Silhouette International Schmied AG v Aust Opthalmic Supplies Pty Ltd

[2001] ATMO 124

TRADE MARKS ACT 1995

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

Re:Opposition by Silhouette International Schmied AG to registration of trade mark application 848043(9) - PIROUETTE - filed in the name of Australian Opthalmic Supplies Pty Ltd.

Background:

Trade mark application 848043 was filed by Australian Opthalmic Supplies Pty Ltd ("AOS") on 29 August 2000.  It seeks registration of the trade mark PIROUETTE for "Eyewear including spectacles and sunglasses, spectacle frames, carrying glasses and other optical products", in class 9 of the International (Nice) Classification of Goods and Services.

The Trade Marks Office ("TMO") has examined the application and advertised it as having been accepted for registration.  Registration, however, is opposed by Silhouette International Schmied AG ("SIS").  SIS filed the requisite notice of opposition on 28 June 2001.  Ordinarily, the procedure set out in Part 5 of the Trade Mark Regulations 1995 would have entailed the serving by SIS of evidence in support of its opposition, on or by 28 September 2001.  However, SIS has obtained an extension of time for this purpose, and the evidence was not due to be served until 28 October 2001.

Parallel to these developments, proceedings in the Federal Court are on foot.  These proceedings, 1117 of 2001, were commenced on 24 July 2001.  SIS alleges that AOS is, inter alia, infringing a trade mark already registered to SIS and that it is:

• passing off its goods as those of SIS or

• otherwise in breach of s 52 of the Trade Practices Act.

SIS has sought a direction from the Registrar of Trade Marks, suspending the opposition at the Trade Marks Office until the court proceedings are resolved.  Such directions can be given under regulation 5.16.  They are unusual, though not unprecedented, particularly where both parties agree that the matters at issue in the court should take precedence.  In the present case, any such directions would also recognise that the due date for service of the evidence in support had passed.

In matters where such a direction is sought unilaterally, there is an onus on the party seeking it to fully disclose the details of the court matter.  This has been done by SIS, through the declaration of Anne Christopher, to which are annexed the statement of claim filed by SIS and the defence filed by AOS. 

Where there is a prima facie nexus between the court and opposition matters, the Registrar will then seek the view of the other party.  That was done in the present matter.  AOS has objected to the giving of such directions.  In view of this dispute, I have been assigned, as a delegate of the Registrar of Trade Marks, to hear the parties and decide the question of the giving of such a direction.  AOS did not appear but has made written submissions, to which I have referred.  These have already been copied to Griffith Hack, the patent and trade mark attorneys acting for SIS.  At the hearing, SIS was represented by Ben Fitzpatrick, of counsel, instructed by Griffith Hack.

Analysis of submissions

At the hearing I put it to Mr Fitzpatrick that, prima facie, SIS might face difficulty in showing that its trade mark, SILHOUETTE, was deceptively similar to that of AOS, viz, PIROUETTE. In any case, deceptive similarity was a threshold question under both s 44 and 60. I put it to him that it was essentially a technical question, separate entirely from any question of reputation, which might be of pivotal importance in other aspects of the cases being put by SIS, either in its opposition or in the Federal Court.

Mr Fitzpatrick replied that, while the two issues of deceptive similarity and reputation might be separate, the finding of deceptive similarity will be influenced by the circumstances of the trade.  As to those circumstances, the best evidence was to be preferred, and this would inevitably be the evidence in the Federal Court, where evidence was in affidavit form and witnesses were routinely available for cross-examination.  I agree with Mr Fitzpatrick on that point and I think AOS was wrong, in its written submission, to say:

It is a matter for (SIS) what evidence it places before the Registrar.  If it chooses to limit the evidence ... AOS should not be disadvantaged by the choice. 

AOS's submission is, I think, based on a misunderstanding of the availability and extent of cross-examination in TMO proceedings and the consequences this must have for the strength of the evidence.

Mr Fitzpatrick also noted that it is well established that evidence of actual confusion is of particular weight.  While such evidence can and routinely does come into TMO procedures by way of a simple declaration, I fully accept his proposition that the weight that may be given to such evidence would be likely to depend on, and vary as a result of, cross-examination in the Federal Court.

Since neither side has had a chance to complete the comparable but arguably inferior evidence, in relation to the trade circumstances aspect, Mr Fitzpatrick argued that any reference to the prima facie merits of the case was, firstly, impermissible in principle and in any case premature at this point.

He noted that the Federal Court has recognised the necessity of the Registrar of Trade Marks considering matters outside his/her traditional field of expertise.  Here Mr Fitzpatrick referred to Advantage-Rent-A-Car Inc v Advantage Car Rental Pty Ltd [2001] FCA 683, a decision that shows that delegates of the registrar cannot ignore a prima facie case that the use of a trade mark would be contrary to laws other than the Trade Marks Act.  Even with the pre-Advantage view of things, Mr Fitzpatrick noted that the registrar would have taken heed of an injunction issued in relation to, inter alia, passing off or a breach of the Trade Practices Act.  See for instance Paragon Shoes Pty Ltd v Paragini Distributors (NSW) Pty Ltd (1988) 13 IPR 323.

I am fully aware of the considerable advantage that a court will have in the quality of evidence that is before it.  However, I put it to Mr Fitzpatrick that the court might benefit from the certainty that would come from the determination of the opposition.  This will result in either the grant of, or the refusal to grant, a certificate of registration of the PIROUETTE trade mark in the name of AOS.  If registration is refused then the parties can argue the matter of infringement on its merits.  If, on the other hand, the trade mark is registered then the use of it, for the goods for which it is registered, is not an act that can possibly infringe the SIS trade mark - s 122(1)(e) of the Act.  It is this provision that requires me to take careful note of the infringement action as Mr Fitzpatrick argued that a finding of infringement by the Federal Court is likely to render the TMO proceedings irrelevant.  An injunction issued in such a case would, Mr Fitzpatrick argued, preclude AOS from using its mark.

Mr Fitzpatrick argued that there was no public interest in hastening any grant of a registration.  The delay would, he argued, serve to preclude such a defence under s 122(1)(e) becoming available to AOS. 

In written submissions, AOS has argued that paragraphs 6 to 10 of the statement of claim in the Federal Court deal with misrepresentations, get-up, passing off and deceptive conduct.  Such issues can, in principle, be separated from the honest use of a registered trade mark.  AOS argues, I think, that the availability of the s 122(1)(e) defence will therefore not preclude the court getting to and deciding these separate issues.

I note too that AOS says it is limiting use of its trade mark until such time as the opposition proceedings have been determined, but does not want its ability to use the trade mark impeded for longer than is strictly necessary.  Mr Fitzpatrick was critical of this, saying that it seemed unlikely that the opposition, rather than the court proceedings, was the fetter to use.  This echoes earlier written argument from the attorneys for SIS, where it is noted that, in any case, there is no legal impediment to the use of an unregistered trade mark.

In its written submission, AOS suggests that the claims based on either passing off or the Trade Practices Act "clearly rely on the physical characteristics of the spectacles" sold by SIS and AOS.  There is no certainty about that assessment, though it does appear to be a reasonable belief.  The existence of such a belief on the part of AOS would explain why it believes that the trade mark issue can be separated from what it apparently sees as the real bone of contention, and expedited.  However, Mr Fitzpatrick argued that uncertainty about the trade mark rights of AOS can be ended only by a decision of the Federal Court.  In the event that AOS is not forced to abandon use of the trade mark PIROUETTE, its rights are retrospective and will date back to the filing date of the opposed application. 

It is one thing to say that rights are retrospective.  It is another thing to say that AOS has no interest in a speedy determination of the proceedings in the TMO, in order to minimise any ongoing disadvantage to its business, so far as this is possible when it is the subject of court action.  While uncertainty may not end with determination of the opposition in the TMO, the next step would then be up to the unsuccessful party, whichever one it may be.  Mr Fitzpatrick noted that there was no basis for saying that a decision unfavourable to SIS would necessarily be appealed.  He reserved his client's position on that point, though he agreed that, in principle, there would be some reason for SIS to do so, simply to maintain the status quo.  I think that the best view of this prospect is that it is still to be determined, if and when a decision issues, just what action the unsuccessful party may take.

Mr Fitzpatrick was critical of AOS for its refusal to say if it would be filing evidence in answer to the opposition.  However, as AOS points out, its own actions will in part depend on what SIS chooses to put into evidence.  Thus, while AOS may appear to be, as Mr Fitzpatrick categorised it, "coy", such a non-committal statement is the best that can generally be expected of a party that has yet to be served with evidence of the full case against it.

Mr Fitzpatrick also argued that there was no precedent for giving particular weight to the refusal of AOS to agree to a direction suspending the opposition.  The trend was in the opposite direction in all of the TMO decisions to which he referred.  From these, Mr Fitzpatrick extracted the basic principle that, where there is a pending court matter of direct relevance, the Registrar prefers the court action be concluded before determining the opposition.  This comes originally from the case of Ferocem v High Tech Auto Tools (1993) 29 IPR 144.

In that decision, the delegate of the Commissioner of Patents, Dave Herald, dealt with the matter of an extension of term of a petty patent while an application was in the court to revoke the patent.  A decision to extend the term of the petty patent itself involved a consideration of the validity of the patent.  Therefore, the decision to proceed with a hearing at the Patent Office raised the possibility of two decisions on utterly identical grounds but perhaps made on differing evidence.  Mr Herald considered the circumstances of various precedent cases that had resulted in the terms set out in the Australian Patent Office Manual of Practice and Procedure.  He noted that it can be of relevance that the parties do not agree on the suspension of the opposition.  In Re Yamazaki Mazak Corporation (1992) 24 IPR 321, the decision was that where the patentee wanted the matter determined, the matter should proceed. Mr Herald also noted that, in that case, what was at issue was the need of the patent holder to obtain an extension of term so that it could seek an injunction preventing an infringement of its patent. This seems to me to be the mirror image of the present case, where, instead of a renewal to allow the grant of an injunction preventing infringement, AOS seeks a registration to shield it from claims of infringement.  In either case, the party objecting to the suspension has much to lose, while the other side will not be disadvantaged by the suspension.  On the other hand, in the patent case that Mr Herald was deciding, all of the material was ready for decision.  Here, it is incomplete and an immediate hearing is simply impossible.

As to the TMO decisions following on from Ferocem, Mr Fitzpatrick relied on Outrigger Hotels Hawaii v Evangelista Pty Ltd, Southcorp Wines Pty Ltd v Elders Limited and Ayrton Senna Promocoes E Emprendimentos Ltda v Senna Racing Team Pty Ltd ([2000] ATMO 28, [2001] ATMO 42 and (1998) 41 IPR 395 respectively). In all three, as Mr Fitzpatrick noted, there was no discernable regard paid to the prima facie merits of the cases. I think that, in all other respects, Mr Fitzpatrick's submissions have fully traversed the issues looked at in the earlier TMO decisions.

Mr Fitpatrick argued, finally, that there was no evidence that the interests of any third party would be damaged if the opposition was suspended.  Therefore it was in the long term interests of the parties, and of the TMO, that matters be decided once only, on the best available evidence, thus avoiding duplication of both effort in the filing and handling of evidence and in the decision-making process.

Conclusion

In Ayrton Senna, Hearing Officer Homann expressed the opinion that the court proceedings had a direct relevance to the trade mark opposition.  That being so, he went on to consider the balance of inconvenience to the parties if the opposition was suspended or otherwise.  I am not sure that the neutral word "inconvenience" will always be sufficient to cover what may be a very real practical disadvantage.  In Yamazaki, supra, the Delegate said, "... in my view the Commissioner has a duty to act in a way which leads to minimal prejudice to the respective parties."

Here, I agree that many of the issues to be dealt with in the Federal Court are of some relevance.  However, what is at issue in the TMO is the right of AOS to make honest use of the trade mark PIROUETTE.  If what is alleged is that dishonest use is being made of the trade mark, that is a question of conduct.  It is fairly clear, for example, that if there are similarities of shape, goods can be passed off as being from the same source even when they bear utterly dissimilar trade marks.  Such conduct would also be in contravention of the Trade Practices Act.  The court will inevitably have to deal with such allegations.  It is the only forum that can deal with that issue.  However, it will not need to deal with the infringement question per se if AOS is successful in the TMO matter and if the parties are prepared to take that determination at face value. Alternatively, if registration is refused then the parties can argue the matter of infringement on its merits.

As to other issues of relevance in the court, I have to say, at this point, that I remain unconvinced that honest use of the trade mark PIROUETTE in the face of SILHOUETTE is likely to be something that the TMO can find "would" be conduct contrary to law in terms of s 42.  Mr Fitzpatrick argued that this line of enquiry is impermissible, an inappropriate determination at this stage.  However, SIS wishes to stay the present proceedings.  It asserts that there is no public interest in the prompt operation of the registration process.  The price of such an assertion must, I think, extend to at least some investigation of the claims that, according to SIS, show that there is insufficient reason to continue with the TMO opposition proceedings. 

Perhaps the opposition will reveal that SIS has a sufficient case under s 42.  Or perhaps, for whatever reason, the court proceedings will result in an injunction that flatly forbids all use by AOS of the trade mark PIROUETTE, even if it is a registered trade mark.  Mr Fitzpatrick is correct to say that, if either of these is the end result, there will have been a considerable waste of energy and resources in any TMO proceedings that result in any initial outcome more favourable to AOS.  But at this point I do not think that the purported general benefits, to SIS and the TMO and, so Mr Fitzpatrick tells me, to AOS, should deprive AOS of the quite appreciable benefits that may flow from obtaining a registration before the completion of the court matters.  True, AOS may fail, either in the TMO or on appeal, to obtain that benefit.  That is for the future.  However, it is entitled to try for that goal.  To deny it the chance while the court proceedings roll on is an appreciable prejudice. 

The remaining elements to balance are practical.  I do not think I should put too much weight on the difficulty in abstracting, from the passing off and Trade Practices matters, sufficient information to allow the opposition to be fought and decided under s 44 of the Trade Marks Act. SIS holds a registration for goods that appear to exactly match the goods on which the other claims are based. Therefore, I do not see any reason why SIS is likely to succeed under s 60 and not succeed under s 44. Certainly, SIS has not pointed to any such reason(s). The difficulties that may complicate the preparing of s 60 evidence about the reputation of the trade mark are thus not likely to significantly complicate the case that SIS will need to establish at the TMO.

I believe that the balance I am required to strike should seek to avoid an outcome that is, at least potentially, unjust for one of the parties.  This, if necessary, must be at the cost of an appreciable risk, for both parties and for the TMO, of duplication and possible waste of effort and of resources.  My view, therefore, is that the opposition should continue on foot for the moment.  It may be that AOS will come to change its view.  Certainly, if the parties agree that suspension of this case is appropriate the scales will immediately tip.  Equally, it may be that the Federal Court will issue directions and make orders that suggest some support for the position taken by SIS.  If so, I stress that the Registrar of Trade Marks will be both appreciative of such guidance and quick to act on it.

Finally, I note that, in dealing with this matter, I have come, in Mr Fitzpatrick's view, impermissibly close to a consideration of the merits.  While I have not actually been required to go far into such an analysis, in order that TMO processes should be seen to be fair, the parties should not anticipate that I will hear the substantive matter.

Costs

SIS has incurred considerable costs in prosecuting its request for suitable directions.  While it has failed in its attempt, I think it will be sufficient if each side bears its own costs in the current matter.

Terry Williams
Hearing Officer
18 December 2001