Virgin Enterprises Limited v Virgin International Pty Ltd

[2010] ATMO 38

TRADE MARKS ACT 1995

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

Re:Opposition by Virgin Enterprises Limited to registration of trade mark application 1134133 (10) - VIRGIN (Stylised) - filed in the name of Virgin International Pty Ltd

Delegate:	Michael Kirov
Representation:	Opponent: David Yates SC, instructed by Susan Darmopil of Addisons Lawyers Applicant: Babak Arya, assisted by Santino Di Bella, Director of the Opponent
Decision:	2010 ATMO 38 Section 52 opposition: Ground under s 59 not established; ground under s 42(b) established. Opposition established. Costs awarded against Applicant.

Background

1. This is an opposition brought by Virgin Enterprises Limited (“the Opponent”) pursuant to s 52 Trade Marks Act 1995 (“the Act”) to registration of the trade mark VIRGIN (Stylised), subject of application number 1134133 in the name of Virgin International Pty Ltd (“the Applicant”).

2.     Details of the opposed application are as follows:

Application Number:             1134133
Priority Date:    7 September 2006 (“the Priority Date”)

Goods:Class 10: Condoms; condoms for hygienic purposes; condoms for medical purposes; condoms for prophylactic purposes; condoms having spermicidical properties; spermicidal condoms; olive oil coated condoms; oil coated condoms; coated condoms

(“the Goods”)

Trade Mark:      (“the Trade Mark”)

3.     The Opponent, a UK company, is one of a number of companies collectively known as the “Virgin Group”, whose Chairman is the UK entrepreneur and businessman Sir Richard Branson.  It is the owner of more than 2,000 registrations around the world for trade marks featuring the word “virgin”, which it licences to other businesses both within and outside the Virgin Group for use in relation to a very wide range of goods and services including passenger and freight airline services, publishing services, retail services, financial services and mobile telephone services, to name but a few.

4.     The Applicant was incorporated in Australia on 1 August 2000.  An historical extract from the records of the Australian Securities and Investments Commission (“ASIC”) included with the Applicant’s evidence indicates that from the date of incorporation until 31 December 2007 the company’s sole director, secretary and shareholder was Claudia Raffaelle Di Bella of 10 Macaulay Street, Stanmore, NSW and that the company’s principal place of business during this period was nominated as being at this address.  Santino Di Bella, whose address is listed as 12 Macaulay Street, Stanmore, is Ms Di Bella’s husband.  He was recorded as replacing his wife as sole director and shareholder of the company as from 1 January 2008, although his evidence is that he has been the Applicant’s “Manager” since 2000 and that he is “familiar with all aspects of [the Applicant’s] business”.  As from 1 January 2008 the ASIC record indicates the Applicant’s principal place of business also changed from 10 to 12 Macaulay Street.  I mention that the Applicant has never had any business relationship or other association with the Opponent.

5. The Opponent filed its Notice of Opposition (“the original Notice”) on 17 April 2007 listing eight specific grounds corresponding to various provisions of the Act. The Opponent was subsequently allowed to amend the original Notice to incorporate an additional ground based on s 62A of the Act. The Opponent filed an amended Notice incorporating this additional ground on 12 September 2007 (“the amended Notice”) and served a copy on the Applicant on or shortly after that date[1].

[1] The Opponent also sought (and was granted without comment) permission to amend the s 60 ground listed in the original Notice to reflect the changed wording to that section introduced by the Trade Marks Amendment Act 2006.  This amendment was thus also included in the amended Notice.  However, since application 1134133 was filed before the changes to s 60 came into force on 23 October 2006, it was not in dispute that s 60 as it stood prior to its amendment on that date continues to apply to the present opposition (See Apple Computer Inc v Todaytech Group Ltd [2007] ATMO 80).

6.     The parties lodged Evidence in Support, Evidence in Answer and Evidence in Reply as set out below:

Evidence in Support
▪ Statutory Declaration by Mark James made 12 October 2007, with Exhibit MJ-1
▪ Statutory Declaration by Karen Anne Hayne made 16 October 2007, with Exhibits KAH-1 to KAH-188, (Exhibits KAH-21, KAH-21A, KAH-49, KAH-53A, KAH-100 and KAH-102 marked “Confidential”)
▪ Statutory Declaration by Lavinia Jeanne Strachan made 14 September 2007, with Exhibit LJS-1 to LJS-3

Evidence in Answer
▪ Statutory Declaration by Santino Di Bella made 16 September 2008, with Exhibits SDB-1 to SDB-3
▪ Statutory Declaration by Cherry He made 16 September 2008, with Exhibits CH-1 to CH-3

Evidence in Reply
▪ Statutory Declaration by Michael Rumore made 16 December 2008, with Annexures A to D
▪ Statutory Declaration by Karen Anne Hayne made 17 December 2008, with Exhibits KAH-A to KAH-V

7.     The matter was heard before me as delegate of the Registrar of Trade Marks on 7 July 2009 in Sydney.  David Yates SC, instructed by Susan Darmopil of Addisons Lawyers, appeared for the Opponent.  Babak Arya, assisted by Santino Di Bella, who is a Director of the Applicant, appeared for the Applicant.

8.     I am proceeding on the basis that, to succeed, the Opponent bears the onus of establishing at least one of its grounds of opposition on the balance of probabilities[2].

[2] Following Gyles J in Pfizer Products Inc v Karam (2006) 70 IPR 599. See also Chocolaterie Guylian N.V. v Registrar of Trade Marks [2009] FCA 891 (18 August 2009) at [22] to [26].

Grounds of Opposition

9. At the hearing Mr Yates indicated the Opponent would be pressing grounds based only on sections 42(b), 59, 60 and 62A of the Act. I treat the remaining five grounds listed in the amended Notice as having been abandoned. Of the four grounds pressed, the first two are discussed below, where I have found it convenient to firstly examine the s 59 ground before turning to the s 42(b) ground. I mention that these two grounds might be considered as “alternatives”, to the extent that the former depends upon my finding that Mr Di Bella’s evidence should be adjudged “unreliable”, while the latter depends on my taking Mr Di Bella’s evidence at face value.

Given my conclusion with respect to the s 42(b) ground in particular, it has not been necessary to discuss the further two grounds pressed by the Opponent at the hearing.

Discussion

Section 59

10. The ground based on section 59 is indicated in the Notice as follows:

The Applicant does not intend to use, or authorise the use of the Opposed Trade Mark, nor to assign the Opposed Trade Mark to a body corporate for use by the body corporate, in Australia. Therefore, the registration of the Opposed Trade Mark would be contrary to section 59 of the Act.

11. Section 59 of the Act is reproduced below:

The registration of a trade mark may be opposed on the ground that the applicant does not intend:

(a) to use, or authorise the use of, the trade mark in Australia; or
(b) 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 specified in the application.

Note:  For applicant see section 6.

12.     Hearing Officer Debrett Lyons reviewed authorities on the issue of intention to use in Americana International Limited v Suyen Corporation (2008) 75 IPR 596 (“the BENCH BODY Logo case”). As he noted, the High Court’s decision in Aston v HarleeManufacturing Co (1960) 103 CLR 391 is longstanding authority that applying to register a trade mark is prima facie evidence of intention to use.  Subsequent decisions nevertheless indicate this prima facie presumption may be rebutted where the evidence readily gives rise to the drawing of an adverse inference and that evidence remains unchallenged and unrebutted by the applicant[3].

[3] See for example Phillip Morris Products SA v Sean Ngu [2002] ATMO 96; Sapient Australia Pty Ltd and Sapient Corporation v SAP Aktiengesellschaft (2002) 55 IPR 638; Danjaq, LLC v Resource Capital Australia Pty Ltd (2004) 61 IPR 651

13. The Hearing Officer in the BENCH BODY Logo case also observed that there have been a number of decisions noting s 59 is written in the present tense and that its operation is therefore a continuing one. As the Hearing Officer put it (at [27]):

What is clear is that the intention of the applicant is an ongoing intention not limited by its state of mind at the filing date of the application. Less clear is the proposition that the relevant date is the date the Notice of Opposition was filed. Other cases, some of which are referred to later, suggest that the relevant date is the date of the hearing, but it seems to me that the correct “cut-off” date is when the last evidence is filed. In some cases, for example where further evidence is admitted at a hearing, that date might be the hearing date. In very rare cases, it might even coincide with the filing of the notice of opposition, but what seems to me to be critical is the time when the record of admissible evidence closes.

14.     In the present opposition I confirm I am proceeding on the basis that the relevant date for assessing the Applicant’s intention to use the Trade Mark is 17 December 2008, being the date the declaration by Karen Anne Hayne completing the Opponent’s evidence in reply was made.

15.     On the face of it none of the information contained in the Opponent’s evidence in support of the opposition is such as to upset, or indeed even to put into question, the prima facie assumption that in filing application 1134133 the Applicant intended to use the Trade Mark in relation to the Goods.

16.     Notwithstanding this, the Applicant does in fact address the issue of use in its evidence in answer.  In particular, Mr Di Bella says the following in his declaration of 16 September 2008:

After applying for registration of the Trade Mark…the following steps were taken by [the Applicant] to establish its condom business in Australia:

(a)     Key Corp HK Limited was identified as a company who could assist with the manufacture of condoms to be sold by [the Applicant] in Australia as well as designing suitable packaging for the condoms.  That company was suggested to me by Mr Tim Clark, a friend of mine who has previously conducted business in China;

(b)     Mr Tim Clark liaised with Key Corp HK Limited on behalf of [the Applicant].  Ms Selina Wang was the contact at Key Corp HK Limited with whom Mr Clark liaised;

(c)     Key Corp HK Limited designed packaging for the condoms to be sold by [the Applicant] in Australia.  Exhibited hereto and marked SDB-3[4] is a sample of packaging designed by Key Corp HK Limited.  I liked the black packaging with the silver writing and decided that that would be the packaging used by [the Applicant];

(d)     I requested Mr Clark arrange for Key Corp HK Limited to manufacture 20,000 condoms with each condom to be packaged in the packaging being SDB-3.  20,000 condoms were imported from China on behalf of [the Applicant] with each condom packaged in the packaging being SDB-3.

[The Applicant] intends to sell the condoms bearing the Trade Mark to various hotels and pubs throughout Australia.

[4] Whereas the Exhibit in question is marked “SDB-3”, Mr Di Bella mistakenly refers to it throughout his declaration as “SD-3”.  For the sake of consistency, therefore, I have where necessary changed any references to the Exhibit in this decision to “SDB-3”.

17. A scanned copy of Exhibit SDB-3 can be seen at paragraph 29 below, where its significance is discussed further in the context of the Opponent’s s 42(b) ground. I simply note at this stage that it is apparent the packaging in question prominently displays the Trade Mark. If Mr Di Bella’s evidence is taken at face value, then, the Applicant has not only confirmed its intention as at 16 September 2008 to “sell the condoms bearing the Trade Mark to various hotels and pubs throughout Australia”, it has indeed already used the Trade Mark by arranging for condoms to be manufactured and packaged in a manner which features the Trade Mark and importing 20,000 of these into Australia[5].

[5] Hermes Trade Mark [1982] RPC 425.

18. The essence of Mr Yates’ submission with respect to the Opponent’s s 59 ground was however that Mr Di Bella’s evidence might be considered unreliable. The submission was based principally on the lack of any substantiating documentation exhibited with the Di Bella declaration which might corroborate his evidence as to the manufacture and importation of the 20,000 condoms in question and on enquiries made by the Opponent and detailed in the Rumore declaration of 16 December 2008 and the Hayne declaration of 17 December 2008 (“Hayne 2”).

19.     Mr Rumore is a private enquiry agent employed by the Opponent, who in July 2007:

·     searched telephone records, both current and historical, but located no listing for either the Applicant nor for its apparently associated company Virgin Condoms Pty Ltd[6];

· searched the online Therapeutics Goods Register, (in which, as discussed below in connection with the Opponent’s s 42(b) ground, condoms must be included before they might legally be imported to, or sold in, Australia), and located no relevant entry; and

·     visited and photographed the officially recorded “principal place(s) of business” of the Applicant at 10 and 12 Macaulay Street Stanmore, which he observed to be ordinary residential premises with no apparent commercial activity taking place.

[6] See paragraph 36 below for more details concerning this apparently associated company.

20.     Mr Rumore also attests that in or about November 2008 he:

·made internet and telephone inquiries which, although locating third party websites which referred to Key Corp HK Limited, did not locate any then current contact details or website for that company; and

·made inquiries with ten (named) hotels in the Sydney CBD and suburbs, none of whom stocked or were aware of “the Virgin or Virgin International brand of condoms”.

21.     Ms Hayne, who is a legal practitioner acting for the Opponent, says in Hayne 2 that in December 2008 she:

·searched the online Therapeutics Goods Register and located no entry related to the Applicant or to condoms with which the Applicant was associated; and

·made further internet and telephone inquiries which did not locate any then current contact details or website for the Applicant, for Virgin Condoms Pty Ltd or for Key Corp HK Limited.

22.     While the Applicant did not seek to serve further evidence to formally address any of the matters raised in the Rumore declaration or in Hayne 2, I do note that at the hearing itself the Applicant’s representative, Mr Arya, conceded no application for inclusion of any of the Goods on the Therapeutic Goods Register had been made as at the time those declarations were made.  Mr Arya also said that the Applicant had itself found Key Chain HK Limited “unreliable” and that the Applicant was no longer dealing with it.  Be that as it may, and albeit that Mr Di Bella’s evidence as to the importation of the 20,000 condoms might, on the face of it, easily have been corroborated with copies of relevant supporting documentation, I am satisfied on the balance of probabilities that the importation did take place.

23.     Nor do I believe the results of the enquiries by Mr Rumore or Ms Hayne should lead me to infer Mr Di Bella was not being truthful when he said in his declaration that “[The Applicant] intends to sell the condoms bearing the Trade Mark to various hotels and pubs throughout Australia.”  As was pointed out by the Hearing Officer in Virgin Enterprises Ltd v Virgin International Pty Ltd (2006) 68 IPR 304[7] (“the Olive Oil case”) in essentially similar circumstances to those before me here:

Alleging, or even showing … that no business exists that could be in a position to use a trade mark, only goes a short part of the way to satisfy me that the applicant does not intend to use the trade mark. Surely, if there is no intention to use a trade mark then it would be expected that there would be no business ready to use it, but simply because there is no business ready to use it tells very little of the intention, or of the plans, to set up such a business and of the intention to also use the mark.

[7] This was an opposition involving the same parties as the present opposition and, indeed, concerned with an essentially identical trade mark, with the goods covered by the opposed application in that case being “edible oils and oil products”.

24.     Based therefore on the long established presumption that applying to register a trade mark is prima facie evidence of intention to use, and accepting the above quoted evidence of Mr Di Bella on behalf of the Applicant as truthful, I find the opposition ground based on s 59 of the Act is not established.

Section 42(b)

25. The ground based on section 42(b) of the Act is indicated in the amended Notice as:

The use of the Opposed Trade Mark would be contrary to law. Therefore registration of the Opposed Trade Mark is contrary to section 42 of the Act.

26. Insofar as relevant to this matter section 42 is reproduced below:

An application for the registration of a trade mark must be rejected if:
   (a)  …
   (b)  its use would be contrary to law.

27. It was not in dispute that the relevant date for assessing the s 42(b) ground is the Priority Date, namely 7 September 2006. In this regard I note the words of Wilcox J in Time Warner Entertainment Co, LP v Stepsam Investments Pty Ltd (2004) 59 IPR 343, at [47]:

I think that [Counsel] is correct to say that the application of s 42(b) of the Act should be considered as at the priority date, although looking forward to prospective conduct after registration was effected.

28.     At the hearing Mr Yates submitted use of the opposed trade mark for any of the Goods would have been contrary to law as at the Priority Date because such use would have offended against a number of provisions of the Therapeutic Goods Act 1989 (“the TG Act”). The submission was based on the same statements by Santino Di Bella in his declaration of 16 September 2008 quoted above at paragraph 16, but this time taking those statements at face value.

29.     In particular, as mentioned, Mr Di Bella declared that at some point after the Priority Date, (but obviously before 16 September 2008), he arranged for 20,000 condoms to be manufactured in China “with each condom to be packaged in the packaging being SDB-3”.  Mr Di Bella goes on to confirm that “20,000 condoms were imported from China on behalf of [the Applicant] with each condom packaged in the packaging being SDB-3”.  Scanned copies of both sides of Exhibit SDB-3 are shown below:

30.     I mention that the word “CONDOMS” is written immediately below the stylized letters “I” and “N” of the Trade Mark appearing on the exterior of the cardboard packaging.  Below that are the words:

100% CE APPROVED & ELECTRONICALLY TESTED

GUARANTEED FOR 5 YEARS,

followed by the sign “1PC” (which presumably is shorthand for “one piece”).

31.     The words on the inside of the cardboard packaging are as follows:

Brief introduction & intended use

Raw material: Natural Latex Rubber, lubricant.  Essence condoms contains edible Essence. (sic)

Specification: W53mm.  Dotted combine with ribbed.  (sic)

Brief introduction: This product-condom is made of natural latex with lubricants in reservoir. (sic)  There is a sperm reservoir at the top of each condom and a yapp[8] at the opening of each condom packed by aluminium foil, with high elasticity and anti-tensile.

[8] According to the Macquarie Dictionary Online, “yapp” refers to “a style of bookbinding in limp leather or the like with projecting flaps overlapping the edges of the pages, used especially on Bibles.”

The use area: It can assist in the prevention of the transmitting of HIV and other sexual diseases.

The way to use:

Handle with care.  Condom can be torn by fingernails and sharp objects such as jewellery, zips and buckles.

Put the condom on when the penis erects before there is any contact between the penis and your partner’s body.  Fluid released from the penis during the early stages of an erection can contain sperm and organisms that can cause sexual diseases and pregnancy.

Tear along one side of the foil being sure not to rip the condoms (sic) inside.  Carefully remove the condom.

Air trapped inside a condom could cause it to break.  To avoid this, squeeze the Closed end of the condom between your fore-finger and thumb and place the condom over the erect penis. (sic)  Be sure that the roll is on the outside.

If you want to use another lubricant, it would recommend the use of the correct type of lubricant. (sic)  Should avoid the use of oil-based lubricants such as Vaseline and baby oil, bath massage oil, butter, margarine, because they would undermine the integrity of condoms. (sic)

Should consult a doctor or pharmacist condoms contact with the applicable drugs. (sic)

Dispose of the used condom in a tissue and place it in a bin (do not flush it down the toilet).

The use area: It can assist in the prevention of the transmitting of HIV and other sexual diseases. (sic)

<Taboo and attention>

The one-time use only goods (sic)

Those who are allergic to latex products cautiously uses (sic)

Storage methods

The goods should be placed on the cool, dry place, free from direct sunlight place. (sic)

32.     Finally, the following appears on the foil packaging contained within the cardboard packaging:

EXP 201301

LOT 200802

-which I understand indicates the condom shown in Exhibit SDB-3 was one of a batch manufactured in February 2008 and that its expiry date is January 2013, five years later.

33. Ms Hayne sets out the provisions of the TG Act said to be relevant to the Opponent’s s 42(b) ground in Hayne 2. She also attests to a number of enquiries she conducted in December 2008 through the website of the Therapeutic Goods Administration (“TGA”), the body charged with oversight of the TG Act. In particular, Ms Hayne indicates, inter alia, that:

·Section 9A(1) of the TG Act requires the maintenance of a register of “therapeutic goods” intended for human use (“the TG Register”);

·Section 9A(3) specifies that the TG Register is to contain three parts, with the third part dedicated to “medical devices included in the [TG] Register under Chapter 4”;

·Chapter 4 of the TG Act concerns “medical devices” covered by the legislation generally and, in particular, section 41BD of Chapter 4 defines a “medical device” as being, inter alia, “any instrument, apparatus, appliance, material or other article … intended, by the person under whose name it is or is to be supplied, to be used for human beings for the purpose of … control of contraception”;

·Section 41MI(4) of the TG Act says that, subject to certain exceptions, “a person commits an offence if…the person imports a medical device into Australia” unless the device in question is “included in the [TG] Register”;

·The Applicant’s condoms (as indicated in the specification of application 1134133) do not on the face of it fall within any of the exceptions indicated in s 41MI(4);

·Section 41MI(5) says the offence indicated by s 41MI(4), (which carries a maximum penalty of 12 months imprisonment and/or a fine equivalent to 1,000 penalty units), is one of strict liability;

·Further to the criminal penalties indicated by s 41MI, s 41MIB specifies additional civil penalties for importing non-exempt medical devices not included in the TG Register, with fines up to the equivalent of 5,000 penalty units in the case of an individual and 50,000 in the case of a body corporate;

·An online search she conducted of the TG Register in December 2008[9] under the category “all current devices” located no listing for a condom sponsored[10] by the Applicant, by Mr Di Bella himself, or by any of the parties mentioned by Mr Di Bella in his declaration as possibly associated with the importation;

·A related search of the TG Register she conducted in December 2008[11] located no listing for the Applicant, or for any party known to have an association with the Applicant, as sponsor of any current medical device.

[9] A hard copy of the results of which are exhibited with Hayne 2.

[10] A “sponsor” is defined in the TG Act as including “a person who imports, or arranges the importation of, the goods into Australia”.

[11] Again, a hard copy of the results of which are exhibited with Hayne 2.

34. Hayne 2 also identifies further requirements of the TG Act, principally to do with the kind of information that must accompany regulated goods when sold to the public, with which the packaging shown in Exhibit SDB-3 arguably may not comply. I have not found it necessary to consider these “arguable” breaches of the TG Act in any detail, however, as I believe the Opponent’s s 42(b) ground can be adequately addressed if my enquiry is limited to those matters in Hayne 2 I have outlined above.

35.     As indicated earlier, at the hearing itself Mr Arya in fact conceded that no application for inclusion of any of the Goods on the TG Register had been made before the Applicant was served with copies of the Opponent’s evidence in reply in December 2008, although he did say that an application had been made subsequently.  Thus no application had yet been made when the Applicant imported the 20,000 condoms discussed above into Australia.  This being the case, I am satisfied on the face of it that the Applicant’s importation of the 20,000 condoms would, on the balance of probabilities[12], contravene ss 41MI(4) and 41MIB of the TG Act.

[12] Although s 41MI(4) of the TG Act is a criminal offence, albeit one of strict liability, I am looking at it through the prism of s 42(b) of the Trade Marks Act1995 and thus in terms of “having a case to answer”. As for s 41MIB of the TG Act, this is in any event a civil provision.

36. It is convenient to here mention that I searched the online TG Register myself following the hearing and located an entry dating from 2 September 2009 in respect of “Condom, male, latex, lubricated”, indicated to be a “Class IIb Medical Device” under the TG Act, with Virgin Condoms Pty Ltd (“VC”) identified as sponsor. VC has the identical address as the Applicant and an ASIC “Historical Company Extract” dated 15 June 2007 annexed to the Rumore declaration indicates that its sole director and shareholder at that date was Mr Di Bella. I note that the TG Register entry identifies the manufacturer of the condoms as a Malaysian company named Biogreen Medical Sdn Bhd and not the Chinese company Key Corp HK Pty Ltd which Mr Di Bella says manufactured the 20,000 condoms imported into Australia prior to 16 September 2008.

37. In his submissions Mr Yates noted that for a trade mark to be caught by s 42(b) it was not necessary that there be some illegality inherent in the trade mark itself.  Rather, the question was whether use of the trade mark as at the relevant date would be contrary to law.  Such was made clear by Madgwick J in the leading case of Advantage Rent-a-Car Inc v Advantage Car Rental Pty Ltd (2001) 52 IPR 24 at [21]:

Counsel for the registrar referred to the English case Re Arthur Fairest Ltd's Application (1951) 68 RPC 197, in which it was held that the contrary to law ground must be made out because of something inherent in the mark. Although that may be the case under the English legislation (and in the context of that case), s 42(b) provides that it is the use of the mark that must not be contrary to law and in this case it is the reproduction and publishing of the mark that would be contrary to law.

38. His Honour also emphasised, at [28], that in forming a view as to whether use of a trade mark would be caught by s 42(b), “the registrar has the comfort that the criterion is that the use ``would'’ not ``could'’ be contrary to law”. As it was put by the Hearing Officer in Red Hat Inc v Martinek (2002) 56 IPR 292 (at 299):

While the Registrar is obliged to take potential breaches such as these[13] into account, the ground of opposition can only be made out where the Registrar is satisfied that the law would be breached. It is not sufficient to establish that the law might or may be breached.

[13] In the Red Hat case the opponent had alleged use of the opposed mark would breach the Fair Trading Act 1999 (Vic) and also constitute passing off at common law and therefore trigger s 42(b) of the Act.

39.     In the Advantage case the opposed trade mark contained an element adjudged to be a substantial reproduction of an artistic work in which the trade mark applicant did not own copyright.  Madgwick J considered there would be a breach of copyright if the applicant reproduced and published the work, (which it would necessarily do in using the trade mark), because he was satisfied the applicant did not have the copyright owner’s permission.  Nor, it might be added, was it likely to obtain the copyright owner’s permission given the opponent itself claimed to be the copyright owner[14].  His Honour nevertheless stressed that:

Such opinion does not have a similar effect to say, a judicial conclusion of law as to breach of copyright in copyright proceedings; the effect is limited to the refusal of registration.

[14] This claim was not tested because Madgwick J considered it unnecessary to decide whether it was the opponent, or the advertising company which originally designed the work on the opponent’s behalf, who was the actual copyright owner.

40. Given the Act allows a trader to obtain a trade mark registration on the basis of intention to use rather than actual use, of course, many traders apply to register their trade mark(s) before finalising their business arrangements, including, as in the present case, before obtaining the necessary regulatory approval to deal in the goods intended to be supplied under the trade mark in question. Thus there are several decisions where an applicant in this position has in effect been given the benefit of any doubt, as far as s 42(b) of the Act is concerned, that it will in fact obtain the necessary approval, or licence, or permission, as the case may be, before actual use commences[15].

[15] The words of Wilcox J in the Time Warner case quoted in paragraph 27 above are pertinent in this regard.

41.     In Nicholas van den Berg and anor v Brian Hamilton [2007] ATMO 31 (5 June 2007), for example, the applicant sought to register his mark in relation to, inter alia, the services “sale of recreational and leisure equipment and vehicles, excluding air tools, parts and accessories”.  The opponent established the applicant was “not registered or licensed to carry out the sale of recreational vehicles in the State of Western Australia” as at the relevant priority date and thus use of the mark in Western Australia for this purpose at that time would have been contrary to the Western Australian Motor Dealers Act 1973 (“the MVDA”).  It was not alleged the applicant had in fact used its mark in this manner, merely that, if it had, such use would in principle have been contrary to law. In dismissing the opponent’s ground based on s 42(b) of the (Trade Marks) Act, however, the Hearing Officer concerned said:

Additionally, there is nothing before me that would prevent the applicant seeking a motor vehicle dealers licence that would enable it to sell vehicles to the general public in the future. As a business decision, any trade mark owner may decide to obtain trade mark registration before making an application to comply with the MVDA – with an intention to acquire both registrations before the sales operation would begin.

42.     Similarly, in New South Wales Lotteries Commission v Novamedia BV (2001) 52 IPR 638, a case cited by Mr Yates, the applicant was seeking to register its mark for services including “the organisation of lotteries”. The Hearing Officer accepted that use of the mark in NSW for such services as at the relevant priority date would have been in breach of NSW legislation which required persons organising lotteries to hold appropriate licences. Again, it was not alleged such illegality had actually occurred, since there was no evidence that the applicant had in fact used the mark in suit while unlicensed. In these circumstances the Hearing Officer concerned concluded:

It is possible that, if the use of the trade marks was not licensed or authorised under the provisions of [the relevant NSW legislation], such use could be contrary to law in NSW. I do not accept, however, that it shows that the use of the trade marks in question here would, of necessity, be contrary to law. As Mr Munday said, a trade mark owner may seek a licence subsequent to the grant of its trade mark registration. I would also presume that it could license the use of its trade marks, under the provisions of ss 7 and 8 of the Trade Marks Act 1995, to one of the entities which is already authorised, entitled or licensed to conduct lotteries in NSW. There may be other ways in which it could make entirely lawful arrangements for the use of its trade marks in NSW, and in other parts of Australia.

43.     Mr Yates nevertheless contrasted the circumstances in the above mentioned two cases with those of the current opposition.  As he put it in his written submission:

Although the Registrar has previously determined that [the s 42(b)] ground of opposition is not made out by the mere prospect of unlawful use (such as the present absence of a licence to lawfully supply a product where the evidence is nevertheless consistent with a finding that a licence will be obtained: New South Wales Lotteries Commision v Novamedia BV (2001) 52 IPR 638 at 648-651), the facts of the present matter are distinguishable. Mr Di Bella’s evidence, if accepted, is that 20,000 condoms have already been imported from China on behalf of [the Applicant] with each condom packaged in the form of Exhibit SDB-3. In other words, if accepted, the evidence would be that the opposed mark has already been put to illegal use.

44.     Mr Yates’ submission in this regard appears consistent with the reasoning of the Hearing Officer in Osgaig Pty Limited v Shigemitsu Industry Pty Ltd [2006] ATMO 41 (26 May 2006). In that case the trade mark applicant (“Shigemitsu”), part of a business operating Japanese noodle restaurants in several countries, had applied in January 2004 to register its mark in relation to the provision of drinks and foods in Class 43. Later in 2004, (but prior to obtaining the trade mark registration sought), Shigemitsu had opened a Japanese noodle restaurant at 130 Bourke Street in Melbourne’s Chinatown district trading under the mark. Osgaig, which already operated a Japanese noodle restaurant only a few doors away and by reference to a similar trade mark, commenced proceedings in the Federal Court. Weinberg J found that Shigemitsu had engaged in conduct which breached ss 52 and 53(c) of the Trade Practices Act 1974 (“the TPA”) and ordered that, for a period of 12 months (from 8 November 2004 to 8 November 2005), it display signs in its restaurant window, and provide information in any related advertising, which disclaimed any association with Osgaig’s business. Shigemitsu duly complied with Weinberg J’s order and the 12 month period specified by his Honour had expired by the time Osgaig’s opposition to Shigemitsu’s trade mark application was heard by IP Australia in February 2006.

45.     Osgaig nevertheless argued in the opposition proceedings that use of the mark as at the date the application to register it was made would also have been in breach of the TPA and thus contrary to law. Weinberg J’s decision was in evidence before the Hearing Officer, who summarised the issue before him as follows:

Clearly, for [the period 8 November 2004 to 8 November 2005] the public use of the trade mark by the applicant, without the disclaimer, would be contrary to law.  After this time period, however, public use of the trade mark by the applicant could occur without any limitation from this judgment.  So the question remains – what of public use of the mark before this time period – particularly as at the date the trade mark application was made on 16 January 2004?

46. Counsel for Osgaig submitted that, although Weinberg J’s decision was not “directly substitutable” for the decision the Hearing Officer had to make in relation to Osgaig’s s 42(b) ground, “it effectively determines the hypothetical question of whether use of the mark would be contrary to law as of 16 January 2004”. The Hearing Officer agreed, reasoning that:

If the applicant had used its trade mark at 130 Bourke Street as at the date of application, 16 January 2004, would Justice Weinberg have issued the same judgement? I believe so. There is nothing to indicate, to me, that his Honour would have formed any other view. Despite the fact that the applicant did not own the premises on that date I do not have to consider the actual use that the applicant could have made of the mark – merely the notional, or hypothetical, use that the applicant could have made. Given this background, I would have to agree that use of the mark at 130 Bourke Street, on 16 January 2004, without signage indicating that the applicant had no business relationship with the opponent would be contrary to law.

47. In the present opposition I feel similarly compelled to agree with Mr Yates that it is not, as he put it, “the mere prospect of unlawful use” that I have to consider in relation to the Opponent’s s 42(b) ground. Here the Applicant’s own evidence is that it imported 20,000 condoms bearing the Trade Mark into Australia prior to having any of the Goods included on the TG Register. I am satisfied that such importation was use of the Trade Mark and, as indicated above, I am satisfied on the balance of probabilities that such importation was in breach of the TG Act. This, to paraphrase the words of the Hearing Officer in the Osgaig case, “effectively determines the hypothetical question of whether use of the mark would be contrary to law as of [the Priority Date]”.

48. I accordingly find that the Opponent has established its s 42(b) ground of opposition.

Sections 60 and 62A

49. Having found in favour of the Opponent in terms of s 42(b) of the Act, it is unnecessary here to discuss the further grounds raised under ss 60 and 62A. I note that the s 60 and s 62A grounds (or any others allowed for under the Act) may nevertheless be relied upon by the Opponent in the event that the Applicant appeals this decision.

Decision

50. Section 55 of the Act provides:

Unless the proceedings are discontinued or dismissed, 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.

1. I have found the Opponent has established the ground it pressed under s 42(b) of the Act. I accordingly refuse to register trade mark application number 1134133.

   Costs

   52.     In the event the Opponent prevailed, Mr Yates requested an award of costs in the Opponent’s favour.  As the successful party, the Opponent is entitled to its costs and I accordingly award costs against the Applicant as per Schedule 8 of the Trade Marks Regulations 1995.

   Michael Kirov
   Hearing Officer
   Trade Marks Hearings
   27 May 2010