Upholding a patent opposition on appeal

Adrian Crooks, at IPnow, provides his summary of Besanko J’s ruling in Aspirating IP v Vision Systems [2010] FCA 1061.

The onus on appeal from a trade mark opposition

If there were any doubt about it, the Full Federal Court has confirmed that the person opposing the registration of a trade mark bears the onus of proving a successful ground of opposition on appeal to the Court. (As a side note, I think this is the new Chief Justice’s first IP decision, at least since joining this Court.)

The Food Channel Pty Ltd (Channel) had applied to register TM 967804:

TM 967804
TM 967804

in class 16 for printed matter. During the application process, it assigned the trade mark application to The Food Channel Network Pty Ltd (Network). Both companies were related entities as a Mr Lawrence was the sole director and shareholder of both.

The registration of TM 967804 was opposed by Television Food Network GP (Television), a US entity. Television is the owner of TM 881666 for TELEVISION FOOD NETWORK and TM 881667, both registered in classes 9, 38, 41 and 42 and  TM938228 for services in class 41. TM 881667 and 938228 were for devices:

TM 881667
TM 938228

The Registrar rejected Television’s opposition. The trial judge, however, upheld the appeal finding that Network bore the onus of establishing it was the owner of the trade mark, had used it in good faith and that it was confusingly similar to Television’s trade marks.

The onus point

The Full Court (Keane CJ, Stone and Jagot JJ) dealt with this point quite quickly as inconsistent with the the presumption of registrability established by s 33, long standing principle and the legislative scheme.

The Full Court rejected Television’s argument that the difficulties facing an opponent attempting to establish lack of ownership (s 58) or lack of intention to use (s 59) meant that an evidential onus should shift to the applicant. While the Court appeared to accept that an evidential onus might arise under s 59 where the opponent raises a prima facie case of lack of intention, it considered the difficulties that could arise in the context of s 59 did not attend s 58 which was usually directed to showing that someone else, often the opponent, had used the trade mark first.

The not the owner point

The difficulty which Television seized on here was the assignment from Channel to Network and some evidence in chief from Mr Lawrence:

1. I am the Founder and Managing Director of Food Channel Network Pty Ltd (The Food Channel) and am authorized to make this affidavit. [Network] is based in Queensland Australia.
5. In 1996, and with the advent of pay television being developed in Australia, The Food Channel trademark was created and a logo device attached to its name. In 1997 after filing the required documentation with our then solicitors MALLESON STEPHEN JACQUES which was then AIPO – (Australian Industrial Property Organisation) and after their search of the database that was conducted, it was concluded that there was no applications [sic] that had been filed or applications that were pending for the trademark – The Food Channel. The Food Channel trademark proceeded to registration without any opposition. The Food Channel is a REGISTERED AUSTRALIAN TRADEMARK – NUMBER 733265 – The Food Channel trademark has been registered in Australia since 1997 and is registered until 2017 when it again comes up for renewal. Annexed hereto and marked annexure H. ….

Television’s argument was that Mr Lawrence defined “The Food Channel” as Network in his affidavit and deposed that it was The Food Channel (i.e., Network) which created and used the trade mark.

The trial judge had found that, the onus being on Network and it not being clear from Mr Lawrence’s evidence who created the trade mark, the ground of opposition was successfully made out.

The Full Court noted that Mr Lawrence had drawn his affidavit himself and commented:

61 The courts should be cautious to allow the legal fiction of the corporate veil to defeat registration in a case where one of a group of companies, all controlled by the same directing mind and will, used the mark prior to the other. This is particularly so where, as here, the conclusion that the words The Food Channel in Mr Lawrence’s affidavit meant Network and only Network depends on a single opening definition in an affidavit drafted by a layperson, in a case where Network was the sole respondent attempting to answer a notified ground of opposition that Network was not the owner of the mark, and where any distinctions Mr Lawrence drew between his companies were few, random and confused. In this case, this evidence does not establish that Network was the prior owner through use. It may establish that Network used the mark at a time before registration, but it doesn’t negate the possibility that Channel was, in fact, also a user (and indeed the first user) of the mark before registration. Further, there is no evidence as to how the mark was used by Network. Use needs to be in relation to the goods or services claimed; on the only evidence before the Court, there was “no set formula” with regard to use. This tends against a conclusion that any mark was used by Mr Lawrence, Network or Channel to distinguish one company’s goods from another. Finally, the requirement of prior user as a trademark is that it is used to distinguish one’s goods from another’s: if Network did use the mark, there does not seem to be evidence of an attempt to use it in such a manner as to distinguish its goods from those of Channel. And of course, it is inherently unlikely that Mr Lawrence, as the directing mind and will of both companies, would have had any such an intention.

62 To treat Mr Lawrence’s statement that Network ‘created’ and ‘used’ the mark as exclusive of permitted use by Channel is counter-intuitive, given her Honour’s observation at [77] that the “evidence …is that Mr Lawrence tended to confuse his own business interests with those of his companies, and appeared to randomly use companies and trade marks depending on the circumstances…”.

This with respect pragmatic approach may be constrasted with the very strict approach taken by a rather different Full Court in Crazy Ron at [109] – [127].

As the Full Court noted, further, to the extent there was any confusion about ownership, it fell to Television to clarify the position since the onus lay on it as the opponent.

(It would appear from the Register that TM 733265 was in fact registered by Channel and subsequently assigned to Network.)

The no intention to use point

The trial judge’s finding that Network had no intention to use the trade mark when it was filed was tied up with the confusion in Mr Lawrence’s evidence about who created the trade mark.

Mr Lawrence did give evidence that “The Food Channel” had provided recipes bearing the trade mark to butchers for distribution by the butchers to their customers. It was not clear whether or not the recipes were sold to the butchers or there was some other quid pro quo. However, the Full Court accepted that this uncontested evidence demonstrated that there had in fact been use of the trade mark in the course of trade.

Trade mark comparison

Finally, the Full Court found that Network’s trade mark was not deceptively similar to Television’s trade marks when viewed as a whole – they neither looked nor sounded similar – and having regard to the differences in the goods and services specified.

Food Channel Network Pty Ltd v Television Food Network GP [2010] FCAFC 58 (Keane CJ, Stone and Jagot JJ)

What happens when an opponent stops opposing

Delnorth had successfully opposed the grant of a standard patent to Dura-post for the latter’s flexible roadside posts (Patent App. No. ) on the grounds that it lacked inventive step.

Dura-post appealed to the Federal Court.

Delnorth decided not to continue with its opposition on appeal. (By this time, it had already lost this one (on the innovation patent) and was in liquidation.)

The Federal Court directed that the appeal be allowed and Dura-post’s application proceed to grant.

Delnorth Pty Ltd v Dura-Post (Aust) Pty Ltd (Administrator Appointed) [2010] FCA 465

The practice point here is that the parties were able to go along to Court armed with a letter from the Commissioner indicating she did not intend to appear on the appeal. Contrast the (interlocutory) outcome in Sherman, where the Commissioner wished to fight on.

Trade marks as security for costs

Lindgren J has ordered that the owners of the WILD TURKEY trade mark (which those of you who drink bourbon may be familiar with) provide security for costs before they can pursue their Federal Court application to have WILD GEESE removed from the Register of Trade Marks.

Lindgren J accepted that the owners, members of the international Pernod Ricard or Davide Campari groups, would have sufficient funds to satisfy an order of costs if they were unsuccessful. However, the purpose of s 56 of the Federal Court of Australia Act was to ensure that there was a fund available within Australia to satisfy the costs order.

His Honour accepted that there were procedures available to enforce money judgments against the owners in their home base(s) eg New York, but those procedures placed an additional burden on a party seeking satisfaction of a costs order over and above the difficulties a party litigating against an Australian based entity would incur.

Lindgren J then rejected the owners’ argument that their registered trade marks in Australia were sufficiently liquid assets within the jurisdiction. They were indeed assets, but they were not “sufficiently liquid”.

44 With respect, the applicants’ submissions fail to grapple with the critical question whether the bare trade marks would be readily convertible into cash by sale to satisfy an adverse order for costs.

45 The evidence to which the applicants refer is not evidence of a sale of the trade marks as items of property distinct from a sale of the underlying business.

46 Considerable difficulty might be experienced in realising the trade marks if Lodestar ever had to take that course. The underlying business would remain that of Rare Breed. A prospective buyer of the trade marks would know that Rare Breed would remain a competitor in the Australian market, albeit under a mark or name dissimilar to the trade marks.

47 Moreover, the only prospective buyers would be sizeable corporations that were in the same line of business in Australia or wished to embark upon such a line of business in Australia. If they already traded under a trade mark or business name, they might not be prepared to abandon it in order to buy and use Rare Breed’s trade marks. Would they be interested to acquire those trade marks in addition?

48 It may be that a receiver would eventually be able to sell the trade marks but the course of doing so would or might well be fraught with considerable difficulty and delay.

With respect, the applicants’ submissions fail to grapple with the critical question whether the bare trade marks would be readily convertible into cash by sale to satisfy an adverse order for costs.
The evidence to which the applicants refer is not evidence of a sale of the trade marks as items of property distinct from a sale of the underlying business.
Considerable difficulty might be experienced in realising the trade marks if Lodestar ever had to take that course. The underlying business would remain that of Rare Breed. A prospective buyer of the trade marks would know that Rare Breed would remain a competitor in the Australian market, albeit under a mark or name dissimilar to the trade marks.
Moreover, the only prospective buyers would be sizeable corporations that were in the same line of business in Australia or wished to embark upon such a line of business in Australia. If they already traded under a trade mark or business name, they might not be prepared to abandon it in order to buy and use Rare Breed’s trade marks. Would they be interested to acquire those trade marks in addition?
It may be that a receiver would eventually be able to sell the trade marks but the course of doing so would or might well be fraught with considerable difficulty and delay.

Similarly, his Honour rejected the Australian distribution rights for Wild Turkey.

Austin, Nichols & Co Inc v Lodestar Anstalt [2009] FCA 1228

Lid dip POF