Seekers Australia Pty Ltd v Janine Zylstra
[2012] ATMO 60
•21 June 2012
TRADE MARKS ACT 1995
DECISION OF A DELEGATE OF THE REGISTRAR OF TRADE MARKS WITH REASONS
Re:Opposition by SEEKERS AUSTRALIA PTY LTD to application under section 92 of the Act by JANINE ZYLSTRA to remove trade mark number 668745(25) - ELEMENTS - in the name of SEEKERS AUSTRALIA PTY LTD.
Delegate: Heath Wilson Representation: Opponent: Kelvin Lord of Lord & Co, Patent and Trade Marks Attorneys.
Applicant: Self-represented.Decision: 2012 ATMO 60
Section 92(4)(b) – lack of trade mark use in the relevant period – no obstacle to use – exercise of discretion under section 101(3) - trade mark to remain on the register for specific goods – no award of costs.Background
On 4 August 1995, Seekers Nominees Pty Ltd filed an application with IP Australia for the trade mark ‘ELEMENTS’ which is now registered for goods in class 25 namely: “Clothing, footwear and headgear in this class, including beachwear and swimwear”. The trade mark was assigned at a later date to Seekers Australia Pty Ltd (now, ‘the Opponent’).
On 17 November 2009 IP Australia received an application for the removal of the opponent’s trade mark on the basis of non-use. The application was filed by Janine Zylstra (‘the Applicant’) under section 92(4)(b) of the Trade Marks Act 1995 (‘the Act’) for the removal of the trade mark in relation to all goods for which the trade mark is registered.
On 2 March 2010, the Opponent filed a notice of opposition to the removal application declaring:
[T]he mark, with or without additions or alterations not substantially affecting its identity, was used in good faith within the relevant period on goods and services to which the non-use application relates by and/or under the control of the registered owner; and/or
The discretion of the Registrar should be exercised in favour of the registered owner because of all the circumstances surrounding the use and registration of the trade mark.
As evidence in support of the opposition, the Opponent filed the statutory declaration of Mr Warren McKinney (Director of the Opponent) dated 27 August 2010 with exhibits WM-1 to WM-12. The statutory declaration of Mr John Zylstra (Joint Managing Director of Skye Group Pty Ltd) dated 23 November 2010, with attached exhibit JZ-1, comprised the evidence in answer from the Applicant. A second statutory declaration by Mr McKinney dated 27 May 2011 is the evidence in reply.
At my direction as a delegate of the Registrar of Trade Marks, both sides provided written submissions before I heard the opposition in Canberra on 2 April 2012. Mr Kelvin Lord of Lord & Company, Patent and Trade Marks Attorneys made submissions on behalf of the Opponent. Mr John Zylstra made submissions on behalf of the Applicant (his wife Janine Zylstra).
It is noteworthy that the Opponent’s trade mark has been the subject of two other applications for removal on the basis of non-use. The first application for removal was made by Rocket Trade Marks Pty Ltd in 2001 - an application which was subsequently withdrawn. The second is an application by Seal Trademarks Pty Ltd filed the same day as the current application and that matter was decided (separately to the current proceedings) on 13 June 2012.
The Law
Section 92 of the Act relevantly provides:
92Application for removal of trade mark from Register etc.
(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:
(a)…
(b)that the trade mark has remained registered for a continuous period of 3 years ending one month before the day on which the non‑use 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.
Under subsection 100(1) of the Act, the Opponent bears the onus of establishing use of the trade mark in good faith on the goods within the relevant period. The removal application was filed on 17 November 2009, and the relevant period is the three years prior to 17 October 2009. In the event of a failure to establish trade mark use in that period, the Opponent may highlight circumstances that would satisfy the Registrar that there was an obstacle to use of the trade mark (subsection 100(3)(c)) or that there are circumstances which enable the Registrar to exercise the discretion contained in subsection 101(3) of the Act and allow the trade mark to remain on the Register despite the allegation of non-use not having been rebutted.
After considering the entirety of the evidence in this matter, it became apparent that while there was use of the trade mark prior to the relevant period, the opponent was unable to establish use of the trade mark within the relevant period. The Opponent argued that there was an obstacle to its trade mark use and indicated circumstances that may be relevant to the exercise of the Registrar’s discretion under subsection 101(3).
Obstacles to Use
Subsection 100(3)(c) of the Act provides:
(3)For the purposes of paragraph 1(c), the opponent is taken to have rebutted the allegation that the trade mark has not, at any time during the period referred to in that paragraph, been used, or been used in good faith, by its registered owner in relation to the relevant goods and/or services if:
(a)…
(b)…
(c) the opponent has established that the trade mark was not used by its registered owner in relation to those goods and/or services during that period because of circumstances (whether affecting traders generally or only the registered owner of the trade mark) that were an obstacle to the use of the trade mark during that period.
Drummond J in Woolly Bull Enterprises Pty Ltd v Reynolds[1] said:
An obstacle of the kind referred to in s 100(3)(c) to the use of the mark that operates only for part (i.e., more than a de minimis part) of the three year period provides the same justification for non-cancellation as does a single user of the mark in the relevant three year period, but only provided the opponent to removal establishes that the mark would have been used during that part of the three year period but for the existence then of the obstacle. A use of the mark which it is shown would have occurred during part of the three year period, but for the existence of the obstacle during that part of the period, has, in my opinion, the same claim to be recognised as excusing non-use that an actual use during that particular part of the period has. [Emphasis added]
[1] Woolly Bull Enterprises Pty Ltd v Reynolds [2001] FCA 261; (2001) 107 FCR 166; (2001) 51 IPR 149 at [58].
In December 2003 the Opponent had discussions with Skye Group Pty Ltd regarding an arrangement to sell some of its Australian trade marks but retain others including the ‘ELEMENTS’ trade mark. A Deed was signed on 21 April 2004 between Skye Group and Mr & Mrs McKinney. Mr McKinney declares that:
[M]y wife and myself were required to agree with the purchaser, Skye Group Pty Ltd, that we would not (subject to clause 2(3)), for a period of three years from the date of settlement of the sale by my company of the property to the purchaser directly or indirectly engage in any business in the nature of the business of swimwear design, manufacture and sale from any location within Australia.
In evidence in reply, Mr McKinney also states:[2]
Further, the restraint relating to my wife and myself with Skye Group Pty Limited from 31 December 2004 for three years was not entered into voluntarily or of our own volition. The restraint was imposed on us by Skye Group Pty Limited as part of a business deal involving the trade mark “SUNSEEKER” in Australia.
[2] Second statutory declaration of Warren McKinney dated 27 May 2011 (at paragraph 6).
According to the agreement, Mr and Mrs McKinney also received consideration for the abovementioned restraint of trade in the form of the sale of certain trade marks to Skye Group Pty Ltd. Despite Mr McKinney’s choice of words in his declarations, and the assertions made by Mr Lord at the hearing, there is nothing to suggest that the agreement itself was entered into involuntarily.
Clause 6 of the Deed exempts Mrs McKinney from the restraint of trade in relation to her business of retailing swimwear under the style/brand ‘Sea Siren’. If the opponent specifically desired to continue trading under the brand ‘ELEMENTS’, an analogous exemption clause may have been appropriate. In any event, Mr and Mrs McKinney did sign the agreement and thereby acknowledged that the restraint obligations were (according to clause 4 of the Deed):
[R]easonable in its extent having regard to the interests of the Purchaser (Skye Group); [and]
Extends no further than is reasonable necessary.
Given the above factors, I am satisfied that the restraint of trade within the relevant period was an event that the Opponent had control of. A self-imposed restriction cannot be interpreted as an obstacle to use under section 100(3)(c) of the Act. As Drummond J in Woolly Bull Enterprises Pty Ltd v Reynolds[3] said:
The circumstances must be “an obstacle to the use of the trade mark by the registered owner”. This suggests that they must arise from or comprise events external to the registered owner in the sense of not having been brought about by the voluntary act of the owner.
[3] Woolly Bull Enterprises Pty Ltd v Reynolds (supra) at [47].
Putting the Deed to one side, the period of restraint only accounts for part of the relevant non-use period (that is, from October until 31 December 2007). While the trade restraint is more than a de minimus part of the relevant period, the absence of use in the following 22 months is largely unaccounted for by the Opponent.
The Opponent has supplied evidence of preparations to use the trade mark which commenced three months before the relevant period ended. During July 2009, the Opponent conducted a market survey and created a draft plan to use the trade mark in the following 12 month period. The Opponent then inquired about Australian swimwear sales agents, arranged meetings with them and commenced product design for the trade mark. Mr McKinney declares that the market survey and analysis was completed in August 2009 and that detailed plans were made to re-launch the ‘ELEMENTS’ brand throughout Australia in summer 2010. The brand profile was completed in September 2009 and an introductory catalogue was developed on 11 November 2009 which is three weeks after the relevant period had ended. Six days later, the current removal application was filed by the Applicant and McKinney declares that “These endeavours were brought to a halt by the non-use allegations by Skye Group’s Janine Zylstra, wife of John Zylstra.”[4]
[4] Second statutory declaration of Warren McKinney dated 27 May 2011 (at paragraph 7).
I am not satisfied that the Opponent had, in the relevant period, reached the stage where it could be seen as having committed itself to using the trade mark.[5] As a consequence, I find that the Opponent has not rebutted the allegation of non-use of the trade mark in the relevant period. The remaining consideration before me is whether it is reasonable to exercise the Registrar’s discretion and allow the trade mark to remain on the Register for any or all of the goods.
[5] See Woolly Bull Enterprises Pty Ltd v Reynolds (supra) at [40].
The Discretion of the Registrar
Section 101(3) of the Act provides:
(3) If satisfied that it is reasonable to do so, the Registrar or the court may decide that the trade mark should not be removed from the Register even if the grounds on which the application was made have been established.
The starting point for the exercise of the discretion under section 101(3) was effectively summarised in Re Carl Zeiss Pty Ltd’s Application[6] by Kitto J who stated:
It has been urged upon me that no deception of any particular purchaser has been proved, and that there is no practical interest of the public to be served by removing the mark from the register. This seems to me to put the matter the wrong way round. The Stiftung's omission to use the mark for the statutory period entitles the applicant to have the mark removed from the register unless sufficient reason appears for leaving it there. (Emphasis added).
[6] Re Carl Zeiss Pty Ltd’s Application [1969] HCA 17; (1969) 122 CLR 1 per Kitto J (at 11).
The Opponent bears the onus of demonstrating the existence of circumstances that need not be ‘exceptional circumstances’[7] but may include those taken into account by Justice Flick in E & J Gallo Winery v Lion Nathan Australia Pty Ltd[8] (who summarised the obiter comments of Falconer J in Hermes Trade Mark[9]):
[T]here had been no abandonment of the trade mark; the registered proprietors still had a residual reputation in the mark; there had been sales by the registered proprietors of watches 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; and the registered proprietors were not aware of the applicant’s sales under the "Hermes" mark.
[7] Kowa Company Ltd v NV Organon [2005] FCA 1282; (2005) 66 IPR 131, per Lander J at [98].
[8] E & J Gallo Winery v Lion Nathan Australia Pty Ltd (2008) 77 IPR 69; [2008] FCA 934 (at 202).
[9] [1982] RPC 425
The above considerations are not exhaustive and the Full Federal Court in Optical 88 Limited v Optical 88 Pty Limited[10] made it clear that there is no requirement that any particular considerations ‘must’ as opposed to ‘may’ be taken into account in an exercise of the discretion under section 101(3) of the Act.
[10] Optical 88 Limited v Optical 88 Pty Limited [2011] FCAFC 130 at [97].
The first statutory declaration of Mr McKinney contains the evidence of use of the ‘ELEMENTS’ trade mark prior to the relevant period. He declares that the use in relation to beachwear and swimwear began in Australia in 1995. The sales figures for items of swimwear bearing the trade mark sold from 1995 to 2004 are not insignificant and indicate growth in the Opponent’s product up until 2002.
In evidence is a cover story from 1997 from a magazine “Growing Business” specifically about the opponent and its directors Mr and Mrs McKinney. There is reference in the article to the ‘ELEMENTS’ range of swimwear “which lets retailers offer a choice of five tops and bottoms, in five colours and five sizes”. There are also advertisements from around 1997, product brochures from 2000 to 2003 and advertisements in ‘Elle Australia’ magazine from December 2001, all of which prominently feature the Opponent’s trade mark.
There is no evidence before me that use of the Opponent’s trade mark was abandoned in the relevant period. There is, in fact, evidence to the contrary. Mr McKinney declares that discussions took place between himself and Mr Zylstra (Director of Skye Group) regarding licensing the ‘ELEMENTS’ trade mark to Skye Group in September 2007 (before the expiry of the trade restraint period).[11]
[11] Despite these discussions, no agreement was reached and the trade restraint expired on 31 December 2007.
As mentioned previously, there is no evidence of sales of the Opponent’s product bearing the trade mark either during or after the relevant period. There is however, evidence of extensive preparations commencing within and subsequent to the relevant period for re-commencing use. Preparations to use a trade mark subsequent to the filing of a removal application must be approached with some degree of caution, but the Full Federal Court in Austin, Nichols & Co Inc v Lodestar Anstalt[12] found that trade mark use after the filing of the removal application is not irrelevant in the exercise of the discretion.
[12] Austin, Nichols & Co Inc v Lodestar Anstalt [2012] FCAFC 8 at [41].
While I am satisfied that the Opponent’s preparations to use the trade mark were genuine and indicated an intention to re-enter the Australian market, I am not satisfied that these preliminary activities undertaken amount to use[13]. However, they may still be considered in the exercise of the Registrar’s discretion.
[13] See Buying Systems (Aust) Pty Ltd v Studio Srl (1995) 30 IPR 517.
The Applicant has provided little information regarding its own private interests in removing the trade mark. Mr Zylstra did indicate in his written submissions that the Applicant has “no objection to the Opponent entering the market. We object to the Opponent passing off as SUNSEEKER”. Mr Zylstra also mentions that a third party (Rocket Trademarks Pty Limited) owns a similar registered trade mark. As previously noted, Rocket Trademarks Pty Limited applied for removal of the Opponent’s trade mark in 2001 but subsequently withdrew its application and its trade mark has co-existed on the Register with the Opponent’s trade mark since 2002.
I find that the Applicant has established the ground for removal of the trade mark in relation to all the goods for which it is registered. Despite this finding, the Opponent has provided evidence of its trade mark use before the relevant period in relation to swimwear and of its preparations during and after the relevant period to re-launch the trade mark in relation to those goods.
Decision
Section 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.
(2)Subject to subsection (3) and to section 102, if, at the end of the proceedings relating to an opposed application, the court is satisfied that the grounds on which the application was made have been established, the court may order the Registrar 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.
(3)If satisfied that it is reasonable to do so, the Registrar or the court may decide that the trade mark should not be removed from the Register even if the grounds on which the application was made have been established.
(4)Without limiting the matters the Registrar may take into account in deciding under subsection (3) not to remove a trade mark from the Register, the Registrar may take into account whether the trade mark has been used by its registered owner in respect of:
(a)similar goods or closely related services; or
(b)similar services or closely related goods;
to those to which the application relates.
The Opponent has not rebutted the allegation of non-use in the relevant period but I am satisfied that it is reasonable to exercise the Registrar’s discretion pursuant to subsection 101(3) of the Act and allow the trade mark to remain on the Register solely for the class 25 goods of swimwear. I direct that the trade mark be removed from the Register after one month from the date of this decision in relation to all the goods specified apart from swimwear.
In the event of an appeal from this decision, I direct that the specification of goods in class 25 will not be restricted until that appeal has been discontinued or dismissed, or in the event of a decision from the court, that the trade mark be subject to that order.
Costs
Both Opponent and Applicant have enjoyed a measure of success. The Applicant has established the ground for removal on the basis of non-use and the Opponent has established a case for the exercise of the Registrar’s discretion. I decline to make an award and find that each party should bear their own costs of the proceedings.
Heath Wilson
Hearing Officer
Trade Marks Hearings
21 June 2012
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