Sterling Winthrop Pty Ltd v Herron Pharmaceuticals Pty Ltd

[1994] ATMO 65

TRADE MARKS ACT 1955

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

Re:      Opposition by Herron Pharmaceuticals Pty Ltd to an application by Sterling Winthrop Pty Ltd to remove trade mark registration number A488194(5).

Trade mark registration number A488194 is the word PARAMOL.  It is registered in the name of Herron Pharmaceuticals Pty Ltd  (a Queensland company of 17 Curzon Street, Tennyson, Queensland)  for the goods pharmaceuticals and analgesics.  The mark is registered from 1 June 1988 and the current renewal date is 1 June 1995.

On 23 July 1993, Sterling Winthrop Pty Ltd, a New South Wales company of 24 Hughes Avenue, Ermington, New South Wales, lodged an application to remove this mark.  The application is made under the provisions of subsection 23(1) and the grounds, as pressed at the hearing, and as stated by sub-section 23(1)(b), are  that:

... up to 1 month before the date of the application, a continuous period of not less than 3 years had elapsed during which the trade mark was a registered trade mark and during which there was no use in good faith of  the trade mark in relation to those goods by the registered proprietor.....

The 3 year period for which non-use is claimed therefore runs from 23 June 1990 to 23 June 1993.

On 15 December 1993, Sterling Winthrop served the registered proprietor, Herron Pharmaceuticals, with a notice of the removal application and, on that same day, Herron Pharmaceuticals lodged a notice opposing the removal of the mark. 

On 24 December 1993, Sterling Winthrop served Herron Pharmaceuticals with evidence supporting its removal  action.  Herron Pharmaceuticals did not, in the time allowed,  respond with any evidence in answer and Sterling Winthrop then asked that the matter be heard.

On 8 July 1994,  I conducted a hearing of the opposed removal action in Sydney.  The proprietor of the trade mark, Herron Pharmaceuticals,  opposing the removal, was represented by Mr Claude Anese of Cullen & Co., patent and trade mark attorneys of Brisbane;  the applicant seeking the removal, Sterling Winthrop, was represented by Mr Graeme Halford, of the Sydney firm of Halford and Co.

The evidence served by Sterling Winthrop in support of its removal application consists of a single declaration by Ms Karen Leanne James, dated 23 December 1993 (the 1993 declaration). However,  14 days before the hearing Mr Halford notified me that his attention had been drawn to an error and, on behalf of Sterling Winthrop, he filed  a second James declaration, dated 22 June 1994 and served a copy on Herron Pharmaceuticals.  Mr Anese, on behalf of Herron Pharmaceuticals, at once notified the Registrar that he believed this second declaration (the 1994 declaration) to be further evidence.   He said that acceptance of fresh evidence at that late stage would prejudice Herron Pharmaceuticals' position, and he indicated that he would make submissions against admission of the 1994 declaration at the hearing.

The hearing commenced, therefore, with submissions directed from both sides to the admissibility of the 1994 declaration.

Admittance of further evidence

Mr Anese objected to admission of the 1994 declaration on grounds that there was no proper application, and that it introduced new issues.  The new issues, he contended, arose from the fact that Herron Pharmaceuticals had treated paragraph 4 of the 1993 declaration as nonsensical and thus not in need of any rebuttal.  The 1994 declaration sought to make paragraph 4 meaningful. In doing so,  he submitted,  it changed the meaning and introduced new issues which Herron Pharmaceuticals had not had an opportunity to address.  

Mr Halford  replied that it was not true that paragraph 4 on the 1993 declaration was nonsense.  He did consider that the meaning of the paragraph should be made clearer, but he denied that in providing clarification any new issues were raised. He said  he did not think that the clarification of the 1994 declaration was sufficiently critical to warrant the time necessary to proceed with a formal application in terms of regulation 47.  On the whole, he thought the matter was quite marginal. Nevertheless, to ensure that the facts were not misinterpreted, he submitted that the 1994 declaration needed to be seen, and he proposed that under the provisions of regulation 70 I could require filing of this document for proper and complete prosecution of proceedings.

I do not agree that regulation 70, which gives me the authority to require an action not otherwise provided for, is appropriate for dealing with Ms James 1994 declaration.  Regulation 47 provides for admittance of further evidence, and indeed, that is what the 1994 James declaration clearly is.  I am therefore dealing with an action that the Act already provides for.

Regulation 47, so far it concerns application for the leave, reads as follows:

47(1)  An opponent or applicant may not adduce further evidence except:

(a)by leave of the Registrar, if the parties agree in writing to further evidence being adduced; or

(b)by special leave of the Registrar granted on an application made for that purpose

(2)  An application for special leave under paragraph (b) of the last preceding subregulation shall, unless it is made at the hearing, be in accordance with Form 14.

(3)  The person making the application shall lodge with the application a declaration setting out the grounds on which the application is made and the nature of the further evidence which it is desired to lodge

(4)  The person making the application shall:

(a)within fourteen days after the making of the application, serve a copy of the application and a copy of the declaration on the other party to the proceedings; and

(b)if the copies are served after the making of the application, lodge at the Trade Marks Office a written statement indicating the place at which, and the day on which, the copies of the application and the declaration were served on the other party. 

The requirements of sub-regulation 47(3) and (4) indicate the delays Mr Halford refers to when he says the 1994 declaration does not warrant the delays involved in a formal application.  Regulation 47(2) makes it clear however, that an application can be made at a hearing.  By virtue of this provision, the Registrar's delegate has admitted evidence but with the clear caution that the practice is not desirable, and that leave will only be granted when it is clear, inter alia, that the application for leave is not intended to ambush the other party (Garden Co Ltd -v- Gardenia Overseas Pty Ltd, 27 IPR 237).

The threefold test for the admission of further evidence developed from Lord Denning's judgment in Ladd -v- Marshall [1954] 1 WLR 1489, is

first,it should be shown that, with reasonable diligence, the evidence could not have been obtained earlier;

second, it should be shown that the evidence is likely to have an important effect on the outcome;  and

third. the evidence should be credible.

In Studio SrL -v- Buying Systems (Aust) Pty Ltd [1992] AIPC 90-858, however, the Registrar's delegate, Mr Homann, pointed to differences between the British and Australian provisions and made these comments in relation to the Australian law:

... it is well established that an "appeal" from the Registrar is not an appeal in the strict sense at all but within the original jurisdiction of the court:  Jafferjee -v- Scarlett (1937) 57 CLR 115.  The appeal is a hearing de novo and the court will not exclude further evidence or additional grounds.

... The effect of refusing an application for special leave may therefore be to force an unsuccessful party to the opposition before the Registrar into an appeal to the court where the evidence, if admissible, would not be excluded.  Obviously it would be preferable for the matter to be finally decided by the Registrar if the admission of further evidence would allow this to be done.  

Mr Homann went on to refer to the findings of Mr Justice Richardson in Pioneer Hi-Bred Corn Co -v- Hy-line Chicks Pty Ltd (1979) RPC 410 where, in relation to a matter of deception and confusion, his Honour said

Within reasonable limits it furthers  that public interest to allow consideration of any available evidence that will assist in providing a clearer picture of the awareness of rival marks as affecting the likelihood of deception and confusion.  Second, the evidence sought to be adduced is evidence that would assist in resolving ambiguities in material furnished to the Assistant Commissioner.  Except for the evidence of Mr Waymouth, it does not attempt to break new ground  and Mr Waymouth's evidence provides, from official sources, relevant information as to the size of the market .... And as put by Ungoed-Thomas J in Bali Trade Mark [1966] RPC 387 AT 393:

.. the proper course is to attach the main weight to the desirability of having the substantial issue satisfactorily and fully investigated.  

While I am not dealing with issues of deception and confusion per section 28, I am dealing with issues of rival marks.  Here the public interest may not be the paramount issue but, on the other hand, I am to determine the fate of a registered trade mark.  Plainly, removal of a registered mark is a serious matter, particularly as it concerns the rights of the registered proprietor and in any case some degree of  public interest is likely to be involved. In deciding on the admission of further evidence in a contested removal action, I think here too I should attach significant weight to the desirability of having the substantive issues satisfactorily and fully investigated. Taking account moreover, of Mr Homann's comments and the unsatisfactory consequence of forcing a de novo court hearing with a decision founded on the partial facts,  I am very unwilling to exclude evidence that purports to clarify the contents of a declaration and avoid a  possible misunderstanding of the facts.

While correction of material therefore constitutes to my mind a particular circumstance generating its own merits, I further consider that the content of the 1994 declaration largely meets the criteria of the Ladd -v- Marshall test.  The correction only became 'available' once the error was identified.  In avoiding misinterpretation of statements in the 1993 declaration it is important.  Last, it is obvious that words are missing from the 1993 declaration, and thus the evidence of the 1994 declaration is credible.

Having considered the nature of the evidence, the importance of dealing with unambiguous facts,  and the need  to be  fully informed, I ruled at the hearing that I would admit this evidence, and I state here that I do so by way of regulation 47.  Clearly, having so decided, it was then necessary to provide an opportunity for Herron Pharmaceuticals to respond and I therefore proposed adjourning the hearing so the opponent and its agent could have time to react to any change in meaning that they took from the 1994 declaration.  Mr Anese declined this  proposal and elected to proceed with the substantive matter.   I therefore continued with the hearing. 

The locus standi of the section 23 applicant

Section 23(1) can only be invoked by a person aggrieved.   At the outset, therefore it is necessary for Sterling Winthrop to establish this standing.

Mr Halford addressed me on this point by referring to two trade marks registered in the name of Sterling Winthrop. Neither mark is mentioned in Sterling Winthrop's evidence and Mr Anese vigorously objected to their inclusion at this point in proceedings.  He said that there were rulings that registered trade marks could only be relied on in inter parte proceedings if they were formally adduced in evidence.  Mr Halford responded with reference to three decisions (Konckier -v- Amco Wrangler Limited, 1987 AIPC 90-385 at 456 and 457; Dow Chemicals Co -v- C.H. Boehringer Sohn KG, 9 IPR 360; and  Prosimmon Golf (Aust) Pty Ltd -v- Dunlop Australia Ltd, 9 IPR 425). In Prosimmon, the delegate, Mr Terry Williams,  comments that the Registrar is entitled to have regard to his own general knowledge and in Dow Chemicals he states that the Registrar is not precluded from taking account of

reference material at his disposal, circumstances which his own enquiries show to prevail in a particular trade or place, the state of the Register of Trade Marks or to material contained in his own records

Mr Williams points out, however, that the Registrar's  prerogative to turn to these sources is constrained by the rules of natural justice.

Mr Halford then submitted that the registered marks he relied on to establish the applicant's standing as a person aggrieved were the words PANADOL  (this mark has been registered since 1956 and belongs to Sterling Winthrop) and certain other marks commencing either with the prefix PANA- or PARA-.   PANADOL he claimed, is in any case a household word and I need not depend on any special knowledge of the Register, to be aware of that fact.  The relevance of these registrations, he said, arise from the effect of the registration of PARAMOL (the subject mark) on Sterling Winthrop's ability to launch infringement actions against it.  He submitted that this restraint constitutes a limitation on the legal rights bestowed on Sterling Winthrop as the registered proprietor of PANADOL and the other marks.  A limitation on legal right has been identified by Justice Kitto  (Continental Liqueurs Pty Ltd -v-G.F.Heubline and Bro. Incorporated, 103 CLR 422 at 427) as establishing locus standi.   

Mr Anese's then commented both in relation to Sterling Winthrop's reliance on the PANADOL marks, and on the question of whether these registrations provided the applicant with the necessary locus standi. First he pointed out that this was an inter partes matter, and thus there was an imperative that the opponent, Herron Pharmaceuticals, should know what case it had to answer.  The Register holds many thousands of registered marks and it is absurd, he said, to expect a party to have an extensive knowledge of those marks, or to anticipate that reliance was to be placed on any one of them. He raised the possibility that, had Herron Pharmaceuticals known that the applicant was intending to rely on these registrations, it may not even have opposed the removal action.  To admit the evidence of Sterling Winthrop's registered marks would thus be a denial of natural justice.   

There are thus two issues. First, is the question of whether the applicant is entitled to rely on its registered trade marks without stating that reliance in the evidence.  Second is the question of whether those trade marks establish a locus standi.

First, then the applicant supports its removal application with the 1993 James declaration, and there is no hint in there (or in the 1994 declaration) of the basis on which it claims standing. Likewise, Sterling Winthrop's application in Form 8 is silent on the matter except for an bald assertion that it is a person aggrieved.  Herron Pharmaceuticals thus had reason to conclude that the matter was not addressed, that the removal application was not validated, and that it had no reason to develop  rebuttal on this issue.

Sterling Winthrop's standing, however, is a threshold question. If it proves unsatisfactory, the whole of the action fails. Thus the unexpected introduction of support for standing fundamentally changes the nature of this case. In addition, of course, support which relies on the applicant's standing as a proprietor of a portfolio of registered trade marks, breaks new ground.   A change of the evidence on this point is clearly very different from the minor correction to the text of the 1993 James declaration that I dealt with above.  The evidence supporting the removal action has failed to address the primary factor of locus standi, and the applicant cannot expect at the hearing to turn the case around merely by pointing to a few of its registered trade mark (of which, I note, there are a total of some 200). The fact that these registrations are available to the public is beside the point. So, I think, is the reputation of the trade mark PANADOL.  The opponent needs due notice of the grounds. If, as here, the evidence give no information about the applicant's standing, not even to the extent of defining its business or its interest in the removal action, it is unreasonable to expect the proprietor to anticipate the removal strategy and prepare accordingly.  Neglect of that due notice smacks of ambush; it does not accord with the rules of natural justice and, I might add, it does not assist with the orderly conduct of  the hearing. If the locus depends entirely on the applicant's position as the owner of certain marks, that claim should be made known in the evidence. If it is not, then the applicant should be prepared to satisfy the criteria of Ladd -v- Marshall (supra).

As Mr Anese submitted, I find that Herron Pharmaceuticals is entitled to know the footing which allows Sterling Winthrop to take removal action, and its reliance on specific trade marks for locus standi should have been led in evidence. Except with good reason, it is not acceptable for Sterling Winthrop to reveal the foundation for its removal application, only in the course of the hearing. Mr Halford offered no explanation  why the trade mark registrations were not disclosed in evidence, nor why these grounds were raised so late in the day.  On weighing up the facts I find there is not sufficient reason to admit evidence of Sterling Winthrop's trade mark registrations and the argument based on those marks I therefore rule to be inadmissible.  In the absence of any other evidence that Sterling Winthrop is a person aggrieved, I find that the section 23 application must fail.

However, in the circumstances, and should I be found wrong on this, I will consider the outcome had I admitted the evidence of the Sterling Winthrop trade mark registrations.

Therefore I come then to the second issue and Mr Halford's argument that Sterling Winthrop has infringement rights which, by reasons of the PARAMOL registration, have now been limited.  He referred me to Powell's Trade Mark, a 19th century case from the House of Lords, and to the following comments from Lord Herschell ((1894) 11 RPC 4).

Whenever it can be shewn, as here, that the applicant is in the same trade as the person who has registered the Trade Mark, and wherever the Trade Mark, if remaining on the Register, would, or might, limit the legal rights of the Applicant, so that by reason of the existence of the entry on the Register, he could not lawfully do, that which but for the existence of the mark upon the Register, he could lawfully do, it appears to me that he has a locus standi to be heard as a person aggrieved.  

Mr Halford's argument is that Sterling Winthrop and Herron Pharmaceuticals are both in the pharmaceutical trade and Sterling Winthrop's legal right to sue Herron Pharmaceuticals for infringing its marks through use of  the word PARAMOL is limited by the defense that PARAMOL is a registered trade mark.  This limitation, he said, is restricting the applicant's marketing strategies. Mr Anese countered that I was being asked to decide matters of infringement and in the course of a section 23 action it was wrong to ask me to summarily decide another substantive issue in the absence, moreover, of any of the relevant facts.  He submitted that Sterling Winthrop was not aggrieved, was attempting nothing more than a unfair tactical manoeuvre, and had not shown its  right to bring about a section 23 application.  

Justice McLelland, more recently, in Ritz Hotel Ltd -v- Charles of the Ritz (1988) 12 IPR 417, and considering a 'person aggrieved', agrees with Lord Herschell. He says at 455

... the expression would embrace any person having real interest in having the register rectified, or the trade mark removed in respect of any goods, as the case may be, in the manner claimed, and thus would include any person who would be, or in respect of whom there is a reasonable possibility of his being, appreciably disadvantaged in a legal or practical sense by the register remaining unrectified, or by the trade mark remaining unremoved .... in my opinion the concept does not admit of further refinement. 

I must find, therefore (and without the necessity of addressing the prospects of an infringement action - which in any case is outside my jurisdiction) that, in view of the applicant's inability to take an infringement action against the use of a registered trade mark, Sterling Winthrop may be appreciably disadvantaged in a legal or practical sense, by Herron Pharmaceuticals' registration of its trade mark PARAMOL.  On that basis I agree with Mr Halford, that had I admitted evidence of Sterling Winthrop's registered marks, the applicant would have succeeded in showing itself to be a person aggrieved.

The prima facie case

That would have brought me to the prima facie case, which, per the expert statements of Ms James, the Regulatory and Scientific Affairs Manager for Sterling Winthrop,  is that

it is an essential requirement for pharmaceutical products to be registered under the Therapeutic Goods Act

that on 20 October 1992, Herron Pharmaceuticals obtained registration of the name PARAMOL for a paracetamol tablet

that PARAMOL does not, as yet, appear in any of the more prominent pharmaceutical indices used in Australia (Mimms, IMS and the PP Guide)

that the conclusion must be that PARAMOL tablets are not yet on the market

Mr Anese submitted that the fact that Therapeutic Goods Administration registration was obtained, was evidence that the mark was in use and, he said, the applicant's evidence, far from being a prima facie case for non-use, showed instead that Herron Pharmaceuticals had achieved use of PARAMOL in October 1992 and thus in the three year period under investigation.  In support of this view, Mr Anese referred me to Murray Goulburn Co-operative Co. Limited -v- The New South Wales Dairy Corporation (the Murray Goulburn case) (1989) AIPC 90-570, and in particular, at 38,990, to the directives:

The expression "use" in sec. 23 must be understood in that context,  but its denotation is not limited by any concept of the physical use of a tangible object....  The phrase "in the course of trade" is  wide enough to cover steps necessary for the production of goods as well as placement of the goods on the actual market.

I am aware that an application for Therapeutic Goods Administration registration has been found not to be the kind of public use necessary to sustain a proprietorship claim per section 40: (unpublished decision in the matter of Trade Mark Application Number A404455(5) NAXEN, and opposition by Alphapharm Pty Limited).   However, the tests for proprietorship are quite different and distinct from the tests for section 23 and the findings as to "use" in the NAXEN  matter can thereby be distinguished from the section 23 "use" defined in the directives of the Murray Goulburn case (supra).   As per NAXEN and a number of other pharmaceutical cases, it is in the Registrar's knowledge that registration with the Therapeutic Goods Administration is time-consuming.  In taking steps and achieving this registration I think that it is quite clear that Herron Pharmaceuticals was preparing to get its goods onto the market and, in line with the Murray Goulburn directives, has used its trade mark.  Furthermore, in light of the findings in NAXEN, it would clearly be untenable to argue that while a Therapeutic Goods Administration application will not establish proprietorship rights in a trade mark, the trade mark legislation cannot function to protect trade mark rights while the subject goods are under application with Therapeutic Goods Administration. 

Ms James states that Herron Pharmaceuticals obtained registration through the Therapeutic Goods Administration,  for the word PARAMOL for paracetamol tablets. This registration commenced on the Australian Register of Therapeutic Goods on 20 October 1992 and falls squarely within the 3 years (June 1990 - June 1993) for which Sterling Winthrop must demonstrate non-use. This registration is a mandatory preparation for marketing pharmaceutical preparations and, per the directives of the Murray Goulburn, must constitute use for the purposes of section 23.  I agree with Mr Anese that the applicant's evidence demonstrates use and that there is thus no prima facie case of non-use to answer.  Had I considered that the applicant's evidence for locus standi was sound, I would therefore have dismissed the removal application by finding that there was no prima facie case.

As it is, I refuse the removal application on grounds that the evidence I am prepared to admit  does not establish that the applicant is a person aggrieved.

Both parties sought costs and, as there are no mitigating circumstances as far as the opponent's service of evidence is concerned, I direct that the applicant should pay the opponent's costs. 

Helen R. Hardie

DeputyRegistrar

23 August, 1994