Transwood Pty Ltd v Independent Cooperage Australia Pty Ltd

[2020] ATMO 56

TRADE MARKS ACT 1995

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

Re:Opposition by Transwood Pty Ltd to registration of trade mark application number 1830482 (class 20) - SCHMEIDER - in the name of Independent Cooperage Australia Pty Ltd.

Delegate:

Louise Tuohy

Representation:

Opponent: David William Schmeider, Director of Transwood Pty Ltd and Spruson & Ferguson.

Applicant: Justin Gillett, Director of Independent Cooperage Australia Pty Ltd

Decision:

2020 ATMO 56

Trade Marks Act 1995 (Cth) – opposition under s 52 – grounds of opposition pressed ss 62A, 60, 58 and 59 – s 62A ground established – registration refused.

Background

1. In these proceeding under s 52 the Trade Marks Act 1995 (‘the Act’), Independent Cooperage Australia Pty Ltd (‘the Applicant’) has made an application to register the following trade mark:

Application No:               1830482

Filing date:   8 March 2017

Specification:                  Class 20: Barrels, not of metal; Baskets for barrels; Lock barrels, not of metal; Non-metallic barrels; Non-metallic bungs for barrels; Non-metallic stands for barrels; Non-metallic valves (taps) for controlling the flow of liquid into barrels; Non-metallic valves (taps) for controlling the flow of liquid out of barrels; Rain barrels, not of metal; Wooden barrels; Non-metallic bungs for vats; Vats, not of metal; Cask hoops, not of metal; Cask stands, not of metal; Caskets made of amber; Caskets made of cane; Caskets made of wood; Casks of wood for decanting wine; Casks, not of metal; Non-metallic bungs for casks; Non-metallic casks; Non-metallic tuns (casks); Non-metallic wine casks; Racks (furniture) for casks; Taps for casks (not of metal); Tuns (casks) of wood

Trade Mark:   Schmeider (‘the Trade Mark’)

1. Acceptance of the application for possible registration was published in the Australian Journal of Trade Marks dated 3 August 2017. Subsequently Transwood Pty Ltd (‘the Opponent’) filed a Notice of Intention to Oppose Registration on 25 August 2017.

2. The Applicant then filed a Notice of Intention to Defend on 31 October 2017.

3. The Opponent filed a Statement of Grounds and Particulars (‘the SGP’) on 19 January 2018.

4. Thereafter the Opponent and Applicant respectively filled evidence in accordance with the provisions of the Trade Marks Regulations 1995 (‘the Regulations’).

5. In the letter issuing from IP Australia on 18 December 2018 the parties were notified that as neither party had requested a hearing, the matter would be given to a delegate of the Register for a decision based on the written record.

6. The opposition was referred to me as a delegate of the Register of Trade Marks on 13 February 2019.

Grounds of Opposition, Relevant Date and Onus

1. In the SGP the Opponent nominates the grounds of opposition under ss 42, 58, 59, 60 and 62A of the Trade Marks Act 1995 (‘the Act’).

2. The rights of the parties are to be determined as at the date of the application[1] which is generally, but not always, the filing date[2]. For the purposes of s 60 which speaks of the priority date, the relevant date is 8 March 2017 which, in this case, is the same as the filing date of the application. Sections 42, 58, 59 and 62A, however, do not refer to a filing date or a priority date. However, I will proceed on the basis that the filing date of 8 March 2017 is the ‘Relevant date’ at which to assess all the grounds in these proceedings[3].

   [1] Southern Cross Refrigerating Co v Toowoomba Foundry Pty Ltd [1954] HCA 82; (1954) 91 CLR 592, [595].

   [2] See Sections 6, 12 and 72 of the Act.

   [3] Apple Inc v Registrar of Trade Marks [2014] FCA 1304, [45].

3. The Opponent bears the onus of establishing at least one of the grounds of opposition[4]. The standard of proof is the ordinary civil standard of the balance of probabilities[5].

   [4] Food Channel Network Pty Ltd v Television Food Network GP [2010] FCAFC 58, [32].

   [5] Telstra Corporation Ltd v Phone Directories Co Pty Ltd [2015] FCAFC 156, [132].

4. In the discussion below, I have only found it necessary to address the section 62A ground in this decision. Nonetheless, should the decision be appealed, then it is open to the Opponent to plead any ground it considers relevant in proceedings before the Court.

Evidence

1. The parties filed evidence in accordance with the provisions of the Regulations being:

   Evidence in Support

   Declaration by David William Schmeider, with Exhibits DS-1 to DS-33, made on 6 February 2018 (‘Schmeider 1’).

   Evidence in Answer

   Declaration by Justin Gillett made on 12 May 2018 (‘Gillett’).

   Evidence in Reply

   Declaration by David William Schmeider, with Exhibits DS-34 to DS-50, made on 8 October 2018 (‘Schmeider 2’).

   Additional Material

   Submission by Spruson & Ferguson, made on 17 January 2019 (‘S&F’).

The Opponent’s Evidence of use

1. The Opponent, Transwood Pty Ltd, is a registered company (registered on 3 October 1985) owned wholly by David Schmeider and Pamela Schmeider in equal shares[6].

   [6] Schmeider 1 [11], [DS-2].

2. However, in Schmeider 1, David Schmeider claims that since November 1982 he and Pamela Schmeider have operated a cooperage business under the name SCHMEIDER’S COOPERAGE and to distinguish their goods and services from those of other traders David and Pamela coined the trade marks SCHMEIDER and SCHMEIDER’S COOPERAGE, in light of the business being a family business and their surname SCHMEIDER being distinctive[7].

   [7] Schmeider 1 [18].

3. The Declarant further explains that for the period 16 November 1982 until 1 December 1985 David and Pamela Schmieder were the registered owners of the business name SCHMEIDER’S COOPERAGE, then on 1 December 1985 the business name was transferred to the Opponent. This registration was cancelled on 6 February 1995[8].

   [8] Schmeider 1 [13], [DS-4].

4. For the period 16 February 1995 to 4 February 2007 David and Pamela Schmeider were the holders of the business name SCHMEIDER’S COOPERAGE & CRAFT CENTRE COMPLEX [9].

   [9] Schmeider 1 [14], [DS-5].

5. As of 22 March 2007, David and Pamela Schmeider are the registered owners of the business name SCHMEIDER’S COOPERAGE[10].

   [10] Schmeider 1 [12], [DS-3].

6. Noting that the Opponent deposes it lost the majority of its advertising, sales and financial records in 2013 during the floods caused by Ex-Tropical Cyclone Oswald[11] the following evidence of use has been submitted.

   [11] Schmeider 1 [45].

7. The Opponent’s annual turnover for the years 2009 to 2017, marked as confidential, is moderate, with sales covering cooperage services provided under the trade mark SCHMEIDER’S COOPERAGE which include the custom manufacture, installation, repair and maintenance of large barrels and vats and goods sold under the SCHMEIDER’S COOPERAGE trade mark including kegs, bottle holders, boxes, and furniture items[12].

   [12] Schmeider 2 [28], [DS-46].

8. The Opponent claims that since 1982 the trade marks SCHMEIDER and SCHMEIDER’S COOPERAGE have been used continuously and consistently with respect to all the goods and services[13]. The goods and services have been offered for sale both in Australia and internationally[14].

   [13] Schmeider 1 [20].

   [14] Schmeider 1 [21].

9. From 1982 up to the relevant date the trade marks SCHMEIDER and SCHMEIDER’S COOPERAGE have been promoted through brochures, signage, newspaper and magazine articles[15].

   [15] Schmeider 1 [46-48], [56], [DS16-18], [DS-25].

10. The Opponent was the recipient of the Queensland Tourism Awards for 1987, 1990 and 1991, the Central Queensland Southern Reef Region Tourism Award in 1993 and 1998/99, the QR Traveltrain Tourism Awards in 2000 and the Australian Small Business Award in 1986[16].

    [16] Schmeider 1 [53-54], [DS-23].

11. The Queensland Government has used the wording SCHMEIDER’S COOPERAGE on official tourist signage located in Bundaberg[17].  

    [17] Schmeider 1 [55], [DS-24].

12. The Opponent has also promoted its trade mark through third parties[18] and in particular through its long-standing relationship with the Bundaberg Rum Distillery[19].

    [18] Schmeider 1 [57], [DS-26].

    [19] Schmeider 1 [31-44], [57], [DS8-15], [DS-26].

13. Moreover, the Opponent trading as SCHMEIDER’S COOPERAGE claims it has a significant and longstanding reputation with businesses and individuals across Australia, with recommendations of support from Bundaberg Brewed Drinks, The Beenleigh Rum Distillery, Radoux Australasia, Heidi Stanton-Cook and Paul Neville[20].

History of the Opponent’s relationship with the Applicant

[20] Schmeider 1 [59], [DS-27].

1. The evidence provided by the Opponent was at best, very confusing. However, I have attempted to explain the relationship between the parties below.

2. The owner of the Trade Mark at the filing date was Acquire Investment Pty Ltd a company wholly owned by Matthew Neville Drane[21]. On 7 May 2018 Acquire Investment Pty Ltd assigned its rights in the Trade Mark to Independent Cooperage Australia Pty Ltd.

   [21] Schmeider 1 [60], [DS-28].

3. The following history will include the Opponent’s relationship with both entities.

4. In Schmeider 1, David Schmeider deposes that in 1988 due to the rapid expansion of the cooperage  business, he and Pamela Schmeider decided to build a Craft Centre to expand and to house local talent called the SCHMEIDER’S COOPERAGE & CRAFT CENTRE COMPLEX[22] (‘the Schmeider’s Cooperage Complex’). In early 2000s, David and Pamela Schmeider started leasing sections of the Schmeider’s Cooperage Complex for retail use[23].

   [22] Schmeider 1 [22].

   [23] Schmedier 1 [25].

5. As noted above Matthew Neville Drane is the Director and sole shareholder of Acquire Investment Pty Ltd the owner of the Trade Mark at the filing date. Matthew Neville Drane is also a Director of another entity, Waterview Bundaberg Limited[24].

   [24] Schmeider 1 [61], [DS-29].

6. On 1 September 2014, David and Pamela Schmeider entered into a tenancy agreement with Waterview Bundaberg Limited, and the lease was executed by Matthew Neville Drane[25].

   [25] Schmeider 1 [63], [DS-30].

7. In Schmeider 1, David Schmeider claims that in addition to providing the lease, he also assisted Matthew Neville Drane in establishing the Waterview Distillery business, and that these services were provided free of charge[26].

   [26] Schmeider 1 [65].

8. The Opponent deposes that the tenancy agreement with Waterview Bundaberg Limited was due to be terminated on 31 August 2017[27]. However, the parties to the tenancy agreement entered into a dispute in January 2017 after David Schmeider requested payment of outstanding rent. This dispute is ongoing, despite attempts to settle the dispute via mediation. In addition, David Schmeider claims that there was malicious damage to the property by the Lessee on exit [28].

   [27] Schmeider 1 [67].

   [28] Schmeider 1 [68].

9. Furthermore, the Opponent states that within months of the commencement of the rental dispute, Aquire Investment Pty Ltd, applied for the Trade Mark on 8 March 2017[29], registered the domain name schmeiderscooperage.com.au on 18 March 2017[30], and registered the business name SCHMEIDER’S COOPERAGE & CRAFT CENTRE on 18 September 2017[31].

   [29] Schmeider 1 [69].

   [30] Schmeider 1 [70] [DS-32].

   [31] Schmeider 1 [71] [DS-33].

10. As noted above Acquire Investment Pty Ltd the owner of the Trade Mark at the time of filing assigned its right in the Trade Mark to Independent Cooperage Australia Pty Ltd and Justin Gillett is Director.

11. On 1 July 2006 Justin Robert Gillett and Leerine Peter Bates entered into an agreement with David and Pamela Schmeider, to take over the running of the Retail/Tourism section of the Schmeider’s Cooperage & Craft Centre Complex. In a letter to suppliers and wholesalers dated 18 July 2006 the Opponent advised[32]:

    As of Saturday, July 1, we are no longer involved in the Retail/Tourism section of Schmeider’s Cooperage & Craft Centre Complex.

    Our 2 coopers, Lee Bates and Justin Gillett have taken over the running of this section of the Complex. […]

    Our business is still Schmeider’s Cooperage and the Complex is still Schmeider’s Cooperage & Craft Centre Complex. Lee and Justin’s business is called ‘Bundy Kegs’. […]

    [32] Schmeider 2 [15], [DS-34].

12. The Opponent states that David and Pamela Schmeider continued to operate the wholesale side of the business, and in particular, engaged in a Vat Building Program at the Bundaberg Rum Distillery, and cooperage work for the Beenleigh Distillery and other small Distilleries starting in Australia. Moreover, the wholesale side of the business operates under the Opponent’s SCHMEIDER and SCHMEIDER’S COOPERAGE Trade Marks to this day[33].

    [33] Schmeider 1 [26].

13. The Opponent deposes the Agreement did not include any assignment of the SCHMEIDER or SCHMEIDER’s COOPERAGE trade marks[34].

    [34] Shcmeider 2 [11].

14. It is unclear when Leerine Bates stopped his business relationship with Justin Gillett and David and Pamela Schmeider, however the Opponent claims David Schmeider’s relationship with Justin Gillett began to deteriorate in or around September 2017 when a new lease was drawn up between the parties. In April 2018 David and Pamela Schmeider decided not to renew the lease and arranged for its solicitor to advise Justin Gillett[35].

    [35] Schmeider 2 [33].

15. In Schmeider 2, David Schmeider claims that on the 5^th and 6^th of May 2018 the Bundy Kegs business moved from the premises and Justin Gillett took operating equipment that was on loan[36] and caused significant damage to the Schmeider’s Cooperage Complex and signage on his exit[37].

    [36] Schmeider 2 [34], [DS-34].

    [37] Schmeider 2 [35], [DS-49].

16. Copies from the Wayback Machine of the Applicant’s website dated 22 August 2013, 17 October 2014, 11 August 2015, 18 October 2016, 15 October 2017, 15 January 2018 and 16 March 2018 indicate that the products sold by the Applicant through its retail business being handcrafted kegs and barrels were sold under the BUNDY KEGS name and the description of the kegs and barrels only mentioned the size, type and cost of the goods[38].

    [38] Schmeider 2 [23], [25], [DS-41], [DS-43].

17. A copy from the Applicant’s website page for handcrafted kegs and barrels as at 2 October 2018, after the filing date and commencement of the opposition proceedings, shows the description of the kegs and barrels includes the trade mark SCHMEIDER[39].

    [39] Schmeider 2 [24], [DS-42], [DS-44].

The Applicant’s Evidence in Answer

1. The Applicant’s evidence comprises a declaration by Justin Gillett, Director of Independent Cooperage Australia Pty Ltd and makes the following statements[40]:

   ·We purchased the business per sale document.

   ·Schmeider and Bundy Kegs are interchangeable in the public’s mind.

   ·Photographs show our address and signage.

   ·We also have trade marks in for registration for tourism classes.

   [40] Gillett.

2. The First Exhibit to the declaration is the ‘Sale Document’ which is an Agreement between Transwood Pty Ltd Trading as Schmeider’s Cooperage and Leeraine Peter Bates and Justin Robert Gillett Trading as Bundy Kegs. The Agreement dated 1 July 2006 states the following[41]:

   ·As at 1^st July, 2006, it has been agreed that Bundy Kegs will take over the running of the Retail/Tourism part of our Schmeider’s Cooperage business.

   ·Bundy Kegs have agreed to purchase the stock at hand as at June 30^th, 2006 being a total of $17,512.41. This total amount is to be paid by June 30^th, 2007.

   ·Bundy Kegs have agreed to pay a weekly rent of $220.00 per week for the 2006/2007 period and then increased as per the ‘attached agreement’.

   [41] Gillett [Exhibit 1].

3. The ‘attached agreement’ is the schedule of the Rental cost of “The Cooperage and Wines at Schmeider’s”. The document also covers costs associated with the tenancy being electricity, rubbish removal, advertising, public liability and includes Schmeider’s Cooperage stocktake as at 30^th June 2006[42].

   [42] Gillett [Exhibit 1].

4. The Second Exhibit is a photograph which shows the street view of the business complex located at 5 Alexandra Street, Bundaberg, East Queensland and provides a clear view of the signage for ‘BUNDY KEGS’ and ‘SCHMEIDER’S COOPERAGE’[43].

   [43] Gillett [Exhibit 2].

5. I note that the Applicant also lodged a number of documents which were not annexures to the declaration and therefore have been excluded from the Applicant’s evidence.

Legal Framework

Section 62A - Application made in bad faith

1. Section 62A of the Act provides:

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

2. In the SGP the Opponent particularised the section 62A ground of opposition as follows:

   We (the Opponent) “own” our surname, it is synonymous with our intellectual property rights across coopering and furniture making over a working lifetime. There is no operational link between the applicant, our surname or the classes nominated. Class 33 (Alcohol) is also in our opinion a mischievous claim. There is a direct link between our trade as a cooper (barrel making) and alcohol which is stored in our product. We (the Opponent) have owned and operated at Schmeider’s Cooperage since November 1982 and registered our trading name since then. We (the Opponent) have also won Queensland Tourism Awards and many local awards over the years under this name.

   There is history between the Opponent and the Applicant. On 1 September 2014, the Opponent and the Director of the Applicant, Matthew Drane, entered into a tenancy agreement. The tenancy agreement entered into dispute in January 2017 and has subsequently been terminated.

   In light of the above, a reasonable person, standing in the shoes of the Applicant, would be aware that they ought not to apply for registration of Schmeider as a trade mark in Australia in relation to the goods specified in the opposed trade mark application.

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

• persons who monitors 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 deliberate misspellings of other registered trade marks; and

• 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.

1. As these illustrations are not exhaustive, in DC Comics v Cheqout Pty Ltd (‘DC Comics’) Bennet J observes that all of the circumstances surrounding the application to register a trade mark are relevant[44]. Moreover, conduct after the priority date can be used to shed light on the Applicant’s subjective intent at the filing date[45].  

   [44] DC Comics v Cheqout Pty Ltd [2013] FCA 478 [62].

   [45] Ibid [71].

2. In Fry Consulting Pty Ltd v Sports Warehouse Inc (No 2) (‘Fry’) Dodds-Streeton J made the following comments, quoting from Harrison’s Trade Mark Application[46]:

   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.[47]

   [46] Fry Consulting Pty Ltd v Sports Warehouse Inc (No 2) [2012] FCA 81; Harrison’s Trade Mark Application [2004] EWCA Civ 1028; [2005] FSR 10.

   [47] [2012] FCA 81, [147].

1. Her Honour also considered

   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[48].

   [48] Ibid [165-166].

Discussion

1. Since 1982 the Opponent’s company directors David and Pamela Schmeider have operated a successful cooperage business under the trade marks SCHMEIDER’S COOPERAGE and SCHMEIDER.

2. The Opponent’s history with the previous and current owner of the disputed Trade Mark was one of Lessor and Lessee of premises located at the Schmeider’s Cooperage Complex. In both cases the relationship between the parties ended in dispute.

3. While the Applicant argues that the words SCHMEIDER and BUNDY KEGS are interchangeable in the public’s mind, it is noted that the Applicant traded under the name BUNDY KEGS and since the expansion of the Opponent’s business premises in 1988 a number of independent businesses have operated from the Schmeider Cooperage Complex including Wolfgang Engel glassblowing, Crystal Creations jewellery and gifts, and Bundy Woodworking supplies and these businesses have only used the Schmeider Cooperage Complex to signal the geographical location of their businesses[49].

   [49] Schmeider 1 [DS-17]; Schmeider 2 [6].

4. Furthermore, the Opponent deposes that the Agreements between the parties did not include any assignment of the SCHMEIDER or SCHMEIDER’s COOPERAGE trade marks. 

5. That the Applicant made changes to its website by adding the Trade Mark to its keg and barrel goods after the filing date and commencement of the opposition proceedings indicates a conscious decision to usurp the Trade Mark from the Opponent.

6. It is clear to me that both the previous owner of the Trade Mark and the Applicant’s conduct was more than just savvy business practice and would fall squarely with the unconscious, unscrupulous, underhanded conduct described by her Honour Dodds-Streeton J in Fry.

7. I find that a person standing in Applicant’s shoes should have known that it should not apply for the registration of the Trade Mark. The Applicant’s conduct falls short of the ‘standards of acceptable commercial behaviour observed by reasonable and experienced persons’[50].

   [50] DC Comics v Cheqout Pty Ltd [2013] FCA 478, [77].

8. The Opponent has established the ground for opposition under s 62A of the Act.

Decision

1. Section 55 of the Act provides:

55 Decision

1. Unless subsection (3) applied to the proceeding, 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.

2. I find that the Opponent has met the onus upon it, in terms of the ground of opposition under section 62A of the Act. Accordingly, as Delegate of the Registrar I refuse to register the Trade Mark. If the Registrar of Trade Marks is served with a notice of appeal within one month from the date this decision, I direct that the disposition of the applications be in accordance with the Court’s direction or order.

Costs

1. The Opponent has sought an award for costs in its favour. I see no reason to depart from the general rule that costs follow the event. As the Opponent is the successful party, I award costs against the Applicant at the official scale set out in Schedule 8 to the Trade Marks Regulations 1995.

Louise Tuohy

Hearing Officer

Oppositions and Hearings

Trade Marks and Designs

16 April 2020