Wild Child WA P/L v Peter Hull

[2004] ATMO 1

TRADE MARKS ACT 1995

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

Re:Opposition by Wild Child WA Pty Ltd to registration of trade mark application 815736(5) - QUITNIT - filed in the name of Peter Hull.

Delegate:	Terry Williams
Representation:	Opponent: Richard McCormack of counsel, instructed by Wray & Associates, patent attorneys Applicant: Edward Heerey of counsel, instructed by Allens Arthur Robinson, solicitors
Decision:	S 52 opposition: s 60 established for Western Australia, registration to be limited to exclude that State

Background

1. Peter Hull is a Queensland resident.  He produces and sells pharmaceuticals in the State in question.  On 30 November 1999, he applied to register the trade mark QUITNIT for "pharmaceutical head and body lice products".  His application, number 815736, was obstructed by the existence of an earlier and conflicting registration, for QUIT NITS, number 776014.  That registration stands in the name of Wild Child WA Pty Ltd ("Wild Child").

2. Mr Hull's application was accepted by the Trade Marks Office under the provisions of s 44(4) of the Trade Marks Act 1995.  These allow for acceptance (for possible registration) of an application where the trade mark in question has been used, continuously, since before the date of the earlier and conflicting registration.  Such registration is now opposed by Wild Child.

3. Both parties have followed the opposition process set out in the regulations, filing and serving copies of the following evidence:

   Wild Child's evidence in support

Declaration by	Annexures
Leanne Preston	LP1-41
John Found	JJF1-3
Michael Nott	MVN1-7

Mr Hull's evidence in answer

Declaration by	Annexures
Peter Hull	PH1-7
Robert McKay	RDM1-4
Richard Boyd	RB1

Wild Child's evidence in reply

Declaration by	Annexures
Leanne Preston	LP1-3

1. At the end of this process the matter was set down for me to hear and decide under delegation from the Registrar of Trade Marks.  At the hearing, the opponent was represented by Richard McCormack of counsel, instructed by Wray & Associates, patent attorneys.  The applicant was represented by Edward Heerey of counsel, instructed by Allens Arthur Robinson.

   History

2. The first Australian user of a relevant trade mark was Mr Hull, in (so he declares) 1990, with documentary corroboration going back to November 1993.  Mr Hull is, as I have said, a Queensland resident.  He operates his business in compliance with the laws of that State, wherein he can lawfully sell pharmaceutical products.  Mr Hull had sought (Commonwealth) Therapeutic Goods Administration ("TGA") approval, in November 2000, for cold-pressed neem oil for topical application, as a preliminary to gaining TGA approval for the QUITNIT product, which is based on both that substance and on pyrethrim, a pyrethrum extract.  With the latter approval, he can engage in interstate trade.  However, from the evidence, it seems that he has not yet obtained such approval.  While he expects to have it "shortly", the exact terms on which it would be granted are not made clear in the evidence, nor is it stated why there has been a delay.  In the meanwhile, Mr Hull has had to "politely decline" what he declares to be "many" potential orders from interstate that he has received over the years, amounting to "many thousands of dollars".

3. To put that in context, Mr Hull's sales for the last 13 years to November 2002 are stated to be 20,000 units, with "several tens of thousands of dollars" of advertising in the same period[1].

   [1] Mr McCormack was critical of this vague accounting, which, he said, was inconsistent with the sales figures.  If taken literally, the figures would suggest that Mr Hull, for the last 13 years, has been spending about 10% of his total revenue on promotion.  Such a figure is, on the face of it, quite high on general commercial principles.  It is possible, but actual evidence of the result of such spending is quite sparse.

4. Wild Child did not start to use a relevant trade mark until July 1998[2].  From the evidence, it seems that Wild Child has been aware of Mr Hull's activities since at least 15 April 1999.  At that time a lawyer acting for Mr Hull wrote to Wild Child, warning of the rights accrued by Mr Hull on the basis of use since "approximately 1990".  Wild Child engaged a commercial investigator, who reported to Wild Child that Mr Hull, who was then absent from his property, appeared to be conducting some form of activities that involved the bottling of liquids, in small premises the content of which resembled that of a laboratory. 

   [2] There was apparently earlier production of relevant goods, based on natural oils and wildflower essences, by Ms Preston herself.  As there are no details stated I think I should regard this use as being either non-commercial or, if commercial, insignificant.

5. I will note, at this point, something from the evidence in reply.  There it is declared by Leanne Preston, Managing Director and sole shareholder of Wild Child:

   The Trade Marks Office file history relating to application 815736 includes a note by an officer of the Trade Marks Office that reads "Applicant was given assurance by owner of the cited mark that use of QUIT NITS would be limited to Western Australia and so he willingly gave permission for the mark to be used in that State only as part of a 'gentleman's agreement'.  However, owner of the cited mark has reneged on this agreement."

6. Ms Preston then presents evidence that invites me to draw a link between this "assurance" and a conversation between Mr Hull and a Mr Glennon, a prospective investor in Wild Child.  She portrays the latter as wanting to obtain information about Wild Child's competitors before investing.  She states that the call was made in October 2000 and without her knowledge or permission.  She goes on to say that:

   Apart from mentioning that Mr Hull appeared to be a brusque character, Mr Glennon did not advise me of any of the details of this telephone conversation.

7. I observe, however, that Ms Preston does not declare that she actually took the step of asking Mr Glennon anything about the conversation.  Why she therefore attributes a statement made by Mr Hull to this conversation is not particularly clear.  Moreover, if the discussion with Mr Glennon is at all relevant, Ms Preston's evidence also tends to suggest that Mr Glennon himself believed that, in October 2000, Wild Child's use was, at the time, geographically limited.

8. Wild Child now has TGA approval of its own QUIT NITS product.  Mr Hull's and Wild Child's preparations are different in action.  Wild Child characterises its own product as "non-chemical".

9. From a later starting date, Wild Child has built up an interstate trade.  Much of this has built up since the date on which Mr Hull applied to register his trade mark and all of it is subsequent, as I have said, to his first use.  Wild Child had 20 distributors in a "state-wide network" in Western Australia in July 1998.  Wild Child's business has continued to grow.  Sales in the period July 1998 - 30 November 1999 are not directly stated.  Taking the figure for 1998-9 and a pro-rata share of the figure for 1999-2000 yields a total of less than $500,000, advertising being quite modest in the earlier years, rising by a factor of five in the financial year 2000-2001.  In July 2000, Wild Child had 3.5% of the market, in a field where there were at least 14 other relevant products[3].  It was at that time the seventh biggest seller in a field where the market leader held 25%.  In 2001 Wild Child was reported to hold a 4% share of the market for head lice treatments.

   [3] The total market in these goods is quite large, about $12 million per year in July 2000.

   Issues considered

10. Wild Child relies on grounds under sections 41, 42 (contrary to law), s 43 (misleading connotation), s 44 (prior and conflicting registered trade mark), s 58 (ownership), s 59 (lack of present intention to use), s 60 (prior reputation in a conflicting trade mark) and s 62(b) (accepted on the basis of a statement false in material particulars).

    Section 41

11. I will put s 41 out of the way immediately.  That provision is not a tool for allocating competing rights in trade marks that are capable of distinguishing.  In the present matter, the capability of distinguishing is inherent in the trade marks in question but, either way, the provision does not allocate rights between competing interests where two traders have independently adopted the same or a deceptively similar mark.  Any such conflict must therefore be dealt with under other headings.

    Section 42

12. As to s 42, Wild Child argues that Mr Hull is caught by various provisions that will prevent him trading outside the State of Queensland, or indeed outside the portion of the State where, according to Mr McCormack, Mr Hull has established a limited bulwark against the business of Wild Child.

13. Mr McCormack noted that Wild Child's approval under the TGA specifies the trade mark to be applied to the goods.  He argued that since such an approval can impose conditions of labelling, the existence of an approval for Wild Child must preclude an approval for Mr Hull if he intends to use the same or a similar trade mark.  Mr McCormack said this must follow, "as night follows day", since the approval of different medicines bearing near-identical trade marks was surely not likely to occur.  However, he was not able to point me to any provision of the Therapeutic Goods Act that had a bearing on that issue, other than s 28 and similar, which deal with general labelling matters.  Mr Heerey was vociferous in denying the impediment existed.

14. I do not think it is sufficient for Mr McCormack to raise this issue at hearing when it is entirely unsupported by a thorough analysis of the relevant provisions.  It would appear that, if Wild Child's existing TGA approval is to prove an impediment to Mr Hull, it would be only in the course of a discretionary exercise by officers of the TGA.  Therefore, I will not accept his evidence from the bar table about the extent of the alleged impediment.  I will decide this matter on the basis that TGA approval is the complex and time consuming process Mr Hull declares it to be.  I accept that, if he can get such approval, he intends to sell his product outside Queensland, subject to the whatever other impediments Wild Child can lawfully put in his path. 

15. Mr Hull has been less than forthright, in the material on which he relies, in disclosing the state of his application to the TGA. However, some progress has been made and cold-pressed Neem oil is now approved as an ingredient in relevant medicines, subject, as Mr McCormack noted, to various labeling conditions. I think it is a fair inference that Mr Hull has not made the prosecution of his TGA application a major priority and, clearly, without it he must trade only within Queensland. However, that does not establish any ground under s 42. Mr Hull complies with the law by restricting his use, and his failure to obtain necessary legal approval to allow wider use amounts, by itself, to neither abandonment (see below) nor to potential illegal use.

16. I do not think that the Trade Practices Act[4] would prove to be an impediment, as at the date of application, to Mr Hull's business.  The ground of opposition in question is said to arise firstly because of a breach of s 52 - misleading or deceptive conduct vis a vis the reputation and trading activities of Wild Child.  In so far as this is a ground of opposition requiring a balancing of the rights of the parties, I have no doubt that the situation is to be assessed at the date on which Mr Hull applied.  At that date, so far as I can judge from the evidence presented to me, the reputation of Wild Child outside Western Australia was quite small.  Perhaps the case mounted by Wild Child suffers from a comparison with events after the date on which Mr Hull filed his application.  However, I think it is fair to say that, like all businesses that have grown over time, it was quite small initially. 

    [4] I will refer to the Federal legislation for convenience only.  Mr McCormack noted that, as Mr Hull is an individual rather than a corporation, he is subject to the relevant State provisions instead.  However, these various Fair Trading acts mirror the same provisions. 

17. Mr Hull, for his part, was trading only in Queensland, and clearly there was no deception occurring in that State at that time.  Mr Hull, in other words, has been entirely law-abiding and I presume that it is not likely that a court would have found his conduct contrary to law when there demonstrably was no unlawful action and no immediate prospect of it.  If, in the alternative, a court would have acted to prevent anticipated future transgressions, I note that the test under the Trade Practices Act deals with misleading or deceptive conduct.  It will not necessarily proscribe conduct that is merely such as to cause confusion[5].  However, where the marks are as close as here, if there is any significant degree of reputation in Wild Child's mark, conflict with that of Mr Hull would go beyond confusion and would be likely to mature into actual deception.  I can only presume that the decision of such a hypothetical court about such a contingency would be no more favorable to the opponent than my own under s 60 (see below) may prove to be.

    [5] Shanahan's Australian Law of Trade Marks and Passing Off, 3^rd Edition, 22.70. 

18. Mr McCormack went on to argue that s 53 of the TPA, which deals with false or misleading representations, was also relevant. Mr McCormack argued that a breach of s 53 requires, on the part of the person making the representation, no knowledge of the falsity of the representation. Since the breach is to be decided on the balance of probabilities, Mr McCormack argued that this would significantly simplify the finding that use, to be trapped by s 42 of the Trade Marks Act, "would", as opposed to "could", be contrary to law[6]. While I understand the point he is making, it does not assist here. The selling of goods under a trade mark that is too close to that of another trader may not necessarily infringe s 53, depending on the marks, the actions of the parties, the reputation and the circumstances. Here, I do not see anything that was a breach of s 53 of the Trade Practices Act.

    [6] See Madgwick J in Advantage Rent-a-Car Inc v Advantage Car Rental Pty Ltd (2001) 52 IPR 24

    Section 43

19. This provision of the Trade Marks Act does not provide a ground of opposition in the present case.  The opponent's case here is well within the limits of comments in the Full Federal Court in Big Country Developments Pty Ltd v TGI Friday's Inc, [2000] FCA 720, 48 IPR 513 at 521:

    The case on deception and confusion sought to be made by Big Country and Friday's Australia in the present proceedings is one that falls outside the reasons specified in [section 43].  It does not depend upon some connotation in the registered mark, but upon its similarity to a name used by Big Country and others.  So the alleged deception or confusion is not for a reason covered by s 43.

    Section 44

20. There is no dispute that Mr Hull is the first user of the trade mark, and that he has used it continuously since before the priority date of Wild Child's own conflicting trade mark registration. As to s 44(4), Mr McCormack simply sought to emphasise that the wording of that provision is not mandatory at the opposition stage, in the sense that any ground of opposition that is otherwise established may well impede registration.

    Sections 58 and 59

21. The intention to use a trade mark is an element of two other grounds of opposition, those under sections 58 and 59.  That intention relates to the two grounds somewhat differently, because s 58 deals with ownership at the outset, where s 59 deals with intention - perhaps by a different party, s 107 - to use in the present tense, presumably at the time the opposition was filed.

22. From Aston v Harlee[7] it is clear that, subject to s 27's additional provisions, which are not at issue here, an application for an unused trade mark cannot be properly filed by someone who does not intend to use it.  Such a party cannot purport to any sort of right to be registered as an owner.  In the present case, Mr McCormack argued that Mr Hull, if he intended not to use outside Queensland, was not the owner of the trade mark.  Mr Heerey, for his part, pointed to PB Foods v Malanda Dairyfoods Ltd[8] for the principle that ownership is a right that is acquired nationwide, either by the filing of an application or by the earlier use of a trade mark.  That is a fair enough stipulation, though it would follow that if Mr Hull had subsequently abandoned his right outside Queensland, Wild Child would have a fair case under one or other provision.

    [7] (1960) 103 CLR 391

    [8] (1999) 47 IPR 47

23. Abandonment is, however, something that has to be clearly shown.  Can it be said that Mr Hull abandoned the right he accrued in, at the latest, 1993?  I think not.  The law as to abandonment was reviewed by McGarvie J in Riv-Oland Marble Co ( Vic) Pty Ltd v Settef SpA[9], at page 421 - 422.  McGarvie J states that "In my opinion title to a trade mark is lost at common law by intentional abandonment but not by mere non-use".  This is a question of fact.  See subsequently at 422: "It is necessary to infer from this whether Settef formed an intention to abandon its proprietary interest in the trade mark." 

    [9] (1987) 10 IPR 402 at 421.

24. That Mr Hull abides by his present lack of TGA approval and turns away interstate orders is not sufficient to show abandonment.  The evidence shows that he clearly recognises that selling his products interstate would be, for the moment, illegal.  The most that can be said is that Mr Hull does not necessarily want to conduct an enterprise on the same large scale as Wild Child.  Even this is not something that the evidence supports.  True, he has perhaps not sought very vigorously to market his goods even throughout Queensland.  As Mr McCormack noted, his operation is quite small-scale, and until recent times it appears that it was Mr Hull himself who attended the pharmacies that stock his product, in order to replenish their shelves.  However, it is a far cry from this point to saying that a man who now turns away interstate orders that come to his doorstep would not fill them if he could legally do so.

25. Mr McCormack's arguments also go to something akin to estoppel.  It is said that, whatever his intentions, Mr Hull is well aware of the business now being conducted by WILD CHILD.  Therefore, argued Mr McCormack, he ought to be impeded, under one ground of opposition or another, from creating the deception or confusion that, it is alleged, will come from his now changing his past pattern of behaviour.

26. This is not a case of a man seeking to take up use of a trade mark he has not so far used.  Mr Hull is the first user.  Wild Child has gained TGA approval and subsequently outflanked him in territory and market size, and now uses a deceptively similar mark in a number of states.  WILD CHILD has invaded Mr Hull's patch in recent times, though clearly aware of his rights.  I do not think that there is any reason why Mr Hull's rights should be seen as restricted in principle, subject only to the damage that, in terms of s 60 Wild Child may have already done to his position.

    Section 60

27. There is no argument that Wild Child was using a deceptively similar trade mark at the time that Mr Hull filed the now-opposed application.  Can it be said that, in terms of s 60, use of the trade mark by Mr Hull would be likely to deceive or cause confusion because of the reputation in Wild Child's trade mark at the priority date?

28. As Mr Heerey argued, for Mr Hull, the reputation that is relevant is that which existed as a result of use by Wild Child between its first use, July 1998, and the priority date, 30 November 1999 ("the critical period").  Wild Child has elected to rely on information that does not necessarily present a clear picture of events during that critical period of time.  Wild Child caused 10,000 information brochures (exhibit LP-15) to be printed in 1998.  Most of these have been distributed since then but it is unclear how many of them were distributed within the critical period, or where.  Ms Preston declares that these brochures have been distributed "throughout Australia".  However, her company did not have its own TGA approval until November 1998 and there was no appointed distributor outside of Western Australia until 25 February 1999.  Therefore, I would expect that, if such distribution has any simple proportionality to sales, by far the majority were distributed after November 1999. 

1. In April 1999, a promotional brochure (exhibit LP-13), featuring Wild Child's product was, Ms Preston declares, distributed by API, a pharmaceutical wholesaler, to all pharmacies throughout Australia.  The brochure originates from API, not Wild Child, but there is no first-hand evidence of the extent of its circulation.  It is a simple A4 advertisement sheet, telling the reader that for the month of April Wild Child's product was available for a special price.  It appears to be aimed at pharmacists, not customers, as it is also an order form, with a minimum order of 12 bottles.  There is no evidence that any orders were placed in response to this brochure.

2. New distributors, using that word in the plural for the first time, were appointed on 1 January 2000, for all States and Territories, but there is no information in the Preston declaration about the interstate performance of the original distributor, whose term finished on 31 December 1999.  I note that the Business Plan for July 2000 (LP-11) identified as a weakness "Distribution network under perfoming".

3. Exhibit LP-14 is a brochure that is styled Head Lice Fact Sheet.  It promotes Wild Child's product and Ms Preston declares that

   copies of this Fact Sheet were provided by my company to its distributors for training purposes and for further distribution to pharmacies as reference material.  It is my understanding and belief, based on information provided to me by my company's distributors, that numerous copies of an updated version of this fact sheet have been distributed to pharmacies throughout Australia.

4. Given what I have already said about the appointment of interstate distributors, in the plural, I cannot determine from this if Apco, the original distributor, circulated any such brochures, "updated" or otherwise, nor can I assess the timing of any circulation of the fact sheet by subsequent distributors. 

5. Ms Preston declares that (in 1998) she caused 100,000 leaflets (LP-20) to be distributed by Apco representatives "throughout Australia".  However, there is no basis given for Ms Preston's belief that Apco succeeded in doing so.  Indeed, as Mr Heerey pointed out at the hearing, Apco was not appointed until February 1999.  Mr McCormack conceded that I should read the declaration as referring to that latter year.  However, this simply illustrates the lack of safety that comes with relying on uncorroborated and second-hand statements.

6. LP21 refers to distribution through Coles supermarkets and is clearly subsequent to the critical date.

7. Similarly, in April 1999 Apco apparently distributed LP-25, another leaflet/order form.  Ms Preston goes on to say that "Apco caused copies of this leaflet to be distributed to every pharmacy in Australia".  However, I cannot determine, from this, just when Ms Preston asserts that Apco carried out this Australia-wide distribution, if indeed that is what Apco actually did.  Much less can I see what effect this had on the recipients.  Mr McCormack argued that the recipients were pharmacists, and thus likely to keep such documents, and to retain knowledge of trade publicity.  Even if I give full weight to that argument, the "when" issue is simply not resolved by the evidence in its present form.  Equally, I note Mr Heerey's comment that, on a question of this type, undue weight should not be given to the opinion of such specialists, which does not necessarily extrapolate to the population at large[10].

   [10] Le Cordon Bleu BV v Cordon Bleu International Ltee (2001) 50 IPR 1.

8. Ms Preston also believes that FH Faulding caused copies of its February 1998 catalogue (LP-22) to be distributed to half a million homes throughout Australia.  However, the catalogue looks to me very much like typical junk mail, the sort of material that is more significant for being distributed than for being read.  Wild Child's product was simply one among many in any case.

9. Exhibit LP-28 also relates to the critical period.  It is pages 21 and 22 from the June 1999 issue of a trade magazine, Retail Pharmacy.  On about a quarter of one page is an article about Wild Child's QUIT NITS product.  In March 2001, this magazine had a circulation of 7041, apparently to all pharmacies in Australia.

10. Overall, I do not think that I can use this evidence as a reliable base for concluding that the trade mark of Wild Child had a nationwide reputation in November 1999.  Perhaps it did, but the opponent has the onus of bringing more certainty into the picture than now exists.  More likely than not, the opponent's trade mark did not attain such a nationwide reputation, one that could have arguably given rise to a significant level of deception or confusion until later, in 2000 or (more probably) subsequently.  This, I think, is the most probable reading of the ambiguities of the evidence together with the fact that, even in July 2000, and prior to a fairly significant increase in promotional spending, Wild Child's market share of nit-control treatments was only 4%. 

11. Equally, I note LP-16, a project and media evaluation report, prepared for WILD CHILD in September 2001.  This shows that Wild Child sought to get its products onto the shelves of Coles supermarkets in order to lift its brand recognition, which the report states that Wild Child itself categorised as "limited".  Wild Child succeeded with the placement of its goods on Coles' shelves, but only in November 2000 and thus after the critical date, and only in stores in Western Australia, Wild Child's apparent heartland.  The lack of any convincing first-hand details about the distribution and effectiveness of publicity, and the lack of an interstate distributor prior to February 1999 combine to weaken Wild Child's case.  Indeterminate publicity, unsupported by the availability of goods for sale any earlier than February 1999 suggest to me that, as at 30 November 1999, a significant possibility of deception or confusion, as a result of the reputation in Wild Child's trade mark, existed only in Western Australia.

12. Accordingly, my conclusion is that the ground of opposition is established only with respect to the State of Western Australia.

    Section 62

13. Mr McCormack was critical of the claim made by Mr Hull, and recorded on the official file, that Wild Child had "reneged" on a gentlemen's agreement. Mr Hull perhaps made that in good faith but his evidence does not refer to it at all. So far as the evidence shows, the claim was a result of a conversation with a potential investor in Wild Child, rather than with Ms Preston or anyone authorised by her. There is no evidence of any other agreements or discussions at all. Thus, the representation was false in material particulars. However, it is clear that Mr Hull's application was accepted under the provisions of s 44(4), which turns only on prior and continuous use. Therefore, I cannot see how Mr Hull's statement was pertinent to the decision to accept the application, and its inaccuracy is irrelevant.

    Conclusion

14. A ground of opposition has been established under s 60 in respect of Western Australia only.  My decision is therefore that the application should not be registered in its present form.  However, registration may proceed on condition that it does not extend to the State of Western Australia.  The trade mark application will be so limited and may proceed to registration after one month from the date of this decision.  If the Registrar has been served with a notice of appeal before that time, I direct that registration shall not occur until the appeal has been decided or discontinued.

    Costs

15. Both sides have enjoyed some success but I do not think either party is entitled to have its costs paid by the other.  I decline to make an award of costs.

    Terry Williams
    Hearing Officer
    Trade Marks Hearings
    09 January 2004