Morarp Pty Limited v Transference Trading Pty. Limited

[2013] ATMO 30

TRADE MARKS ACT 1995

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

Re:Opposition by Morarp Pty. Limited to registration of Trade Mark Application 1332409(19) - STYROCON - filed in the name of Transference Trading Pty. Limited.

Delegate:	Iain Thompson
Representation:	Opponent: Mr. Reginald Hornibrook. Applicant: Mr. Christopher Burgess of Counsel instructed by Ms. Tracey Berger and Ms. Amanda Caldwell, of Spruson & Ferguson, Patent & Trade Mark Attorneys.
Decision:	2013 ATMO 30 Section 52 opposition – subparagraph 42(b) – contrary to law established. Costs Having regards to the conduct of the Opponent, no costs award.

Background

1. Transference Trading Pty Limited (‘the Applicant’) has made application for registration of a trade mark under the provisions of the Trade Marks Act 1995 (‘the Act’).  Details of the application are:

Application No:         1332409

Priority Date:             20 November 2009

Goods:Class 19: Building materials made of fibre cement; cementitious building materials (other than in the nature of paint); building materials made of fibre cement; building materials of expanded polystyrene in block form; building materials of expanded polystyrene in sheet form; building materials of expanded polystyrene in slab form; cementitious building materials (other than in the nature of paint)

Trade Mark:               STYROCON

(‘the Trade Mark’)

1. The Trade Mark was examined as mandated by Section 31 of the Act, accepted for possible registration and advertised as such in the Australian Official Journal of Trade Marks dated 25 March 2010.

2. On 24 June 2010 Morarp Pty. Limited (‘the Opponent’) filed Notice of Opposition (‘the Notice) to the registration of the Trade Mark.  On 14 October 2010 the Opponent served and filed its evidence in support of the Opposition.  On 11 March 2011 the Applicant served and filed its evidence in answer.  On 10 June 2011 the Opponent served and filed its evidence in reply.

Preliminary Issues

1. This matter was duly allocated to a delegate of the Registrar of Trade Marks for determination and it was set down for hearing in Sydney on 15 February 2012.  At the hearing the Opponent requested permission to serve further evidence.  The delegate’s determination of that request has been the subject of an earlier written decision (Morarp Pty. Limited v. Transference Trading Pty. Limited [2012] ATMO 27) which issued on 5 March 2012. In that decision the delegate directed that the Opponent’s request for permission to serve further evidence be granted, that the Opponent be allowed the period of one calendar month within which to serve the further evidence on which it seeks to rely, that the Applicant be allowed the period of one calendar month from the date on which the further evidence was served within which to serve any responding evidence.

2. On 5 April 2012 the Opponent’s further evidence was served and filed.  The Applicant served and filed its further evidence on 3 May 2012.  The matter was then set down for hearing on 30 May 2012.  However, under cover of a letter dated 24 May 2012 the Opponent forwarded correspondence addressed to the Registrar of Trade Marks together with copies of eight additional documents with the request that these items be admitted into evidence for the hearing.  However, the delegate considered that the evidence was informal in nature and therefore not able to be admitted on that basis.

3. At the hearing on 30 May 2012 the delegate became aware that these documents were formalized in declaratory form.  On 29 May 2012 the Opponent had made application to serve and file this further evidence comprising a statutory declaration made by Mr. Hornibrook on that date, and two documents (comprising the Licence Agreement dated 15 January 1999 between the parties Building Technologies Australia Pty. Limited, Styro Panel Building Systems Pty. Limited and the Opponent and a document described as a ‘Term Sheet’ and purporting to be a précis of proposed contractual terms and in unsigned form) as distinct from the eight documents which had accompanied the earlier covering letter of 24 May 2012.

4. At the hearing the Opponent was represented by Mr. Reginald Hornibrook (in his capacity as a consultant to the Opponent) who was accompanied by Mr. Paul Ure (a former director of the Opponent).  The Applicant was represented by Mr. Christopher Burgess of Counsel, instructed by Ms. Tracey Berger, Solicitor, of Spruson & Ferguson, Patent and Trade Mark Attorneys.  Ms. Berger was in turn assisted by Ms. Amanda Caldwell, Solicitor, also of Spruson & Ferguson.

5. The delegate raised the issue of the letter of Mr. Hornibrook dated 24 May 2012 and the attempted admission of additional documents by the Opponent.  He pointed out the obvious problems with this fresh material: that the material was not in the correct form, that it was out of time, and that no formal request had been made seeking leave to file and serve further evidence. As well, he noted the objection of the Applicant to the admitting of the additional materials.  In particular the delegate noted the concerns which were expressed by Mr. Burgess that there was no sufficient reason as to why the additional materials could not have been obtained and served at an earlier point in time and that the Applicant would be unfairly prejudiced if that material were now to be allowed.  Moreover the Licence Agreement dated 15 January 1999 had only been provided in incomplete form (with pages 4, 5, 7 and 8 missing) and as such it failed to establish the existence of a full copy of that document.

6. The delegate declined to allow the Opponent’s application for further evidence dated 29 May 2012.  However, in relation to the bundle of documents earlier submitted by covering letter dated 24 May 2012 (that bundle having been served on the Applicant at an earlier point in time), he accepted the partial document being the Licence Agreement dated 15 January 1999 on the basis that at least part of that document was already in existence as Exhibit G to the Matthew Hornibrook statutory declaration made on 5 October 2010.  Further, he took the view that the content of the covering letter dated 24 May 2012 was in the nature of being submissions and accepted it on that basis.

7. In relation to some missing pages from the Licence Agreement dated 15 January 1999, the delegate directed that the Opponent be allowed the period of two weeks within which to locate those pages and make them available to the Applicant and to the delegate failing which that Agreement in its entirety would not be admitted as evidence. In addition the delegate made the direction that the Applicant would be allowed three weeks from then or from the date on which the missing pages were provided (whichever event first occurred) within which to provide written submissions and any additional evidence in response only to the newly-admitted materials.

8. Subsequent to the hearing, by covering letter from Fisher Adams Kelly, Patent & Trade Mark Attorney’s dated 13 June 2012 the delegate received the Statutory Declaration of Danielle Jepson made on that date.  Attached as Exhibit A were the four missing pages of the Licence Agreement dated 15 January 1999 together with confirmation that a copy of this material had been served on the Applicant.  In response, by correspondence dated 29 June 2012 the Applicant duly served and filed further evidence comprising the statutory declarations of Paul Haddow and of Daniel Christopher Munoz each made on 27 June 2012.

9. Subsequently, for administrative and operational reasons, the matter has been passed to another delegate of the Registrar Iain Thompson, for determination on the basis of all documents on file including the audio recording of the hearing.

`Onus

1. The Opponent bears the onus of establishing one or more grounds of opposition on the balance of probabilities.[1]

   [1] See Pfizer Products Inc v Karam [2006] FCA 1663; 237 ALR 787; (2006) 70 IPR 599; [2006] AIPC 92-146 per Gyles J at [6] to [26]; Chocolaterie Guylian N.V. v Registrar of Trade Marks [2009] FCA 891; (2009) 180 FCR 60; (2009) 258 ALR 545; (2009) 82 IPR 13; [2009] AIPC 92-355 per Sundberg J at [22] to [26]; Sports Warehouse, Inc v Fry Consulting Pty Ltd [2010] FCA 664; (2010) 87 IPR 300 per Kenny J at [30] to [40]; NV Sumatra Tobacco Trading Company v British American Tobacco Services Limited [2011] FCA 1051; (2011) 198 FCR 435; (2011) 283 ALR 743 per Greenwood J at [16] to [32]; Allergan, Inc v Di Giacomo [2011] FCA 1540; (2011) 199 FCR 126; 94 IPR 541 per Stone J at [11] to [12] and most recently Tricarico v Dunn Bay Holdings Pty Ltd [2012] FCA 271 per McKerracher J at [9] to [10] and Fry Consulting Pty Ltd v Sports Warehouse Inc (No 2) (2012) 94 IPR 551 per Dodds-Streeton J at [13].

2. The date at which the grounds of opposition must be established is the date of filing of the application for registration (‘the relevant date’): see Southern Cross Refrigerating v Toowoomba Foundry Pty Ltd (1953) 91 CLR 592 at 595. Here the relevant date is 20 November 2009.

Grounds of Opposition

1. In the Notice of Opposition, the Opponent nominated four grounds of opposition namely sections 42, 43, 60 and 62A of the Act.

The Evidence

1. The evidence comprises:

Evidence in Support

• Statutory Declaration of Matthew Grant Hornibrook made on 5 October 2010 together with the accompanying Exhibits A to W inclusive.

Evidence in Answer

• Statutory Declaration of Paul Haddow made on 10 March 2011 together with the accompanying Exhibits 1 to 15 inclusive.

Evidence in Reply

• Statutory Declaration of Matthew Grant Hornibrook made on 10 June 2011 together with the accompanying Exhibits 1 to 4 inclusive.

Further Evidence of the Opponent

• Statutory Declaration of Reginald Clark Rayner Hornibrook made on 4 April 2012 together with the accompanying Exhibits A to Z inclusive and AA.

  • Statutory Declaration of Paul Joseph Ure made on 4 April 2012 together with the accompanying Exhibits A to E inclusive.

Further Evidence of the Applicant

• Statutory Declaration of Daniel Christopher Munoz made on 1 May 2012 together with the accompanying Exhibits DCM-1 to DCM-9 inclusive.

Further Evidence of the Opponent

• The document marked ‘Exhibit YY’ (being the Licence Agreement dated 15 January 1999 between Building technologies Australia Pty. Limited, Styro Panel Building Systems Pty. Limited and Morarp Pty. Limited) have been allowed as evidence by me.

  • Statutory Declaration of Danielle Belinda Jepson made on 13 June 2012 together with the accompanying Exhibit A (being the four pages which were previously missing from the Licence Agreement dated 15 January 1999).

Further Evidence of the Applicant

• Statutory Declaration of Daniel Christopher Munoz made on 27 June 2012.

• Statutory Declaration of Paul Haddow made on 27 June 2012.

1. The history of this matter may be stated as follows. During the 1960’s and 1970’s Mr Julius William Elischer was engaged in the development of technology pertaining to a novel type of prefabricated building panel together with the method for producing it.  Mr. Elischer was aware that on the Australian market at that time there were many types of building boards or panels consisting of a core material faced with pre-manufactured sheets.  However such building boards or panels had not found favour in the building industry for various reasons.  Mr. Elischer set about addressing this problem.  His idea involved the use of a lightweight core (typically consisting of concrete containing an aggregate material) and faced with sheets of suitable material which are firmly bonded to the core.  The resulting panel has adequate strength enabling it to be used as a self-supporting, load-bearing panel which can be readily handled by two men.

2. On 21 December 1971 the Australian Patent No. 448474 (provisional no. 37186/710 entitled ‘Laminated building panel and method of producing same’ was lodged with Julius William Elischer named both as the inventor and the patent applicant. In its broadest form, this invention was said to reside in:

   . . . a laminated self supporting load bearing building panel comprising a core of concrete containing polystyrene foam beads or other lightweight aggregate faced on both faces with an asbestos cement sheet the bond between the facing and the core being solely through the adhesion of the cement in the core with the facing material.

In another form, the invention:

. . . resides in a method producing a laminated panel comprising a central core of lightweight concrete having polystyrene foam beads as the aggregate faced on both faces with an asbestos cement sheet which comprises placing the sheets in spaced positions in a mould and pumping concrete into the space between the sheets through a nozzle the outlet of which is located adjacent to the final position of the concrete in the mould and with a velocity which ensures that the concrete travels from the nozzle to its final position with a minimum of rolling action.

1. While the invention makes particular reference to the use of polystyrene beads as the aggregate, it is recognised that other lightweight aggregates such as vermiculite or expanded shale (either on their own or in combination with polystyrene beads) may be used to obtain the desired weight characteristics. This patent ran its full term and it expired on 21 December 1987.

2. On 1 March 1972 Mr. Elischer (both as inventor and applicant) lodged a further Australian Patent No. 473993 (provisional No. 52589/73) entitled ‘Improved Building Panel’. The invention which is disclosed by this patent was said to reside in ‘a load bearing self supporting building panel comprising a core of lightweight plaster and faced on both faces with a facing sheet of flexible asbestos cement or paper faced plaster sheets without any special bonding agent to bond the facing sheets to the core’. The patent specification recognises that the lightweight plaster core of this invention may be produced by mixing polystyrene beads or vermiculite into the plaster or by foaming the plaster or by combining one or more of these techniques.

3. In addition to those inventions which were the subject of specific patent applications, both in Australia and overseas, Mr. Elischer devised and developed a body of technology, know-how and information pertaining to lightweight building panels and the method of production pertaining to same.  Mr. Elischer arrived at the choice of the expression STYROCON as the trade mark for use in conjunction with his invention.  That trade mark takes the form of a ‘portmanteau’ word which is formed from the simple combination of the prefix ‘STYRO-’ (being derived from the expression ‘polystyrene beads’) and the suffix ‘-CON’ (being an abbreviated form of the word ‘concrete’) with both components referring to ingredients utilised in the manufacture of the finished product.

4. It is clear from the evidence, and in particular from the wording of the relevant patent specifications, that there has existed an identifiable body of technical knowledge and information pertaining to the STYROCON product and the method for manufacturing same which can properly be referred to as ‘the STYROCON Technology’.  Specifically, the trade mark STYROCON can be said to have a meaning and significance in that it is intended to allude only to that particular type of building panel devised by Mr. Elischer which uses lightweight concrete facing sheets and as disclosed both in the original Australian patent No. 448474 and in the subsequent improvement patent No. 638567.  By contrast, the trade mark STYROPLAST (an expression which was also originated by Mr. Elischer) refers to that particular type of building panel which uses lightweight plaster sandwiched between facing sheets as disclosed in the Australian patent No. 473993.

5. To commercialise his inventions, Mr. Elischer put in place a suitable corporate structure which saw the establishment of two corporate vehicles or trading arms.  On 8 December 1971 the company Tau Pty. Limited was incorporated with Mr. Elischer as the largest individual shareholder (but not the holder of a majority shareholding in his own right).  Subsequently, on 14 December 1979, the company Patentee Nominees Pty. Limited was incorporated with eleven shareholders (including Mr. Elischer) each holding one share.

6. On 30 December 1976 the trade mark applications Nos. 303447 STYROCON and 303448 STYROPLAST were lodged in the name of Tau Pty. Limited.  Subsequently, by Deed of Assignment dated 20 December 1979, the ownership of the Australian patents Nos. 448474 and 473993 was transferred from Julius William Elischer to Tau Pty. Limited.  On 2 October 1980 an application was lodged with the Commissioner of Patents to record this change in ownership which was duly entered on the appropriate records.

7. During the period of the 1980’s and continuing until late 1996, Mr. Elischer and his related companies Tau Pty. Limited and Patentee Nominees Pty. Limited were engaged in a business arrangement with the company James Hardie & Coy. Pty. Limited and in respect ‘the STYROCON Technology’.  On 16 March 1990 an application for registration of the improvement patent No. 638567 (provisional No. 74913/91) entitled ‘Improved Building Panel’ was lodged in the name of James Hardie & Coy. Pty. Limited as applicant with Julius William Elischer nominated as the inventor.  This patent, which I will subsequently refer to as ‘the Morarp Patent’, is of fundamental importance to these proceedings.

8. On 4 May 1990 the Opponent was incorporated with its shareholders including Reginald Hornibrook, Paul Ure, Peter Thomas, Kells Investments Pty. Limited, Metropolitan Credits Pty. Limited and Thurzo Holdings Pty. Limited.  In the same year, James Hardie and Coy. Pty. Limited lodged a fresh patent application entitled ‘Improved Building Panel’ under No. 74913/91 and having the priority date of 16 March 1990 and the international filing date of 14 March 1991.  The inventor is stated as being Julius William Elischer.  This patent was duly granted under No. 638567 (‘the Morarp Patent’) and it is recorded as having expired on 14 March 2009 (two years before the completion of its full term).  In the specification, the invention is expressly stated to be embodied in the STYROCON panel (that is, having fibre reinforced cement facing sheets as described in the earlier patent No. 448474) with added reinforcement provided by the metal strips, and it may also be based on a similar lightweight panel using a lightweight plaster core as described in the Australian patent No. 473993 and manufactured under the STYROPLAST trade mark.

9. The first of several commercial transactions which are crucial in relation to these proceedings occurred on or about 17 October 1990 when agreements were entered into between Julius William Elischer, Tau Pty. Limited and Patentee Nominees Pty. Limited (as Assignor or Licensor) on the one hand and, on the other hand, the Opponent (as Assignee or Licensee).  The principal document, entitled ‘Transfer of Intellectual Property Agreement’, was dated 17 October 1990 and it is the first in a chain which relates to the title in respect of the STYROCON Technology and the vesting of same in favour of the Opponent.  This Agreement expressly states (in Recital A):

   The Technology is not generally known to, and not readily ascertainable by proper means by other persons who can obtain economic value from its disclosure and use and is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.

1. The Agreement includes the trade marks Nos. 303447 STYROCON and 303448 STYROPLAST and the Morarp Patent as well as the STYROCON Technology, and while it nominates some fourteen countries as falling outside its scope the Agreement does include Australia.  The relevant consideration is stated as being the amount of $289,416.00 (Clause 1.1).

2. In close sequence, the Agreement was followed by an Agreement for Sale of Business and a separate Sale of Business document (each dated 17 October 1990) together with a Deed of Variation dated 20 October 1990.  The effect of these documents is that as from October 1990 the Opponent became the owner in Australia of the STYROCON Technology including the STYROCON trade mark and the Morarp Patent.  Meawhile, James Hardie continued to hold rights in respect of the STYROCON Technology which were complementary to those rights which were conferred on the Opponent.

1. Subsequently, by Agreement dated 12 November 1990 the Opponent granted James Hardie, in return for the making of agreed royalties payments, a licence to use the Technology together with an assignment of certain rights pertaining to same including the STYROCON and STYROPLAST trade marks and the Morarp Patent.  Importantly, this commercial arrangement contained a ‘sunset’ clause in the form of Clause 8.5(b) which in effect provided that in the event that it came to the Opponent’s notice that James Hardie has discontinued the manufacture of the products in commercial quantities or that James Hardie should advise in writing that it has or proposes to discontinue the manufacture of the products, the Opponent was entitled to require James Hardie to re-assign to it all of the intellectual property rights and to terminate the licence ‘with immediate effect’.

2. By Deed of Assignment dated 23 April 1991, Tau Pty. Limited transferred to the Opponent the STYROCON trade mark throughout the world (including the Australian registration No. 303447) with the exception of twelve countries where the trade mark rights were indicated as having already been licensed.

3. On 16 October 1992 the company Building Technologies Australia Pty. Limited (‘BTA’) started operating under that name after the shareholders of the Opponent had earlier acquired the company Holarna Pty. Limited and later changed the name of that entity.  In the course of his submissions at the hearing, Mr. Reginald Hornibrook (a former director both of the Opponent and BTA) explained that as a matter of corporate strategy the directors of the Opponent wished it to be the holding company for the STYROCON Technology and to have the ownership of the relevant intellectual property rights remain in the name of the Opponent.  At the same time the intention was for BTA to become the contract management arm of the Opponent.  As such, the plan was that the executive of BTA would be authorised to carry out the day-to-day business involved in trading and conducting business in relation both to the STYROCON Technology and the STYROCON trade mark.  The Opponent and BTA were said by Mr. Hornibrook to be ‘joined at the hip’, and BTA conducted business by negotiating, entering into and managing contracts pertaining to countries which included Brunei, Yemen, India, Chile, Indonesia, Iraq, Jordan, United Arab Emirates and Australia.  So, at least until 22 February 2007, the Opponent and BTA were closely linked and each of them had a clear awareness of the business activities of the other.  Both companies had directors and shareholders in common.  The Opponent is said by Mr. Hornibrook to have been aware at all times of those arrangements which BTA was negotiating with third parties in any part of the world (including Australia).

4. The second transaction which is crucial to this matter is evidenced by the Licence Agreement dated 27 December 1992 and entered into between the Opponent and BTA (being Exhibit E to the Reginald Hornibrook Statutory Declaration made on 4 April 2012).  This Agreement granted to BTA the licence to use the STYROCON Technology and it assigned to BTA the rights in respect of the intellectual property in consideration of the issuing to the Opponent of ordinary shares in BTA equal to 50% of the authorised capital of BTA (thereby effectively conferring control of the company in favour of the Opponent when the interests of the individual shareholders of the Opponent in BTA are taken into account). The Agreement expressly included the Morarp Patent and the STYROCON trade mark.  Clause 9 of the Licence Agreement provided for grounds of termination and held a sunset clause or reversionary right in favour of the Opponent in the event of the ‘determination or termination of this Agreement’.  The significance of this document is that it is the source of the granting of rights from the Opponent to Building Technologies Australia Pty. Limited (BTA).

5. In his submissions Mr. Burgess has endeavoured to challenge this document and the effect of same. He stated:

   The opponent describes this document as the agreement whereby it licensed the STYROCON trade marks to BTA ‘allowing the opponent to act as a holding company.[2]

   [2] The quoted words are, however, taken out of context in that they are stated by Mr. Hornibrook by way of explanation of the reason as to why BTA was established and not in relation to the STYROCON trade mark (see Reginald Hornibrook Statutory Declaration made on 4 April 2012 at paragraph 11, page 2).

6. Mr. Burgess went on to contend that the Opponent never had rights in Australia in respect of the STYROCON trade mark (and consequently it could not have granted such rights to BTA) because the assignment entitlement which it had received was subject to a territorial limitation which excluded Australia.  In this regard, Mr. Burgess drew attention to Recitals A and C of the Exhibit E (which in turn referred to the several Agreements dated 17 October 1990 whereby the relevant rights were transferred from Mr. Elischer, Tau Pty. Limited and Patentee Nominees Pty. Limited to the Opponent) and the Fifth Schedule of that document and he argued that the Opponent had only ever been assigned and licensed rights in the STYROCON technology in countries other than Australia. That argument is incorrect. On my interpretation, while the Fifth Schedule to the Transfer of Intellectual Property Agreement dated 17 October 1990 did exclude some twelve countries, Australia was not one of them.  In this regard I refer also to Recitals H and I of the Agreement of 17 October 1990.

7. However the observation of Mr. Burgess is correctly drawn in relation to the Licence Agreement dated 27 December 1992 (Exhibit E) where the collective effect of Clauses 1.4, 2.1(a) and the Fifth Schedule to that document is to exclude Australia from the relevant territory and in turn from the scope of that Agreement.  So, the rights which were granted by the opponent to BTA by virtue of the Licence Agreement dated 27 December 1992 were limited as at that time and in particular such rights did not extend to include Australia.  Mr. Burgess relied on this fact as indicating a fatal weakness in the Opponent’s argument that BTA held rights in respect of the STYROCON technology.

8. Mr. Hornibrook provided an explanation which not only makes sense but which has the effect of meeting this argument.  In the course of his oral submissions, Mr. Hornibrook explained that at the relevant time the Opponent was quite aware of the situation and that the territorial limitation (that is, excluding Australia) was a conscious and intentional measure which followed from the Opponent’s awareness that certain rights had already been granted in favour of James Hardie and that as at 27 December 1992 those rights continued to remain on foot.  As Mr. Hornibrook described the situation, the same rights could not have been granted twice.  At a later point in time, when the rights had been reassigned from James Hardie and had reverted to the Opponent (by virtue of the subsequent Deed of Assignment dated 29 August 1996 and referred to in the following paragraph) so that it was in a position to do so, the Opponent was able to cure the situation by allowing further rights to flow to BTA (as evidenced by the terms of the Licence Agreement dated 15 January 1999).  In particular, once the STYROCON trade mark became available to the Opponent in respect of Australia BTA was able to be a permitted user of it.

9. The Licence Agreement dated 27 December 1992 included the following express provisions, namely:

• that upon determination or termination the rights and licenses granted in that document shall terminate and revert to the Licensor (that is, the Opponent) without further action or notification (Clause 9.2(a) );

• that the Licensee is to reassign to the Licensor all right, title and interest in the Rights (Clause 9.2(b) );

• that the Licensee is to hand over or transmit to the Licensor all documents and drawings (Clause 9.2 (c) );

• that immediately on determination or termination the Licensee will cease to use the Rights and the Technology and will not thereafter use them in any way whatsoever (Clause 9.3); and

• that any determination or termination shall not release the Licensee from the ongoing obligation to observe and abide by the provisions relating to confidentiality (Clause 9.4).

1. In relation to the use of the STYROCON Technology, Clause 5.2(b) specifies that the obligation of confidentiality shall continue after the termination of this Agreement.

2. At the hearing, Mr. Hornibrook submitted that the Agreement with BTA dated 27 December 1992 was terminated on 1 February 2008 by the Opponent due to breaches on the part of BTA (which by that time was no longer under the Opponent’s control and which had passed into the hands of that group of companies which is associated with the Applicant).  Mr. Hornibrook contended that by virtue of that termination the contractual clauses referred to above came into force so that the Applicant thereafter had no right to use the STYROCON trade mark or the intellectual property rights that were handed to it by virtue of the entering into of that Agreement.

3. By Deed of Assignment dated 29 August 1996, James Hardie (as Assignor) transferred to the Opponent (as Assignee) its interest in the STYROCON Technology (including the Morarp Patent No. 638567, the trade marks Nos. 303447 STYROCON and 303448 STYROPLAST, and those technical drawings, designs and other written and printed materials relating to the manufacture, assembly and use of the relevant materials which were in the possession or control of Julius William Elischer, Tau Pty. Limited and/or Patentee Nominees Pty. Limited as at 17 October 1990.  This Deed makes specific reference to the Agreement dated 12 November 1990 and it provides that because the event described in Clause 8.5(b) of that document has occurred (namely, the failure on the part of James Hardie manufacture the products in commercial quantities) the Assignee has called upon the Assignor to re-assign the Rights (including, as earlier stated, the Morarp Patent and the trade marks STYROCON and STYROPLAST).  So, from that point, the STYROCON Technology was reassigned and placed under the control of the Opponent. However it was not until 25 February 1999 that the Opponent was recorded on the Register as the owner of the STYROCON trade mark registration No. 303447.

4. Throughout the period of the 1990’s (from December 1992) the Opponent set about the business of commercializing the STYROCON Technology through its related company BTA.  According to Mr. Hornibrook, during that period BTA had in place licensing arrangements in many overseas countries including Brunei, Yemen, India, Chile, Indonesia, Iraq, Jordan and the United Arab Emirates.  

5. In India, BTA was involved in a joint venture with the local company Hyderabad Industries Limited which was also engaged in the development and production of lightweight building panels. One outcome of that collaboration was the Australian patent No. 752467 (provisional no. 14731/97) entitled ‘Improved Lightweight Prefabricated Construction Element’ which has the application date of 17 February 1997 and the priority date of 26 April 1996.

6. The product which is manufactured pursuant to this patent is identified and marketed generally by means of the trade mark AEROCON (and not STYROCON). The official file for this patent includes an item of correspondence dated 30 September 1996 from Hyderabad Industries Limited authorizing BTA to file the patent jointly and ‘to do all such other lawful acts and things’ as BTA thinks necessary for the successful registration of the patent.  The patent describes a ‘process’ invention and it has a formula (as indicated in the Paul Haddow Statutory Declaration made on 10 March 2011 at paragraph 12).  In his evidence, Mr. Haddow refers to this invention as ‘the BTA Patent’.

7. At that time, BTA was a related company of the Opponent and under the Opponent’s direction and control.  The Opponent’s evidence is that the BTA Patent differs greatly from the Morarp Patent in terms of its composition and manufacturing process, that the AEROCON product is expensive to make, and that it has never been produced in Australia (see the Matthew Hornibrook Statutory Declaration made on 10 June 2011 at paragraphs 8-11 inclusive) so that it cannot be said to be part of the STYROCON Technology.  For its part, the evidence of the Opponent is that it has never promoted any building technology other than the STYROCON and STYROPLAST products and the Morarp Patent with the exception of an involvement with the AEROCON technology (which was developed by its related company BTA in collaboration with Hyderabad Industries Limited).

8. The next salient development which occurred was the entering into of the Licence Agreement dated 15 January 1999 between BTA, Styro Panel Building Systems Pty. Limited (‘SPBS’) and the Opponent.  SPBS was incorporated on 15 January 1999.  The directors SPBS were Robert Frederick Stuart, Lynette Taylor, Jose Eli Hernandez, Hector Edward Quinones and Lawrence Cauchi while the shareholders were Robert Frederick Stuart, Anthony James Taylor, Associated Building Technologies Pty. Limited and New Age Building Systems Pty. Limited.  I have not conducted a search of the latter two companies but I presume them to be the family companies of Jose Hernandez and Hector Quinones respectively.  Mr. Hernandez is a person well-known to Mr. Hornibrook who has described him as having been at one time ‘a close personal friend’ (refer to the Reginald Hornibrook Statutory Declaration at paragraphs 14 and 25).

9. The Licence Agreement which was entered into with SPBS by the Opponent and BTA contains the following essential terms:

• The objective of the arrangement is to establish for SPBS a factory ‘to manufacture Styrocon’ within New South Wales and Victoria (Clause 2.1);

• The territory of the Agreement is limited to the States of New South Wales and Victoria only (third and fourth recitals, Clauses 2.1, 3.3 and 3.11);

• The Agreement purports to grant the exclusive licence (within the territory of New South Wales and Victoria only) to SPBS ‘to manufacture and use the know how, methodology, calculations, data and techniques necessary to produce Styrocon’ (Clause 3.1);

• Under the Agreement, BTA will provide expert technical assistance by way of drawings, schedules of machinery and building specifications required for the installation and commissioning of the Plant (Clause 3.2 and Schedule 1);

• The term of the Agreement is for ten years with the right for BTA to grant SPBS an option to renew for further periods of ten years provided that ‘in BTA’s sole opinion’ SPBS ‘has fully and punctually performed all its obligations’ under the Agreement (Clause 1.2);

• The consideration is stated to be the amount of $356,000.00 with $25,000.00 to be paid on signing and the balance in accordance with the payment schedules contained in Schedule 1 and Schedule A together with a royalty, fee or commission of 2.5% on all gross revenue (net invoice price) from sales of STYROCON both within and outside New South Wales and Victoria for a period of twenty years from the date of commissioning the plant and equipment or on commencement of production whichever is the earlier with the said royalty to be paid quarterly and in arrears (Clauses 4.1 and 4.2).

• SPBS ‘shall have the right but not the responsibility’ to use the STYROCON trade mark (Clause 3.16);

• The rights and obligations under the Agreement are not to be assigned or transferred by either party to any other party without prior approval (Clause 6.2);

• In the Agreement, the STYROCON product is defined specifically and precisely in terms consistent with the provisions of the Morarp Patent (Clause 1.1) and it is stated to include any improvements together with the technology necessary to manufacture STYROCON panels;

• Under the terms of the Agreement, the rights of SPBS are subject to certain restraints and limitations.  In particular, SPBS undertakes that it will respect and not do anything to affect ‘the intellectual property rights, know how, technology, trade secrets or techniques of BTA or Morarp Pty. Limited (Clause 3.10). Further, SPBS will never be involved either directly or indirectly with any other party outside the scope of this Agreement in the manufacture, making or marketing of STYROCON or any BTA improvement of STYROCON or other BTA products without the prior written agreement of BTA (Clause 3.14);

• The title in respect of any intellectual property rights pertaining to the STYROCON Technology, including improvements and adaptations to same, shall be the exclusive property of BTA and Morarp (Clause 7.1);

• Each party undertakes to observe secrecy and not to disclose directly or indirectly to any other person or legal entity any particulars of this agreement or of the technical know-how, trade secrets or other information with regard to STYROCON ‘which may facilitate or enable any person or legal entity to compete directly’ with BTA or SPBS (Clause 6.1);

• There is a reversionary right in that, upon termination of the Agreement, all intellectual property and trade secrets are to be returned immediately to BTA (Clause 7.2).

1. In their evidence, both Mr. Haddow and Mr. Munoz have sought to deny their awareness of the Licence Agreement dated 15 January 1999 (see the Munoz Statutory Declaration made on 1 May 2012 at paragraph 18, the Munoz Statutory Declaration made on 27 June 2012 at paragraph 10 and the Haddow Statutory Declaration made on 27 June 2012 at paragraphs 8 and 9).  However I have difficulty in putting much weight on that proposition.  I consider that there exists the strong likelihood that both Mr. Haddow and Mr. Munoz knew of the involvement of Messrs. Hornibrook, Ure, Thomas, Beetles, and others, and that they were aware of the ongoing roles of BTA and the Opponent and of the ownership of both the STYROCON trade mark and the related STYROCON Technology.  That awareness is borne out by the course of subsequent negotiations and dealings which took place.

2. As I have mentioned, control of BTA subsequently passed into the hands of that group of companies which is associated with the Applicant and I note that as such BTA continued to be bound by the same sunset or reversionary clause referred to at paragraph 34 of this decision and that, as such, Mr. Haddow and Mr. Munoz presumably knew, or ought to have known, of that sunset clause.

Section 42

1. This matter is unusual in that the ground of opposition which most obviously ought to have been argued (section 58 – ownership) was not, as Mr Burgess pointed out twice during proceedings, nominated by the Opponent. Instead, the Opponent has primarily relied on subparagraph 42(b) of the Act – presumably, by its allegations, going to sections of the Trade Practices Act 1974.

2. However, I also note that other trade mark law and sections of the Act are regularly argued before delegates of the Registrar under the subparagraph 42(b) heading, most notably in relation to both passing off and section 120 but there is no obvious reason, at least at first flush, why other sections of the Act – such as section 17 or indeed section 58 of the Act for example – could not also be similarly argued under subparagraph 42(b).

3. To my mind, the arguments of the Opponent, and the responses of the Applicant, most obviously go to section 52 of the Trade Practices Act 1974 (‘the TPA’) (which was in force at the relevant date) and which provides:

   52Misleading or deceptive conduct

   (1)A corporation shall not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive.

   (2)Nothing in the succeeding provisions of this Division shall be taken as limiting by implication the generality of subsection (1).

   Note:For rules relating to representations as to the country of origin of goods, see Division 1AA (sections 65AA to 65AN).

1. In considering the application of section 52 of the TPA, Hill J set out a number of propositions in Equity Access Pty Limited v Westpac Banking Corporation (1989) 16 IPR 431 at [41]:

   1.      For conduct to be misleading or deceptive the conduct must convey in all the circumstances of the case a misrepresentation: Taco Bell[3] at 202. In the present case the misrepresentation on the part of the respondents is said to be that the financial product advertised and marketed by each of them is the product of the applicant or that there is some business relationship between the applicant and each of the respondents or that the applicant has endorsed the respective product of the respondents.

   2. There will however be no contravention of s.52(1) of the Act unless error or misconception results from the conduct of the corporation and not from other circumstances for which the corporation is not responsible: Puxu[4] per Gibbs CJ at p 6 and per Mason J at p 15, Global Sportsman Pty Ltd v. Mirror Newspapers Ltd [1984] FCA 180; (1984) 55 ALR 25, at p 34.

   3.      Conduct will be likely to mislead or deceive if there is a ‘real or not remote chance or possibility’ of misleading or deception regardless of whether it is less or more than 50%: Global Sportsman at p 34. The question of whether conduct is misleading or deceptive or likely to mislead or deceive is an objective question which the Court must determine for itself. Hence evidence that persons in the relevant class have been misled will, although admissible, not be determinative. In some cases however such evidence will be very persuasive: Puxu per Gibbs CJ at pp 198-9.

   4.      Conduct of a corporation causing mere confusion or uncertainty in the minds of the public in the sense that they may be caused to wonder whether two products may have come from the same source is not necessarily coextensive with misleading or deceptive conduct: Puxu at p 100; Bridge Stock Brokers v. Bridges [1984] FCA 391; (1984) 57 ALR 401 at p 413 per Lockhart J. Since actual deception need not be shown the Court must consider whether a reasonably significant number of potential purchasers would be likely to be misled or deceived: Weitmann v. Katies Ltd (1977) 29 FLR 336, 343. The test in passing off cases is usually expressed as being whether a ‘substantial number of persons likely to become purchasers ... are liable to be deceived by the defendant’s use of the name. On the other hand it is not necessary to show that all, or substantially all, persons in the market associate the name with the plaintiff’s goods, if this can be shown of a substantial proportion of persons who are probably purchasers of the goods of the kind in question.’ (per Wilberforce J, as he then was, in Norman Kark Publications Ltd v. Odhams Press Ltd (1962) RPC 163 at 168 and see Saville Perfumery v. June Perfect Ltd (1941) 58 RPC 147 at 175-6, 10th Cantanae Pty Ltd v. Shoshana Pty Ltd (1987) 79 ALR 299 at 315 per Gummow J).

   5.      In a case such as the present the applicant must establish that it has acquired the relevant reputation in the name, that is to say that the name had become distinctive of the applicant’s business in a particular country or geographical area: Sheraton Corporation of America v. Sheraton Motels Ltd (1964) RPC 202; BM Auto Sales Pty Ltd v. Budget Rent A Car System Pty Ltd (1976) 12 ALR 363. However at least in some circumstances very slight activities may be found to be sufficient to establish that a name has become distinctive of a person’s business in a particular country: Miki Shoko Co Ltd v. Merv Brown Pty Ltd (1988) ATPR 40-858.

   6. Section 52 is not confined to conduct which is intended to mislead or deceive: Puxu per Gibbs CJ at p 197 and a corporation which acts honestly and reasonably may none the less engage in conduct that is likely to mislead or deceive: Yorke v. Lucas [1985] HCA 65; (1985) 61 ALR 307 at p 309.

   [3] Taco Company of Australia Inc v. Taco Bell Pty Ltd [1982] FCA 136; (1982) 42 ALR 177

   [4] Parkdale Custom Built Furniture Pty Ltd v. Puxu Pty Ltd [1982] HCA 44; (1981-2) 149 CLR 191)

2. The Applicant is a corporation which, via the filing of the Trade Mark, is engaged, or intends to engage, in trade and commerce.

3. In this matter the conduct which is said to be misleading or deceptive is the Applicant’s claim to be the person who has the exclusive right to deal in the Trade Mark, to register it, and to subsequently, by inference, hold itself out to be the person who has the sole right use the trade mark in relation to goods or to licence its use in relation to such goods.

4. I consider that the history of this matter shows that the Trade Mark has always, via the ‘sunset’ clauses in its agreements, been used under the ultimate control of the Opponent and that while this is so, any of the claims mentioned in the preceding paragraph which might be made by the Applicant if the Trade Mark were registered would mislead and deceive.  As such the reputation acquired by the Trade Mark has redounded to the Opponent – most relevantly to these reasons when BTA was a licensee and Messrs Haddow and Munoz were directors of that company.

5. It is not necessary in order for section 52 of the TPA to be established that the Applicant knew that its conduct would mislead or deceive. However, because of the prolonged involvement of Messrs Haddow and Munoz in at least BTA who had dealings with the Opponent or its officers over the years, one might reasonably place low weight on the subsequent claims by those persons on behalf of the Applicant to be unaware of the Opponent’s exclusive rights to deal with the Trade Mark.

6. One might also reasonably conclude that the Applicant is unaware that, ‘The scheme of the Act is not proprietorship by registration but rather registration of proprietorship’ PB Foods Ltd v Malanda Dairy Foods Ltd [1999] FCA 1602; (1999) 47 IPR 47; [1999] AIPC 40,117 at [78] and has participated in these proceedings on the basis of that misunderstanding.

7. In my consideration, the ground under section 52 of the TPA is made out.

8. Should it have been necessary to consider section 51AA of the TPA (unconscionable conduct) that ground is, at the very least, enlivened by the conduct of the Applicant. Further, if section 58 of the Act had been included as a ground of opposition (or inasmuch as it might be included as it is also captured by the catchall ‘contrary to law’) it too, in my consideration, should have at the very least been enlivened.

9. The ground under subparagraph 42(b) is established.

Decision

1. Subsection 55(1) provides:

   55Decision

   (1)Unless the proceedings are discontinued or dismissed, 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.

   Note:For limitations see section 6.

2. I refuse to register application 1332409.

Costs

1. It is usual to award costs to the successful party and I note that the Opponent may have incurred costs since it has, from time to time, relied on the services of a patent and trade mark attorney in this matter.  However, the award of costs is discretionary.  The Applicant’s conduct of proceedings, in particular the repeated late service of evidence, have added to the complexity and expense both for the Registrar and for the Applicant.  In view of this conduct, I make no award of costs.

Iain Thompson
Hearing Officer
Trade Marks Hearings
17 May 2013