Moorgate Tobacco Co Ltd v Philip Morris Ltd

[1980] HCA 32

HIGH COURT OF AUSTRALIA

Barwick C.J., Gibbs, Stephen, Mason, Murphy, Aickin and Wilson JJ.

MOORGATE TOBACCO CO. LTD. v. PHILIP MORRIS LTD.

(1980) 145 CLR 457

2 September 1980

Privy Council

Privy Council—Appeal from State Supreme Court—Court invested with federal jurisdiction in matters arising under laws made by Commonwealth Parliament—Matter raised by pleadings and at trial—Cause otherwise concerned with other matters—Whether court exercising federal jurisdiction—Whether non-federal claim severable—The Constitution (63 &64 Vict. c. 12), s. 76 (ii.)—Judiciary Act 1903 (Cth), ss. 39 (2) (a), 40.

Decisions

September 2.
The following judgments were delivered: -
BARWICK C.J. Moorgate Tobacco Co. Ltd. (the applicant) sued Philip Morris Ltd. and another (the respondents) in the Supreme Court of New South Wales, seeking a declaration that it is the proprietor of certain trade names as used in relation to cigarettes and that the respondent is not the proprietor of a certain trade mark. The applicant was unsuccessful in its suit which was dismissed by the Supreme Court (Helsham C.J. in Eq.). It applied to that Court for conditional leave to appeal to Her Majesty in Council. If the case were one which the Privy Council could properly entertain by way of appeal, the application for conditional leave would have to be granted, bearing in mind the terms of the Order in Council of 2nd April 1909. (at p466)

2. However, the application for conditional leave was removed into this Court pursuant to s. 40 of the Judiciary Act 1903, as amended. This was done because it was asserted by the respondents that the Supreme Court in hearing and deciding the suit between the parties had been exercising federal jurisdiction vested in it by s. 39 of the Judiciary Act. If the respondents are correct in this contention, then the Privy Council is not competent to entertain the applicant's appeal. (at p467)

3. The question for this Court therefore is whether in entertaining and deciding the suit the Supreme Court was exercising invested federal jurisdiction. (at p467)

4. I have earlier expressed the view in Felton v. Mulligan (1971) 124 CLR 367 that although federal jurisdiction may initially be invoked there may exist in the long run in the litigation an independent and disparate cause of action of a non-federal kind. I confess to thinking that it must rarely be so but that it may be so must be conceded. It is worth recalling that the Privy Council, when deciding that it was denied jurisdiction in The Commonwealth v. Bank of New South Wales (1949) 79 CLR 497, at p 629; (1950) AC 227, at p 299 , by reason of the presence of s. 74 in the Constitution, evidently thought that though an inter se question may have emerged at some stage of the litigation, if in the long run the claim or submission giving rise to such a question were abandoned, room was left for a non-inter se question to be kept alive between the parties. The final determination of that question so remaining in the case was contemplated as being within the competence of the Privy Council. (at p467)

5. I have had the advantage of reading the reasons for judgment prepared by my brothers Stephen, Mason, Aickin and Wilson. They there analyse the suit as it was pleaded and as it was conducted in the Supreme Court. I agree entirely with their analysis. Upon that analysis it seems to me that invested jurisdiction was invoked and exercised by the Supreme Court. I agree with my brothers' reasons for thinking so. The federal question was never excluded from the dispute between the parties which the Court was asked to resolve. I agree with my brothers' conclusion that it is not possible in this case to isolate a non-federal question independent of the federal question which was involved in the case between the parties. (at p467)

6. I am of the opinion that the Privy Council would not be competent to entertain the applicant's appeal from the decision of the Supreme Court in this case. Accordingly, in my opinion, the application for conditional leave should be refused. (at p468)

GIBBS J. The facts giving rise to the present application for conditional leave to appeal to the Privy Council, and the respective contentions of the parties, are fully discussed in the judgment of my brothers Stephen, Mason, Aickin and Wilson which I have had the advantage of reading. I agree with the conclusion at which my brothers have arrived, but would state, as briefly as I may, my own reasons for joining in that conclusion. (at p468)

2. The question at issue in the present case is whether the decision of the Supreme Court of New South Wales (Helsham C.J. in Eq.) was given in the exercise of federal jurisdiction. If so, it is not subject to appeal to the Privy Council: s. 39 (2) (a) of the Judiciary Act. By the combined effect of s. 39 (2) of the Judiciary Act and s. 76 (ii.) of the Constitution, the Supreme Court is invested with jurisdiction in all matters arising under any laws made by the Parliament. There can be no doubt - and it was indeed conceded - that the applicant's statement of claim raised a matter arising under a law made by the Parliament, viz. the Trade Marks Act 1955 (Cth), as amended ("the Act"). The claims made by the statement of claim included the following:
"(1) A declaration that, in Australia, the names 'KENT GOLDEN LIGHTS' and 'GOLDEN LIGHTS', in relation to cigarettes:
(a) are the property of the plaintiff; and
(b) have been since some time prior to 12th July 1977 the property of the plaintiff.
. . .
(3) A declaration that the first and/or the second defendant are not the proprietors of the trade mark 'GOLDEN LIGHTS' in Australia.
(4) An order restraining the defendants and each of them from proceeding further with application number 309409 to the Registrar of Trade Marks to register the trade mark 'GOLDEN LIGHTS'".
These claims raised for judicial determination questions as to rights which owe their existence to the Act, or which can only be enforced by virtue of the Act: Felton v. Mulligan (1971) 124 CLR 367, at p 416 . Accordingly, at the time when the statement of claim was lodged, the Supreme Court was invested with federal jurisdiction. (at p468)

3. Mr. Handley, for the applicant, did not submit that the Supreme Court was divested of the federal jurisdiction with which it had undoubtedly been invested. His contention was that the trial was conducted on a narrower basis than that provided by the pleadings. He submitted that the learned primary judge was not asked to, and did not, decide any matters arising under the Act, and that, having regard to the conduct of the trial, he could not properly have decided any such matters. This meant, in his submission, that the Court did not exercise federal jurisdiction; the federal element had vanished from the case, leaving only State jurisdiction to be exercised. (at p469)

4. I do not agree that, because of the manner in which the case was conducted, it was not competent for the learned primary judge to decide whether one or other of the parties possessed rights created by, or enforceable only under, the Act. The statement of claim was not amended to remove the allegations and claims that raised for decision the matters arising under the Act, and there was no express abandonment of any such matters. I am by no means satisfied that the conduct of the trial was such as to require it to be held that there was an implied abandonment. It is true that at the trial the case for the applicant was rested on three bases - first, on the licence agreement, secondly, on breach of fiduciary duty and, thirdly, on the so called tort of unfair competition. However, this did not mean that the learned primary judge was not able to dispose of the suit, in part at least, by deciding a matter arising under the Act. This was clearly recognized by Helsham C.J. in Eq. in his judgment. His Honour discussed one argument of the applicant which he stated as follows:
"It is said that by its application for registration of the words 'GOLDEN LIGHTS' as a trademark on 12th July 1977 the first defendant (the present first respondent) acquired a right which can be categorized as a trademark right, and that by Art. VI cl. 6.02 of the licence agreement it renounced any proprietary interest in 'the Trademark Rights and any other trademark rights which may be developed and created through the exploitation by Godfrey Phillips of the rights and licence herein granted'. It is said that the right so acquired by the first defendant was so renounced by it in favour of the plaintiff, and that therefore it must hold that right on trust for the plaintiff."
It should at this point be mentioned that the licence agreement defined "Trademark Rights" to mean "All rights in Australia, including all Austrlian regstrations and applications for registration, in respect of the trademarks 'KENT' and 'MICRONITE' as now existing or as hereafter developed and acquired by Lorillard". His Honour went on to say that this claim was "based on the proprietorship that is necessary for registration of a trademark." After some discussion of the nature of proprietorship for the purposes of the Act his Honour concluded his discussion of this aspect of the matter as follows:
"However, it is unnecessary to reach any conclusion about this here, and probably desirable in any event that the matter should await opposition proceedings. Because even if some form of proprietorship in favour of the first defendant did arise by reason of its application for registration of the mark 'GOLDEN LIGHTS' . . . it is neither a right developed and acquired by Lorillard within the meaning of the words 'trademark rights' when used in the licence agreement, nor is it a trademark right developed and created through the exploitation by the licensee of the rights granted under the licence agreement which the licensee was bound to renounce."
If his Honour had taken a different view on the question whether the alleged right was a "Trademark Right" within the licence agreement, he would have found it necessary to decide this matter arising under the Act. He could indeed have disposed of this aspect of the case if he had considered whether any form of proprietorship arose before he dealt with the construction and effect of the agreement, that is, of course, if he had answered the former question in the negative; it was within his jurisdiction to deal with these questions in the order which seemed to him appropriate and he could therefore have decided the matter arising under the Act, even though, in the exercise of his judgment (with which I respectfully agree) he thought it better not to do so. (at p469)

5. Mr. Handley's argument assumes that the Supreme Court was invested with two jurisdictions derived from different sources, so that if it became no longer appropriate to exercise federal jurisdiction, State jurisdiction would remain. The jurisdiction of the State court was not divested by s. 39 (1) of the Judiciary Act, since the matter is not one in which original jurisdiction is conferred on the High Court, and, on the view put forward by Mr. Handley, the Supreme Court, in the present case, remained possessed of State jurisdiction, which remained available notwithstanding the investiture of the Court with federal jurisdiction. This approach is supported by what was said in Lorenzo v. Carey (1921) 29 CLR 243, at p 252 . However, the correctness of what was there said was doubted in Ffrost v. Stevenson (1937) 58 CLR 528, at p 573 and in Minister for Army v. Parbury Henty &Co. (1945) 70 CLR 459, at pp 482-483 , and the case was not followed in Felton v. Mulligan (1971) 124 CLR 367 . There Walsh J., who discussed the question at some length (1971) 124 CLR, at pp 411-413 concluded (1971) 124 CLR, at p 413 :
"But when the conditions which have been attached to the grant of federal jurisdiction are considered, I think it should be held that Parliament intended that in the federal matters to which the section (s. 39) relates the only jurisdiction to be exercised by the State courts was to be federal jurisdiction, the exercise of which would be subject to the specified conditions."
Barwick C.J. agreed with the opinion of Walsh J. on this question, saying (1971) 124 CLR, at p 373 :
"I further agree with the view that if federal jurisdiction is attracted at any stage of the proceedings, there is no room for the exercise of a State jurisdiction which apart from any operation of the Judiciary Act the State court would have had."
Windeyer J. (1971) 124 CLR, at pp 391-394 expressed a similar view. The other members of the Court did not decide this question. (at p471)

6. Because of the view which I took in Felton v. Mulligan (1971) 124 CLR 367 , it was unnecessary for me in that case to express a view on the question now under discussion. However, having now considered that question, I concur in what Walsh J. said on this aspect of the matter. I find it inconceivable that the Parliament could have intended that the conditions attached to the exercise of federal jurisdiction might be rendered nugatory either by the parties or by the State court. The law of the Parliament investing the State court with federal jurisdiction, and imposing conditions on its exercise, therefore is inconsistent with a law of the State which confers jurisdiction to do the same thing but would produce different consequences: cf. Ffrost v. Stevenson (1937) 58 CLR, at p 573 . And the power of the Parliament to invest a State court with federal jurisdiction, which includes a power to impose conditions on the exercise of the jurisdiction so invested, must extend to ensure that the exercise of the jurisdiction and observance of the conditions are made effective. (at p471)

7. This conclusion is, I think, supported by a consideration of the extent of the jurisdiction with which a State court is invested when the Parliament makes laws under s. 77 (iii.) of the Constitution. It is well established that where the High Court is invested with jurisdiction to determine a matter of a particular kind, the Court is "clothed with full authority essential for the complete adjudication of the matter" and not merely for the decision of the matter which attracted jurisdiction: R. v. Bevan; Ex parte Elias and Gordon (1942) 66 CLR, at p 465; and pp 480-481 . In other words, once the jurisdiction is attracted, the Court can deal with all questions necessary to be dealt with to enable the case to be finally disposed of, except such matters as are severable and distinct from that which attracted jurisdiction. This principle has been recognized in a number of cases: R. v. Carter; Ex parte Kisch (1934) 52 CLR 221, at p 223-224 ; Hopper v. Egg and Pulp Marketing Board (Vict.) (1939) 61 CLR 665, at pp 673-674, 680-681 ; Carter v. Egg and Egg Pulp Marketing Board (Vict.) (1942) 66 CLR 557, at pp 580, 585-587, 602 ; Parton v. Milk Board (Vict.) (1949) 80 CLR 229, at pp 249, 257-258 . In my opinion, a similar principle applies when a State court is invested with federal jurisdiction. By the investiture, the State court acquires jurisdiction to deal with all matters necessary to determine the whole case (except matters which are severable and distinct from that which attracted jurisdiction). The consequence is that (except as to severable "non-federal" questions, to use the words of Walsh J. in Felton v. Mulligan (1971) 124 CLR, at p 410 the court will exercise federal jurisdiction in the whole case. The jurisdiction does not cease to be federal, because the matter that attracted jurisdiction is either not dealt with, or is decided adversely to the plaintiff. Where there is no severable "non-federal" question, the State court is invested with federal jurisdiction to hear and determine the whole case, and s. 109 of the Constitution prevents the inconvenient result that the State court will exercise concurrently State and federal jurisdiction: cf. Felton v. Mulligan (1971) 124 CLR, at p 373 . (at p471)

8. I need not consider whether the authorities to which I have referred were correctly applied in Adamson v. West Perth Football Club (1979) 39 FLR 199; 27 ALR 475 . (at p472)

9. In the present case, the matters that arose under the Act were not severable and distinct from the rest of the case. The parts of the judgment to which I have already referred illustrate this. Indeed, as Helsham C.J. in Eq. said, in reality the fight was over who was to get on the register of trade marks in Australia. The question arising under the Act was intimately bound up with the other matters that fell for decision. (at p473)

10. For these reasons I conclude that the decision of Helsham C.J. in Eq. was given in the exercise of federal jurisdiction and is not subject to leave to appeal to the Privy Council. (at p472)

11. I would dismiss the present application as incompetent. (at p473)

STEPHEN, MASON, AICKIN AND WILSON JJ. This application for conditional leave to appeal to the Privy Council was removed from the Court of Appeal in New South Wales by an order made by this Court under s. 40 of the Judiciary Act 1903, as amended. The applicant seeks conditional leave to appeal from an order made in the Supreme Court of New South Wales by Helsham C.J. in Eq. By that order the applicant's action for declarations, injunctions and other relief was dismissed. The application before this Court is opposed by the respondents on the ground that the order which is the subject of the proposed appeal was made in the exercise of federal jurisdiction invested in the Supreme Court by s. 39 of the Judiciary Act and that as a consequence of the operation of s. 39 (2) (a) no appeal lies to the Privy Council. (at p473)

2. The dispute between the parties relates to the ownership and use of certain trade names or trade marks, more particularly "GOLDEN LIGHTS". By its amended statement of claim the applicant sought a declaration that it is the proprietor of the names "KENT GOLDEN LIGHTS" and "GOLDEN LIGHTS" as applied to cigarettes (order 1) and a declaration that the respondents are not proprietors of the trade mark "GOLDEN LIGHTS" (order 3). The applicant also sought injunctions, one restraining the respondents from using the names "MARLBORO GOLDEN LIGHTS" and "GOLDEN LIGHTS" in Australia (order 2), another restraining the respondents from proceeding with an application to register the trade mark "GOLDEN LIGHTS" (order 4). (at p473)

3. The applicant's case as pleaded and presented at the trial rested very largely on the existence and terms of a licence agreement said to have been made on 22nd June 1977 between the applicant and the first respondent. The agreement alleged was one which had earlier been made between the predecessors in title of the applicant and the first respondent. According to the applicant it was later adopted by the two parties. By the alleged agreement the applicant granted to the first respondent until 30th November 1977 a licence of all rights in Australia in respect of the trade marks "KENT" and "MICRONITE" as then existing or thereafter developed and acquired by the applicant during the life of the licence agreement, such rights being described as "Trade Mark Rights". The agreement provided that the "Trade Mark Rights" licensed were the sole and exclusive property of the applicant, that the first respondent's use of them should enure for the benefit of the applicant and that nothing in the agreement was to be construed as creating in the first respondent any proprietary interest in the "Trade Mark Rights". It was also provided that the first respondent renounced any proprietary interest in those rights and any other trade marks which might be developed and created through its exploitation of the rights granted. (at p473)

4. The applicant claimed that, as a result of a variety of acts and transactions mentioned in the statement of claim, it had, prior to 12th July 1977, "acquired rights in respect of the name 'KENT GOLDEN LIGHTS' and 'GOLDEN LIGHTS' within the meaning of the Licence Agreement" (par. 30 of the amended statement of claim). The applicant alleged that the first respondent began to manufacture and market in Australia cigarettes known as "MARLBORO GOLDEN LIGHTS" (par. 31) and that on 12th July 1977 it applied for registration of the trade mark "GOLDEN LIGHTS" (par. 39). The applicant claimed that these actions were in breach of the licensing agreement and of fiduciary obligations owed by the first respondent to the applicant and, alternatively, that the application for registration constituted unfair competition. (at p474)

5. The applicant went on the allege that on or before 21st December 1977 the first respondent executed a deed of assignment in favour of the second respondent with respect to the trade mark "GOLDEN LIGHTS" (par. 42) and that on or about 21st December 1977 a transmission application was lodged with the Registrar with respect to the assignment (par. 43). The applicant claimed that the assignment was not effective and did not validly assign to the second respondent "any claim to proprietorship of the trade mark 'GOLDEN LIGHTS' in Australia" (par. 44). By way of particulars of par. 44 the applicant stated that it was the proprietor of this trade mark and also of "KENT GOLDEN LIGHTS", that the first respondent's claim to proprietorship of the "GOLDEN LIGHTS" mark was fraudulent, in breach of contract and in breach of fiduciary duty and that the first respondent had no interest in that mark which it could validly assign. (at p474)

6. From all this it will be seen that the applicant's case was based on contract, trust or fiduciary obligation, and the tort of unfair competition. So much of the case as related to trust or fiduciary obligation rested on the licence agreement because its provisions constituted the foundation for an argument that "KENT GOLDEN LIGHTS" was a development by the applicant falling within the description "Trade Mark Rights", that the first respondent's use of the "GOLDEN LIGHTS" mark and any variant of it was the subject of the licence and that by applying for registration of the "GOLDEN LIGHTS" mark the respondents had established a proprietorship in it entitling the second respondent to registration, a proprietorship which was held for the benefit of the applicant. Mr. Handley Q.C., for the applicant, in the course of the hearing, if not in his opening, made it clear that the applicant was not presenting a passing-off case or a claim to common law proprietorship of "KENT GOLDEN LIGHTS" or "GOLDEN LIGHTS". Nonetheless the applicant subsequently filed its further amended statement of claim without alteration to the particulars given in par. 44 or to the relief claimed. And the applicant argued that the circulation of magazines in Australia containing advertisements for "KENT GOLDEN LIGHTS" was sufficient to give the applicant a ground for opposing the respondents' application for registration of the "GOLDEN LIGHTS" mark - see The Seven Up Co. v. O.T. Ltd. (1947) 75 CLR 203 . (at p474)

7. In dismissing the action, the primary judge held that the applicant had failed to make out the three principal grounds on which its case for relief was based: (1) that the licence agreement did not confer any rights on the applicant with respect to the respondents' use of the words "GOLDEN LIGHTS" and that in particular it did not entitle the applicant to the relief claimed; (2) that the trade mark "GOLDEN LIGHTS" was not the subject of any trust or fiduciary obligation in favour of the applicant; and (3) that the respondents' use of the mark was not actionable as unfair competition. In the course of rejecting the applicant's case the primary judge found that it had not used the trade mark "KENT GOLDEN LIGHTS" in Australia during the period of the licence agreement and that consequently it did not generate any rights here with respect to the mark under that agreement. His Honour considered that the question whether the first respondent had acquired proprietorship of the "GOLDEN LIGHTS" mark by applying for registration of it, which was an element in the applicant's case that the mark was the subject of a trust in its favour, as well as the question whether the respondent's claim to proprietorship was defeated by the applicant's user of the "KENT GOLDEN LIGHTS" mark should be left for determination in opposition proceedings under the Trade Marks Act 1955 as amended. (at p475)

8. The respondents' case that the Supreme Court was exercising federal jurisdiction was based on (a) the existence in the further amended statement of claim of the claim to proprietorship of "KENT GOLDEN LIGHTS" and "GOLDEN LIGHTS", despite Mr. Handley's disclaimer, and (b) the claim that the respondents were not the proprietors of the mark "GOLDEN LIGHTS". Additionally, the respondents submitted that their defence attracted the exercise of federal jurisdiction, but this argument may be put aside. (at p476)

9. It was common ground between the parties that the Supreme Court was invested by s. 39 (2) of the Judiciary Act with federal jurisdiction to determine matters arising under the Trade Marks Act, being matters arising under a law made by the Parliament (Constitution, s. 76 (ii.)). Moreover, the parties were in agreement that a matter is a s. 76 (ii.) matter if, being a right, title, duty, privilege, protection or immunity, it "owes its existence to Federal law or depends upon Federal law for its enforcement" (R. v. Commonwealth Court of Conciliation and Arbitration; Ex parte Barrett (1945) 70 CLR 141, at p 154 , per Latham C.J.; Felton v. Mulligan (1971) 124 CLR, at pp 387, 408, 416 ). Nor was it in contest that a matter pleaded by way of defence, as well as a matter asserted by a plaintiff by way of claim for relief, will attract an exercise of federal jurisdiction (see Miller v. Haweis (1907) 5 CLR 89, at p 93 ; Felton v. Mulligan (1971) 124 CLR 367 ). In the result it was accepted that if in the proceedings there arose an issue as to the existence or non-existence of a right created by the Trade Marks Act the Supreme Court was exercising federal jurisdiction. (at p476)

10. However, the parties were in dispute as to when a matter "arises" within the meaning of s. 76 (ii.) so as to attract the exercise of federal jurisdiction. The cases establish that federal jurisdiction is attracted if the right or duty based in a federal statute is directly asserted by the plaintiff or defendant, but not if the federal question arises only in some incidental fashion. So too federal jurisdiction is attracted if the court finds it necessary to decide whether or not a right or duty based in federal law exists, even if that matter has not been pleaded by the parties. But the converse is not true. If a federal matter is raised on the pleadings federal jurisdiction is exercised, notwithstanding that the court finds it unnecessary to decide the federal question because the case can be disposed of on other grounds. (at p476)

11. An analogy is provided by the cases dealing with inter se questions. An inter se question arises as soon as it appears that the case can be resolved by deciding that question, even if it might ultimately prove possible, by answering other questions, to dispose of the case without determining the inter se question itself (The Commonwealth v. Bank of New South Wales (1949) 79 CLR 497, at p 624 ; Lansell v. Lansell (1964) 110 CLR 353, at pp 357-358 ; Reg v. Green; Ex parte Cheung Cheuk To (1965) 113 CLR 506, at p 518 ). Likewise it may be said that once federal jurisdiction is attracted, it is exercised "throughout the case" (Felton v. Mulligan (1971) 124 CLR, at p 373 ); it is not lost by subsequent disclaimer. The disclaimer may inhibit what the court does in the exercise of its jurisdiction but it does not affect the existence of its jurisdiction. Consequently, if the pleadings attracted federal jurisdiction by raising a s. 76 (ii.) matter for determination, that jurisdiction was not lost by subsequent disclaimer or by the primary judge's failure to decide the matter. (at p476)

12. In asserting that the "proprietorship" issues raised for decision are a federal matter, the respondents proceeded according to a view that the Trade Marks Act creates a right or entitlement to registration based on a statutory concept of proprietorship. It has been accepted that when s. 40 (1) provides that a person "who claims to be the proprietor of a trade mark" may make application for registration it expresses the notion of proprietorship of a mark before registration and that registration depends upon proprietorship (Shell Co. of Australia Ltd. v. Rohm and Haas Co. (1949) 78 CLR 601, at p 629 ; The Kendall Co. v. Mulsyn Paint and Chemicals (1963) 109 CLR 300, at p 304 ). It is also settled that proprietorship for the purposes of s. 40 (1) is demonstrated by prior public user of a distinctive mark or authorship and the making of an application for registration (Shell (1949) 78 CLR, at pp 627-629 ; Aston v. Harlee Manufacturing Co. (1960) 103 CLR 391, at pp 399-401 ). (at p477)

13. The statutory concept of proprietorship is novel in that it differs from the common law notion of proprietorship of a mark by treating authorship by a person intending to use the mark, in the absence of prior public user, and the making of an application for registration as a foundation for proprietorship - see especially Shell (1949) 78 CLR, at pp 625-629 . (at p477)

14. There are passages in the judgments of this Court which, it is suggested, support the proposition that an applicant who is the "proprietor" in the statutory sense of the mark applied for is entitled to registration of it. In Shell (1949) 78 CLR 601 , McTiernan J. spoke of the lodgment of the application as giving to the proprietor of the mark "an inchoate title to that trade mark and an inchoate right to its exclusive use" (1949) 78 CLR, at p 631 . See, also, Shell (1949) 78 CLR, at pp 626-627 , and Kendall (1963) 109 CL, at p 304 We do not so read them. They do no more than say "The statutory proprietor is the person who is entitled to get on the register if the requirements of the statute e.g. s. 28 are otherwise fulfilled". They do not say "The statutory proprietor is entitled to registration without more". (at p478)

15. Less emphasis has been given to this concept of proprietorship in the United Kingdom than in Australia. In G.E. Trade Mark (1973) RPC 297 Lord Diplock (with whose speech other members of the House of Lords concurred) said (1973) RPC, at p 331 that "registration of a person as proprietor of a mark became the source of his title to the exclusive right to the use of the mark". Later, his Lordship said (1973) RPC, at p 332 that the Acts made "registration the only way whereby a trade mark could become the subject-matter of proprietary rights". (at p477)

16. Certain it is that the lodgment of the application does not entitle the applicant to registration, for it remains to be established that the mark is free from objections under s. 28. Even so, a critical question, if not the critical question, for the Registrar to decide is whether the applicant is the proprietor in the statutory sense. If the applicant is the proprietor and there are no lawful grounds of objection, then the Registrar is bound to accept the application (s. 44 (1)). (at p478)

17. In view of the foregoing we accept that the applicant's case did not invite the Supreme Court to decide whether there was vested in the applicant or the respondents a right conferred by the Trade Marks Act. None the less we think it correct to say that the Supreme Court was invited to determine matters arising under that Act by reason of the applicant raising for decision the questions (1) whether the applicant was the proprietor in the statutory sense of "KENT GOLDEN LIGHTS" and "GOLDEN LIGHTS"; and (2) whether the respondents or either of them were the proprietors of "GOLDEN LIGHTS". (at p478)

18. We note that the first declaration sought is expressed to relate to the "names 'KENT GOLDEN LIGHTS' and 'GOLDEN LIGHTS'" (emphasis supplied). But this has no significance. Once it is appreciated that the applicant was not presenting a passing-off case the first declaration had no purpose except to provide a determination relevant to the pending applications for registered trade marks. As we have seen, registration is the only way in which a trade mark can become the subject of a proprietary right to its exclusive use. Moreover, although the first declaration may have been expressed too widely for the purpose, it seems to have been directed in part to establishing that the use of the "KENT GOLDEN LIGHTS" mark in Australia in advertisements in magazines was a bar to the respondents' registration of the "GOLDEN LIGHTS" mark. So also with the second declaration. Its raison d'etre is exclusively connected with the trade mark applications. If the applicant had succeeded in making out a case for relief based on contract, trust, fiduciary obligation or unfair competition, it would not have been entitled to either of the declarations, unless in addition the issues of proprietorship under the Trade Marks Act had been raised and decided. (at p478)

19. The fact that the relief claimed was declaratory does not make it non-federal. Section 39 of the Judiciary Act invests State courts with jurisdiction to grant declaratory as well as other forms of relief. It was not suggested before us that federal law, more particularly the Judiciary Act, read in the light of the Trade Marks Act, does not authorize a State court to make declarations with respect to issues arising in trade mark applications, though a submission to this effect was pleaded and, it seems, argued in the Supreme Court. (at p479)

20. As Walsh J. observed in Felton v. Mulligan (1971) 124 CLR, at pp 411-412 , s. 39 (1) of the Judiciary Act took away the jurisdiction of State courts in matters in which the High Court had jurisdiction. This was achieved by making the jurisdiction of this Court exclusive of that of State courts. The jurisdiction of State courts in those matters in which this Court might have original jurisdiction conferred on it but in which such jurisdiction was not conferred, was not affected. However, by s. 39 (2) State courts were invested with federal jurisdiction in both classes of matter. We agree with the reasons given by Walsh J. (1971) 124 CLR, at pp 412-413 for "treating the Commonwealth law as paramount and as excluding, in relation to the matters to which that law applies, the operation of the laws under which the State jurisdiction of the court would be exercised". The supremacy of Commonwealth law in this respect is based on s. 109 of the Constitution and covering cl. 5. (at p479)

21. In inviting the Supreme Court to make declarations on questions which were crucial to the outcome of the trade mark applications the applicant in our opinion raised for decision matters arising under the Trade Marks Act and attracted the exercise of federal jurisdiction. Although the word "matter" in s. 76 (ii.), as we have seen, has often been translated as embracing "right", "title", "duty", "privilege", "protection", "immunity" and "defence", its content should not be confined to these terms and to what they denote. "Matter" is the subject matter for determination in a legal proceeding (In re Judiciary and Navigation Acts (1921) 29 CLR 257, at p 265 ; Carter v. Egg and Egg Pulp Marketing Board (Vict.) (1942) 66 CLR 557, at pp 586-587 ; in our opinion it extends to a claim that a party satisfies or does not satisfy a statutory description, whether it be a qualification or a condition, when conformity with that description is made essential to the grant of a right for which the federal statute makes provision. (at p479)

22. In this case the proprietorship issues were raised directly for decision on the pleadings, in the relief sought and in the presentation of the applicant's case. The disclaimer by the applicant's counsel of a passing-off case left these issues open for decision, as the final judgment of the primary judge so amply demonstrates, though in the event he considered that they should be left to the Registrar in opposition proceedings. Although the applicant's three principal grounds for relief are causes of action based on the general law and do not owe their existence to the Trade Marks Act, the applicant was unwilling to confine its case to the three grounds and to the relief which those grounds might afford, dissociated from issues arising under the federal statute and from relief directed to the obtaining of rights under that statute. Indeed, both the pleadings and the manner in which the case was fought create the strong impression in our minds that registration of the trade mark "GOLDEN LIGHTS" was the real bone of contention between the parties. What is more, many of the issues which arise in the case under the contract, trust and fiduciary obligation claims would have inevitably arisen for decision in opposition proceedings. In these circumstances we find it impossible to conclude that the issues which arose under the Trade Marks Act were merely an "incidental consideration", to use the expression of Barwick C.J. in Felton v. Mulligan (1971) 124 CLR, at p 374 . They were directly pleaded and asserted by the applicant with a view to obtaining registration of a trade mark. (at p480)

23. The important question which remains is whether there was room in the case for the exercise of any non-federal jurisdiction. If so, it is submitted that conditional leave to appeal should be granted in respect of that part of the case. In approaching this problem we have assumed that the court has no discretion to refuse or grant conditional leave to appeal under the Privy Council Appeal Rules embodied in the Order in Council dated 2nd April 1909 when the applicant here has an appeal as of right under cl. 2 (a) - see Lopes v. Valliappa Chettiar (1968) AC 887 . But there is a question as to the meaning of "decision" in s. 39 (2) (a). What is the extent of its application when the determination of the lower court involves claims and questions which have their origin in State as well as federal law? (at p480)

24. The extent, if any, to which a State court in a given case is exercising non-federal, as well as federal, jurisdiction necessarily depends upon the limits of the legislative power to invest State courts with federal jurisdiction under s. 77 (iii.) of the Constitution. In Felton v. Mulligan (1971) 124 CLR, at p 373 , Barwick C.J. observed that if federal jurisdiction is attracted it is exercised throughout the case "unless perhaps there is some completely disparate claim constituting in substance a separate proceeding". In that case Walsh J. (1971) 124 CLR, at p 410 , with whom Barwick C.J. agreed, thought that there was no "severable" non-federal question and that "the decision was really given upon one entire legal question". (at p481)

25. There are strong reasons for saying that the word "decision" in s. 39 (2) (a) should not be narrowly construed. It is not to be supposed that the Parliament intended to permit an appeal to the Privy Council on an isolated question or questions abstracted from the entirety of a case, unless the question or questions constituted or formed part of a non-federal claim which is distinct and unrelated to the federal claim. Were it otherwise, the paragraph would be productive of confusion and injustice, as Walsh J. explained in Felton v. Mulligan (1971) 124 CLR, at p 410 . The possibility that appeals on issues of fact common to both federal and non-federal claims could be taken to both the Privy Council and this Court is sufficiently alarming to deter us from accepting an interpretation of s. 39 (2) (a) which would admit of an appeal to the Privy Council on a non-federal claim being a cause of action different from the federal claim but standing on related facts. (at p481)

26. Once the subject matter for determination involves a federal claim, then the Court exercises jurisdiction by virtue of, and in accordance with, the authority conferred by s. 39 of the Judiciary Act. The "decision" to which s. 39 (2) (a) refers certainly comprehends so much of the decision as relates to the issues which arise for determination in federal jurisdiction. And for reasons already given it should be understood as comprehending the decision given in the entire proceeding, unless perhaps it can be shown that there was some distinct and unrelated non-federal claim, as, for example, where the federal claim and the non-federal claim are not based on a common substratum of facts. If, however, the two claims arise out of common facts and transactions, they cannot be described as distinct and unrelated and, accordingly, they are non-severable. (at p481)

27. The observations of Barwick C.J. and Walsh J. in Felton v. Mulligan (1971) 124 CLR 367 reflected what had earlier been stated in a different context by Latham C.J. in Carter (1942) 66 CLR 557 . There, the plaintiffs had joined to a claim for a declaration of invalidity on constitutional grounds of three State statutes and a regulation a severable non-federal claim for an account of the defendant's dealings with the plaintiff and an order for payment of any amount found due on the taking of such account. Latham C.J., holding that the claim for an account was beyond the Court's jurisdiction, described it as "an entirely severable claim having no relation whatever to another claim or claims made in the same proceeding which other claim or claims alone involved the interpretation of the Constitution" (1942) 66 CLR, at p 580 . Williams J. (1942) 66 CLR, at p 601 described the claim for an account in the words of Sargant J. in Goldrei, Foucard &Son v. Sinclair and Russian Chamber of Commerce in London (1918) 1 KB 180, at p 192 , "This alternative claim constitutes . . . a separate and distinct cause of action resting on a different foundation and involving very different remedies". See also Carter's Case (1942) 66 CLR, at pp 585-587,-594 . (at p482)

28. In Parton v. Milk Board (Vict.) (1949) 80 CLR 229, at p 258 , Dixon J. said that the Court had jurisdiction to deal with an attached non-federal claim because, unlike Carter's Case (1942) 66 CLR, 557 , it was not "collateral to and severable from that involving the Federal questions". See also P. J. Magennis Pty. Ltd. v. The Commonwealth (1949) 80 CLR 382, at p 425 . (at p482)

29. In the instant case we are not concerned with the exercise of "pendent jurisdiction", to use the American expression, by a federal court. In ascertaining the meaning of "decision" in s. 39 (2) (a) we are confronted with a converse problem, one which does not arise in the United States, namely, that of identifying the extent, if any, to which a State court was exercising non-federal jurisdiction. We therefore do not find it necessary to examine the views expressed by Northrop J. in Adamson v. West Perth Football Club Inc. (1979) 39 FLR 199, at pp 220-222; 27 ALR 475, at pp 499-500 with respect to the exercise of pendent jurisdiction by the Federal Court of Australia. (at p482)

30. In this case many of the questions arising on the pleadings would have been relevant to the proprietorship issues and therefore incidental to the determination of them. It is true that the applicant's case for damages and an account of profits had its genesis in contract, fiduciary obligation and unfair competition. It was therefore non-federal in character. However, both the federal and non-federal cases presented by the applicant rested on what was a common substratum of transactions involving a plurality of issues of fact giving rise to questions of law some of which were common to both cases. So inextricably mixed and interwoven were the two cases that it would be a task of overwhelming difficulty to identify with precision the extent to which, and the respects in which, the Supreme Court was exercising non-federal jurisdiction, that is, jurisdiction in respect of issues which were not incidental to matters arising under the Trade Marks Act. The applicant's non-federal claim was not distinct from and unrelated to the federal claim; in the words of Barwick C.J. in Felton v. Mulligan (1971) 124 CLR, at p 373 , the applicant's non-federal case was not a "completely disparate claim constituting in substance a separate proceeding". (at p483)

31. For these reasons we would dismiss the application. (at p483)

MURPHY J. In Southern Centre of Theosophy Inc. v. South Australia (1979) 145 CLR 246 this Court decided that appeals in non-federal matters still may be taken to the Privy Council from State Supreme Courts (at least of South Australia). My view is that appeal rights to the Privy Council no longer exist. (at p483)

2. This case has been conducted on the basis that such appeals lie from the Supreme Court of New South Wales. The competence of such an appeal is, of course, subject to the provisions of s. 39 of the Judiciary Act 1903 (Cth), as amended. For the reasons given by Stephen, Mason, Aickin and Wilson JJ., I agree that, even if an appeal would lie in a purely non-federal case, it does not lie here. A federal common law rule should be adopted that where non-federal issues as well as federal are involved in a case, the case should be treated as wholly within federal jurisdiction unless the non-federal aspects are completely separate and distinct. (at p483)

3. The application should be dismissed. (at p483)

Orders

The application for conditional leave to appeal to Her Majesty in Council is dismissed with costs including reserved costs.