Steven Kelly v Quick Steps School of Dance Pty Ltd

[2016] ATMO 56

TRADE MARKS ACT 1995

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

Re:Oppositions by Quick Steps School of Dance Pty Ltd to registration of trade mark applications 1634109 (41) and 1652005 (41) - Quicksteps Dance Studios and Quicksteps International Dance Studios with device - in the name of Steven Kelly.

Delegate:

Nicole Worth

Representation:

Opponent: David Ananian-Cooper of counsel, instructed by Sebastien Ananian-Cooper of Opponent

Applicant: did not attend hearing

Decision:

2016 ATMO 56

Trade Marks Act 1995 (Cth) – opposition to registration under s 52 – application filed in bad faith – s 62A established – registration refused.

Background

1. In this matter Quick Steps School of Dance Pty Ltd (‘the Opponent’) opposes the registration of the trade marks detailed below, filed in the name of Steven Kelly (‘the Applicant’).

Quicksteps Dance Studios
Application No.: 1634109	Application No.: 1652005
Filing date: 13 July 2014	Filing date: 12 October 2014
Services: Class 41: Dance choreography; Dance hall services; Dance instruction; Organisation and conducting of dance, music and other entertainment festivals	Services: Class 41: Dance choreography; Dance hall services; Dance instruction; Organisation and conducting of dance, music and other entertainment festivals

1. The applications to register the above trade marks were examined as required by s 33 of the Trade Marks Act 1995 (‘the Act’) and accepted for possible registration. Their acceptance was advertised for opposition purposes. The Opponent filed Notices of Intention to Oppose their registration on 9 December 2014 and 5 March 2015 respectively, followed by Statements of Grounds and Particulars on 22 December 2014 and 6 March 2015. Each of the Statements of Grounds and Particulars nominated grounds under ss 58, 60, 59 and 62A, and attached to each was documentation which appears to be intended as evidence in support of the Opponent’s case.

2. Neither party had legal representation during the evidence stages of the oppositions, and there are therefore some anomalies that have occurred in the preparation of evidence. Nonetheless, the parties have, in the end, filed their evidence as follows. Evidence in support, which appears to encompass the entirety of the documentation attached to the Statements of Grounds and Particulars, was filed on 7 March 2015 and 2 April 2015 respectively. On 11 August 2015 the Applicant filed documentation intended to be evidence in answer; however it was not in declaratory form and insufficient time remained in the period for filing evidence in answer for it to be filed in its correct form. To that end the Applicant filed a declaration on 20 August 2015 together with a request that it be considered under reg 21.19 of the Trade Marks Regulations 1995 (‘the Regulations’). On 12 November 2015 the Opponent then filed a declaration purportedly responding to the Applicant’s declaration. Since the Opponent’s declaration was filed after the period for filing evidence in response, it was advised that the Hearing Officer to whom the matter was ultimately allocated would decide whether or not to take the declaration into account, per reg 21.15(4).

3. The oppositions were subsequently set down for hearing and allocated to me, a delegate of the Registrar of Trade Marks. In sending out directions for the hearings, I indicated to the parties that the Applicant’s declaration was not strictly evidence (as opposed to submission) and the Opponent’s late declaration purported to respond to it, but that to ensure both parties felt they had been given proper opportunity to present their cases I would allow both parties’ late evidence.

4. The hearing took place before me in Canberra on 5 July 2016. The Opponent was represented at the hearing by David Ananian-Cooper who also prepared written submissions on its behalf. The Applicant did not attend the hearing or file written submissions.

Grounds and Onus

1. As stated previously the Statements of Grounds and Particulars particularised grounds of opposition under ss 58, 60, 59 and 62A of the Act.

2. In order to succeed in its opposition the Opponent bears the onus of establishing at least one of the grounds upon the ordinary civil standard of the balance of probabilities.[1] The rights of the parties are to be determined as at the filing dates of the opposed applications, being 13 July 2014 and 12 October 2014.[2]

   [1] Per Gyles J in Pfizer Products Inc v Karam [2006] FCA 1663 at [6] to [26] and Telstra Corporation Ltd v Phone Directories Co Pty Ltd [2015] FCAFC 156.

   [2] Southern Cross Refrigerating Co v Toowoomba Foundry Pty Ltd [1953] HCA 73.

3. As will be seen I have found it necessary to address only the ground of opposition under s 62A.

Evidence

1. The evidence filed in these oppositions comprises declarations by the following persons:

Application No.: 1634109	Application No.: 1652005
Sebastien Ananian-Cooper, Director of the Opponent, with exhibits A to Q, dated 18 November 2014.	Sebastien Ananian-Cooper, Director of the Opponent, with exhibits A to Q, dated 18 November 2014.
Steven Kelly, the Applicant and Founder and Director of Pro Dance Services, dated 19 August 2015.	Steven Kelly, the Applicant and Founder and Director of Pro Dance Services, dated 19 August 2015.
Sebastien Ananian-Cooper, with exhibits A to J, dated 11 November 2015.	Sebastien Ananian-Cooper, with exhibits A to J, dated 11 November 2015.

The Opponent’s Evidence

1. Mr. Ananian-Cooper is the sole director of the Opponent, which was incorporated on 27 June 2011. His partner in that business is Ms Michelle Robinson. I will describe the nature and history of that business only briefly as it is the Opponent’s interactions with the Applicant which is the salient information.

2. The Opponent trades under names including ‘QuickSteps Dance | Club | Studio’, providing a dance studio and lessons to adults. It is located in the central business district of Adelaide, as is the business Steven Kelly Dance Studios (owned by the Applicant) which operates nearby.

3. Mr. Ananian-Cooper and Ms Robinson adopted the trade mark ‘QuickSteps’ in November 2010. In adopting the ‘QuickSteps’ trade mark, they took care to select a mark not currently used in Australia. To that end in November 2010 they conducted a number of searches for the same or similar names, and identified only an unused business name registration in Western Australia. The Opponent first traded under the name ‘QuickSteps School of Dance’ in April 2011. The business quickly expanded leading to the incorporation of the Opponent on 27 June 2011 and a move to bigger premises (being the current location). In April 2012 the Opponent engaged a branding agency which devised the branding ‘QuickSteps Dance | Club | Studio’, which has been used since upon all of the Opponent’s marketing material including Facebook®, its website and brochures. The Opponent holds bi-annual balls at which its students perform, the first being a ‘Summer Ball’ held on 9 February 2013, and it also invites its competitor dance studios and their students to participate. It declares it is now the largest social dance studio for adults, running more than 150 classes per week with eight part time and full time staff.

4. The Opponent declares that the Applicant, of Steven Kelly Dance Studios, is well aware of the Opponent’s ownership and use of the ‘QuickSteps’ name. The Opponent first had dealings with the Applicant in 2012 when it sent a number of dance studios, including the Applicant’s, an invitation to its upcoming ‘QuickSteps Summer Ball’.

5. Subsequent to that, the Applicant is declared to have made two business proposals to the Opponent during 2013, however nothing eventuated from these. In early 2014 the Applicant requested to meet with the Ms Robinson of the Opponent and discuss ‘Pro Dance Services and Seminars’ (apparently being services offered by the Applicant under the banner ‘Pro Dance Services’). Ms Robinson requested further information before meeting up, however this was not provided and nothing further came of the Applicant’s ‘proposed business venture’ (as the Opponent describes it). Copies of text messages are exhibited evidencing this exchange.

6. A number of months later, on 23 September 2014, the Applicant contacted Ms Robinson to say he had opened a new dance studio in Melbourne and wished to discuss a new business proposal. Within the text message regarding this exchange, the Applicant states ‘Quicksteps and Steven Kelly attracts different clients and I see something like this can work!’.

7. On 8 October 2014 the Opponent declined the proposal. The Applicant responded with thanks and also enquired under what name the Opponent might buy another studio, to which the Ms Robinson replied ‘we would only be looking at expanding Qs at this stage’ (the Opponent declares that ‘Qs’ refers to ‘QuickSteps’). In response to that message the Applicant replied that perhaps the parties could ‘work something out’. He went on to say that ‘in Melbourne we are opening under 3 names Qs if all go well with our planning is one [of] the names that we will use there [sic]’. I take this to mean that the Applicant intended to use the name ‘QuickSteps’ in relation to a business venture he was opening in Melbourne. Ms Robinson reiterated that the Opponent was not looking to expand outside of Adelaide at that stage, to which the Applicant responded that ‘to sell is an option’ and ‘[From] research I did there is 3 different qouikstep [sic] studios in Australia For Melbourne I have applied for 5 trademarks that I wish to develop and one [of] them is Qs. Note for use in Melbourne.’ It is not clear to me whether the Applicant was referring to the selling of his studio or perhaps the ‘Quicksteps’ name that he appeared to wish to use.

8. Ms Robinson then showed the above text message exchange to Mr Ananian-Cooper who wrote to the Applicant the following day, 9 October 2014. Mr Ananian-Cooper expressed concern at the Applicant having applied for ‘Quicksteps’ as a trade mark, pointing out that such registration would be Australia-side and not limited to states. He also acknowledged he was aware of other business name registrations for ‘Quicksteps’, but explained they did not appear to be in business or were in the process of changing names. Lastly, he stated that the Opponent intended to be the sole owner and user of the name ‘Quicksteps’ and to that end had filed an objection to trade mark application 1634109 (application 1652005 having not yet been filed). Mr Ananian-Cooper declares that the Applicant had filed the trade mark application without any prior discussion or notification to himself or Ms Robinson.

9. Two days later, on 11 October 2014, the Applicant registered the business names ‘Quicksteps Dance Studios’ and ‘Quicksteps Dance Academy’. In July 2014 the Applicant had also, unknown to the Opponent, registered the domain name quickstepsdancestudios.com.au, and it created and uploaded a website to that address. An undated screen shot of that website shows it to state, inter alia, ‘Welcome to Quicksteps International Dance Studios!  Opening in Melbourne soon!’

10. On 12 October 2014 the Applicant filed application 1652005, which the Opponent declares was done without prior discussion or notification.

11. The following day the Applicant wrote to Ms Robinson again stating ‘selling is an option’ and ‘we are opening in Melbourne and if you would like we can list you on our new Melbourne site…’ On 23 October 2014 Ms Robinson and the Applicant met in person, wherein the Opponent declares that the Applicant asserted he had the right to register the trade mark. According to the Opponent Ms Robinson offered to reimburse the Applicant for the cost of registering the trade mark in exchange for its transfer of ownership; however the Applicant stated that he had received an offer for $150,000 for the trade mark application and had spent $300,000 on registering and ‘setting up’ the trade marks. The meeting ended with no agreement.

12. The Applicant sent further messages to Ms Robinson over the next few days in response to being notified of the Opponent’s intended opposition to his trade mark application. He stated:

    ‘…in our meeting last Thursday I thought that I was clear that this was a done deal and that I am looking forward to [opening] in Melbourne. As I see [Mr Ananian-Cooper] does not understand that and he [does] not have the knowledge [of] how things operate with trademarks and registered business names. There[fore] he is forcing me to start trading from tomorrow and hold our quicksteps dance studios head office in Adelaide. I don’t understand what is the big deal and why all the tension from the time there is other quicksteps dance studios in Australia! As I told you I am open to any possibility [of] us working together’

The Applicant also makes some other statements regarding use of business names upon business paraphernalia, however they are not relevant to this matter. Ms Robinson did not reply to these messages.

1. A few days later, on 29 October 2014, Ms Robinson received an email from ‘[email protected]’ which is addressed to ‘Michelle’ (Ms Robinson’s first name) and signed off by ‘Steven’ (the Applicant’s first name). The authenticity of this email is disputed by the Applicant. Nonetheless it states:

   Hi Michelle

   As I told you in our meeting when you asked to buy the registrations etc I had another offer from someone [else] but at that time I was not looking to sell my investment.

   With how things are going I am thinking now that maybe it’s best for all for me to sell to the other people or except and sell to you guys [sic].

The writer of the email then lists a number of prices for domain name registrations, business name registrations and trade mark applications, totaling $211,000. The trade mark applications are those at issue here, which were given prices of $70,000 and $55,000 respectively. The email closes with the statement ‘if there is still interests to buy feel free to contact me’.

1. In relation to the bad faith ground the Opponent makes a number of statements describing the reasons it considers that applications were made in bad faith, and asserts that the Applicant has a history of applying to register other businesses’ trade marks (providing two examples).

2. Subsequently, in its additional evidence the Opponent attests to investigations it carried out in relation to the Applicant’s claimed business in Melbourne and no such business being apparent at the address given (nor existing according to a representative of the body corporate). It additionally points out that the only business name registrations relating to the words ‘Quick Steps’ not owned by the parties have now been cancelled.

The Applicant’s Evidence

1. The Applicant has always been in the dance industry, with a family background in it. He has since branched out and ‘founded, created and owned a variety of products, companies and studios’, with interests in dance, entrepreneurship, technology, marketing and software and product development.

2. The Applicant is the sole owner and director of ‘Pro Dance Services’. The Applicant states that Pro Dance Services is a ‘business services company’ specializing in the dance and fitness industries. In respect of the services it provides the Applicant says ‘We provide business solutions, staff training, workshops, consulting, business evaluations, marketing evaluations and professional experts for hire’ and that the nature of Pro Dance Services is to ‘collaborate with different dance businesses and individuals in order to take the industry to the next level.’

3. In respect of the Applicant’s role in the business, he states ‘it is natural that as part of Steven Kelly’s job, he applies for different trademarks in order to develop his products, services and business ventures under the full protection of the trademark registration act.’ He further asserts that he has adhered to all the rules, regulations and laws which give him the power to operate his business and grow it as he sees fit. In relation to the possible collaboration with Ms Robinson and/or the Opponent, the Applicant states that the Opponent contacted him twice expressing interest in working with Pro Dance Services, and that discussions ensued. This is stated as the reason why the Applicant thought to potentially include Ms Robinson in his business ‘Quicksteps Dance Studios’ in Melbourne.

4. With regard to the oppositions, the Applicant states that he is surprised by their nature, and alleges that the Opponent attacks him in a personal way instead of claiming ‘real grounds’ as to why he can’t own the trade marks. The Applicant asserts that the Opponent owns a registered business name and not a trade mark, and that:

   [T]he reason why they have not registered a trade mark (as they have mentioned in their opposition documents) is that they are not interested in developing, opening or franchising other dance studios in Australia. If the opposition was interested to own a trademark, it is clear that they could have applied for one at any time from 2010 onwards. The reason they didn’t apply for a trademark was that they either didn’t want or need one – which has nothing to do with Mr Kelly.

   According to the Australian Securities & Investments Commission (ASIC), the fact is that a business registration name does not give exclusive trading rights or protection over that name.

5. The Applicant makes a number of further submissions regarding business names; however for reasons that will be discussed shortly they are not relevant to the matter here.

6. The Applicant asserts that he did not operate in bad faith. He says that the Opponent acknowledges it is not looking to expand, and evidence of his good faith can be found in the fact that he informed the Opponent of his future plans and trade mark application. In respect of the email sent on 29 October 2014 offering to sell the domain name registrations, business name registrations and trade mark applications, the Applicant alleges that that evidence is false and he never sent any email of that nature. To support this claim he states that the email account service (‘Outlook’) from which the email was sent is a free email service where anyone can create an account under any name they choose.

7. In his closing statements the Applicant reiterates that ‘as is our right, we have followed the normal, legal procedure and applied and paid for our trademark…The reality is that the opposition did not want a trademark, and therefore they were happy with a business name. But, when they saw that Steven Kelly applied and got accepted for the trademark, then they decided that they wanted it.’

Section 62A

1. Section 62A of the Act provides:

   The registration of a trade mark may be opposed on the ground that the application was made in bad faith.

2. Bad faith is a relatively new provision in the Act, and as such there are relatively few judicially decided cases in Australia. Two recent authorities in relation to s 62A were summarised by the delegate in Hard Candy Fitness, LLC v Hard Candy (Australia) Pty Ltd[3] as follows:

   [3] [2015] ATMO 61

   [T]here have been two relatively recent decisions of the Federal Court which have considered s 62A, Fry Consulting v Sports Warehouse Inc (No 2)[4] per Dodds-Streeton J (“Fry Consulting”) and DC Comics v Cheqout Pty Ltd[5] per Bennett J (“DC Comics”).  Relevantly to the present opposition the following propositions emerge from these decisions:

   [4] (2012) 94 IPR 551.

   [5] (2013) 101 IPR 334.

   (a)    All of the circumstances surrounding the application to register the mark are relevant: DC Comics at [62].

   (b)    The registration of a trade mark is designed to enable bona fide proprietors to protect their proprietary rights without having to prove unfair trading: DC Comics at [62].

   (c)While the seriousness of an allegation of bad faith that “impugns the character of an individual or collective character of a business” requires correspondingly cogent evidence, the standard of proof is the balance of probabilities, rather than that of beyond reasonable doubt: Fry Consulting at [145].

   (d)    Conduct which falls “short of the standards of acceptable commercial behaviour observed by reasonable and experienced men in the particular area” is sufficient.  Dishonesty is not required.  Bad faith requires both subjective and objective elements; it is a combined test: Fry Consulting, at [147]-[148] and [165].

   (e)    Circumstances where, following prolonged competition between the parties, there is a subsequent application to register a series of nearly identical trade marks can amount to conduct such that a reasonable person standing in the shoes of the applicant would have been aware that it ought not apply for trade mark registration: Fry Consulting at [152].

   (f) Subjective naivety does not exclude a determination of bad faith for the purposes of s 62A: Fry Consulting at [154]-[155].

   (g)    A prior business connection with and knowledge of the opponent by the applicant such that a person standing in the shoes of the applicant should have known that he should not have applied for a trade mark deceptively similar to that used by the opponent is sufficient for a finding of bad faith: Fry Consulting at [156].

   (h)    Use of a trade mark together with other indicia associated with the trade mark owner may lead to an inference of bad faith: DC Comics at [73].

   Adopting the language used by Dodds-Streeton J in Fry Consulting, Bennett J confirmed in DC Comics at [62] that:

   The question is whether the conduct falls short of the standards of acceptable commercial behaviour observed by reasonable and experienced persons in the particular area.  It is whether the knowledge of the applicant was such that the decision to apply for registration would be regarded as in bad faith by persons adopting proper standards.

   [Footnotes original]

1. Here, the Applicant does appear to have been aware of the Opponent’s business and that the Opponent used the name ‘QuickSteps’ in relation to that business. Such is evidenced from the Opponent’s initial invitation in 2012 to the Applicant to participate in the ‘QuickSteps Summer Ball’; the Applicant’s statement on 23 September 2014 that ‘Quicksteps and Steven Kelly attracts different clients…’; the Applicant’s subsequent notification to the Opponent on 8 October 2014 that it intended to use the name and register the trade mark ‘for use in Melbourne’; and the Opponent’s explicit statement on 11 October 2014 that it intended to be the sole owner and user of the name. It is therefore reasonable to conclude that the Applicant knew the Opponent used the ‘QuickSteps’ name in relation to a dance studio business. It was also explicitly stated to the Applicant that the Opponent did not intend to dilute the ownership of that name, prior to the Applicant’s filing of application 1652005.

2. The question is therefore, in light of that knowledge, would the Applicant’s decision to apply for registration of the trade marks be regarded as in bad faith by a reasonable person standing in the Applicant’s shoes?

3. The Applicant does indicate a fundamental misunderstanding of trade mark law and its interaction with the business names registration scheme in Australia. It is true that registration of a business name does not give rise to proprietary rights in a trade mark. A business name is simply the name or title under which a person or entity conducts a business, and registration of a business name does not provide exclusive ownership of that name nor prevent others from using names similar to it.[6] A trade mark on the other hand is a sign used by a person to distinguish their goods or services from others, and it may or may not be registered. It is often the case that a person’s business name is also the trade mark under which they provide their goods and services, particularly in the case of small businesses and sole proprietors; however this is not necessarily so. In Australia ownership of a trade mark arises either by virtue of using the trade mark in trade (giving rise to common law ownership), or where a sign is as yet unused as a trade mark, by virtue of registration (giving rise to statutory ownership). Registration of a trade mark alerts other traders in the market that the trade mark is not available for them to use. It may also assist in proving ownership but does not necessarily of itself do so. Prior use of a trade mark at common law will prevail over the trade mark’s subsequent registration by another party who has not used the trade mark. The owner of the trade mark (whether at common law, by registration, or both) has the exclusive right to use it or authorise others to use it, throughout Australia.

   [6] From accessed 27 July 2016.

4. The Applicant has misunderstood that the Opponent’s ownership of its trade mark is not lessened merely because the Opponent has not registered it. Nor does the registration of other business names that incorporate the words ‘Quick Step’ necessarily mean that the Opponent does not have an exclusive right to them as a trade mark – the Opponent has declared that it could find no use of businesses operating under those names and the business names have since been cancelled or changed. The Applicant has not shown that this is not the case, nor put forward any cogent reason to doubt the Opponent’s declaratory evidence.

5. Nonetheless, even though the Applicant has apparently misunderstood the difference between business name registrations and trade marks, I am not persuaded that he applied for the trade marks in good faith. The Applicant was aware that the Opponent used the trade mark. The Applicant did not inform the Opponent about having registered the domain names incorporating the words ‘quick step’. Nor did the Applicant inform the Opponent about having registered the business names or applying for the trade marks in his own name - which with the exception of the first trade mark application took place after the explicit statement from the Opponent that it intended to be the sole owner and user of the name.

6. I note that the Applicant disputes the authenticity of the email offering to sell the various registrations and trade mark applications. I consider it more likely than not that the email is indeed from the Applicant – it appears in a statutory declaration for which there are penalties for giving false information, it refers to the meeting that took place between Ms Robinson and the Applicant, pertains to matters of dispute between the parties and uses the first names of both of the persons involved. It is therefore unlikely to be from a third party, and less likely to have been ‘created’ by the Opponent in an effort to bolster its case given the penalties involved in giving a false statement in a statutory declaration. Nonetheless, even in the absence of this email I consider the Applicant ought to have known that he should not apply to register the Opponent’s trade mark in his name, as would a reasonable person standing in his shoes.

Decision and costs

1. I am satisfied that the knowledge of the Applicant was such that his decision to apply for registration of the trade marks was in bad faith. Accordingly, the ground of opposition under s 62A is established and I refuse to register trade mark applications 1634109 and 1652005.

2. At the hearing the Opponent confirmed that it sought an award of costs should it succeed in its opposition. Costs usually follow the event, and as there is no apparent reason to depart from this principle, I award costs against the Applicant in accordance with Schedule 8 of the Trade Marks Regulations 1995.

Nicole Worth

Hearings Officer

Trade Marks Hearings

28 July 2016