Polo Textile Industries Pty Ltd v Domestic Textile Corporation Pty Ltd
[1993] FCA 265
•30 APRIL 1993
Re: POLO TEXTILE INDUSTRIES PTY LIMITED and KEITH GAMBLE PTY LIMITED
And: DOMESTIC TEXTILE CORPORATION PTY LIMITED and POLO TEXTILE INDUSTRIES PTY
LIMITED
No. NG710 of 1990
FED No. 265
Number of pages - 15
(1993) 114 ALR 157
(1993) AIPC 91-007
(1993) 42 FCR 227
COURT
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION
Burchett J(1)
CATCHWORDS
Trade Marks - infringement of word mark "Polo" by the use of a mark "Polo Club" - whether sale of the same goods by the rival trader in stores of an allegedly quite different standard avoided infringement - test for infringement of a case of this kind - defence under s. 62(2) - whether the defence focuses on a more restricted circle of facts than is required to be considered for the purposes of infringement - construction of s. 62(2) - cross-claim alleging the mark is a surname and cannot be distinctive - cross-claim alleging non-use for three years - whether use on a few occasions is sufficient to answer cross-claim - onus of proof and effect of prima facie case established by reputable persons in the trade not having heard of the mark, although other evidence established the mark was actually being used by a different company - whether in answer to a case under s. 23(1)(b) the registered proprietor may rely on use of the trade mark, not directly by himself or a registered user, but by an unregistered licensee - use of trade mark as a house mark by a group of companies - the effect and construction of s. 23(2) and discussion of the test as to whether goods are "goods of the same description" - discussion of discretion under s. 23.
Words and Phrases - "goods of the same description".
Trade Marks Act 1955, ss. 23 and 62
Pioneer Kabushiki Kaisha v. Registrar of Trade Marks (1977) 137 CLR 670
Revlon Inc v. Cripps and Lee Ltd (1980) FSR 85
Fender Australia Pty Ltd v. Bevk (trading as Guitar Crazy) (1989) 25 FCR 161
Ritz Hotel Ltd v. Charles of the Ritz Ltd (1988) 15 NSWLR 158
J. Lyons and Coy. Ld.'s Application to rectify the Register in respect of Trade Mark No. 418, 577 ("Hostess") (1959) RPC 120
Southern Cross Refrigerating Company v. Toowoomba Foundry Proprietary Limited (1954) 91 CLR 592
Carl Zeiss Pty Limited (1969) 122 CLR 1
"Astronaut" Trade Mark (1972) RPC 655
Estex Clothing Manufacturers Pty Limited v. Ellis and Goldstein Limited (1967) 116 CLR 254
Nodoz Trade Mark (1962) RPC 1
Cassini v. Golden Era Shirt Co Pty Ltd (1985) 6 IPR 247
Tavener Rutledge Ld. v. Specters Ld. (1959) RPC 355
Marc A. Hammond Pty Ltd v. Papa Carmine Pty Ltd (1976) 2 NSWLR 124
Associated Rediffusion, Ld. v. Scottish Television, Ld. (1957) RPC 409 de Cordova v. Vick Chemical Coy. (1951) 68 RPC 103
Berlei Hestia Industries Limited v. The Bali Company Inc. (1973) 129 CLR 353
HEARING
SYDNEY, 24, 25 and 26 August 1992
#DATE 30:4:1993
Counsel for the Applicants
and Cross-respondent: Mr D. Shavin with Ms J. Baird
Solicitors for the Applicants
and Cross-respondent: Messrs Michell Sillar
Counsel for the Respondent
Cross-claimant: Mr D.K. Catterns with Ms S.J. Goddard
Solicitors for the Respondent
Cross-claimant: Messrs Corrs Chambers Westgarth
ORDER
THE COURT ORDERS THAT the applicants and cross-respondent bring in on a date to be fixed, short minutes of orders to reflect the reasons of the Court.
Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
JUDGE1
BURCHETT J The applicants, Polo Textile Industries Pty Limited ("Polo Textile Industries") and Keith Gamble Pty Limited ("Keith Gamble"), sued upon various causes of action, seeking injunctive relief and an inquiry as to damages or an account of profits against the respondent Domestic Textile Corporation Pty Limited. However, at the hearing, the applicants grounded their claims for relief only upon a cause of action for infringement of Polo Textile Industries' registered trade mark number B381694, "Polo". The respondent denied infringement; raised a defence under s. 62(2) of the Trade Marks Act 1955; and cross-claimed for removal of the trade mark from the Register under s. 23(1)(b) of the Act, on the ground that there was no use in good faith of the trade mark in relation to the goods in respect of which it was registered, and in particular in respect of sheets, during the relevant period of three years, and alternatively, in reliance on ss. 22 and 24 of the Act, for removal of the mark on the ground that it is a surname. The relevant three years period is the period from 13 October 1987 to 13 October 1990.
Polo Textile Industries has traded in Australia since 1941, and since 1942 has been the proprietor of the trade mark "POLO", registered in class 24 in Part A of the Trade Marks Register in respect of handkerchiefs. Since about 1981, it has sold by wholesale manchester goods, including sheets and bath towels, and since 1982 it has been registered in Part B of the Register of Trade Marks as proprietor of the same mark in respect of bed sheets, quilt covers, pillow cases, handkerchiefs, cot sheets, tablecloths, napkins, place mats, towels, and tea towels, and since 1987 as the proprietor of a further mark consisting of the same word over a representation of two mounted men, apparently polo players. In 1979, the holding company of Keith Gamble, Gamble Holdings Pty Limited, became also the holding company of Polo Textile Industries by the purchase of all its shares. Thereafter, the three companies were managed as a group of companies controlled by Mr Keith Gamble, in which members of his family were the persons solely or principally interested. In 1987, Mr Gamble's son-in-law Mr Richard Church, who was an important witness in the case, became a director of the holding company and the managing director of each of the applicants. Keith Gamble, which was incorporated in 1959, had always traded as a manufacturer and distributor of handkerchiefs and other textile products, and it has for a considerable period supplied bed sheeting, towels and other manchester goods under various trade marks. After the acquisition of the shares in Polo Textile Industries, one of those trade marks became the mark "POLO".
It is apparent that for a number of years, and, I infer, probably from about the time of the takeover of Polo Textile Industries, the two applicants have traded from the same address, 120 Dunheved Circuit, St Marys in the outer suburban area to the west of Sydney. They shared common post office box numbers. They shared, too, some personnel, including the managing director, as I have said. He seems also to have been the person who did the marketing on behalf of both companies. A striking aspect of the fusion of the two businesses emerged during the course of the evidence; sheets sold by Keith Gamble were delivered in packages bearing the name of Polo Textile Industries, packages identical to those in which, at least for some period, Polo Textile Industries had itself sold sheets. When, in about 1987, Mr Church decided that sales of manchester goods should be gradually taken out of the name of Polo Textile Industries and put in the name of Keith Gamble, Keith Gamble continued to sell a proportion of those sheets under the trade mark "POLO". No step was ever taken to have Keith Gamble registered as a registered user of the trade mark, but I think the facts point unequivocally to the conclusion that there was an implied licence given by Polo Textile Industries to Keith Gamble to use the trade mark, which was in fact treated as if it were a house mark of the group of companies.
Between 13 December 1982 and 17 January 1986, the orders for plastic bags in which bed sheets were sold were given in the name of Polo Textile Industries, although both of the applicants made sales of sheets sold in those bags under the Polo trade mark. Whether the companies continued to share the bags after Keith Gamble took over the ordering of them is one of the matters that were disputed at the hearing, but I see no reason to doubt that the sharing of resources continued, and I am confident that the manner in which the businesses were conducted together ensured that if Polo Textile Industries had need of bags it could obtain them from those ordered by Keith Gamble. I think Mr Church accurately summarized the position of the two companies when he said: "(T)he Applicants are part of the Gamble Group of Companies and the business operated by that Group involved the participation of both Applicants." It was regarded as the group's business, and was conducted accordingly.
Since 1975, bed linen products have been manufactured and wholesaled by the respondent, then known as Sleeping Beauty Distributors Pty Ltd. The present litigation erupted when the respondent, in late 1990, commenced to sell bed linen products by wholesale as "Polo Club" bed linen. The respondent says that it did so after selecting the brand name "Polo Club" as a suitable brand name for its purposes, and after having a search made to check that there was no trade mark registration to preclude its adoption of this name. Apparently, the search was not properly done, since it revealed nothing of Polo Textile Industries' trade mark registrations. However, the respondent's good faith in this respect is not questioned by counsel for the applicants, nor is the respondent's account of how it came to choose the words "Polo Club", which it considered projected the right image for a bed linen product intended to make some "masculine" appeal. Part of that appeal was a hint of riches; but of course the word "Polo" alone carries a similar suggestion, being the name of a game played by princes.
The first issue is the issue of infringement. Section 62(1) of the Act provides:
"A registered trade mark is infringed by a person who, not being the registered proprietor of the trade mark or a registered user of the trade mark using by way of permitted use, uses a mark which is substantially identical with, or deceptively similar to, the trade mark, in the course of trade, in relation to goods or services in respect of which the trade mark is registered."
It is contended by the respondent that its use of the words "Polo Club" is neither substantially identical with nor deceptively similar to the trade mark "POLO". According to the respondent's argument, the word "Club" provides a sufficient differentiation, and, indeed, its addition to the word "Polo" creates a compound word with a different meaning. The editor in chief of the Macquarie Dictionary, who was formerly Professor of Linguistics at Macquarie University, Dr Arthur Delbridge, A.O., was called to give evidence in support of this proposition. Dr Delbridge said that "Polo Club" and "POLO" are distinctly different expressions. In the expression "Polo Club", the genus word, he claimed, is "Club". In the sense that the word "Polo" is there used adjectivally, this may readily be accepted. But when the words are used to express a brand name, I think a great many people would attribute distinction to the word "Polo" rather than to the word "Club", which might be any sort of club. In fact this is brought out most clearly by an example which Dr Delbridge himself gave of the use in Australia of the expression "Polo Club". He cited Banjo Patterson's poem, the Geebung Polo Club. That poem revolves around the game, the spirit in which it is played, and the men who play it. The witness suggested that "Polo Club" could be shortened to "the Club", but never to "the Polo". This is true, but does not require the conclusion that the word with the more powerful impact is the word "Club". To take a very similar compound expression, compounded of two nouns one of which is used adjectivally, the famous work the Pillow Book could hardly be evoked by a reference to "the Book". But someone imperfectly recalling the title, who referred to it as a work about the pillow, would be perfectly understood by anyone at all acquainted with Japanese literature or with Sei Shonagon's masterpiece. On the mundane level which is appropriate here, someone who knew of a "Polo" product, upon seeing a similar product selling under the name "Polo Club", would be quite likely to think it was a particular version of the product which could be described as the Club version. And a shopper with a less than perfect recollection of a "Polo" product, who saw a similar product bearing the mark "Polo Club", might well immediately link it to a memory of association with the key word "Polo". (See the remarks of Mason J in Berlei Hestia Industries Limited v. The Bali Company Inc. (1973) 129 CLR 353 at 362, and those of Whitford J in Unilever plc v. Johnson Wax Limited (1989) 1 FSR 145 at 161, and see also Polaroid Corporation v. Sole N Pty Ltd (1981) 1 NSWLR 491.)
The respondent placed some reliance on the proposition that its sheets were sold by retail in stores (e.g. Myers-Grace Bros) which were different, in terms both of image and of the quality of their merchandise, from the stores presently or recently stocking the applicants' sheets (e.g. Woolworths). But it is admitted that the customers of these stores are not segregated into wholly distinct groups. A Woolworths customer one day may be a customer of Myers-Grace Bros the next. Nor should it be assumed that the proprietor of a trade mark such as "Polo", who sells to Woolworths today, may not wish to sell to Myers-Grace Bros tomorrow, as indeed, the evidence shows, Polo Textile Industries has done, with some goods, in the past. Cf. Associated Rediffusion, Ld. v. Scottish Television, Ld. (1957) RPC 409 at 413, 415. In that case, it was argued, for the defendants, that the plaintiff proprietor of the mark "TV Times" could not complain of any likelihood to deceive or cause confusion in the course of trade by reason of the defendants' use in Scotland of the mark "Scottish TV Times", since the plaintiffs did not carry on their business in Scotland. However, the registration of the plaintiffs' mark covered Great Britain, thus extending to Scotland. Salmon J held "it is irrelevant to consider whether they trade in Scotland or whether they do not". In the same way, I think it is irrelevant whether "Polo" sheets and "Polo Club" sheets are sold within the same shop or not, although I think I should add that it is perfectly likely that in the near future, if not now, they may be.
Associated Rediffusion is an interesting case for present purposes, since it involved infringement by the taking of a word mark and the adding to it of an additional word. However, I do not think such an authority should be applied mechanically, as by concluding that no addition of another word could ever save such a taking from infringement. It is unnecessary to consider whether that could be so or not. What is important is the principle applied in the decision. That principle was taken from the advice of the Privy Council, delivered by Lord Radcliffe, in de Cordova v. Vick Chemical Coy. (1951) 68 RPC 103. There, a registered trade mark containing the words "Vicks VapoRub Salve" was infringed by the use, as a trade name, of the words "Karsote Vapour Rub". Lord Radcliffe said (at 105-106):
"They have not used the mark itself on the goods that they have sold, but a mark is infringed by another trader if, even without using the whole of it upon or in connection with his goods, he uses one or more of its essential features. The identification of an essential feature depends partly on the Court's own judgment and partly on the burden of the evidence that is placed before it. A trade mark is undoubtedly a visual device; but it is well-established law that the ascertainment of an essential feature is not to be by ocular test alone. Since words can form part, or indeed the whole, of a mark, it is impossible to exclude consideration of the sound or significance of those words. Thus it has long been accepted that, if a word forming part of a mark has come in trade to be used to identify the goods of the owner of the mark, it is an infringement of the mark itself to use that word as the mark or part of the mark of another trader, for confusion is likely to result. It is sufficient to refer to the words of Lord Cranworth, LC in Seixo v. Provezende,
(1866) LR 1 Ch 192 at p 197: 'If the goods of a manufacturer have, from the mark or device he has used, become known in the market by a particular name, I think that the adoption by a rival trader of any mark which will cause his goods to bear the same name in the market, may be as much a violation of the rights of that rival as the actual copy of his device.' Decisions to the same effect are to be found in Ford v. Foster (1872) LR 7 Ch 611, Orr Ewing and Coy. v. Johnston and Coy. (1880) 13 Ch D 434, Saville Perfumery Ld. v. June Perfect, Ld. (1941) 58 RPC
147. The likelihood of confusion or deception in such cases is not disproved by placing the two marks side by side and demonstrating how small is the chance of error in any customer who places his order for goods with both the marks clearly before him, for orders are not placed, or are often not placed, under such conditions. It is more useful to observe that in most persons the eye is not an accurate recorder of visual detail, and that marks are remembered rather by general impressions or by some significant detail than by any photographic recollection of the whole."
Lord Radcliffe added (at 106):
"(T)heir Lordships think that 'VapoRub' must be treated as an essential feature, or, to use an alternative phrase, a material or substantial element, of Trade Mark 1852, and that the Appellants have infringed the mark by selling their ointment under the designation 'Karsote Vapour Rub'; for the word 'Karsote' prefaced to 'Vapour Rub' is quite insufficient in itself to dissolve the confusion that is bound to arise from associating the Appellants' goods with a word so distinctive as 'Vapour Rub'."
Applying this passage to the present case, it is plain that the word "Polo" must be an essential feature of the applicants' mark, since it is the whole of the mark. In Lord Radcliffe's alternative phrase, it is a material or substantial element of the mark. The same view was taken by the Court of Appeal, in a comparable case, in Baume and Coy., Ld. v. Moore (A.H.) Ld. (1958) RPC 226 at 234. "Polo" is also a quite distinctive word, and the taking of it is bound to cause confusion which the mere addition of the word "Club" will not dissolve. Bearing in mind that the test requires consideration of the customer with an imperfect recollection of the mark, it is important that the distinctive impact of the word "Polo" is likely to affect the mind although the presence or absence of the blander word "Club" may escape notice. At the same time, some persons may be quite aware that one mark contains the added word, and the other does not, but may yet think of "Polo Club" bed linen as a particular style of "Polo" bed linen. This has in fact happened, although the evidence must be treated with caution, since it is the evidence of persons having some association with the Gamble group of companies.
Quite apart from any question of actual confusion, I am satisfied that the applicants have established that the respondent used a mark which was deceptively similar to the trade mark, in the course of trade, in relation to goods in respect of which the trade mark was registered.
I turn to the defence under s. 62(2), which provides:
"In an action for infringement of a trade mark registered in Part B of the Register (not being an infringement occurring by reason of an act referred to in the next succeeding section), an injunction or other relief shall not be granted to the plaintiff if the defendant establishes to the satisfaction of the court that the use of the mark of which the plaintiff complains is not likely to deceive or cause confusion or to be taken as indicating a connexion in the course of trade between the goods or services in respect of which the trade mark is registered and a person having the right, either as registered proprietor or as registered user, to use the trade mark."
The bracketed reference to s. 63 is of no present relevance.
The question arises whether, for the purposes of subs. 2, attention may be confined to the respondent's use of the mark up to the present time, or whether, as in the case of subs. 1, it is relevant also to consider the use that may be made of the mark, if no injunction should issue. Unless subs. 2 enables the court to focus on a more restricted circle of facts, it is difficult to see how a respondent, who has ex hypothesi failed under subs. 1 upon an issue on which the applicant bore the onus, can ever succeed in himself discharging the onus under subs. 2. Although, as Salmon J remarked in Associated Rediffusion (at 415), the making out of such a defence (Salmon J was of course speaking of the Trade Marks Act of the United Kingdom, s. 5(2) of which is in closely similar terms to those of s. 62(2)) "is always a heavy burden", subs. 2 is intended to open up a significant escape route from the effect of subs. 1 for a defendant who can surmount the obstacle of the onus. Under subs. 1, the owner of the mark is entitled to have account taken both of what the defendant may do if he is permitted to continue to use the impugned mark, and also of what the plaintiff himself may lawfully do in the exercise of the statutory monopoly conferred by the registered trade mark, perhaps using it upon new lines or in new areas within Australia in respect of goods or services within the registration. The effect of subs. 2 is to allow a defendant to show that what he has actually done or threatens to do is not likely to deceive or cause confusion, or to be taken as indicating the connexion in the course of trade to which reference is made in the subsection. But it does not provide a way of escape from the implications of the uses of the registered trade mark open to the plaintiff himself, and therefore the defence has a limited scope. This view of the matter is discussed in Shanahan on Australian Law of Trade Marks and Passing Off 2nd ed, 1990 at 340 et seq. The leading authority is Tavener Rutledge Ld. v. Specters Ld. (1959) RPC 355, a decision of the Court of Appeal. In that case, Lord Evershed MR (with whom Sellers and Harman LJJ agreed) said (at 359-360):
"I accept Mr. Weitzman's argument that in order therefore to establish a prima facie case in the absence of identical user, the Plaintiffs must show likelihood of deception or the causing of confusion. But there is then added to Sec. 5 a subsection which seems, at first sight, to create a queerly topsyturvy effect. Subsec. (2) says 'In any action for infringement of the right to the use of a trade mark given by registration as aforesaid in Part B of the Register ... no injunction or other relief shall be granted to the plaintiff if the defendant establishes to the satisfaction of the Court that the use of which the plaintiff complains is not likely to deceive or cause confusion,' etc.
Now, of course, in order to raise effectively the right given to the defendant by Subsec. (2), the onus clearly is on the defendant to show that the use to which he is putting the mark is not likely to deceive or cause confusion. You may get, therefore - and this case has been suggested as being such a case - a clearly narrow point: the plaintiff has first to prove in general that the defendant's mark is likely to cause confusion. But then the defendant may come along and say, 'The actual use I am making of this mark is not in fact likely to deceive or cause confusion.' It was Mr. Weitzman's complaint that the learned Judge here had treated the onus about confusion as being throughout on the defendant. I will turn in a moment to what the learned Judge said, but I agree with Mr. Weitzman that before you get to the stage where an onus is put on the defendant, the plaintiff, if the mark used is not identical with his own mark, has got to prove in general of the defendant's mark that it is a mark likely to cause confusion; and I add by way of exposition, if used in circumstances which would give rise to such confusion. If the plaintiffs establish that then, as I have said, the defendants may still have another line of defence and may say, 'Though it may generally be as you say a mark likely to cause confusion, in fact in the way I have used it and in the circumstances and environment in which I have used it, it is not likely to cause confusion.'"
The defence has been seen in a similar light in Australia: Marc A. Hammond Pty Ltd v. Papa Carmine Pty Ltd (1976) 2 NSWLR 124.
However, in my opinion, a concentration on the actual use it has made of the impugned mark does not enable the respondent to discharge the onus in the present case. In reaching the conclusion I have already expressed under s. 62(1), holding that the applicants had discharged the onus, I did not rely on any possible future extension of the activities of the respondent proved in evidence. I was able to reach my finding on the basis of those activities in themselves. It follows that, in my opinion, the respondent cannot discharge the onus resting upon it under s. 62(2).
The cross-claim raises a number of questions. The first can be dealt with quite shortly. It was submitted, but almost in a whisper, that "Polo" was ineligible to be a mark distinctive of the goods of Polo Textile Industries on the ground that it is a surname. Except as the surname of Marco Polo, who is always referred to in English by both names, the word would not, I think, suggest a surname to any ordinary person using the English language. It appears that it is a reasonably common surname in Spanish, and a search of the telephone directories of Sydney and Melbourne has produced some entries in the Melbourne directory and a very few in the Sydney directory which may be those of Spanish migrants to Australia. I do not think that this makes the trade mark vulnerable to s. 24(1)(d). Rich J in Mangrovite Belting Limited v. J.C. Ludowici and Son Limited (1938) 61 CLR 149 at 159-160 said:
"But no surname according to its primary meaning can be distinctive. For according to its primary meaning it seems to identify every individual so called."
But I do not think an ordinary meaning of the word "Polo", let alone its primary meaning, is to signify the surname of a person. It signifies the game of polo. Even in a case where a rarely encountered foreign surname had no other signification in English, in Cassini v. Golden Era Shirt Co Pty Ltd (1985) 6 IPR 247, Powell J refused to hold that the word, being a foreign surname, was not entitled to registration in Part B of the Register. Accordingly, the cross-claim, so far as it relies on this contention, must be dismissed.
The other questions arise under s. 23, subss. 1 and 2 of which provide as follows:
"(1) Subject to this section and to section 93, a prescribed court or the Registrar may, on application by a person aggrieved, order a trade mark to be removed from the Register in respect of any of the goods or services in respect of which it is registered, on the ground-
(a) that the trade mark was registered without an intention in good faith on the part of the applicant for registration that it should be used in relation to those goods or services by him or, if it was registered under sub-section (1) of section 45, by the body corporate or registered user concerned, and that there has, in fact, been no use in good faith of the trade mark in relation to those goods or services by the registered proprietor or a registered user of the trade mark for the time being earlier than 1 month before the application; or
(b) that, up to 1 month before the date of the application, a continuous period of not less than 3 years had elapsed during which the trade mark was a registered trade mark and during which there was no use in good faith of the trade mark in relation to those goods or services by the registered proprietor or a registered user of the trade mark for the time being.
(2) Except where an applicant has been permitted under section 34 to register a substantially identical or deceptively similar trade mark in respect of the goods or services to which the application relates, or the prescribed court or the Registrar is of opinion that the applicant can properly be permitted to register such a trade mark, a prescribed court or the Registrar may refuse an application made under the last preceding sub-section in relation to any goods or services if there has been, before the relevant date or during the relevant period, as the case may be, use in good faith of the trade mark by the registered proprietor or a registered user of the trade mark for the time being in relation to goods or services in respect of which the trade mark is registered, being -
(a) where the application relates to goods - goods of the same description as those goods or services that are closely related to those goods; or
(b) where the application relates to services - services of the same description as those services or goods that are closely related to those services."
It is desirable first to set out my conclusions of fact in respect of the period of three years from 13 October 1987 to 13 October 1990 which I am required to examine. First, there is no doubt that the trade mark was used during that period in respect of some manchester goods, and particularly sheets and towels, supplied by Keith Gamble. That raises the very interesting question whether its use under its implied licence will save the trade mark, although it was not a registered user. Secondly, both Keith Gamble and Polo Textile Industries used the trade mark extensively in respect of handkerchiefs during the period, as well as both before and afterwards. Thirdly, Mr Church's decision, to which I have already referred, to utilize Keith Gamble as the trading company for manchester goods, and gradually to reduce the role of Polo Textile Industries in respect of those goods, meant that there was not a great deal of use of the trade mark by Polo Textile Industries in respect of sales made in its own name during the period. The question is whether sufficient use was proved to sustain the trade mark, or rather whether the cross-claimant has established that "there was no use in good faith of the trade mark" in relation to manchester goods and particularly sheets.
On the evidence, I find that, on or about 3 November 1988, Polo Textile Industries made a sale to Grace Bros Pty Ltd of 600 cartons of towels, at a price of $32,340, under the trade mark "POLO". So far as towels are concerned, that seems to me to be the end of the matter. The quantity cannot be dismissed as insubstantial, and there was no attack on the bona fides of the sale, except an attack from one point of view, which I regard as misconceived. That attack was launched on the basis that, Mr Church having decided to reduce sales of manchester goods by Polo Textile Industries eventually to vanishing point, in order to replace that company as the trading company of the group for these goods by Keith Gamble, any sale by Polo Textile Industries at that time should not be regarded as involving a use in good faith of the trade mark. I do not accept this proposition. If a company were about to go out of business altogether, a sale of goods under its trade mark during its last month of trading would not be a transaction denying to the use of the trade mark the quality of good faith. Polo Textile Industries has not gone out of business, and the particular decision made by Mr Church must be capable of change or reversal at any time. While the company continued to effect some sales using the trade mark, they remained actual sales in the course of a business in which the trade mark was used. The true effect, for relevant purposes, of Mr Church's decision was simply to create a situation in which, if the state of affairs he envisaged was allowed to run its course, the statutory period of three years of non-use of the trade mark would finally be complete; but until that happened the trade mark was not liable to be removed simply because perfectly genuine sales were infrequent and irregular.
The practical importance of this conclusion depends on whether use of the trade mark in respect of towels will save it for sheets. Sheets are the important goods for the purposes of this case. But that importance will, of course, disappear if I find that there was no failure by Polo Textile Industries to use the trade mark in respect of sheets. This was the most vexed question of fact in the case. Ultimately, the decision comes down to whether I accept the evidence of Mr Church that a number of sales of sheets were effected by Polo Textile Industries during the three years period. The documentary evidence does not either establish or refute this proposition. It shows that Polo Textile Industries did invoice some 712 sets of sheets sold by it during the relevant period. However, the invoices do not show whether the sheets were sold under the trade mark "Polo", and it is common ground that Polo Textile Industries also sold sheets under other brand names. Mr Church's evidence, if it is accepted, fills the gap, because he says that a proportion of the sales so effected by Polo Textile Industries was of sheets sold under the trade mark. He says that on the basis of his memory, as the Managing Director and marketing person in the Gamble Group at the time. No attack was made on Mr Church's honesty, but counsel for the cross-claimant submitted an elaborate analysis of stock records and records of purchases of the plastic bags in which sheets were sold, and on which the trade mark was printed, with a view to showing that Mr Church's recollection was unlikely to be correct. There is no doubt that the records support the view that Polo Textile Industries may well have run out of plastic bags, bearing the trade mark, purchased in its own name before the three years period commenced. However, as I have already held, I am satisfied that the companies were conducted, in relevant respects, as one business, and bags purchased by Keith Gamble would have been available to Polo Textile Industries, if required. Keith Gamble was continuing to purchase bags bearing both the name of Polo Textile Industries, as manufacturer, and also the trade mark. In these circumstances, even if the onus rested upon the cross-respondent, I would be satisfied that Mr Church's evidence should be accepted, notwithstanding that he did not himself point out that he may have used bags purchased by Keith Gamble. I think that is likely to have been so much a matter of course, so far as he was concerned, that the distinctions made by counsel in argument simply did not have any meaning for him. After all, for a long period Keith Gamble used bags purchased by Polo Textile Industries. In any case, it is also possible that some bags purchased by Polo Textile Industries remained after earlier orders were filled; the contrary was not proved. A further possibility is that Mr Church had little personal concern with the problems of packing and despatch; but he was directly concerned with marketing. In the end, having heard Mr Church cross-examined, and being favourably impressed with him, I do not see any sufficient reason to reject the general correctness of his recollection that some of the sheets sold in the relevant period by Polo Textile Industries, and undoubtedly there were a number of sales, although it was not a very large number, were sold under the trade mark. This conclusion is sufficient to dispose of the cross-claim, since even one genuine sale has been regarded as sufficient for that purpose: Nodoz Trade Mark (1962) RPC 1 at 7 per Wilberforce J (as he then was); Settef SpA v. Riv-oland Marble Co (Vic) Pty Ltd (1987) 10 IPR 402 at 437.
Strictly, I think, the onus of proof of this issue rests upon the cross-claimant. It must make out the ground on which it seeks removal of the trade mark from the register. Of course, it is clear law that proof of non-use, being proof of a negative in relation to facts much more within the knowledge of the other side, may be sustained, at least prima facie, by quite slight evidence. Accordingly, it has always been held that upon reputable persons, knowledgeable in the particular trade, giving evidence that they have not known of any use of a mark during the relevant period, the burden shifts to the registered proprietor to make out a case in answer to this evidence. I think that must mean, however, the burden of adducing evidence; the ultimate burden of proof must always remain with the cross-claimant. In this case, although there was evidence from persons knowledgeable in the trade who had never heard of the trade mark "Polo", and there was no challenge to the honesty of the witnesses, extensive use of the trade mark in fact, at least by Keith Gamble, was amply proved in respect of the whole of the relevant period. That conclusively refutes the evidence upon which the cross- claimant's prima facie case was based. With its foundation thus shattered, I do not think it can be regarded as a safe support for the proposition that the onus of proof has shifted to the cross-respondent. See Estex Clothing Manufacturers Pty Limited v. Ellis and Goldstein Limited (1967) 116 CLR 254 at 258-259. At all events, as I have held, if they bear an onus, that onus has been discharged.
In case I should be wrong in my conclusion on the facts, and as the remaining issues of law were fully argued, I now turn to consider them. A fundamental question raised was whether the registered proprietor of a trade mark may rely, in answer to a case under s. 23(1)(b), upon use of the trade mark, not directly by himself or a registered user, but by an unregistered licensee. If the answer to that question is yes, the cross-claim must fail because of the extensive use of the trade mark in sales by Keith Gamble.
Both sides accepted that the answer, for Australia, is to be found in a right understanding of the judgment of Aickin J in Pioneer Kabushiki Kaisha v. Registrar of Trade Marks (1977) 137 CLR 670. The case actually turned on other issues, but it contains an examination of the foundations, in some respects, of trade marks law. Aickin J considered (at 680 et seq.) the proposition that, before the introduction of the registered user provisions in 1948, a licence given by the registered proprietor of a trade mark to some other person to use the mark was fatal to its validity, and that accordingly the purpose of the registered user provisions was to authorize licensing which would not jeopardize the mark. In his examination of this argument, Aickin J insisted (at 681) that the making of provision for registered user agreements, and indeed for assignment of trade marks without the goodwill of the business with which they were associated, "did not change the law with respect to licensing in so far as it affected the validity of registration of the mark". He explained the apparently contrary decision in Bowden Wire Ltd v. Bowden Brake Co Ltd (1914) 31 RPC 385 as "based upon the fact that the marks had ceased to have any connexion in the course of trade with the registered proprietor and had become deceptive". He accepted the view of Lloyd-Jacob J in "Bostitch" Trade Mark (1963) RPC 183 that registration of a user agreement is neither necessary to preserve the mark, where the user agreement is not inconsistent with the maintenance of the connexion in the course of trade with the registered proprietor and does not lead to the mark becoming deceptive, nor effective to preserve the mark, where the user agreement, though registered, does lead to a loss of that connexion in the course of trade or to the mark becoming deceptive. He pointed out (at 682) that in G.E. Trade Mark (1970) RPC 339 Cross LJ
"concluded that the authority given by the United States parent company in respect of the G.E. trade mark to its United Kingdom subsidiary to use the registered mark was open to no objection because the use by the subsidiary might fairly be considered as user by the parent itself and because the licensing of the mark, whether registered or not, did not deprive it of the character of a trade mark provided that the owner of the mark retained a sufficient connexion in the course of trade with the mark and the goods bearing it".
My summary statement cannot, of course, do justice to Aickin J's extended analysis, but I think it fairly indicates the background against which he went on to conclude (at 683):
"These cases demonstrate that the essential requirement for the maintenance of the validity of a trade mark is that it must indicate a connexion in the course of trade with the registered proprietor, even though the connexion may be slight, such as selection or quality control or control of the user in the sense in which a parent company controls a subsidiary. Use by either the registered proprietor or a licensee (whether registered or otherwise) will protect the mark from attack on the ground of non-user, but it is essential both that the user maintains the connexion of the registered proprietor with the goods and that the use of the mark does not become otherwise deceptive. Conversely registration of a registered user will not save the mark if there ceases to be the relevant connexion in the course of trade with the proprietor or the mark otherwise becomes deceptive."
This passage draws together the threads of three pages of discussion, dealing with the effect of the use of a trade mark by someone other than the registered proprietor. I accept the point made by counsel for the cross-claimant that the discussion is not concerned with s. 23(1)(b). However, it is clear that Aickin J was setting out to make a fairly comprehensive statement, not indeed in detail, but of the principles relevant to the registered user provisions of the Act. It was of the essence of the view he was expounding, in rejecting the approach taken by the Registrar, that the registered user provisions did not fill a yawning gap in the previous law of trade marks, but rather facilitated and partly codified an always permissible practice. In that context, in the passage I have quoted, he pointed out that "(u)se by either the registered proprietor or a licensee (whether registered or otherwise) will protect the mark from attack on the ground of non-user", and he added what was essential to enable the benefits of the user to be reaped. (Cf. the apparent acceptance by Dixon CJ, Taylor and Windeyer JJ in G.F. Heublein and Bro. Incorporated v. Continental Liqueurs Proprietary Limited (1962) 109 CLR 153 at 159 that some uses of a trade mark by a licensee can in some sense be regarded as use by the registered proprietor.)
I cannot see any escape from the conclusion that Aickin J meant to say exactly what his language conveys. It was not essential to the decision for him to do so, and his statement is accordingly an obiter dictum. But it is the considered view of a judge of the High Court whose views on matters of intellectual property law have always been treated with particular respect. And it is supported by the weight of the logic of the preceding discussion. I accept that dictum of Aickin J as establishing that use by an unregistered licensee may be relied on in answer to an attack on the ground of non-user. Subsequent decisions in England have supported the endorsement by Aickin J of Bostitch, and have affirmed the idea that a trade mark may be used as a house mark for a group: Revlon Inc v. Cripps and Lee Ltd (1980) FSR 85; Chanel Ltd v. F.W. Woolworth and Co Ltd (1981) 1 WLR 485. I discussed these and other cases in Fender Australia Pty Ltd v. Bevk (trading as Guitar Crazy) (1989) 25 FCR 161, citing (at 171) a passage from the judgment of Buckley LJ in Chanel where his Lordship summarized the holding in Revlon as involving "that every company in the group must be taken to have consented to the mark's being used by every other company of the group to designate the products so marked as products of the group as a whole". While there will be factual contexts in which such a conclusion cannot be drawn in relation to a group (cf. Ritz Hotel Ltd v. Charles of the Ritz Ltd (1988) 15 NSWLR 158 at 199-201), I think, as between the applicants, a similar conclusion is to be drawn here.
Counsel for the cross-claimant suggested that use by Keith Gamble of the trade mark on packages which also referred to Polo Textile Industries created a "shambles" of the representations made by the use of the mark. But it seems to me that the close links between the companies made use of the mark as a house mark quite appropriate. There was an extremely close connexion in the course of trade between the goods sold under the mark and each of the companies, operating in the way in which I have held they operated. The use of the mark was not in the circumstances deceptive (cf. Need v. J.H. Coles Proprietary Limited (1931) 46 CLR 470, per Starke and Dixon JJ dissenting, and J.H. Coles Proprietary Limited v. Need (1933) 49 CLR 499, which reversed the previous decision), and it was not necessary that the precise situation should be spelled out on the packaging, provided the appropriate connexion existed. In Pioneer (at 686) Aickin J said:
"The use by a registered user may properly indicate a connexion both with the registered user and the registered proprietor, including a connexion which does not distinguish between them. This must follow from the fact that the use need not indicate the identity of either the registered proprietor or the registered user."
A question which I have mentioned, but at that stage passed by without considering it, is whether the use of the mark by Polo Textile Industries in respect of towels would shield the registration from attack on the ground of non-user, so far as sheets are concerned, in the absence of a finding of use of the trade mark in relation to sheets. Section 23(2) refers to "use in good faith of the trade mark by the registered proprietor ... in relation to goods ... in respect of which the trade mark is registered, being ... goods of the same description as those goods ... ." The meaning of this expression was examined in J Lyons and Coy. Ld.'s Application to rectify the Register in respect of Trade Mark No. 418, 577 ("Hostess") (1959) RPC 120, a decision of the Court of Appeal. After referring to a number of authorities, Lord Evershed MR said (at 128):
"To all these cases the oft-quoted proposition that each was decided on its own particular facts is, to my mind, peculiarly applicable. In all cases of this kind regard will be had to such matters as the nature and composition of the goods, to their respective uses and functions, and to the trade channels through which respectively they are marketed or sold; and in different cases (as Mr. Levy observed) one (but not always the same one) of these characteristics may have greater significance or emphasis than the others. The matter falls to be judged, as Lindley, LJ, observed in the case already quoted (Australian Wine (1899) 6 RPC 311), 'in a business sense'; and this is to my mind made clear by considering the legislative background against which the problem has to be judged. By the Trade Marks legislation Parliament has provided that a registered proprietor of a mark, to be used by him in the course of his trade, has a monopoly right to that mark as an indication of the trade source or origin of the goods, and the restriction contemplated by Sec. 26 is an incident of the general legislative purpose. The question whether goods are or not goods of the same description must therefore (I think) be one to be answered in the context of that purpose; and having regard to that context, the cases cited, and particularly McDowell's case
((1926) 43 RPC 334 (C.A.), (1927) 44 RPC 342 (H.L.)) and the Australian Wine case, lend some support to the view that the phrase 'goods of the same description' ought not to be given too restrictive a construction - not, at all events, so as to be limited to goods substantially analogous in kind, or commonly used as mere substitutes or alternatives the one for the other."
A quite similar enumeration of relevant considerations is to be found in Southern Cross Refrigerating Company v. Toowoomba Foundry Proprietary Limited (1954) 91 CLR 592 at 606, and see Lever Brothers, Port Sunlight, Ld. v. Sunniwite Products, Ld. (1949) 66 RPC 84 at 99.
In my opinion, the application of a principle so broadly stated requires some concentration upon the object which s. 23(2) exists to serve. That object seems plainly to be the avoidance of confusion and deception in the market place, which would be likely to arise should a mark become available for use by two or more different companies, which are unrelated, upon goods of the same description. From that point of view, the expression "goods of the same description" is generally to be understood in such a sense that, if two different items are held not to fall within the expression, their sale under the same mark by different companies is not likely to lead to confusion or deception. That approach would seem to me to accord with the common sense business view recommended by Lord Evershed. In its application to the present case, it would place weight on the fact that sheets and towels are both sold in the manchester goods sections of stores and fall within the generic description of manchester goods. I think I would be entitled to take judicial notice of this situation, but there is no need, since the evidence makes it abundantly clear.
In the light of my findings of fact, and applying the language of s. 23(2) as it has been interpreted, I have to consider whether towels and sheets, as manchester goods, are goods of the same description. As I have said, I think it is relevant, in understanding the sense in which that expression is used, to consider the matter of the likelihood of confusion or deception. But the test is not whether confusion or deception will occur, but whether, as the expression is properly understood, the goods are goods of the same description. I have come to the conclusion that sheets and towels are goods of the same description within the meaning of s. 23(2).
Had I taken a different view of the facts, so as to conclude that s. 23(1)(b) was made out, I would have had a discretion to exercise under that subsection, and also a discretion to exercise under subs. 2. The nature of these discretions may be gathered from a consideration of a number of cases. The first to which I will refer is Carl Zeiss Pty Limited (1969) 122 CLR 1, where Kitto J held, after full argument, that s. 23(1)(b) does involve a discretion as to whether an order for removal should be made. That decision was cited as authoritative by Barwick CJ in Hunter Douglas Australia Pty Limited v. Perma Blinds (1970) 122 CLR 49 at 59. A similar discretion was held to exist under s. 22 in Paragon Shoes Pty Ltd v. Paragini Distributors (NSW) Pty Ltd (1988) 13 IPR 323 at 345-346. The discretion under the equivalent of subs. 2 of s. 23 was asserted by the Court of Appeal in Lyons ("Hostess") (supra, at 130-131, 133, 136). See also Ritz Hotel (supra, at 221) and Lever Brothers, Port Sunlight, Ld. v. Sunniwite Products, Ld. (ubi supra). In "Astronaut" Trade Mark (1972) RPC 655 at 672 Whitford J referred to the fact that the goods in question, even if the mark had not strictly been used by the registered proprietor, had been sold under the mark by the instrumentality of its officers who had selected those goods for sale; if the mark were now removed, it would be open to others to sell similar goods under that mark, selected quite differently, to the deception of the public. He considered this a good ground to exercise his discretion against removal.
In my opinion, the considerations mentioned by Whitford J in Astronaut are applicable here. Sheets have certainly been sold the quality of which has been under the control of the same persons who would be responsible for the sale of goods under the mark if the registration were left standing, whereas sale by the respondent under the mark would be by a company in no way connected with the previous source of such goods. Furthermore, even if sales by Keith Gamble under the mark do not count as use for the purposes of s. 23, I think they certainly count for the purpose of the exercise of my discretion. Therefore, had I taken a different view as to whether a case has been made out under s. 23(1)(b), and had been required to exercise my discretion, I would have exercised it in favour of Polo Textile Industries.
I direct the applicants to bring in, on a date to be fixed, short minutes of orders to reflect these reasons. The respondent cross-claimant must pay the costs.
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