Federal Court of Australia

Watson as Trustee for the Watson Family Trust v Cosmetic Warriors Ltd [2022] FCA 700

ORDERS

THE COURT ORDERS THAT:

1.    The decision of the Registrar’s delegate made on 26 February 2020 directing that Registered Trade No. 607740 be removed from the Register is set aside.

2.    The respondent pay the appellant’s costs of and incidental to the proceeding and the costs of and incidental to the application before the Registrar’s delegate.

3.    Pursuant to s 23 and s 37P of the Federal Court of Australia Act 1976 (Cth), rule 1.32 and rule 1.36 of the Federal Court Rules 2011, these orders and the reasons for judgment in support of these orders are made and published from Chambers.

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

REASONS FOR JUDGMENT

GREENWOOD J:

1    Mr Austin John Watson, as trustee for the Watson Family Trust, described as the appellant in these proceedings for the purposes of s 104 of the Trade Marks Act 1994 (Cth) (the “Act”) (although, of course, the Court is exercising original jurisdiction in hearing an “appeal” from a decision of the Registrar or the Registrar’s delegate under that section of the Act) is the registered owner of the trade mark “Lush” (a Word Mark, No. 607740) registered in Class 25 for goods described as “clothing, footwear and headgear”.

2    The trade mark was filed on 26 July 1993 and was registered on the Register on 3 April 1995, although, of course, the priority date is 26 July 1993.

3    On 22 May 2018, Cosmetic Warriors Ltd (“CWL” or the “respondent”) applied to the Registrar under s 92(1) of the Act to have the trade mark removed from the Register in reliance on the ground described in s 92(4)(b) of the Act. CWL contended, in reliance on that ground, that at no time during a period of three years ending one month before the day on which its application had been filed (during which period the trade mark was continuously registered), had the registered owner used the trade mark in Australia in relation to the goods for which it was registered or used it in good faith in Australia in relation to such goods.

4    The relevant three year period is from 22 April 2015 to 22 April 2018.

5    It should be noted that in these proceedings no issue arose as to the competency of the non-use application under s 93(2) of the Act recognising that s 93(2) at the time relevant to these proceedings provided that a non-use application made in reliance on the ground contained in s 92(4)(b) could not be made until a period of five years had elapsed from the date of filing of the trade mark application. CWL’s application before the Registrar was filed approximately 25 years after the filing date of the trade mark application on 26 July 1993.

6    The registered owner opposed CWL’s application before the Registrar’s delegate. The parties put on evidence on the matters in issue.

7    The registered owner (opponent) sought to discharge its burden arising under s 100(1)(c) of the Act of rebutting CWL’s contentions in reliance on s 92(4)(b). Some of the material relied upon by the appellant before the Registrar’s delegate is also relied upon in these proceedings.

8    The Registrar’s delegate found, on the evidence before her, that the registered owner had failed to discharge the burden cast upon it by the Act and directed on 26 February 2020 that the trade mark be removed from the Register after one month from the date of her decision subject to the final determination of any appeal under the Act from her decision.

9    These proceedings are concerned with that appeal. The questions in issue in this appeal fundamentally fall to be determined on the facts. The legal principles are not in contest.

10    The hearing of the questions arising under s 92(4)(b) and whether the appellant has discharged the burden arising under s 100(1)(c) of the Act in this appeal proceeding engaged by s 104 of the Act is a de novo determination on the basis of the evidence put before the Court. Thus, the focus of CWL and the parties has been upon an examination of the evidence relied upon by the appellant in contended discharge of its burden.

11    The appellant relies upon the following material: a declaration made by Mr Watson dated 24 December 2018; a declaration made by Mr Watson dated 5 June 2019; an affidavit of Mr Watson sworn 22 June 2020; an affidavit of Mr Watson sworn 18 August 2021; an affidavit of Catherine Muscat sworn 24 June 2020; and an affidavit of Kiran Bajaj dated 7 July 2020, all subject to the rulings on objections to various aspects of the evidence. The first two declarations were relied upon by the appellant before the Registrar’s delegate.

12    The starting point is the evidence of Mr Watson.

13    Before examining the evidence of Mr Watson, these preliminary matters ought to be noted.

14    Mr Watson is the registered owner of the trade mark in a particular capacity, “as trustee for the Watson Family Trust”. The instrument establishing that capacity (or any limits upon the powers of the trustee of the Trust, or the scope of the grant) was not in evidence. The Court raised the question of the source of the appellant’s powers with counsel for the appellant. No question or issue was raised concerning the scope of the grant, by the respondent in written submissions, although the Court’s question on this topic was taken up in oral submissions by the respondent. The appellant contends that so far as the trade mark is concerned, anything he did with, or in relation to it, was done in his capacity as trustee for the Watson Family Trust. I proceed on the basis that any step taken (or step not taken where relevant such as contended non-use) in relation to the trade mark is in Mr Watson’s capacity as registered owner of the trade mark as trustee for the Watson Family Trust.

15    The second preliminary matter is that it is not contended that, as a question of fact, Mr Watson used the trade mark at any time during the relevant period of 22 April 2015 to 22 April 2018. Rather, the contention is that, as a matter of law, Mr Watson is taken to have used the trade mark for the purposes of s 92(4)(b) because, as a question of fact and law, entities associated with Mr Watson used the trade mark in their capacity as an authorised user of the trade mark from him.

16    It will be necessary to examine the foundation for that contention.

17    Mr Watson’s evidence is this.

18    Since approximately 1981, Mr Watson has continuously carried on the business of retail sale of clothing. He has done so by carrying on many different businesses under a range of trading names either on his own behalf or by companies controlled by him. Some of the trade names he has used are these: “Bocoo”, “DCS”, “Dot Com Surf”, “Hound Dog”, “HDFO”, “Factory $2U”, and others.

19    Mr Watson accepts that he has never carried on a trading business under the trade name “Lush”. He accepts that in his various trading businesses he has sold, over time, garments (clothing) marked with various labels. Some of the product label names he has sold are these: “Frutta”, “Tex Woman” (or “Tex Womwn”), “Chips & Chipes”, “Colours of the World”, “Benotti”, “Narma” and others. Mr Watson described these labels as the “brands” and, in that context, he accepted the proposition put to him in cross-examination that one of the product brands he has sold over time for garments is the brand or label “Lush”: T, p 51, lns 1-2; T, p 51, lns 31-32; T, p 51, lns 18-40.

20    In his declaration of 24 December 2018, Mr Watson says that he is the sole director and shareholder of a company called HD Brands Pty Ltd (“HDBPL”) which he describes as “my Company”. He says that during the period 24 April 2015 to 22 April 2018, HDBPL carried on a clothing retail business known under the trade names “DCS” and “HDFO” from premises described as “The Paradise Centre Surfers Paradise, 2 Cavill Avenue, Surfers Paradise” and, at the date of the declaration, HDBPL was continuing to do so.

21    In oral evidence, Mr Watson accepted that HDBPL was deregistered on 6 April 2020. In Mr Watson’s affidavit sworn 22 June 2020, he had said that his earlier declarations are true and correct, and at para 19 of his affidavit, he said that since July 2019, HDBPL had continuously carried on a clothing retail business known as “Hound Dog” from premises described as a “store located at 3155 Surfers Paradise Boulevard”, and had continuously sold “Lush branded clothing from these premises” (as supported by the latest “clothing order” and “shipping documents” referred to earlier in his affidavit).

22    Mr Watson was challenged about the accuracy of the statements in his affidavit as at 22 June 2020 as HDBPL had been deregistered a little over two months earlier. Mr Watson explained in his oral evidence that he now knows that HDBPL had been deregistered but only learnt of that matter sometime after the swearing of his affidavit of 22 June 2020 and said that he “probably wasn’t informed” of the fact at the time. Mr Watson gave oral evidence that the company was deregistered because he “just wasn’t using it anymore” as the “new venture” was to label the stores as the “BSHD Group” which is an abbreviation of “Be Seduced Hound Dog Group”: T, p 53, lns 31-34.

23    Mr Watson accepted that he had not corrected the affidavit of 22 June 2020 and also accepted that he had not sought to correct the para 19 statement in his most recent affidavit sworn 18 August 2021 concerning HDBPL continuing to trade although it had been deregistered on 6 April 2020.

24    Mr Watson said in his declaration of 24 December 2018, as already noted, that HDBPL carried on its business as a clothing retailer from the Paradise Centre premises and continued (as at the date of that declaration made on 24 December 2018) to do so. Mr Watson accepted in oral evidence that by June 2020, that was not so. In Mr Watson’s declaration of 5 June 2019, he explained further aspects of his trading background. Mr Watson is the “current holder” of the business name “DCS Retail” (which he describes as a derivative of “Dot Com Surf”). It was registered on 29 June 2011. The current address for the place of business is shown on the ASIC search details as “Australia Fair Post Shop SHOP (sic) SHOPPING CENTRE 42 Marina Parade Southport”, and Mr Watson says that this was the principal place of business for “my Business” during the period of “approximately 2010 to 2016”. Mr Watson confirmed the correctness of this evidence in his oral evidence: T, p 41, lns 23-25.

25    In that declaration of 5 June 2019, Mr Watson describes DCS (by which he says he means DCS Retail (para 2.4)) as a business name (along with HDFO) of HDBPL (which he had described in the earlier declaration as “his Business”). He says at para 2.5(b) of the later declaration that during the period from approximately 2011 to April 2019 he also conducted “the Business” from additional premises located at “Shop 71, The Paradise Centre Surfers Paradise Centre, Surfers Paradise, 2 Cavill Avenue Surfers Paradise”. The rental invoice annexed to Mr Watson’s declaration is addressed to HDBPL followed by “HDFO”. Mr Watson says that although DCS Rental is shown as a business name registered to him as proprietor, the business carried on under that name was conducted by HDBPL.

26    As to the trading name HDFO, Mr Watson says that business carried on under that name was conducted by HDFO Pty Ltd (“HDFOPL”) from approximately July 2015 to on or about 18 July 2017 when HDBPL took over “running the Business”. Mr Watson also says that during the period from approximately 2013 to the date of his declaration (5 June 2019), he also conducted “the Business” under another trading name, “Hound Dog” from other premises located at Shops G7/8 Paradise Avenue, Surfers Paradise Boulevarde, Surfers Paradise …” (which, correctly described, is “Surfers Paradise Boulevard”). In the declaration of 5 June 2019, Mr Watson says that this business continues to be carried on from these premises. In Mr Watson’s oral evidence, he agreed with the proposition put to him in cross-examination that this business was conducted in his personal capacity and that he operated this store from 2013 to the beginning of February 2021: T, p 49, lns 37-38.

27    In the declaration of 5 June 2019, Mr Watson gives evidence about what he describes as the “Licence”. He says that at all material times “my Company [HDBPL] was authorised and licensed by me to use the subject Trade Mark” (“Lush”), which Mr Watson describes as the “Licence”. Mr Watson says that this Licence was “subject to my absolute control of the use of the trade mark” which Mr Watson says included the following “express terms”:

(a)    all orders for clothing under the label depicting the subject Trade Mark were to be made by me;

(b)    all consignments of clothing under the label depicting the subject Trade Mark were to be received and inspected by me;

(c)    all matters surrounding quality control of clothing under the label depicting the subject trade mark, including returns to the manufacturer were to be attended by me;

(d)    all sales of clothing under the label depicting the subject trade mark were to be made by me or under my supervision.

28    Mr Watson also says at cl 3.3 of his declaration of 5 June 2019 that at all material times during the relevant period, he personally attended to all of the operational matters as quoted at [22] of these reasons.

29    The respondent, in the context of Mr Watson’s evidence of the authority and licence that he says he conferred on a company (of which he was the sole shareholder and director), challenges the force, legitimacy or weight of the reference to the notion of “express terms” if the true position is that Mr Watson was seeking to confer rights in respect of the trade mark on an entity not at arms-length which he nevertheless controlled as the sole director and sole shareholder.

30    Although Mr Watson was the sole shareholder, sole director and sole guiding mind of HDBPL during its period of activity, that was not always true of HDFOPL in the sense that during the period 22 April 2015 to 22 April 2018 there was a period when Mr Watson was not the sole director and shareholder of that company. That period was a period immediately before HDBPL “took over” control of the business: T, p 43, lns 1-3.

31    Mr Watson explained that he was not the sole director for a time because he had allowed someone into his life who wanted to be a part of the business, although he observes that “I was still in control of the whole company”: T, p 52, lns 15-18, T, p 42, lns 44-45.

32    HDBPL was incorporated on 18 July 2017. It took over the business of HDFOPL. Mr Watson says that HDFOPL conducted the business of the retail sale of clothing “under its own name” (which seems to have simply been by reference to “HDFO”). Mr Watson says at para 2.6 of his declaration of 5 June 2019 that “I adopted the same licensing practice for the trade marks with this Company as stated in paragraph 2.5 of my declaration [of 24 December 2018]”. Paragraph 2.5 of the earlier declaration was not read and thus the cross-referencing fails to identify the content of the licensing arrangements. However, I propose to read para 2.6 of the declaration of 5 June 2019 as given content by paras 3.1 to 3.3 of that declaration (as to which see [22] and [23] of these reasons), on the footing that the substance of Mr Watson’s evidence is that the authority and licence conferred on HDFOPL by him was in the same terms as the authority and licence conferred by him on HDBPL.

33    The scope of the Licence conferred on HDBPL and its relationship with the Act is discussed later in these reasons.

34    HDBPL was carrying on business for a period of nine months and four days in the relevant period of 22 April 2015 to 22 April 2018 (that is, from 18 July 2017 to 22 April 2018).

35    The evidence in relation to the premises from which retail trading activity occurred by either Mr Watson personally or by HDBPL or by HDFOPL is unnecessarily confusing and imprecise, largely because Mr Watson gives evidence about these things by aggregating everything he did or does as references to him, whether by companies controlled by him, or by him personally.

36    The position seems to be this.

37    In his affidavit sworn 22 June 2020, Mr Watson says at para 10 that in his declaration of 24 December 2018, he made reference to “my retail shop premises” at Shop 71, the Paradise Centre, 2 Cavill Avenue, Surfers Paradise; that “I traded out of these premises” during the period 22 April 2015 to 22 April 2018; and that “I ceased trading from the Paradise Centre premises in or about July 2019” when “I moved the trading operations” to another store located at “3155 Surfers Paradise Boulevard …”.

38    I assume that, relevantly for these proceedings, Mr Watson is trying to say that from 22 April 2015 to 17 July 2017, retail trading in clothing was being conducted by HDFOPL (trading under its own name “HDFO”) and from 18 July 2017 to 22 April 2018 retail trading in clothing was being conducted by HDBPL, from Shop 71 at the Paradise Centre, 2 Cavill Avenue and that trading from these premises ceased in July 2019 with HDBPL commencing trading out of the premises at 3155 Surfers Paradise Boulevard on and from July 2019.

39    Also, from 2013 to February 2021, retail trading in clothing occurred from premises at G7/8 Paradise Avenue, Surfers Paradise Boulevard, Surfers Paradise. Mr Watson says that he conducted that business under the name “Ground Hog” although it seems that the business was conducted by HDBPL from 18 July 2017.

40    Mr Watson relies upon his own evidence of entities associated with him and under his control having sold garments (goods in respect of which the trade mark is registered) bearing the trade mark “Lush” in the relevant period and in support of his oral evidence he refers to three transactions for the acquisition of garments (“bulk lots of clothing bearing the trade mark”) for “on-sale in the Business” from a supplier described as A B Global Inc (“Global”) based in Chennai, India. Mr Kiran Bajaj is the “proprietor” of that company. He gave evidence by affidavit. The respondent elected not to cross-examine him. Mr Bajaj describes the company as carrying on business as a “garments exporter” and says that he has had a business relationship with Mr Watson for 23 years during which time Mr Bajaj has arranged for the manufacture and wholesale supply of clothing to Mr Watson. Mr Bajaj says that he is aware that Mr Watson carries on business as a clothing retailer. I will return to Mr Bajaj’s evidence later in these reasons.

41    The first of the three transactions with Global relied upon by the appellant is dated 10 November 2017. The description of the goods the subject of the import transaction relevant to the trade mark “Lush” is this:

Lush – 100% Cotton Woven Ladies Dress [Category A]

Lush – 100% Cotton Woven Ladies Blouse [Category B]

Lush – 100% Cotton Knitted Ladies Blouse [Category C]

Lush – 100% Cotton Knitted Ladies Jackets [Category D]

42    As to the Category A goods, the quantities are described in this way: Carton No. 164, 100 garments; Carton No. 165, 95 garments; and Carton No. 166, 89 garments. The documentation relating to the transaction concerning the Category A goods is this:

•    Tax Invoice dated 10/11/17 [Exhibit AJW-2]

•    Packing List dated 10/11/17 [Exhibit AJW-3]

•    Bill of Lading dated 17/11/17 [Exhibit AJW-4]

•    Packing Declaration dated 07/12/17 [Exhibit AJW-5]

43    The Tax Invoice from Global so far as it relates to Category A goods refers to 284 pieces and another 126 pieces. The invoice refers in all to 41,510 pieces of clothing. The consignee is HDBPL. The Packing List also refers to 284 and 126 Category A pieces and also refers to 41,510 pieces in all. The Packing List identifies the quantities of garments broken down by references to the produce name such as Oxide, Sea Port, Kiabi, Chips and Chipes, Colours of the World, Benotti, Narma and other including “Lush”. It also breaks the Category A goods (and all other named goods) down so as to identify the carton number, colour of the garment, size and quantity of garments per carton.

44    The Bill of Lading is issued by Cargo Container Line Ltd (“CCL”). It shows that the goods, “Ready Made Garments”, were shipped on board on 17 November 2017 (described as 1 x 20 GP Container STC 403 Carton(s), gross weight 6,464kg; net weight 5,656kg). The port of loading is Chennai and the place of delivery and port of discharge is Brisbane, Australia. The Packing List shows that 403 cartons of Readymade Garments were “consigned” to the “buyer”, HDBPL. The vessel is the Racha Bhum (Voyage No. 091).

45    As to the Category B goods, the quantities are described in this way: Carton No. 167, 144 garments; Carton No. 168, 144 garments; Carton No. 169, 144 garments; Carton No. 117, 144 garments; and Carton No. 171, 95 garments. The documentation relating to the transaction concerning the Category B goods is this:

•    Tax Invoice dated 10/11/17 [Exhibit AJW-2]

•    Packing List dated 10/11/17 [Exhibit AJW-3]

•    Bill of Lading dated 17/11/17 [Exhibit AJW-4]

•    Packing Declaration dated 07/12/17 [Exhibit AJW-5]

•    Photos [Exhibit AJW-6]

46    In other words, the appellant relies on the same documentation in relation to the Category B goods as he does for the Category A goods (except for the photographs).

47    Without identifying each and every entry for Category B goods, the Global Tax Invoice refers to 1,179 pieces and 671 pieces for those goods (garments). Both items, in those quantities, appear in the Packing List. The document also refers to 671 Category B goods under the product name “Lush” broken down by carton number, colour, size and the total number of pieces (quantity). The Bill of Lading refers to the 403 cartons to which the Packing List relates.

48    Mr Watson refers to photographs at Exhibit AJW-6 so far as Category B goods are concerned (Cartons 167 to 171) and other photographs are exhibited at AJW-7 relating to goods (Cartons 81-83) the subject of a transaction with Global on 7 February 2018.

49    As to the photographs, Mr Watson says that they “depict some of the clothing referred to in the schedule as indicated” (which is the schedule currently under discussion). In the case of Exhibit AJW-6, the photographs are said to depict “Lush – 100% Cotton Woven Ladies Blouse”. Exhibit AJW-6 depicts a mauve garment (the top section is at Court Book (“CB”) 71 and the lower section is at CB 72). The top section prominently displays the label or brand “Lush” in a slightly stylised way. A copy of Exhibit AJW-6 is Attachment A to these reasons so as to show the style, label, name or brand. The Packing List shows a reference to the 671 pieces under a heading “100% Cotton Woven Ladies Blouse Lush”. The items are shown as coloured “Grey”.

50    After describing the photographs in the way mentioned at [48] and [49] of these reasons, Mr Watson says that the photographs not only depict the goods as indicated in the schedule but they depict such goods (as indicated) “sold by the Business and their labels bearing the Trade Mark”. I will return to the matter of the photographs later in these reasons.

51    As to the Category C goods, the quantities are described in this way: Carton No. 351, 112 garments. The documentation supporting the acquisition of the goods from Global is the same documentation described at [42] of these reasons by reference to the same exhibit numbers. The Global Tax Invoice so far as it relates to Category C goods (as examples) refers to 448 and 112 pieces of the Category C goods. The Packing List shows the 448 and 112 pieces. The goods (garments) are shown broken down by carton number, colour, size and number of pieces under the label “Lush” (see, for example, CB 67). The goods are the subject of the total number of cartons referred to in the Packing List and the Bill of Lading. The garments form part of the 403 cartons the subject of the Bill of Lading.

52    As to the Category D goods, they are described by reference to Carton No. 401 comprising 18 garments. The documentation supporting the purchase is the same documentation described at [42] of these reasons by reference to the same exhibit numbers. The Global Tax Invoice refers to the Category D goods and the quantity. So does the Packing List. It also shows the breakdown by carton, colour and quantities under the production name “Lush”. The garments form part of the 403 cartons the subject of the Bill of Lading.

53    This discussion of the Category A, B, C and D goods is the subject of the first transaction with Global of 10 November 2017.

54    The second transaction with Global is dated 24 November 2017. It too refers to four categories of goods. They are:

•    Lush – 100% Cotton Knitted Ladies Blouse [Category A]

•    Lush – 100% Cotton Knitted Ladies Blouse [Category B]

•    Lush – 100% Cotton Woven Ladies Blouse [Category C]

•    Lush – 100% Cotton Woven Ladies Blouse [Category D]

55    As to the Category A goods, the quantities are described in this way: Carton No. 185, 240 garments; Carton No. 186, 169 garments. As to the Category B goods, Carton No. 204, 109 garments. As to the Category C goods, Carton No. 208, 73 garments. As to the Category D goods, Carton No. 248, 150 garments and Carton No. 249, 77 garments.

56    The documentation in support of the transaction concerning the Category A goods is this:

•    Tax Invoice dated 24/11/17 [Exhibit AJW-8]

•    Packing List dated 24/11/17 [Exhibit AJW-9]

•    Bill of Lading dated 04/12/17 [Exhibit AJW-10]

•    Packing Declaration dated 18/12/17 [Exhibit AJW-11]

57    The documentation in support of the transaction with Global in relation to the Category B, C and D goods is the same documentation as described at [55] of these reasons. It is not necessary in these reasons to step through an examination of each of these documents as they apply to each of the four categories of goods the subject of the transaction with Global of 24 November 2017. The consignee (buyer) is HDBPL. The invoice refers to 36,468 garments (or pieces) in all including the four categories of goods described by reference to the label “Lush”. The Packing List shows the breakdown of all of the garments (including the “Lush” designated garments) by carton number, colour, size and number of pieces. The CCS Bill of Lading for this transaction shows that the goods were shipped on board on 3 December 2017 at the port of loading of Chennai, India and that the port of discharge is Brisbane, Australia. The Packing List refers to 348 cartons and the Bill of Lading refers to 1 x 20 GP Container of “Ready Made Garments” comprised of 348 cartons. The vessel is the “CMA CGM Verdi”. As each of the documents are examined, cross-referenced to the four categories of goods, the same pattern as described in relation to the transaction of 10 November 2017 emerges in relation to the transaction of 24 November 2017.

58    The third and final transaction with Global is dated 7 February 2018 and it concerns goods described as “Lush – 100% Cotton Woven Ladies Blouse” comprising the following cartons and quantities: Carton No. 81, 200 garments; Carton No. 82, 200 garments; and Carton No. 83, 194 garments. The documentation relating to the transaction of 7 February 2018 is this:

•    Tax Invoice dated 07/02/18 [Exhibit AJW-12]

•    Packing List dated 07/02/18 [Exhibit AJW-13]

•    Bill of Lading dated 26/02/18 [Exhibit AJW-14]

•    Packing Declaration dated 15/03/18 [Exhibit AJW-15]

•    Photos [Exhibit AJW-7]

59    Again, the Global Tax Invoice is addressed to HDBPL. It comprises 20,817 garments in all including the Lush labelled garments. The Packing List shows a breakdown of the Lush nominated goods by carton number, colour, size and quantities. It refers to 446 cartons of readymade goods. The CCL Bill of Lading shows that 446 cartons of “Readymade Garments” were shipped on board on 25 February 2018. The port of loading is Chennai, India and the port of discharge is Brisbane, Australia. Again, the vessel is described as the “CMA CGM Verdi”.

60    As to the photographs, Mr Watson says in his declaration that the two images at AJW-7 depict some of the clothing referred to in the schedule (Cartons 81-83) which, in the case of these goods, is a reference to “Lush – 100% Cotton Woven Ladies Blouse”. In the Packing List, the breakdown of the goods (594 pieces) describes each piece as “Red”. The images at AJW-7 show (what seems to be) almost all of the garments (coloured pink or light red with a white pattern) and a close-up of the neckline of the garment showing the “Lush” label: CB 73 and CB 74.

61    The total number of garments the subject of these three transactions (in relation to all pieces, not just “Lush” labelled garments) amounts to 98,795 garments. Within that total number of pieces is the number of garments represented by “Lush” labelled garments (2,497 garments), described in these reasons (and Mr Watson’s schedule set out in the declaration of 24 December 2018). In his oral evidence, Mr Watson observed that “to make a container, there’s a lot of garments involved in a container”: T, p 51, lns 46-47.

62    Mr Watson says that all of the garments noted in the categories of goods the subject of the three transactions “bore the label ‘Lush’” as depicted in the photographs as cross-referenced in the schedule in his declaration of 24 December 2018 and as described above, which is the stylised version of the word “Lush”: see Attachment A to these reasons. Mr Watson also says that he has sold, from “the Business”, during the period 22 April 2015 to 22 April 2018, other garments “bearing the Trade Mark” in various quantities. He says that by and large, however, he has not kept photographs of the other garments. He says that one exception is a chequered shirt which he sold “from the Business” during the period 22 April 2015 to 22 April 2018, a true photograph of which is Exhibit AJW-16. That exhibit shows a blue shirt with a white pattern and the stylised label “Lush”. In his affidavit sworn 18 August 2021, Mr Watson says that when he uses the expression “Lush branded” or “bearing the Lush brand” or “bearing the trade mark” or similar words, he is referring to clothing that “displays the word ‘Lush’ in the manner depicted in the photographs of clothing that were annexed to my declarations”: Exhibits AJW-6, AJW-7 and AJW-16.

63    As to these photographs, complaint is made by the respondent that there is no evidence verifying the time or place when or where the photographs were taken or by whom they were taken. That is true so far as Mr Watson’s declarations and affidavits are concerned. However, Mr Watson says in his declarations and oral evidence that he is the sole director and shareholder of HDBPL and is thus, in effect, the guiding mind of that company (which he describes as under his direction and control at all times) and thus he says that he can say that the photographs he has exhibited to his declaration of 24 December 2018 are a “depiction” of, in the case of AJW-6, a Lush labelled 100% Cotton Woven Ladies Blouse the subject of the transaction with Global of 10 November 2017; and, in the case of AJW-7, a Lush labelled 100% Cotton Woven Ladies Blouse the subject of the transaction with Global of 7 February 2018; and in the case of AJW-16, a men’s chequered shirt which he says he sold (presumably by HDBPL) although he can’t say precisely when within the relevant period he sold the garment depicted in Exhibit AJW-16.

64    Mr Watson also says in his declaration that the garment depicted at AJW-6 and AJW-7, as so depicted and labelled, was sold by “the Business” which in the period post-10 November 2017 was HDBPL. Mr Watson also says that by reference to the photographs he can say that all of the Lush labelled garments the subject of the transactions with Global bore the label “Lush” as depicted in the photographs. Mr Watson also gives evidence that the clothing depicted in the photographs (being some the goods acquired from Global as described and cross-referenced to the Category B goods of 10 November 2017 and the transaction of 7 February 2018) were sold by “the Business” bearing the labels as depicted.

65    The respondent does not contest the proposition that Mr Watson can give evidence that as the sole director and guiding mind of HDBPL he can say, in effect, that when he looks at the photographs as exhibited to his declaration, he recognises the garments and the labels and that the photographs are a true depiction of the goods (as he describes them by reference to the schedule) and the label.

66    Mr Watson can also say that based on his knowledge of the business conducted by HDBPL, the company sold the goods as so labelled. Mr Watson says at para 26 of his affidavit of 18 August 2021 that where shipment manifests refer to clothing as being “Lush” clothing, he can say from his own observation from the unpacking of the shipments that the “Lush” clothing as unpacked was “Lush branded”.

67    The respondent’s complaint, as a matter of probative evidence in discharge of the burden falling upon the appellant, is that the documentation relied upon in relation to the transactions with Global does not establish that HDBPL ever received the goods from Global and that, the transactions with Global as an anterior or upstream transaction, do not evidence a sale of the goods or conduct of offering the goods for sale in Australia. The respondent also says that in any event none of the documentation in support of the Global transactions shows that even if there was a sale, there was use of the trade mark either at all or use of the trade mark “Lush” as a trade mark in relation to goods for which the trade mark is registered, in the relevant period.

68    As to the photographs, Mr Watson says at para 24 of his affidavit of 18 August 2021 that the photographs exhibited to his declarations were provided to him as part of the routine protocols for deliveries of stock by Mr Kiran Bajaj of Global and he says that accordingly, these photographs are part of his business records and the records of HDBPL and Global. In his oral evidence, Mr Watson said that the photographs exhibited to his declarations are photographs that were provided to him by his supplier in India (T, p 48, lns 34-36) and that includes the photograph at AJW-16: T, p 48, lns 38-39. Mr Watson says that these photographs were provided to him as part of the routine protocol for deliveries of stock. He says that he tries to keep these photographs as records of his business and he tries to keep as many as he can but he has a lot of photographs: T, p 48, lns 40-47. He says that he keeps the photographs on his mobile phone but when he changes his phone and tries to bring the photographs across, he sometimes loses them. He says that he would probably have 70,000 or 80,000 photographs comprising not only photographs of what is shipped but photographs from other people trying to sell him stock: T, p 48, lns 46-47; T, p 49, lns 1-5. Mr Watson was challenged about the proposition that he has 70,000 to 80,000 photographs of stock but confirmed that that was so (although it is not entirely clear how these are held although some seem to be kept on a mobile phone).

69    It will be recalled that the number of garments the subject of the three transactions with Global amounted to 98,795 garments.

70    The proposition was put to Mr Watson that the photographs annexed to his declaration and referred to in the schedule relating to the transactions with Global were not photographs of garments sent in those cartons. Mr Watson said that they were photographs of garments sent in the cartons. The suggestion was put to Mr Watson that the photographs were taken long after April 2018 and taken for the purpose of defending the removal application before the Trade Marks Office. Mr Watson denied that proposition. Mr Watson affirmed that the photographs at AJW-7 were provided to him as part of the routine protocol for delivery of stock and that sometimes a close-up image of the label was provided by the supplier. Mr Watson said that that was also true of the photograph at AJW-16.

71    In his declaration of 24 December 2018, Mr Watson said that “our point of sales system is not sophisticated”. He says that there is no barcoding and sales are simply recorded according to a general description of the item, that is, “tops, bottoms, accessories, etc”. He says that accordingly, he does not have any point of sale documents which he can link to individual garments sold. At para 3.4 of his declaration of 5 June 2019, Mr Watson takes up aspects of that matter and says this:

My Business is now quite small; I am effectively a “one man band” attending personally to all operations of the Business including:

(a)    purchasing of all stock;

(b)    receiving (including quality control inspection) and display of all stock;

(c)    sale of stock;

(d)    stock control;

(e)    all financial and managerial matters including finance, creditor control, banking and book keeping.

72    At para 3.5, Mr Watson says that the use of his company (HDBPL) as the legal entity for “my Business” is for accounting and taxation reasons only “and it is in all respects my alter ego”. He says, at para 3.6, that as the sole director and shareholder of “my Company”, he personally exercises complete financial control over its trading activities.

73    In his oral evidence, Mr Watson accepted that it was fair to say that he does not keep detailed records of sales in the business. He agreed with the proposition put to him that he does not keep any written records of sales by reference to brand or by reference to the “style name” of the garment or by reference to size or colour, and that sales are only recorded by reference to a general description of the item: T, p 49, lns 27-40. As to sales by reference to a general description, Mr Watson said that originally he kept records of sales by general description such as by reference to “a top or something like that” but that now, “the volumes are so big, you can’t keep a record of – and the prices are small [and thus] it’s all about volume [so] it’s not feasible to keep records of every style, every brand [because] it’s all about the price”: T, p 49, lns 42-46.

74    Mr Watson agreed that he was unable to provide a point of sale document that could be linked to any individual garment sold and that he does not keep detailed records of purchases and relies only on “what’s on the invoice”: T, p 50, lns 1-5. Mr Watson said that when an item is sold, all that is entered in relation to the sale is “just the dollar amount”: T, p 50, lns 10-11. Mr Watson confirmed again that he had changed his system such that there is no longer any recording of a general description of the items sold by reference to tops, bottoms, accessories etc and that the practice has changed so as to just record price and the records are “just the records from the cash register”. Mr Watson says that “being in store” and “seeing what’s happening” if he needs something in the business he can simply order the garments as part of the “next lot of stock”: T, p 50, lns 17-28.

75    As to the transactions with Global and Mr Watson’s relationship with Mr Bajaj more generally, Mr Bajaj says that he has had a business association with Mr Watson for approximately 23 years and during that time he has arranged for the manufacture and wholesale supply of clothing to Mr Watson for Mr Watson’s various clothing retail outlets in Australia. He says that he is aware that Mr Watson has for many years carried on business as a clothing retailer under various trading names and companies throughout various different retail outlets in Australia. He says that the various entities and trading names are reflected in Global’s invoices for the supply of stock to Mr Watson or entities or businesses controlled by him. He says that during the course of his business relationship with Mr Watson, Global has regularly supplied Mr Watson with clothing “including clothing bearing the label Lush”. I understand Mr Bajaj’s statement to mean largely what it says which is that the clothing bore the label “Lush” and, in that sense, the garment had a label affixed to it in some fashion showing the word “Lush”. Mr Bajaj says that he has reviewed Global’s business records of past dealings with Mr Watson and has identified various transactions involved with the manufacture and supply of clothing bearing the label “Lush” (in the sense I have described). Mr Bajaj also says that he has been provided with Mr Watson’s various declarations and affidavits filed in the proceedings and the opposition proceedings before the Trade Marks Office. He says that he can confirm a number of things.

76    First, he says that the Tax Invoice at AJW-2, the Packing List at AJW-3, the Bill of Lading at AJW-4 and the Global Packing Declaration at AJW-5 are true and correct copies of those documents.

77    Second, he says that the Tax Invoice at AJW-8, the Packing List at AJW-9, the Bill of Lading at AJW-10, the Global Packing Declaration at AJW-11, the Global Tax Invoice at AJW-12, the Packing List at AJW-13, the CCL Bill of Lading at AJW-14 and Global’s Packing Declaration at AJW-15 are true and correct copies of those documents.

78    Third, he says that the Bill of Lading at AJW-22, the Tax Invoice at AJW-22 and the Packing List at AJW-22 are true and correct copies of those documents although those documents are otherwise not in evidence as para 5 of Mr Watson’s affidavit of 22 June 2020 was not read into evidence.

79    Fourth, he says that the Bill of Lading at AJW-23, the Tax Invoice at AJW-23 and the Packing List at AJW-23 are true and correct copies of those documents although, I note again, that those documents are otherwise not in evidence as para 8 of Mr Watson’s affidavit of 22 June 2020 was not read into evidence.

80    Mr Bajaj also says that all of the orders for Mr Watson “contained clothing bearing the label Lush as specified in the Packing Lists”. He says that all of the clothing the subject of the orders was shipped by Global to Mr Watson to his address noted in the invoices contained in the various records, on or about the dates the records respectively bear.

81    The respondent chose not to cross-examine Mr Bajaj. The respondent challenges references by Mr Bajaj to the phrase “bearing the label Lush” as being imprecise and lacking the precision necessary to identify how or in what way the garments were said to bear the label. Nevertheless, I read Mr Bajaj’s statements in the way I have construed them above.

82    As to the transactions with Global, I accept that Mr Bajaj has had a long relationship with Mr Watson and that over the period of that relationship Mr Bajaj and Global have supplied Mr Watson with clothing at the scale and of the range reflected in the Packing Lists, Tax Invoices and other documents in evidence described in these reasons.

83    I accept that Global has supplied clothing to Mr Watson in various capacities as a wholesale supplier. I accept that Mr Watson, over time, in various capacities, acquired these goods for retail re-supply in Australia.

84    I accept that he acquired all of the goods the subject of the three transactions described in his declaration of 24 December 2018, the subject of further evidence in his subsequent declaration and affidavits. I accept that he acquired those goods for re-supply at the retail level.

85    I accept that in relation to those garments which were said to bear the label “Lush”, those garments bore that label in the stylised form depicted in the photographs, as supplied to Mr Watson. I accept that the clothing, the subject of the three transactions, was shipped to Australia and regularly received by Mr Watson in the ordinary course of business for such wholesale supply transactions for clothing shipped by Global from the Port of Chennai to the Port of Brisbane.

86    I regard it as almost fanciful to contend that anyone would enter into three transactions to acquire, by wholesale, 98,795 garments when conducting a business for the retail sale of such clothing and not seek to sell, or offer for sale, those garments in the ordinary course of the business of retail sale of such clothing.

87    I accept Mr Watson’s oral evidence that at the retail level the prices are small and that retail trade in relation to these garments is “all about volume” and “all about the price”. There is no basis for contending that the documents supporting the three transactions are anything other than genuine documents. Mr Bajaj has confirmed that they are all true and correct, in any event. I accept Mr Watson’s evidence generally. No basis has been shown for calling into question Mr Watson’s credit or for concluding that he was doing anything other than giving his evidence honestly.

88    Accordingly, the real issue in this case is whether there is probative evidence of a sale of a garment (or sales of garments) bearing the label or brand “Lush” in the relevant period and whether the relevant trading entity controlled by Mr Watson has used the label or brand as a trade mark in the course of trade in goods for which the mark is registered.

89    There is, of course, Mr Watson’s own evidence that this occurred in the course of his business (or in the course of businesses controlled by him) as a clothing retailer, and having regard to the scale of the business activity his entities are conducting, his own evidence cannot be simply put to one side. The level of his contended trade is certainly supported, objectively, by the substantial documentation evidencing a very large number of garments imported into Australia for sale. There is no other point or purpose to the importation of these garments other than for sale. Mr Watson’s evidence is supported by the pattern of behaviour about which Mr Bajaj gave evidence.

90    The question then is, apart from Mr Watson’s own evidence, in the context of no written business records relating to the sales of garments (other than cash register sales), what other evidence is there which supports the proposition that sales of garments bearing the label “Lush” occurred during the relevant period and, in particular, in the period in which HDBLP was conducting the business in the last nine months of the relevant period.

91    As to this question, Mr Watson relies upon the evidence of Ms Catherine Muscat. Ms Muscat has given a relatively shortly affidavit in which she says these things.

92    Ms Muscat was employed as a permanent casual sales assistant at various retail clothing stores operated by Austin Watson from approximately 2012 to early 2020. Ms Muscat says that during the period 2015 to early 2019, she regularly worked as a sales assistant at the store known as “DCS” and also “HDFO” at The Paradise Centre Surfers Paradise, 2 Cavill Avenue, Surfers Paradise, Queensland. She says that in relation to her employment she “took instructions” from Mr Watson. She says that from approximately early 2019 to early 2020, she regularly worked as a sales assistant at the store known as “Hound Dog” at 3155 Surfers Paradise Boulevard, Surfers Paradise, Queensland. Again, she says that she took instructions in relation to her employment from Mr Watson, which is necessarily a reference to the period of her regular work as a sales assistant at the “Hound Dog” store as described. In her affidavit, Ms Muscat then describes her duties. She says that in the course of her employment at both stores, she was required to unpack and display stock for sale. She was also required to attend to customers and she was required to record sales of goods. She says that she recalls that the recording of sales in both stores was “quite simple”. She says that sales were recorded according to a general description of the items sold and there was no barcoding (of the clothing). As to the question of sales of “Lush” branded clothing, she says that during the course of her employment at both stores, she recalls that they “regularly carried various lines of Lush branded clothing including tops, blouses, shorts and dresses”. She also says that she recalls “regularly unpacking, hanging and selling Lush branded clothing throughout my employment at these stores”. She also says that Lush branded clothing was carried in and sold from both stores during the period 22 April 2015 to 22 April 2018 which period, she understands, “is relevant in these proceedings”.

93    Ms Muscat gave the following oral evidence in the course of cross-examination.

94    Ms Muscat confirmed that she began working at stores operated by Mr Watson from 2012 although it could have been earlier “sort of within months” earlier. Ms Muscat confirmed that she ceased working at stores operated by Mr Watson in early 2020 largely because of the COVID pandemic and it may be that she ceased work in April 2020 or within a few months of April. Ms Muscat also confirmed that during the period 2015 to early 2019 she regularly worked at the Paradise Centre. The commencement period was “definitely 2015” and “sometime in that year”: T, p 58. Ms Muscat confirmed that when she says that she worked there until 2019, she means sometime in the “first half of 2019”. Ms Muscat also confirmed that from early 2019 to early 2020 she regularly worked at the store at 3155 Surfers Paradise Boulevard and that she “transitioned from [the] Paradise Centre to that one” and “so [there was] a continuum”. Ms Muscat confirmed that sometime in the first half of 2019 she moved from the Paradise Centre store to the store at 3155 Surfers Paradise Boulevard.

95    The proposition was put to Ms Muscat that these dates of employment had been provided to her by Mr Watson for the purpose of preparing her affidavit and Ms Muscat was asked whether Mr Watson had reminded her of the dates she had worked in order to prepare the document. She said that Mr Watson had not done so and that her affidavit was prepared from her “own records”: T, p 59, lns 27-31.

96    Ms Muscat was then taken to the observation at para 10 of her affidavit that Lush branded clothing was carried in and sold from both stores during the period 22 April 2015 to 22 April 2018 and the proposition was put to her that, in that period, she had only been employed at the Paradise Centre and that she was not working at the store at 3155 Surfers Paradise Boulevard. Ms Muscat confirmed that she had been working at the Surfers Paradise Boulevard store in 2019 and 2020. The proposition was put to her that because she had been working at the Paradise Centre store in the relevant period, she would not be able to say whether it was the position that Lush branded clothing was carried in, and sold from, both stores during the relevant period, and that before 2019, she did not know what was happening at the store at 3155 Surfers Paradise Boulevard.

97    Ms Muscat said that the store (by which, in the context of the transcript, she means the store at 3155 Surfers Paradise Boulevard) “was within walking distance”. She said that the two stores “were almost a block away from each other” and “I sort of knew what the stock was between the two stores”: T, p 60, lns 20-27. Ms Muscat added that because the “stores were within walking distance to each other – if we did a lunch break, I would go there and do a lunch break and …”: T, p 60, lns 31-33. Ms Muscat confirmed that the stores were “almost [in] the same block”: T, p 60, ln 36. Ms Muscat confirmed that the “main store” prior to early 2019 was the Paradise Centre store but, in the period before early 2019, Ms Muscat would work at the store at Surfers Paradise Boulevard during “lunch breaks or if someone had a day off or they were sick or something like that” and “we were interchangeable”: T, p 61, lns 1-3.

98    Ms Muscat said that she could “not really” recall the earliest time when she ever worked at the Surfers Paradise Boulevard store, but “maybe early [2018]”, “but it’s definitely from [2019] that I was there permanently”: T, p 61, lns 12-22. Ms Muscat was pressed about the earliest time that she would ever have worked at the Surfers Paradise Boulevard store and thought that it would have been about 2017/2018 but not on a “permanent basis”. She then said that she thought that the earliest time that she would have undertaken “lunch time fill-in duties” at the Surfers Paradise Boulevard store would have been sometime in 2018.

99    As a result, the proposition was again put to her that if that was so, she would not be able to say what clothing was being sold from the Surfers Paradise Boulevard store earlier than that date. In response, Ms Muscat said this at T, p 62, lns 9-18:

This is just confusing, because we did help each other out. But as I say, my main store was – at that time was in Paradise Centre. But when new stock came in or if somebody went on holiday I would go and work in there; but I was employed by Austin during that time but we did move around stores. But as I say, I could have gone there from 2014/2015, but it wasn’t my main store: my main store at the time was in [the] Paradise Centre … I may have helped unpack stock there [at the Surfers Paradise Boulevard store] during – from 2015 to 2018; I could have helped with them. But as I say, I just recall what my permanent position was and that was in [the] Paradise [Centre]. And then in 2019 to 2020 that Boulevard store was my store.

100    Ms Muscat was asked how she knew that stock bearing the label “Lush” had been sold in the period 22 April 2015 to 22 April 2018 and she observed that those dates were “approximations” and when asked about “how approximate” would she say they were, she said that she did not particularly know the “exact month” but it seemed to be “around about April because it’s my son’s birthday in April so I kind of put the two together”: T, p 62, lns 31-42. Ms Muscat agreed that it could have been “maybe a few months in either direction” and when it was suggested to her that it might have been as much as 12 months in any direction she said “not 12 months”: T, p 62, ln 46.

101    I accept the evidence of Ms Muscat.

102    Ms Muscat has a recollection of the duties she discharged at the Paradise Centre store and it seems clear enough that she had an understanding of stock sold at the Surfers Paradise Boulevard store by reason of tasks she performed at that store from time to time as she describes. It is not clear when she began providing “fill-in” or “lunch time” support, and thus when she began to develop an understanding of the stock sold from the Surfers Paradise Boulevard store. It may have been in 2017/2018 or perhaps earlier. On reflection, she thought it may have been as early as 2014/2015. I accept that it was at least 2017/2018 but it is difficult to be sure about any earlier date.

103    However, I accept that Ms Muscat’s responsibilities as a permanent casual employee discharging the duties she described, enabled her to say from her own knowledge that during the period from April 2015 to April 2018, she took instructions from Mr Watson and that she was required to unpack and display stock, attend to customers and record sales. She recalls that during this period, the store (at the Paradise Centre) regularly carried various lines of clothing labelled, or as she puts it, branded, “Lush”, including tops, blouses, shorts and dresses. She recalls the period in question because the April month resonated with her due to her son’s birthday in April.

104    I have no reason to doubt the evidence of Ms Muscat and it is consistent with Mr Watson’s evidence and his pattern of acquiring garments labelled “Lush” as described earlier. She also has at least some basis for recalling stock at the Surfers Paradise Boulevard store but it is difficult to be confident exactly when that knowledge arose.

105    I am satisfied that either HDFOPL (trading under its own name, “HDFO”) or HDBPL (after it took over the business on 18 July 2017), or both, sold garments, examples of which were tops, blouses, shorts and dresses and at least some garments of the description revealed in the documents in evidence in relation to the transactions with Global, labelled “Lush” in the relevant period.

106    The respondent contends that in conducting any such sale, the seller was not using the trade mark “Lush” as a trade mark because it was not being used as a badge of identification so as to distinguish goods dealt with or supplied in the course of trade by a person from goods so dealt with or provided by any other person. The suggestion is that although the label bearing the stylised script or text of the word “Lush” may have been attached to the garments described as “Lush garments” (although the respondent does not accept that the garments were so labelled), the label served a descriptive role of simply identifying particular goods as supplied, and the label was not used to “distinguish” the garments “in the course of trade” by either or both of the Watson entities in their retail trade from the garments of other traders in clothing. The respondent contests as accurate, any description of the label as a “brand” or any suggestion that the label was deployed by the seller in the course of trade as a “trade mark”.

107    The difficulty with this contention is that Mr Watson says that the entities were carrying on the business of retail sale of clothing. They were, in the relevant period, entities trading in clothing. Some of the garments were marked with a label consisting of the word “Lush” in stylised script as depicted in Attachment A to these reasons. The label (leaving aside any contentious word such as “brand”) operated to identify the particular goods and so as to distinguish those garments from the garments of any other trader in garments or clothing. A buyer entering the store could purchase a Lush labelled garment sold by the seller (whatever the trade name or business name of the seller might have been, HDFO or some other trade name identifying the business), or buy the goods (garments) of another person in another place or store in respect of which garments (clothing) were not marked “Lush”. The stylised label “Lush” operated to distinguish the goods in connection with which it was used, from the goods of any other person selling garments of that kind or goods otherwise described as “clothing” for the purposes of the class of goods in respect of which the trade mark was registered. The registered owner of the trade mark enabled the entities to conduct trade in these goods by reference to the trade mark as depicted. The label attached to the goods, or put another way, used in connection with the goods, was the registered trade mark and it was used to differentiate the particular clothing, in the course of the particular trade, from the garments of other traders. These were goods sold by Mr Watson’s entities so marked.

108    I am satisfied that use of the trade mark “Lush”, as described, was use by the Watson entities as a trade mark.

109    The use, however, was not use by Mr Watson, the registered owner of the trade mark subject to what follows. It was use by either or both of the two mentioned entities.

110    Mr Watson says that that use is taken to be use by him because each of the entities was exercising rights conferred by him, as the trade mark owner, on those entities, subject to his supervision, control and direction in the way described at [27] to [29] of these reasons. Mr Watson says that he conferred a licence and authority on HDBPL to use the Lush trade mark. He does not say when he did so. Mr Watson says that HDBPL enjoyed such a licence and authority “at all material times”.

111    The “material times” so far as HDBPL is concerned, is the period from 18 July 2017 (the date of incorporation and takeover of HDFOPL’s role) to 22 April 2018, the end point of the relevant period.

112    The “material times” for HDFOPL is from 22 April 2015 to 18 July 2017 when HDBPL took over the business.

113    The basis on which no particular date is identified as the date of conferral of the licence, permission or authority (as there would be in the case of an arms-length third party), can be seen in Mr Watson’s statement of his conception of the standing of each company in relation to him and the business activities undertaken through the vehicle of each company. Mr Watson says at para 3.5 of the declaration of 5 June 2019, as mentioned earlier in these reasons, that the use of “my Company” (which he defines as HDBPL) as the legal entity for “my Business” is for accounting and taxation reasons only and “it is in all respects my alter ego” and at para 3.6 of the declaration he says that: “As the sole director and shareholder of my Company, I personally exercise complete financial control over all its trading activities”. He also describes himself as a “one man band” attending “personally to all operations of the Business” including all of the things noted at [71] of these reasons.

114    The features of control exercised by Mr Watson over HDBPL and HDFOPL noted at [27] of these reasons are not “express terms” in any sense that anyone would understand such a phrase as applied to oral or written terms agreed with someone (a third party) in conferring a licence, permission or authority to use a trade mark on or in connection with goods in respect of which the trade mark is registered.

115    Those features of control described by Mr Watson are matters of control exercised by him in conducting the business through the vehicle of each entity. In other words, he determined all of those matters; personally exercised complete financial control over all trading activities by the entities; regarded the entities as his “alter ego”; and personally determined all of the matters to be determined as described at [27] and [71] of these reasons.

116    These arrangements are unusual because Mr Watson is engaging with entities he controls and which he sees as his alter ego, and everything they did or did not do, is a function entirely of the guiding mind of Mr Watson as the guiding mind of each entity, in circumstances where he is also the registered owner of the trade mark. Normally, the registered owner of the trade mark would be at arms-length from the relevant entity and questions would ordinarily arise about the extent to which the trade mark owner has exercised control and authority, financial and otherwise, over the entity granted the right to use the trade mark in the course of trade in goods for which it is registered.

117    I have no doubt that throughout the entirety of the period of 22 April 2015 to 22 April 2018, Mr Watson saw each entity (in the period of relevance to each entity as described earlier) as entirely subject to his decision-making and control in enjoying and exercising such licence and authority to sell goods bearing the label or mark “Lush” as he determined, subject to all of the decision-making he exercised in relation to the matters described at [27] and [71] of these reasons.

118    The question then is what standing did that confer on HDBPL and HDFOPL in the period relevant to each of them in the course of their trade in goods bearing the label or mark “Lush” as the registered trade mark owned by Mr Watson?

119    Section 8(1) of the Act provides that a person is an “authorised user” of a trade mark if the person “uses the trade mark” in relation to goods “under the control of the owner of the trade mark”.

120    The phrase “use of a trade mark” has, by reason of s 6(1) of the Act, “a meaning affected by subsections 7(1), (2) and (3)” of the Act.

121    Section 7(4) of the Act provides that “use of a trade mark in relation to goods” means use of the trade mark upon, or in physical or other relation to, the goods.

122    Section 7(3) of the Act provides that an “authorised use of a trade mark by a person (see section 8) is taken, for the purposes of the Act, to be a use of the trade mark by the owner of the trade mark”. Returning to s 8, subsection (2) of that section provides that the use of a trade mark by an “authorised user” of the trade mark is an “authorised use” of the trade mark to the extent only that the user uses the trade mark “under the control of the owner of the trade mark”.

123    Section 8(3) provides that if the owner of a trade mark “exercises quality control over the goods” dealt with in the course of trade by another person; and, in relation to which the trade mark is used, the other person is taken, for the purposes of s 8(1) of the Act, to “use the trade mark” in relation to the goods “under the control of the owner”.

124    Section 8(4) is in similar terms to s 8(3) except that it contemplates the trade mark owner exercising “financial control” over the other person’s relevant trading activities, in which case the other person is taken to use the trade mark in relation to the goods “under the control of the owner”.

125    Section 8(5) provides that ss 8(3) and 8(4) do not limit the meaning of the expression “under the control of” in ss 8(1) and 8(2).

126    Having regard to the control exercised by Mr Watson over HDFOPL and HDBPL as the guiding mind of each company, recognising that in all decision-making concerning all of the matters described at [27] and [71] of these reasons, Mr Watson was the registered owner of the trade mark, I am satisfied that use by either or both entities of the trade mark “Lush” in relation to the goods (garments) was an “authorised use” of the trade mark by an “authorised user” under the control of the owner of the trade mark.

127    It follows that the registered owner of the trade mark has established, for the purposes of s 92(4)(b) of the Act, and has discharged the burden under s 100(1)(c) in relation to the question arising under s 92(4)(b) of the Act, that there was use of the trade mark in Australia in the relevant period. Accordingly, the decision of the delegate is to be set aside and the trade mark is to remain registered on the Register. The respondent will be ordered to pay the costs of the applicant of and incidental to the proceeding and the application before the Registrar’s delegate.

Associate:

Dated:    17 June 2022

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