Thunderbird Products Corp v Thunderbird Marine Products Pty Ltd

[1974] HCA 51

HIGH COURT OF AUSTRALIA

Jacobs J.

THUNDERBIRD PRODUCTS CORPORATION v. THUNDERBIRD MARINE PRODUCTS PTY. LTD.

(1974) 131 CLR 592

28 November 1974

Trade Mark

Trade Mark—Rectification of register—Expunging mark—Entry wrongly made in register—No user in Australia before application for registration—Whether applicant for registration author of mark in Australia—Whether applicant for expunging had used mark in Australia with purpose of indicating a connexion between mark and goods—Whether knowledge acquired by single importer of distinctiveness of mark sufficient to give distinctiveness in Australia—Validation of mark seven years after registration—Notice of motion for expunging filed within seven years—Service and hearing beyond seven year period—Trade Marks Act 1955-1958 (Cth), ss. 6, 22 (1) (b), 40 (1), 61 (1)—High Court Rules, O. 66B, rr. 4, 5.

Decision

Nov. 28.
JACOBS J. delivered the following written judgment:-
In 1965 Mr. Craigie a director and shareholder and Mr. Huybers his co-director in a company American Marine Distributors Pty. Ltd., a builder of boats in Queensland, became interested in obtaining from Thunderbird Products Corporaton of Florida, U.S.A., the right to manufacturer in Australia a certain style of power boat which the American corporaton had designed and which was known as the Formula 233 boat. The first contact with the American corporation was made by Mr. Craigie's co-director, Mr. Huybers, when he was in the United State. He returned to Australia, discussed the matter with his co-director and wrote to the American corporation. The American corporation replied to Mr. Huybers in April 1965 indicating its willingness to negotiate a licence agreement. Mr. Craigie went overseas shortly afterwards and in June 1965 wrote offering further negotiations. In July the American corporation wrote stating that it was prepared to furnish a loosely assembled boat for mould-making at a price of $4,000. It agreed that on boats produced from the moulds a royalty of 100 Pounds per boat would be satisfactory. It asked for a cheque for $1,000 deposit and a letter of credit for the payment of the balance plus shipping charges. Later in July the American corporation set out further charges which would be involved in respect of shipment and insurance and the cost of certain further items which had been requested by American Marine Distributors Pty Ltd. (at p595)

2. Towards the end of July 1965 the latter company requested photographs of the model and twenty copies of certain brochures. There was also a request that the American corporation should send 1,000 copies of each brochure inside the ordered boat when it was shipped. In August 1965 the American corporation sent to Mr Craigie two copies of a proposed agreement between him personally and the corporation authorising him to build the Formula 233 hulls and to sell them in Australia using the name Formula 233. The agreement was executed between Mr Craigie who was clearly acting on behalf of American Marine Distributors Pty Ltd and the American corporation. The agreement set out the terms negotiated, including the price of $4,000 for the Formula 233 boat, and provided that the licensor should grant to the licensee a licence to manufacture and sell Formula 233 boats in the Commonwealth of Australia only, using the name Formula thereon, for which licence the licensee would pay to the licensor the sum of $225 in United States dollars in the United States of America for each Formula 233 boat manufactured by him. It was provided that the agreement should remain in force for a period of three years from its date, 15th August 1965, and from year to year thereafter. (at p595)

3. The agreement was returned to the American corporation duly signed by Mr Craigie under cover of a letter of 15th September 1965 and included in that letter was a further request for the photographs and brochures. The boat which was ordered arrived in Australia in October 1965. Payment therefor in accordance with the agreement had already been made. In the shipping documents and the invoice the boat was described as a Thunderbird Formula 233 loosely assembled hull. There was a further description by way of detail. (at p595)

4. The brochures which had been requested described the boat as the Formula 233 and bore prominently upon their face the name of the American corporation Thunderbird Products Corporation and below these words on either side of the pictorial mark of an eagle and crossed lightning flashes the words "Thunderbird" and "Formula" respectively. These words, together with the insignia, had appeared on all correspondence of the American corporation to Mr Craigie and American Marine Distributors Pty Ltd and their placing on the letterhead of the American corporation and on the brochure to which I have referred clearly shows that these were intended as trade marks of the American corporation. (at p595)

5. On 1st December 1965 American Marine Distributors Pty Ltd applied to the Registrar of Trade Marks for the registration of the name Thunderbird as a trade mark in relation to boats. It is not disputed that it did this entirely on its own behalf and for its own benefit and in no way as trustee for or for the benefit of the American corporation. It should be mentioned that it also applied for registration of the mark "Formula" and this was done, according to Mr Craigie, with no thought of or consideration for the American corporation or its point of view but entirely for its own benefit. This attitude was taken despite the fact that the agreement provided that this mark Formula was only licensed to be used for the duration of the agreement. There was considerable delay in the granting of the application which arose apparently because the same word was registered by the Ford Motor Co. But eventually this difficulty was overcome and on 26th July 1968 the registration was granted by the Registrar of Trade Marks in Pt A of the register in respect of boat hulls. Registration of the mark "Formula" was refused. (at p596)

6. The first production of Australian-made boats from the moulds made from the original boat which had been purchased and shipped occurred in late May 1966. It was not until 17th January 1966 that the Australian company had the moulds completed. It is not altogether clear when the brochures were received in respect of the Formula 233 boat. They were not included with the boat which was shipped but it was estimated by Mr Craigie in his evidence that it took about three months for them to arrive. It would appear most probable that they arrived before 1st December 1965. (at p596)

7. By the time that the trade mark was registered the boat had been in production in Queensland for some time. The actual manufacture was done under contract for American Marine Distributors Pty Ltd by Haines Hunter Pty. Ltd. Mr Haines of the latter company was throughout aware of the arrangements made between the American corporation and American Marine Distributors Pty Ltd and of the sale and delivery of the Formula 233 boat loosely assembled. (at p596)

8. In March 1968 American Marine Distributors Pty Ltd wrote to the American corporation reporting progress with the Formula 233 boat. By this time the notepaper of the Australian company included in its heading the eagle and lightning insignia of the American corporation and underneath it the word "Thunderbird". Below the name of the company were printed the words "Australian Licencees and Distributors of Formula Thunderbird Powerboats and O'Day Sailboats". In the letter to which I refer various financial factors were mentioned and further development was proposed. The letter stated:

"To do this further development and get more funds into the business we propose a new company Thunderbird Marine Products Pty Ltd, bringing in Mr John Haines whom you have met and who will provide further capital. Naturally before investing his funds he would like to see a new licensing agreement drawn up to cover the next three to five years. As soon as these funds are made available we intend to remit our total royalties due to you namely 25 boats at $225 - $5,625."

A little later in the letter the following appears: "The costly stage of establishing the Formula Thunderbird on the Australian market as a high performance prestige craft is now successfully completed. Also our application to register the trade mark Thunderbird has at last been successful. The next stage of gaining volume sales should not now be difficult and we ask your help in sending us a new licensing agreement with the above suggested royalties as soon as possible. This new agreement should be made out to our new company Thunderbird Marine Products, Brisbane, Australia." (at p597)

9. The American corporation replied enclosing a form of agreement and stating that they were "more than happy to license the new company Thunderbird Marine Products Pty Ltd". Two copies of a proposed agreement were enclosed. Then in June Mr Haines took over the correspondence. He returned a new form of agreement which excluded a reference which had been made in the form sent by the American corporation to the payment of back royalties but he assured the American corporation that he would not be a party to investing moneys in the new company until such time as the back royalties had been paid. (at p597)

10. The American corporation was not prepared to exchange agreements until it received the past royalties. It informed Mr Haines that this is no way implied that it was holding the new company responsible for the moneys but merely indicated that they were slightly reluctant to license a new company in Australia when there were still outstanding moneys from an existing licensee. No conclusion was reached in this exchange of correspondence but Thunderbird Marine Products Pty Ltd continued to use the word Thunderbird and the name Formula 233 in relation to the boats which it had commenced to manufacture and sell. (at p597)

11. In December 1970 the American corporation took the matter up with Mr Craigie. It stated that it had not been able to locate any funds transmitted to it under the licence agreement and it asked for an accounting. Mr Craigie replied for American Marine Distributors Pty Ltd, stating that all royalties due had been paid on boats produced until Mr Haines took over the production of the Formula 233 and that in terms of the agreement with him he had remitted the total royalties. Then on 26th January 1971 Mr Haines as managing director of Thunderbird Marine Products Pty Ltd wrote to the American corporation. He wrote on notepaper bearing the letterhead of Thunderbird Marine Products Pty Ltd. This included the insignia of the eagle and crossed lightning flashes similar to that which had been at all times used by the American corporation and under the name of the company stated "Manufacturers of Formula Thunderbird Power Boats". Mr Haines in this letter stated that Mr Craigie had passed on a copy of the American corporation's letter and of his reply. He referred to earlier correspondence and to the fact that no final agreement had been signed between the American corporation and the new company Thunderbird Marine Products Pty Ltd. He referred to the fact that the American corporation had not been willing to sign the agreement until such time as the cheque for past royalties was in its hands. The letter proceeded:

"This created somewhat of a stalemate, as Mr Genth would not sign the agreement until the royalties were paid and I would not further invest money, until such times as I had a legal and binding agreement with Thunderbird. Since this time I have, on behalf of Thunderbird Marine Products U.S.A., received royalty monies (sic) from Cam Craigie for boats produced up until the change-over took place. To expedite the payment of these monies I suggest the agreement again be looked at and finalised so as to straighten up this whole business. Further to this, as much time has passed since this stalemate was reached, more royalty payments have accrued and we have on your behalf applied to our Government regarding the lodgment of an Income Tax Return."

No conclusion was reached, no agreement was signed but production and sale in Australia continued, though there were some modifications to the structure of the product. (at p598)

12. On 8th February 1972, Brisbane solicitors for Fuqua Industries Inc., a United States company which had purchased Thunderbird Products Corporation wrote to Mr Haines setting out a history of the matter, requesting that the funds held for royalties prior to the formation of the new company in Australia in 1968 be made available and expressing concern about arrangements for marketing in Australia. (at p598)

13. The trade mark Thunderbird had been assigned to Thunderbird Marine Products Pty Ltd from American Marine Distributors Pty Ltd on 21st October 1968 but although Mr Haines regarded the grant and assignment of the registration as important factors in the purchase by the new company of the business of American Marine Distributors Pty Ltd it is not suggested that in these proceedings the new company is in any position different from that of the original grantee of registration. Renewal of the trade mark was due on 1st December 1972. (at p598)

14. The solicitors for Fuqua Industries Inc., the purchaser of Thunderbird Products Corporation, in the letter of 8th February 1972, requested an assignment of the trade mark and stated that in the event of Thunderbird Marine Products Pty. Ltd. being unwilling to make the assignment they might be obliged to institute proceedings challenging the trade mark registration. No reply was received to this letter. A further letter was sent by registered post on 10th April 1972 and legal proceedings were threatened unless there was a reply by the end of the month. Thereafter correspondence took place between the solicitors for Fuqua Industries Inc. and the solicitors for Thunderbird Marine Products Pty. Ltd. It is not necessary to refer to this correspondence in detail but it concluded in September with a confirmation by the solicitors for Thunderbird Marine Products Pty. Ltd. that the solicitors Fuqua Industries Inc. would be seeking instructions as to whether there was a basis on which the matter might be settled. However, December was approaching and before the period of seven years ran out, namely, on 29th November 1972, the American corporation filed a notice of motion for an order for rectification of the register by the expunging of the entry of the trade mark upon the ground that it was wrongly made in the register: s. 22(1)(b). The notice of motion was not served on or before 1st December 1972. The original return date stated in the notice of motion was 13th March 1973 but subsequently pursuant to a consent order made by Mason J. on 13th August 1974 the motion was adjourned to the first day of the sittings set down to commence in Sydney on 22nd October 1974 and it was ordered by consent that the time for service of the notice of motion be extended to 3rd September 1974 without prejudice to the questions whether it had already been sufficiently served and whether if it had not been any non-compliance with the Rules of Court would be excused. No application has been made to be excused from compliance with any of the Rules. (at p599)

15. Upon these facts the applicant claims that it is entitled to relief under s. 22(1)(b) upon the ground that the original registration of the trade mark was invalid. In defence the respondent Thunderbird Marine Products Pty. Ltd. denies any invalidity of the original registration and also claims the protection of s. 61(1). In rejoinder the applicant claims that s. 61 is inapplicable because the legal proceedings there referred to are only legal proceedings commenced after the expiration of seven years from the date of the original registration and that the present proceedings were commenced within the seven years, namely, on 29th November 1972: In re Keystone Knitting Mills' Trade Mark (1929) 1 Ch 92 . The applicant also claims that the exception stated in s. 61 is applicable, namely, that it is shown that the original registration was obtained by fraud. This is denied by the respondent company which also claims that the filing of the notice of motion of 29th November 1972 was not sufficient to commence proceedings within the principle enunciated in In re Keystone Knitting Mills' Trade Mark. (at p600)

16. The first question which arises is as follows: Since American Marine Distributors Pty. Ltd. did not use the trade mark in Australia prior to 1st December 1965, the date of the application, was it the proprietor of the mark at that date so as to entitle it to make application to the Registrar under s. 40 for the registration of that mark? It was only the claim that it was the "author" of the trade mark in Australia which could sustain the right to registration: Blackadder v. Good Roads Machinery Co. Incorporated (1926) 38 CLR 332 ; Shell Co. of Australia Ltd. v. Rohm and Haas Co. (1949) 78 CLR 601, at pp 625, 627-629 esp. per Dixon J. It was not the "author" of the trade mark if that trade mark had been used by a person in Australia before the date of the application "in relation to goods for the purpose of indicating, or so a to indicate, a connexion in the course of trade between the goods" and that person. See the definition of "trade mark" in s. 6. Such a use has been described as a use on the Australian market. It has been held that any use at all on the Australian market will suffice to deny to the applicant the right to claim authorship and consequent registration: Seven Up Co. v. O. T. Ltd. per Williams J. (1947) 75 CLR 203, at p 211 in a passage adopted by Latham C. J. on appeal (1947) 75 CLR, at p 216 . It has been submitted on behalf of the present applicant for expunction of the trade mark "Thunderbird" that the American company used the mark in Australia between April and October 1965 in its dealing with American Marine Distributors Pty. Ltd. which led to the sale and delivery to the latter company of the Thunderbird Formula 233 boat in October 1965. The use relied on in relation to the goods, namely, the boat, is the correspondence between the dates mentioned, the brochures, the invoice, the shipping documents and the boat itself. I have already expressed my conclusion that more probably than not the brochures had reached American Marine Distributors Pty. Ltd. before 1st December 1965 but I do not find it necessary to base my decision on the conclusion. Also, it is not clear that the name "Thunderbird" appeared on the boat itself. However, it is abundantly clear that in the correspondence, the invoice and the shipping documents, the mark "Thunderbird" was used in relation to the goods. Although the correspondence was with Mr Craigie personally it is clear that he was acting on behalf of the company of which he was director and shareholder. The boat was sold and delivered as a Thunderbird Formula 233 boat. This is hardly disputed but on behalf of the respondent company it is submitted that there was thereby no use on the Australian market in any relevant sense. It is submitted that these words mean a use on an Australian market consisting of a person or persons who proposes or propose to use or to deal with the goods for the purpose for which the goods are designed, that the relevant market is the market of persons who will buy boats as retailers thereof or actual users. On the facts of this case, it is said, the boat was purchased by an importer who did not propose to use it in this way or to sell it for that purpose but who proposed to use it for the making of moulds whereby reproductions of the Formula 233 boat could be locally manufactured. I do not think that the factual basis for this submission is correct. In the letter of 17th January 1966 (Exhibit M-13) the American company was informed by American Marine Distributors Pty. Ltd. that it had finished off the prototype hull and had fitted it with engines and that it performed very well. But, in any case, I do not think that the submission on the nature of the Australian market which must exist is a correct one. The words "Australian market" appear in the cases, e.g. Seven Up Co. v. O.T. Ltd. (1947) 75 CLR, at pp 215, 216 ; Kendall Co. v. Mulsyn Paint and Chemicals (1963) 109 CLR 300, at pp 304-305 , but the words do no more than describe a use in Australia for the purpose of indicating a connexion in the course of trade between the goods and the person who uses the mark. There is no need for a general market reputation to exist: Hall v. Barrows (1863) 8 LT (NS) 227, at p 229 , per Romilly M.R. in a passage approved by Williams J. in Re Registered Trade Mark "Yanx" (1951) 82 CLR 199, at p 205 . The clearest case of use for such a purpose in the course of trade is a use on an article sold by the user in Australia. The nature of the sale or the purpose of the purchaser in making the purchase cannot gainsay the use of the mark in relation to the goods sold for the obvious purpose of indicating the necessary connexion. (at p601)

17. I cannot accept further proposition that if there is a single importer the knowledge acquired by him that the article or articles sold bore a distinctive mark is insufficient to give distinctiveness to that mark on the Australian market. I do not read the cases relied on by the respondent as so deciding. Impex Electrical Ltd. v. Weinbaum (1927) 44 RPC 405 was a case where there was no use of the name in England before registration of the trade mark. Foreign markets were held to be irrelevant and that is now well established. Re "Diehl" Trade Mark (1970) RPC 435 is also a different case. I do not have to determine whether or not it was correctly decided though I find it very difficult to reconcile with In re Apollinaris Company's Trade Marks (1891) 2 Ch 186 . It is important to bear in mind that in Re "Diehl" Trade Mark it was assumed that the original registration was valid: see N. S. Toy Co. Ltd. v. Stevenson Ltd. (1973) 1 NZLR 562, at p 570 . Re "Diehl" Trade Mark (1970) RPC 435 was a case which turned on the conclusion that the only use which had been made of the trade mark in England was a use by the importer into England, and in some way that was used as a distinguishing factor. But I see Re Registered Trade Mark "Certina" (1970) 44 ALJR 191 . (at p602)

18. In the present case the use relied on is a use by the American corporation when it dealt with the local company. It happened to be a single sale so that the local company was a single importer but that is by the way. It is a use in Australia, and registration by another of the trade mark prevents the further use of the mark by the person who had been the first to use it. That is not permissible because it bars the true proprietor of the mark in Australia, the person who had first used the mark to distinguish his goods in the course of trade in this country. I am of the opinion that the claim of American Marine Distributors Pty. Ltd. that it was the proprietor of the mark on 1st December 1965 was not well founded and that therefore the initial entry of registration should not have been made. (at p602)

19. But then the question arises whether s. 61 nevertheless makes the original registration valid. It will do so unless the present proceedings were commenced within the period of seven years provided that the original registration was not obtained by fraud. It has been submitted that the present proceedings did not in truth commence until the application was actually made in Court by a motion moving for the order sought. It is conceded that if the delay in moving the motion was caused by the state of the Court's business or by some act or omission for which the Court or its officers was responsible then time would not run but that is not this case. The notice of motion was filed only a day or so before the period of seven years ran out. The question turns on the true meaning and effect of the High Court Rules, O. 66B, rr. 4 and 5. Rule 4(1) provides that application to the Court under the Trade Marks Act shall be made by motion on notice, but r. 5(1) provides that notice of application to the Court shall be given "forthwith after the notice of motion by which the . . . application is brought has been filed". This seems to me to be a clear statement that the application is brought by notice of motion even though at the same time it is correct to say that the application is made to the Court by motion. It regards the notice of motion as an originating process, even though the application is made by motion. This in my opinion accords with the modern concept of a notice of motion. I think that it is correct to state that in past times a motion could only be moved in the courts in a proceeding which had been otherwise commenced or which was about to be commenced. In the latter case an undertaking was required that the proceedings by appropriate originating process would be commenced. But in more recent times the originating motion has become a recognized form of procedure and as a result the notice of such a motion became an originating process. This appears from our O. 51, r. 1. The application is by motion (sub-r. (1)) but a copy of a notice of motion to be served must be filed before it is so served (sub-r. (2)). So far the true nature of a modern notice of motion may not fully appear but it does so appear in sub-r. (3) which provides that;

"A copy of a notice of motion or petition which is not to be served upon, or of which notice is not to be given to, a person or party shall be filed before the motion or petition is heard or,if that is not practicable, then as soon as conveniently may be thereafter."

The notice is not and never has been notice to the Court. The Court cannot be given notice; it can only be moved unless of course it has summoned a party or person before it. Therefore the notice referred to in the phrase "notice of motion" originally meant notice to a party or proposed party to proceedings. How then can there be such a notice of motion in its original sense if it is not to be served? The answer lies in the concept of a notice of motion as an originating process. In my opinion legal proceedings are commenced when notice of such an originating motion is filed pursuant to the Rules. Section 61 is therefore not a bar to a challenge to the validity of the initial registration of the trade mark. (at p603)

20. In view of the conclusions which I have expressed it becomes unnecessary for me to express any conclusions on two other interrelated aspects of the applicant's submissions. The applicant submitted that the initial registration was invalid not only in the manner with which I have already dealt but also because the registration of the mark by American Marine Distributors Pty. Ltd. for its own benefit was so inequitable that the registration could not be allowed to stand. The facts relied on to support this submission sufficiently appear from my outline of the facts. This ground for expunction would not subsist if seven years had passed since the original registration but if the conduct of American Marine Distributors Pty Ltd. amounted to fraud within the meaning of s. 61 then the ground would exist a fortiori. In this way the questions of inequitable conduct and of fraud are interrelated but, as I have said, I do not find it necessary to determine either of them. I would only add that a conclusion upon either of them would not depend upon the credibility of the two witnesses cross-examined upon their respective affidavits but would depend on the inferences to be drawn from the facts which were really not in dispute and on the application of legal principle in the light of the inferences so drawn. (at p603)

21. I order that the Register of Trade Marks be rectified by expunging the entry therein of registered trade mark No. A198954 being an entry wrongly made in the register. I order that the respondent Thunderbird Marine Products Pty. Ltd. pay the applicant's costs of this motion, other than the additional costs incurred by reason of the non-service of the notice of motion before the original return day. Usual order as to exhibits. (at p604)