sworn that the invoice relates to a sale of a BLACK KNIGHT golf club.

   [11] See, for example: ‘Nodoz’ Trade Mark [1962] RPC 1 at 7; Prosimmon Golf (Aust) Pty Ltd v Dunlop Australia Ltd, 9 IPR 425 at 431, Woolly Bull Enterprises Pty Ltd v Reynolds, op. cit. at 17.

   [12] [1999] ATMO 101 (29 September 1999) at 8.

4. The evidence before me does not contain even one such invoice, or any other form of document which might have convinced me that a single commercial sale of the sterile talc spray was made under the STERITALC trade mark by Mr Pawlyshyn, or by TFL, during the three year period ending on 30 June 2007. The opponent has not discharged the onus upon him to rebut Novatech’s paragraph 92(4)(b) ground of removal.

   Discretion not to remove trade mark from the Register

26.  For completeness, there remains for discussion the discretion available to the Registrar not to remove a trade mark from the Register, even if a ground of removal has been established. The opponent has not attempted to make a case, via evidence or submissions, for the exercise of the Registrar’s discretion under subsections 101(3) or (4). The removal applicant has, however, emphatically argued against any possibility that the circumstances of this case might serve to justify such a finding. The circumstances under which such discretion might be exercised have been recently described in the Federal Court by Bennett J, in the following terms:

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

In Kowa Company at [98], Lander J rejected the submission that a party seeking the exercise of the discretion needs to show “exceptional circumstances”. In E & J Gallo at [198], Flick J agreed with Lander J that there is no requirement to establish exceptional circumstances. With respect, I also agree with Lander J that there is no warrant to read a requirement for exceptional circumstances into s 101(3).

In E & J Gallo at [202]-[203], Flick J stated that the following factors set out by Falconer J in Hermes Trade Mark [1982] RPC 425 were of assistance in considering the exercise of the discretion:

·there had been no abandonment of the trade mark;

·the registered proprietors of the mark still had a residual reputation in the mark;

·there had been sales by the registered proprietors of goods for which removal was sought since the relevant period ended;

·the applicants for removal had entered the market without having taken steps to ascertain from the Register whether anyone had a right to exclude their use of the mark;

·the registered proprietors were not aware of the applicant’s sales under the mark.[13]

[13] Pioneer Computers Australia Pty Limited v Pioneer KK [2009] FCA 135 (23 February 2009), at paras 167-169

27.  Later in her decision, Bennett J observed that the factors in favour of maintaining trade marks on the Register under section 101 were less to do with the protection of those trade marks and their proprietors and ‘more to do with the public interest’.[14] Generally, I find that I have not been satisfied in terms of any of the factors quoted above, and that the public interest concerns weigh heavily against Mr Pawlyshyn in this matter. Novatech’s declarant, Bruno Ferreyrol, has attested that the company has by no means abandoned the trade mark it began using in Australia in 1996. Indeed, as I have discussed above, some of the opponent’s own evidence also supports this claim. Accordingly, it would not be in the public interest for me to facilitate, by allowing the trade mark to remain on the Register, the potential confusion, deception, and real possibility of danger to the public resulting from Mr Pawlyshyn also selling an alternative medical product under the STERITALC name. I decline to exercise the Registrar’s discretion in this manner.

[14] Pioneer Computers Australia Pty Limited v Pioneer KK, ibid. para 231.

Decision

28.  The opponent has not discharged the onus upon him to rebut Novatech’s allegations of non-use. The opposition is therefore not established. I direct that registration 892697 be removed from the Register one month from the date of this decision. If the Registrar has been served with a notice of appeal before then, I direct that removal shall not occur until the appeal has been discontinued or, in the event of a decision from the Court, that the registration be dealt with as the Court sees fit.

Costs

29.  In the event of a successful outcome, Mr Bebber requested an award of costs in the removal applicant’s favour. As the successful party, the removal applicant is entitled to its costs and accordingly I award costs against the opponent as per Schedule 8 of the Trade Marks Regulations 1995.

Claudia Murray
Hearing Officer
Trade Marks Hearings
26 February 2010