Seekers Australia Pty Ltd v Seal Trademarks Pty Ltd

[2012] ATMO 54

TRADE MARKS ACT 1995

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

Re:Opposition by Seekers Australia Pty Ltd to applications under section 92 of the Act by Seal Trademarks Pty Ltd to remove trade mark number 668745(25) - ELEMENTS - in the name of Seekers Australia Pty Ltd

Delegate:	Nicole Worth
Representation:	Opponent: Angela Dahlke of Cullens Patent and Trade Mark Attorneys. Applicant: Kelvin Lord of Lord and Company Patent and Trade Mark Attorneys.
Decision:	2012 ATMO 54 Section 96: s92(4)(a) and s92(4)(b) – no use in non-use period – no evidence of circumstances which were an obstacle to use – exercise of Registrar’s discretion – registration partially removed from the Register – no award of costs.

Background

1. Seekers Australia Pty Ltd (‘the Opponent’) is the registered owner of trade mark registration number 668745, relevant details of which are as follows:

   Trade Mark No:     668745

   Trade Mark:           ELEMENTS

   Registered from:     4 August 1995

   Goods:Class 25: Clothing, footwear and headgear in this class, including beachwear and swimwear.

2. On 17 November 2009 Seal Trademarks Pty Ltd (‘the Removal Applicant’) filed an application under subsections 92(4)(a) and 92(4)(b) of the Trade Marks Act 1995 (‘the Act’) seeking removal of the trade mark from the Register in respect of all of the goods for which it is registered.

3. The parties duly served and filed their evidence. In the lead up to the hearing the Opponent filed an application for permission to serve further evidence, to which the Removal Applicant responded. The Opponent subsequently withdrew the application and I therefore advised both parties I would be taking neither the Opponent’s further evidence nor the Removal Applicant’s response into account when deciding this matter.

4. I heard the matter as a delegate of the Registrar of Trade Marks in Canberra on 22 March 2012. The Opponent was represented by Kelvin Lord of Lord and Company Patent and Trade Mark Attorneys who attended by telephone conference. The Removal Applicant was represented by Angela Dahlke of Cullens Patent and Trade Mark Attorneys who also attended by telephone conference.

   Evidence

5. The evidence served and filed in respect of this matter is as follows:

Declarant	Position	Date	Exhibits
Evidence in support
Warren McKinney ‘McKinney 1’	Director, Seekers Australia Pty Ltd	27/8/10	WM-1 to WM-13
Evidence in answer
Nicole Louise Murdoch	Attorney with Cullens Patent and Trade Mark Attorneys	30/12/10	NLM-1
Evidence in reply
Warren McKinney ‘McKinney 2’	Director, Seekers Australia Pty Ltd	27/5/11	n/a

1. A brief history, as described in the evidence, is as follows.

2. The Opponent commenced trading in swimwear under the trade mark ELEMENTS in 1995, and continued to do so until 2004. It appears to have enjoyed reasonable success, due in part to its business model of selling separate tops and bottoms of two piece swim suits (thereby allowing variations in size and style in the one suit).

3. During this time (in 2002), in response to another action concerning the subject trade mark registration, Sunseeker Beachwear Pty Ltd (formerly Seekers Nominees Pty Ltd) an entity with the same director as the Opponent, and an entity in the same corporate group as the Removal Applicant (Rocket Trademarks Pty Ltd) entered into a Deed of Settlement[1]. A condition of the deed was that neither party would pursue the other for infringement of their respective trade mark registrations[2] ‘or any related rights’. (The Opponent submits that given the Removal Applicant and Rocket Trademarks Pty Ltd belong to the same corporate group, the deed applies here. I am not satisfied this is the case given (a) the deed is made in the context of infringement and (b) the parties are different and the precise nature of their relationship is not explained).

   [1] Exhibit WM-13 of McKinney 1.

   [2] The trade mark registrations being: number 668745 for the trade mark ELEMENTS in class 25 now in the name of Seekers Australia Pty Ltd, and number 830377 for the trade mark ELEMENT in classes 25 and 28 in the name of Rocket Trademarks Pty Ltd.

4. In 2004 Mr. McKinney and his wife (‘the McKinneys’) entered into an agreement with another party, Skye Group Pty Ltd[3]. Skye Group Pty Ltd agreed to purchase certain trade marks (not including the ELEMENTS trade mark) and stock of the McKinneys’ companies and the McKinneys agreed not to engage in swimwear design, manufacture or sale in Australia and New Zealand for a period of three years (with the exception of a swimwear range called ‘Sea Siren’ which Mrs. McKinney was permitted to continue trading under). The restraint of trade in the McKinneys’ business took effect from 31 December 2004 and remained in place until 31 December 2007.

   [3] The relationship between Skye Group Pty Ltd and the Removal Applicant is not clear. However I note that the Removal Applicant’s evidence exhibits a declaration made by John Zylstra, Joint Managing Director of Skye Group Pty Ltd, which was made in relation to a concurrent non-use action filed in the name of Janine Zylstra.

5. At some point during 2006, and again in September 2007, the Opponent’s directors and Skye Group Pty Ltd held discussions regarding the possibility of licensing the ELEMENTS trade mark. It appears that nothing came of these discussions.

6. In July 2009 the Opponent began investigating opportunities and developing a plan to recommence trade under the ELEMENTS trade mark in relation to swimwear. Specifically these activities included:

   ·    in July 2009 investigating the state of the current Australian swimwear market, particularly current styles and pricing, and investigating potential sales agents and store contacts (Exhibit WM-8 of McKinney 1). It is also declared that product design and sampling continued from July to the end of 2009, although this is not documented;

   ·    in August 2009 developing a ‘project plan’ for the potential relaunch of the ELEMENTS trade mark in the summer of 2010. The project plan includes identifying the Opponent’s target market, the appropriate price for its swimwear, suitable agents, the level of service required by the target market, logistical requirements, projected costs, the timing of projected activities (apparently to begin in September 2009), and which products to proceed with. It appears that the ‘project plan’ is an internal document of the Opponent, not apparently presented to anyone external to it. I note also it identifies the need to decide whether to proceed with the project or postpone it until 2010. (Exhibits WM-9 and WM-10 of McKinney 1);

   ·    in September 2009 completing a ‘brand profile’, being a document describing the Opponent’s business model and a preview of its range of products available under the ELEMENTS trade mark. There is no evidence, however, that this was shown or made available to anyone external to the Opponent; and

   ·    in November 2009 creating an ‘introduction catalogue’, being a document describing the history of the Opponent and its business model. It is not a catalogue in the sense of being a list of items – there is no mention of specific goods available nor any description of how they may be viewed or ordered. It is declared that from 11 November 2009 contact commenced with market companies, agents and retailers and that the “ELEMENTS introduction” was attached (I note this is after the non-use period).

7. On 17 November 2009 the Removal Applicant filed its application for removal of the trade mark.

   Legal Framework

8. Subsection 92(4) of the Act provides:

   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) that, on the day on which the application for the registration of the trade mark was filed, the applicant for registration had no intention in good faith:

   (i) to use the trade mark in Australia; or
   (ii) to authorise the use of the trade mark in Australia; or
   (iii) to assign the trade mark to a body corporate for use by the body corporate in Australia;

   in relation to the goods and/or services to which the non-use application relates and that the registered owner:

   (iv) has not used the trade mark in Australia; or
   (v) has not used the trade mark in good faith in Australia;

   in relation to those goods and/or services at any time before the period of one month ending on the day on which the non-use application is filed;
   (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.

   Note 1:  For file and month see section 6.

   Note 2:  If non-use of a trade mark has been established in a particular place or export market, then instead of the trade mark being removed from the Register, conditions or limitations may be imposed under section 102 on the registration of the trade mark so that its registration does not extend to that place or export market.

9. Section 100 of the Act specifies that the onus is upon an opponent to rebut any allegations made under section 92. It is for an opponent, therefore, to establish that it had the requisite intention (to use or authorise use of the mark) or that it used its trade mark in good faith at any time before filing its application for registration (under 92(4)(a) ), or that it used the trade mark in good faith in the three year period specified by 92(4)(b). In the case at hand the relevant period for the purposes of section 92(4)(b) is the three year period ending on 17 October 2009 (‘the non-use period’).

10. Alternatively an opponent may establish that it did not use the trade mark 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[4]. I note that this defence is only available to an action made under section 92(4)(b).

    [4] Subsection 100(3)(c).

11. The Registrar retains the discretion not to remove a trade mark from the register even if the grounds upon which the removal application was made have been established[5]. Lastly, I proceed on the basis that the relevant standard of proof is on the balance of probabilities[6].

    [5] If satisfied that it is reasonable to do so, see subsection 101(3) of the Act.

    [6] Following Gyles J in Pfizer Products Inc v Karam (2006) 70 IPR 599 at [6] to [26], and more recently Allergan, Inc v Di Giacomo [2011] FCA 1540 (30 November 2011) and Tricarico v Dunn Bay Holdings Pty Ltd [2012] FCA 271 (23 March 2012).

    Section 92(4)(b)

12. It is convenient to discuss the ground under 92(4)(b) before 92(4)(a) given that if the removal application does not succeed here it will also fail under 92(4)(a) (as the Opponent will have shown use in the three year period, thereby rebutting the allegation that it had no intention to use at the time of filing and did not use the trade mark at any time up until one month before the day on which the non-use application was filed).

13. As a preliminary matter, the Opponent revealed at the hearing that it wished to maintain protection of its trade mark in relation to “swimwear and beachwear” only. I will proceed on this basis, considering the grounds in respect of this reduced scope of goods rather than the broader range of goods for which the trade mark is currently registered.

14. As stated previously the non-use period is from 17 October 2006 to 17 October 2009. The activities which took place during the latter half of 2009 are described by the Opponent as concrete steps to re-enter the Australian market, whereas the Removal Applicant contends that they are merely preliminary arrangements for use.

15. In particular the Opponent characterizes this matter as one analogous to the HERMES trade mark[7]. In that case orders for watch components which contained references to the mark (placed during the relevant period), that culminated in the actual placement of watches on the market under the trade mark (after the relevant period), was considered to be a step necessary for the production of watches and therefore a use of the trade mark in the course of trade in the relevant period.

    [7] Hermes Trade Mark [1982] RPC 425.

16. To my mind the Opponent’s activities during the non-use period fall short of the kind considered in the HERMES case. Although there is evidence of the Opponent’s intention to use the trade mark, there is nothing to suggest that the Opponent took steps necessary for the production of its goods (such as arranging the necessary logistics facility or placing orders with suppliers). Nor did the Opponent’s activities culminate in the actual placement of its goods on the market after the non-use period.

17. Drummond J, in Woolly Bull Enterprises Pty Ltd v Reynolds[8], commented that

    Though it is not necessary, for there to be such a use of a mark [sufficient for the purpose of s100(3)(a)], that there be an actual trade in the sense of the offering for sale and the sale of goods bearing the mark, the owner will not use its mark unless it has so acted to show that it has gone beyond investigating whether to use the mark and beyond planning to use the mark and has got to the stage where it can be seen objectively to have committed itself to using the mark, ie, to carrying its intention to use the mark into effect.

    [8] (2001) 51 IPR 149; [2001] FCA 261 (15 March 2001).

18. The Opponent’s activities in July, August and September of 2009 show only that it was investigating the viability of re-launching its brand and developing plans on how to successfully do so (and supported by internal documents only). It was not committed to “carrying its intention into effect” by the time the non-use period ended. The first indication of an objective commitment to use the trade mark does not occur until 11 November 2009, at which time the ‘introduction catalogue’ displaying the ELEMENTS trade mark was (according to the McKinney declaration) distributed to market companies, agents and retailers[9].

    [9] I note that there is no documentary evidence to show to whom the ‘introduction catalogues’ were sent, nor how many.

19. As such I am not satisfied that the Opponent has shown use of the ELEMENTS trade mark in respect of swimwear or beachwear during the non-use period. The Opponent contends, then, that if there was non-use of the trade mark during the period it was due to circumstances which constituted an obstacle to its use, to which I now turn.

    Obstacle to use

20. Section 100(3)(c) of the Act allows for rebuttal of the ground under 92(4)(b) where an opponent can establish that it did not use the trade mark during the non-use 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.

21. The agreement between the McKinneys and Skye Group Pty Ltd contained in Clause 1 that the McKinneys would not for a period of three years “directly or indirectly engage in…the business of swimwear design[,] manufacture and sale from any location within Australia and New Zealand”[10]. This restraint was in place for the period 31 December 2004 to 31 December 2007, thereby existing for the first fourteen months and two weeks of the non-use period. The Opponent contends therefore that the restraint constituted an obstacle to its use during that period.

    [10] Exhibit WM-7 in McKinney 1.

22. Both parties cite Woolly Bull[11] in support of their positions, although they draw different points from that case. With regard to the length of time an obstacle is in place during a non-use period, that case confirmed it is not necessary for the obstacle to exist for the entire three year period for the purposes of section 100(3)(c), provided it is established that the mark would have been used but for the existence of the obstacle.

    [11] Woolly Bull Enterprises Pty Ltd v Reynolds (supra).

23. As to the nature of the obstacle, Drummond J in Woolly Bull[12] commented:

    In the context of s 100(3)(c), there are, however, good grounds for reading “circumstances” as not embracing any event of any kind. 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. (Emphasis added).

    [12] supra, at [47].

24. Further, Cowdroy J, in Austin, Nichols & Co Inc v Lodestar Anstalt[13], in considering Woolly Bull summarized the relevant considerations as:

    His Honours observations raise the question of the nature of the obstacles which are relied upon by Lodestar for its non-use of the trade mark in Australia. Lodestar is required to firstly prove such circumstances existed, secondly that such circumstances were of a trading nature and lastly demonstrate a causal link between the apparent obstacles and the failure to use the WG trade mark in the relevant non-use period.

    [13] (2011) 90 IPR 310; [2011] FCA 39 (4 February 2011) at [108].

25. I do not believe that the circumstances relied upon by the Opponent arose from events external to it, nor that the necessary causal link between the purported obstacle and the lack of trade mark use has been shown. The McKinneys voluntarily agreed to the restraint in order to facilitate the sale of their property. The agreement specifically states that the ‘Covenantors’ (being the McKinneys) “acknowledge that each of the restraint obligations imposed in clause 1: (1) is reasonable in its extent having regard to the interests of the Purchaser; (2) extends no further than is reasonably necessary”.

26. Nor is it established that but for the restraint, the Opponent would have used the ELEMENTS trade mark during the non-use period. A significant period of time elapsed between the end of the restraint period and the beginning of investigations into the viability of a re-launch. Little explanation is provided for this, except that the McKinneys were not in a position to re-enter the Australian market at that time. Given the significant delay I am unable to conclude, on the balance of probabilities, that but for the restraint the Opponent would have traded in swimwear during the non-use period.

27. As such I am not satisfied that the restraint in trade constitutes an obstacle for the purposes of section 100(3)(c).

28. Given that the Opponent establishes neither use nor an obstacle to use of the trade mark during the non-use period, the allegation under section 92(4)(b) has not been rebutted.

    Section 92(4)(a)

29. The application for removal of the trade mark is made under both sections 92(4)(a) and 92(4)(b). Despite this fact neither party specifically addresses 92(4)(a) in its evidence. The Opponent does not do so either in relation to the broad statement of goods in the registration nor for the more limited scope of “swimwear and beachwear”. Similarly the Removal Applicant does not make any comment on this ground, and in its written submissions for the hearing it explicitly stated that only section 92(4)(b) will be pursued.

30. Subsequently at the hearing the Removal Applicant made oral submissions that whilst section 92(4)(b) was being pursued for all of the registered goods, section 92(4)(a) was also being pursued in respect of the registered goods other than women’s swimwear.

31. There is a potential argument for the Opponent having been taken by surprise at the inclusion of section 92(4)(a) at the hearing. There is a corresponding argument that the onus was upon it to rebut the allegation in its evidence. As the Opponent did not do so I can only assume that it either presumed section 92(4)(a) would not be pursued, or it intended to rebut the allegation by showing that it had in fact used the trade mark in relation to the reduced scope of goods for which it wishes to maintain registration, being swimwear and beachwear.

1. In any event given I have not found there to be use of the ELEMENTS trade mark in respect of swimwear and beachwear in the non-use period ending 17 October 2009, it is redundant to now investigate the intentions of the Opponent at the time it filed its application (almost 15 years previously) and any use it made of the trade mark up until 17 October 2006. Once five years have passed from the date of filing an application for registration, a trade mark becomes vulnerable to removal if it has not been used within the period specified by section 92(4)(b), regardless of the intentions of the owner at the time it filed the application for registration (and of any use which may have taken place prior to the period specified by 92(4)(b) ).

   Registrar’s discretion

2. Under section 101(3) the Registrar has the discretion not to remove a trade mark from the Register even though the grounds on which the removal application was made have been established. A broad range of circumstances may be taken into account in exercising the discretion. They need not be exceptional circumstances, but will need to be sufficient to satisfy the Registrar that application of the discretion is reasonable.

3. The Full Court, in Austin, Nichols & Co Inc v Lodestar Anstalt[14] confirmed the proper test as “[t]he question to be asked is whether it [is] reasonable not to remove the trade mark from the Register, although the trade mark had not been used during the statutory period”. In Tivo Inc v Vivo International Corporation Pty Ltd[15] Dodds-Streeton J summarized some relevant considerations for the exercise of the discretion:

   In Austin, the Full Court affirmed that Flick J’s view that while public interest, particularly in the integrity of the Register, was the guiding principle behind the discretion, the private commercial interests of parties could be taken into account and the interests of both consumers and traders must be recognised (at [33]-[34]).

   In E&J Gallo, Flick J identified (at [202]) the following factors additional to that in s 101(4) which, while not exhaustive, were also relevant to the exercise of the discretion: whether there has been no abandonment of the trade mark; whether the registered proprietor still had a residual reputation in the mark; whether there had been sales by the registered proprietor in relation to the goods for which removal was sought since the relevant period ended; whether 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 whether the registered proprietors were aware of the applicants’ sales under the mark.

   In Austin, the Full Court confirmed that the discretion under s 101(3) was limited only by the statutory purposes and “whether the removal of the [relevant mark] would lead to deception or confusion... was plainly a relevant consideration to be taken into account” (at [31]). The Full Court also recognised that evidence showing a lack of deception or confusion should the mark remain on the Register was relevant to the exercise of the discretion, but it was not erroneous to find that circumstance an insufficient justification for its retention.

   [14] [2012] FCAFC 8 (21 February 2012).

   [15] [2012] FCA 252 (19 March 2012).

4. In taking into account the circumstances surrounding this matter, I consider it reasonable to maintain the registration in respect of swimwear for the following reasons:

   ·    There has been no abandonment of the trade mark.

   ·    The Opponent twice undertook negotiations to license it during the restraint period, with one of those occasions being during the non-use period.

   ·    The evidence also establishes that the Opponent had a bona fide intention to use the trade mark, albeit after the non-use period. It began developing its plans to re-commence trade under the mark well before the end of the non-use period and before the subject removal action.

   ·    It is possible that some reputation still resides within the market. Whilst it may not be positively established that the trade mark enjoys a residual reputation in the swimwear market, it does appear to have had reasonable success previously, particularly in the late 1990’s and early 2000’s.

   ·    There is a public interest in that this is not a case of an unused mark merely ‘cluttering up the Register’, but rather a reflection of a genuine intention to use the mark.

   ·    The maintenance of the subject registration merely preserves the status quo in respect of registrations owned by Rocket Trademarks Pty Ltd (which the Removal Applicant submits are a basis for deception or confusion should the registration not be removed). The Opponent’s mark has remained registered since before any of those owned by Rocket Trademarks Pty Ltd were filed, and the public is therefore at no greater risk of confusion than it may have been previously.

5. In addition I do not consider it reasonable to excise different types of swimwear from the registration, despite the Removal Applicant’s submissions that the Opponent shows it intends to trade only in women’s swimwear. In Tivo Inc v Vivo International Corporation Pty Ltd[16] Dodds-Streeton J commented:

   Prior to the insertion in 2006 of s 101(4) (which expressly permits consideration of the trade mark owner’s use of the mark on goods which are similar to those specified in the registration), Drummond J, in McHattan v Australian Specialised Vehicle Systems Pty Ltd (1996) 34 IPR 537, recognised that fragmented ownership of the same or a very similar mark in respect of very similar goods could lead to confusion. Fine distinctions between the goods which should remain or be removed could, in the context of applications for removal for non-use, erode the value of trade mark registration. His Honour stated:

   [T]here is a real question as to the proper interpretation to be placed on the expression “any or all of the goods ... in respect of which the trade mark ... is registered” in s 92(1): if that provision is construed to permit fine distinctions to be drawn between two items, eg, between a sedan motor car and a utility motor car or the sort of distinction implicit in the second of the respondents’ non-use applications, viz that between armoured military vehicles of greater than eight tonnes and smaller armoured military vehicles, the value of trade mark registration under the new Act is potentially capable of very great erosion.

   I consider that excising different types of swimwear, such as men’s or children’s, from the description “swimwear” would equate to the sort of ‘fine distinction’ contemplated in the cases above.

   [16] [2012] FCA 252 (19 March 2012).

6. Conversely I do not consider that the Opponent’s registration should be maintained in respect of the broad description “clothing, footwear and headgear including beachwear”, nor the reduced scope “beachwear”. I am not satisfied that the circumstances described above apply to those goods. The ‘project plan’ developed in August 2009 includes information about popular beachwear items generally, and under its ‘product strategy’ identifies the need for ‘one mesh solid sarong’. However that appears to be the extent of the Opponent’s considerations with regard to beachwear. The ‘introduction catalogue’ eventually sent out to the market made no mention of beachwear, nor any goods other than swimwear.

   Decision

7. Section 101 of the Act relevantly provides:

   (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.

8. I am satisfied that there has been no use of the Opponent’s ELEMENTS trade mark within the non-use period and no circumstances that constituted an obstacle to us of the trade mark. As such the removal application has been made out. Having regard to the relevant circumstances and upon exercising the discretion under Section 101(3) of the Act, I direct that one month from the date of this decision registration 668745 be removed from the Register of Trade Marks for all of the goods for which it is registered except “swimwear”. If the Registrar has been served with a notice (or notices) of appeal before that time the disposition of the registration should be in accordance with the Court’s order or direction.

   Costs

9. Each of the parties has requested costs. As neither party has been entirely successful I decline to make an order as to costs in favour of any party. I consider that the appropriate course on this occasion is that each party should be responsible for meeting its own costs.

   Nicole Worth
   Hearing Officer
   Trade Marks Hearings
   13 June 2012