Taco Bell Corporation v Taco Bill Mexican Restaurants (Australia) Pty Ltd

[1999] ATMO 79

TRADE MARKS ACT 1955

DECISION OF THE REGISTRAR OF TRADE MARKS WITH REASONS

Re:     Trade mark application 720996 -  TACO BILL - in the name of Taco Bill Mexican Restaurants (Australia) Pty Ltd and application by the opponent -Taco Bell Corporation - that the Registrar require production of documents

Trade mark application number 720996 was filed on 1 November 1996 by Taco Bill Mexican Restaurants (Australia) Pty Ltd (hereafter Taco Bill Mexican) for registration of the trade mark taco bill.  Taco Bill Mexican seeks registration of taco bill in respect of a broad range of stationery, clothing, food and drink items in classes 16, 25, 29, 30 and 32.  It also seeks registration in respect of restaurant and other hospitality services in class 42. 

The Registrar of Trade Marks advertised acceptance of the taco bill trade mark in the Official Journal of Trade Marks of 19 February 1998.  720996 was then open for opposition and, on 19 August, 1998, after successfully extending the time allowed for opposition,  Taco Bell Corporation of Irvine, California, USA, filed a notice of opposition.  

The issues to be determined (which I shall come to below) directly concern grounds stated in the notice of opposition and it is appropriate, at this point, to quote them in full.  They are:

(a)The Alleged Trade Mark is not capable of distinguishing the Applicant’s goods, and therefore the Alleged Trade Mark is not a registrable Trade Mark within the meaning of Section 41 of the Trade Marks Act 1995.

(b)The Alleged Trade Mark is not inherently adapted to distinguish the goods of the Applicant from those of other persons, and therefore the Alleged Trade Mark is not a registrable Trade Mark within the meaning of Section 41 of the Trade Marks Act 1995 .

(c)The use of the Alleged Trade Mark would be contrary to law, and therefore registration of the Alleged Trade Mark is contrary to Section 42 of the Trade Marks Act 1995 .

(d)The Applicant is not the owner of the Alleged Trade Mark, and therefore, the registration of the Alleged Trade Mark would be contrary to the provisions of Section 58 of the Trade Marks Act 1995.

(e)By reason of the matters set forth in any one or more of the above paragraphs, the Registrar in the exercise of his discretion ought to refuse to register the Alleged Trade Mark. 

I shall refer to the opponent as Taco Bell Corp. It is represented by Allen Allen & Hemsley, a firm of solicitors, of The Chifley Tower, 2 Chifley Square,  Sydney. 

Background

On 8 December 1998, Allen Allen & Hemsley, acting on behalf of Taco Bell Corp, applied to the Registrar, pursuant to section 202(c) of the Trade Marks Act 1995,  for the issue of a summons. The summons was to require Taco Bill Mexican to produce all documents which refer or relate to dealings between it and a New South Wales  business referred to as Taco Bill’s Restaurant in Darby Street, Newcastle.   This request stated that:

-     the production is for the purpose of the opposition

-     the documents are relevant to grounds (a) and (b)

-     the documents sought can be sufficiently identified.

The Trade Marks Office responded to this request with advice that the Registrar must be satisfied that the production of documents is for a purpose under the Act, that the documents sought are relevant to the matter before the Registrar and that the documents are sufficiently identified.  Allen Allen & Hemsley was therefore required to specify the documents sought and show them to be relevant to the opposition proceedings before the request could be given further consideration.

Allen Allen & Hemsley replied that the documents sought were all documents in the possession, custody or control of the Applicant … which refer or relate to dealings between the Applicant and the Taco Bill’s Restaurant in Darby Street, Newcastle.  Those documents include but are not limited to documents which relate to the terms on which the proprietors of the Taco Bill’s Restaurant in Darby Street, Newcastle are or have been permitted to use the taco bill word mark ….  In respect of the requirement to show relevance, it submitted that the documents pertain to the question of whether any control has been or is still exercised by Taco Bill Mexican in relation to Taco Bill’s Restaurant in Newcastle over the use of the taco bill mark.  Allen Allen & Hemsley accompanied these submissions with a copy of a letter which indicated that the Darby Street restaurant business was formerly a franchisee of Taco Bill Mexican, that the franchise agreement no longer existed, and that the Darby Street restaurant  continued to trade under the name Taco Bill. 

The Registrar replied pointing out that the grounds of opposition are couched in terms of sections 41, 42 and 58 and it was far from apparent that documents going to Taco Bill Mexican’s relation with the owner of a restaurant in Newcastle, had relevance to any one of them. Further, the documents requested were not sufficiently specified and the scope and limitation of the documents required would need to be perfectly clear both to the nominated party and the Registrar, before any order would be executed.

There followed a deal of correspondence between the Office and Allen Allen & Hemsley. In the course of this the Registrar agreed that the following description does sufficiently identify the documents sought:

All documents which refer or relate to dealings between the Applicant and the Taco Bill’s Restaurant in Darby Street, Newcastle made or used from 1 January 1985 to date.

However, despite a considerable number of submissions which argued the relevance of these documents to the section 41 grounds, the Registrar remained unconvinced. The bulk of the correspondence was between me, as Deputy Registrar, and Allen Allen & Hemsley. Not-withstanding the submissions, I retained the view that the matter of the applicant’s control of a previous user of its mark is not in any way material to the section 41 grounds. Allen Allen & Hemsley then raised the argument that by relinquishing control over the Newcastle franchisee, Taco Bill Mexican had allowed the term taco bill to be used as the name of a company. taco bill was therefore in the same position as the trade mark the american tobacco company[1] — a mark which failed, under the terms of section 41, as not capable of distinguishing. Likewise, so the submissions went, the requested documents would show that with the dissipation of control, the term taco bill was not capable of distinguishing because it too was in use as a company name.

[1] 35 IPR 98: Re Application by American Tobacco Company

The term the american tobacco company, however, is an apt description of any tobacco business with an American connection, and it therefore failed because of its generic nature The term taco bill has no generic application — the word bill has no descriptive meaning either in respect of tacos or taco restaurants — and the mere fact that a single entity in Newcastle is using the name taco bill is not a circumstance which controverts that fact, or supports a section 41 ground. The particulars of the american tobacco company trade mark therefore distinguish it from circumstances confronting the trade mark taco bill.

In applying the test for relevance, recently and relevantly considered by  Justice Beaumont in GS Technology Pty Ltd v The Commissioner of Patents (1998) AIPC ¶91-387, and by Justice Spender in Stack & Anor v Commissioner of Patents (1999) AIPC ¶91-468, I took the view that while the documents sought could go to the question of termination of authority and to Taco Bill Mexican’s abandonment of control over a user, evidence of this kind was not even arguably relevant to a trade mark’s capacity to distinguish. I was therefore satisfied that the subject documents were not relevant (either substantively or adjectivally) to the section 41 grounds and I declined to issue any notice for production.

The provisions of section 202 furnish the Registrar with a power. When (as was the case) the Registrar intends to exercise the authority of section 202 contrary to the interest of a person applying for the exercise of that power, that person (in this case, Taco Bell Corp) has a right to be heard. I thus advised Allen Allen & Hemsley, in April 1999, that any further submissions should be the subject of a hearing. Taco Bell Corp availed itself of this right, and further asked the Registrar to issue a second summons, this time to Andrew Craig and Cheryl May Andrew, the registered proprietors of Taco Bill’s Mexican Restaurant at 80 Darby Street, Newcastle, NSW 2300. Again, the documents nominated for production are all documents which refer or relate to dealings between Taco Bill Mexican and the Taco Bill’s Restaurant in Darby Street, Newcastle, made or used from 1 January 1985 to date.

The matter of the two requests for production of documents was scheduled for hearing before the Registrar in Sydney on 16 July 1999. Mr Philip J. Kerr of Allen Allen & Hemsley represented the opponent, Taco Bell Corp.  As Deputy Registrar, I conducted the hearing. The matter being between the Registrar and Taco Bell Corp, Taco Bill Mexican had no part in these proceedings.

The Law

Section 202 of the Trade Marks Act 1995 reads as follows:

202. The Registrar may, for the purposes of this Act:

(a)summon witnesses; and

(b)receive written or oral evidence on oath or affirmation; and

(c)require the production of documents or articles; and

(d)award costs against a party to proceedings brought before the Registrar; and

(e)notify, as he or she considers fit, any person of any matter that, in his or her opinion, should be brought to the person's notice.

Section 203 reads:

203. The Registrar may not exercise a power under this Act in any way that adversely affects a person applying for the exercise of that power without first giving that person a reasonable opportunity of being heard.

Submissions and Considerations

The first step in Mr Kerr’s submissions is the precedent and direction set by Justice Beaumont in GS Technology[2], and per Justice Spender in Stack[3]. Mr Kerr particularly refers me to the following comments in  GS Technology at p37,070:

[2] (1998) AIPC ¶91-387

[3] (1999) AIPC ¶91-468

… whilst it would be appropriate to reject a request for the issue of a summons on the ground that the request is fanciful or purely speculative, it is true nonetheless that an applicant for the issue of a summons need not show that the documents requested are actually relevant to the matter at hand.  It is sufficient, in accordance with the conventional test in this area, that the material sought by the summons is, on reasonable grounds, arguably relevant to the issues in the litigation.

I am here with Mr Kerr, in that the appropriate test is not whether the documents sought can be shown to be substantively relevant to any of the opposition grounds — and in particular to the section 41 grounds. It is whether the documents could arguably be relevant.

The second step in Mr Kerr’s submissions is an argument that the provisions of section 41 of the Act permit consideration of the evidence of use of a sign by another party, as evidence that the sign is not capable of distinguishing. He refers me to Blount Inc v Registrar of Trade Marks[4] and Justice Branson’s directive concerning the operation of section 41. The first question under section 41 is to determine the extent to which the mark is inherently adapted to distinguish the goods from those of other persons and the test, approved by her Honour, to assess inherent adaptation, is the michigan test[5].  This test, says Mr Kerr, requires an assessment of the likelihood that other persons trading in goods of the relevant kind and being actuated by proper motives might want to use the mark taco bill in a manner which would infringe that mark if it was registered.  Mr Kerr then submits that the fact that another entity (the restaurant in Darby Street, Newcastle) can be shown to be using the name taco bill establishes that there is a strong likelihood that other persons trading in goods of the relevant kind, want to use this trade mark.

[4] (1998) 40 IPR 498

[5] Clark Equipment Co v Registrar of Trade Marks (1964) 111 CLR 511 at 514

In my view this approach is critically flawed. Consideration of registrability in terms of section 41 hinges on the question of the inherent meaning of the words constituting a trade mark. Here, those words are taco bill. Mr Kerr’s quote from the michigan case omits some of Justice Kitto’s famous words.  A more complete version, as from p514, reads as follows:

… the question whether a mark is adapted to distinguish  [is to] be tested by reference to the likelihood that other persons, trading in goods of the relevant kind and being actuated only by proper motives — in the exercise, that is to say, of the common right of the public to make honest use of words forming part of the common heritage, for the sake of the signification which they ordinarily possess — will think of the word and want to use it in connexion with similar goods in any manner which would infringe a registered trade mark granted in respect of it.   

The words which narrow the application of the test to the inherent meaning of a term, are the words in the exercise, that is to say, of the common right of the public to make honest use of words forming part of the common heritage, for the sake of the signification which they ordinarily possess. I find that there is nothing in the signification which the words taco bill ordinarily possess to render them part of the common heritage of words which other properly motivated traders will be likely to think of and want to use in respect of their taco (or Mexican) restaurants. I therefore find Mr Kerr’s second argument does not satisfy me that documents, which go to show that a Newcastle restaurant uses the term taco bill in its title, are even arguably relevant to the section 41 grounds.

As a third step, however, Mr Kerr, refers me to the directives of Justice Beaumont in Melhero Pty Ltd and Another v Club X and Others (1996-1997) 37 IPR 151. In particular he refers me to a passage on p199, but in order to put this passage into context, I quote, in addition from line 28 on 198.

… another problem for Mr Oxlee in justifying his registration of the trade mark would have been the reputation arising from the activities of Melhero, and perhaps of Dominion Publishing and "AXIS" as well, in the name "Adam & Eve" in connection with its business activities at Fyshwick. By July 1994, the applicants [for removal] had established substantial businesses under that name [Adam & Eve] in selling, locally and by mail order, x-rated videos and accessories and also through an associated company, Budtint, in providing services in Arcade at Fyshwick. … Even if it be accepted that Mr Oxlee for trade mark (as distinct from passing off) purposes, did not need to establish a general market reputation in Australia (see Re Trade Mark "Thunderbird" (1974) 48 ALJR 456 at 459), he had to show distinctiveness within the meaning of s.41.

Despite the evidence that Mr Oxlee's business had undoubtedly used the mark for a number of years prior to the commencement by the applicants of the use of the mark, at the time of registration of the mark by the respondents, the applicants had also been trading under the name "Adam and Eve" and had already gained a substantial reputation in the name in respect of the same goods and services in relation to which the mark was registered. Notwithstanding the geographically localised nature of the two businesses, the evidence, including the fact that much trade was done by mail-order, indicates that it is likely that there would be confusion between the two businesses.

It follows, in my opinion, that Mr Oxlee, and thus the applicants for registration, could not have satisfied the "distinctiveness" criteria of s.41. In my view, as at July 1994, the name "Adam & Eve" was not capable of distinguishing their services (or goods) from the goods or services of other persons. It further follows from the language of s.41(2) that any application for registration must be rejected. The register should, accordingly, be rectified by cancelling the registration.

Mr Kerr argues from these findings that it is clearly the case that if more than one person is shown to use a name as the name of its business, that fact bears directly on the capacity of that name to distinguish.  I think, however, that there is undoubtedly another view.  Justice Beaumont prefaces the passage just quoted with the words -  198, line 23 

Adam and Eve, as the first man and the first woman and their biblical story are as well known to the public as any story in our history. Their names have been used in countless contexts, some of which have been picked up in the many business name registrations already described.

In this context, and contrary to Mr Kerr’s argument, his Honour in my view was concerned first with the inherent meaning of the term Adam & Eve. Second, on evidence that it is in frequent use, he is concerned that the term Adam & Eve is common to the trade. Hence on the question of distinctiveness, his Honour found Mr Oxlee could not defend his registration in terms of section 41 of the Act.

Nevertheless, I accept that Mr Kerr’s interpretation of the Melhero decision is at least arguable. That being the case, I agree that he has demonstrated that documents which go to show that more than one entity uses the name taco bill as its title, may arguably be relevant to Taco Bell Corp’s section 41 grounds of opposition.

Decision

In accordance with the directions of the GS Technology[6] and Stack[7] cases  I will therefore proceed to issue a notice requiring both

-Taco Bill Mexican Restaurants (Australia) Pty Ltd, and

-Andrew Craig and Cheryl May Andrew, the registered proprietors of Taco Bill’s Mexican Restaurant at 80 Darby Street, Newcastle,

to produce all documents which refer or relate to dealings between the Applicant and the Taco Bill’s Mexican Restaurant in Darby Street, Newcastle made or used from 1 January 1985 to the date of the notice.   I note here that there is some inconsistency in the reference to the Darby Street restaurant.  In early correspondence from Allen Allen & Hemsley  the reference is to Taco Bill’s Restaurant in Darby Street. In later correspondence Andrew Craig and Cheryl May Andrew are said to be the proprietors of Taco Bill’s Mexican Restaurant at 80 Darby Street, Newcastle.  The notices of production will need to be unambiguous.

Procedures

The procedures which will be followed are as they are set out in the Patents Manual of Practice and Procedure - Part 5 - Opposition, Courts, Extensions and Disputes at 5.2.  For good order I will set down the steps of these proceedings.

[6] GS Technology Pty Ltd v The Commissioner of Patents (1998) AIPC ¶91-387

[7] Stack &  Anor v Commissioner of Patents (1999) AIPC ¶91-468

1. Taco Bell Corp shall provide me with a notice ready for dating, signing and sealing as per the attachment at  Annex A.

2. If the notice is in a satisfactory form, I will decide on an appropriate return date,  sign and seal it and return it to Taco Bell Corp’s address for service for them to arrange service on Taco Bill Mexican Restaurants (Australia) Pty Ltd; and on Andrew Craig and Cheryl May Andrew. 

3. The return date is the date by which Taco Bill Mexican Restaurants (Australia) Pty Ltd; and Andrew Craig and Cheryl May Andrew must produce the documents to the Registrar.  The documents may be produced by delivering them in person to IP Australia or to any of the State Offices on or before the date that the notice will specify.  They may also be mailed, providing adequate allowance is made for the time to deliver the mail.

4. If either Taco Bill Mexican Restaurants (Australia) Pty Ltd; or Andrew Craig and Cheryl May Andrew object to producing certain documents, or wish to have certain documents treated as confidential, those documents should not be produced on that date (although all other documents should be produced).  Rather the person, or persons, should notify me by that date of their objection, and the basis of that objection  (see section 153(2) of the Act).

1. In the event that Taco Bill Mexican Restaurants (Australia) Pty Ltd; or Andrew Craig or Cheryl May Andrew claim grounds of reasonable excuse for not producing the documents, that matter itself may bring on further need for a hearing.

Helen R. Hardie
Deputy Registrar

6 August 1999