Myerton Pty Ltd v Foreign Supplement Trademark Ltd

TRADE MARKS ACT 1995

DECISION OF A DELEGATE OF THE REGISTRAR OF TRADE MARKS WITH REASONS
Re:Applications for removal of registrations 392230, 521837, 521838, and 521839 EVERSLIM trade marks by Foreign Supplement Trademark Ltd and opposition thereto by Myerton Australia Pty Ltd, the registered owner.

Delegate: Iain Thompson

Representation: Opponent
Ian Horak of Counsel,
Applicant
Annette Freeman, of Spruson & Ferguson

Decision:
2007 ATMO 75
1. Section 92 removal applications – ‘person aggrieved’ not an issue, possible use of a trade mark where goods not in existence, evidence of pre-use activity only, trade mark not used, Registrar’s discretion not exercised, opposition not established.

2. Costs ordered against opponent.

Background

Myerton Australia Pty Ltd, (‘the opponent’ or ‘the owner’ in these proceedings), is the registered owner of four EVERSLIM trade marks, details of which appear below:
Reg No:  392230
Priority Date:               2 June 1983
Goods/Services:          Class: 5 Slimming aids, dietary supplements, vitamins and vitamin preparations, all of the foregoing being goods included in this class.
Reg No:  521837
Priority Date:               25 October 1989
Goods/Services:          Class: 29 All goods in this class, including meat, fish, poultry, game, meat extracts, preserved, dried and cooked fruits and vegetables, jellies, jams, eggs, milk and other dairy products, preserves, pickles, soups, soup mixes, prepared food products and preparations in the nature of "instant" food products and preparations, all of the aforesaid being for use as slimming aids or dietary supplements.
Reg No:  521838
Priority Date:               25 October 1989
Goods/Services:          Class: 30 All goods in this class including coffee, tea, cocoa, rice, tapioca, sago, coffee substitutes, flour and preparations made from cereals, bread and other bakery products, biscuits, cookies, cakes, pastry, confectionery, ices, honey, treacle, yeast, baking-powder, salt, mustard, pepper, vinegar, sauces and spices, all of the aforesaid being for use as slimming aids or dietary supplements.
Reg No:  521839
Priority Date:               25 October 1989
Goods/Services:          Class: 32 All goods in this class including, beer, ale and porter, mineral and aerated waters and all other non-alcoholic drinks, syrups and other preparations for making beverages, all of the aforesaid goods being for use as slimming aids or dietary supplements.
I will refer to the above registrations as ‘the trade mark’, or ‘the trade marks’, context requires.
On 30 August 2005, Foreign Supplement Trademark Pty Ltd, (‘the applicant’) filed applications in terms of subsection 92(4)(b) of the Trade Marks Act 1995 (‘the Act’) for removal of the trade marks from the Register in respect of all of the goods for which they are registered on the ground that there had been no use, or use in good faith, of the trade marks in the three year period ending one month before the filing of the removal applications. The owner has filed Notices of Opposition to the removal of the trade marks. The owner cites one ground of opposition – namely, that it has used the trade marks within the relevant period, which is from 30 July 2002 until 30 July 2005.
As a delegate of the Registrar of Trade Marks, I heard the submissions of the parties, those of the applicant were made by Annette Freeman of Spruson & Ferguson at a hearing in Sydney on 13 August 2007. Ian Horak of Counsel represented the opponent.
Evidence
The evidence in support of the opposition to the removal applications is a declaration by Anthony Myer, Managing Director of the opponent. Mr Myer says that a prior owner of the trade marks first used the trade mark EVERSLIM in 1984 – I gather that this use was in relation to a dietary preparation which suppresses appetite for food. The opponent purchased the trade mark in 1989. The opponent first used the trade mark in 1990 and at some time after 1990, to use Mr Myer’s words, ‘sales became sluggish’. I am not assisted by the generality of this declaration but I gather that sales of the goods did, in fact, cease because the declarant states, ‘products of the nature of goods sold under the trade mark EVERSLIM sometimes require a redirection in the marketplace for a period of time, and then reinstatement into the market using a new product format to rejuvenate sales.’ I would gather that the word ‘redirection’ is a euphemism for deliberately withdrawing the goods and trade mark from the market for a period.
The declarant further states that during 2003 the opponent obtained quotes for the manufacture of the goods and packaging, obtained or produced a video showing goods bearing the trade mark for making presentations, and made a presentation to Woolworths by reference to the video. During the subsequent year, 2004, Coles were also contacted concerning the potential sale of the goods, the packaging for the proposed product was further refined, and a mocked up brochure was produced.
It is not stated, but I gather that the presentations, or representations, to Coles and Woolworths during the relevant period came to naught as far as orders were concerned.
Mr Myer says that the opponent incurred substantial costs concerning the development of the brand during the relevant period, and that sales figures for the goods bearing the trade mark during the relevant period are not available. However, he estimates the sales during the period 2001/2002 as being approximately $14,100.
The evidence in answer is a declaration by Neville Stone, who was at the relevant time an investigator with Pinkerton (PGSA) Pty Ltd. He says that he received instructions from Spruson & Ferguson to investigate the use of the trade mark by the opponent.
Mr Stone says that he attended at the opponent’s offices on 11 July 2005 and that he spoke to a Ms Helen Barlow who is identified as both Office Manager and Financial Controller of the opponent. When Mr Stone broached the subject of EVERSLIM, Ms Barlow allegedly stated that the product had not been manufactured for seven years. Ms Barlow also allegedly stated that the product name had been changed to ULRASLIM and that all rights had been sold to a third party ‘a few years ago’.
The evidence in answer is a further declaration by Mr Myer who explains that Ms Barlow, as Financial Controller, does not have a detailed knowledge of the products sold by the opponent. Mr Myer further explains that the trade mark EVERSLIM has had several million dollars worth of sales of product under the trade mark and that the trade mark has consequently a high degree of residual value and public recall. These factors, says Mr Myer, have not been addressed in the applications for removal.
Mr Myer also refutes the suggestion that the trade mark had been sold to a third party. He does not, however, rebut the statement by Ms Barlow that the trade mark had not been used for some time.
Comment
I do not think that the declaration by Mr Stone provides evidence of very great weight in rebutting the allegations of non-use of the trade mark except in that Mr Myer’s declaration in answer to that evidence makes statements which could be viewed as amounting to a concession that the trade mark was not used in trade during the relevant period and that he subsequently seeks an exercise of the Registrar’s discretion.
Lest there be any doubt, however, I will first discuss the alleged use of the trade mark during the relevant period.
Section 92
At the date that the non-use applications were filed, section 92 of the Act relevantly provided:
(4)     An application under subsection (1) or (3) (non use application) may be made on either or both of the following grounds, and on no other grounds:
(a)       that, on the day on which the application for the registration of the trade mark was filed, the applicant for registration had no intention in good faith:
(i)        to use the trade mark in Australia; or
(ii)       to authorise the use of the trade mark in Australia; or
(iii)to assign the trade mark to a body corporate for use by the body corporate in Australia;
in relation to the goods and/or services to which the non use application relates and that the registered owner:
(iv)      has not used the trade mark in Australia; or
(v)       has not used the trade mark in good faith in Australia;
in relation to those goods and/or services at any time before the period of one month ending on the day on which the non use application is filed;
(b)       that the trade mark has remained registered for a continuous period of 3 years ending one month before the day on which the non use application is filed, and, at no time during that period, the person who was then the registered owner:
(i)        used the trade mark in Australia; or
(ii)       used the trade mark in good faith in Australia;
in relation to the goods and/or services to which the application relates.
Note: For file see section 6.
The burden, or onus, is on the owner of a trade mark to show it was used during the relevant period: section 100 of the Act. Mr Horak argued that the preparatory steps taken by the opponent concerning a product relaunch amounted to use within the relevant period. Mr Horak referred me to Moorgate Tobacco Co Limited v Philip Morris Limited [1984] HCA 73; (1984) 156 CLR 414 where Deane J said at paragraph 23:
The cases establish that it is not necessary that there be an actual dealing in goods bearing the trade mark before there can be a local use of the mark as a trade mark. It may suffice that imported goods which have not actually reached Australia have been offered for sale in Australia under the mark (Re The Registered Trade Mark "Yanx"; Ex parte Amalgamated Tobacco Corporation Ltd., at pp 204-205) or that the mark has been used in an advertisement of the goods in the course of trade (The Shell Co. of Australia v. Esso Standard Oil (Australia) Ltd., at p 422). In such cases however, it is possible to identify an actual trade or offer to trade in the goods bearing the mark or an existing intention to offer or supply goods bearing the mark in trade.
Mr Horak is, of course, correct, but the subsequent passages from Deane J’s judgment show that Mr Horak is only correct in as far as it goes. Deane J went on to say, op cit:
In the present case, there was not, at any relevant time, any actual trade or offer to trade in goods bearing the mark in Australia or any existing intention to offer or supply such goods in trade. There was no local use of the mark as a trade mark at all; there were merely preliminary discussions and negotiations about whether the mark would be so used. The cigarette packets and associated advertising material were delivered to Philip Morris to demonstrate what Loew's was marketing in other countries and what Philip Morris might market, under licence from Loew's, if it decided to manufacture and trade in the goods in Australia and to use the mark locally at some future time. There was no relevant trade in the goods in Australia and the delivery of the cigarette packets and associated material to Philip Morris did not, in the circumstances, constitute a relevant user or use in Australia of the mark "KENT Golden Lights" for the purpose of indicating or so as to indicate a connection in the course of trade between the new cigarettes and Loew's.
Mr Horak also brought my attention to the following passage in Winton Shire Council v Lomas [2002] FCA 288, per Spender J at paragraph 36:
The passage quoted from Moorgate Tobacco clearly envisages that either of an alternative will suffice: preparatory steps coupled with an actual trade or offer to trade; or preparatory steps coupled with an existing intention to offer or supply goods in trade.
This passage should be read in the context of the appeal reported at Lomas v Winton Shire Council [2002] FCAFC 413 at paragraph 39:
It is not necessary that there be an actual dealing in goods bearing a trade mark before there can be said to be use of that mark as a trade mark in Australia. For example, there may be use where goods intended to be imported into Australia have not actually reached Australia but have been offered for sale in Australia under the mark. It may even be possible to establish use where the mark has been used in an advertisement of goods in the course of trade in circumstances where there is an existing intention to offer or supply goods bearing the mark in trade or there is an actual trade or offer to trade in the goods bearing the mark - Moorgate Tobacco Co Ltd v Phillip Morris Ltd and Anor [No. 2] (1984) 156 CLR 414 at 433-4. However, where there is no actual trade or offer to trade in goods bearing the relevant mark in Australia or any existing intention to offer or supply such goods in trade, but merely preliminary discussions and negotiations about whether the mark would be so used, there is no use so as to constitute ownership of the mark
I think that the opponent did not have a fixed intention to use the trade mark. The goods, which were possibly to bear the trade mark, were not in physical existence. While the opponent did have artwork for packaging and promotional materials prepared, these were in connection with a possible product re-launch. The opponent did make presentations to major retailers; however, whether the trade mark was actually going to be used and whether the goods were to come into existence was contingent on either of the major retailers agreeing to the opponent’s offer – the positive intention to use the trade mark would only have been fixed if the opponent’s offer to these traders had been accepted. The preparations and negotiations are thus very much of the same order as those discussed in Woolly Bull Enterprises Pty Ltd v Reynolds (2001) 107 FCR 166; (2001) 51 IPR 149. Nor do I think that these preparations for use went as far as those in Buying Systems (Australia) Pty Limited v. Studio (1995) AIPC 91-119; (1995) 30 IPR 517 where Gummow J said of the selling of advertising space in the magazine:
These steps amount to sufficient activity by the opponent to produce the result that the applicant for registration at the date of its application on 8 December 1983 could not accurately put itself forward as claiming to be proprietor of the relevant mark. The activities of the opponent were sufficient to constitute a relevant use of the mark in Australia for the purpose of indicating or so as to indicate a connection in the course of trade between it and the new magazine. This is not a case where those activities occurred without any existing intention to offer or supply the magazine in trade.
There are two revenue streams in respect of magazines – that from sales of the magazine and that from the sales of advertising in the magazine. Studio implicitly acknowledges this and the revenue stream from the sale of advertising contributes towards use of that trade mark; but Studio does not appear to me to be any authority for the proposition that preparations and negotiations for use alone will constitute use of a trade mark, even if those preparations involve an outlay of considerable expense on promotional material.
I note also that it does not appear that the goods in question were in physical existence either in Australia or elsewhere – however, if there were a firm order to purchase the goods under the trade mark and the goods were not in physical existence in Australia, this distinction might not be of concern: Moorgate, above.
If the issue is looked at in contractual terms, it seems to me that, absent the physical existence in Australia of the goods bearing the trade mark, the opponent (to establish use of the trade mark) must be able to affirmatively demonstrate that it has been promised, or obtained, consideration in relation to the relevant goods or services under the trade mark in question and negotiations should have proceeded beyond an offer or mere invitation to treat and have reached at least a ‘heads of agreement’.
In terms of section 100 of the Act, the onus is on the opponent to satisfy me that it has used the trade mark during the period in question. I am not satisfied that the opponent has used the trade mark during the period in question and the applicant has thus made out its applications for removal.
Discretion
Subsection 101(3) of the Act provides:
(3)If satisfied that it is reasonable to do so, the Registrar or the court may decide that the trade mark should not be removed from the Register even if the grounds on which the application was made have been established.
It may be that a trade mark’s residual reputation becomes a factor to be taken into account in the exercise of the Registrar’s discretion – see, for example, ‘Hermes’ Trade Mark [1982] RPC 425. However, Hermes, and the line of cases which follow it, suggest that both preparations for use and actual use which follows the relevant period are necessary factors to be balanced as well as residual reputation: see, for example, QH Tours Ltd v Mark Travel Corp (1999) 45 IPR 553. The discretion is exercised in cases such as Hermes and QH Tours because there is a public interest in preventing deception or confusion.
However, the opponent, while stating that the trade mark has a residual reputation, has not led evidence which convincingly establishes a residual reputation for the trade mark from which it might be inferred that use of the trade mark by another person could lead to deception or confusion. In McCormick & Company Inc v McCormick [2000] FCA 1335, Kenny J observed of evidence which goes to establish reputation:
In practice, it is commonplace to infer reputation from a high volume of sales, together with substantial advertising expenditures and other promotions, without any direct evidence of consumer appreciation of the mark, as opposed to the product: see, e.g., Isuzu-General Motors Australia Ltd v Jackeroo World Pty Ltd (1999) 47 IPR 198; Marks & Spencer plc v Effem Foods Pty Ltd (2000) AIPC ¶91-560; Photo Disc Inc v Gibson (1998) 42 IPR 473; and RS Components Ltd v Holophane Corp (1999) 46 IPR 451. This Court has followed this approach as well, acknowledging that public awareness of and regard for a mark tends to correlate with appreciation of the products with which that mark is associated, as evidenced by sales volume, amongst other things. Thus, in Toddler Kindy Gymbaroo Pty Ltd v Gymboree Pty Ltd [2000] FCA 618 ("Gymboree"), Moore J accepted at [94] that the applicant had established a reputation for the purposes of s 60 solely on the basis of use and promotion of the relevant mark. Another example of this approach is Nettlefold Advertising Pty Ltd v Nettlefold Signs Pty Ltd (1997) 38 IPR 495 ("Nettlefold"), in which Heerey J relied upon the public visibility of the applicant's marks over approximately two decades as well as a $100,000 promotional campaign in finding that a reputation for the purposes of s 28 of the 1955 Act existed.
Mr Myer’s evidence is not of substantive weight in establishing any reputation that the trade mark might have had or how much residual reputation might be inherent in the trade mark. The statement of revenues and advertising under the trade mark preceding the non-use period are baldly averred to be ‘many millions’ but there are no details such as an annual breakdown of sales and advertising figures, no details of how and where sales and advertising occurred, and no objective support in the way of exhibits, or trade declarations, for the claim. If slight evidence is going to establish the opponent’s case for residual reputation, that evidence should be of high probative value to which I may accord significant weight and preferably it should include third party evidence: Nodoz Trade Mark [1962] RPC 1.
In the circumstances, the exercise of my discretion and a finding that one or more of the trade marks should remain on the register would not be reasonable.
Decision
Section 101 of the Act allows, inter alia:
101 Determination of opposed application—general
(1) Subject to subsection (3) and to section 102, if:
(a)the proceedings relating to an opposed application have not been discontinued or dismissed; and
(b) the Registrar is satisfied that the grounds on which the application was made have been established;
the Registrar may decide to remove the trade mark from the Register in respect of any or all of the goods and/or services to which the application relates.

I decide to remove registrations 392230, 521837, 521838, and 521839 from the Register in respect of all of the goods for which they are registered as I am satisfied that the grounds on which the applications were made have been established and the opponent has not discharged the onus on it to show that the trade marks have been used.
I direct that the trade marks be so removed after one month from the date of this decision unless before then the Registrar is served with a notice of appeal. In the event of such an appeal, the trade marks would not be removed unless the appeal is discontinued or the Court otherwise orders removal.
Costs
The applicant, having been successful in these proceedings, is entitled to its costs which I order against the opponent at the official scale.
Iain Thompson
Hearing Officer
Trade Marks Hearings
5 November 2007

[2007] ATMO 75

5 November 2007

Key Legal Topics

Areas of Law

Intellectual Property

Commercial Law

Legal Concepts

Appeal

Costs

Remedies

Standing