FEDERAL COURT OF AUSTRALIA

Singtel Optus Pty Limited v Optum Inc (No. 2)[2018] FCA 963

ORDERS

THE COURT ORDERS THAT:

1.    The Appeal be dismissed.

2.    The Appellant pay the Respondent’s costs of the Appeal, as agreed or taxed.

3.    Pursuant to s 101(2) of the Trade Marks Act 1995 (Cth), trade mark registration numbers 558811 and 578775 be removed from class 35 of the Register only insofar as each of those registrations is in respect of "management consulting in this class; public relations in this class".

4.    The Cross-Claim otherwise be dismissed.

5.    The Cross-Respondent pay 85% of the Cross-Claimant's costs of the Cross-Claim, as agreed or taxed.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

DAVIES J:

1    On 1 May 2018 I delivered judgment in this proceeding: Singtel Optus Pty Limited v Optum Inc [2018] FCA 575. The issues determined by the Court included a cross-claim by Optum for orders that Singtel’s OPTUS mark be removed from the register pursuant to s 92(4)(b) of the Trade Marks Act 1995 (Cth) (“the Act”) for non-use in respect of some of the goods and services set out in the specifications of the registrations. The Court found that Singtel had only rebutted the allegation of non-use of the OPTUS mark in respect of general business consultancy services. Singtel accepts that there should be an order for removal of its trade mark registrations 558811 and 578775 in respect of management consulting services and public relations services in class 35, but has urged the Court to exercise its discretion under s 101(3) of the Act not to remove the trade mark in respect of advertising services and marketing services in class 35.

2    Section 101(3) of the Act permits the Court to decide that the trade mark should not be removed from the register, even if the grounds on which the non-use application was made have been established, “if satisfied that it is reasonable to do so”. In Austin, Nichols & Co Inc. v Lodestar Anstalt (2012) 202 FCR 490 (“Lodestar”), the Full Federal Court at [28] cautioned that to ask whether sufficient reason has been shown is apt to mislead. The question to be asked is whether it was reasonable not to remove the trade mark from the Register, although the trade mark had not been used during the statutory period. The onus is on the registered owner (i.e. Singtel), and for the discretion to operate in favour of the registered owner, the Court must be positively satisfied that it is reasonable that the trade mark should not be removed: Lodestar at [41]. In determining whether the Court is satisfied that it is reasonable to decide that the trade mark should not be removed from the register, the Court can take into account the interests of the owner of the trade mark. In Lodestar at [38], the Full Court explained that the non-use provisions in the Act are “plainly designed to protect the integrity of the Register, and in this way, the interests of the consumer” but “at the same time, however … accommodate, where reasonable, the interests of the registered trade mark owners. Otherwise, there would be no need for the discretion”. The Court can also have regard to the use of the trade mark after the statutory non-use period. As the Full Court also explained at [41], as s 101(3) is expressed in the present tense, the question is whether at the time the Court is called upon to make its decision it is reasonable not to remove the trade mark.

3    In the present case, Singtel relies on the following factors:

(a)    although the evidence did not show that Singtel had used the OPTUS mark in relation to marketing and advertising services during the statutory non-use period (April 2013 to April 2016), the evidence showed that Singtel commenced providing such services soon after the non-use period;

(b)    the provision of such services is ongoing;

(c)    the ongoing use indicates there has been no abandonment of the trade mark in relation to these services; and

(d)    the consideration that Singtel has received for those services is considerable.

4    Singtel put into evidence two broadcast sponsorship agreements. The first agreement relates to Singtel’s exclusive live broadcast coverage and digital rights for broadband and mobile in relation to the 380 Premier League soccer games. These broadcasting rights commenced in August 2016 and continue for three seasons. Under the agreement, Singtel is entitled to broadcast virtual advertising and promote or publicise the name, brand, product of services of a third party and appoint broadcast sponsors. In November 2016, Singtel granted Sportsbet Pty Ltd sponsorship benefits, which include advertising inventory and sponsor recognition in relation to Singtel’s coverage of the Premier League which must accord with Singtel’s corporate policy on advertising. The consideration for the sponsorship benefits is substantial. The second agreement relates to Singtel’s coverage of cricket in Australia. Under this agreement, Singtel, in December 2016, granted Huawei Technologies (Australia) Pty Ltd sponsorship benefits, which included advertising inventory and sponsor recognition in relation to Singtel’s coverage of cricket in Australia. Such advertising etc also has to accord with Singtel’s corporate policy on advertising. The consideration for the sponsorship benefits is, again, substantial. Singtel submitted that the sponsorship agreements show its continued commitment to the use of the OPTUS mark, including as part of its contractual obligations with third parties on relation to the broadcasting and sponsorship arrangements for major national and international sporting events

5    Optum submitted that the Court made no finding of use after the statutory non-use period. Optum also submitted the matters raised by Singtel cannot positively satisfy the Court that it is reasonable for the categories not to be removed. Optum further submitted that there were other reasons supporting the non-exercise of the Court’s discretion, namely:

(a)    there is a public interest in ensuring the integrity and accuracy of the register and there is no evidence that the OPTUS mark has ever been used as a trade mark in respect of marketing and advertising services in class 35;

(b)    Singtel sought to use the registration in respect of most services to the detriment of other traders, noting in particular it was used in these proceedings both before the Court and the Trade Marks Office in an attempt to block the registration of Optum’s trade mark. It was submitted that a failure to remove the relevant services would enable that to occur again in respect of other traders and would also enable Singtel to commence infringement proceedings relying upon those services against other traders;

(c)    although private commercial interests of the parties may be taken into account in the exercise of the discretion, Singtel did not adduce any evidence of any private commercial interests in respect of the disputed categories; and

(d)    even after the filing of the non-use proceedings, Singtel did not use the OPTUS mark in respect of the disputed categories nor is there any evidence of an intention to do so in the future.

6    It is true that there was no finding of use in the reasons for decision but, as the reasons for decision explained, the exercise of the discretion was expressly left open for further submission by the parties. Based on the evidence, Singtel has shown a significant involvement in marketing and advertising activities in the period shortly after and since the expiry of the statutory non-use period and, although there is no evidence of that Singtel has used the OPTUS mark as a trade mark in respect of marketing and advertising services, it is reasonable to infer, and I accept, that Singtel still has an intention to do so. Weight can, and should, be attached to those matters and I am satisfied that it is reasonable not to remove the trade mark from the register in respect of the disputed categories. In reaching this conclusion I have not been persuaded by the other submissions of Optum. The legislative scheme, by the provision of the discretion in s 101(3), plainly contemplates that the fact of non-use during the statutory period is not a complete answer to whether the trade mark can, or should, remain on the register. Thus, the consequences of the type alluded to in Optum’s submissions flow from an exercise of discretion in favour of Singtel. In the present case, it is not suggested, and the material does not indicate, that the use of the trade mark in respect of such services would be colourable or not in good faith (cf. Lodestar at [41]). In the circumstances, I am of the view that the statutory consequences of registration under the Act do not, without more, weigh against the exercise of the discretion in the present case.

7    The Court did find that the OPTUS mark was used during the non-use period in respect of business consultancy services. However, Optum submits that the use was only in respect of “business consultancy workshops”, being a narrow subset of “general business consultancy services” and it now seeks an order amending that category in the marks to read “business consultancy workshops in this class”. Optum submitted that Singtel should not be permitted to retain an overly broad registration in circumstances where it could, and should, in the first place, have confined the relevant category to “business consultancy workshops”. It was submitted that there is a public interest in ensuring that trade mark applicants do not seek or maintain registrations for goods or services that capture goods or services for which they have not traded and do not plan to trade.

8    Singtel argued that the Court’s finding of use was unqualified in that the Court found that there had been use of the OPTUS mark in respect of business consultancy services in class 35. I do not think that the submission is based upon a fair reading of the reasons. At para [213] the Court recorded Optum’s argument that if there was trade mark use it was in respect of business consultancy workshops which was a narrow subset of “general business consultancy services” and did not form part of “management consultancy service”. Whilst the Court accepted the submission that the relevant services were not apt to be described as “management consultancy services”, it did accept on the basis of the evidence there had been use of the OPTUS mark in respect of business consultancy services. However, the question for the Court was whether Singtel used the OPTUS mark in respect of either of those types of services, not whether, if coming within either of those services, the services should be more narrowly defined. The Court did not address or make any finding on whether the use was in respect of a more narrow subset of “general business consultancy services”.

9    That said, I do not think that the limitation urged by Optum is justified. The evidence of Mr Tam, which the Court accepted, was that through business consultancy workshops, Singtel assists its business customers to plan their business and solve (or help solve) their business issues and problems, including in relation to business strategy development, stakeholder alignment and organisation change. It does this by designing and facilitating workshops for its business customers. Services of that nature are business consultancy services and the fact that they were provided through the forum of designing and facilitating workshops does not justify any limitation of the registration restricted to the provision of those services through that particular forum only. This is not a case in which there has been use in relation only to one specified kind of good or service within a broader category specified in the registration such as for example “flavoured milk and cheese” compared with “dairy products” in Murray Goulburn Co-op Corporation v New South Wales Dairy Corporation (1990) 17 IPR 269 discussed in Hills Industries Limited v Bitek Pty Ltd [2011] FCA 94 at [297]–[301].

10    The final issue for determination concerns the costs of Optum’s cross-claim. Optum seeks an order that Singtel pay all of its costs (or if there is to be an apportionment, it should get 90-95% of its costs) whereas Singtel seeks an order that it pay only 70% of Optum’s costs. Under s 43 of the Federal Court of Australia Act 1976 (Cth), the Court has an unfettered discretion to award costs, subject to the requirement that the discretion be exercised judicially: Hughes v Western Australia Cricket Association (Inc) [1986] FCA 382. Ordinarily, costs will follow the event, but it is well accepted that in exercising the discretion to award costs the Court may have regard to the issues in respect of which each of the parties has been successful and apportion costs in that way: Shord v Commissioner of Taxation (No. 2) [2018] FCAFC 27 at [18] (Siopis and White JJ). Where there are several issues and the successful party has failed on some issues, it may be appropriate to deprive the successful party of their costs or a portion of the costs if the matters upon which that party was unsuccessful took up a significant amount of time at trial: Wu v Li [2015] FCAFC 109 at [56].

11    In the present case, the goods and services the subject of the non-use claim were general business consultancy services, management consultancy services, advertising services, public relations services and marketing services. Singtel rebutted the non-use allegation with respect to general business consultancy services and accepts that the OPTUS mark ought to be removed insofar as the mark is registered in respect of management consultancy services and public relations services. In view of the Court’s conclusions, the registrations will be maintained with respect to general business consultancy services, advertising services and marketing services. It is thus appropriate, in my opinion, that there should be some apportionment of costs in the circumstances, having exercised the discretion in favour of non-removal where use was not established. I do not think it should be as much as Singtel contends for, however. A substantial part of the hearing was taken up with the question of whether Singtel had established use, on which Singtel was largely unsuccessful. In my opinion, an appropriate and fair apportionment is to make an order that Singtel pay 85% of Optum’s costs on the cross-claim.

12    In view of these conclusions, it is unnecessary to deal with Singtel’s application for a stay of orders for removal.

Associate:

Dated:    26 June 2018