Re: Opposition by Enterprise Above & Beyond Pty Ltd to registration of trade mark application number 1760544 (class 25) Maroons in the name of Queensland Rugby Football League Limited

[2020] ATMO 115

TRADE MARKS ACT 1995

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

Re:Opposition by Junhui Zheng to registration of trade mark application 2010383 (33) – MAGIC TREE (Fancy) – in the name of Weili Mu

Delegate:	Nicholas Smith
Representation:	Opponent: Norman Waterhouse Lawyers Pty Ltd Applicant: Cowell Clarke Pty Ltd
Decision:	2020 ATMO 115 Trade Marks Act 1995 (Cth) - Section 52 opposition: s 62A considered and not established – trade mark to proceed to registration

Background

1. This decision concerns an opposition brought by Junhui Zheng (‘Opponent’) to the registration of the trade mark which is the subject of the application detailed below in the name of Weili Mu (‘Applicant’): 

Application Number:

2010383

Filing Date:

29 May 2019

Goods:

Class 33: Alcoholic beverages containing wine; Beverages containing wine (wine predominating); Blended wine; Cooking wine; Dessert wine; Drinks containing wine (wine predominating); Dry fortified wine; Dry red wine; Dry sparkling wines; Dry white wine; Dry wine; Fortified wines; Ginger Wine; Hampers consisting predominantly of wine; Low alcohol wine; Mulled wines; Non-sparkling wines; Red wine; Sparkling fruit wines; Sparkling wines; Still wines; Sweet fortified wine; Sweet red wine; Sweet sparkling wine; Sweet white wine; Sweet wine; Vintage wines; White wine; Wine

(‘Applicant’s Goods’)

Trade Mark:

(‘Trade Mark’)

1. Unless otherwise indicated, any references to sections or regulations in this decision are references to sections or regulations of the Trade Marks Act 1995 (Cth) (‘Act’) or the Trade Marks Regulations 1995 (Cth) (‘Regulations’), respectively.

2. Following the advertisement of the application’s acceptance for possible registration in the Australian Official Journal of Trade Marks, the Opponent filed a Notice of Intention to Oppose the registration followed by a Statement of Grounds and Particulars, later rectified by this office, on 11 January 2020 (‘SGP’).  The SGP raised grounds of opposition under s 62A.  The Applicant filed a Notice of Intention to Defend on 14 April 2020. 

   Evidence

3. The Opponent filed the following evidence in support of its opposition:

   ·Declaration made on 31 August 2020 by Jia Xiao, the Director of Xiao Lawyers, the Opponent’s former legal representatives, with Attachments A to F (‘Xiao declaration’).

4. The Applicant filed the following evidence in answer:

   ·Declaration made on 2 December 2020 by Weili Mu, the Applicant, with Annexures WM-1 to WM-13 (‘Mu declaration’).

5. The Opponent filed the following evidence in reply:

   ·Declaration made on 4 February 2021 by Liyan Guo, with Annexure GL-1 (‘Guo declaration’).  

6. Once the time allowed for filing evidence had ended the parties were given an opportunity to request a hearing in this matter or a decision without hearing.  The Opponent requested that the matter proceed to a decision without hearing and paid the appropriate fee.  As a result the matter has been allocated to a delegate of the Registrar for a decision based on the written record.

7. I am a delegate of the Registrar of Trade Marks and I am to decide the opposition as required by s 55 which provides that, unless the proceedings are discontinued, dismissed, or have lapsed under s 54A the Registrar must, at the end, decide:

   (a)to refuse to register the trade mark; or

   (b)to register the trade mark (with or without conditions or limitations) in respect of the goods and/or services then specified in the application;

   having regard to the extent (if any) to which any ground on which the   application was opposed has been established. 

   In doing so I take account of the written record comprised of the materials mentioned in the preceding paragraphs.

   The Opponent

8. The Opponent is an individual based in China.  

9. The relevant claims/statements in the Xiao declaration can be summarised as follows:

   ·     On 14 October 2017 the Opponent designed a mark containing the words ‘Magic Tree’ (‘Magic Tree Mark’) which was registered with the National Copyright Bureau of the People’s Republic of China.

   ·     The Opponent’s husband, Guotai Huang is the sole director and shareholder of Pomerol Wine Industry Co. Ltd, later known as Magic Tree Winery (Guangzhou) Fine Wine Co Ltd. (‘Pomerol’), which is an entity incorporated in China. The Opponent licensed the Magic Tree Mark to Pomerol.

   ·     In 2016, Mr Huang met the Applicant who advised him that she would be able to source wine for Pomerol to sell in China and Pomerol entered into contracts with the Applicant’s company China Australia Mu Trading Group Pty Ltd (‘Mu Group’) for the supply of wine with Pomerol’s labels affixed to it.  Under a contract entered into on 27 April 2017 the Mu Group was to supply wine to Pomerol to be sold in China under the Magic Tree Mark.  The labels were to be provided by Pomerol. 

   ·     In May 2017 Mr Huang and the Applicant incorporated Magic Tree Wine Estate Pty Ltd (‘Magic Tree’) for the purpose of engaging in future endeavours together.

   ·     Pomerol caused labels to be produced featuring the Magic Tree Mark to be attached to the bottles of wine supplied by Mu Group.  Neither the Applicant nor the Mu Group has ever sold wine bearing the Magic Tree Mark in Australia.

   ·     The Applicant’s decision to apply for the registration of the Trade Mark is in bad faith.  It has deliberately sought to take over the mark from Pomerol.

10. The attachments to the Xiao declaration include a copy of a 2017 contract between Pomerol and Mu Group.  The product sold is described as ‘2013 Pomerluo Magic Tree’ and has the statement ‘wine lable (sic) provide by buyer’. It also includes extracts of a WeChat conversation in December 2017 between the Opponent and Applicant which suggests that the Magic Tree Mark was designed by the Opponent.  

11. Much of the Guo declaration repeats the statements made in the Xiao declaration. The relevant additional claims/statements in the Guo declaration can be summarised as follows:

    ·     The Applicant and Opponent met in person in December 2016 to discuss wine labels and commercial terms for wines to be imported and sold under Pomerol’s own labels.

    ·     The Magic Tree Mark was not designed by the Applicant in early 2017, indeed the inspiration for the name came from the tree design on the original wine label from Pomerol.   What had occurred in May 2017 was that the Opponent asked the Applicant to insert the name Magic Tree into the existing label provided by Pomerol.  

    ·     On 2 April 2017 Pomerol entered into a contract with a company in China to manufacture 12,200 labels depicting the Magic Tree Mark.

    ·     The contracts under which the wine was sourced expressly state that the labels belong to the buyer and the buyer has copyright if they provided the label.

    ·     Prior to the Applicant seeking to register the Trade Mark (on 29 May 2019) the Applicant, on 10 November 2017, communicated to the Opponent and Mr Huang that they should register the Magic Tree Mark as a trade mark.

    ·     In May 2018 Pomerol exhibited wines in Guangzhou that were provided under contract by the Mu Group including wine bearing the Magic Tree Mark.  However the Applicant at the exhibition told visitors that all wine bearing the Magic Tree Mark was to be exclusively sourced from the Mu Group.

12. The annexures to the Guo declaration include translations of WeChat messages between the Applicant and Mr Huang on 10 November 2017 in which the Applicant asks whether the Magic Tree Mark has been registered.  

13. I note that I am highly concerned with the nature of the Opponent’s evidence.  Both Mr Xiao and Ms Guo are lawyers employed by the Opponent’s (current and former) representatives.  Absent any specific explanation (none having been provided) I would not expect either of them to have a direct level of knowledge of the Opponent’s business or the relationship between the parties.  However both declarations make statements that I would not expect the declarants to have the direct personal knowledge to make. 

14. Mr Xiao does not provide any reference to notes or other materials that he has had access to that enable him to make these statements, nor does he identify in any way any individual with direct knowledge who has provided him with information enabling him to make these statements.  In short, his statement amounts to unsupported assertions that I would not expect a party’s representative to make and have been significantly discounted accordingly.

15. Ms Guo does provide an explanation for her evidence, stating that the Opponent has limited proficiency in English.  Ms Guo, who is a fluent Chinese and English speaker, states that she makes her declaration from verbal and written instructions received from the Opponent and from her review of the records provided by the Opponent.  While this explanation is appreciated, there appears to be no reason why the Opponent could not provide a sworn declaration in her own words, translated by Ms Guo or a certified translator to avoid the problems involved in Ms Guo declaring to facts that she has no direct personal knowledge of. In such circumstances I find the Guo Declaration to be reliable in the sense that it refers to specific documents but to the extent that it consists of unsupported second-hand (and in some cases third-hand) hearsay disputed by the Applicant I am minded to prefer the Applicant’s direct recollection of events.  

    The Applicant

16. The Applicant is an individual based in Australia who is the sole shareholder and director of the Mu Group.  

17. The relevant claims/statements in the Mu Declaration can be summarised as follows:

    ·     The Applicant designed the Trade Mark 3 months before the Opponent claims to have created the mark.  The Mu Group was the first to use the Trade Mark in Australia and hence the Mu Group is the owner of the Trade Mark at common law.

    ·     The Mu Group is a company incorporated in 2015 that sources wine for customers which are then on sold to distributors, retailers or consumers in China.  It will either receive artwork from its customers and produce a bottle label for them based on the artwork, or it will design the entire wine label, including branding. 

    ·     In situations where Mu Group designs a label for the customer, it either provides the label to the customer in exchange for a design fee or agrees that the customer will have to purchase wine under that label exclusively through the Mu Group.

    ·     The Applicant and Mr Huang met in 2016 and discussed doing business together.  In December 2016 Mr Huang asked the Applicant to come up with a wine label for him.  In March 2017 the Applicant finalised the design of the Magic Tree Mark, which includes the word ‘Magic Tree’.

    ·     On 27 July 2017 the Applicant, Mr Huang, and the Applicant’s designer Luna had WeChat conversations where the Applicant provided Mr Huang with the final design of the wine label featuring the word ‘Magic Tree’.

    ·     The Applicant and Mr Huang did not discuss who owned the design for the wine labels and the Mu Group has never been paid for the Magic Tree Mark.  The Mu Group created further designs featuring the Magic Tree Mark which were reviewed and approved by the Applicant to be applied to wine sourced by the Mu Group and sold to the Applicant.

    ·     Since March 2017 the Mu Group has entered into numerous contracts for the production, sale and importation of wine under the Magic Tree Mark and the Trade Mark.  This included contracts with third parties other than Pomerol. 

    ·     Each of these contracts contained the same standard wording namely that if the buyer of the wine provided the label, the label belonged to it.  The purpose of this clause was to ensure that the buyer, if they provided the label design to Mu Group, had to confirm that they owned copyright in the label and hence Mu Group would not be infringing third party copyright by applying the label to its wine bottles.  This standard term did not apply with respect to the Trade Mark since the Mu Group owned copyright in the Trade Mark.

    ·     From 2017 to 2019 Mr Huang ordered approximately 15,799 cases of wine bearing the Trade Mark from Mu Group. The Applicant and Mr Huang also reached an oral agreement that Pomerol would change its name to Magic Tree Winery and share additional profits with the Mu Group however Mr Huang did not honour this agreement.

    ·     In summary, the Mu Trading Group created the Magic Tree Mark and the Trade Mark and were the first entity to use the marks in Australia by applying it to wine bottles in April 2017. The Mu Trading Group has a considerable reputation in the Trade Mark and the Magic Tree Mark

    ·     In 2018 the Mu Group arranged to rent a booth in Guangzhou to showcase its wine under the Magic Tree Mark. It did so unaware that Mr Huang had registered the Magic Tree Mark in China and hence had monopoly rights to the Magic Tree Mark in China.

    ·     Given the conduct of Mr Huang, the Applicant registered the Trade Mark to ensure that it was the only entity that could sell wine in Australia under the Trade Mark.   

18. The annexures to the Mu declaration include a copy of contracts for sale of wine under the Trade Mark by the Mu Group as well as screenshots of conversations had via e-mail and WeChat that the Applicant provides translations for.  It also contains dated documentation showing the creation of the Magic Tree Mark more than a month prior to the date the Opponent suggests she created the Magic Tree Mark.

    Grounds of Opposition, Onus and Standard of Proof

19. As indicated above in the SGP the Opponent nominated s 62A as the sole ground of opposition.  To successfully oppose the Opponent needs to establish this ground.   I note that the Opponent’s evidence makes submissions with respect to the ground under s 42(b) but as this ground is not particularised in the SGP I cannot consider it.

20. The onus of proof in an opposition rests upon the Opponent.[1]  The relevant standard of proof is the ordinary civil standard based on the balance of probabilities.[2]  The date at which the rights of the parties are to be determined is the filing date 29 May 2019 (‘relevant date’).[3]

    Discussion

    [1] Food Channel Network Pty Ltd v Television Food Network GP [2010] FCAFC 58, [32] (Keane CJ, Stone and Jagot JJ).

    [2] Following Pfizer Products Inc v Karam (2006) 70 IPR 599, [6]-[26] (Gyles J), and Telstra Corporation Limited v Phone Directories Company Pty Ltd [2015] FCAFC 156, [133] (Besanko, Jagot and Edelman JJ).

    [3] Southern Cross Refrigerating Co v Toowoomba Foundry Pty Ltd (1954) 91 CLR 592, 595 (Kitto J), see also s 29(1) Trade Marks Act 1995 (Cth).

    Section 62A

21. Section 62A is reproduced below:

    62A Application made in bad faith

    The registration of a trade mark may be opposed on the ground that the application was made in bad faith.

22. The Explanatory Memorandum to the Trade Marks Amendment Bill 2006 provided some non-exhaustive examples of applications made in bad faith:

    ·persons who monitor new property developments, register the names of new developments as trade marks for a number of services and then threaten the property developers with trade mark infringement proceedings unless the developers licence or buy the trade marks;

    ·persons who have a history of applying for trade marks that are deliberate misspellings of other registered trade marks;

    ·persons who identify trade marks used overseas but with no Australian use as yet who then apply to register the trade marks in Australia for the express purpose of selling them to the overseas owners.

23. The case of Fry Consulting Pty Ltd v Sports Warehouse Inc (No 2) is a current leading Australian authority on s 62A.  In that case, Dodds-Streeton J made the following comments, quoting from Harrison’s Trade Mark Application[4]:

    Clearly the court, when considering bad faith, cannot apply a purely subjective test, called by Lord Hutton ‘the Robin Hood test’. The dishonest person or one with low standards cannot be permitted to obtain trade mark registrations in circumstances where a person abiding by a reasonable standard would not. The registration of a trade mark is designed to enable bona fide proprietors to protect their proprietary rights without having to prove unfair trading. Registration is not provided to help those with low moral standards.

    … The words ‘bad faith’ suggest a mental state. Clearly when considering the question of whether an application to register is made in bad faith all the circumstances will be relevant. However the court must decide whether the knowledge of the applicant was such that his decision to apply for registration would be regarded as in bad faith by persons adopting proper standards.[5]

    [4] [2004] EWCA Civ 1028; [2005] FSR 10.

    [5] [2012] FCA 81, [147].

24. Her Honour continued later in the same decision:

    The formulation in United Kingdom authority of bad faith as falling short of the standards of acceptable commercial behaviour observed by reasonable and experienced persons in a particular area is, in my view, an apt touchstone. An overly literal application may, however, tend to negate the relevance attributed to the applicant’s mental state in the combined test preferred in Harrison.

    Further, in my view, mere negligence, incompetence or a lack of prudence to reasonable and experienced standards would not, in themselves, suffice, as the concept of bad faith imports conduct which, irrespective of the form it takes, is of an unscrupulous, underhand or unconscientious character.[6]

    [6] Ibid [165]-[166].

25. The Opponent has particularised this ground of opposition in the SGP as follows:

    1. In October 2017, the opponent (Ms Zheng) designed a mark comprising the words Magic Tree for use with wine and in particular for use on wine labels for wine initially for sale in the Peoples’ Republic of China.

    2. Ms Zheng’s husband, Mr Guotai Huang, is the principal of a Pomerol Wine Industry Co Ltd, (“PWI”), a company incorporated in the Peoples’ Republic of China, which has now changed its name to Magic Tree Winery (Guangzhou) Fine Wine Co., Ltd.

    3. Ms Zheng licenced the use of the mark Magic Tree to PWI for use with wine to be purchased by it in Australia and exported to the Peoples’ Republic of China.

    4. Mr Huang met the applicant, Ms Mu, through wine industry trade events and she indicated to him that she would be able to source wine for PWI to sell under its labels.

    5. A number of contracts were entered into between PWI and Ms Mu’s company China Australia Mu Trading Group Pty Ltd (“Mu Trading Group”) for the supply of wine, in bottles affixed with PWI’s labels.

    6. By a contract dated 21 April 2017 PWI entered into a contract with Mu Trading Group to supply 2013 vintage wine sourced in South Australia to PWI for it to sell in China under its mark Pomerluo Magic Tree (“the supply contract”).

    7. The supply contract provides:

    7.1 Mu Trading Group would supply 1,388 Cases of South Australian wine at a price of $38,308.80 (“the wine”).

    7.2 The wine was to be 2013 vintage wine.

    7.3 The wine is identified as “2013.Pomerluo Magic Tree”.

    7.4 Labels were to be supplied by PWI.

    8. In mid 2017, Mr Huang and Ms Mu caused to be incorporated Magic Tree Wine Estate Pty Ltd (ACN 619 106 286) (“Magic Tree Wine Estate”), owned in equal shares, with a view to future projects together.

    9. In order for the contract to be performed, PWI caused labels to be produced and shipped to Mu Trading Group to be applied to the wine bottles containing the wine to be supplied under the supply contract.

    10. At no time did the applicant or Mu Trading Group have wine bearing the mark Magic Tree on for sale in Australia or at all.

    11. The opponent is the owner of the trade mark Magic Tree and the trade mark has been used by PWI since 2017. The applicant’s use of the trade mark in respect of the goods claimed would be contrary to law as it would constitute (1) misleading and deceptive conduct under section 18 of the Australian Consumer Law (“ACL”) because consumers are likely to be misled or deceived into believing that the goods offered by the applicant or an entity associated with her are those of the opponent or an entity associated with her when they are not, and (2) a misrepresentation in breach of section 29 of the ACL.

    12. The true effect of the supply contract was for Mu Trading Group to sell cleanskin wine to PWI and to supply the service of applying PWI’s own labels to that wine. The identification of the wine in the contract as “2013.Pomerluo Magic Tree” was for the purpose of enabling the vendor and purchaser to know which product the contract referred to.

    13. Mu has, in bad faith, and contrary to proper standard to be adopted by persons involved in the supply of cleanskin wines to which the purchaser’s labels are to be affixed, sought to claim ownership of the mark “Magic Tree” and to seek registration of the mark in Australia. The applicant has deliberately sought to take over the mark Magic Tree from PWI and Ms Zheng. This is conduct that falls short of the standards of acceptable commercial behaviour observed by reasonable and experienced persons in the field of supply of wine to which a purchaser’s wine labels are to be affixed as part of the supply contract.

    14. In seeking the registration, Ms Mu has breached the relationship of trust and confidence between her and Mr Huang in respect of sourcing of wine for PWI’s business.

1. The onus is on the Opponent to establish bad faith and it will not be found easily given the serious nature of the allegation.[7]  The issue in this particular case is that the evidence provided by the Applicant and the Opponent is entirely inconsistent in a number of respects, including who created the Magic Tree Mark and the nature of the relationship between the parties; namely did Pomerol provide labels incorporating the Magic Tree Mark (and hence the Trade Mark) to the Mu Group for printing or did the Mu Group design the labels and sell its wine to Pomerol bearing Mu Group’s labels.  I note that the question of ownership of the respective marks is a difficult one to decide absent the benefit of cross-examination.

   [7] Hard Coffee Pty Ltd v Hard Coffee Main Beach Pty Ltd [2009] ATMO 26, [12] (Hearing Officer Nancarrow).

2. Noting the onus and the nature of the case particularised by the Opponent, I find that the Opponent has failed to establish bad faith on the balance of probabilities.  While noting that there is documentary evidence that is subject to different interpretations I reach this conclusion for the following reasons:

   -The Opponent’s ground is particularised on the basis that Junhui Zheng designed the Magic Tree Mark in October 2017.  This is stated again in the application filed in China to register the Magic Tree Mark as well as the statement of Junhui Zheng in Attachment B of the Xiao declaration.  This is completely inconsistent with the evidence filed by both parties which suggests that the parties agreed to use the Magic Tree Mark on the wine in February 2017.

   -The Applicant has provided detailed documentation showing it sending various draft concepts of the Magic Tree Mark and the label to Pomerol in February 2017, which strongly suggests that its statements about the design of the wine labels are accurate.

   -As noted above; the Opponent’s evidence suffers a significant flaw in that it consists of sworn declarations of facts provided by lawyers who simply had no direct knowledge of the facts.  The only direct evidence provided by the Opponent is an unsworn statement of Junhui Zheng which as discussed above is factually incorrect.  In circumstances where the Applicant has provided a sworn declaration as to particular facts and the Opponent’s evidence consists of declaration from people without direct knowledge of the facts, I am inclined to prefer the evidence of the Applicant.

3. While I note the complexity of the dispute between the parties, I am not satisfied that the Opponent has established the ground of opposition under s 62A.

   Decision and Costs

4. The Opponent has failed to establish the ground of opposition it nominated in the SGP.  Trade mark application no. 2010383 may proceed to registration not less than one month from the date of this decision.  If the Registrar has been served with a notice of appeal before that time, I direct that registration shall not occur until either the appeal is withdrawn or discontinued.  Otherwise the disposition of the application should be in accordance with the Court’s order or direction.

5. The Applicant has sought an award of costs in its favour. I see no reason to depart from the general rule that costs follow the event. I accordingly award costs against the Opponent under s 221 in the relevant amounts under Schedule 8 of the Regulations.

   Nicholas Smith
   Hearing Officer
   Delegate of the Registrar of Trade Marks
   5 October 2021