Outrigger Hotels Hawaii v Evangelista Pty Ltd

[2000] ATMO 28

TRADE MARKS ACT 1995

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

Re:The matter of a hearing date for the opposition by Outrigger Hotels Hawaii to registration of trade mark application 731665(42) - Outrigger Resort and Sail Device- filed in the name of Evangelista Pty Limited.

Background
This issue concerns whether a hearing date should be set down for the hearing by a delegate of the Registrar of the opposition in the above matter or if the issue should be suspended from opposition till proceedings in the Federal Court between the parties have been finalised.

This opposition arose in the following way.  On 3 Apr 1997, Evangelista Pty Limited of Queensland (EPL) filed application for the registration of the trade mark appearing below in International Class 42 in respect of services which now read as appear below:

Services rendered in procuring lodgings, rooms and meals; holiday resort services in this class; services rendered in procuring food and drink prepared for consumption; restaurants, self-service restaurants and canteen services in this class;

On 29 Jul 1997, an examiner issued a report that stated there were grounds under which the application should be rejected in terms of subsection 44(2).  She cited registration 588576 which has a priority date of 16 Oct 1992 and is registered in the name of Outrigger Hotels Hawaii (OHH).

On 6 Jan 1998, Fisher Adams Kelly, trade mark attorneys for EPL, wrote to the examiner enclosing evidence of the use of the trade mark by EPL which was said to date from 5 Jan 1988.

Following an assessment of the evidence by the examiner and her supervisors, the application was accepted for registration on 19 January 1998 and advertised as such on 5 Mar 1998. The application carried the endorsement:

Provisions of subsection 44(4) applied.

By way of explanation, subsections 44(2) and 44(4) allow as below and, inasmuch as it is relevant to the issue, read:

Identical etc. trade marks

(2) Subject to subsections (3) and (4), an application for the registration of a trade mark (applicant's trade mark) in respect of services (applicant's services) must be rejected if:

(a) it is substantially identical with, or deceptively similar to:

(i) a trade mark registered by another person in respect of similar services or closely related goods; or
(ii) a trade mark whose registration in respect of similar services or closely related goods is being sought by another person; and

(b) the priority date for the registration of the applicant's trade mark in respect of the applicant's services is not earlier than the priority date for the registration of the other trade mark in respect of the similar services or closely related goods.

Note 1: For deceptively similar see section 10.

Note 2:  For similar services see subsection 14(2).
Note 3:  For priority date see section 12.

(4) If the Registrar in either case is satisfied that the applicant, or the applicant and the predecessor in title of the applicant, have continuously used the applicant's trade mark for a period:

(a) beginning before the priority date for the registration of the other trade mark in respect of:

(i) the similar goods or closely related services; or
(ii) the similar services or closely related goods; and

(b) ending on the priority date for the registration of the applicant's trade mark;

the Registrar may not reject the application because of the existence of the other trade mark.

Note 1:  An authorised use of the trade mark by a person is taken to be a use of the trade mark by the owner of the trade mark (see subsection 7(3)).

Note 2:  For predecessor in title see section 6.
Note 3:  For priority date see section 12.

The application was advertised in the Official Journal of 5 Mar 1998 and, on 23 Apr1998, OHH filed notice of opposition to the registration of the trade mark.

Other
On 8 Jan 1998 OHH commenced proceedings in the Federal Court in Brisbane against EPL.  OHH alleges that EPL has infringed its trade marks, committed the tort of passing off and is contravening, or has contravened, the Trade Practices Act 1974.  EPL has lodged counterclaims against OHH.

EPL has requested that the proceedings before the Registrar be suspended until the Federal Court proceedings are finalised and the decision of the Court is known.  OHH, however, wishes the Registrar to deal with the opposition forthwith.

There being an impasse in the issue of the hearing of the matter before the Registrar, the parties were notified of the Deputy Registrar's decision to list the matter of the suspension for a hearing.  OHH relied on written submissions at the hearing from their solicitors Corrs Chambers Westgarth (Corrs); Paul Thompson of Fisher Adams Kelly represented EPL and made submissions by telephone conference.

The submissions
Corrs recounted the history of the issues before the Federal Court and continued, "EPL has sought to defend these proceedings and has cross-claimed against OHH, making similar claims.

"The hearing of these proceedings will require the Federal Court to traverse the entire trading history of Evangelista and Outrigger Australia, and the public perceptions arising therefrom.

"These proceedings in the Federal Court have not yet been set down for trial.  In summary, the position is that:

(a)the delivery of pleadings was only completed on 28 April 1999;

(b)on 26 May 1999 Evangelista was directed to deliver witness statements by 29 June 1999;

(c)it has taken almost 5 months for Evangelista to deliver 4 witness statements (which are of modest size and from local witnesses) in response to these directions;

(d)on 12 October 1999, Outrigger was directed to deliver witness statements by 22 November 1999.  These statements are presently being finalised,

(e)the Federal Court requires a letter from the parties by 4 February 2000 on whether the matter is to be the subject of a further mediation;

(f)subject to any mediation, the matter will then be relisted for pre-trial directions.

"These Federal Court proceedings are not the only forum in which this dispute is being litigated.  The dispute was originally fragmented into:

(a)proceedings before the Registrar of Trade Marks brought by Evangelista to remove Outrigger's trade marks for non-use.

This dispute has now been incorporated in the Federal Court proceedings by Evangelista's cross-claim

(b)there is an application by Evangelista to, obtain registration of a trade mark in its own name.

This is the present matter under consideration.

(c)there is an application by Outrigger to register these trade marks for an expanded range of accommodation services.

This is a matter which neither party wishes to have heard prior to the resolution of the Federal Court proceedings,

"The question for present determination is to settle upon the most efficient and just manner of resolving these fragmented disputes.

"Outrigger's Submissions

"The conventional approach to the resolution of fragmented disputes of this nature is to devise a procedure by which all substantive matters in dispute between the parties are resolved at the one hearing.

"This approach is conventionally taken to ensure that:

(a)there is no risk of inconsistent findings of fact or law between different tribunals (the unhappy event which is colourfully described as 'falling between two stools').

(b)the cost and expense of hearings is minimised,

(c)the duration of the dispute is minimised (eg. by ensuring that there is only a single appeal process, rather than a series of hearings and appeals).

"Outrigger submits that this approach should also be taken in the present matter to avoid these very risks of prejudice,

"As Outrigger understands the position, it is Evangelista's intention to appeal any unfavourable determination of the present application.

"Such an appeal goes to the Federal Court and involves a hearing de novo with fresh evidence admitted as of right.

"Accordingly, Outrigger faces the risk of two separate Federal Court hearings concerning related matters .

"The risk of prejudice of such a course will be minimised if the present application is determined as soon as possible, so that any such appeal may be heard together with the existing Federal Court proceedings at a single trial.

"At the trial of the present Federal Court proceedings, all relevant factual matters pertaining to the trading history of the parties will be ventilated.  Accordingly, this is the ideal opportunity for all relevant disputes between the parties to be finally resolved.  Any disputes of fact can be determined by a single tribunal which will have the benefit of a broad-ranging view of the evidence.

"Such a determination:

(a)will remove any risk of subsequent, inconsistent findings.

(b)will concentrate the appeal process, into one avenue.

(c)will eliminate the risk of further cost and delay of other hearings.

"It appears to be Evangelista's position that the present application could merely be suspended, to permit the Federal Court trial to proceed.  Evangelista wishes to suggest that the Federal Court trial will have the practical effect of resolving the dispute between the parties.

"The difficulty with this course is that Evangelista does not bind itself to this position.  It is free to change its mind and, after losing the Federal Court proceedings, continue to press ahead with this application and all appeal avenues therefrom.

"In our letter of 27 November 1999 (which we understand was copied to Evangelista), the following observation was made:

"We note that Evangelista has offered to undertake that, in the event that it is unsuccessful in its defence of the matters in the Federal Court, it will consent to the discontinuance of its applications and opposition before the Registrar."

"Since the date of that letter, no such undertaking has been forthcoming.

"In these circumstances, our client is anxious to have the earliest possible determination by the Registrar of this application, to ensure that any appeal from this determination can be heard together with the present Federal Court proceedings.

"Prior to the letter of 5 November 1999, there was no suggestion from Evangelista that the proceedings before the Registrar should not be heard and determined at the earliest available opportunity.  No reason is given for Evangelista's recent change of attitude.  Our client is. concerned that this late request for a suspension is merely another attempt to postpone the determination of this dispute.  This is a course our client is determined to resist.

"In the circumstances, Evangelista's request for suspension should not be granted.

In response for EPL, Paul Thompson also first gave an outline of the history of the issues.  Mr Thompson said that it is clear that the Registrar has the power under section 54 and regulation 5.14 to set a date for a hearing of an opposition and to determine that opposition.  It is also clear that the Registrar or his delegate has the expertise and experience to determine the opposition to registration.  The question is whether it is appropriate to proceed with such a hearing or to await the outcome of the Federal Court action.

In the Federal Court action OHH alleges passing off, breaches of the Trade Practices Act 1994, (TPA) and infringement of various registered trade marks. EPL's counterclaims in the Federal Court include passing off and similar breaches of the TPA. The various claims and counterclaims seek injunctions or orders from the Court restraining the use of the trade mark, removal of OHH's registered trade marks or such other orders as the Court may see fit.

Mr Thompson continued, in considering the present situation, and the provisions of section 54 and the provisions of regulation 5.14, it can be seen that no time is specifically set for the setting down or the conduct of a hearing.  The Registrar has a wide discretion in when to hear an opposition - he has an obligation to hear an opposition but the timing is at his discretion. In exercising that discretion there are a number of matters that should be considered:

Turning to case-law, Mr Thompson observed that in Dynamic Data Systems Pty Ltd v Ingenico International (Pacific) Pty Ltd (1998) 43 IPR 416, the Commissioner of Patents' Delegate after mentioning Ferocem Pty Ltd v Commissioner of Patents (1994) 28 IPR 243 and quoting Sackville J in A Goninan & Co Ltd v Commissioner of Patents  (1997) 38 IPR 213, continued: "From these decisions it is clear that the commissioner must give genuine and proper consideration to all relevant circumstances and that his discretion cannot be reduced to an imperative compliance with particular requirements." … "Relevant considerations will include the varied interests of the parties and also the public interest which may be much more significant in considering the extension of term of a petty patent that it would be in normal opposition proceedings."

In Ferocem Pty Ltd v High Tech Auto Tools Pty Ltd (1993) 29 IPR 144 proceedings for revocation of the petty patent at the instigation of Ferocem were then pending in the Federal Court. The petty patentee sought to defer the Patent Office hearing pending resolution of the Federal Court proceedings. Ferocem opposed that course and requested a Patent Office hearing without further delay. At page 148 of the decision, the Delegate says, "As a general proposition, where there is a pending court action of direct relevance to a matter before the commissioner, the commissioner prefers the court action to be concluded before determining the matter before him."

If we are to take notice of this conclusion, says Mr Thompson, the question is whether the Federal Court action is of direct relevance to the current opposition. The Federal Court actions relate to infringement, passing off and breaches of the TPA. Although not identical considerations, the causes of action are founded on reputation and goodwill, both of which in turn are direct products of use.

As a first conclusion, Mr Thompson submits, it is highly likely that the Court will make orders, which will dispose of all issues between the parties.  If that is not the case, the Court will make findings of fact which relate to EPL's use of its trade mark.  If we consider the present application, trade mark 731665 was accepted pursuant to the terms of subsection 44(4); that is, a Trade Marks Office examiner concluded that, on the basis of evidence provided, that there had occurred continuous use prior to and up to the date that OHH lodged its applications to register its trade marks.  It is hence worthwhile at this stage considering the nature of subsections 44(3) and (4).  To state the obvious, says Mr Thompson, the Act sets up a scheme of statutory rights dependent on registration.  However, the legislator acknowledges that trade mark rights can arise independently of the Act, through use.  The normal requirements of the Act are suspended in certain circumstances where use is present.  Subsections 44(3) and (4) reflect those circumstances.  The Act goes on to acknowledge that parties to such use may have a conflict; it (the Act) therefore states specifically at section 230 that passing off is unaffected by the Act [except as provided by in subsection 230(2)].  [My parentheses].  That is, submits Mr Thompson, the parties can still go to Court and debate the issues of possible infringement of reputation rights.  

It is the applicant's submission that this is exactly what the present parties to this dispute are doing.  It should be noted at this stage that EPL is confident that the examiner's assessment will be supported by any subsequent consideration of the facts.  However, the Court will make a finding of fact of direct relevance to acceptance and opposition of this application.  It can be reasonably assumed that the Court will, in all probability, will be better supplied with evidence, and will have the advantage of the oral examination, and cross-examination, of witnesses. The material before the Court will therefore almost certainly be more comprehensive that that before the Registrar's Delegate.  Any finding of fact will be based on this more extensive material. 

In Ferocem, supra, says Mr Thompson, the Delegate goes on to comment on the practice of deferring a hearing.  The Delegate states at 148-149          :

This would seem to particularly apply where the matters in dispute are strictly between the parties, and have no significant consequential effect on third parties. Thus if the effect of the court action was in a practical sense confined to the parties, I think the commissioner would be fully justified in deferring a hearing until the court action is determined — providing neither party would be significantly disadvantaged.

In the result, submits Mr Thompson, neither party is disadvantaged by the suspension of the opposition.  The applicant has no registered right to its trade mark and, if OHH is successful in the opposition to registration, EPL will have no registered right to its trade mark.  The position of the parties will not change if the opposition is successful.  If, on the other hand, EPL is successful, it will hold a registered right, which it currently does not hold.  However EPL is pragmatic enough to acknowledge that an injunction spawned by the Federal Court action, will render such a registration of no value.  In the absence of a hearing, OHH is not disadvantaged. 

It can be argued, however, says Mr Thompson, that the applicant is the only party who could be harmed by a deferral. Despite that disadvantage, the applicant (EPL) acknowledges the appropriateness of the deferral. In fact, either outcome will not impact significantly on the parties. The Court action will remain on foot, the applicant will rely on its use of its trade mark in both the passing off and TPA actions and additionally will rely on the same use to support its application for trade mark registration (if necessary, subsequent to the decision of the Court, if the application is still alive).

Mr Thompson then referred me to the case of Re Applications By Yamazaki Mazak Corporation (1992) 24 IPR 321 where at 343, the Delegate stated:

In the circumstances before me, were the patentee in favour of an adjournment of the extension of term matters until after the court appeal is determined, I would not hesitate in deciding to adjourn the extensions hearing. It is easy to appreciate some advantages arising from that course of action given that one matter can be resolved before the other. However, the patentee is against such an adjournment for various reasons, none the least being related to its interests in benefiting from the patents.

However, here, says Mr Thompson, the applicant is in a situation analogous to that of the patentee and has no objection to the suspension of the opposition process until the decision of the Courts is known.  In Yamazaki, supra, the Delegate also remarked that, "… in my view the Commissioner has a duty to act in a way which leads to minimal prejudice to the respective parties."  In the present instance, no legal prejudice will be suffered to either party, but both parties will suffer financial prejudice if the matter is heard by the Delegate prior to trial.

Turning to the public interest, Mr Thompson conceded that there is a public interest in having matters before the Registrar considered expeditiously.  However, in this case there are, he argued, other factors that impact on the public interest.  There is an interest in having disputes between parties resolved as efficiently as possible and with the minimal cost to the public purse as is possible with fairness to the parties.  The Federal Court proceedings should dispose of all of the issues between the parties.  If the issue of trade mark registration is still alive at the close of proceedings, it will simply be a matter of listing the opposition for a hearing and proceeding, but with the advantage of factual decisions made by the Court.  There is no need at this time to expend the resources of the Trade Marks Office on a detailed analysis of the evidence and extensive submissions expected at a full hearing of the matter before the Registrar's Delegate.  There is a further public interest in letting the parties dispose of the matter in the most efficient and cost effective manner possible, proper preparation for a hearing before the Registrar will take a considerable amount of time.  The real costs to the parties, both in preparation and appearance, will by far exceed any costs recoverable under Schedule A to the Trade Marks Regulations which may be awarded to a successful party.  Given the relative financial size of the parties, the balance tips towards EPL, says Mr Thompson, as it is not so able to shoulder the burden of expenses as is OHH.

The present application can be distinguished from Ferocem, supra, says Mr Thompson, because there are no significant third party rights, which may be affected.

Reasons
Section 54 of the Act allows:

Opposition proceedings

54.(1) The Registrar must give to the opponent and to the applicant an opportunity of being heard on the opposition.

Note:For opponent and applicant see section 6.

(2) Subject to subsection (1), the proceedings for dealing with the opposition must be in accordance with the regulations.

Further, regulations 5.14, 21.15 and 5.16 provide:

Hearing of opposition

5.14   (1)     An applicant may ask the Registrar to hear the parties to opposition proceedings, if:

(a)the opponent serves a copy of a notice under subregulation 5.8 (1); or

(b)at the end of the period for service of:

(i)a copy of the evidence in support under subregulation 5.7 (1); or

(ii)a copy of the notice under subregulation 5.8 (1);

the opponent has not served a copy of the evidence in support or a copy of the notice.

(2)   A party to opposition proceedings may ask the Registrar to hear the parties to the opposition proceedings, if:

(a)the applicant serves a copy of a notice under subregulation 5.11 (1); or

(b)at the end of the period for service of:

(i)a copy of the evidence in answer under subregulation 5.9 (1); or

(ii)a copy of the notice under subregulation 5.11 (1);

the applicant has not served a copy of the evidence in answer or a copy of the notice; or

(c)the opponent serves a copy of the evidence in reply under subregulation 5.12 (1) or a copy of a notice under subregulation 5.13 (1); or

(d)at the end of the period for serving:

(i)a copy of the evidence in reply under subregulation 5.12 (1); or

(ii)a copy of a notice under subregulation 5.13 (1);

the opponent has not served a copy of the evidence in reply or a copy of the notice.

(3)   The Registrar must comply with a request made in accordance with subregulation (1) or (2).

(4)   If:

(a)an applicant may make a request to the Registrar under subregulation (1); or

(b)a party to opposition proceedings may make a request to the Registrar under subregulation (2);

and a request is not made, the Registrar may, on his or her own initiative, give an opportunity to the parties to the opposition proceedings to be heard in relation to those proceedings.

Hearings by Registrar

21.15 (1)     This regulation applies if the Act or these Regulations provide for a person to be heard by the Registrar.

(2)   A request for a hearing by the Registrar must be in an approved form.

(3)   On request, or on his or her own initiative, the Registrar may:

(a)fix a time, date and place for the hearing; and

(b)give the parties to the hearing at least 10 days’ notice in writing of the hearing and of the time, date and place fixed for the hearing.

(4)   A party must, as soon as practicable after being notified of a hearing, inform the Registrar in writing whether the party wants to be heard.

(5)   A party may attend a hearing in person or by such means as the Registrar reasonably allows.

(6)   A party may make representations in writing before or during a hearing.

(7)   A hearing must be conducted with as little formality and technicality, and with as much expedition, as the requirements of the Act and these Regulations and a proper consideration of the matters before the Registrar, allow.

(8)   The Registrar is not bound by the rules of evidence but may inform himself or herself on any matter that is before him or her in any way that the Registrar reasonably believes to be appropriate.

(9)   The Registrar may adjourn a hearing by notifying each party to the hearing accordingly.

(10)   Subject to these Regulations, the Registrar may give a direction that is reasonably necessary for the conduct of the hearing.

Conduct of opposition proceedings generally

5.16   (1)     The Registrar may, at the request of a party to the opposition proceedings or on the initiative of the Registrar, give a direction in relation to the procedure in the proceedings.

(2)   A direction given under subregulation (1) must not be inconsistent with these Regulations.

(3)   The Registrar must not give a direction unless the Registrar:

(a)is reasonably satisfied that parties to the proceedings have been notified of the proposed direction; and

(b)has given the parties a reasonable opportunity to make representations concerning the proposed direction; and

(c)is reasonably satisfied that the proposed direction is appropriate.

(4)   For the purposes of paragraph (3) (b), the representations may be made in writing or at a hearing or by such other means as the Registrar reasonably allows.

The above provisions (and case-law referred to in submissions) make it clear that I am, in considering the issue of the possible suspension of this application from the opposition, to balance and reasonably consider the interests of the parties; the most expeditious way of running the hearing of the substantive issue when it comes on before a Delegate of the Registrar; and the public interests which includes the efficiency of the Courts, the maintenance of the Trade Marks Register and the interests of any third parties.

Prior decisions of the Delegates of the Commissioner of Patents or the Registrar of Trade Marks can provide some guidance, but it is clear that I should primarily consider what direction is reasonable in the particular circumstances of this issue.

It has not been suggested that suspending the opposition and hearing of the substantive issue could damage the interests of any third party.  Nor, do I believe, that OHH has shown that its interests could be adversely affected if I so decide.

I bear in mind on the one hand the costs of the immediate hearing of the issue before a Delegate, a possible subsequent appeal and the complication and additional costs to both parties and the public purse of the additional proceedings before the Federal Court.  Counterweighing this possibility is that of the full airing of the issues that are, in any case, on foot in the Federal Court and a judgement on all of the evidence in Court (which will include witness statements and cross-examination).  Such a judgement would appear to be inevitable at this juncture and should be one which will expedite (or even render unnecessary) the hearing of the issue by the Delegate of the Registrar.  I am satisfied that a direction to the latter effect is reasonable and appropriate.

I also think one telling factor is, in the circumstance of this application, that the Federal Court proceedings include allegations and counter claims of passing off, infringement and breaches of the TPA. It is, of course, ultra vires the power of the Registrar's Delegate to decide matters on these bases in the absence of a Court decision addressing those issues.  However, in the presence of a Court decision in these issues, the Registrar may apply the provisions of section 42 which provides, inter alia:

Trade mark scandalous or its use contrary to law

42. An application for the registration of a trade mark must be rejected if:

…

(b) its use would be contrary to law.

I also note that if the issue is immediately heard ahead of any decision by the Court, and if the Delegate is thus not able to reach a decision which could include a finding under subparagraph 42(b), the decision reached might be inappropriate in view of a Court's findings as regards infringement, passing off or breaches of the TPA. It is obviously reasonable for me to direct in a way which minimises the risks that this situation could arise.

It thus appears to be most efficient to all concerned, expeditious for this Office, cost effective to the parties and Court and procedurally fair in this instance to direct a postponement of the hearing and await the decision of the Court.  This will also have the outcome that the Delegate has the opportunity to apply all relevant provisions of the Act should the issue come before the Delegate subsequent to a decision by the Court. 

I note that OHH has argued that EPL has not bound itself to accept and follow the decision of the Court as regards how the Court decision might affect the trade mark application.  However, I do not believe that it would be procedurally fair for a Delegate to presuppose that a party to actions in Court would not abide by the decision of the Court.  Also, I can only restate the possible application of the provisions of subparagraph 42(b) of the Act in circumstances that the Court decision be favourable to OHH.  I finally observe that I am bound to be reasonable in my directions and must, I believe, issue directions with the belief (in the absence of evidence which would indicate otherwise) that the parties not only are reasonable but will also be reasonable.

Decision
I therefore direct that the matter be suspended from opposition until the Court proceedings have been finalised.

Costs
EPL, having been successful in this issue, is entitled to its costs which I award against OHH.

Ian Thompson
Hearing Officer

31 March 2000