Re: Opposition by Celli S.p.A to registration of trade mark application number 1806979 (class 7) - Celli with cat device - in the name of Inlon Pty Ltd

[2019] ATMO 180

TRADE MARKS ACT 1995

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

Re:      Opposition by Celli S.p.A to registration of trade mark application number 1806979 (class 7) – CELLI with cat device – in the name of Inlon Pty Ltd

Delegate:

Adrian Richards

Representation:

Opponent: Sophie Goddard of Senior Counsel and Edwina Whitby of Counsel, instructed by Simon Berry of Hilliard and Berry Solicitors

Applicant: Gabriella Rubagotti of Counsel and Gilbert Tsang of Counsel, instructed by Andrew Wilson of Aubrey Brown Lawyers

Decision:

2019 ATMO 180

Trade Marks Act 1995 (Cth) – opposition under section 52 – section 58 considered – first user in Australia – whether mark sold with goodwill – nemo dat rule applied – whether mark abandoned – section 58 established – registration refused

Background

This matter concerns the ownership in Australia as of 2016, of a trade mark first used in Italy over 60 years earlier. On 3 November 2016 (‘Relevant Date’), Inlon Pty Ltd (‘Applicant’) filed application number 1806979 (‘Application’) under the Trade Marks Act 1995 (Cth) (‘Act’) seeking registration of the following:

Trade mark:   (‘Trade Mark’)

Specification of goods:          Class 7: Agricultural implements other than hand-operated (‘Goods’)

The Application was examined by this office and accepted for possible registration. Its acceptance was advertised for opposition purposes on 23 March 2017. Celli S.p.A (‘Opponent’) formally opposed registration of the Trade Mark by filing a Notice of Intention to Oppose on 3 April 2017 and then its Statement of Grounds and Particulars on 1 May 2017. The Applicant indicated that it would defend its application from opposition by filing a Notice of Intention to Defend on 30 June 2017.

The parties then filed their evidence, which I have detailed under the heading below. This office informed the parties that the opposition was ready to be heard and invited them, accordingly, to seek a hearing. Both asked to be heard in person. The hearing date was originally set for Canberra, but this was later moved to Sydney at the mutual request of the parties. I held the hearing on 2 May 2019 in my capacity as a delegate of the Registrar of Trade Marks. Appearing for the Opponent were Sophie Goddard of Senior Counsel and Edwina Whitby of Counsel, instructed by Simon Berry of Hilliard and Berry Solicitors. Gabriella Rubagotti and Gilbert Tsang both of Counsel, instructed by Andrew Wilson of Aubrey Brown Lawyers appeared for the Applicant. Also in attendance were Stefania Celli, Managing Director of the Opponent, Giuseppe Landi, Export Area Manager of the Opponent, and Jim Jardim, Director of the Applicant.

Evidence

The following documents were filed in accordance with the procedure for filing evidence set out in reg 5.14 of the Trade Marks Regulations 1995 (Cth):

Evidence in support

Declaration of Stefania Celli, Managing Director of the Opponent, made 5 December 2017 with exhibit SC-1

Declaration of Paolo Celli, former Managing Director of the Opponent, made 6 December 2017 with exhibit PC-1

Evidence in answer

Statutory Declaration of Andrew Allan Wilson, solicitor at Aubrey Brown Lawyers, made 14 March 2018 with exhibit AW-1

Evidence in reply

Declaration of Stefania Celli, Managing Director of the Opponent, made 12 July 2018 with exhibit SC-2

Declaration of Paolo Celli, former Managing Director of the Opponent, made 13 July 2018 with exhibit PC-2

As their names suggest, the deponents for the Opponent are related. Mr and Ms Celli are brother and sister, and the Opponent is owned by the Celli family. Both deponents offer firsthand accounts of the Opponent’s dealings with the Applicant, with Mr Celli having run the Opponent’s export department from 1992 to 2004, and later being its Managing Director from 2008 to 2012. Ms Celli took on the Managing Director role in 2014 which she still occupies.

Mr Celli’s first declaration sets out the earlier history of the Opponent. It is an Italian manufacturer and exporter of farming equipment that commenced operations in 1955. It makes items of machinery that attach to tractors such as rotary hoes, power harrows, cultivators, rotary spaders and mulchers as well as spare parts and accessories for those goods (‘Opponent’s Goods’). Originally offering the Opponent’s Goods in Italy and then Europe, by 2017 the Opponent had sold to over 500 customers (this I take to be local distributors rather than end users) in 46 countries, including Australia. The Opponent has provided a summary of its total sales in Euros covering both Australia and worldwide from 1996 to 31 October 2017. The figures are substantial.

Authorship and first use of the Trade Mark is not in issue but they help provide context to this dispute. Both of the Celli siblings attest that the Trade Mark was designed by their father Alfredo Celli, who founded the Opponent. Both also identify the distinctive device within the Trade Mark as a depiction of their family cat. Mr Celli deposes that the Trade Mark has been in use by the Opponent since around 1955. This use had likely extended into Australia by the 1970s, though the precise dates have not been offered. It is unnecessary to explore this first use in detail. I am satisfied that that the Trade Mark has seen extensive and continual use in Australia from well before the Relevant Date. At any rate the controversy in these proceedings is not when ownership in the Trade Mark crystallised in Australia, but who owned it at the Relevant Date.

The Applicant’s evidence raises the issue of a possible historical transfer of ownership in the Trade Mark arising from the Opponent’s dealings with the Applicant. In that regard, both parties’ evidence contain copies of agreements between them, along with various contemporaneous documents. I discuss the detail of some of these below in relation to the s 58 ground of opposition.

Grounds and onus

The Statement of Grounds and Particulars nominates grounds of opposition under ss 42(b), 58, 59, 60 and 62A of the Act. The onus is on the Opponent to show on the balance of probabilities that it has established one of those nominated grounds of opposition. The rights of the parties are to be determined as they were at the Relevant Date.

Discussion: s 58

I have set out the terms of s 58 of the Act below:

58  Applicant not owner of trade mark

The registration of a trade mark may be opposed on the ground that the applicant is not the owner of the trade mark.

Note:          For applicant see section 6.

Ownership in a trade mark can arise ‘either by reason of authorship and prior use or by reason of authorship, filing the application and an intention to use’. Once ownership in a trade mark is established it can be transferred to a subsequent owner, or lost, by operation of the general law.

The Opponent’s case under this ground of opposition is straightforward: by virtue of its authorship and first use in Australia, it is (and crucially was at the Relevant Date) the owner of the Trade Mark. As foreshadowed, the Applicant seeks to negative that by asserting that it took ownership of the Trade Mark in 2002 or 2003. To understand the Applicant’s claim some appreciation of the Opponent’s history in Australia is needed.

The Applicant was until relatively recently the exclusive distributor of the Opponent’s Goods bearing the Trade Mark in Australia, and was the fourth entity to have held that role since the first imports that occurred in the 1970s. The first distributor was an Australian business that was the Opponent’s local distributor from around 1973 to 1997. The second distributorship was with a new company set up by one of the directors of the first distributor. This second arrangement was very brief, operating either only in 1997 or possibly into early 1998. The third distribution arrangement was with a wholly owned subsidiary of the Opponent called Celli Australia Pty Ltd (‘CAPL’). CAPL was registered with the Australian Securities and Investment Commission from 27 July 1997 until 30 June 2008. However, it appears that CAPL ceased trading sooner than this, probably as early as 2002, due to a bargain with the Applicant (detailed below).

In around 2001 the Opponent began negotiations with the Applicant which eventually resulted in three consecutive exclusive distribution agreements beginning on 17 September 2002. The third exclusive distribution agreement was terminated by the Opponent on 10 March 2017 (taking effect on 10 September 2017). Whether this third agreement was effectively terminated by the Opponent was the subject of a recent judgment of the NSW Supreme Court. None of those distribution agreements effected a transfer of the Trade Mark.

Assignment

The Applicant’s primary submission surrounding ownership is that it purchased title in the Trade Mark in 2003, the year after the first distribution agreement was signed. In discussions surrounding and subsequent to the execution of the first distribution agreement, the evidence shows that the Applicant had made approaches to the Opponent to purchase CAPL. Those discussions did not result in a purchase of the business. But there is some evidence of two payments by the Applicant around this time. The purpose of the larger sum is straightforward and well documented. The Applicant paid CAPL for a transfer of its inventory, evidenced by a consignment agreement. The smaller sum is significantly less clear. Its purpose and even its existence have not been well documented. I take the parties do not disagree that this payment was made, but their accounts of what it was payment for vary significantly. The Applicant submits that it was for the goodwill from CAPL, and it says that CAPL’s goodwill included title in the Trade Mark. The Opponent’s position is that this was once contemplated to be a payment for goodwill, but that this later changed to a license fee. There are other documents in evidence that mention that it might have been a sales commission or consideration for the exclusivity of the distribution agreement(s).

While each account seems plausible, each is also inconclusive. It is unnecessary for me to decide whose account is best. It is enough for me to take the Opponent’s position at its highest and assume that the smaller payment was consideration for a purchase of CAPL’s goodwill. Even with this assumption I am not satisfied that title in the Trade Mark passed to the Applicant. This is because either CAPL held back its title in the Trade Mark by virtue of s 106(3) of the Act or, more likely, it did not hold title to transfer in the first place.

CAPL held back title

Section 106 of the Act reads:

106  Assignment etc. of trade mark

(1)  A registered trade mark, or a trade mark whose registration is being sought, may be assigned or transmitted in accordance with this section.

(2)  The assignment or transmission may be partial, that is, it may apply to some only of the goods and/or services in respect of which registration is sought or the trade mark is registered, but it may not be partial in relation to the use of a trade mark in a particular area.

(3)  The assignment or transmission may be with or without the goodwill of the business concerned in the relevant goods and/or services.

Note:          For assignment and transmission see section 6.

This provision grants the ability to separately deal with the goodwill and a trade mark with which it is associated. This is only available for marks that have been applied for under the Act—trade marks that exist only under the common law cannot be dealt with this way:

The Common Law of Trade Marks before 1875

…

The right of property in a trade mark had special characteristics. One, which it shared with patents and with copyright, was that it was a monopoly, that is to say, it was a right to restrain other persons from using the mark. But it was an adjunct of the goodwill of a business and incapable of separate existence dissociated from that goodwill.

Prior to 1998, the only manifestation of a trade mark substantially identical to the Trade Mark in Australia was a common law trade mark (CLTM), continually owned by the Opponent since at least the 1970s deriving from its use in Australia in relation to farming equipment, subject to a series of agreements with the Opponent’s exclusive distributors.

From 1998 CAPL was the registered owner of the following trade mark for goods in class 7:

(‘CAPL Mark’)

I have significant misgivings about whether CAPL held the beneficial title to the CAPL Mark, which I discuss further below. Leaving that uncertainty aside and assuming CAPL was correctly recorded as the owner of the CAPL Mark, if that mark was sold to the Applicant then there must be some evidence of this fact. This is because s 106(3) of the Act provides that a registered trade mark need not be transferred with the goodwill of a business. Given this provision, it is not open to me to simply infer that goodwill included the CAPL Mark. For this purported assignment to be established the Applicant would need to offer some evidence showing that there was an assignment of the CAPL Mark itself or that this goodwill transaction included the CAPL Mark. No evidence of either has been tendered, and the Applicant’s case in this regard does not rise above assertion. There is actually evidence of sorts to the contrary. Had the Applicant thought that it had taken good title in the CAPL Mark in 2003, then it would have asked this office for recordal of the assignment of that valuable intellectual property. This did not happen. Rather, the CAPL Mark was not renewed beyond its initial 10 year term of registration and as a result was removed from the register in 2008.

CAPL had no title

Given all I have recounted about the history of the Opponent in Australia, CAPL’s purported ownership of the CAPL Mark appears to be suspect. For a local distributor to seize a trade mark from a foreign manufacturer, there must be shown to be in fact a ‘clear dissociation from the initial significance’ of the CLTM. That is, the mark must be shown to have become associated with the local distributor rather than the overseas manufacturer. CAPL promoted goods affixed with the CAPL Mark, imported them and distributed them within Australia. It did not manufacture those goods, nor did it purport to offer CAPL Mark branded goods that derived from it, nor from anywhere other than the Opponent. Given the goods were made, and the CAPL Mark affixed to them by the Opponent, any promotional or other use of that mark by CAPL appears to be authorised use. To put it another way, CAPL did not, nor did it attempt to, displace the association the CAPL Mark had with the Opponent.

Turning to the CLTM, there is no suggestion of any assignment of this common law trade mark from the Opponent to CAPL. Without an earlier assignment to CAPL, there can be no subsequent assignment with the goodwill of CAPL in 2003. That it is impossible to transfer ownership in something you do not own is a fundamental principle of Australian property law.

Abandonment

The Applicant’s other path to ownership of the Trade Mark is through alleged abandonment of the CLTM by the Opponent.

[T]o show abandonment of the mark in circumstances such as the present it would be necessary to demonstrate more than slightness of use. There would have to be some evidence indicating an intention to abandon the trade mark to result in the right to proprietorship being lost …

The Applicant’s submissions on abandonment follow two threads. The first, that the Opponent sold the CLTM to it along with the goodwill of CAPL, is seriously flawed. This argument relies on the assumption that the Opponent’s CLTM was in 2003 an indivisible element of the goodwill of CAPL (as opposed to CAPL’s purported ownership of the CAPL Mark, which I have discussed above). How this is supposed to have happened is not explained, and I find the suggestion unconvincing. Also, had a sale of the CLTM occurred, this would not have been an act of abandonment (to throw away), but an act of alienation (to hand over to someone else).

The second thread asserts that the Applicant was the only user of the Trade Mark in Australia from September 2002 to the Relevant Date by virtue of the three exclusive distribution agreements mentioned above. The facts do not support this view. The Opponent has established that it exported significant quantities of CLTM branded goods into Australia throughout this period. According to the terms of the distribution agreement and accompanying sales data, significant goods were sold by the Opponent to the Applicant during this time. These sales qualify as use of the CLTM by the Opponent.

In case I am wrong about the Opponent’s use of the CLTM, the Applicant’s argument here also rests on another shaky pillar. Namely, it asserts that its use of the Trade Mark between 2002 and the Relevant Date was not authorised use within the meaning of s 8 of the Act. Recalling that the Application seeks registration for agricultural implements, and that the Applicant has not asserted that the Goods it offered and sold came from anyone other than the Opponent, it follows that the Opponent had the most reliable quality control possible over those Goods—the Opponent made them.

Decision and costs

I am required to decide whether to refuse to register the Trade Mark having regard to the extent to which any ground of opposition has been established. The Opponent has established that it was the owner of the Trade Mark at the Relevant date, and as such has also established the ground of opposition under s 58 of the Act. On that basis, I refuse to register the Trade Mark.

Both parties sought an award of costs. It is usual for costs to follow the event, and I see no reason for me to deviate from that well-worn path. I award costs against the Applicant.

Adrian Richards

Hearing Officer

Delegate of the Registrar of Trade Marks

17 December 2019