FEDERAL COURT OF AUSTRALIA

Time Warner Entertainment Company, LP v Stepsam Investments Pty Limited [2003] FCA 1502

TRADE MARKS – Application for registration of the trade mark ‘harry potter’ in relation to clothing - appeal against the delegate’s decision to dismiss opposition to registration – whether the trade mark is not capable of distinguishing the applicant’s goods from the goods and services of other persons – whether use of the trade mark by the applicant for registration would be contrary to law or likely to mislead – whether the Registrar of Trade Marks accepted the application for registration on the basis of false representations.

Trade Marks Act 1995 (Cth) ss 41, 42(b), 59, 62(b)

TIME WARNER ENTERTAINMENT COMPANY, LP V STEPSAM INVESTMENTS PTY LIMITED

N 1181 of 2002

WILCOX J

17 DECEMBER 2003

SYDNEY

THE COURT ORDERS THAT:

1.                  The appeal be dismissed.

2.                  The applicant, Time Warner Entertainment Company, LP, pay to the respondent, Stepsam Investments Pty Limited, the costs incurred by it in connection with the appeal.

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

REASONS FOR JUDGMENT

WILCOX J:

1                     The issue in this appeal is the entitlement of the respondent, Stepsam Investments Pty Limited (‘Stepsam’), to register the trade mark ‘harry potter’ (‘the trade mark’) in respect of clothing.

The appeal

2                     Stepsam applied to register the trade mark (application 755905), in class 25 of the Trade Marks Register, in relation to ‘clothing and accessories’. However, prior to acceptance and advertising of the application, it was amended to delete the reference to accessories. The application for registration was opposed by the present applicant, Time Warner Entertainment Company, LP (‘Time Warner’). After a hearing, the delegate of the Registrar of Trade Marks (‘the delegate’) dismissed the opposition and permitted the application to proceed to registration.

3                     Pursuant to s 56 of the Trade Marks Act 1995 (Cth) (‘the Act’), Time Warner appealed to this Court against the delegate’s decision. By its notice of appeal, Time Warner sought orders that the delegate’s decision be set aside and the application for registration be refused. However, at an early stage of the hearing, Time Warner’s counsel, Ms Julia Baird, modified her client’s position. She said her client was no longer totally opposed to Stepsam’s application for registration, but contended that registration of the trade mark should be limited to adults’ clothing. Specifically, Ms Baird contended that registration of the trade mark should not extend to children’s clothing. Mr Stephen Burley, counsel for Stepsam, indicated his client did not accept that limitation. He argued Stepsam was entitled to have the trade mark registered in relation to all types of clothing.

4                     Both parties approached this case upon the basis that an appeal under s 56 of the Act is a hearing de novo in which the Court must decide the opposition issues for itself. That view is consistent with the approach of Bennett J in Torpedoes Sportswear Pty Limited v Thorpedo Enterprises Pty Limited [2003] FCA 901 at [15]. An appeal under s 56 is similar to an appeal under s 35(b) of the Act against a decision by the Registrar to reject an application. That is a hearing de novo: see Ocean Spray Cranberries Inc v Registrar of Trade Marks [2000] FCA 177; 47 IPR 579 at [16] and the authorities there cited.

5                     It follows that the parties have the right to put before the Court evidence additional to that considered by the delegate. Both parties have taken advantage of that right. Each of them has adduced considerable additional evidence. Much of it was, in my opinion, unnecessary; or, at least, unnecessarily detailed. There is really no dispute about the crucial facts.

The parties' interests

(i) Stepsam

6                     Stepsam is a company controlled by a married couple, Les Jack Farah and Claire Jennifer. They have been the sole shareholders and directors of the company since May 1992. Since July 1990, Mr Farah and Ms Jennifer have also been the sole shareholders and directors of Wombat Enterprises Pty Ltd (‘Wombat’).

7                     Since 1992, Mr Farah and Ms Jennifer have conducted the affairs of the two companies upon the basis that Stepsam is the owner of all assets used by Wombat, including real property and intellectual property, and that Stepsam authorises Wombat to use those assets in conducting a chain of retail clothing shops under the name ‘Wombat Boutique’.

8                     Apparently, the first Wombat Boutique store was opened by Ms Jennifer in 1988. Within a short time thereafter, she opened other stores. After Wombat was acquired by Ms Jennifer and Mr Farah, that company took over management of the stores. In December 1994, Ms Jennifer and Mr Farah devised the name and trade mark ‘harry potter’ and commenced to use that trade mark in connection with clothing promoted and sold through Wombat Boutique stores. The unchallenged evidence of Mr Farah is that Wombat did this as exclusive licensee of Stepsam.

9                     As at the priority date of the trade mark application, 26 February 1998, Wombat operated 17 clothing stores in New South Wales and Queensland. There are presently 50 Wombat Boutique stores. They are located in four States: New South Wales, Queensland, Victoria and South Australia. Stepsam and Wombat together employ approximately 260 sales and administrative staff.

10                  In his affidavit, Mr Farah explained the organisation of the company. He said:

‘From about 1988 to about 1994, the Wombat Boutique stores only resold women’s clothing manufactured by third party clothing manufacturers such as those made under the labels JAG, TABLE EIGHT, OJAY, DG DESIGNS and CMC. As Wombat’s business grew and it moved into more and larger shopping centres, there were increasing restrictions as to the third party clothing which Wombat could sell due to existing retailers in those shopping centres having exclusive rights to sell the same third party clothing in those shopping centres. My wife and I decided, therefore, that Wombat could not continue the development of its business relying on such third party clothing manufacturers. We decided to develop our own line of clothing (something that we had wanted to do for some time) which would also enable Wombat to increase margins on sales. This led to the conception of the HARRY POTTER trade mark and label’.

11                  Mr Farah said that ‘harry potter’ was selected as a trade mark because he and Ms Jennifer thought it ‘would have wide appeal as an Australian masculine name’. He said that, at that time, they did not imagine there would, in the future, be a popular fictional character of that name.

12                  Mr Farah said it was the intention of Ms Jennifer and himself ‘to develop a strong brand that could be used for a wide range of clothing’. He went on:

‘When we chose the HARRY POTTER trade mark we thought that it would work well for our line of women’s clothing and that we could expand with it into other clothing lines. My understanding at the time was (and still is) that male names are generally suitable for women’s clothing but female names do not work in the marketing sense for men’s or boys’ clothing. As, in our experience, it is women who tend to shop for men’s and children’s clothing, we believed that developing a brand identity under the name HARRY POTTER would be a good way to develop the brand to expand our market segment by offering our existing customer base clothing for other members of the family such as men’s wear and children’s wear.’

13                  Although the words ‘Harry Potter’ are capitalised in Mr Farah’s affidavit, the words on the clothing labels that have been tendered in evidence are all printed in lower case letters, including the initial letters in each word. That is consistent with the presentation of the words in the trade mark application.

14                  Mr Farah deposed that, in each year since 1994, Wombat Boutique stores have sold hundreds of thousands of units of harry potter clothing. Sales in the financial year ended 30 June 1998 exceeded 216,000 units. In that year, Wombat spent $125,000 on promotion of its stores and, in particular, the harry potter label. The cost of promotion increased in subsequent years.

15                  Mr Farah explained that, after a transition period following the December 1994 decision to adopt the harry potter label, all merchandise sold by Wombat Boutique stores has borne this label. In a confidential exhibit, he revealed Wombat’s trading results for each of the financial years ended 30 June 1995 to 30 June 2000. I need not reveal those figures. It is enough to say that, in the financial year containing the priority date, that is, the year ended 30 June 1998, the company achieved sales exceeding $9,000,000, a gross trading profit of over $4,000,000 and a significant net profit. In each year since that time, each of those items has increased significantly.

16                  In his affidavit, Mr Farah referred to the intention of Stepsam and Wombat. He said:

‘the intention of Stepsam and Wombat was to expand their market in relation to clothing to other market segments than women’s. This has, to a great extent, slowed down by the uncertainty caused by the advertising, promotion and merchandising of the Applicant’s HARRY POTTER motion picture and related media, as well as the Applicant’s opposition to the Application. At the time that Stepsam applied to register the trade mark, it intended that HARRY POTTER would be used in relation to a broader range of products including men’s and children’s clothing. The Wombat Boutique stores were well positioned, in my opinion, to be able to move into such lines and, in my opinion, they still are.’

17                  In her cross-examination of Mr Farah, Ms Baird challenged this evidence. Mr Farah acknowledged that the use covenant in the leases of all of Wombat’s existing stores referred to the sale of women’s clothing, as distinct from clothing generally. He said this was intentional; it would not be appropriate to put a second range of clothing into an 80 or 90 square metre shop. Mr Farah said the company would have to have to take up leases for larger stores ‘should we want to run them all in the one banner, in the one store name under one floor space’. Nonetheless, he insisted that he and Ms Jennifer had men’s and children’s clothing in mind when they applied for the trade mark. He explained:

‘At the time we looked at the trade mark we were convinced we were unbeatable. We’d won every award under the sun, there’s nothing we couldn’t do, we were all younger and we were strong and we were winners and there was absolutely every reason to believe we’d make a good go of it now and then.’

(ii) Time Warner

18                  Time Warner is an American corporation. It has a wide range of commercial interests, especially in the sphere of entertainment. Time Warner acquired from Ms J K Rowling the right to make films based on the Harry Potter books written by her.

19                  The first of those books, Harry Potter and the Philosopher’s Stone, was published shortly before the date of Stepsam’s trade mark application. However, as at that date, only some 2000 copies had been sent for sale in Australia; the book had not made any substantial impact in this country.

20                  After the date of the trade mark application, demand for the book increased considerably. In time, three more Harry Potter books were published, all of them written by Ms Rowling. They all featured the same fictional characters, with magician Harry Potter as the principal protagonist. The title of each book contained the words ‘Harry Potter’. The impact of the four books, and the films made out of them, was enormous.

21                  A report of the world-wide sales of books discloses that, by 30 November 2002, each of the first four titles in the series had sold more than one million copies in Australia. The first film, also Harry Potter and the Philosopher’s Stone, was released in Australia in November 2001. It was exhibited in cinemas around Australia, with more than four million tickets being sold. The second film, Harry Potter and the Chamber of Secrets, was released in November 2002. As at February 2003, ticket sales exceeded three million. Publication of the more recent titles, and the release of each of the films, caused media frenzies.

22                  Time Warner licensed various companies to market products featuring J K Rowling’s characters. The evidence includes photographs of some of the licensed products. The photographs demonstrate that, as might be expected, licensees have endeavoured to emphasise the connection between their products and the magical one by including sketches of J K Rowling’s characters and objects described in the books. The licences provided by Time Warner extend to clothing designed for teenagers and younger children. I understand that, presumably because of Stepsam’s trade mark application, no licences for clothing have been granted in Australia.

The issues

23                  In submissions furnished at the conclusion of the evidence, Ms Baird indicated that Time Warner relied on four grounds of opposition to Stepsam’s application for registration of its trade mark. The four grounds are that:

(i) the trade mark is not capable of distinguishing Stepsam’s goods from the goods or services of other persons (s 41 of the Act);

(ii) the use of the trade mark by Stepsam would be contrary to law (s 42(b));

(iii) Stepsam does not intend to use, or authorise the use of, the mark in Australia, or to assign it to a body corporate for use in Australia (s 59); and

(iv) the Registrar accepted the application for registration on the basis of representations that were false in material particulars (s 62(b)).

24                  I will deal separately with each of these issues. The onus of establishing any particular ground of opposition lies on the opponent; in this case, Time Warner: see Lomas v Winton Shire Council [2002] FCAFC 413; (2003) AIPC 91-839 at [36].

Whether the trade mark is not capable of distinguishing Stepsam’s goods

25                  Section 41 of the Act provides as follows:

‘(1) For the purposes of this section, the use of a trade mark by a predecessor in title of an applicant for the registration of the trade mark by the applicant.

(2) An application for the registration of a trade mark must be rejected if the trade mark is not capable of distinguishing the applicant’s goods or services in respect of which the trade mark is sought to be registered (designated goods or services) from the goods or services of other persons.

(3) In deciding the question whether or not a trade mark is capable of distinguishing the designated goods or services from the goods or services of other persons, the Registrar must first take into account the extent to which the trade mark is inherently adapted to distinguish the designated goods or services from the goods or services of other persons.

(4) Then, if the Registrar is still unable to decide the question, the following provisions apply.

(5) If the Registrar finds that the trade mark is to some extent inherently adapted to distinguish the designated goods or services from the goods or services of other persons but is unable to decide, on that basis alone, that the trade mark is capable of so distinguishing the designated goods or services:

(a) the Registrar is to consider whether, because of the combined effect of the following:

(i) the extent to which the trade mark is inherently adapted to distinguish the designated goods or services;

(ii) the use, or intended use, of the trade mark by the applicant;

(iii) any other circumstances;

the trade mark does or will distinguish the designated goods or services as being those of the applicant; and

(b) if the Registrar is then satisfied that the trade mark does or will so distinguish the designated goods or services – the trade mark is taken to be capable of distinguishing the applicant’s goods or services from the goods or services of other persons; and

(c) if the Registrar is not satisfied that the trade mark does or will so distinguish the designated goods or services – the trade mark is taken not to be capable of distinguishing the applicant’s goods or services from the goods or services of other persons.

(6) If the Registrar finds that the trade mark is not inherently adapted to distinguish the designated goods or services from the goods or services of other persons, the following provisions apply:

(a) if the applicant establishes that, because of the extent to which the applicant has used the trade mark before the filing date in respect of the application, it does distinguish the designated goods or services as being those of the applicant – the trade mark is taken to be capable of distinguishing the designated goods or services from the goods or services of other persons;

(b) in any other case – the trade mark is taken not to be capable of distinguishing the designated goods or services from the goods or services of other persons.’

26                  The scheme of s 41 was explained by Branson J in Blount Inc v Registrar of Trade Marks (1998) 40 IPR 498 at 504-505. That explanation repays reading but I need not set it out in these reasons. I agree with Mr Burley that the section provides for the decision-maker to conduct a ‘three staged inquiry into the question of whether or not a trade mark is capable of distinguishing the designated goods from the goods of other persons’. Mr Burley said:

‘In summary, the three stages involve questioning:

(a)   whether the trade mark is inherently adapted to distinguish the designated goods from the goods or services of other persons by itself (section 41(2);

(b)   if not, whether the trade mark is to some extent inherently adapted to distinguish the designated goods from the goods or services of other persons either in conjunction with evidence of use, intended use or “other circumstances” (section 41(5)); or

(c)    if the trade mark is not to any extent inherently adapted to distinguish the designated goods from the goods or services of others whether, because of evidence of the extent of use of the mark, that trade mark is nonetheless capable of distinguishing the goods (section 41(6)).

In the event that the Court is satisfied as to (a), then consideration of neither (b) nor (c) will be necessary.’

27                  Mr Burley maintained that the evidence established his client’s entitlement to succeed under s 41(2). He referred to the well-known test applied by Kitto J in Clark Equipment Company v Registrar of Trade Marks (1964) 111 CLR 511 at 514:

‘the question whether a mark is adapted to distinguish be tested by reference to the likelihood that other persons, trading in goods of the relevant kind and being actuated only by proper motives – in the exercise, that is to say, of the common right of the public to make honest use of words forming part of the common heritage for the sake of the signification which they ordinarily possess – will think of the word and want to use it in connexion with similar goods in any manner which would infringe a registered trade mark granted in respect of it.’

28                  Kitto J was referring to the position under the previous legislation, the Trade Marks Act 1955 (Cth). However, this test was applied to s 41 of the current Act in Kenman Kandy Australia Pty Ltd v Registrar of Trade Marks [2002] FCAFC 273; 122 FCR 494; 56 IPR 30. In that case, at [70], Lindgren J worked on the basis that the test suggested by Kitto J should be applied as at the moment immediately after registration. Mr Burley also referred to a comment of Stone J in Kenman Kandy at [145]:

‘Signs that are descriptive of the character or quality of the relevant goods or which use a geographical name in connection with them cannot be inherently distinctive because the words have significance or associations that invite confusion and because registration of a trade mark using such words would preclude the use by others whose goods have similar qualities or which have a connection with the relevant areas. This concern is to any of the elements referred to in the definition of sign and involves the courts in policy considerations inherent in trade mark law.’

29                  Her Honour remarked at [147] that it is ‘the absence of these associations and significations that makes a sign inherently adapted to distinguish one trader’s goods from those of another. In other words the concept is negative not positive’. At [149], Stone J went on:

‘Even where an invented word contains components that are ordinary English words, the combination may produce a word that has no association or signification that deprive it of the capacity of inherent adaptation.’

30                  Mr Burley’s argument is that the ‘harry potter’ trade mark is in this category. He said that, although both ‘harry’ and ‘potter’ are common words, and common names, and their combination as names is not unknown, the combination had no association or signification that deprived it of capacity for inherent adaptation at the priority date.

31                  The delegate rejected the argument that s 41(2) applied to this case. He said:

‘I am satisfied that the names HARRY and POTTER are common in Australian society. When used together, they are less common, but still not unusual or rare. Similarly, it is not unusual for clothing manufacturers or designers to apply their names to their clothes. On its face, the combination does not contain any references to the kind, quality, quantity, intended purpose, value, geographical origin, or some other characteristic of the goods. Taking the commonness of the name into account, and the practice of designers or manufacturers to use their own name, I am satisfied that there is a reasonable likelihood that other traders will legitimately wish to use the expression HARRY POTTER in relation to clothing. Accordingly, I am satisfied that the trade mark does not have the requisite degree of inherent distinctiveness to mean that s.41(3) can be satisfied.’

32                  There is evidence that the Commonwealth Electoral Roll contains four persons whose surname is ‘Potter’ and whose given name is ‘Harry’, ‘Harold’ or ‘Henry’. Taking this evidence into account, Mr Burley submitted ‘it would be highly unlikely that a trader, actuated only by proper motives, will think of the word and want to use it in connection with clothes’.

33                  I agree with Mr Burley that, having regard to the comparative rarity of the combination name ‘Harry Potter’, it is statistically unlikely that a person bearing that combination name would wish to use it in connection with the sale of clothing. If Kitto J is to be understood as requiring, by the word ‘likelihood’ in Clark, a probability that some other trader would wish to use the name, it can be said there is no such probability in the present case. However, I do not think his Honour should be so understood. In Burger King Corporation v Registrar of Trade Marks (1973) 128 CLR 417 at 424, Gibbs J described the mark in issue in that case as not inherently adapted to distinguish the appellant’s goods because it was ‘a word which a trader might, without any improper motive want to use to describe his goods’.

34                  I think the delegate was correct to take into account the possibility of a trader named Harry (or Harold or Henry) Potter wishing to deal in clothing under his own name.

35                  Accordingly, I hold that, at the priority date, the mark did not meet the test specified in s 41(3) of the Act. Accordingly, it is necessary to go to s 41(5).

36                  In relation to s 41(5), Mr Burley submitted ‘there is at least some degree of inherent adaptability to distinguish given that, apart from being a name of some members of the public, the mark itself has no significance or association that might invite confusion’.

37                  Ms Baird did not dispute that statement, but she argued that the name failed to satisfy s 41(5) of the Act because it was not used by Stepsam before the priority date; although the name had been used since December 1994, the user was Wombat, not Stepsam. Ms Baird also noted that the use by Wombat was limited to use on low priced women’s outerwear garments in Wombat Boutiques. Although the relevance of the point was not readily apparent, Ms Baird emphasised that those shops had a distinctive ‘Australiana’ getup.

38                  Ms Baird’s point about non-use by Stepsam is answered by s 7(3) of the Act. That subsection provides:

‘An authorised use of a trade mark by a person (see section 8) is taken, for the purposes of this Act, to be a use of the trade mark by the owner of the trade mark.’

Section 8(1) reads:

‘A person is an authorised user of a trade mark if the person uses the trade mark in relation to goods or services under the control of the owner of the trade mark.’ (Original highlighting)

39                  As Ms Baird observed, the goods sold by Wombat were all women’s outerwear garments. Whilst it is relevant to take that fact into account in considering the application of s 41(5)(a)(ii) of the Act to the case, it does not necessarily lead to the result that Stepsam does not satisfy s 41(5). A person’s use of an established trade mark in connection with a new product may cause members of the public readily to associate that person with the new product, especially one that is closely related to the first product. If a car manufacturer, who had not previously produced trucks, were to decide to do so using the trade mark previously used for its motor cars, members of the public would readily associate the trucks with the car manufacturer. It might be different if the car manufacturer moved into a totally different field, such as real estate development or breakfast foods.

40                  As the evidence indicates, it is commonplace for a manufacturer or distributor of women’s clothing to add to its range a related range of goods – for example, women’s perfumes or toiletries or men’s clothing. I think members of the public, familiar with harry potter women’s clothing, would assume a common provenance for a related range of goods, particularly if the presentation of the trade mark on each product was identical.

41                  As to the nature and degree of use by Wombat, I note the evidence of Mr Farah as to the large volume of goods bearing the harry potter label that were sold prior to the priority date. Hundreds of thousands of people must have learned to associate the harry potter label with goods offered at Wombat Boutique stores.

42                  Having regard to the extent to which the subject trade mark is inherently adapted to distinguish Wombat’s goods; the fact that there is only a small chance of the mark being used by a person named Harry Potter; the volume of sales of harry potter women’s clothing before the priority date; and the closeness of the relevant product fields, I am satisfied that s 41(5) is satisfied.

43                  I reject the first ground of opposition to registration.

Whether the use of the trade mark by Stepsam would be contrary to law

44                  Ms Baird submitted that the use of the trade mark by Stepsam or Wombat would be ‘contrary to law’ because that use would constitute conduct that is misleading or deceptive or likely to mislead or deceive: see s 52 of the Trade Practices Act 1974 (Cth). She said that, up to this time, Stepsam has not used the mark other than on labels and ‘swing tags’ in Wombat Boutiques; nonetheless, Stepsam seeks registration of the mark ‘in respect of clothing for children (and teenagers) including in particular the primary target market of the Harry Potter books of J K Rowling and the Harry Potter films’. She argued that use of the name on clothing designed for such people would convey the false notion that there was an association between the suppliers of the clothing and those concerned with Harry Potter books and films.

45                  Ms Baird contended that character merchandising of rights in fictitious characters is well-known to Australians. She said:

‘With the growing popularity, indeed notoriety, of the Harry Potter books and the Harry Potter films and the Harry Potter entertainment property licensed by the Applicant and the public’s awareness of character merchandising, the name ‘Harry Potter’ has now acquired a secondary meaning as directly associated with the Harry Potter books, Harry Potter films, and in Harry Potter character merchandising…In the light of this meaning, the Respondent’s use of the Mark outside the particular form and kind established in Wombat Boutiques in respect of the women’s clothing sold in Wombat Boutiques, and in particular in respect of children’s clothing, will be likely to have the consequence that a substantial number of persons seeing the name “Harry Potter” on clothing will be misled or deceived into purchasing that clothing in the mistaken belief that they would be acquiring clothing having some legitimate association with the Harry Potter boy wizard character. Such a representation is clearly injurious to the goodwill and reputation of the applicant in the Harry Potter entertainment property.

The representation made by the use of the name “Harry Potter” if used in respect of children’s clothing causes more than mere wonderment or confusion and travels into the areas of positive misrepresentation. A reasonable prospective purchaser looking at children’s clothing labelled “Harry Potter” (and upon registration use of the Mark is not limited to use in Wombat Boutiques and with the Wombat getup) would not simply wonder or be confused as to whether there was an association between the Harry Potter character and the Respondent, rather they would be likely to believe that in fact an association existed.’

46                  This argument effectively asserts a monopoly over the words ‘Harry Potter’, at least in relation to products intended to be purchased by, or on behalf of, children and teenagers. Mr Burley contends the assertion is unjustified. First, he argues that every ground of opposition has to be considered as at the priority date. In support of this argument, he referred to Campomar Sociedad, Limitada v Nike International Ltd [2000] HCA 12; 202 CLR 45; 46 IPR 481 at [72]. Mr Burley said:

‘it would be contrary to the scheme of the Act if, by virtue of post priority date use the applicant was able, under the guise of s 42(b), successfully to oppose the registration when the Act would specifically permit;

(a) by operation of s 44(1), the registration of the HARRY POTTER mark even if Time Warner had previously registered a substantially identical mark (even since before 1994) for anything but “similar goods” or “closely related services”. Thus if Time Warner had achieved applied for a trade mark in 1990 for HARRY POTTER motion pictures, the Stepsam application would nonetheless still be registrable; and

(b) by operation of s 44(3) or (4), the registration of the application even if it was substantially identical or deceptively similar to a Time Warner prior registration would still be registrable for clothing if Stepsam could establish either honest concurrent use or prior use.’

47                  Mr Burley’s submissions on this point should be accepted. I think he 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. As at 26 February 1998, any association in the public mind between the name ‘Harry Potter’ and a product would not have been within the fictitious character created by J K Rowling, but rather with Wombat’s clothing. Only a handful of copies of J K Rowling’s first Harry Potter novel had been released in Australia, whereas many thousands of people are likely to have visited Wombat stores (by then 17 in number) over the previous three years and three months, a proportion of which would have noted the ‘harry potter’ label on garments displayed in those stores.

48                  There is a marked dissimilarity between the fields of activity engaged in by the present parties. Time Warner seeks to link the activities by speaking of character merchandising. However, as the evidence in this case illustrates, character merchandising usually involves more than invocation of the character’s name. It is usual for a merchandiser to use pictorial material reminiscent of the character. The evidence gives examples of this being done in relation to products endorsed by Time Warner. It is a phenomenon markedly absent from Wombat’s clothing.

49                  Although it may be accepted that a person who, first hears the name ‘Harry Potter’ today (as distinct from in February 1998) would most likely first think of the J K Rowling character, it seems to me unlikely that a person seeing the ‘harry potter’ label on clothing in a Wombat Boutique would assume a connection with that character. Not only are the initial letters of each word on the label in lower case, as distinct from the upper case letters used in all the J K Rowling character merchandising; but also the label contains none of the graphics that reinforce identification of the character being merchandised. I refer to sketches of Harry himself and his magic paraphernalia and references to Quidditch, the Hogwart Express etc.

50                  Mere use by Stepsam or Wombat of the subject trade mark on clothing (even for children) would not be likely to mislead members of the public into believing the clothing was associated with Time Warner or the Harry Potter books or films. If the trade mark were used in a different way in the future, that situation might change. If so, any s 52 case that is brought at that time can be determined on its merits.

51                  Time Warner’s case under s 42(b) of the Act must be rejected.

Whether Stepsam intends to use, or authorise use of, the trade mark

52                  It is a ground of opposition, under s 59 of the Act, that the applicant for registration does not intend to use, or authorise the use of, the trade mark in Australia, or to assign it to a body corporate for use by the body corporate in Australia. In each case, the use must be in relation to the goods and/or services specified in the application.

53                  Ms Baird submitted that the relevant intention must be a bona fide one and that, at the application date, Stepsam had no bona fide intention of using the trade mark, or authorising it to be used by Wombat, except in respect of the type of women’s clothing to which it had been applied before that date. She said that, at its highest, Stepsam’s intention regarding men’s, teenagers’ and children’s clothing was ‘an uncertain indeterminate possibility’. Ms Baird cited authorities supporting the proposition that it is necessary, for a registration application to be valid, that the applicant have a ‘definite and present intention to deal in certain goods or descriptions of goods, and not a mere general intention of extending his business at some future time, to anything that he might think desirable’: see Lindley LJ in Re Registered Trade Marks of John Batt & Co [1898] 2 Ch 432 at 439-440. That formulation has been repeatedly endorsed, both in the United Kingdom and Australia. However, it is relevant to note a rider attached to it by McLelland J in The Ritz Hotel Ltd v Charles of the Ritz Limited (1988) 12 IPR 417. His Honour said at 464:

‘In my opinion, the correct view is that an unused mark is not “proposed to be used” by an applicant for registration unless that applicant has, at the time of the application, a real and definite intention to use the mark publicly in Australia as a trade mark, although not necessarily immediately or within any limited time.’ (Emphasis added)

54                  It is common ground, in the present case, that, at the priority date, Wombat was using the ‘harry potter’ trade mark in relation to women’s clothing. It was doing so with the authority of Stepsam, the owner of the trade mark. The issue, as Ms Baird puts it, is whether those controlling Stepsam and Wombat (Ms Jennifer and Mr Farah) had a real and definite intention, as at 26 February 1998, that Wombat should also use the trade mark in connection with men’s, teenagers’ and children’s clothing. She says that, if this factual issue is resolved against Stepsam, the registration should be confined to use in connection with women’s clothing.

55                  It is not necessary for me to determine whether it is appropriate to apply s 59 so restrictively. It may be the correct view that the application of the section is excluded by bona fide use at the priority date in relation to any goods within the relevant class. However, even if the issue is to be resolved in the manner suggested by Ms Baird, I would resolve it adversely to her client.

56                  I have no reason to reject Mr Farah’s evidence that it has always been the intention of himself and his wife ultimately to expand their clothing range beyond women’s clothing and into men’s and children’s wear; and that, if this occurred, they would wish to use the ‘harry potter’ trade mark in relation to the expanded range. It seems that immediate expansion was never intended, but Mr Farah’s evidence supports the existence of a ‘real and definite intention’ to take this step at some time. That is enough.

57                  Time Warner’s s 59 argument must be rejected.

Whether the Registrar accepted the registration application on the basis of false representations

58                  Section 62(b) of the Act allows an application for registration of a trade mark to be opposed on the ground ‘that the Registrar accepted the application for registration on the basis of evidence or representations that were false in material particulars’.

59                  Ms Baird said this ground applies to the present case. She asserted that Stepsam made false representations concerning the extent to which the trade mark had been used by Stepsam in respect of clothing. Ms Baird identified the relevant representations as being contained in a letter written to the Registrar by Stepsam’s then solicitors on 16 September 1999. The letter was sent in response to an unfavourable examiner’s report. The examiner had apparently questioned whether Stepsam could satisfy s 41 of the Act. The solicitors wrote:

‘The Trade Mark has been in use for five years in a quite extensive manner and annexed hereto is a statutory declaration by Les Farah, the General Manager of the applicant corporation indicating that sales of clothing under the Trade Mark in Australia have exceeded AU$3,000,000.00 even in the first year of use 1994 and have now reached AU$14,000,000.00 per annum.’

The enclosed statutory declaration of Mr Farah said:

‘I say that the Trade Mark was first used by my Company in Australia upon clothing (such products being hereinafter referred to as the “Products”) in 1994 and my Company has continuously used the Trade Mark upon such Products in Australia since such date.’

60                  Ms Baird argued these statements were false in two respects: first, the trade mark had only been used, by Stepsam and Wombat, ‘in respect of a select range of women’s fashion outerwear seen in the Wombat Boutiques in close association with the trade mark “Wombat”’; and that the trade mark had never been used ‘throughout the Commonwealth of Australia’.

61                  I agree with Ms Baird’s statement about the facts. However, I do not think Stepsam represented otherwise. The solicitors referred to ‘sales of clothing’ and Mr Farah spoke of use of the trade mark ‘upon clothing’. The products upon which the trade mark was used are correctly to be described as ‘clothing’, notwithstanding that those products represented only part of the range of products that are clothing.

62                  Similarly, the references to ‘sales of clothes… in Australia’ and Stepsam’s use of the trade mark ‘in Australia’, contain no implication that sales occurred in every part of the Commonwealth of Australia. The relevant sales were in Australia, as was the relevant use of the trade mark, albeit not throughout the length and breadth of the continent.

63                  There is no substance in this ground. It must be rejected.

Disposition

64                  All four grounds of opposition fail. The appeal should be dismissed with costs.

Associate:

Dated: 17 December 2003