Pedita Australia Pty Ltd v Knickerbox Limited

[1995] ATMO 7

TRADE MARKS ACT 1955

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

Re:Opposition by KNICKERBOX LIMITED to an application under section 23 of the Act by PEDITA AUSTRALIA PTY. LTD. to remove trade mark registration number B527599 from the Register

Background

Trade mark number B527599 was registered in the name of KNICKERBOX LIMITED in respect of "all goods in class 25" for the trade mark KNICKERBOX with the effective date of registration being 26th January 1990.  On 24th March 1993, PEDITA AUSTRALIA PTY LTD ("the applicant") filed an application under section 23 of the Act for removal of the trade mark from the Register in respect of all or any of the goods for which it is registered.  The grounds relied upon by the applicant are that the mark was registered without an intention to use it in good faith by the proprietor, and that up to one month before the date of the s 23 application, a period of not less than three years had elapsed during which time there was no use in good faith of the mark in relation to the specified goods by the registered proprietor.  The relevant three year period for the purpose of the application is from 24th February 1990 to 24 February 1993.

On 19th November 1993 KNICKERBOX LIMITED ("the opponent") lodged notice of opposition to the s 23 application.  The grounds of opposition are based on the opponent's denial that the subject trade mark was registered without an intention in good faith to use it in relation to the goods registered; that the opponent does not admit non-use of the mark in good faith during the period 24th February 1990 to 24th February 1993; that it does not regard the applicant as aggrieved by the existence of the present registration; that the mark should not be removed in the exercise of the Registrar's discretion; that it is not in the public interest to have the mark removed, and that the opponent has not abandoned its mark.

Evidence

The evidence in support of removal, which was lodged on 23rd November 1993, comprises statutory declarations by Karen O'Brien, Innes John Douglas Hutchison and Victor Wright.

Lodgment of the opponent's evidence in answer was completed on 26th July 1994.  It consists of the following: a statutory declaration with exhibits A to S by Stephen Schaffer, a statutory declaration with annexure A by Kay Johnston, a statutory declaration by Khajaque Kortian and a statutory declaration with annexure A by Ping-Ping Lam.

All the evidence in reply was lodged on 25th October 1994, comprising statutory declarations by Stephen Albert Voce, Jennifer Gay Gray and Shelley Elizabeth Williams, as well as statutory declarations by Victor Wright, Eric Bruin, Shelly Elizabeth Williams and Margarita Ivanchenko with exhibits VW1, EB1, 1 and MI1, respectively. 

Hearing

The hearing was held in Canberra on 20th December 1994.  The applicant was represented by Mr Graham L Cowin of Phillips Ormonde & Fitzpatrick, Melbourne.  Appearing for the opponent was Ms Kate Johnston of Spruson & Ferguson, Sydney.

The submissions

To establish the standing of a person aggrieved, and therefore of a party with real interest in having the subject mark removed from the Register (Ritz Hotel v Charles of the Ritz 1988 12 IPR 417), Mr Cowin referred to application No 552570 in the name of the applicant, seeking registration of the mark KNICKERBOX in respect of "articles of clothing including briefs for women", against which application has been cited the mark of the present application.

Mr Cowin acknowledged the applicant's onus to establish a prima facie case of non-use of the subject mark, adding that in the present proceedings it was exceedingly difficult to investigate and to provide evidence of the situation existing throughout the whole clothing industry for the relevant period, pursuant to section 23 of the Act.  The three declarants, Messrs Hutchison and Wright and Ms O'Brien, had nevertheless, provided that evidence.  The onus had therefore shifted to the opponent to demonstrate use of the mark.

He then proceeded to discuss at considerable length the opponent's evidence, first concentrating on Mr Schaffer's declaration which, in his opinion, showed that the opponent's interest did not extend to goods beyond women's lingerie, men's underwear and swimwear, identified in para 3 as being "Knickerbox Clothing", and that, from the wording in para 4, it was not clear that the opponent was using the word KNICKERBOX as a trade mark to any significant extent in the course of trade.  The exhibits A to G annexed to Mr Schaffer's declaration concerned the opponent's company or its retail outlets, but it was not clear that those  retail outlets sold clothing under the subject trade mark.  In exhibits H to Q, in the word "Knickerbox" only the letter "K" was rendered in a capital letter, which, together with the context in which the words are used, indicated use of the opponent company's name, but not the use of that name as a trade mark.  The only reference to the opponent's activities in Australia was contained in two brief paras, 15 and 16, on negotiations with a prospective licensee, Mr Steven Katz, with a view to establishing a retail outlet in this country.  In April and May 1993, after the relevant s 23 period, there was a flurry of activity, but there was no indication from the invoice dated 6th April 1993 and the advertisement of 22nd May 1993 that the products in question bore the subject mark.  This hurried activity, possibly prompted by the lodgment of the application the subject of these proceedings, according to Mr. Cowin, showed anything but good intention, on the part of the opponent, to use the mark in this country.

Mr Cowin wished to highlight a further difficulty emerging from Mr Schaffer's declaration which concerned the lack of evidence on circulation of publications included as copies of exhibited articles and advertisements.  Of the exhibits A to Q referred in paras 10 and 12 of the said declaration, only circulation of exhibits A, B, E, K and L was supported by declarations provided by Messrs Kortian and Lam, he said.  The copies of advertisements from the British edition of Elle magazine of January 1991, exhibit K, and from the newspaper the Evening Standard (UK) of 14th January 1992, exhibit L, did not contain reference to KNICKERBOX as a trade mark.  These advertisements, in his opinion, were clearly directed to British readers; prices of the products appeared in English pounds and no contact details had been given for the overseas readers.  He observed that these articles and advertisements were not at all consistent with the placement of products in the Australian market under the trade mark KNICKERBOX, and in support he referred to Radford's and Austin's Appn (1951) 68 RPC 221, Baxter, Woodhouse and Taylor Ltd v Windex Sportswear (1953) 23 AOJP 2395 and Moorgate Tobacco v Philip Morris Ltd (1984) 156 CLR 414. This position, he submitted, was also supported by the evidence given in the delarations by Ms Ivanchenko, Gray and Williams and Messrs Wright and Bruin, all of whom declare their awareness of advertisements of the type appearing as exhibits K and L of Mr Schaffer's declaration, but who believe that the articles and advertisements are directed to foreign readers.

Discussing special circumstances in the trade that might have prevented the opponent from using the trade mark during the relevant period in terms of sub-s 23(4), Mr Cowin believed that, even if the copies of the correspondence of exhibit S of Mr Schaffer's declaration did relate to clothing bearing the subject mark, the subject of that correspondence did not amount to special circumstances; no details had been provided on the opponent's research of market opportunities in Australia mentioned in a letter of 22nd April 1993, which he assumed had nothing to do with special circumstances in the Australian trade, nor would the opponent's commitment to the British market, referred to in a letter of 2nd October 1992, constitute special circumstances. 

Mr Cowin further submitted that there was no good or compelling reason for not exercising my discretion to remove the subject mark from the Register.  He reiterated that the evidence showed that the proprietor had not adopted the mark in good faith and had not commenced using it in Australia.  On the other hand, there was no suggestion of its abandonment.  With the possible exception of one questionable shipment of the products to Australia after the relevant three year period, which may have involved the KNICKERBOX mark, there had been absolutely no use of it.  In the absence of the mark's use and its reputation, it would not be necessary to retain the present registration on the Register in order to safeguard the public from market place deception or confusion.  The applicant had manufactured clothing in Australia over ten years and had a subtantial and genuine commitment to the Australian clothing market.  A further reason for the removal in the public interest would be a more accurate reflection of the actual situation relating to use of the trade marks.  The Trade Marks Register ought to show only those marks that are properly qualified for registration, and which properly continue to be so qualified. 

Finally, he requested that in the event of deciding removal of the mark for some of the goods in respect of which the subject mark is registered, the costs be awarded to the applicant, but even if removal was to proceed for all the goods, then the costs should also go to the applicant.

Ms Kate Johnston first addressed the question of whether the applicant was indeed a person aggrieved by referring to exhibit A of Ms Johnston's declaration containing a copy of a letter with letterhead from Knickerbox Briefs Co Pty Ltd and signed by Mr Alan H Trumble.  For a definition of a "person aggrieved" she relied on Powell's Trade Mark (1893) 10 RPC 195, adding that in a recent decision, Kraft General Foods Inc v Gaines Pet Foods Corporation 28 IPR 617-626, the hearing officer had stated that, if it could be shown that the lodgment of applications in terms of s 23 was tainted or foreshadowed by certain dealings, the applicants of such applications could not be considered as persons aggrieved. She pointed out that the aggrieved person in this instance was probably Knickerbox Briefs Co Pty Ltd, which had incorporated in its name the mark KNICKERBOX. In this regard, Mr Cowin responded by referring to Mr Voce's declaration which, he said, made clear the applicant's position as to the adoption of the mark in 1991 for clothing and as to the filing of the application to register the mark KNICKERBOX. Mr Trumble's letter could be saying that his company wished to use the mark KNICKERBOX, but it could not be interpreted as evidence of the applicant's intention not to use the mark.

Turning to the two grounds for removal in the application, Ms Johnston argued that the applicant had not discharged its onus of proving that the opponent did not have the intention to use the mark KNICKERBOX at the date of filing the application for registration of the mark.  At that time the opponent had stated its intention in a Statement of User under reg 8, and its continuing intention was supported by the licence negotiations, as evident from Mr Schaffer's declaration; moreover, the filing of the application itself constituted prima facie intention to use the mark (Aston v Harlee Manufacturing Co (1960) 103 CLR 391 at 401).

As to the primary ground for removal of the mark, Ms Johnston noted that the applicant had relied on evidence only in respect of goods which could be termed as "intimate apparel", reminding of its onus of establishing a prima facie case of non-use of the mark in respect of all the goods for which the mark is registered, notwithstanding the difficult onus.  Having commented on the applicant's declarations individually, Ms Johnston expressed doubt that the declarants had provided information concerning the trade mark in all the states and territories for the required three year period.  

In response to the claim that the opponent had not produced evidence of sales of the goods in Australia during the period prescribed by s 23, she referred to paras 3 and 4 of Mr Schaffer's declaration explaining that a more apparent and obvious interpretation of his statements would be that the opponent sells "Knickerbox Clothing" using its name or the mark KNICKERBOX; the mark was used with reference to Knickerbox Clothing and also with reference to the retail outlets.  She then turned to use of the mark in a copy of an advertisement under exhibit J which shows the mark KNICKERBOX.  She further submitted that use of the words "by Knickerbox" in the clothing industry was also trade mark use, employing the examples "by Simone" and "by Chanel".  With reference to "Hermes" Trade Mark [1982] RPC 425 for support, she stated that advertisements can constitute use of a trade mark in the course of trade, provided there is a product available to trade. Further, she said, in Moorgate v Philip Morris, supra, at p 433, the High Court considered that use of a trade mark may be effected by advertising of the goods, provided it was possible to identify an actual trade or offer to trade in the goods bearing the mark, or an existing intention to offer or supply the goods bearing the mark.  The advertisements illustrated in exhibits K and L of Mr Schaffer's declaration stated that the products were available from Knickerbox.  Advertisements of this nature were clearly for the purpose of soliciting trade, she asserted; products could be shipped to Australia, they were available for supply, even though they could not be bought at locations in this country operated by or on behalf of the opponent.  In this regard, she cited Re Registered Trade Mark "Yanx"; Ex parte Amalgamated Tobacco Corp Ltd (1951) 82 CLR 199. She noted that some recent decisions have suggested that advertisements in publications may not constitute an offer to sell, one such notable case being Midas Ltd v Mister Figgins Pty Ltd (1987) AIPC 90-384 in which there was no evidence before the Registrar that goods had found their way to Australia, and the hearing officer had not agreed that there had been use of the mark as a trade mark. In her opinion, that case could be distinguished from the present situation, because use "by Knickerebox" was trade mark use in relation to clothing.

In continuing her submissions, Ms Johnston discussed the exercise of the Registrar's discretion under s 23, which had been considered by Kitto J in Carl Zeiss Stiftung's Trade Mark [1970] RPC 139, i e that removal of a mark may be refused, even though the party seeking removal had established a case in terms of section 23. The opponent submitted that in the present case public interest would be better served by maintaining the registration. In expanding her argument, she referred to Ritz v Charles of the Ritz, supra, where at p 481 McLelland J said that the "Court's powers to order ... the removal of a trade mark under sec 23(1) are in each case of a discretionary nature.  This is the natural and ordinary meaning of the words used and promotes the underlying policy of the Act by giving the court a sufficient degree of flexibility to give effect to public interest considerations", and further his Honour had stated that "if the condition of exercise of the court's power has been established, the entry of the mark should be expunged, or the mark should be removed, as the case may be, 'unless sufficient reason appears for leaving it there'..." (p 482).  The opponent submitted that sufficient reason was present.

She then proceeded to apply the five reasons as to the exercise of discretion, set out in the "Hermes" case, supra, to the opponent's situation.  Firstly, the opponent had no intention to abandon its mark, which was supported by negotiations with the prospective licensee.  The opponent's correspondence with Mr Katz, as illustrated in exhibit S, up until the end of the relevant period envisaged possible grant of a licence to him or his company.  The negotiations were still continuing but, because of the specialized manner in which the opponent's business was carried on, the appointments required time.  Even though bona fide steps to revive the mark were not apparent through sales of products in Australia, continuation of these negotiations to establish the opponent's business in the same manner in which it had establised business in other countries of the world continued, hence, in the opponent's view, the revival point of the Hermes case  was satisfied.  Secondly, the opponent's mark was known to the Australian public through a number of avenues: advertisements and promotion of Knickerbox clothing by use of its corporate name or its trade mark in publications circulated in Australia, and by constant travel of people from other countries, as espoused by Lockhart J in ConAgra Inc v McCain Foods (Aust) Pty Ltd 23 IPR 193 at p 231. Thirdly, even though there had not been any sales of the goods to consumers in Australia bearing the trade mark since the relevant period, the preparation work had commenced before it and it continues. Fourthly, the applicant had filed its application without first ascertaining that the opponent had the right to exclude the applicant's use of the mark. Fifthly, although stricty not in compliance with the issue in the Hermes case, if the subject registration was removed and the applicant's application was permitted to be accepted, in view of the opponent's reputation, members of the public would believe that clothing bearing the KNICKERBOX trade mark came from the opponent or its licensees.  The public interest dictated therefore that, to safeguard the public from deception and confusion, the present registration should be maintained.  A further basis upon which public interest dictated that the registration should remain was the fact that the mark had been on the Register only three years, and the opponent was and still is expanding its business internationally to those countries in which it took the precaution of registering its trade marks in the early stages of its business.  It was the opponent's submission that the Trade Marks Office should protect international traders' interests in cases where there had been established an intention to use a trade mark at the date of application and a continuing bona fide intention to use it in Australia. 

Discussion
Person Aggrieved
I do not think Ms Johnston's arguments concerning the applicant's standing, which were based on Mr Trumble's letter of 11th March 1994, have displaced the applicant's case as a person aggrieved.  The letter suggests that Knickerbox Briefs Co Pty Ltd desires to use the mark KNICKERBOX in Australia as a manufacturer and marketer of the products, but the claim that it sought cancellation of the present registration "to enable our own application to proceed" is not supported by any evidence that the company has, in fact, lodged an application to register the mark, or has applied for removal of the existing registration. 

Nor did Ms Johnston elaborate as to precisely why the section 23 application suffered from any defects of the kind considered in Kraft v Gaines, supra, if that is what she was inferring.  Since the mark of the present registration as a citation objection in terms of section 33 is blocking acceptance of the applicant's identical mark of application No 552570, lodged on 22nd March 1991 in respect of the same goods, the applicant undoubtedly has real interest in having the trade mark removed from the Register.  From Mr Voce's declaration, as suggested by Mr Cowin, it is obvious that the applicant has been active in the clothing industry since 1983 by manufacturing a range of clothing articles for sale in Australia.  The presence of the opponent's registration would prevent the applicant from acquiring registration of the mark the subject of application No 552570.  In light of the interpretation of "person aggrieved" in Powell's Trade Mark, supra, Continental Liqueurs Pty Ltd v GF Heublein and Bro Inc (1960) 103 CLR 422 at 428 and Ritz Hotel v Charles of the Ritz, supra, at 454-455, I believe the applicant has established a locus standi as a person aggrieved.

Onus
As stated earlier, the applicant recognized its onus of proof of non-use of the subject mark, as enunciated by Windeyer J in Estex Clothing Manufacturers Pty Limited v Ellis & Goldstein Limited (1967) 116 CLR 254 at p 258:

"It is for an applicant who seeks to have a mark removed to prove his case.  The onus is on him to show an absence of use in good faith during the period.  If persons who, by reason of their connection with the relevant trade, might be expected to have seen or heard of the mark if it were used as a trade mark upon goods for which it is registered, swear that they had not seen or heard of it in use as a trade mark at any time during the relevant period, that is prima facie evidence of the fact which the applicant must prove.  Slight evidence may suffice at this stage, for the applicant has the task of proving a negative and the registered proprietor is probably in a better position to prove user than is the applicant to prove non-user."

To establish non-use of the subject mark, the applicant relies on three primary declarations from traders in the States of New South Wales and Victoria.  All three declarants have held responsible positions in the clothing industry, including in the relevant period.  Their experience in the respective employment in Australia ranges from 10 to over 15 years.  Although their direct responsibilities relate to articles of clothing categorized as "intimate apparel", they have been involved in the Australian clothing industry and attest as to their familiarity with the trade marks in relation to clothing generally.  All three state they are not aware of use of the mark KNICKERBOX in Australia in relation to clothing and specifically refer to non-use of the mark between January 1990 and March 1993 by or on behalf of the opponent. 

Ms Johnston commented that the experience of the declarants Messrs Hutchison and Wright was limited to the State of Victoria, and that of Ms O'Brien, prior to 1992, to the State of South Australia.  She also stressed that Ms Gray's statement that she did not know of any Knickerbox retail outlets in Australia as not being an indication that the mark was not used in the country by the proprietor of the mark.  She also pointed out that Ms Ivanchenko's experience in the current position as merchandise manager for a retail store selling intimate apparel did not cover the complete period under consideration.  These two declarations constitute part of the evidence in reply. 

I do not totally agree with Ms Johnston's assessment.  The first two declarants have held the position of a category manager of women's underwear and fashion accessories, and intimate apparel, respectively, during the relevant period, for two large well known retail stores, in which capacity they are required to select the goods for retail sale in the respective stores throughout Australia, whereas Ms O'Brien has held a similar position only for part of the period, from an unspecified date in 1992.  Before assuming her current position, Ms Ivanchenko was involved at least in the sleepwear area in New South Wales.  Since January 1990 her employment had involved her at various levels in the Australian clothing industry, including manufacture, wholesale buying and retailing.  She states that the clothing she handled also included women's underwear, intimate apparel, hosiery and swimwear.  Like the three declarants in the primary evidence, she too declares no knowledge of the opponent's mark in Australia during the relevant period.  Having regard to their senior standing and considerable experience in the specialized area of the clothing articles, as well as their broad exposure to and knowledge of the trade marks used in Australia in relation to clothing generally, I believe all the mentioned declarants are well placed to attest as to their familiarity with the situation in Australia as far as the use of the trade marks is concerned in respect of clothing.  Despite the fact that the declarations might suffer from some deficiencies alluded to by Ms Johnston, considering their contents together, I believe the applicant has presented "slight evidence" to which Windeyer J referred in Estex v Ellis and Goldstein, supra, to establish prima facie evidence of non-use in Australia of the mark KNICKERBOX in respect of "clothing", but it has not discharged its onus in respect of other goods in class 25 falling into the category "boots, shoes and slippers".

As the applicant has established a prima facie case, the onus shifts to the opponent to demonstrate use of its mark for the goods specified during the prescribed s 23 term.  The opponent may, however, elect to defend its registration on the grounds of special circumstances that prevented it from using the mark in the period under consideration, despite its bona fide intention to do so, seeking favourable exercise of the Registrar's discretion under the provisions of s 23.

Use
Paragraph 23(1)(b) refers to a continuous period of not less than 3 years "during which there was not use in good faith of the trade mark in relation to those goods or services by the registered proprietor...".  "Trade mark" is defined under para 6(1)(a) as:

"... a mark used or proposed to be used in relation to goods or services for the purpose of indicating, or so as to indicate, a connexion in the course of trade between the goods or services and a person who has the right, either as proprietor or as registered user, to use the mark...".

A mark therefore must be used in the course of trade.  To determine what constitutes a connection in the course of trade, I refer to a High Court case, Moorgate v Philip Morris, supra, where Deane J elucidated at pp 433-434:

"The Court was referred to a large number of cases and to some administrative decisions in which consideration has been given to what constitutes a use or user of a trade mark for the purpose of the statutory notion of proprietorship of the mark before registration.  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 Registered Trade Mark "Yanx"; Ex parte Amalgamated Tobacco Corporation Ltd. (65)) or that the mark has been used in an advertisement of the goods in the course of trade: Shell Co. of Australia v. Esso Standard Oil (Australia) Ltd. (66).  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.  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."

In that case it was found that the delivery of cigarette packets and associated material to the licensee in Australia did not constitute relevant use in Australia by the licensor, i e there had been no actual trade or offer to trade in goods bearing the mark in Australia, or any existing intention to offer of supply such goods in trade.  In Settef S p a v Riv-Oland Marble Co (Vic) Pty Ltd 10 IPR 402, McGarvie J said at p 417:

"I consider that it follows from the authorities that a mark is used as a trade mark only if it is used with a view to facilitating or promoting the operation of a trading channel which in a business sense had already been opened in Australia.  The mark must be used for the purpose of trade: W D & H O Wills (Australia) Ltd v Rothmans Ltd (1956) 94 CLR 182 at 191. The forwarding of samples and brochures is not sufficient to indicate that Settef was ready and willing to fulfil such orders as it received from Australia."

Use of the mark must therefore be shown to be in a commercial sense.

The opponent did argue in terms of evidence of sales of the goods in Australia during the relevant period, but relied on use of the mark in various articles and advertisements in publications.  According to Mr Lam's statements in his declaration, average circulation figures in Australia for the last ten years of newspapers referred to by Mr Schaffer under exhibits A, B and E have been approx 10 per week for the  Sunday Telegraph (UK), 300 every Saturday and 200 every other day for the  Financial Times (UK), and 10 per week for the Sunday Express.  Only one copy of an article, that under exhibit E from the Sunday Express, falls within the period under consideration; it is dated 22nd December 1991, but does not mention the trade mark KNICKERBOX. 

To establish use of the mark, Ms Johnston concentrated on Mr Schaffer's exhibits K and L.  The first of these features a copy of an advertisement which appeared on the front cover of the United Kingdom Elle magazine in January 1991 containing, inter alia, the words: "Red chiffon slip worn over burgundy body with shoestring straps ... both by Knickerbox." The price for this article has been quoted in pounds sterling.  Mr Kortian has provided information that between 2000 and 3000 copies of this magazine were circulated in Australia.  In the other advertisement, under L, extracted from the Evening Standard (UK) of 14th January 1992, appear the words: "Grey cotton jersey trunks ... from branches of Knickerbox", again showing the price in British currency.  Mr Lam has declared that approx 10 copies of this magazine would have been purchased in Australia.  Apart from the indication that the goods illustrated in these advertisements originate from the opponent's company, or are available at one of its retail outlets, no information has been made available as to how and where a person in Australia might order the goods, nor what the price of the goods, including their transport, might be in the local currency.  I do not think these advertisements can be interpreted as offers for the purpose of soliciting trade in an article of clothing that will be supplied on order.  In this regard, the advertisements contrast with a copy of an advertisement which appeared in the  Teenage Magazine in Singapore of January 1993, annexed as exhibit J to Mr Schaffer's declaration, where the goods are clearly identified as "KNICKERBOX FASHION LINGERIE", imported from London, prices are stated in Singapore dollars, and an address is supplied for availability of the goods.  I must concur with Mr Cowin's submissions that, given the use of British currency and in the absence of the opponent company's branches in Australia, the advertisements could not be seen to be directed to the Australian consumers, nor intended for the Australian subscribers of the magazines.  Indeed, as recited previously, five declarants in the evidence in reply: Messrs Wright and Bruin and Ms Gray, Williams and Ivanchenko, all of whom regularly read overseas publications to remain abreast of developments and trends occurring overseas in clothing styles and fashions, including articles and advertisements, have stated that advertisements of this kind normally include local price, and local retailer or supplier of the promoted articles, and that the information contained in the overseas publications read by them is directed to and intended for readers in the respective countries in which they are issued, rather than readers in Australia.  Accordingly, my conclusions are similar to those expressed in Midas v Mister Figgins, supra, where the Chief Assistant Registrar found that the advertising material was limited to the United Kingdom fashion scene identifying the sales outlets there, and that it was directed only to the prospective purchasers in that country.

In light of the principles established in Moorgate v Philip Morris and Settef v Riv-Oland, both supra, I am of the opinion that the use in the opponent's subject advertisements did not constitute use of the mark in Australia in the course of trade, because no actual trade or offer to trade in the goods bearing the mark, or an existing intention to offer or supply the goods bearing the mark, can be deduced from the advertisements. 

Special Circumstances
Under the provisions of sub-s 23(4), the registered proprietor is entitled to show that the failure to use its mark during the relevant s 23 period was caused by special circumstances.  Evershed L J postulated in Aktiebolaget Manus v R J Fullwood and Bland Ltd (1949) 66 RPC 71 at p 79:

"... it seems to me (without attempting any precise definition) that the words must be taken to refer to circumstances which are "special" in the sense of being peculiar or abnormal and which are experienced by persons engaged in a particular trade as the result of the working of some external forces as distinct from the voluntary acts of any individual trader."

The opponent did not produce any evidence in relation to special circumstances which might have prevented it from using the mark in Australia during the section 23 period, and no submissions were made at the hearing.  Having reviewed the evidence in light of his Honour's interpretation of special circumstances, I do not believe the opponent experienced conditions in the trade within the meaning of the term. 

Discretion of the Registrar
The Registrar has a general discretion in respect of removal of any trade mark which is subject to removal under the provisions of s 23.  In considering this matter, in Ritz v Charles of the Ritz, supra, McLelland J said at pp 481-482:

"The court's powers to order rectification of the register under s 22(1) and to order removal of a trade mark under s 23(1) are in each case of a discretionary nature.  This is the natural and ordinary meaning of the words used and promotes the underlying policy of the Act by giving the court a sufficient degree of flexibility to give effect to public interest considerations.  The existence of a discretion to withhold relief even if a ground for rectification or removal has been made out is also well established by authority ...

The proper approach under both ss 22(1) and 23(1) is that if the condition of exercise of the court's power has been established, the entry of the mark should be expunged, or the mark should be removed, as the case may be, 'unless sufficient reason appears for leaving it there': cf Carl Zeiss ...".

Considering the opponent's submissions as to why the Registrar should exercise his discretion in its favour, which were primarily based on the reasons set out in the Hermes case, supra, I do not believe these reasons to be on all fours with the present circumstances.  In that case Falconer J stated that if a decision concerning the exercise of discretion were required, it would be in the registered proprietor's favour because of five reasons given by the Assistant Registrar, which stated briefly are:

1. The registered proprietors did not intend to abandon their mark and took bona fide steps to revive it, which had nothing to do with the application to remove the mark.

2. The registered proprietors had a residual reputation in the mark.

3. There had not only been sales of HERMES watches by the registered proprietors since the relevant period ended, but preparatory work leading to these sales was done within the relevant period.

4. The applicants for removal commenced use of their HERMES mark apparently without ascertaining whether anyone had the right to exclude their use of that word as a trade mark for those goods, and their use was limited.

5. The registered proprietors were not aware of the applicants' sales under the HERMES marks.

While it is true that extensive negotiations have been conducted by the opponent  with a view to appointing a prospective licensee and franchisee in Australia, and indeed correspondence with Mr Katz up to the end of the relevant period February 1993 envisaged a possible grant of licence to him or his company, as supported by the evidence in exhibit material S of Mr Schaffer's declaration, and these negotiations may be continuing, evidence is lacking that the mark has ever been used in Australia, even outside the relevant period.  An advertisement, which bears the opponent's name prominently, has appeared in the newspaper Sydney Morning Herald on 22nd May 1993 concerning an offer in Australia of "Forfit" bodysuits, available on order from an address in New South Wales.  This advertisement is accompanied by a sales invoice dated 6th April 1993 and addressed to Mr Katz for 47 "Forfit" bodysuits.  Even though the word KNICKERBOX appears on top of the copy of invoice, there is no indication that the transaction concerned the trade mark KNICKERBOX.  There may be good reasons for the long delay in finalizing the negotiations, such as the specialized manner in which the business of the opponent is conducted, requiring careful considerations, as has occurred in other countries, before appointing the franchisees and licensees, but such circumstances, in my view, cannot be said to constitute interest in reviving the mark, within the meaning of considerations applied in the Hermes case.  Even if the opponent did not intend to abandon the subject mark, it has not made serious efforts to ensure its retention on the Register. 

Turning to the residual reputation question which was argued vigorously at the hearing, while, as inferred earlier, some knowledge of the opponent's clothing as emanating from the opponent, has filtered through to persons associated with the clothing industry or those with special interest in it via advertisements and articles in publications, that connection between the opponent and its goods is not based on the use of the trade mark KNICKERBOX in the course of trade in Australia.  From the articles and advertisements exhibited under A, B, E, K and L of Mr Schaffer's declaration, which have appeared in the overseas newspapers circulated in Australia, and from the specified magazines read by Mr Wright and Ms Gray and Williams, it would appear that at least all the persons who have access to those publications ought to be aware of the opponent's corporate name, its outlets or the subject trade mark.  In the absence of any concrete evidence, however, I am unable to draw conclusions as to the degree of the mark's reputation in Australia (see Pioneer Hi-Bred Corn Co v Hy-Line Chicks Pty Ltd [1979] RPC 410). The assertion as to the reputation of the mark engendered by overseas travellers, especially Australians travelling to United Kingdom who are likely to encounter the mark in the opponent's retail outlets at various strategic locations, such as airports, major railway and underground stations and popular central shopping areas, appears to be feasible and logical, but again no evidence has been made available by the opponent in support of this contention.

In relation to the third reason in the Hermes case, the opponent has submitted that preparatory work for the sale of its products had commenced before the relevant period and is continuing which, as I see it, cannot be equated with the situation in Hermes, i e actual sales of HERMES watches by the registered proprietors since the relevant period ended.  If I am correct in my conclusion, the opponent has not established a case in terms of this point.

I do, however, agree with Ms Johnston that according to the statements in Mr Voce's declaration, the opponent decided to adopt the mark KNICKERBOX for use on clothing before checking the Register and pending applications to ascertain whether any other trader had prior rights in the mark.  It appears that the applicant learned of the existence of the present registration only upon examination of its application for registration of the mark.  In this regard, the opponent has satisfied the fourth item considered in the Hermes case.

The last criterion is not strictly relevant, as pointed out by Ms Johnston, because the applicant has not commenced using the mark in Australia as is evident in particular from Mr Voce's declaration and was confirmed by Mr Cowin.  In the absence of an established reputation in the mark attached to the opponent, the matter concerning deception or confusion, should the applicant obtain registration of the mark, is redundant.  Having regard to my comments then, I conclude that the above reasons for maintaining the registration in terms of the Hermes case do not favour the opponent. 

Whilst I appreciate the opponent's explanation as to its expansion programme involving time, careful planning and selection, and taking steps to register its trade marks in a country with the intention of using the marks at the date of their applications, I cannot accept the proposition that the public interest demands that this Office protect the interest of the international traders in a situation where the registered proprietor of a mark has not commenced using its mark over three years since it applied for its registration, thus exposing itself to attacks to removal of the mark in terms of s 23 of the Act. 

Decision
In view of the foregoing, the opponent has not discharged its onus of establishing why the subject mark should not be removed from the Register for some of the goods on the grounds of non-use during the period under consideration. 

Having found that the applicant has the necessary standing as a person aggrieved, that there is no justification for the exercise of the Registrar's discretion in favour of the opponent, and that the applicant has succeded in establishing non-use of the trade mark KNICKERBOX during the period 24th February 1990 to 24th February 1993 in respect of "clothing", I must decide that the application can be approved.  The applicant did not endeavour to establish a case of non-use of the mark in respect of "boots, shoes and slippers".

Accordingly, I order that, subject to any appeal against this decision, the Register be amended in respect of registration No B527599 so as to specify "boots, shoes and slippers".

The applicant having succeeded in partial removal of the goods from the Register, I order further that each party to the proceedings should bear its own costs. 

Vija Zars
Senior Examiner
17 February 1995