Playground Supplies Pty Ltd v Joachim Grabosch

[1991] ATMO 24

TRADE MARKS ACT 1955

DECISION OF A DELEGATE OF THE REGISTRAR OF TRADE MARKS

Re:Opposition by JOACHIM GRABOSCH to Application for Registration No 329777 in the Name of PLAYGROUND SUPPLIES PTY LIMITED

Application No 329777 was lodged on 7 March 1979 in the name of PLAYGROUND SUPPLIES PTY LIMITED, a New South Wales company, of 42 Hotham Parade, Artarmon, New South Wales, Manufacturers and Merchants ("the applicant").  The application was for the registration of the trade mark TECHNIC-MOBILO, and following examination it was advertised as accepted on 13 September 1984 in respect of "Educational and construction toys".
          On 6 March 1985 notice of opposition to the registration of the mark pursuant to s.49 of the Act was lodged in the name of JOACHIM GRABOSCH, a German citizen, Toy Manufacturer, of Siedlungsstrasse 3, 4900 Herford 1, West Germany ("the opponent").  The grounds of opposition set out in the notice are as follows:

1. The applicants are not entitled to registration of the mark TECHNIC-MOBILO because it closely resembles the marks MOBILO and PLASTICANT MOBILO of which the present Opponent is the proprietor.

1. The Marks MOBILO and PLASTICANT MOBILO have been used by the Opponent in connection with games and playthings and children's constructional toys.

1. The Opponent's predecessor in title devised the marks MOBILO and PLASTICANT MOBILO many years ago to use on goods of their manufacture.

1. The Opponent has applied to register his MOBILO and PLASTICANT MOBILO trade marks as follows:

MOBILONo. 338,977 - dated October 16, 1979 -

in respect of "Toys; toy construction kits

including building block sets and parts thereof;
  blocks, ladders, angles, triangles and clips,
  all being parts of toy construction kits,
  including such items when made from plastics"   Class 18 (as amended)

PLASTICANT MOBILO
  No. 338,978 - dated October 16, 1979 -
  in respect of "Toys; toy construction kits
  including building block sets and parts thereof;
  blocks, ladders, angles, triangles and clips,
  all being parts of toy construction kits,
  including such items when made from plastics"
  Class 28 (as amended).

1. The marks MOBILO and PLASTICANT MOBILO have been used in the Commonwealth of Australia by the Opponent and his predecessor in title on goods stated in paragraph 4 since well before the date of the present application.

1. The mark TECHNIC-MOBILO so closely resembles the Opponent's trade marks MOBILO and PLASTICANT MOBILO that use of this mark on the same goods is likely to cause confusion and deception in trade.

1. The mark which forms the subject of Trade Mark Application No. A329,777 by reason of its being calculated to deceive or otherwise mislead the public and cause confusion in trade, is thereby disentitled to protection in a Court of Justice.

1. User of the mark forming the subject of Application No. A329,777, if any, has been without the knowledge or consent of the Opponent.

   Evidence in support of the opposition in accordance with reg 43 was served on the agents for the applicant on 19 May 1987.  It consisted of a statutory declaration by J.A. Herrington, the managing director of MODERN TEACHING AIDS PTY LTD, the Australian distributor of the opponent.  The evidence in answer, comprising a statutory declaration of Graham William Halford, patent attorney for the applicant, was served on the agents for the opponent on 21 August 1987.  Evidence in reply consisting of an affidavit sworn by the opponent was served on 9 November 1989.  On 26 July 1990 the agent for the applicant applied for the leave of the Registrar to adduce further evidence.  This was granted and the further evidence was served on 27 July 1990.  It comprised a declaration of Pamela McDowell, the director of Cronulla Pre-school, together with Exhibits PMcD1 and PMcD2.  On 27 September 1990 the applicant then requested that a time and place be appointed for a hearing pursuant to reg 49.  The matter came on before me on 1 November 1990.  The applicant was represented by Mr Peter Franke of Watermark, patent attorneys, while Mr James Abel of Griffith Hack & Co, patent attorneys, appeared for the opponent.
             Mr Abel's case for the opponent was essentially that a predecessor in business of the opponent, MILTON BRADLEY GmbH, had used the mark in Australia prior to the date of lodgement of the application for registration by the applicant or of the first use of the mark and that the opponent was therefore by virtue of s.40 of the Act the proprietor of the mark in Australia.  Furthermore, he said, the evidence showed that the applicant had acknowledged the opponent's proprietorship of the mark and had in fact entered into an agency agreement with the opponent to distribute the opponent's goods in Australia.  By lodging the present application it had breached that agreement and acted in bad faith.  The applicant knew, he said, that the rights in the mark had been transferred from MILTON BRADLEY to the opponent and had therefore deceived its attorney and the Registrar in an attempt to pirate the opponent's mark.
             Mr Franke replied, firstly, that the applicant's mark was TECHNIC-MOBILO and not simply the word MOBILO.  It had always used the mark in this form to distinguish it from MOBILO.  There was no evidence of the use of that trade mark by any other person in Australia and the applicant was therefore entitled to be considered the proprietor of the mark in Australia and therefore to the registration of the mark.  He referred me to an earlier decision in relation to an opposition by the same opponent to the registration of the applicant's mark MOBICO (application No 318682).  In that case the Assistant Registrar found that there was no evidence of any connection between the opponent and MILTON BRADLEY and dismissed the opposition.  In the present case, said Mr Franke there was no dispute that the moulds and copyright in drawings as well as design rights had been transferred to the opponent there was no evidence of an assignment of any trade mark rights.  MILTON BRADLEY was therefore irrelevant to the question of proprietorship of the mark.  The belief of Mr Forrest, the principal of the applicant company, as to the rights of the opponent were irrelevant since those rights were a matter of law.
             Mr Abel referred to the exhibits to the McDowell declaration which showed that in its use of the mark TECHNIC-MOBILO the word MOBILO was always shown in much larger lettering than the word TECHNIC.  This emphasized that MOBILO was the essential feature of the mark.  He said the decision on the MOBICO mark was irrelevant because in the present case the evidence was different and showed that the mark had been assigned to the opponent and that this had been acknowledged by the applicant in correspondence between the parties by which the applicant had entered an exclusive distributorship agreement which it had then breached by applying for registration of the mark in its own name.
   Proprietorship
             Section 40(1) of the Act provides as follows:

40.(1) A person who claims to be the proprietor of a trade mark may make application to the Registrar for the registration of that trade mark in Part A or Part B of the Register.

The opponent alleges that the applicant was not the proprietor of the trade mark at the date of application, 7 March 1979, but that it itself was the proprietor of the mark at that

date.  The concept of proprietorship of a trade mark was explained by McGarvie J in Settef v Riv-Oland Marble 10 IPR 402 at 413:

"Acquiring proprietorship

At common law (which in the present context is treated as including the principles of equity), property in a trade mark could only be acquired by public use of the mark as a trade mark.  The right of the proprietor of a trade mark was to prevent its use as a trade mark by other persons.  The original remedy for the protection of this right was an injunction to restrain infringement.  Principles as to the way in which the discretion should be exercised to protect a trade mark by injunction were settled by the Court of Chancery.  The cases which settled these principles established the types of trade marks in which a person would be recognised as having a right of property which would be protected by injunction : G.E. Trade Mark [1973] RPC 297 at 324-7 per Lord Diplock.

The basic common law principle is that the first person who uses a trade mark of an appropriate type within a country becomes the proprietor of the mark there: Re Registered Trade Mark "Yanx"; Ex parte Amalgamated Tobacco Corp Ltd (1951) 82 CLR 199 at 203; Thunderbird Products Corp v Thunderbird Marine Products Pty Ltd (1974) 131 CLR 592 at 603; Moorgate Tobacco Co Ltd v Philip MOrris Ltd (No 2) 59 ALJR 77 at 83. A person who becomes proprietor of a trade mark in this way is entitled at common law to restrain a person who later commences to use the trade mark.

The proprietor is not entitled to restrain a later user who is an honest concurrent user of the trade mark.  For example, a person who innocently commences to use the trade mark, unaware that this infringes the proprietor's right is an honest concurrent user.  At common law neither the proprietor nor the honest concurrent user could restrict the other from using the trade mark, but each could restrain a usurper who used the mark: G.E. Trade Mark, supra, at 326.  The rights of concurrent users are discussed in more detail later.

In considering who, within s.40(1) of the Act, was at the time of Settef's application for registration the proprietor of the trade mark, one considers who at common law was the proprietor in Australia: The Shell Co of Australia Ltd v Rohm & Haas (1949) 78 CLR 601 at 625 and 627. Settef claims to be the first person to have used the trade mark in Australia and therefore to have been proprietor at common law in Australia.

Use of the trade mark by Settef overseas gave it no right to proprietorship in Australia.  Any use at all in Australia gave it that proprietorship: the Thunderbird case (1974) 131 CLR 592 at 600.

The fact that a manufacturer is proprietor of a trade mark overseas and has earlier used it overseas does give it a forensic advantage in a contest between it and an Australian distributor who claims proprietorship of the trade mark.  There is authority that a court will regard slight use in Australia by the overseas proprietor as sufficient to give it proprietorship of the trade mark in Australia: The Seven UP Co v O T Ltd (1947) 75 CLR 203 at 211; Aston v Harlee Manufacturing Co (1960) 103 CLR 391 at 400; Moorgate Tobacco Co Ltd v Philip Morris Ltd (No 2) 59 ALJR 77 at 83."

The right to claim proprietorship of a mark within the meaning of s.40(1) therefore depends on first use of the mark in Australia.  The meaning of the word "use" in the Act (and there is no relevant difference between the concept of use at common law and that used in the Act) is to be understood in the context of the definition of "trade mark" in s.6(1) of the Act: W D & H O Wills (Australia) Ltd v Rothmans Ltd (1956) CLR 182 at 191; Estex Clothing Manufacturers Pty Ltd v Ellis & Goldstein Ltd (1967) 116 CLR 254 at 271. That definition is as follows;

"trade mark means -

(a)except in relation to Part XI, 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 a proprietor or as registered user, to use the mark, whether with or without an indication of the identity of that person; ..."

The word "use" itself is defined in s.6(2) as follows:

(2)In this Act -

(a)references to the use of a mark shall be construed as references to the use of a printed or other visual representation of the mark; and

(b)references to the use of a mark in relation to goods shall be construed as references to the use of the mark upon, or in physical or other relation to, goods.

It is essential therefore that the use relied on by a person claiming proprietorship of a mark be use for the purpose of indicating or so as to indicate a connection in the course of trade between the relevant goods and that person.  As to the use of the mark by an overseas manufacturer exporting goods to Australia Windeyer J. observed in the Estex case (supra) at 271:

"When an overseas manufacturer projects into the course of trade in this country, by means of sales to Australian retail houses, goods bearing his mark and the goods, bearing his mark are displayed or offered for sale or sold in this country, the use of the mark is that of the manufacturer."

What constritutes a connection in the course of trade for establishing prior use of a mark in Australia was discussed by the High Court in Moorgate Tobacco v Philip Morris 3 IPR 545 at 557:

"To establish prior use of the mark in Australia, Moorgate relies upon evidence that, during or in connection with discussions between Loew's and Philip Morris about the introduction of the low tar and nicotine cigarette in Australia, packets of cigarettes and associated advertising material displaying the name "KENT GOLDEN LIGHTS" were handed personally, or in one instance sent by mail, to representatives of Philip MOrris in Australia.  That evidence indicates that there were at least three occasions on which such cigarette packets and advertising material were so delivered.  At the times when those items were so delivered, there was no intention on the part of Loew's that it would itself trade in the goods in Australia.  Nor, for that matter, had it been decided that name would be used if Philip MOrris were, under licence from Loew's, to commence to manufacture and market the goods in Australia at some indefinite future time.

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 purposes 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, supra, at 204-5) 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, supra, at 422).  In such cases, however, it is possible to identify an actual trade or offer to trade in the goods bearing the mark in trade.  In the present case, there was not, at any relevant time, any actual trade or offer to trade in goods bearing the mark in Australia or any existing intention to offer or supply such goods in trade.  There was no local use of the mark as a trade mark at all; there were merely preliminary discussions and negotiations about whether the mark would be so used.  The cigarette packets and associated advertising were delivered to Philip Morris to demonstrate what Loew's was marketing in other countries and what Philip Morris might market, under licence from Loew's, if it decided to manufacture and trade in the goods in Australia and to use the mark locally at some future time.  There was no relevant trade in the goods in Australia and the delivery of the cigarette packets and associated material to Philip Morris did not, in the circumstances, constitute a relevant user or use in Australia of the mark "KENT GOLDEN LIGHTS" for the purpose of indicating or so as to indicate a connection in the course of trade between the new cigarettes and Loew's."

In order to establish use in the relevant sense then it must be 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.  In the Moorgate case the Court found that there had been no 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.  Likewise in W.D. & H.O. Wills (Australia) Ltd v Rothmans Ltd (1956) 94 CLR 182 cigarettes under the relevant trade mark were available in America. An Australian company having some association with the American manufacturer transmitted orders from Americans living in Australia to the American company. The cigarettes were purchased and paid for in the United States - i.e. no money was sent from Australia. The Australian company took no part in the importation but received a commission. The cigarettes were labelled as having been made in the United States for the Australian Company. The High Court held that there was no use of the trade mark in Australia because all "trade" in the goods took place in the United States. Trading ended once goods were purchased or otherwise acquired for consumption. On the other hand in the Thunderbird case (1974) 131 CLR 592 the importation of one unit as a prototype for the purpose of building and selling the goods in Australia was held to be use in Australia by the exporter. The Australian manufacturer who received the unit was not entitled to register the trade mark. Also, in Blackadder v The Good Roads Machinery Co. (1926) CLR 332 an Australian company imported machinery from the United States bearing the American exporter's trade mark. The Australian company removed the American exporter's trade mark and put its own trade mark on the goods before sale. Although purchasers never saw the exporter's trade mark, the exporter was held to have used it in Australia.
          In the absence of fraud it is not unlawful for a trader to become registered proprietor of a trade mark which has been used, however extensively, by another trader as a trade mark for similar goods in a foreign country, provided there has been no use of the foreign trade mark in Australia at the date of application for registration (per Williams J. in The Seven Up case).
          Regardless of use, the right to register a foreign mark is restricted to those who cannot be said to owe any duty to the proprietor of the foreign trade mark.  Thus the trade mark of a foreign company may not properly be registered in Australia by its agent or by an Australian importer of its goods or by an employee of the importer.  Any such registration will be invalid even if the agent is honestly registering to protect the principal, or if the goods have never been sold in Australia bearing the trade mark (the "Certina" case (1970) 44 ALJR 191, also Blackadder v Good Roads (supra).
The Evidence
          The evidence in support of the opposition comprises a declaration dated 8 April 1987 by J.A. herrington, managing director of MODERN TEACHING AIDS PTY LTD, the Australian distributor for Mr Joachim Grabosch of educational toys which it imports into Australia supplied by Mr Grabosch under the trade marks MOBILO and PLASTICANT MOBILO.  Mr Herrington states that his company has imported those goods continually and sold them throughout all States of Australia since 1979.  He then gives FoB values of goods imported by his company for the years 1979-1986.  Whether the first use of the mark occurred before or after the date of lodgment of the application is not established.
          The evidence in answer consists of a declaration dated 21 August 1989 by Graham William Halford, patent attorney, who acted for the applicant during the years 1977 and 1978 and later.  Annexed to this declaration as Exhibit GWH1 is a copy of a letter dated 15 July 1977 from MILTON BRADLEY to the applicant in response to an inquiry from the latter advising of the discontinuance of the production of the MOBILO toys and the disposal of the moulds and offering the applicant the remaining stock of the goods at various quoted prices.  Exhibit GWH2 consists of a copy of an invoice dated 17 January 1978 in relation to a shipment of MOBILO toys from MILTON BRADLEY to the applicant in response to an order dated 10 November 1977.  According to Mr Halford's declaration this shipment arrived in Sydney in March 1978.

          The opponent's evidence in reply consists of an affidavit sworn by the opponent himself and dated 30 October 1989 in which he states that he acquired the trade mark PLASTICANT MOBILO from MILTON BRADLEY together with the moulds, drawings and designs and copyright relating to the toy in 1977.  Exhibit JG1 is a copy of an agreement dated 14 October 1987 which purports to confirm the acquisition of these rights.  I set out the relevant terms of the agreement below:

THIS AGREEMENT is made the     day of         1987

BETWEEN Milton-Bradley GmbH of Waldstrasse 49, 8510 Fürth/Bay hereinafter referred to as the ASSIGNOR and Joachim Grabosch trading as Plasticant-Mobilo of Hauptstrasse 17, 7811 Sulzburg hereinafter referred to as the ASSIGNEE.

WHEREAS

1. Until about 1977 ASSIGNOR has manufactured parts for a toy known as Plasticant Mobilo.

2. Such parts have been manufactured in accordance with design and production drawings including those works identified in the Schedule to this Assignment and those works copies of which are annexed hereto.

3. In 1977 ASSIGNOR granted to ASSIGNEE all rights in respect of Plasticant Mobilo and the moulds drawings and designs therefor.

4. It was envisaged by ASSIGNOR and ASSIGNEE that all benefit in the said works would vest in ASSIGNEE.

5. ASSIGNOR and ASSIGNEE wish to confirm and complete the agreement of 1977 by assigning all such copyright and like rights in the works as may remain vested in ASSIGNOR.

NOW IT IS HEREBY AGREED

The ASSIGNOR hereby assigns to the ASSIGNEE all that the copyright and all rights in the nature of copyright in all drawings models designs or other works for or relating to the toy known as Plasticant Mobilo including but not limited to the works set out in the Schedule hereto and those works copies whereof are annexed hereto (all such works hereinafter collectively being referred to as "the Works") through the world and for the full period thereof and including any reversion or extension thereof including such rights if any as ASSIGNOR may have to call for the assignment to it of copyright in the Works and all other beneficial or legal interests ASSIGNOR may have in the Works insofar as such rights and interests are vested in the ASSIGNOR together with the right to sue and recover damages including damages for conversion and wrongful interference with goods and all like remedies in respect of any acts which have been committed prior to the date of this agreement.

The ASSIGNOR warrants that of the persons whose names are set out in the Schedule hereto, Messrs Deinhardt and Brüschke were the authors of the works identified in the Schedule as theirs and the approximate dates upon which such works were made are set out in the said schedule and that the said Messrs Deinhardt and Brüschke were at the time when the works were made employed by the ASSIGNOR under a contract or contracts of service and that the Works were made in the course of such employment.

Exhibit JG2 comprises a copy of a letter from MILTON BRADLEY to the opponent dated 19 March 1986 and a copy of a letter from the applicant to the opponent dated 5 December 1977.  The former contains the following statements: "We sold the molds and all rights to manfuacture and sell these products exclusively to your company ..."; "After we have sold the rights to your company we have informed all our customers that the only source to buy MOBLIO (sic) from is your company".  The latter is a trade enquiry by the applicant in which is evinced a belief that the opponent was now the owner of rights in MOBILO.  On 2 January 1978 the opponent replied to that letter and offered to sell goods under the mark MOBILO at various stated prices.  There followed further correspondence between the applicant and the opponent in which the opponent offered, and the applicant accepted, exclusive distribution rights of the MOBILO product and in which the applicant sought and was given an authorisation to use the trade mark MOBILO.  It appears that the applicant had had a distribution agreement drawn up but there is no evidence that this was ever signed.  There is no evidence that any goods were ever shipped by the opponent to the applicant.  Finally, at Exhibit JG6 there is a copy of an extract from the International Trade Marks Register in respect of the mark PLASTICANT MOBILO initially registered in the name of MILTON BRADLEY but subsequently assigned to the opponent with effect from 4 July 1979.
          The further evidence of Pamela McDowell states that she is the director of Cronulla pre-school which in 1978 purchased two buckets of construction toys bearing a label having the trade mark TECHNIC-MOBILO thereon.  Examples of the label are exhibited to the declaration.
Conclusion
          I find, firstly, that as at the date of lodgment of its application to register the trade mark TECHNIC-MOBILO the applicant was not the proprietor of the mark MOBILO in Australia.  I find that, on the authorities cited above, MILTON BRADLEY had become the proprietor of the mark in Australia by virtue of its first use of the mark here.  If the relevant date be that of the letter offering to trade in the goods in relation to the mark then MILTON BRADLEY's letter to the applicant of 15 July 1977 antedates that of the opponent's of 2 January 1978.  If on the other hand the date of the invoice relating to shipment of the goods or the date of arrival of the goods in this country is more relevant the evidence shows that between 1977 and 1978 goods bearing the mark were shipped to Australia by MILTON BRADLEY whereas there is no evidence of the importation of relevant goods into Australia before 1979 by the opponent.  However, I find further that on all the evidence title in the mark passed to the opponent at some time in 1977 and that therefore the earlier use by MILTON BRADLEY inured to the benefit of the opponent.  Accordingly, at the relevant date, that is, 7 March 1979 the opponent was the proprietor of the mark MOBILO in Australia.  In my opinion the addition of the word TECHNIC is of no assistance to the applicant.  It follows that the opposition is allowed.
          Having been successful the opponent is entitled to its costs to be taxed according to the official scale.

(M. HOMANN)
Hearing Officer
11 April 1991