Re: Opposition by Austin John Watson ATF the Watson Family Trust to an application under section 92 of the Trade Marks Act 1995 (Cth) by Cosmetic Warriors Ltd to remove trade mark number 607740 (class 25) Lush

[2020] ATMO 29

TRADE MARKS ACT 1995

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

Re:Opposition by Austin John Watson ATF the Watson Family Trust to an application under section 92 of the Trade Marks Act 1995 (Cth) by Cosmetic Warriors Ltd to remove trade mark number 607740 (class 25) - LUSH - in the name of Austin John Watson ATF the Watson Family Trust.

Delegate:	M.Cooper
Representation:	Opponent: Dr G Dempsey of counsel instructed by Holland and Holland Solicitors Applicant:  Jesmini Ambikapathy of counsel instructed by IP Solved
Decision:	2020 ATMO 29 Trade Marks Act 1995 (Cth) - s 96 Opposition to application to under s 92(4)(b) – no good faith use demonstrated in relevant period - Registrar’s discretion under s 101 not exercised - Trade Mark to be removed from the Register.

Background

1. Austin John Watson as trustee for the Watson Family Trust (‘the Opponent’) is the registered owner of the following trade mark:

Registration:  607740

Trade mark:    LUSH (‘the Trade Mark’)

Filing date:  26 July 1993

Registered goods:                 Class 25: Clothing footwear and headgear (‘the Goods’)

1. On 22 May 2018, Cosmetic Warriors Ltd. (‘the Removal Applicant’) applied under s 92(4)(b) of the Trade Marks Act 1995 (‘the Act’) to remove the Trade Mark from the Register for non-use in relation to all the goods for which it is registered.

2. A Notice of Intention to Oppose the removal application was filed by the Opponent on 30 July 2018. On 27 August 2018 it filed its Statement of Grounds and Particulars (‘SGP’).

3. A Notice of Intention to Defend was filed by the Removal Applicant on 20 September 2018.

Evidence

1. The evidence filed in relation to this removal opposition comprises:

   ·     Evidence in Support

   Ø  Declaration of Austin John Watson dated 24 December 2018 with Exhibits AJW-1 to AJW-16 (‘first Watson Declaration’).

   ·     Evidence in Answer

   Ø  Declaration of Helen Peachey, registered trade mark attorney with the Removal Applicant’s representatives, dated 29 March 2019, with Exhibits HP-1 to HP-5 (‘Peachey Declaration’).

   ·     Evidence in Reply

   Ø  Declaration of Austin John Watson dated 5 June 2019 with Exhibits AJW-17 to AJW-20 (‘second Watson Declaration’).

2. On 5 July 2019 the Removal Applicant requested a hearing. Following directions, the Opponent and Removal Applicant filed written submissions on 6 November and 14 November 2019 respectively. A third Watson declaration was filed on 19 November 2019 however the Opponent did not press for its inclusion at the hearing and accordingly I have excluded it from my consideration.

3. As delegate of the Registrar, I heard the matter in Canberra on 20 November 2019. Counsel for the Opponent attended the hearing and the Removal Applicant’s counsel appeared by video link.

Opponent’s Evidence

1. In his first declaration, Mr. Watson stated that he has continuously carried on a retail clothing business from various retail outlets in Australia under a variety of trading names. He claimed to have continuously used the Trade Mark on clothing sold from these retail outlets. He stated that he is currently the sole director and shareholder of HD Brands Pty. Ltd. (‘HD Brands’) which, throughout the relevant period[1], has conducted a clothing retail business known as
   

   [1] The relevant period is the three years preceding 22 April 2018 (see paragraph 15).

   ‘DCS’ and ‘HDFO’ (‘the businesses’) from premises in the Paradise Centre in Surfers Paradise, Queensland. He claimed to have verbally authorised and licensed HD Brands to use the Trade Mark and listed three occasions in the relevant period when it had purchased cartons of clothing bearing the Trade Mark from India. He attached copies of three invoices, associated bills of lading, packaging declarations and packing lists sent by the Indian supplier and highlighted the cartons which he said contained the garments bearing the ‘Lush’ label. He attached 5 photographs of 3 garments with a ‘Lush’ label (AJW-6,7 and 16). He said the Opponent’s point of sales system is ‘not sophisticated’, he did not barcode items and he had no documents linking sales to garments, only general sales records.

2. In the second Watson Declaration, in response to the Removal Applicant’s evidence of its searches for the businesses, he clarified details of the various business names under which he claimed to have operated. Pertinently, that the full name of ‘DCS’ was ‘DCS Retail’ and he attached the business name registration record. He maintained that HD Brands ran the HDFO business, taking it over in 2017, and that he had licensed its use of the Trade Mark as he had outlined in his first declaration. He further claimed that from 2013 to date he has carried on the retail clothing business under the trading name Hound Dog from different premises in Surfers Paradise. He claimed that ‘as sole director and shareholder of my Company (HD Brands) I personally exercise complete financial control over all its trading activities’, maintaining that he had full quality control over the goods and attended to all operational matters. He reiterated that HD Brands was ‘at all material times authorised and licensed by me to use the Trade Mark’ and listed the express terms under which he said he had licensed HD Brands to use the Trade Mark. He said he used it, i.e. a company vehicle, for accounting and taxation reasons.

Applicant’s evidence

1. Ms. Peachey attached various ASIC and ABN documents to her declaration which indicated that HD Brands was registered as a company with ASIC on 20 July 2017 and prior to this it had no apparent status (and no registered Business Name). Further attachments of ASIC database searches failed to reveal any relevant entry for ‘DCS’ or ‘HDFO’. An ABN Lookup search revealed a current registration for the Opponent (as an individual) from 3 May 2018 and that he is not registered for GST.

Onus

1. In respect of the proceedings under s 92(4)(b), s 100 of the Act provides that the Opponent bears the onus of rebutting the allegation of non-use. The relevant standard of proof is on the balance of probabilities.[2]

   [2] Blount Inc v Registrar of Trade Marks (1998) 40 IPR 498 [504].

Legislation

1. Section 92 of the Act relevantly provides as follows:

   92 Application for removal of trade mark from Register etc.

   (1)  Subject to subsection (3), a person may apply to the Registrar to have a trade mark that is or may be registered removed from the Register.

   (2)  The application:

   (a)  must be in accordance with the regulations; and

(b)  may be made in respect of any or all of the goods and/or services in respect of which the trade mark may be, or is, registered.

(3)  An application may not be made to the Registrar under subsection (1) if an action concerning the trade mark is pending in a prescribed court, but the person may apply to the court for an order directing the Registrar to remove the trade mark from the Register.

Note:          For prescribed court see section 190.

(4) An application under subsection (1) or (3) (non-use application) may be made on either or both of the following grounds, and on no other grounds:

[...]

(b) that the trade mark has remained registered for a continuous period of 3 years ending one month before the day on which the nonuse application is filed, and, at no time during that period, the person who was then the registered owner:

(i)   used the trade mark in Australia; or
(ii)  used the trade mark in good faith in Australia;
in relation to the goods and/or services to which the application relates.

1. If the Opponent establishes its good faith use of the Trade Mark, (or the Trade Mark with additions or alterations not substantially affecting its identity), or that there was a relevant obstacle to its use during the relevant period, it is taken to have rebutted the allegation: s 100(3). A single instance of bona fide use in the relevant period is all that is required[3].

   [3] Woolly Bull Enterprises Pty Ltd v Reynolds [2001] FCA 261, [14-17].

Consideration

1. There is no evidence of any action concerning the Trade Mark pending in a court (s 92(3)). Based on the available records, the Trade Mark has been registered since 26 July 1993, that is, it has remained registered for a continuous period of 3 years ending one month before the day on which the non-use application was filed (s 92(4)(b)). It is also self-evident that it has been over 5 years since the filing date of the application for registration (s 93(2)).

2. As noted above, the Removal Applicant sought that the Trade Mark be removed under s 92(4)(b) for non-use for all the goods for which it is registered. The period of non-use was asserted to be from 22 April 2015 to 22 April 2018, that is, the three years ending one month prior to the filing of the non-use application on 22 May 2018 (‘the relevant period’).

3. The Opponent contended the evidence established that it has continuously sold the branded products at clothing outlets in Australia through related corporate entities, including HD Brands, of which Mr. Watson is the sole director and its ‘alter ego’.

4. The Removal Applicant submitted that the only evidence the Opponent carries on a retail clothing business and had used the Trade Mark are his assertions which, on their own, are insufficient to establish good faith use. It was noted that the address listed in the invoices and packing lists was not the address given by the Opponent for his businesses. In addition, the invoices purportedly relating to the rental of the two Surfers Paradise stores, while suggesting that business is carried on at the premises, do not evidence the type of business, that is, whether they operated as clothing retail businesses. Furthermore, there is no evidence of sales by the businesses, even by ‘general description’, or of marketing or promotion activities.

5. In addition, it submitted that the Opponent provided no evidence that he undertakes these activities as Trustee for the Watson Family Trust as opposed to in his capacity as an individual and/or sole director and shareholder of HD Brands. Even if it was accepted that any Trade Mark use by HD Brands had been authorised use within the meaning of ss 7 and 8 of the Act, it was submitted that there is insufficient evidence demonstrating such use constituted good faith use in relevant period. That is, aside from the documentary evidence of the proposed transport of garments to Australia on 3 occasions, some of which referred to the Trade Mark, no evidence had been provided of any commercial dealings by HD Brands and consequently the Opponent had failed to provide ‘convincing proof’[4] of genuine commercial use.

   [4] Re Nodoz Trade Mark [1961] RPC 1 [7]

6. With regard to the type of evidence that is regarded as sufficient to establish trade mark use, the authorities have determined that ‘the tribunal may not be persuaded by evidence that is solely from the internal files of the opponent’[5] or of a circumstantial nature[6], although one invoice, if genuine, will suffice[7]. Little weight is to be given to assertions of use which are not supported by documentary evidence[8].

   [5] Ibid.

   [6] Trina Trade Mark [1977] RPC 131

   [7] Prosimmon Golf (Aust) Pty Ltd v Dunlop Australia Ltd (1987) 9 IPR 425; Geo W McPherson Nominees Pty Ltd v Remington Arms Co. Inc. (1999) 47 IPR 636.

   [8] Great White Shark Enterprises Inc v Joose Apparel Pty Ltd [1998] ATMO 8

7. As noted above, the Opponent’s evidence included copies of 3 invoices and associated packing lists, bills of lading and packing declarations, prepared by the Indian supplier in November 2017 and February 2018, which concerned the transport of clothing from India to HD Brands Pty Ltd at 64 Cabana Blvd Gold Coast, Australia. The invoices do not reveal any order or reference numbers. While the packing lists show a relatively small number of cartons of clothing listed under the heading ‘Lush’, what happened to them when/if they reached Australia is not the subject of any objective evidence. While the Opponent submitted that the only logical inference to be drawn from this material is that the goods were brought to Australia and offered for sale, I am not satisfied that the evidence is sufficient to support such an inference. In particular, I observe that:

   ·     The five photographs of three garments bearing a ‘Lush’ label (AJW-6,7 and 16) do not show where or when these photographs were taken and/or whether these goods were advertised, promoted or offered for sale in Australia by the Opponent.

   ·     The second Watson Declaration attached an invoice which indicated that HD Brands Pty Ltd paid one month’s rent in February 2018 but other than the words ‘Paradise Centre’ appearing at the top of the invoice, it does not indicate the nature of the business or the address of the property rented.

   ·     Similarly, the CBRE statement provided indicates that HD Brands Pty Ltd had paid rental and other expenses associated with the premises ‘Paradise Avenue’, however all the dates on the statement post-date the relevant period.

   ·     There is no evidence of the receipt or distribution of the cartons or their contents.

   ·     No records or other material demonstrate orders, displays, sales, advertising or promotion of the Goods in Australia, under the Trade Mark, at any point in time by any person.

8. On my assessment, the material provided only relevantly establishes that HD Brands Pty Ltd was the consignee for shipments of clothing from India on 3 occasions in the relevant period, of which a relatively small number of cartons (17 of 1,197 cartons) were identified as ‘Lush’.

9. Even accepting that the goods were shipped to Australia, there is no objective evidence that they were ever offered for sale, promoted or sold in Australia by the Opponent (or his authorised user) under or by reference to the Trade Mark. Overall, I consider the evidence provided is of insufficient probative weight to satisfy me that I should draw the inference pressed by the Opponent as to its Trade Mark use in the relevant period.

10. I note that the Opponent’s circumstances in this regard are not analogous to some other cases in which, although direct commercial use of the mark was not demonstrated, use was accepted on the basis of other activities such as the supplies of samples[9], engaging in a course of conduct that results in the marketing and supply of the goods[10], expenditure on packaging and promotional videos and trade presentations[11] or the combination of the purchase of business cards, printing of letterheads, approaching of potential advertisers and soliciting them for advertisements[12]. The court in Dick Smith Investments Pty Ltd v Ramsey[13] also considered whether something short of evidence of the actual sale of goods could amount to trade mark use. Noting the production of ‘two promotional pieces’ and that ‘considerable funds had been invested’ in the development of the brand, the court was satisfied that this involved a use of the mark in good faith for the purposes of Part 9 of the Act.[14]

    [9] Kronborg Isager v Boboli International Inc (1990) 18 IPR 526.

    [10] Hermes Trade Mark [1982] RPC 425 [432].

    [11] NSW Dairy Corporation v Murray-Goulburn Co-operative Co. Ltd. [1989] FCA 124.

    [12] Buying Systems (Aust) Pty Ltd v Studio SRL (1995) 30 IPR 517.

    [13] [2016] FCA 939 [155-7].

    [14] Ibid.

11. In this matter, even if I accepted that the packing lists prepared in India, which use ‘Lush’ to refer to some of those cartons, constituted the Opponent’s Trade Mark use, it falls well short of establishing the Opponent’s good faith use of the Trade Mark in Australia (s 100(3)(a)). There is no objective or corroborative evidence of the Opponent’s claims that the Goods arrived in Australia and/or its authorised representative sold them through its retail stores. There is no persuasive evidence which demonstrates, or enables an inference to be drawn, that the Opponent promoted the Goods in Australia under or by reference to the Trade Mark. Even if I accept that Mr. Watson is a ‘one-man band’, this does not explain the absence of any presumably easily obtainable evidence, such as that noted by the Removal Applicant, of internal records, photographs of the retail businesses or trade promotions, or sales records, even with general descriptions, to support his claims. I consider Watson’s statement that he had a sales system that was ‘not sophisticated’ incredible and inherently inconsistent with his acknowledgement that he used a company structure for taxation and accounting purposes. That is, his declarations, combined with the oral submissions made that he ran a small business and kept few internal records, are inconsistent with his record-keeping obligations as a trustee and/or as a director of a registered company.

12. Relying on Pan World Brands Ltd v Tripp Ltd[15], concerning legislation from a different jurisdiction, the Opponent contended that it was not open to me to disbelieve the uncontested claims of use made in the Watson declarations and that the Removal Applicant bore the onus to put on evidence otherwise. As the Applicant correctly submitted, it is not a matter of disbelieving the claims made but whether the Opponent has provided sufficient cogent evidence to discharge the onus placed on it by s 100. As the Court commented in Optical 88 Limited v Optical 88 Pty Limited (No. 2) (‘Optical 88’):

    The onus falls on the opponent to the removal application (in this case, the applicant in the proceeding) to rebut the allegations that have been made: see s 100(1). It is, of course, the opponent who will know what use, if any, it has made of the mark the subject of the removal application. The opponent cannot be heard to complain of what might be found to be deficiencies in proof of the use that is relied on in order to rebut the allegation of non-use, when it has the means at its disposal to show precisely how, when and where the challenged mark was used.
    

    [15] [2008] RPC 2.

    [16] [2010] FCA 1380 [204]-[205].

    The applicant for removal (the first respondent in this proceeding) bears no risk in that regard and, as s 100(1) recognises, is entitled to stand squarely behind the allegations that are made to actuate s 92(4)(a) and s 92(4)(b)…. Thus, it is the opponent (the applicant in this proceeding) who must make good the case, in all its dimensions, for a challenged mark to remain on the Register.[16]

13. I consider that the Opponent would have had ‘the means at its disposal to show precisely how, when and where the challenged mark was used’ however it has failed to do so in respect of the Goods.

14. Having carefully considered the Removal Applicant and Opponent’s evidence and submissions, and having regard to the relevant authorities, for the reasons above, I am not satisfied that there was any good faith use of the Trade Mark in Australia, or use of it with additions or alterations that did not substantially affect its identity, by the Opponent, during the relevant period for the purposes of s 100(3)(a).

15. There is no evidence or claim that the mark has been relevantly assigned for the purposes of s 100(3)(b) nor of any circumstances that were an obstacle to its use under s 100(3)(c). Given the above finding of the absence of any relevant use, it is unnecessary to consider the submissions concerning the Opponent’s purported authorisation of HD Brands to use the Trade Mark in the relevant period.

16. It follows that I am not satisfied the Opponent has discharged its obligation to rebut the allegation made by the Removal Applicant under s 92(4)(b).

17. I am satisfied that the grounds on which the application was made have been established: s 101(1).

Registrar's discretion

1. Even where grounds for removal have been established, s 101(3) of the Act provides that, if the Registrar or the court is ‘satisfied that it is reasonable to do so’, it may decide the trade mark should not be removed from the Register.

2. The applicable principles, as stated by Flick J in E & J Gallo Winery v Lion Nathan Australia Pty Ltd (‘Gallo Winery’)[17] and as adopted in Optical 88, require that ‘the discretion under s 101(3) is not conditioned on the need to establish ‘exceptional circumstances’ before the discretion can be exercised favourably to the trade mark owner’ and that ‘it is the opponent for removal who bears the burden of persuasion on that issue’.[18]

   [17] E & J Gallo Winery v Lion Nathan Australia Pty Ltd (2008) 77 IPR 69; [2008] FCA 934 [193]-[213]

   [18] Optical 88 [2010] FCA 1380 [273]

1. The Opponent did not address the discretion in its written submissions. At the hearing the Opponent referred generally to ‘the equity of the issue’ alleging that the Removal Applicant had conducted a global campaign to remove all similar Trade Marks and suggesting a lack of ‘clean hands’ in this regard. The Removal Applicant noted the authorities and submitted that the factors identified as relevant to the exercise of the discretion were either inapplicable or not satisfied.

2. In Gallo Winery Flick J applied the five (non-exhaustive) factors listed by Falconer J in Hermes Trade Mark [1982] RPC 425 for consideration in the exercise of the discretion, as follows:

   • there had been no abandonment of the trade mark;
   • the registered proprietors of the mark still had a residual reputation in the mark;
   • there had been sales by the registered proprietors of goods for which removal was sought since the relevant period ended;
   • the applicants for removal had entered the market without having taken steps to ascertain from the Register whether anyone had a right to exclude their use of the mark;
   

   [19] E & J Gallo Winery v Lion Nathan Australia Pty Ltd (2008) 77 IPR 69; [2008] FCA 934 [202]

   • the registered proprietors were not aware of the applicant’s sales under the mark.[19]

3. The latter two factors are not relevant in the circumstances of this application. In relation to the others, while it cannot be positively stated that the Trade Mark has been abandoned, there is no reliable evidence of any residual reputation or sales since the relevant period ended.

4. Additional and similar factors were also considered in Austin, Nichols & Co Inc v Lodestar Anstalt[20] where the Full Federal Court agreed with the factors listed by the primary judge. In this regard, in consideration of those factors and the Opponent’s circumstances, there is no substantiated evidence of any international profile or of use of the Trade Mark in Australia after the relevant period of non-use. In relation to the period of non-use, and whether it was substantially greater than the minimum statutory period of three years’ non-use, I note that the Trade Mark was registered in 1993, almost 27 years ago. Based on the findings above, the only objective evidence of its use are the few photographs of items of labelled merchandise, of unknown provenance, location or date, as supplied by the Opponent. It follows that, on the face of it, the period of non-use has been substantially greater than the minimum statutory period. While there is no indication of any public mischief if the Trade Mark remains on the Register, there is correspondingly no evidence or claim of any market confusion or public detriment which might arise, either in Australia or internationally, if the mark is removed.

   [20] (2012) 202 FCR 490; 287 ALR 221; [2012] FCAFC 8 [9-12].

5. There is no claim or any evidence of the Opponent’s Trade Mark use on similar goods or closely related services: s 101(4).

6. As noted above, it is the Opponent which bears the onus of satisfying the Registrar that the discretion under s 101 ought to be exercised[21]. While acknowledging the broad discretion available under s 101(3), having carefully considered all the claims and material before me, and in the absence of any detailed submissions from the Opponent in this regard, I am not satisfied in all the circumstances of this matter that it is reasonable to exercise the discretion not to remove the Trade Mark.

   [21] Optical 88 [2010] FCA 1380 [273]

Decision

1. Section 101 of the Act relevantly provides:

101 Determination of opposed application--general

(1) Subject to subsection (3) and to section 102, if:

(a) the proceedings relating to an opposed application have not been discontinued or dismissed; and

(b) the Registrar is satisfied that the grounds on which the application was made have been established;

the Registrar may decide to remove the trade mark from the Register in respect of any or all of the goods and/or services to which the application relates.

1. As the Opponent has not rebutted the allegation of non-use, the ground for removal has been established. It follows that the application for removal of the Trade Mark in respect of all the goods for which it is registered, has been successful.

2. I direct that the Trade Mark be removed from the Register after one month from the date of this decision. If the Registrar is served with a notice of appeal on or before that time, the registration will not be amended or removed unless the appeal is withdrawn or discontinued. Otherwise, the registration will be subject to the decision of the Court.

Costs

1. As the Removal Applicant has been successful, I award costs against the Opponent under section 221 of the Act in the amounts set out in Schedule 8 of the Trade Mark Regulations 1995.

Mary-Ann Cooper
Hearing Officer
Oppositions and Hearings
Trade Marks and Designs
26 February 2020