Reid Cycles Pty Ltd v Condor Cycles Limited

[2017] ATMO 161

TRADE MARKS ACT 1995

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

Re:Opposition by Reid Cycles Pty Ltd to registration of trade mark application 1723273 (12) - CONDOR - filed in the name of Condor Cycles Limited

Delegate:	Nicholas Smith Decision on the Written Record
Decision:	2017 ATMO 161 Trade Marks Act 1995 (Cth) - Section 52 opposition: ss 42(b), 58, 60 and 62A considered – none established – trade mark to proceed to registration

Background

1. This is an opposition brought by Reid Cycles Pty Ltd (‘Opponent’) pursuant to s 52 of the Trade Marks Act 1995 (Cth) (‘Act’) to the registration of the trade mark which is the subject of the application detailed below in the name of Condor Cycles Limited (‘Applicant’): 

Application Number:	1723273
Filing Date:	22 September 2015
Goods:	Class 12: Bicycles and bicycle frames; parts and fittings for bicycles and bicycle frames; none of the foregoing being motor cycles, frames for motor cycles or parts and fittings for motor cycles and frames for motor cycles (‘Applicant’s Goods’)
Trade Mark:	CONDOR	(‘Trade Mark’)

2. Following the advertisement on 18 February 2016 in the Australian Official Journal of Trade Marks of the application’s acceptance for possible registration, the Opponent filed a Notice of Intention to Oppose on 16 March 2016.  The Opponent then filed a Statement of Grounds and Particulars (‘SGP’) on 11 April 2016. The SGP raised grounds of opposition under ss 42(b), 43, 58, 59, 60 and 62A of the Act[1].  The Applicant filed a Notice of Intention to Defend on 18 May 2016.  On 7 December 2017 the Opponent filed a request to change its name from Bargain Bicycles Pty Ltd to Reid Cycles Pty Ltd.

[1] As noted later in this decision, in its written submissions, the Opponent indicated that it no longer sought to rely on the grounds of opposition under ss 43 and 59 of the Act.

Evidence

3. The Opponent filed Evidence in Support of its opposition (‘EIS’) on 8 August 2016.  This evidence consists of a declaration made on 4 August 2016 by Bruce Coulson Reid, Finance Director of the Opponent, with Annexures BCR-1 to 4, 9 to 10 and Confidential Annexures BCR-5 to 8 (‘Reid Declaration’).

4. The Applicant filed Evidence in Answer (‘EIA’) on 30 November 2016.  This evidence consists of a declaration made on 29 November 2016 by Robin Croker, an Australian former Olympian and professional cyclist unconnected with the Applicant other than as a customer, with Exhibits RC-1 to RC-4 (‘Croker Declaration’), a declaration made on 30 November 2016 by Michael Peter Squires, Partner at Philips Ormonde Fitzpatrick, the Applicant’s representatives, with Exhibits MPS-1 to MPS-7 (‘Squires Declaration’), and a declaration made on 30 November 2016 by Robert Peter Bath, an Australian cyclist unconnected with the Applicant other than as a customer, with Exhibit RPB-1 (‘Bath Declaration’).  The Opponent chose not to file any evidence in reply.

5. Once the time allowed for filing evidence had ended the parties were given an opportunity to request a hearing or to file written submissions.  Neither party chose to avail themselves of these opportunities at that time.  By letter issuing from IP Australia on 17 April 2017 the parties were notified that as neither party had requested a hearing the matter would be given to a delegate of the Registrar for a decision based on the written record.  The letter indicated that the parties had one month from the date of the letter to file any written submissions they wished to reply upon.  The Opponent filed written submissions on 5 May 2017 (‘Opponent’s Submissions’).  The Applicant did not file any submissions. 

6. I am a delegate of the Registrar of Trade Marks and I am to decide the opposition as required by s 55 of the Act which provides that, unless the proceedings are discontinued, dismissed, or have lapsed under s 54A the Registrar must, at the end, decide on the basis of the written record, comprised of the materials mentioned in the preceding paragraphs:

(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.

The Opponent

7. The Opponent is a manufacturer, distributor and retailer of bicycles, bicycle accessories and products relating to the use of bicycles that trades under the name ‘Reid Cycles’.

8. The Reid Declaration contains the following claims/statements:

·    On 2 November 2015 the Opponent filed an application to register the trade mark CONDOR, Application number 1731877 for goods in Class 12, namely bicycles (‘Reid Mark’). The Reid Mark was accepted for registration in accordance with s 44(4) of the Act but is presently being opposed by the Applicant.

·    The Opponent selected the Reid Mark in August 2008 because it wanted its range of bicycles to have the names of birds of prey, such as Condor, Osprey and Aquila.  The first instance of use was in January 2009, when the Reid Mark was applied to a racing bike model called Condor.  The Opponent has continuously used the Reid Mark in Australia since then on its website and on certain models of bicycles sold by it.  It has also been used on third party websites including bicycling forums.

·    The Opponent also has provided evidence of sales and purchase orders for bikes bearing the Reid Mark between 2012 and the relevant date which are not insignificant.

·    At the time the Opponent selected the Reid Mark it had no knowledge of any other business in Australia using the mark ‘CONDOR’ for bicycles or any use of the Trade Mark by the Applicant.  There is no evidence that the Applicant has ever used the Trade Mark in Australia or intends to do so.

The Applicant

9. The Applicant is a manufacturer and retailer of bicycles based in the United Kingdom which has traded since 1948.

1. The Squires Declaration contains the following claims/statements:

   ·    Since at least 2005, the Applicant has sold bicycles under the Trade Mark through its online store at to the Australian market.  In 2005 its website contained the statement ‘We have been sending products all over the world by mail order for many years, particularly Australia, New Zealand, South Africa and U.S.A…’  The Applicant’s website also displayed its catalogue online which prominently featured the Trade Mark.

2. The Croker Declaration contains the following claims/statements:

   ·    In 1974, when the Deponent was living near Melbourne, Australia, the Declarant’s parents purchased a bicycle from the Applicant sold under the Trade Mark.  This was purchased by mail order from the United Kingdom and mailed to Australia.  At that time the Applicant advertised in various United Kingdom cycling magazines that the Deponent’s family subscribed to.

   ·    The Applicant’s CONDOR bicycles are particularly desirable and have had a reputation for several decades as a high quality and desirable racing bicycles.  Several years ago the Deponent saw a bicycle that he now understands to be manufactured by the Opponent in Collingwood in Victoria.  He was confused as to whether it was produced by the Applicant and noted that the bicycle had cheap wheels and low-end components.

3. The Bath Declaration contains the following claims/statements:

   ·    The Deponent first became aware of the Applicant’s CONDOR bicycles in 2005-06 and first purchased a CONDOR bicycle through the Applicant’s online store in 2008.

   ·    The Deponent considers that the Applicant has a reputation in the Trade Mark in Australia as a desirable and somewhat exclusive brand, partly through the sponsorship of the Rapha Condor racing team which competes in various cycling events in Australia and elsewhere.  This sponsorship arrangement started in 2006-07.

Grounds of Opposition, Onus and Standard of Proof

1. As indicated above in the SGP the Opponent nominated grounds of opposition under ss 42(b), 43, 58, 59, 60 and 62A and now only seeks to rely on the grounds under 42(b), 58, 60 and 62A. To successfully oppose the application the Opponent needs to establish at least one of those grounds.

2. The onus of proof in an opposition rests upon the Opponent.[2]  The relevant standard of proof is the ordinary civil standard based on the balance of probabilities.[3] The date at which the rights of the parties are to be determined is 22 September 2015, being the filing date of the application in Australia (except in circumstances, not present here in which a different priority date is provided for in the Act).[4]

Discussion

[2] Food Channel Network Pty Ltd v Television Food Network GP [2010] FCAFC 58, [32].

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

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

Section 58 – Applicant not owner of trade mark

1. Section 58 of the Act is reproduced below:[5]

   [5] In summarising the principles that apply with respect to s 58 of the Act I have paraphrased the unpublished decision of the Registrar’s Delegate in respect of the opposition to Trade Mark Application No. 1678345 – Heavens Woodfire Pizza - in the name of Melambada Pty Ltd.

   Section 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.

2. The owner of a trade mark is the person who first uses it in Australia, or first files a trade mark application in Australia, whichever is the earlier.  It is now well established at law that in order to succeed under this ground of opposition the Opponent must establish three factors.  These are:

   · that the Trade Mark is identical, or substantially identical, to the trade mark(s) relied upon by the Opponent (‘the first factor’);[6]

   · that the Applicant’s Goods are the ‘same kind of thing’ as the goods for which the trade mark(s) relied upon by the Opponent was used (‘the second factor’);[7] and

   ·    that a person other than the Applicant has the earlier claim to ownership of the Trade Mark based on use of the trade mark(s) relied upon by the Opponent prior to whichever is the earlier of: (a) the application to register; or (b) any actual use of the Trade Mark by the Applicant (‘the third factor’).[8]

   [6] Carnival Cruise Lines Inc. v Sitmar Cruises Limited (1994) 31 IPR 375.

   [7] Re Hicks’ Trade Mark (1897) 22 VLR 636.

   [8] Settef SpA v Riv-Oland Marble Co (Vic) Pty Ltd (1987) 10 IPR 402, 413.

3. The ground based on s 58 of the Act was particularised in the SGP as follows:

   The Opponent has used the unregistered trade mark CONDOR (which is the basis for Australian trade mark application no. 1731877 CONDOR) in Australia in respect of a range of its bicycles since January 2009. The Applicant's first incidence of use of the CONDOR trade mark was in Victoria in January 2009, when the Trade Mark was applied to the ten speed road racing bike model named CONDOR which predates the priority date of the Trade Mark

4. The first and second factors are satisfied.  I find that the Opponent has used the Reid Mark (which is identical to the Trade Mark) as a trade mark from 2009 for bicycles which are the same kind of thing as the Applicant’s Goods.

5. However I do not consider that the third factor has been satisfied, namely that the Opponent has the earlier claim to ownership of the Trade Mark based on use of the Reid Mark prior to any actual use of the Trade Mark by the Applicant.  The Applicant was established in 1948 in the United Kingdom and, accepting the evidence of the Croker and Bath Declaration, sold bicycles bearing the Trade Mark in Australia in 1974 and 2005-06.  I also accept the evidence in the Squires Declaration that, prior to the first use of the Reid Mark by the Opponent, the Applicant used the Trade Mark on its website which specifically stated that it sold its bicycles by mail order to Australia.

6. Ward Group Pty Ltd v Brodie & Stone Plc[9] is authority that use of a trade mark on a website occurs in Australia when the mark is used on a website accessible in Australia, and when there has been a sale in Australia and/or if there is evidence that the use of the mark on the website was specifically intended to be made in, or directed or targeted at Australia. I find that the test in Ward Group is satisfied by the EIA which shows use of the Trade Mark, prior to the first use of the Reid Mark, on a website targeted at Australia along with the sale of at least one bicycle bearing the Trade Mark to Australia. I find that the Opponent has failed to establish the ground of opposition pursuant to s 58 of the Act.

Section 60

[9] [2005] FCA 471.

1. Section 60 of the Act is reproduced below:

   Section 60 - Trade mark similar to trade mark that has acquired a reputation in Australia

   The registration of a trade mark in respect of particular goods or services may be opposed on the ground that:

   (a)another trade mark had, before the priority date for the registration of the first‑mentioned trade mark in respect of those goods or services, acquired a reputation in Australia; and

   (b)because of the reputation of that other trade mark, the use of the first‑mentioned trade mark would be likely to deceive or cause confusion.

2. To establish a ground of opposition under s 60 an opponent must demonstrate that as at the relevant date there was another trade mark which had acquired a reputation in Australia amongst a significant or substantial number of persons in the relevant market such that use of the Trade Mark would be likely to deceive or cause confusion.[10]

   [10] The present paragraph and the following paragraphs summarizing the requirements under s 60 of the Act are paraphrased from the decision of the Registrar’s Delegate in Australian Boutique Markets Pty Ltd v Rachael Zelensky and Jeffrey Zelensky [2013] ATMO 97.

3. In McCormick & Co Inc v McCormick, Kenny J considered what is intended by the word ‘reputation’ as used in s 60. Her Honour had consulted the Macquarie Dictionary and on the basis of the definition provided concluded that it was ‘the recognition of the [trade mark] by the public generally’.[11]  Her Honour quoted with approval the following words of Lockhart J in Re ConAgra Inc v McCain Foods (Aust) Pty Ltd:

   [R]eputation within the jurisdiction may be proved by a variety of means including advertisements on television or radio, or in magazines and newspapers within the forum. It may be established by showing constant travel of people between other countries and the forum and that people within the forum, (whether residents there or persons simply visiting there from other countries) are exposed to the goods of the overseas owner …[12]

   [11] [2000] FCA 1335, [81].

   [12] (1992) 33 FCR 302, 343.

4. On the subject of reputation Kenny J also referred to the Hugo Boss decision, where the Registrar’s delegate observed:

   [I]t is true that the assessment of the reputation of a trade mark goes far beyond mere examination of sales or turnover of goods sold under that trade mark and contemplation of the advertising and promotional figures.

   As regards a trade mark, its reputation derives both from the quantum of sales under that mark and also its esteem, or image, projected by that trade mark. The quantum of sales, advertising and promotion contributes to the ‘recognition’ component of the trade mark’s reputation. The credit, image and values projected by a trade mark attaches to the ‘esteem’ component of the reputation as do the public events and other trader’s marks with which [the] owner of the trade marks in question chooses to associate the trade marks via sponsorships, cross-promotions, ‘contra deals’ and so forth.

   It follows that a trade mark used in relation to goods with comparatively low sales may have a high and strong reputation by virtue of the high credit or esteem in which it is held, or, conversely, that a trade mark which has very high sales may have a strong reputation notwithstanding the lack of esteem that attaches to it. The particular popular images, or sets of values, that attach to the trade mark are also, therefore, important parts of the reputation of the trade mark and may be as strong an associative force in the minds of the public as the association of the trade marks with the goods or services themselves.[13]

   [13] Hugo Boss AG v Jackson International Trading Co Kurt D Bruhl Gesellschaft MbH & Co KG (1999) 47 IPR 423, 426.

5. As stated above, in assessing reputation under s 60, what constitutes a significant or substantial number of persons in the relevant market must be considered. The case of Le Cordon Bleu BV v Cordon Bleu International Ltee[14] was decided under s 28(a) of the (now repealed) Trade Marks Act 1955.  That provision did not refer to ‘reputation’ at all, only that use of the impugned trade mark would be ‘likely to deceive or cause confusion’.  Nevertheless the words of Heerey J provide some guidance:

   What is ‘significant’ or ‘substantial’ will depend on the nature of the goods or services in question. For some highly specialised products, awareness among a few thousand persons, or even less, might be sufficient … We are here concerned with foodstuffs sold in supermarkets, delicatessens, milk bars and other retail outlets. The relevant market is virtually the entire Australian population from early teenage years onwards.[15]

   [14] (2000) 50 IPR 1.

   [15] Ibid 20. Heerey J’s decision was overturned on appeal to the Full Federal Court, although not on the point quoted. Indeed the court specifically noted that his approach contained no error; see Renaud Cointreau v Cordon Bleu International Ltee [2001] FCA 1170, [75].

6. Furthermore, in practice, once the requisite reputation is demonstrated, the likelihood of deception or confusion increases the more closely the trade marks resemble each other.[16]

   [16] Mark Davison, Shanahan’s Australian Law of Trade Marks and Passing Off Online Westlaw AU, [50.2415] <

7. The Opponent has particularised the ground of opposition in the SGP in the manner set out below: 

   The Opponent has used the unregistered trade mark CONDOR (which is the basis for Australian trade mark application no. 1731877 CONDOR) in Australia in respect of a range of its bicycles since January 2009. As a result, the Opponent has acquired a substantial reputation in the trade mark CONDOR which is similar to the Trade Mark and use of the Trade Mark is likely to deceive or cause confusion.

8. The evidence in the Reid Declaration is that the Opponent has used the Reid Mark since 2009 both on its website at and on certain makes of its models sold since that date.  The Opponent provides no evidence of the number of visits to its website.  There is no other evidence of any advertising featuring the Reid Mark.  The only evidence of consumer reputation and/esteem of the Reid Mark is a single article from 2009 and extracts of some online forum discussions about the Opponent’s bicycle products that occasionally make reference to the Opponent’s Condor bicycle. 

9. The Opponent provides evidence of sales of bicycles under the Reid Mark from 2012 to the relevant date.  The number of bicycles sold under the Reid Mark is not insignificant or token, however given the nature of the bicycle market in Australia which, at least in respect of low-end bicycles, is not specialised and indeed quite broad, the number of bicycles sold under the Reid Mark in Australia would not by itself be sufficient to satisfy me that the Reid Mark had acquired a reputation in Australia at the relevant date.  

10. Given the lack of advertising, the limited evidence of consumer reputation or esteem and the level of sales which by themselves are insufficient to show a substantial customer base, I am not persuaded that at the relevant date the Reid Mark had acquired a reputation in Australia amongst a significant or substantial number of persons in the relevant market such that use of the Trade Mark would be likely to deceive or cause confusion. I find that the Opponent has failed to establish the ground of opposition pursuant to s 60 of the Act.

Section 42

1. Section 42 of the Act is reproduced below:

   42 Trade mark scandalous or its use contrary to law

   An application for the registration of a trade mark must be rejected if:

   (a) the trade mark contains or consists of scandalous matter; or

   (b) its use would be contrary to law.

2. The Opponent pressed this ground of opposition solely on the basis that the use of the Trade Mark would be contrary to law (s 42(b)).  The onus is on the Opponent to establish that use of the Trade Mark by the Applicant would be, rather than could be, contrary to law on the balance of probabilities.[17]  The relevant time for assessing whether an application is contrary to law is at the relevant date but ‘looking forward to prospective conduct after registration’.[18]

   [17] Advantage Rent-a-Car Inc v Advantage Car Rental Pty Ltd [2001] FCA 683.

   [18] Time Warner Entertainment Co LP v Stepsam Investments Pty Ltd [2004]  59 IPR 343, 353.

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

   Given the Opponent’s extensive use and reputation in Australia in the trade marks identified above, use of the Opposed Mark would constitute common law passing off and/or contravene the misleading and deceptive conduct provisions of the Australian Consumer Law.

   The use of the Trade Mark by the applicant is contrary to law under section 42(b) as it constitutes breaches of section 18 and section 29(1)(a) of the ACL. The Opponent has used the unregistered trade mark CONDOR (which is the basis for Australian trade mark application no. 1731877 CONDOR) in Australia in respect of a range of its bicycles since January 2009. Use of the Trade Mark amounts to the making of a false or misleading representation that the Applicant's goods are associated with the goods promoted by the Opponent when this is not the case.

4. As previously stated the Opponent has failed to establish a ground of opposition under s 60 of the Act. The test for misleading or deceptive conduct under s 18 of the Australian Consumer Law (‘ACL’) is a more stringent one than that for deception or confusion under s 60,[19] and I find that the Opponent has also failed to establish that the Applicant’s use of the Trade Mark would be contrary to s 18 of the ACL.

   [19] See, e.g.: Ownit Homes Pty Ltd v Ownit Conveyancing Pty Ltd [2005] ATMO 47, [36]; Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd (1982) 149 CLR 191, 198.

5. Hill J considered—in connection with the superseded Trade Practices Act1974 (‘TPA’)— the relationship between ss 52 and 53 of the TPA[20] and passing off.  His Honour considered that:

   The scope for the operation of s 52 will thus be broader than that involved in the tort of passing off so that in a case such as the present where the claim is for the protection of the reputation in a name against the use of that name by another, failure to succeed under s 52 or s 53 will invariably mean that proceedings for passing off would likewise fail.[21]

   [20] The equivalents of ss 18 and 29 of the ACL.

   [21] Re Equity Access Pty Ltd v Westpac Banking Corporation [1989] FCA 506, [40] (citations omitted).

6. For these reasons I am not satisfied that use of the Trade Mark by the Applicant would be contrary to law. Therefore, the Opponent has failed to establish the ground of opposition under s 42(b).

Section 62A

1. Section 62A of the Act 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.

2. 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.

1. The case of Fry Consulting Pty Ltd v Sports Warehouse Inc (No 2) is a current leading Australian authority on this section.  In that case, Dodds-Streeton J made the following comments, quoting from Harrison’s Trade Mark Application[22]:

   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.[23]

   [22] [2004] EWCA Civ 1028; [2005] FSR 10.

   [23] [2012] FCA 81, [147].

2. 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.[24]

   [24] Ibid [165]-[166].

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

   Before filing the Trade Mark, the Applicant was aware that the Opponent was promoting bicycle goods by reference to the trade mark CONDOR. Notwithstanding that knowledge of the Opponent's rights in the CONDOR trade mark, the Applicant chose to file and prosecute a trade mark application for the same mark for the same or similar goods.

4. The onus is on the Opponent to establish bad faith and it will not be found easily given the serious nature of the allegation.[25] In the present case the Applicant has sought to register a trade mark that reflects the name under which it has traded under in the United Kingdom since 1948 and which it has used in Australia since at least 2005, prior to the adoption by the Opponent of the Reid Mark. I find that the Opponent has failed to establish the ground of opposition under s 62A.

   [25] Hard Coffee Pty Ltd v Hard Coffee Main Beach Pty Ltd [2009] ATMO 26, [12].

Decision

1. The Opponent has failed to establish any of the grounds of opposition it nominated in the SGP.  Trade Mark application no. 1723273 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.

Nicholas Smith
Hearing Officer
Oppositions and Hearings
19 December 2017