Marcus v Sabra International Pty Limited [1995] FCA 35

CATCHWORDS

TRADE MARKS - appeal against Registrar's decision upon opposition to an application for registration of a mark - nature of a claim for registration as a proprietor under s. 40 of the Trade Marks Act - what is prior use of the mark in the case of an overseas vendor of goods into Australia - effect of a previous, now lapsed, registration of the mark and licence to use it - distinction between non-use of a mark and abandonment of it - residual goodwill where use of a mark is suspended - validity of assignments at common law together with such goodwill.

Trade Marks Act 1955, ss. 40 and 51

The Shell Company of Australia Limited v. Rohm and Haas Company (1949) 78 CLR 601

Moorgate Tobacco Co. Limited v. Philip Morris Limited (1984) 156 CLR 414

Estex Clothing Manufacturers Pty Limited v. Ellis and Goldstein Limited (1967) 116 CLR 254

Thunderbird Products Corporation v. Thunderbird Marine Products Pty Ltd (1974) 131 CLR 592

Pioneer Kabushiki Kaisha v. Registrar of Trade Marks (1977) 137 CLR 670

Polo Textile Industries Pty Limited v. Domestic Textile Corporation Pty Limited (1993) 42 FCR 227

Hassan-el-Madi's Application to Register a Trade Mark (the "Magic Carpet" case) (1954) 71 RPC 348

Mouson & Co. v. Boehm (1884) 26 Ch D 398

Settef SpA v. Riv-oland Marble Co. (Vic) Pty Ltd (1987) 10 IPR 402

Riv-oland Marble Co. (Vic) Pty Ltd v. Settef SpA (1988) 19 FCR 569

R.J. Reuter Co. Ld. v. Mulhens [1954] Ch 50

RAEL MARCUS v. SABRA INTERNATIONAL PTY LIMITED

NG 577 of 1993

Burchett J.

Sydney

10 February 1995

IN THE FEDERAL COURT OF AUSTRALIA)

)

NEW SOUTH WALES DISTRICT REGISTRY) NG 577 of 1993

)

GENERAL DIVISION )

ON APPEAL FROM A DELEGATE OF THE REGISTRAR OF TRADE MARKS

BETWEEN: RAEL MARCUS

Applicant

AND: SABRA INTERNATIONAL PTY LIMITED

Respondent

CORAM: Burchett J.

PLACE: Sydney

DATE : 10 February 1995

ORDERS OF THE COURT

THE COURT ORDERS THAT:

1. The appeal be upheld.

2. The applicant bring in, on a date to be fixed, short minutes of orders appropriate to be made in the light of the reasons of the Court.

NOTE: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA)

)

NEW SOUTH WALES DISTRICT REGISTRY) NG 577 of 1993

)

GENERAL DIVISION )

ON APPEAL FROM A DELEGATE OF THE REGISTRAR OF TRADE MARKS

BETWEEN: RAEL MARCUS

Applicant

AND: SABRA INTERNATIONAL PTY LIMITED

Respondent

CORAM: Burchett J.

PLACE: Sydney

DATE : 10 February 1995

REASONS FOR JUDGMENT

BURCHETT J.:

By s. 51 of the Trade Marks Act 1955, it is provided that the applicant, or an opponent, in an application for registration of a trade mark may appeal to this Court from a decision of a Registrar to refuse to register, or to register, the mark. The "appeal" is heard in the original jurisdiction of the Court. This case is such an appeal by an opponent in respect of a decision to register the mark "Ginsu" in Class 8 (Goods: Cutlery) upon an application to the Registrar made by the now respondent. The appellant seeks an order setting aside the decision and declaring that the respondent is not entitled to be registered as the proprietor of the mark.

The application for registration was made by the respondent under s. 40 of the Act, subs. (1) of which provides:

"A person who claims to be the proprietor of a trade mark may make application to the Registrar for the registration of that trade mark in Part A or Part B of the Register."

The application of these simple words to the present case involves some measure of complexity. The respondent's association with the mark began a number of years before its application for registration, the subject of the present proceedings, which was made on 9 February 1990. It is necessary to go back to 1978, when a corporation Ginsu Products, Inc ("GPI") was formed in the United States of America as a wholly owned subsidiary of Dial Media, Inc ("DMI"), another American corporation. On 11 November 1982, GPI obtained Australian trade mark registration number A343563 in respect of the mark "GINSU", based on an application it had made on 4 March 1980.

The respondent first arrived on the scene in 1981, when its director, or one of its directors, had discussions in the United States with representatives of DMI, during which he was shown some "GINSU" branded products, some knives. In 1982, the respondent executed a written licence agreement with GPI, whereby the respondent was licensed to use the registered mark "GINSU" in Australia. In the same year, the respondent arranged for the showing, by way of a test run in an Australian country town, of an American made television commercial advertising "GINSU" branded knives. Subsequently, the respondent arranged for the production in Australia of television commercials, based on the American commercial, advertising knives under the mark "GINSU". It did so pursuant to the licence agreement. From late 1982, for some five years, about five television advertising campaigns per year were pursued in every Australian capital city, and in many country towns, in which these Australian made television commercials were broadcast at the respondent's instructions pursuant to the licence agreement.

During the period 1982 to 1987, the respondent purchased "GINSU" branded products through DMI or GPI. The respondent would place orders, and the products would arrive in Australia from the United States between four and six weeks later, sales invoices being rendered by DMI or GPI to the respondent. The knives carrying the mark "GINSU" were sold in Australia by the respondent in the period 1982 to 1987 by direct marketing, that is by sale to persons responding to the television advertising, and also through retail outlets such as a particular chain of chemists. Total sales were in the order of $500,000 in value, or 25,000 sets of knives in number, sold by direct marketing, and some 5,000 sets of knives sold through retail outlets. These sales were made pursuant to the licence agreement.

DMI and GPI did not conduct any business in Australia other than that which I have described.

Under the licence agreement, GPI was obliged to ensure sufficient supply to the respondent of "GINSU" branded products to meet the sales demand in Australia and the market in Australia to be developed. Between 1987 and 1988/1989, the respondent received no "GINSU" branded products from GPI or anyone else. There is no evidence concerning the circumstances in which supply ceased, except that some time shortly before 26 June 1986, GPI went into receivership, with consequences I will shortly recount, and, pursuant to the laws of Rhode Island, a state of the United States, a permanent receiver was appointed to administer its assets.

On 21 May 1987, Australian trade mark registration number A343580 "GINSU" was removed from the Register. It had lapsed for non-renewal.

Meanwhile, on 26 June 1986, pursuant to an order of the Supreme Court of Rhode Island of the same date, the permanent receiver of GPI had sold to an Ohio corporation, Scott & Fetzer Company, assets belonging to GPI, including Australian trade mark registration A343563 "GINSU" together with "the goodwill of the business in connection with which the ... trade mark [had] been used". A series of further assignments followed. First, by a further agreement of the same date, 26 June 1986, Scott & Fetzer Company assigned all its right, title and interest in the trade mark to a Massachusetts corporation, Metro Express Inc, together with "the goodwill of the business in connection with which [the trade mark] had been used". Then, on 21 December 1987, after the registration had lapsed, Metro Express Inc assigned the trade mark and the goodwill to one Chen Cheng-Fu, a person also known as Charles C.F. Chen, a resident of Taiwan. Finally, by agreement dated 14 September 1988, Chen Cheng-Fu assigned to the appellant Rael Marcus "the entire right, title and interest in and to the trade mark `GINSU' in Australia together with the goodwill of the business pertaining to the same".

None of Scott & Fetzer Company, Metro Express Inc, Chen Cheng-Fu or Rael Marcus has sold any products in Australia under the "GINSU" trade mark since 16 June 1986.

During the period 1981 to approximately 1989, "GINSU" branded products were manufactured and sold in the United States of America by a Delaware corporation, through a particular division of it known as Quikut. This corporation was the manufacturer of the products supplied, as I have stated earlier, by GPI and DMI to the respondent under the licence. In 1988/1989, the respondent received some 5,000 sets of "GINSU" branded products directly from Quikut, many of which were used as a "premium gift" in association with sales by the respondent of other products involved in its direct marketing campaigns. The respondent still holds some "GINSU" branded products which it intends to promote on television and to sell.

In the circumstances outlined, which I have taken in the main from an agreed statement of facts, the respondent alleged it was entitled to registration, while the applicant (the opponent in the original proceedings) says that the respondent's claim to be the proprietor of the mark within the meaning of s. 40 cannot be sustained. That claim was made on the basis, as the delegate of the Registrar held, that the respondent, having "continued to use the mark after the registered mark 343563 had lapsed on 21 May 1987", must be regarded as "the first user of the mark in Australia and thus the proprietor of the mark in this country". In taking this view, the delegate was strongly influenced by the proposition that GPI "had ceased to trade here" and that, upon its ceasing to do so, it and its successors in title lost the ability to assign the mark along with the goodwill of the business to which it appertained.

The starting point must be to consider the nature of the claim made by an applicant for registration under s. 40. In Shanahan on Australian Law of Trade Marks and Passing Off 2nd ed. (1990) at 154-155, the law is stated as follows:

"(A)n applicant for registration cannot validly claim proprietorship without being, in a sense, the `author' of the mark. Such authorship need not entail creation of the mark for it may have been copied from abroad but it does require that no one else has acquired a prior right through use in Australia. In a passage that has found the approval of the High Court on several occasions, Holroyd J. explained in Re Hicks' Trade Mark (1897) 22 VLR 636 at 640 (and see arguendo at 639):

`In order to substantiate his application to be placed on the Register for this word he must have claimed to be the proprietor, and the word "proprietor" must be taken to mean the person entitled to the exclusive use of the name. If there is anyone else who would be interfered with by the registration of the word "Empress" in the exercise of a right which such person has already acquired to use the same word in application to the same kind of thing, then Hicks ought not to have been put on the Register for that trade mark.'"

Dixon J. expounded the same proposition at some length in The Shell Company of Australia Limited v. Rohm and Haas Company (1949) 78 CLR 601 at 625 et seq. He said (at 625):

"The basis of an application for the registration of a trade mark is a claim on the part of an applicant to be proprietor of the trade mark",

citing s. 32 of the earlier Trade Marks Act 1905, which is not, I think, relevantly distinguishable. And at 627, his Honour said:

"(I)t is clear enough from the course of legislation and of decision that an application to register a trade mark so far unused must, equally with a trade mark the title to which depends on prior user, be founded on proprietorship."

Accordingly, he stated (at 629) the question in the case as being "whether at the time the appellants made their application to register `Ditrene' the respondents possessed a better title to the proprietorship of `Dithane' and a better right to be registered as proprietors of that mark". Similarly, in Moorgate Tobacco Co. Limited v. Philip Morris Limited (1984) 156 CLR 414 at 432, Deane J. (with whom Gibbs C.J., Mason, Wilson and Dawson JJ. agreed) said:

"The prior use of a trade mark which may suffice, at least if combined with local authorship, to establish that a person has acquired in Australia the statutory status of `proprietor' of the mark, is public use in Australia of the mark as a trade mark, that is to say, a use of the mark in relation to goods for the purpose of indicating or so as to indicate a connexion in the course of trade between the goods with respect to which the mark is used and that person ... . The requisite use of the mark need not be sufficient to establish a local reputation and there is authority to support the proposition that evidence of but slight use in Australia will suffice to protect a person who is the owner and user overseas of a mark which another is seeking to appropriate by registration under the Trade Marks Act."

His Honour added (at 433):

"The Court was referred to a large number of cases and to some administrative decisions in which consideration has been given to what constitutes a use or user of a trade mark for the purposes of the statutory notion of proprietorship of the mark before registration. The cases establish that it is not necessary that there be an actual dealing in goods bearing the trade mark before there can be a local use of the mark as a trade mark. It may suffice that imported goods which have not actually reached Australia have been offered for sale in Australia under the mark ... or that the mark has been used in an advertisement of the goods in the course of trade ... ."

In the present case, GPI, over a period of several years, sold goods to the respondent for resale in Australia under the mark, which was then registered as GPI's trade mark. The goods were also widely advertised in Australia under that mark. A significant question in the case is whether GPI thus made relevant use of the mark. In Estex Clothing Manufacturers Pty Limited v. Ellis and Goldstein Limited (1967) 116 CLR 254 at 271, Barwick C.J., McTiernan, Taylor and Owen JJ. commented, in their joint judgment, on sales by an English manufacturer, made in England, to Australian retail houses for importation into Australia. They said the denotation of a trade mark -

"is not limited by any concept of the physical use of a tangible object and we have no doubt that when an overseas manufacturer projects into the course of trade in this country, by means of sales to Australian retail houses, goods bearing his mark and the goods, bearing his mark, are displayed or offered for sale or sold in this country, the use of the mark is that of the manufacturer. Indeed, in this case, the respondent [i.e. the English manufacturer, which had registered its mark in Australia] is the only person who has the right to use the mark and the retailer to whom the goods have been sold for re-sale does not, in any relevant sense, use it."

That would seem to apply precisely to the sales made in Australia of "GINSU" knives purchased by the respondent from GPI, unless the formal licence to use the registered mark in Australia makes any difference. I do not see how it could. Honest use of a mark under licence cannot negative the connection in the course of trade with the registered proprietor of the mark: Pioneer Kabushiki Kaisha v. Registrar of Trade Marks (1977) 137 CLR 670 at 683; Polo Textile Industries Pty Limited v. Domestic Textile Corporation Pty Limited (1993) 42 FCR 227 at 239. See also R.J. Reuter Co. Ld. v. Mulhens [1954] Ch 50 at 95, per Romer L.J. (as he then was).

Accordingly, immediately prior to the lapse of registration in 1987, GPI or anyone claiming under a valid chain of assignments from GPI, was not only entitled to be registered in respect of the trade mark, but was also proprietor of the trade mark at common law. The lapse of the registration involved the loss of certain statutory rights, but did not affect the common law proprietorship of the mark. If the assignments were valid, by the time the respondent made its application in 1990, only three years after the lapse of the registration, the proprietor of the mark at common law was the present applicant, the opponent. It is accepted that the matter should be tested by the position at the date of the application for registration: The Shell Company of Australia Limited v. Rohm and Haas Company (supra, at 624). But even if the assignments were not valid, unless within the three years period GPI should be held to have abandoned its mark, it would itself have been the proprietor at that date. In either case, the words of Jacobs J. in Thunderbird Products Corporation v. Thunderbird Marine Products Pty Ltd (1974) 131 CLR 592 at 602 (and see also Aston v. Harlee Manufacturing Company (1960) 103 CLR 391 at 400) would have been applicable:

"(R)egistration by another of the trade mark prevents the further use of the mark by the person who had been the first to use it. That is not permissible because it bars the true proprietor of the mark in Australia, the person who had first used the mark to distinguish his goods in the course of trade in this country."

The question of abandonment requires separate consideration. It is not the law that all rights with respect to a trade mark vanish at once upon a mere discontinuance of its use. The connection in the course of trade denoted by it will not immediately be forgotten. That connection may be valuable, and it remains open to the proprietor to resume the use of the mark. Unless he has actually abandoned the mark, its use by another may amount to an appropriation of the benefit of the good name acquired by the mark over an earlier period of years. These propositions are supported by a number of authorities. In Hassan-el-Madi's Application to Register a Trade Mark (the "Magic Carpet" case) (1954) 71 RPC 348, a mark had been used by the opponents in Lebanon and Syria up to World War II, but not since. Indeed, the only real evidence of an intention to resume its use was the maintenance of registration in those two countries, a matter of no greater significance than the incurring of the expense of formal assignments quite shortly before the relevant date in the present case. Yet, the Court of Appeal declined to regard the mark as having been abandoned, and upheld the opponents' reliance upon it. Sir Raymond Evershed M.R. (as he then was) said (at 356):

"There is no evidence which meets the point that this mark was used, and was associated up to the last war with the Opponents in Middle Eastern countries. Having regard to the great reputation of `Rakeb-el-Rih' [the mark], I think for my part that the inference that there is a residual renown in this mark is reasonably well established. At least, for my part, I think the evidence to which I have briefly alluded is persuasive that, having regard to the history of the existing registration, the revival of a mark containing `Bissat-el-Rih' would inevitably lead, in the minds of many persons who are buyers in this trade, and others, to the assumption that this was a revival by the Opponents in some form of the older use or that the Applicant
was in some way connected with the business of the Opponents."

Jenkins L.J. said (at 357): "(T)hey cannot, in my view, be said to have abandoned the mark, inasmuch as it still remains on the Register in Syria and Lebanon." It will be observed that the word used by Jenkins L.J. was "abandoned", and that in a case involving a failure to use a mark for many years, mere discontinuance was not treated as the equivalent of abandonment.

The Magic Carpet case was cited by Wilberforce J. (as he then was) in Norman Kark Publications Ltd v. Odhams Press Ltd [1962] RPC 163 at 170. His Lordship was concerned with a cause of action in passing off, not upon the basis of a trade mark, but (at 171) he referred to a right "in the nature of a right to a trade mark which, once acquired, remains effective until abandoned". The older case Mouson & Co. v. Boehm (1884) 26 Ch D 398 is particularly instructive. There, a trade mark depicting a kangaroo was used from 1874 to 1876, but between then and 1882 was used so little that its proprietor (as appears at p. 401 of the report) "had quite forgotten the fact of his own mark of 1874". It was never registered. Chitty J. said (at 405): "(T)he question of abandonment is one of intention to be inferred from the facts of the particular case." He reached the conclusion (at 406):

"Here it appears to me there was no absolute non-user for any sufficient time, taken in connection with all the circumstances, to shew an intention to abandon. A man who has a trade-mark may properly have regard to the state of the market and the demand for the goods; it would be absurd to suppose he lost his trade-mark by not putting more goods on the market when it was glutted."

Mouson & Co. v. Boehm was followed in Settef SpA v. Riv-oland Marble Co. (Vic) Pty Ltd (1987) 10 IPR 402 at 421-422. That case went on appeal as Riv-oland Marble Co. (Vic) Pty Ltd v. Settef SpA (1988) 19 FCR 569. In the judgment of Bowen C.J., the point was examined at 571-572, where he said:

"Once having acquired proprietorship it can only be lost upon some established general law basis such as estoppel, acquiescence or abandonment. ... (I)n my opinion, to show abandonment of the mark in circumstances such as the present it would be necessary to demonstrate more than slightness of use. There would have to be some evidence indicating an intention to abandon the trade mark to result in the right to proprietorship being lost: see Mouson & Co v. Boehm [supra]."