Opposition by Carabella Holdings Pty Ltd to registration of trade mark application number 1908288 (class 30) – THE PARAGON - in the name of Conset Investments Pty Ltd
[2021] ATMO 12
•22 February 2021
TRADE MARKS ACT 1995
DECISION OF A DELEGATE OF THE REGISTRAR OF TRADE MARKS WITH REASONS
Re:Opposition by Carabella Holdings Pty Ltd to registration of trade mark application number 1908288 (class 30) – THE PARAGON - in the name of Conset Investments Pty Ltd
| Delegate: | Adrian Richards |
| Representation: | Opponent: Sonia Stewart of Counsel instructed by FB Rice Pty Ltd Applicant: Geoff Davidson and Huon Shields of Halfords IP |
| Decision: | 2021 ATMO 12 Trade Marks Act 1995 (Cth) – opposition under section 52 – ground of opposition under section 58 considered – applicant is not the owner of the trade mark – opposition successful – registration of the trade mark refused |
Background
Katoomba, the largest town in the Blue Mountains of New South Wales, is home to a building called The Paragon (‘Building’). It has stood at its location in the middle of town since 1909. It was substantially refurbished in the mid-1920s with art deco trappings. Many of those opulent details are preserved in the Building today, having been protected by various heritage registers since at least the late 1970s.
A café and chocolatier operated from the Building from 1916 to 2018 (‘Business’). The Business traded under a few names over those 102 years. Those names always included the word Paragon. Originally opening as Paragon Café and Oyster Palace, by at least 1928 it had changed name to The Paragon Sundae and Candy Store. Throughout its trading it was referred to variously as The Paragon Café, The Paragon Restaurant or simply The Paragon.
This is an opposition to registration of the plain words The Paragon (‘Trade Mark’) in relation to various chocolate-based goods in Class 30. The parties to this matter are the current owner of the Building and the (purported) current owner of the Business. The applicant for the Trade Mark and owner of the Building is Conset Investments Pty Ltd (‘Applicant’). Seeking to oppose registration of the Trade Mark is the successor in title to the Business, Carabella Holdings Pty Ltd (‘Opponent’).
The Applicant filed with this office seeking registration of the Trade Mark on 20 February 2018 (‘Relevant Date’). It was advertised as having been accepted for possible registration on 12 July 2018, and the Opponent filed with this office notice of its opposition to the registration on 30 August 2018. The parties have met the various filing requirements set out in Part 5 of the Trade Marks Act 1995 (Cth),[1] including the filing of evidence. Once this opposition process had neared its end, the parties asked for a hearing of the opposition. I was allocated to hear the matter in my capacity as a delegate of the Registrar of Trade Marks. The hearing was held on 18 May 2020. In attendance for the Applicant was Geoff Davidson and Huon Shields of Halfords IP. Sonia Stewart of Counsel appeared on behalf of the Opponent.
[1] Any reference to a section in these reasons is a reference to a section of the Trade Marks Act 1995 (Cth).
Grounds and onus
The Opponent nominates grounds of opposition under ss 42(b), 58, 60 and 62A. The Opponent carries the burden of establishing any of these grounds on the balance of probabilities.[2] The rights of the parties are assessed as at the Relevant Date.[3] I have decided this opposition solely by reference to the ground of opposition under s 58, and so it has not been necessary to consider the other three nominated grounds.
[2] Pfizer Products Inc v Karam (2006) 219 FCR 585, 591-4 [16]-[26] (Gyles J); Telstra Corporation Limited v Phone Directories Company Pty Ltd [2015] FCAFC 156, [133] (Besanko, Jagot and Edelman JJ).
[3] Southern Cross Refrigerating Co v Toowoomba Foundry Pty Ltd (1954) 91 CLR 592, 595 (Kitto J).
Evidence
The following declarations were filed by the parties to this proceeding:
Evidence in support
Robyn Parker, director of the Opponent, made 4 February 2019 with annexures RP-1 to RP-8
Evidence in answer
John Landerer, director of the Applicant, made 13 May 2019 with annexures JL-1 to JL-11
Evidence in reply
Robyn Parker made 2 August 2019 with annexures RP2-1 to RP2-11
Section 58
This ground of opposition is established if it is found the Applicant is not the owner of the Trade Mark. A decision under this ground of opposition often involves two unrelated parties contesting whether each of their marks so nearly resemble one another, and their goods and services so similar, that the owner of one mark ought to be considered the owner of the other. This matter does not proceed on those lines, but instead seeks to follow ownership of a mark from creation through to the Relevant Date. Trade marks are acquired either through first user or first registration (together with an intention to use).[4] From the point of first acquisition a trade mark is property and may be transferred to a subsequent owner.[5] In the present matter, the Trade Mark was acquired by first user and then sold to a subsequent owner. Later still it was sold to one of the parties to this opposition.
[4] Pham Global Pty Ltd v Insight Clinical Imaging Pty Ltd (2017) 251 FCR 379, 386-7 [29] (Greenwood, Jagot and Beach JJ).
[5] Riv-Oland Marble Co (Vic) Pty Ltd v Settef SpA (1988) 19 FCR 569, 571 (Bowen CJ).
The aspects of the evidence of central relevance to my decision relates to the various historical legal instruments—contracts for sale of real property and business, leases, business registrations and supplementary materials such as liquor licenses. There is within them on my reading of it sufficient evidence of a devolution of title in the Trade Mark from first acquisition through to the Relevant Date. I hasten to add that dealings in the Building, Business and Trade Mark stretch back over many years. This means that some documents are missing, so I have inferred some links in the chain from other sources. I have set out the basis for those inferences where necessary and with a particular emphasis on the areas of contention between the parties.
First user and a pair of family companies
The first user of the Trade Mark, established in the evidence, is something on which the parties agree. Historical accounts show that it was first used in relation to chocolate goods in the mid-1920s by Zacharias Simos, the original proprietor of the Business. This aspect of the enterprise began when Zacharias Simos took on a master chocolatier, his brother George. At around the same time, ‘Simos Bros’ (which I take to be Zacharias and George) obtained trade mark registration number 49735, reproduced below.
Zacharias Simos had by 1924 bought two of the three shopfronts in the Building. In 1930 Zacharias Simos married Mary, who during that decade bought the third shopfront in the Building. As such Zacharias and Mary Simos together held the freehold of the entirety of the Building since the 1930s.
Paragon (Katoomba) Pty Ltd was registered on 29 June 1959. Details of the assets of this company are scarce, but this office’s records show that it was recorded as having taken over as registered proprietor of trade mark 49735 at least by 2 April 1998 (but probably much earlier).
Zacharias Simos passed away on 15 November 1976, with Mary Simos carrying on as sole manager of the Business. Paragon Properties Pty Ltd was registered on 14 May 1985. I infer from its later dealings both that Mary Simos had effective control of this company and that it in turn held title to the Building. In 1996 Paragon (Katoomba) Pty Ltd obtained registration of three more trade marks, two of which are relevant here: 714083 for the plain words THE PARAGON, and 716383 for a stylised version of the same words, both for goods including chocolates.
I pause here to note that the Trade Marks Act 1995 (Cth) provides for ‘registration of ownership not ownership by registration’.[6] As such, I consider that the common law ownership of the Trade Mark created by first user around 70 years prior, was registered as an aspect of registration 714083. As such, when I refer below to these registered marks associated with the Business, I refer also to the Trade Mark.
[6] Accor Australia & New Zealand Hospitality Pty Ltd v Liv Pty Ltd (2017) 345 ALR 205, 240 [170] (Greenwood, Besanko and Katzmann JJ).
Despite retiring from the hospitality trade in 1987, it appears that Mary Simos did not relinquish ownership of the Business until 2000. Instead, she continued to control the company that owned the Business, Paragon (Katoomba) Pty Ltd. This inference is again based on later dealings by that company, to which I now turn.
Gavin Enterprises Pty Ltd, Gavin and Castle
Mary Simos’ two companies sold off major assets in 2000. The Opponent has produced partial copies of the contracts of sale for the Building and the Business. Despite their having turned up in evidence in reply and only being the front page of each contract, I consider these documents to be reliable. The two contracts for sale were both executed on 16 June 2000. They purport to effect the following transfers of ownership:
- The Building was sold by Paragon Properties Pty Ltd to Gavin Enterprises Pty Ltd
- The Business was sold by Paragon (Katoomba) Pty Ltd to Bruce Gavin and Joanna Castle.
The Applicant submits that Bruce Gavin and Joanna Castle control Gavin Enterprises Pty Ltd. I see no reason to doubt this, but the point to be drawn here is that the split in ownership between the Building and the Business, possibly established by Mary Simos in 1985, or perhaps by Zacharias and Mary Simos some decades earlier, continued after these transfers on 16 June 2000.
At this time, this office’s records listed Paragon (Katoomba) Pty Ltd as proprietor of registered trade marks 49735, 714083 and 716383. I note this to further observe that, if the Trade Mark was transferred on this day, it must have been assigned to Bruce Gavin and Joanna Castle, not Gavin Enterprises Pty Ltd. The Applicant questions whether the Trade Mark transferred at this time, seeking to draw a negative inference from two facts: only the front page of this contract is in evidence and no request was made with this office to record the assignment of any of those registered trade marks.
Notwithstanding those points I consider it probable that proprietorship of those three registered trade marks came to be with Bruce Gavin and Joanna Castle on that day. The position at common law is that an unregistered trade mark is part of the goodwill of the related business, and so can only be assigned as part of that goodwill.[7] The situation is sometimes different with a registered trade mark, which may be sold ‘with or without the goodwill of the business concerned’.[8] This provision leaves to the contracting parties to decide whether to transfer trade mark ownership. While it is good practice to execute a deed of assignment in this situation, s 106(3) is neutral in its terms. It certainly does not amount to a presumption that a registered trade mark was not transferred with the goodwill of a business. Indeed, the position at common law indicates the contrary—that unless agreed otherwise a registered trade mark will also transfer as part of the goodwill. While the Register of Trade Marks stands as prima facie evidence of the particulars on it,[9] there are several circumstances surrounding the sale of the Business on 16 June 2000 reinforcing the view that transfer of those registered marks, and thus the Trade Mark, did in fact occur at the time.
[7] Kraft Foods Group Brands LLC v Bega Cheese Ltd (No 8) (2019) 370 ALR 371, 400-4 [99]-[117] (O’Callaghan J), affd (2020) 377 ALR 387, 420-1 [128] (Foster, Moshinsky and O’Bryan JJ).
[8] Trade Marks Act 1996 (Cth) s 106(3).
[9] Ibid s 210(1).
Firstly, the amount paid for goodwill was considerable—over 70% of the sale price (the remainder being for plant, fittings and chattels). Secondly, the circumstances of this transaction were such that Mary Simos was, after many decades running a restaurant and then continuing with its ownership for over a decade after that, was now at a very advanced age and appears to have been exiting the Business entirely. It would seem odd to hold back ownership of any trade marks associated with the Business, particularly since Paragon (Katoomba) Pty Ltd began winding up as soon as 2001. (At deregistration, had Paragon (Katoomba) Pty Ltd still owned these registered trade marks in law, they would have transmitted either to the Australian Securities and Investments Commission (‘ASIC’)[10] or the Commonwealth.[11]) Thirdly, the business name history held by ASIC shows Paragon (Katoomba) Pty Ltd, having held the name THE PARAGON since time immemorial,[12] transferred it to Bruce Gavin and Joanna Castle on 28 June 2000. Finally, the evidence indicates that the Business continued after 16 June 2000 and was sold twice more after this date (detailed below), trading continually until 2018, with no mention of any liability to pay out trade mark license fees. This is consistent with the owner of the Business also owning the Business’ trade marks.
[10] Corporations Act 2001 (Cth) s 601AD(2)
[11] Ibid s 601AD(1A).
[12] The ASIC record shows an unlikely commencement date of 1 January 1753, some 35 years before the colony of New South Wales was established.
The Business: Gavin and Castle to Allatt
Bruce Gavin and Joanna Castle sold the Business to Barbara Allatt and Liam Barlow, probably on 2 June 2003. While the sale document is not in evidence, there is a registered lease of ‘The Paragon’ Restaurant premises listing Gavin Enterprises Pty Ltd as lessor and Barbara Allatt and Liam Barlow as lessees, commencing 2 June 2003. Further support is found in the ASIC record of a transfer of the business name THE PARAGON from Bruce Gavin and Joanna Castle to Barbara Allatt and Liam Barlow on 2 June 2003. Yet more support appears in a liquor license information search of 12 May 2006 which list Bruce Gavin and Joanna Castle as owners of the Business from 28 June 2000 to 2 June 2003, and Barbara Allatt and Liam Barlow thereafter.
Late in 2003 all of Liam Barlow’s interest in the Business transferred to Barbara Allatt. The lease between Gavin Enterprises Pty Ltd and Barbara Allatt was renewed for a further five years from 2 June 2008.
The Building: Gavin P/L to the Applicant
The Applicant submits that it purchased the Building from Gavin Enterprises Pty Ltd on 12 May 2006. Direct records of the actual transfer are again not in evidence, but again there is sufficient evidence supporting this fact. Of note here are the records of registered leases over the ‘The Paragon’ Restaurant premises with the Applicant as lessor and (at least initially) Barbara Allatt as lessee.
The Business: Allatt to the Opponent
Barbara Allatt sold the Business to the Opponent on 2 May 2011. Then on 23 May 2011 Barbara Allatt purported to assign ‘Common Law rights’ to four trade marks, including, relevantly, the formerly registered trade marks 49735, 714083 and 716383. I write ‘formerly’, since by this time all three marks had been removed from the Register. Trade mark registrations need renewal once every ten years, and these three marks had lapsed between 2006 and 2008. Strictly, this deed of assignment will have been superfluous. Since no registered trade marks existed, there was no need to assign them by deed. Rather, any common law trade marks, including the Trade Mark, must have transferred on 2 May 2011 along with the goodwill.
Also on 23 May 2011, Barbara Allatt assigned her tenancy in the Building to the Opponent. The Applicant subsequently entered into another five-year lease with the Opponent from 2 June 2013. At the end of that lease, the parties were unable to strike a new bargain, and the Opponent vacated the Building. A little over a month later, the Applicant filed for the Trade Mark with this office.
Counterfactual: the Applicant’s preferred interpretation of events
The Applicant submits that after Mary Simos sold off the Business and Building, Gavin Enterprises Pty Ltd then merely leased the Business and its premises to Allatt. From this it would follow that the 2011 transfer from Barbara Allatt to the Opponent is a case of nemo dat quod non habet (you cannot sell what you do not own). Barbara Allatt did not even own the Business, let alone any trade marks associated with it. As such the Opponent could only have provided valuable consideration to Barbara Allatt for the privilege of taking over her lease.
That would have required one of two sets of transactions. Either sometime between 1985 and 2000 Paragon (Katoomba) Pty Ltd sold the Business and its trade marks to Paragon Properties Pty Ltd, then leased the Business back to Paragon (Katoomba) Pty Ltd granting a license to use the trade marks. (There is no hint anywhere that these transactions might possibly have taken place.) Later still Paragon (Katoomba) Pty Ltd purported to sell the Business again (being something it no longer owned), and despite the document I can see in evidence appearing as a sale of business, this transaction was merely an assignment of a lease to the Business (and presumably a license to use the trade marks). Alternatively, and this at least is reflected in the evidence, Paragon (Katoomba) Pty Ltd sold the Business with its trade marks as part of the goodwill to Bruce Gavin and Joanna Castle. Then Bruce Gavin and Joanna Castle sold the Business and trade marks to Gavin Enterprises Pty Ltd, who then leased the Business back to Bruce Gavin and Joanna Castle, licensing them use of the trade marks. (Again, there is no suggestion in the evidence of any of these hypothetical sell-and-lease-back/license transactions.) Later still Bruce Gavin and Joanna Castle purported to sell the Business (which they did not own) to Barbara Allatt and Liam Barlow, but again this was merely an assignment of the lease to the Business. Apart from the sale of the Business to Bruce Gavin and Joanna Castle, there is simply no supporting documentation that would go to any of the transactions above.
The Applicant refers to certain aspects of the leases that were in effect from time to time between, as lessors, Gavin Enterprises Pty Ltd and the Applicant, and as lessees, Barbara Allatt (and Liam Barlow) and the Opponent. The Applicant particularly draws attention to terms of the lease that appear to control the lessee’s running of the Business. For example, there is a clause requiring the premises be kept ‘fully stocked’ and to conduct the Business ‘in a reputable manner to produce the maximum volume of sales and transactions’. There is in my view nothing in any of these clauses that would indicate that the Business was being leased out with its premises. Each of these lease documents concern the letting of commercial real estate, and nothing more.
The Applicant also seeks to accord the goodwill of the Business with the Building itself. It is the Building, the Applicant submits, so ornate and of such historic significance, it is inherently tied to the goodwill of the Business. Support for this contention is found in a characterisation of the High Court as to the nature of goodwill: it is ‘the attractive force which brings in custom and adds to the value of the business’.[13] It is helpful at this point to recall that the goods here are chocolates. The attractive force driving customers toward these chocolates as opposed to those of other traders relates to a long history of fine chocolates sold under the Trade Mark. That the Building they were most often sold from happens to share the name of that Trade Mark seems to be merely incidental.
[13] Commissioner of Taxation (Cth) v Murry (1998) 193 CLR 605, 630 [68] (Gaudron, McHugh, Gummow and Hayne JJ).
Conclusions on ownership
The owner of a business also owning that business’ trade marks is orthodox practice. The evidence strongly suggests that this arrangement had been established as early as the time of Zacharios Simos. The evidence also indicates that the Trade Mark has since then quite deliberately traded down the chain of title alongside the Business. While it is certainly true that the Opponent bears the onus of establishing the Applicant’s lack of good title to the Trade Mark, in circumstances such as these the Applicant must put forward a coherent case as to why it enjoys ownership. There is simply no evidence that the Applicant bought the Business in 2006. It was within the Applicant’s powers to put all of the relevant documents from that time into evidence, and it elected not to. If those documents had said that the Business was being sold alongside the Building, while there would still be questions to resolve,[14] the Applicant’s claim to be the true owner of the Trade Mark would have been strengthened. The deliberate choice to omit these documents, together with the evidence I have already discussed, suggests that they did not deal in the ownership the Business.
[14] For example, how can this be squared with the fact that Bruce Gavin and Joanna Castle sold the Business to someone other than Gavin Enterprises Pty Ltd three years beforehand?
The parties have each to some extent invited me to make a finding as to whether an assignment of the Trade Mark was either part of, or implied into, a contract that I have not seen. The Opponent’s evidence strings together a chain of title in the Trade Mark stretching back to the 1920s, with some small gaps that are filled in with corroborating evidence. In contrast the Applicant asks me to imagine that a series of complex dealings took place for which there is no evidence and then to read the contracts of sale of a business that are in evidence as though they were assignments of leases.
I consider the Opponent has established on the balance of probabilities that it was the owner of the Trade Mark at the priority date. It follows that this ground of opposition is established.
Decision and costs
The Opponent has established a ground of opposition, and so I refuse to register the Trade Mark. Bearing in mind the parties’ rights to appeal, this refusal should be recorded one month from the date of this decision. If the Registrar of Trade Marks is served with a notice of appeal before that time, the refusal shall not occur until the appeal has been withdrawn or discontinued. Otherwise the disposition of this opposition should be in accordance with the Court’s order or direction.
Both parties sought an award of costs. Costs usually follow the event. There being no reason to make an exception here, I award costs against the Applicant.
Adrian Richards
Hearing Officer
Delegate of the Registrar of Trade Marks
22 February 2021
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