Tajura Fashions Pty Ltd v Franklin Loufrani

[2001] ATMO 12

TRADE MARKS ACT 1995

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

Re:Opposition by Tajura Fashions Pty Ltd to an application under section 92 of the Act by Franklin Loufrani to remove from the Register trade mark registration number 542711 comprising the word trade mark SMILEY BLUE in Class 25.

Background
An application, under s.92(4)(b) of the Trade Marks Act 1995, for the removal from the Register of registration number 542711(25), covering "all goods in this class", which comprises the word trade mark SMILEY BLUE was filed by Franklin Loufrani (the applicant) on 9 August 1999. Accordingly, the relevant three year period of alleged non-use under s.92(4)(b) commenced on 9 July 1996 and ceased on 9 July 1999. The application for removal was accompanied by a statutory declaration by Chris Sgourakis dated 9 August 1999. The application for removal was advertised in the Australian Official Journal of Trade Marks (the Journal) of 2 September 1999.  A Notice of opposition to the application was filed, under s.96 of the Act, on 12 November 1999, by the owner of the subject trade mark, Tajura Fashions Pty Ltd (the opponent).

The evidence in support of the opposition comprises a statutory declaration by Paul Hotz, the opponent's Managing Director (the first Hotz declaration).  He declares that his company has sold garments bearing the trade mark since at least March 1998.  Annexed to his declaration are some copies of customer purchase orders, invoices and also two garment samples.

The applicant's evidence in answer includes a statutory declaration by Eric Ziehlke, an employee of Griffith Hack, the applicant's patent attorneys.  Mr Ziehlke comments on a visit he made to the offices of Greenstein Shakenovsky, the opponent's attorneys, in order to view some garments.  The balance of the evidence in answer comprises a statutory declaration by Quentin Goodwin, the Legal Manager of Smiley Licensing Corporation which is licensed by the applicant to use his various SMILEY and SMILEY FACE trade marks.  Mr Goodwin discusses the applicant's various trade mark registrations and the use which he has made of his marks on various goods.  He annexes to his declaration brochures and advertisements bearing the applicant's marks, and a list of countries where those marks are registered, or where registration has been applied for.

The opponent's evidence in reply comprises another declaration by Paul Hotz (the second Hotz declaration), where he contends that a representation of the subject trade mark is embroidered on the fabric on the front of the garment samples annexed to his first declaration.

The applicant requested a hearing in the matter and it came before me, as a delegate of the Registrar, in Canberra.  Mr David Greenstein of Greenstein Shakenovsky represented the opponent via videoconference, while Mr Chris Sgourakis of Griffith Hack appeared in person on behalf of the applicant.

Submissions and analysis
Both Messrs Greenstein and Sgourakis made quite comprehensive submissions in relation to the matter before me.  I will not repeat them in detail here but I will refer briefly to any points made by the respective parties which I consider are relevant in explaining my decision.

The first sub-section of Part 9 of the Trade Marks Act 1995 reads as follows:

Application for removal of trade mark from Register etc.

92.(1)  A person aggrieved by the fact that a trade mark is or may be registered may, subject to subsection (3), apply to the Registrar for the trade mark to be removed from the Register.

Person aggrieved

The threshold question, which needs to be resolved in a matter of an application under s.92 for removal of a registered mark, is whether the applicant is a "person aggrieved" in terms of that section of the Act.  Only such a person can make an application for removal.

On his part, Mr Greenstein argued that the applicant might not have clean hands in relation to his own application for registration of the SMILEY mark because of his having done so with the knowledge of the subject mark here being on the Register.  He said that because that application might have been made in less than good faith, then the applicant could not be regarded as a "person aggrieved" in his present application for removal.  Mr Sgourakis submitted that a similar argument, where a removal applicant's bona fides had been challenged in relation to its own trade mark, had been considered and rejected in a decision of Heerey J, - Conquip Holdings Pty Ltd v S & A Restaurant Corp. [2000] FCA 256; (2000) AIPC 91-547 (the Bennigans case) and that I should find likewise here.

The criteria for determining whether the applicant is a "person aggrieved" under the present Act has not altered from that considered in relation to s.23 of the Trade Marks Act 1955.  The meaning of the term was defined, for the purposes of that section, by McLelland J in The Ritz Hotel Ltd v Charles of the Ritz and Another 12 IPR 417 at p.454:

It is sufficient for present purposes to hold that the expression would embrace any person having a 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 respect of any goods, as the case may be, in the manner claimed.

I must agree here with Mr Sgourakis that the present situation is analogous to the Bennigans case, in that the removal applicant's intentions, with respect to his own application for registration, is irrelevant to the situation of whether or not he is a person aggrieved here.  The question of whether or not he intends to use his own trade mark is one that needs to be determined when considering that application's acceptance, or during opposition to its registration.  As Justice Fullagar said, in relation to an accusation that an applicant did not intend to use a trade mark, in Aston v Harlee  Manufacturing Co. (1906) 103 CLR 391 at 401: "I cannot think that the Registrar is called upon to institute an inquiry as to the intention of any applicant...".

The applicant for removal here claims "person aggrieved" status on the ground that he is also the applicant for registration of the trade mark SMILEY in a number of classes including class 25.  The present registration has been cited as a bar to that marks' acceptance.  The applicant has also stated that there is a risk that use of his trade mark on goods covered by class 25 might infringe the subject mark.  This is sufficient, in my opinion, to show that the applicant for removal has sufficient interest in the proceedings to be a “person aggrieved”.  Accordingly, I find that the applicant is such a person and qualifies to apply for removal of the present trade mark from the Register.

Having established that the applicant is qualified to apply for removal of the present registration, I note that the remaining relevant sub-sections of s.92 of the Act read:

(4) An application under subsection (1) or (3) (non-use application) may be made on either or both of the following grounds, and on no other grounds:

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

(i)to use the trade mark in Australia; or

(ii)to authorise the use of the trade mark in Australia; or

(iii)to assign the trade mark to a body corporate for use by the body corporate in Australia;

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

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

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

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

(b)that the trade mark has remained registered for a continuous period of 3 years ending one month before the day on which the non-use application is filed, and, at no time during that period, the person who was then the registered owner:

(i)used the trade mark in Australia; or

(ii)used the trade mark in good faith in Australia;

in relation to the goods and/or services to which the application relates.

Opposition

In relation to an opposition to a non-use application under the 1995 Act, s.96(1) allows:

96.(1) Any person may oppose an application under section 92 by filing a notice of opposition with the Registrar or the court, as the case requires.

Unlike s.92.(1), where only an aggrieved person may apply to have a mark removed from the Register, s.96.(1) allows any person to oppose that application.  In this instance, as with the majority of oppositions to removal, it is the registered owner of the registration involved which has opposed the action sought.

Onus

Burden on opponent to establish use of trade mark etc.

100.(1) In any proceedings relating to an opposed application, it is for the opponent to rebut:

...

(c)any allegation made under paragraph 92(4)(b) that the trade mark has not, at any time during the period of 3 years ending one month before the day on which the opposed application was filed, been used, or been used in good faith, by its registered owner in relation to the relevant goods and/or services.

...

(3) For the purposes of paragraph 1(c), the opponent is taken to have rebutted the allegation that the trade mark has not, at any time during the period referred to in that paragraph, been used, or been used in good faith, by its registered owner in relation to the relevant goods and/or services if:

(a)the opponent has established that the trade mark, or the trade mark with additions or alterations not substantially affecting its identity, was used in good faith by its registered owner in relation to those goods or services during that period; or

...

(c)the opponent has established that the trade mark was not used by its registered owner in relation to those goods and/or services during that period because of circumstances (whether affecting traders generally or only the registered owner of the trade mark) that were an obstacle to the use of the trade mark during that period.

Under s.100, the onus is clearly upon the opponent here to establish that, on the day that the subject application for registration was filed, the owner did have an intention in good faith to use the trade mark during the relevant period under s.92(4)(b), or that circumstances existed that were an obstacle to that use. Accordingly, I must decide, as the Registrar’s delegate, whether the opponent has met that onus sufficiently by clearly showing that the registered trade mark has been used in the course of trade, or that there existed circumstances which prevented use. Here, the applicant has alleged that there has been no use at all of the trade marks involved during the critical period. The opponent has claimed the opposite and clearly has the burden upon it to show that this is the case.

However, notwithstanding the above, under the terms of subsection 101(3), the Registrar has a discretion not to remove the trade mark under attack.  This discretion hinges on the Registrar being satisfied that even though the removal grounds have been made out, it is reasonable to leave the trade mark on the Register.

Use
Mr Greenstein argued that the evidence demonstrated unequivocal use of the subject trade mark by the opponent because of the sale of goods bearing the mark to Millers Fashion Club and to Kmart Australia during the critical period of claimed non-use.  This evidence, he said, comprised the two Hotz declarations, to which were annexed purchase orders and invoices, and also the samples of the goods themselves, which clearly bore the mark SMILEY BLUE embroidered on them.  He argued that the presence of these words on the clothing was clearly intended to be a badge of origin, especially given that there was no secondary meaning to that phrase, other than as a trade mark.  He compared the present situation to the application of Olympic trade marks to clothing which, he said, the public still regarded as trade mark use, despite the presence of other trade marks on those goods.  Mr Greenstein said that, having used the trade mark in such a manner, i.e. with a "primary intention of deriving from it a trading profit coupled with a trading goodwill" - Imperial Group Ltd v Phillip Morris & Co Ltd [1982] FSR 72 (C.A.), then the opponent had used its trade mark in trade, as specified in the Act. He said that what happened to the goods themselves, e.g. the attachment of other stores' own labels, was beyond the control of the mark's proprietor. He said further that any claims that Millers or Kmart should provide collaborative evidence to support assertions of sales were invalid, as the evidence already submitted was enough to show that the requisite use had taken place.

Mr Sgourakis, in his turn, argued that the evidence relied upon by the opponent was insufficient to satisfy the onus on it to show that use had occurred during the relevant non-use period.  He pointed to what he said were several discrepancies in that evidence, saying that the instances to which the opponent had referred were not the kind of use which would equate to proper use of a trade mark.  What did qualify as trade mark use had been countenanced in such cases as Shell Co (Australia) Ltd v Esso Standard Oil (Australia) Ltd, (1963) 109 CLR 407 and Johnson and Johnson Australia Pty Ltd v SterlingPharmaceuticals Pty Ltd 21 IPR 1. Mr Sgourakis said that when words, such as those comprising the present mark, were embellished on the front of clothing, it had to be clear that such use was use as a trade mark and not merely for the purpose of decoration, or as a "style" - as the combination of words, SMILEY BLUE, and embroidery been referred to in the first Hotz declaration. He said that such use fell short of showing that the words were used by the opponent as a badge of origin which indicated a connection in trade between it and the goods. He relied for support here upon such cases as Top Heavy Pty Ltd v Killin (1996) 34 IPR 282 and Unidoor Ltd v Marks and Spencer plc [1998] RPC 275. Mr Sgourakis said that the evidence showed that the opponent was a contract manufacturer, making garments to order for retailers under the trade mark TAJURA FASHIONS. These parties then affixed their own trade marks to the goods. He said that, even if I did find that the words SMILEY BLUE had been used as a trade mark during the critical period, on those goods particularly exhibited in the evidence, then the mark should be removed for the all of the other goods for which it was registered.

Mr Sgourakis concluded by submitting that the opponent had done nothing to show that there was any reason for the Registrar to exercise his discretion not to remove the trade mark because it was "reasonable to do so" - as per s.101(3), or because there were "circumstances ... that were an obstacle to (its) use" - s.100(3)(c).

Section 7 of the Act says:

Use of trade mark

7.(1) If the Registrar or a prescribed court, having regard to the circumstances of a particular case, thinks fit, the Registrar or the court may decide that a person has used a trade mark if it is established that the person has used the trade mark with additions or alterations that do not substantially affect the identity of the trade mark.

Note:For prescribed court see section 190.

(2) To avoid any doubt, it is stated that, if a trade mark consists of the following, or any combination of the following, namely, any letter, word, name or numeral, any aural representation of the trade mark is, for the purposes of this Act, a use of the trade mark.

(3) An authorised use of a trade mark by a person (see section 8) is taken, for the purposes of this Act, to be a use of the trade mark by the owner of the trade mark.

(4) In this Act:

use of a trade mark in relation to goods means use of the trade mark upon, or in physical or other relation to, the goods (including second-hand goods).

(5) In this Act:

use of a trade mark in relation to services means use of the trade mark in physical or other relation to the services.

I have carefully considered the evidence put forward by the opponent in this case to support its claim that the trade mark has been used during the critical period under s.92.  This evidence comprises the two declarations by Mr Hotz.  He has declared that use has taken place and he has annexed purchase orders, invoices and two garments bearing the words SMILEY BLUE on their fronts to support his claim.  The purchase orders and invoices are in respect of Kmart Australia Ltd and Millers Fashions Club and are all dated within the period in question.  However, the words "SMILEY BLUE embroidery", as they are used on the order form of 9 July 1998 in respect of Kmart, appear to describe a style - rather than use as a trade mark indicating origin.  That style number is listed as "70089" and it is referred to as "a coordinate with 70090 and 70091".  The Kmart invoice, dated 29 July 1998, which is presumably related to the previous order, does not mention the words SMILEY BLUE at all - the only trade mark appearing on it being  its own house brand "NOW KIDS".  The clothing is referred to as simply as being "GIRLS EMBROIDERED FRONT MESHT (sic) SINGLET TOP" and the brand label as "NOW".  Similarly, the documents referring to the supply of clothing by the opponent to Millers Fashion Club do not mention the SMILEY BLUE mark at all - merely the house label of the buyer.  The clothing included with the evidence - which comprises a buff coloured short sleeved top and a black sleeveless top - does include the words SMILEY BLUE embroidered on their fronts, together with floral designs.  The latter garment appears to be in the style described by the opponent as number "70089".

However, it is not certain that the garments exhibited to the second Hotz declaration are the same as the ones sold by the opponent to Kmart and Miller's Fashions.  There is, I concede, a rough drawing of a garment in a section of the Kmart order of 9 July 1998, which could be the black sleeveless girl's top supplied with the evidence.  However, it is an unclear representation and not drawn to scale.  The drawing does include some squiggles on its front, which presumably represents floral embroidery.  The words "SMILEY BLUE embroidery" are also included in the document, although those words are not on the garment but off to one side.  It is therefore arguable that the illustrated garment, described as style number 70089 and said to have been supplied to Kmart and Miller's Fashions, is not the same as the top relied upon as evidence of sales of goods bearing the opponent's trade mark.  I am therefore of the opinion that this evidence falls short of showing that the garments included in the opponent's evidence are the ones which were actually the subject of the purchase orders and invoices relative to Kmart and Miller's Fashions.

Notwithstanding the foregoing, even if I had found that the tops, included in the evidence, were samples of those actually sold to the eventual clothing retailers, I believe that the words SMILEY BLUE, in the manner that they are applied to that clothing, do not qualify as having been used as a trade mark.  This is because I think that the words, used in the way that they are - i.e. along with decorative embroidery and also with other labels and swing tags comprising the obvious trade marks TAJURA, TAJURA FASHIONS and NOW, which are attached to or enclosed with the goods - would not be regarded by purchasers as indicating a connection between the goods and their origin.  Instead, it appears to me that they are used as a meaningless and decorative slogan.  I think that this use can be distinguished from any possible use of Olympic trade marks along with other marks on clothing, as referred to by Mr Greenstein, because there the public had already been "educated" as to what the Olympic marks actually were.  In the present case, I believe that the evidence is not sufficient to demonstrate to me that the words SMILEY BLUE would be apparent to the public as a trade mark.  Additionally, there does not appear, from the evidence, to have been any effort to enlighten those in the relevant market to the contrary.

Taking all of the foregoing into consideration, I do not believe that it has been convincingly shown that the trade mark, the subject of this registration, was used in Australia during the period of claimed non-use on the goods included in the specification.  Accordingly, I find that this is the case.

Registrar’s discretion
Determination of opposed application—general

101.(1) Subject to subsection (3) and to section 102, if:

(a)the proceedings relating to an opposed application have not been discontinued or dismissed; and

(b)the Registrar is satisfied that the grounds on which the application was made have been established;

the Registrar may decide to remove the trade mark from the Register in respect of any or all of the goods and/or services to which the application relates.

(2) Subject to subsection (3) and to section 102, if, at the end of the proceedings relating to an opposed application, the court is satisfied that the grounds on which the application was made have been established, the court may order the Registrar to remove the trade mark from the Register in respect of any or all of the goods and/or services to which the application relates.

(3) If satisfied that it is reasonable to do so, the Registrar or the court may decide that the trade mark should not be removed from the Register even if the grounds on which the application was made have been established.

In deciding an opposed removal application, the Registrar (or a court) is called on to exercise a discretion.  The Registrar or a court "may" remove a registration.  The proper exercise of that discretion by the Registrar will generally be as per Ritz Hotel v Charles of the Ritz, supra, at 482:

If the condition of exercise of the court's power has been established, the entry of the mark should be expunged, or the mark should be removed, as the case may be, "unless sufficient reason appears for leaving it there: cf Application by Carl Zeiss Pty Ltd (1969) 122 CLR 1 at 11 and Astronaut trade mark [1972] RPC 655 at 672.

However, the decision of the Registrar is an administrative one, unlike the decision of a court in what may otherwise be the same matter - see the decision of Jacobs J in The Queen v Quinn, ex parte Consolidated Food Corporation 138 CLR 1 at 10. Thus, there may be matters which affect the exercise of the discretion by a court but which are beyond the Registrar’s competence to decide.

Nevertheless, as was said by Deputy Registrar Hardie, as the delegate of the Registrar, in Figgins Holdings Limited v Beltrami SpA 46 IPR 411 at 418:

Under subsection 101(3) the Registrar needs to be "satisfied that it is reasonable" to leave a mark on the Register even when the grounds on which the removal application is made have been established.  This requires the Registrar to be satisfied that there is sufficient reason for leaving it there.  The reason would need to be based on special facts and circumstances, or an overriding question of public interest.  The onus for showing that those circumstances exist, is on the opponent to the removal application.

I have had regard to the evidence served in this matter and to the submissions made by the attorneys from both sides at the hearing in deciding, as the delegate of the Registrar, whether there is sufficient reason to leave the present trade mark on the Register.  In that respect, nothing was put to me as to why the Registrar's discretion should be exercised in favour of the opponent in this case.  The opponent did not point to any circumstances which might have prevented use.  It merely stated that it did use the mark during the relevant period but then produced evidence which, in my opinion, was not convincing enough to support that assertion.  I cannot see any public interest in leaving a trade mark on the Register which appears, on the evidence and submissions before me, not to have been used in Australia, as a trade mark, on the goods covered by the specification and during the critical period.  That interest would appear to be better served by the mark's removal to avoid any possible misconceptions as to ownership of any deceptively similar trade marks.

Conclusion
I find that the opponent has not, to my satisfaction, discharged the heavy onus placed on it under the Trade Marks Act 1995 of showing why the mark, the subject of this registration, should not be removed from the Register on the grounds of non-use during the period in question.  Accordingly, I find that the opponent has been unsuccessful in its opposition to the applicant's action under s.92.

Having so found, I direct, subject to any appeal from this decision, that the trade mark covered by registration number 542711 should be removed for all the goods for which it is registered.

Costs
Both parties sought costs in the matter.  However, as the applicant has been the successful party in the present instance, he is entitled to his costs.  Thus, I award costs against the opponent, in accordance with the Official scale.

Ian Forno
Hearing Officer

14 February 2001