Re Carl Zeiss Pty Ltd's Application

[1969] HCA 17

HIGH COURT OF AUSTRALIA

Kitto J.

RE CARL ZEISS PTY. LTD.'S APPLICATION

(1969) 122 CLR 1

2 May 1969

Trade Marks

Trade Marks—Removal from register—No use during period of three years—Whether discretion to refuse to remove—Principles upon &hich discretion should be exercised—Trade Marks Act 1955-1958 (Cth), s. 23 (1) (b), (4).*

Decision

May 2.
KITTO J. delivered the following written judgment: -
This is an application under s. 23 (1) (b) of the Trade Marks Act 1955-1958 (Cth) for the removal of trade mark No. 5018 from the register. The only ground upon which the application is pressed is that up to one month before the date of the application, that is to say up to 20th April 1965, a continuous period of not less than three 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 the goods in respect of which it was registered, by the registered proprietor or a registered user. (at p3)

2. The respondents (I shall use that word as not including the Registrar of Trade Marks) are described in the notice of motion as "Carl Zeiss, Carl-Zeiss-Strasse, Jena, Germany, and V.E.B. Optik Carl Zeiss, Jena, Germany". It is common ground that the former of these descriptions refers to Carl Zeiss Stiftung, and the latter to V.E.B. Carl Zeiss, both of Jena in East Germany. (at p3)

3. The trade mark consists of the words "Carl Zeiss" over a horizontal line with the word "Jena" beneath the line, all being enclosed in an outline of the cross section of a lens, or a lens frame as it has been called. It is registered in class 8 in respect of optical instruments in 1907, the application for registration having been made in the name of "The firm trading as Carl Zeiss, of Carl-Zeiss-Strasse, Jena, Germany, Manufacturers of optical and philosophical instruments", and granted to "The firm trading as Carl Zeiss". There was no such firm if the word be taken to mean a partnership ; but at the address given a business of manufacturing optical and scientific instruments was then being carried on under the name "Carl Zeiss" by a legal entity the correct name of which was "Carl Zeiss Stiftung", and the trade mark was being used by that entity as a distinguishing mark for its goods. (The entity was also carrying on at Jena a glassworks enterprise under another "firm" name.) Apart from the Stiftung there was no person, partnership or entity carrying on any similar business at Carl-Zeiss-Strasse, Jena, and I find as a fact that the application for registration was made by the Stiftung, though under the name "Carl Zeiss". The description of the Stiftung as a "firm", both in the application and on the register, was at most a misdescription, thought I should prefer to call it an identification of the Stiftung by means of the name of its "house of business": see Churton v. Douglas (1859) Johns 174, at p 189 (70 ER 385, at p 391) . The employment of this form of identification instead of the name of the Stiftung, though an irregularity, cannot be held to have invalidated the registration : cf. R. v. Commissioner of Patents ; Ex parte Weiss (1939) 61 CLR 240, at pp 252, 253, 259 . In my opinion it was the Stiftung that became the registered proprietor of the trade mark. (at p4)

4. On the face of the register there has been no change in the proprietorship. The registration was indeed suspended during the first world war, but the suspension was revoked in 1922. Registration was renewed for periods of fourteen years from 1921, 1935, 1949 and 1963, and I shall assume it makes no difference that, as I shall mention later, the last two renewals were not obtained by the Stiftung itself. In the early stages of this matter the applicant put in issue the continued existence of the Stiftung, but ultimately it agreed that if the Stiftung was the proprietor to whom registration was granted by the name of "the firm of Carl Zeiss" the matter should be determined on the assumption that the Stiftung still exists. While I need therefore make no adjudication on the question of its existence, I must say that I do not find in the evidence anything to make me hesitate to proceed on the basis of that assumption. (at p4)

5. The applicant is a company formed in the Australian Capital Territory. Its issued share capital is held by or on behalf of an aggregation of persons (whether incorporated or not I need not determine) carrying on the manufacture of optical instruments at works situated at or near Heidenheim in West Germany under the name of Carl Zeiss. The applicant sells in Australia the products of those works, with a mark upon them which consists of a rectangle with the word "Carl" above a median line and the word "Zeiss" below it. This mark does not contain the word "Jena" or any other place name. In these circumstances, as the respondents concede, the applicant is a person aggrieved, within the meaning of s. 23 (1) of the Trade Marks Act, and as such is entitled to make the present application. (at p4)

6. There has never been a registered user of trade mark 5018, and the proprietor, the Carl Zeiss Stiftung of Jena, has not itself used the mark in Australia since 1st June 1948. The reason is that in that year the optical works in Jena were expropriated and became vested in the respondent corporation now known as V.E.B. Carl Zeiss, Jena. That corporation manufactured optical instruments which were advertised and sold in Australia during the three year period to 29th April 1965 under the trade mark 5018 ; but it did so on its own behalf only, and the respondents concede, as the evidence indeed makes clear, that no use of the mark in Australia in that period, or indeed at any time since 1948, can properly be credited to the registered proprietor. (at p5)

7. The case for removal of the trade mark from the register is thus made out, at least prima facie. The respondents contend, however, that on the true construction of s. 23 (1) the Court has a discretion to refuse the application, and that in the circumstances of the case the discretion ought to be exercised by allowing the registration of the mark to continue. The provision made by the section is that on either of two grounds there specified, the second being the ground of non-use for three years, the Court or the Registrar "may" order a trade mark to be removed. This is the language of authorization and not of command, but the applicant submits that on the principle of Julius v. Bishop of Oxford (1880) 5 App Cas 214 (see Ward v. Williams (1955) 92 CLR 496, at pp 505, 506 ) a duty to exercise the authority where the conditions prescribed for its exercise are satisfied is to be inferred, in the case of the High Court from its judicial character and in the case of the Registrar from the public character of his office. (at p5)

8. In Continental Liqueurs Pty. Ltd. v. G. F. Heublein and Bro. Inc. (1960) 103 CLR 422, at p 433 , I noticed the question thus raised, but expressed no view upon it. In Estex Clothing Manufacturers Pty. Ltd. v. Ellis and Goldstein Ltd. (1967) 116 CLR 254, at pp 260, 261 , Windeyer J. indicated a tendency of opinion against the existence of a discretion to refuse an application for removal, but found no need in that case to decide the point. I have now heard full argument upon it and have come to the conclusion that a discretion exists. As Lord Evershed M.R. pointed out in Re J. Lyons &Co. Ltd.'s Application (1959) RPC 120, at p 130 , the terms of the proviso to s. 26 (1) of the Trade Marks Act, 1938 (U.K.), corresponding with those of the Australian sub-s. (2), carry the implication that where the special facts there referred to are not shown the tribunal prima facie ought not to refuse the application ; but as his Lordship said : "That is not to say that no discretion whatever is left by the use of the word 'may' . . . Exceptional circumstances may arise. . . which would make it just to refuse the application even though the proviso were not at all called into play." This view seems to have been held consistently in England under successive forms of the removal section. Long ago it was expressed in bald terms by Vaughan Williams L.J. in John H. Andrew &Co. Ltd. v. Kuehnrich (1913) 30 RPC 677, at p 696 : "Section 37 does not require, but empowers the Court to remove under the circumstances there mentioned"; and in more recent times Romer J. said explicitly : "The jurisdiction conferred by s. 26 (of the 1938 Act), however, is discretionary", and he referred to the proviso to s. 26 (1) as prescribing only a "particular ground of discretion" : Lever Bros., Port Sunlight, Ltd. v. Sunniwite Products Ltd. (1949) 66 RPC 84, at p 99 . See also Re A. A. Byrd &Co.'s Application (1953) 70 RPC 212, at p 217 ; Halsbury's Laws of England, 3rd ed., vol. 38, p. 574, par. 956, note (u) ; and Kerly on Trade Marks, 9th ed. (1966), p. 211, art. 398. It is a proper assumption in the light of these authorities that the draftsman of the Australian Act of 1955 had the long-established English view of the matter before him when he penned s. 23, and that his adherence to the word "may" was the result of a considered determination to leave the jurisdiction discretionary. The opposite decision could hardly have been made without a clear indication of it appearing in the language of the section. (at p6)

9. A point made in the applicant's submissions on this question was based upon s. 23 (4), which provides that if a failure to use a trade mark is shown to have been due to special circumstances in the trade an applicant is not entitled to rely on the failure for the purposes of s. 23 (1) (b). From this, it was said, the intention appears that a failure due to special circumstances not in the trade as a whole but relating only to the individual registered proprietor shall not be relied upon as a ground, even a discretionary ground, for the refusal of an application for removal under s. 23 (1) (b). I am unable to agree. The operation of sub-s. (4) is to create an absolute bar to an application, and this is quite consistent with the co-existence of a discretion in the Court to refuse the application where the special circumstances are more particular than the absolute bar requires. (at p6)

10. I therefore turn to consider how the Court's discretion should be exercised in the circumstances of this case, bearing in mind, as I must, that the prima facie case for removal is very strong indeed, since the trade mark 5018 has been unused by the true proprietor or any registered user not merely during three years but during nearly seventeen years, before the critical date, 20th April 1965. The respondents contend that nevertheless a number of circumstances, considered together, afford sufficient reason for allowing the registration to continue. The registered proprietor, the Stiftung, is a foreign corporation the management, control and operation of which have always been abroad. The mark has stood on the register for more than sixty years, and for the greater part of that time has enjoyed the presumption of validity which was originally conferred by s. 51A of the Trade Marks Act 1905, inserted by the amending Act of 1912. Its use in Australia was interrupted by two world wars, but it reappeared as soon as was practicable after each. True, its reappearance after the second war was delayed until 1952 or 1953, but this was because of difficulties existing in East Germany during the period of the American occupation, the Russian occupation, and the establishment of the German Democratic Republic. True also, its reappearance in 1952 or 1953 was in connexion with products of a new corporation, the respondent V.E.B. Carl Zeiss, Jena (formerly called the V.E.B. Optik Carl Zeiss, Jena), but they were products of the works at Jena which may be regarded in a practical sense as having been carried on as a continuation of the Stiftung's former enterprise. In important respects there was a connexion between the V.E.B. (as I shall call the new corporation) and the Stiftung. In June 1945 the American forces vacated Thuringia, the area of East Germany in which Jena is situated, taking with them certain material from the Carl Zeiss optical works, and they were followed by the members of the two boards of management which, under the governing body, the Special Board, of the Stiftung, had controlled the optical works and the glassworks respectively, and by some 120 members of the works' staff. (It was by the emigrating members of the board of management of the optical works that the new works at Heidenheim were established.) The Soviet forces thereupon occupied Thuringia and on 30th October 1945 an Order No. 124 was promulgated sequestrating the Stiftung's optical and glass works (amongst others), that is to say placing the works under the control of a nominated person, in this case a Dr. Schrade. Then followed, on 17th April 1948, an Order No. 64 which the parties agree was effective to expropriate the works from the Stiftung and to vest them, as "property of the people", in the V.E.B. as from 1st June 1948. No assets other than those comprised in the two works were ever expropriated, and, as I have said, the applicant does not here contend that the Stiftung has been dissolved. On 16th June 1948 the German Economic Commission which had been set up in East Germany published a formal resolution expressly recognizing the continued existence of the Stiftung and the existence of "certain rights and obligations" of the V.E.B. "towards the Carl Zeiss Stiftung which are to be laid down in a newly framed statute for the Stiftung". The resolution further decreed that till the new statute should come into force the powers of all the organs of the Stiftung would be exercised by a State Commission to be appointed by the German Economic Commission. Such a State Commission was in fact appointed, and the person who formed it, a Professor Rompe, instructed the boards of management to go on as before. There has ever since been a board in at least de facto control of the Stiftung's affairs, the members of which have been or have included some or all of the persons exercising control over the optical works. (at p8)

11. The proposed new statute for the Stiftung was never brought into being, and the old statute has not been altered since 1948. Reference to it is necessary because of an expression used by the German Economic Commission to introduce its resolution : "In recognition and appreciation of Ernst Abbe's works and convinced of the necessity of continuing the existence and activity of the Carl-Zeiss-Stiftung in Jena." Ernst Abbe was the founder of the Stiftung, which owed its corporate existence to the approval of the statute by the Grand Duchy of Weimar. A Stiftung in the relevant sense is a corporation without corporators, existing to carry on a profit-making enterprise for the furtherance of defined purposes rather than the private advantage of particular individuals, and regulated as to its objects and mode of government by the provisions of its statute. The statute of the Carl Zeiss Stiftung, as amended to 1906, and as still (so far as appears) in force, divides the objects of the Stiftung into two categories. The first may be described in free translation as being, by the carrying on of its industrial undertakings, to cultivate the branches of precision technical industry introduced into Jena by the optical works and the glassworks, but to do so not for the profit of any proprietor but as a source of employment and increasing economic benefits to the labour force and of service to the scientific and practical interests of the community. The second category may be described as being to use any surplus funds, remaining after the first category of objects had been provided for, to promote the general interests of precision technical industry outside the sphere of action of the Stiftung's works, to take part in advancing the public good of the working population in Jena and its immediate neighbourhood, and to promote study in natural and mathematical sciences. The evidence indicates that the V.E.B. has in fact made substantial contributions to the Stiftung as the optical works would have done if they had not been expropriated, and these contributions have enabled the Stiftung, with the aid of income derived from those of its assets which were not expropriated, to expend considerable sums in furtherance of its objects, e.g., in augmenting the pensions of retired employees of the optical works. There has of course been no contribution from the optical works that were set up near Heidenheim in West Germany. They were set up, as I have mentioned, by the emigrating members of the Stiftung's board of management for the Jena optical works ; but although they are described in some of the evidence as carried on by "Carl Zeiss Stiftung" (with the addition of the word "Heidenheim") they have no legal or practical connexion with the Stiftung. The Heidenheim business and the V.E.B.'s business are in fact in direct commercial rivalry with one another. (at p9)

12. I need not recount the appointments that were made after 1948 to the control of the Stiftung on the one hand and the V.E.B. on the other, nor need I consider their legal validity. These matters were dealt with in some detail in the evidence, affidavit and oral, but it will suffice here to say that there has always been an overlapping of the personnel in de facto control (and perhaps in de jure control : for s. 85 of the German Civil Code in conjunction with the statute may have authorized the appointments that were made). As was to be expected, the Stiftung, which has had no optical works of its own since 1948, has ever since that year acquiesced in the use which the V.E.B. has made of the Australian trade mark. As regards East Germany, the Stiftung purported to grant to the V.E.B. on 8th April 1954 a licence expressed to run from 1st June 1948 to use a large number of trade marks, including that which in Australia is No. 5018 ; and it is presumably in pursuance of this licence, be it valid or invalid, that the mark has been placed in East Germany upon the V.E.B.'s products for export to Australia. (at p9)

13. In 1949 the registration of the trade mark fell due for renewal and it was removed from the register for non-payment of the necessary fees. In the following year, however, one Victor Sandmann, an officer of the V.E.B., obtained its restoration and renewal by giving a purported authority to Australian patent attorneys in the name of "the firm trading as Carl Zeiss" and making a statutory declaration as "Managing Director of this firm". Thus the V.E.B. assumed to act as the "firm" that had been the registered proprietor since 1907. In 1963 it obtained a further renewal, again purporting to be the same "firm". (at p9)

14. As early as 1955, however, the V.E.B. seems to have become concerned about the weakness of its position in Australia in regard to the trade mark No. 5018, for it initiated an informal application to become a registered user, and in addition it sought the Registrar's advice as to the possibility of changing the registered name of the proprietor. By that time, however, there was pending in this Court an application, purporting to be by the Stiftung but describing it as of Oberkochen (which is near Heidenheim) and in fact made by the West German concern at Heidenheim, to alter the address of the proprietor on the register from Jena to Heidenheim, or alternatively to expunge the trade mark ; and because of this the Registrar quite properly declined to deal with the V.E.B.'s applications. The respondents showed clear signs of opposing the application to this Court by the Heidenheim concern, but though they might have forced it to a hearing they did not do so. In this part of the history of the matter they now seek some basis for a suggestion that they were doing all they could to regularize the V.E.B.'s use of the mark in Australia. But they rely upon the whole course of their conduct since 1948 as showing a continuing intention not to abandon the trade mark in Australia, and they contend that in the absence of an intention of abandonment the Court's discretion should not be exercised in favour of removing the mark from the register. In particular they refer to their conduct in building a reputation for the mark in Australia in connexion with the V.E.B.'s products, their links with one another so far as persons in positions of managerial control are concerned, and the assignment by the German Economic Commission to the V.E.B. of a role towards the Stiftung resembling that which the optical works (if considered separately) formerly played towards the non-commercial activities of the Stiftung, so that such financial benefit as the V.E.B. has derived from the mark has helped to swell the amount of the funds the V.E.B. has contributed to the Stiftung for the latter's non-commercial purposes ; and from these matters they ask the Court to conclude that little or nothing more could have been done to manifest an intention on the part of both respondents that the Stiftung, though unable to use the mark after 1948 for want of a manufacturing business of its own, should not abandon the mark in Australia, should not let it fall into desuetude, but should ensure its continued use for a purpose of identification similar, in a practical sense, to the purpose it had served before 1948. (at p10)

15. The contention is nothing if not courageous. The Stiftung finally ceased to use the mark in 1948. True, it did so only because, having lost its optical works by expropriation, it had no further use for the mark ; but the fact remains that at no time since 1948 has it had any intention of using the mark in Australia. The only intention that has existed of using the mark in this country has been an intention on the part of the V.E.B. to use it by way of de facto expropriation for the illegitimate purpose of distinguishing its goods instead of goods of the registered proprietor. At no time since 1948 has the Stiftung, as distinguished from any of its officers, been in a position to exercise any legal or practical control, any effective oversight, or even any influence, over the methods or standards of manufacture observed by the V.E.B. Yet because the Stiftung had originally registered the mark under its trade name of "Carl Zeiss, Jena" instead of under its correct name, the V.E.B., producing optical instruments at the works in Jena known by the name of Carl Zeiss, has been able to pose as the registered proprietor in making its application for restoration of the mark to the register and for renewal, and in having marketed in Australia, under the protection of the mark, goods the qualities of which are to no extent whatever attributable to the true registered proprietor. (at p11)

16. It has been urged upon me that no deception of any particular purchaser has been proved, and that there is no practical interest of the public to be served by removing the mark from the register. This seems to me to put the matter the wrong way round. The Stiftung's omission to use the mark for the statutory period entitles the applicant to have the mark removed from the register unless sufficient reason appears for leaving it there. No advantage that I can see would accrue to the public from maintaining the register in its present form. The only result of doing so would be that the V.E.B., though neither the registered proprietor nor a registered user, would enjoy the advantage, in its use of the mark, of protection against competitors by reason of the willingness of the Stiftung to enforce, for the benefit of the V.E.B.'s trade, rights which the Trade Marks Act confers upon the Stiftung for the benefit of its own trade. I see no reason for allowing this perversion of the trade mark law to continue. (at p11)

17. Before parting with the matter I should say, lest on an appeal any question involving translation should arise, that I accept without hesitation the evidence of Dr. Koenig, even where it is at variance with other evidence, not only by reason of his demeanour as a witness but also because of his superior sensitivity to the niceties of English expression and his understanding of English legal ideas. (at p11)

18. For the reasons stated I am of opinion that the application should succeed. (at p11)

Orders

Order that the notice of motion be amended by omitting as the names of the respondents other than the Registrar of Trade Marks the names "Carl Zeiss" and "V.E.B. Optik Carl Zeiss" and substituting therefor "Carl Zeiss Stiftung" and V.E.B. Carl Zeiss" respectively.

Order pursuant to s. 23 of the Trade Marks Act 1955-1958 (Cth) that trade mark No. 5018 be removed from the register in respect of all the goods in respect of which it is registered, on the ground that, up to one month before the date of this application a continuous period of not less than three 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 any goods by the registered proprietor or any registered user of the trade mark for the time being.

Order that the respondents other than the Registrar of Trade Marks pay the costs of the applicant and of the Registrar of Trade Marks.