TNSG Biotech Co Ltd v Clarke, Murray Colin

[2023] ATMO 209

TRADE MARKS ACT 1995

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

ReOpposition by TNSG Biotech Co Ltd to registration of the trade mark the subject of application 2170040 (5, 30, 35) – 4 Chinese Characters (figurative) – in the name of Clarke, Murray Colin

Delegate:                 Robert Wilson

Representation:       Opponent: Gilbert Tsang of Counsel, instructed by Davies Collison Cave Pty Ltd

Applicant: Wen Wu of Counsel, instructed by Baker McKenzie

Decision:                   2023 ATMO 209

Trade Marks Act 1995 (Cth) - Section 52 opposition: s 62A considered – application made in bad faith – registration refused

Background

1. This decision concerns an opposition to registration of the trade mark which is the subject of the application for registration detailed below. The application is in the name of Clarke, Murray Colin (‘Applicant’). The opposition was brought by TNSG Biotech Co Ltd (‘Opponent’) pursuant to s 52 of the Trade Marks Act 1995 (Cth).

Trade Mark:

(‘Trade Mark’)

Application Number:

2170040

Filing Date:

9 April 2021

Specification:

Class 5: (including) Dietary supplements for human beings; pharmaceuticals, medical and veterinary preparations; dietary supplements for animals

Class 30: (including) Coffee, tea, cocoa; rice, pasta and noodles, salt, seasonings, spices

Class 35: (including) Advertising, business management, wholesaling, retailing and sales promotion in relation to dietary and nutritional supplements

Full specification appears in the annexure to this decision.

Endorsement:

The applicant has advised the CHINESE characters appearing in the trade mark may be transliterated as TONG NIAN SHI GUANG and translated into English literally as "Child; year; time; light" and together meaning "Childhood time"

2. Unless otherwise indicated, any references to sections or regulations, below, are references to sections or regulations of the Trade Marks Act 1995 (Cth) or the Trade Marks Regulations 1995 (Cth), respectively.

3. Following advertisement of the application’s acceptance in the Australian Official Journal of Trade Marks, the Opponent filed a Notice of Intention to Oppose registration of the Trade Mark, followed by a Statement of Grounds and Particulars (‘SGP’). The SGP nominated grounds of opposition under ss 42(b), 59, 60 and 62A. The Applicant subsequently filed a Notice of Intention to Defend. The Opponent later requested that the Registrar amend the SGP to add further grounds of opposition; this request was refused. The decision to refuse to amend the SGP does not form part of this decision.

Evidence

4. The Opponent filed Evidence in Support of its opposition, being:

• Declaration made on 8 June 2022 by Liqin Song, the Outside Business Manager of the Opponent, with Annexures LS-1 to LS-13 (‘Song 1’).

5. The Applicant filed Evidence in Answer, being:

• Declaration made on 16 September 2022 by Brian Conan Harty, the Executive Vice President and General Counsel of Biozeal LLC, with Annexures BCH-1 to BCH-71 (‘Harty declaration’).

6. The Opponent filed Evidence in Reply, being:

• Declaration made on 23 November 2022 by Liqin Song with Annexures A1 to E3 (‘Song 2’). It is noted that in this declaration Liqin Song indicates that they are ‘Legal Counsel of the Opponent’, cf Song 1;

• Declaration made on 23 November 2022 by Michael Wolnizer, a Principal of Davies Collison Cave Pty Ltd, the representative of the Opponent in these proceedings;

• Declaration made on 23 November 2022 by Seow Pea Sze, a Trade Marks Principal in the employ of Davies Collison Cave Asia Pte Ltd; and

• Declaration made on 22 November 2022 by Zhijuan Guo, the founder of the Opponent (‘Guo declaration’). Zhijuan Guo declared that they were also the legal representative and shareholder of the Opponent until 2014.

7. Once the time allowed for filing evidence had ended both parties requested to be heard. I am a delegate of the Registrar of Trade Marks, and in this capacity, I heard the matter on 19 September 2023. Gilbert Tsang of Counsel, instructed by Davies Collison Cave Pty Ltd, appeared on behalf of the Opponent. Wen Wu of Counsel, instructed by Baker McKenzie, appeared on behalf of the Applicant. Counsels’ oral submissions were supplemented by written submissions filed prior to the hearing.

The Opponent

8. According to the Song declaration:

The Opponent is a well-established Chinese company that was founded in March 2010 to capitalise on the huge market prospects in the field of infant and child health products and the nutritional health supplements and wellness industry in general. The Opponent is affiliated with and closely operates together with its UK company, TNSG Health Co Ltd.

The Opponent is highly regarded as a reputable health and nutritional supplements distributor and online retailer and is well-known to consumers in Mainland China, Hong Kong SAR, Macau SAR as well as to Chinese-literate consumers worldwide (including those in Australia). …

The Opponent identifies suitable infant and child health products from reputable companies and obtains exclusive rights to distribute, promote and sell these products to their customers (particularly the Chinese-speaking community) around the world.

In March 2010, the Opponent first created and adopted [the Trade Mark] to serve as its company name and umbrella brand for its products in the nutritional health supplements and wellness sector.

[The Trade Mark] is transliterated as ‘Tong Nian Shi Guang’ in Chinese and is translated as ‘Childhood Times’ in English.

On 20 April 2010, the Opponent filed two applications (one in class 5 and the other in class 30) for [the Trade Mark] at the Chinese Trade Mark Office. Both trade mark applications were granted registration in April 2011 and have since been renewed to 27 April 2031. Details of both Chinese registrations are as follows:

(i)Chinese Trade Mark Registration No. 8223462

Class 5: Vitamin preparations; Cod liver oil; Medicated candy; Dietetic foods adapted for medical purposes; Medical food nutrition preparation; Food for babies; Dietetic beverages adapted for medical purposes; Candy for medical purposes; Dietetic substances adapted for medical use; Baby milk powder

(ii)Chinese Trade Mark Registration No. 8223466

Class 30: Chocolate-based beverages; natural sweeteners; fondants [confectionery]; golden syrup; edible propolis (propolis); edible propolis (bee glue); non-medical nutrient solution; non-medical nutrient cream; non-medical nutrient powder; non-medical nutrient capsule

The Opponent (along with its affiliate TNSG Health Co Ltd) owns at least 58 trade mark registrations/applications covering goods and services in most classes of the Nice Classification System.

The Applicant

9. According to the Harty declaration:

Biozeal LLC has at all material times been a limited liability company duly organised and existing from 1997 to 2014, under the laws of California and, since 2014, under the laws of Delaware, both in the United States of America.

The Applicant … is an individual residing in California, USA. The Applicant is a renowned paediatrician in the United States. …

As early as 1996, the Applicant started formulating nutritional and dietary supplements for children … The first complete line of premium nutritional supplements made specifically for infants and children was subsequently developed under the brands ‘ChildLife’ and ‘ChildLife Essentials’.

In 1997, the Applicant founded Biozeal LLC with the object of bringing the benefits of the supplements formulated by him to children in the United States and around the world. Biozeal LLC, trading as ‘CHILDLIFE ESSENTIALS’ (hereinafter referred to as ChildLife), is and has at all material times been in the business of overseeing the production and distribution of the nutritional and dietary supplement products specifically formulated by the Applicant. The Applicant is both the founder and president of ChildLife. …

After two decades of specialising in formulating and producing nutritional and dietary supplements for infants and children, ChildLife and the Applicant have become one of the global leaders in children health products (sic). Today, the ChildLife Products are widely recognised throughout the world, in particular in Hong Kong … In Hong Kong, such recognition had existed since the early 2000s. …

At all material times, the ChildLife Products are and have been marketed under and by reference to one or more of the following trade marks:

(a)CHILDLIFE;

(b)CHILDLIFE ESSENTIALS;

(c)[Heart Device]; and

(d)marks consisting of or incorporating CHILDLIFE, CHILDLIFE ESSENTIALS and/or the Heart Device.

Summary of the Players

1. There are a number of entities involved in this matter. It is useful to summarise them here.

• The Applicant (Murray Colin Clarke)

  oFounder of Biozeal LLC t/a Childlife Essentials (‘ChildLife’)

• Asambly Chemicals Co Ltd (‘Asambly’)

  oA distributor of ChildLife’s goods

  oAppointed the Opponent as its sub-distributor in China for goods supplied by ChildLife

• The Opponent (TNSG Biotech Co Ltd)

1. The Applicant is a natural person. Childlife is a corporation. Much of the evidence and submissions refers to actions carried out by Childlife. At the hearing, I sought the parties’ views as to whether the natural person/corporation distinction was relevant for the present purposes. Without hesitation, the parties agreed that it was not, and that the actions and state of mind of ChildLife could be taken to be that of the Applicant; I proceed on this basis. In the interests of simplicity, in the discussion which follows ChildLife will be referred to as the Applicant unless otherwise indicated.

Grounds of Opposition, Onus and Standard of Proof

1. As indicated above, in the SGP the Opponent nominated grounds of opposition under ss 42(b), 59, 60 and 62A. At the hearing Counsel for the Opponent pressed only the ground pursuant to s 62A and indicated that the other grounds were abandoned.

2. The onus of proof in an opposition rests upon the Opponent.[1] The relevant standard of proof is the ordinary civil standard based on the balance of probabilities.[2] The date at which the rights of the parties are to be determined is 9 April 2021, being the filing date of the application (‘Relevant Date’).[3]

Discussion

[1] Food Channel Network Pty Ltd v Television Food Network GP [2010] FCAFC 58, [32] (Keane CJ, Stone and Jagot JJ).

[2] Telstra Corporation Limited v Phone Directories Company Ltd [2015] FCAFC 156, [132]-[133] (Besanko, Jagot and Edelman JJ).

[3] Southern Cross Refrigerating Co v Toowoomba Foundry Pty Ltd [1954] HCA 82, [2] (Kitto J).

Timeline of events

1. The Opponent provided a timeline of key events, which is reproduced below. The Opponent based the timeline on statements contained in the Guo declaration, Song 1, Song 2, Harty declaration.

Date	Event
March 2010	The Opponent’s founder developed the Trade Mark to serve as the name and trade mark for its business. On 26 March 2010 the Opponent was incorporated in China

2011–2012	The Opponent entered into discussions and partnerships with various manufacturers to distribute its goods in China under a co-branding arrangement. These co-branded goods featured both the manufacturers’ trade marks and the Trade Mark.
May 2011	Asambly appointed the Opponent as its sub-distributor for goods supplied by the Applicant in China. The Opponent did not have a direct relationship with the Applicant at this time.
June 2011	The Applicant adopted the Chinese character mark 赛儿乐 as the ‘Chinese trademark’ for its goods distributed in China (‘SAI ER LE trade mark’). (There is some dispute on this point, and this is discussed below)
1 February 2013	The Opponent and the Applicant signed a distributorship agreement which took effect on 1 February 2013. That agreement had a five year term.
1 January 2018	The Opponent and the Applicant signed a second distributorship agreement which took effect on 1 January 2018. This agreement also had a five year term.
2020	Having received multiple complaints regarding the quality of the goods supplied by the Applicant, the Opponent sought to return a batch of these goods to the Applicant. However, tests conducted on the proposed replacements revealed further quality issues.
23 March 2021	The Applicant unilaterally terminated the distributorship agreement. The Applicant’s assertion is that this was based on breaches of the agreement by the Opponent.
9 April 2021	The Applicant filed the application to register the Trade Mark in Australia.

Origin of the Trade Mark

1. As indicated in the background to this matter, above, it is declared in the Song declaration that, ‘In March 2010, the Opponent first created and adopted [the Trade Mark] to serve as its company name and umbrella brand for its products’. The Trade Mark may be transliterated as ‘Tong Nian Shi Guang’; this is not controversial. The first letters of those four words are TNSG. It is noted that the Opponent is TNSG Biotech Co Ltd. The literal translation of the Trade Mark is ‘Childhood time’; this too, is not controversial. The Opponent submitted, ‘The Applicant has not disputed the Opponent’s creation of [the Trade Mark]. Neither has the Applicant claimed any involvement in the creation of [the Trade Mark]’; I am satisfied that this is so.

Distributorship agreements

1. Copies of the distributorship agreements referred to in the timeline, above, are provided in evidence. The agreements are essentially the same. In the 1 February 2013 agreement, the Opponent is defined in the agreement as ‘DISTRIBUTOR’. The agreement contains a definition of ‘Intellectual Property’, being:

   ‘Intellectual Property’ shall include, but is not limited to, all company trademarks, trade names, words, designs, copyrights, marking, insignias, slogans, and legends and the various applications therefor and registrations thereof on and in connection with the advertising promotion, sale and distribution of the Products in English and any translations thereof or other versions of same in languages other than English.

No specific trade marks are referred to in the agreement.

1. Clause V(c) of the agreement concerned the ‘Permitted Use of Intellectual Property’ and stated, ‘DISTRIBUTOR may display and/or use the Intellectual Property solely in connection with the advertising, promotion, sale and distribution of the Products’.

Trade marks forming part of the distributorship agreements

1. At issue in this matter is whether the Trade Mark falls within the definition of ‘Intellectual Property’ contained in the distributorship agreements. The distribution agreements refer to all trade marks ‘used on and in connection with the advertising, promotion, sale and distribution of the Products in English’ and ‘any translations thereof or other versions of same in languages other than English’.

2. The Applicant submitted that the Trade Mark is a Chinese version of its trade mark CHILDLIFE, thereby bringing it within the distribution agreement. The Applicant summarised its position as follows:

   The Opponent is the Applicant’s former Chinese distributor of CHILDLIFE supplements. Under distribution agreements, the Opponent agreed that Chinese version of the CHILDLIFE mark was the Applicant’s intellectual property. It also agreed to use that intellectual property only in connection with its distribution of ChildLife products. For 8 years, the Opponent used and educated the Chinese public to recognise [the Trade Mark] as the Chinese version of the CHILDLIFE mark.

3. The Opponent’s contrary submissions included:

   The Applicant has not provided any clear and cogent evidence demonstrating that the Opponent created [the Trade Mark] to serve as a ‘Chinese version’ of CHILDLIFE. There are no copies of correspondence between the Applicant and the Opponent regarding the creation of [the Trade Mark], or any records of the Opponent ever agreeing that the Applicant would have any ownership, title or interest in [the Trade Mark].

   In contrast to the above, the evidence plainly shows that … Asambly, had in 2011 requested that [the Applicant] accept its proposed trade mark, 赛儿乐 (‘SAI ER LE Mark’), as the ‘Chinese trademark’ for goods supplied by [the Applicant] for distribution in China. Asambly had also explained that the SAI ER LE Mark would be a suitable ‘Chinese version’ due to its phonetic similarity to the English word ‘CHILDLIFE’. Subsequently, [the Applicant] and Asambly entered into a Trademark Usage Agreement dated 22 June 2011. The SAI ER LE Mark was then used by [the Applicant] and by third parties to identify goods supplied by [the Applicant] for distribution in Chinese-speaking markets …

A copy of the Trademark Usage Agreement, referred to above, is provided in the Harty declaration.

1. Having considered the evidence before me, I am inclined to the Opponent’s view on this question and do not accept the Applicant’s assertion that the Trade Mark was intended to be, or seen as, a Chinese version of CHILDLIFE.

Section 62A – Application made in bad faith

1. In the SGP, the particulars for the ground under s 62A included the following:

   At the time the Applicant filed for registration of the Trade Mark in Australia, the Applicant knew that it was taking the Trade Mark belonging to its Chinese distributor as an attempt to take advantage of the Opponent’s reputation and goodwill generated amongst the Chinese-speaking consumers living in Australia.

   The Applicant and the Opponent operate in the same industry which is specialised and competitive. The Opponent and its Trade Mark had already acquired a substantial reputation amongst the Chinese-speaking community in Australia before the priority date … The Applicant knew or ought to have known that it was not entitled to the Trade Mark.

   The Applicant’s conduct has been in bad faith as it falls short of the standards of acceptable commercial behaviour observed by reasonable and experienced persons in both the Applicant’s and Opponent’s industry.

2. Section 62A of the Act is reproduced below:

   62A Application made in bad faith

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

3. The Explanatory Memorandum to the Trade Marks Amendment Bill 2006 provided some non-exhaustive examples of applications made in bad faith:

   • persons who monitor new property developments, register the names of new developments as trade marks for a number of services and then threaten the property developers with trade mark infringement proceedings unless the developers licence or buy the trade marks;
   • persons who have a history of applying for trade marks that are deliberate misspellings of other registered trade marks;
   • persons who identify trade marks used overseas but with no Australian use as yet who then apply to register the trade marks in Australia for the express purpose of selling them to the overseas owners.

4. The case of Fry Consulting Pty Ltd v Sports Warehouse Inc (No 2) (‘Fry Consulting’) is a current leading Australian authority on this section of the Act. In that case, Dodds-Streeton J made the following comments:

   Clearly the court, when considering bad faith, cannot apply a purely subjective test, called by Lord Hutton ‘the Robin Hood test’. The dishonest person or one with low standards cannot be permitted to obtain trade mark registrations in circumstances where a person abiding by a reasonable standard would not. The registration of a trade mark is designed to enable bona fide proprietors to protect their proprietary rights without having to prove unfair trading. Registration is not provided to help those with low moral standards. …

   The words ‘bad faith’ suggest a mental state. Clearly when considering the question of whether an application to register is made in bad faith all the circumstances will be relevant. However the court must decide whether the knowledge of the applicant was such that his decision to apply for registration would be regarded as in bad faith by persons adopting proper standards.[4]

   [4] Fry Consulting Pty Ltd v Sports Warehouse Inc (No 2) [2012] FCA 81, [24]-[26] (Dodds-Streeton J) (citations omitted).

1. Her Honour continued later in the same decision:

   The formulation in United Kingdom authority of bad faith as falling short of the standards of acceptable commercial behaviour observed by reasonable and experienced persons in a particular area is, in my view, an apt touchstone. An overly literal application may, however, tend to negate the relevance attributed to the applicant’s mental state in the combined test preferred in Harrison.

   Further, in my view, mere negligence, incompetence or a lack of prudence to reasonable and experienced standards would not, in themselves, suffice, as the concept of bad faith imports conduct which, irrespective of the form it takes, is of an unscrupulous, underhand or unconscientious character.[5]

   [5] Ibid [165]-[166].

2. As indicated above, it is accepted that the actions and state of mind of the corporation, ChildLife, can be taken as the actions of Murray Colin Clarke (the applicant and natural person). To this point I have referred to ChildLife as the Applicant. However, it is convenient for the remainder of this decision, that a distinction be drawn between the two entities; in what follows, a reference to the Applicant means solely Murray Colin Clarke.

3. For this opposition to succeed, I must be satisfied, on the balance of probabilities, that the Applicant knew that the Opponent owned the Trade Mark at the Relevant Date; if I am not so satisfied the opposition will fail. This decision, therefore, turns on the state of mind of the Applicant. It is noted that there is no declaration in evidence made by the Applicant. The sole evidence filed on behalf of the Applicant is the Harty declaration. Therefore, the state of mind of the Applicant can only be deduced from the evidence before me.

4. The Opponent submitted and provided evidence that the Opponent’s sole purpose of creating the Trade Mark was to use it as the trade mark and identifier for its own business, and that the ‘evidence clearly shows’ that Trade Mark was not used exclusively for goods supplied by ChildLife. With respect to the state of mind of the Applicant vis-à-vis ownership, the Opponent submitted:

   The Applicant was not only aware that the Opponent used [the Trade Mark] as a trade mark to identify its own business, but had himself used [the Trade Mark] to identify and refer to the Opponent. In video footage from 2016 and 2019, the Applicant is shown stating that:

   a.‘we’d like to thank the Chinese partner [Trade Mark]’;

   b.‘I’m glad that I met [Trade Mark] in China, which is my important partner here’;

   c.With the help of [Trade Mark] company …’

   The above evidence contradicts the Applicant’s claim that [the Trade Mark] had been used as the ‘Chinese version’ of CHILDLIFE. If that were in fact the understanding between the parties, or the Applicant’s genuine belief, there would be no reason for the Applicant to be addressing or referring to the Opponent by [the Trade Mark].

   In addition, the Opponent had also sent [ChildLife] purchase orders which identified the Opponent using [the Trade Mark] since 2012 or earlier. The position of [the Trade Mark] directly above the full company name unambiguously conveys that it was intended to serve as an identifier of the Opponent.

5. The Applicant submitted, inter alia, that the use of the Trade Mark by the Opponent, referred to above, ‘appears to be (at best) de minimus, preparatory to actual trade, and (in any event) before the [distributorship agreements]’. In respect of the video footage referred to the Applicant submitted:

   [N]one of the videos showing [the Applicant] referring to the Opponent as 童年时光 constitutes an admission that the Opponent has rights to the 童年时光 mark. The Opponent’s Chinese company name is 南京童年时光生物技术有限公司 … It is impossible to refer to the Opponent in Chinese without saying 童年时光. In any event, [the Applicant] was referring to the Opponent as a company … not to the 童年时光 mark.

6. I find the Opponent’s evidence and submissions persuasive and am satisfied that on the balance of probabilities the Applicant was aware that the Opponent was the owner of the Trade Mark at the time he filed the application to register the trade mark in Australia, and that this was shortly after the termination of the distribution agreement between the parties. I am of the view also, that in the light of this knowledge, the decision to apply for registration of the Trade Mark in Australia would be regarded as in bad faith by persons adopting proper standards. The Opponent has therefore established this ground of opposition.

Decision

1. Section 55 relevantly provides:

   55Decision

   (1)Unless subsection (3) applies to the proceedings, the Registrar must, at the end, decide:

   (a)to refuse to register the trade mark; or

   (b)to register the trade mark (with or without conditions or limitations) in respect of the goods and/or services then specified in the application;

   having regard to the extent (if any) to which any ground on which the application was opposed has been established.

   Note:For limitations see section 6.

2. The Opponent has established the ground of opposition it raised pursuant to s 62A. As a delegate of the Registrar, I accordingly refuse to register the Trade Mark.

Costs

1. The Opponent sought an award of costs in its favour. I see no reason to depart from the general rule that costs follow the event. As the Opponent has established a ground of opposition, I award costs against the Applicant under s 221 in line with the amounts in Schedule 8 of the Trade Mark Regulations 1995 (Cth).

Robert Wilson
Hearing Officer
Delegate of the Registrar of Trade Marks
14 December 2023

Annexure

The Applicant’s Goods and Services

Class 5: Dietary supplements for human beings; dietetic food and substances adapted for medical use; food for babies, infants and invalids; anti-oxidant nutritional supplements; cod liver oil; colostrum supplements; compounds derived from fruits, herbs or plant extracts for use as dietary supplements; dietary fiber; flaxseed dietary supplements; food supplements in the form of capsules, tablets, caplets, powder, liquids, syrups, chews, chewing gums, gummies, gels, oral sprays and dissolvable strips, all for medical purposes; health food supplements; herbal supplements; lecithin dietary supplements; liquid nutritional supplements; mineral food supplements; nutritional supplements; probiotic supplements; protein supplements; vitamin supplements; gummy vitamins; medicated candies; medicated chewing gum; nutritional supplements in the form of capsules, tablets, caplets, powder, liquids, syrups, chews, chewing gums, gummies, gels, oral sprays and dissolvable strips; pharmaceuticals, medical and veterinary preparations; sanitary preparations for medical purposes; dietary supplements for animals; plasters, materials for dressings; material for stopping teeth, dental wax; disinfectants; preparations for destroying vermin; fungicides, herbicides

Class 30: Coffee, tea, cocoa and artificial coffee; rice, pasta and noodles; tapioca and sago; flour and preparations made from cereals; bread, pastries and confectionery; chocolate; ice cream, sorbets and other edible ices; sugar, honey, treacle; yeast, baking-powder; salt, seasonings, spices, preserved herbs; vinegar, sauces and other condiments; ice (frozen water); candies; chewing gum

Class 35: Advertising; business management, organization and administration; office functions; presentation of goods on communication media, for retail purposes; online distributorship, wholesaling and retailing services; retail store services; distributorship, wholesaling, retailing and sales promotion in relation to dietary and nutritional supplements, dietetic food and substances adapted for medical use, food for babies, infants and invalids, food and beverages