Trade mark licensing problems

Trident Seafoods has failed to get Trident Foods’ registrations for TRIDENT removed for non-use, but only because Gleeson J exercised her Honour’s discretion against removal.

Trident Foods has had TRIDENT registered for fish and fish products in class 29 since 1973, TM No. 266,625 and, since 1983, for meat, fish, poultry and various extracts, preservatives and pickles, TM No. 400,953.

Trident Seafoods was founded in the USA in 1973. It is apparently the largest seafood distributor in North America. It uses and has registrations all round the world – except for Australia and New Zealand – the trade marks “Trident Seafoods” and a stylised logo incorporating those words. It has been marketing its products in Australia since 2007 under the trade mark “Bountiful”, but its attempt to register “Trident Seafoods” has been blocked by Trident Foods’ prior registrations. It brought an action under s 92(4)(b) to remove those blocking registrations on the grounds of non-use. The non-use period was 7 January 2011 to 7 January 2014.

There is a good chance you have, or have had, some TRIDENT condiments on your shelf, but here’s the thing. Since at least 2000, Trident Foods did not itself manufacture and sell TRIDENT branded products. The products were manufactured and sold by Manassen Foods Australia. Trident Foods claimed Manassen’s use was use as an authorised user.[1] Gleeson J, however, rejected this claim but, as noted above, decided it was appropriate to exercise the discretion under s 101(3) not to order removal.

Manassen was not an authorised user

There was no written licence agreement between Trident Foods and Manassen until 3 November 2017.[2]

In addition to that licensing arrangement, Trident Foods relied on the corporate relationship with Manassen, the involvement in their respective businesses of two common directors and Manassen’s compliance with the Bright Food Group’s quality assurance manual.

Trident Foods is a wholly owned subsidiary of Manassen (and both are members of the same corporate group, the ultimate holding company of which is Bright “Cayman Islands”). Nonetheless, Trident Foods relied on the essentially pragmatic approach applied by the Registrar:[3]

There is nothing unusual in a large company such as Henry Schein, Inc and/or its predecessors (that is “the Company” as defined earlier) incorporating a wholly owned subsidiary in order to hold its worldwide trade mark (or, for that matter, patent or other IP right) portfolio. It is very common practice” because, inter alia, it efficiently streamlines processes for the prosecution and renewal of properties in the portfolio and it avoids the need to record name changes, mergers or assignments around the world should the parent company restructure or change names.

Gleeson J rejected this. Based on the Henschke v Rosemount and the Lodestar v Campari cases, her Honour held at [84] that “control” for the purposes of authorised use required “actual control” “as a matter of substance”.

The corporate relationship between Trident Foods and Manassen did not provide that. At [100(1)]: Gleeson J explained:

The corporate relationship between Trident Foods and Manassen does not place Trident Foods in a relationship of control over Manassen; rather, the converse is the case. The commonality of directors does not, without more, permit Trident Foods to exercise control over Manassen.

Trident Foods led evidence from a Ms Swanson, one of the two directors:

We have always maintained control over Manassen from the point of view of [Trident Foods’] as we have fiduciary obligations to act in the interest of [Trident Foods]. One of the things that has been considered, at least by me, since appointment as a director of Trident, is the quality and standard of the goods being sold under [Trident Foods’] trade mark registrations. As a director of Manassen, I appreciate the high standard of the goods that are sold by this company. As such, I have never had any cause for concern regarding the damage that could occur to the TRIDENT brand owned by [Trident Foods]. If there ever was a suggestion that poor quality goods were to be sold under [Trident Foods’] TRIDENT brand, I would be empowered and authorised to prevent such an occurrence.

Ms Swanson also gave evidence that Manassen had to comply with the Bright Food Group’s vendor quality management system (the VQM Manual) which was in place to maintain quality measures over all of the Group’s brands. In addition, she participated each month in meetings of Manassen’s “Innovation Council” which decided what products Manassen would sell, including “Trident” products, and were concerned with brand valuation and impairment to ensure that the brand was performing well and to avoid devaluation.

Gleeson J considered this was inadequate to establish actual control. Trident Seafoods argued that the directors would be in breach of their fiduciary duties to Manassen if they sought to exercise quality control over its operations on behalf of Trident Foods. Thankfully, Gleeson J did not accept this in terms. Rather, it seems Ms Swanson’s evidence was insufficient because it was at the level of assertion, without demonstrating examples of control being exercised by Trident Foods. At [100] points (2) – (6), her Honour explained:

(2) Ms Swanson’s evidence is in the nature of assertion. It does not include any particular illustration of conduct by Trident Foods amounting to actual control of the use of the “TRIDENT” trade mark.

(3) The fact that Ms Swanson considered it unnecessary to give directions, whether by reason of the existence of the VQM Manual or otherwise, is not relevant to the question of whether Manassen had obligations to Trident Foods in relation to the use of the “TRIDENT” trade mark.

(4) Any control that Ms Swanson might personally exercise by virtue of her membership of the Innovations Council (which was asserted but not demonstrated) does not prove control by Trident Foods.

(5) The identification of Trident Foods as trade mark owner on products supplied by Manassen does not prove use of the trade mark under the control of Trident Foods.

(6) Assuming that the VQM Manual is owned by Trident Foods jointly with other corporate entities in the Bright Group, Trident Seafoods did not demonstrate that the VQM Manual conferred any relevant control on Trident Foods over Manassen.

Finally, Gleeson J was not prepared to find there had in fact been an unwritten licence agreement in place as claimed in the recitals to the 2017 document. The claim was inconsistent with the evidence of how things had actually operated.

It is not possible to tell from the judgment what the contents of the VQM Manual were. One must wonder, however, whether much would really be gained by requiring the directors of Trident Foods to have met and formally adopted the relevant parts of the VQM Manual (assuming there were any) as the quality standards that Manassen needed to comply with and, further, to meet formally as directors of Trident Foods and approve changes to any applicable quality standards or even to meet at regular intervals to consider whether Manassen was complying with quality standards they had prescribed. Unless a subsidiary can never exercise control of its parent or a related body corporate that was not a subsidiary, nonetheless, it would seem that level of formalism is required.

Her Honour’s approach may be compared to that of Nicholas J in Dunlop v Goodyear at [88] and [121]. Of course, in that case the trade mark was owned by the parent, not the subsidiary; there seem to have been numerous written agreements in place and some evidence of head office (i.e., the parent) issuing instructions about the business and the use of the trade marks in the business.

As already indicated, Gleeson J went on to exercise the discretion not to remove Trident Foods’ registrations. In what is already an overly long post, that and some other points of interest will have to await consideration another day.

Trident Seafoods Corporation v Trident Foods Pty Limited [2018] FCA 1490


  1. As you know, under s 7(3), authorised use of a trade mark by a person is taken to be use of the trade mark by the registered owner. And, under s 8 a person is an authorised user of a trade mark if that person uses the trade mark under the control of the trade mark owner. Section 8(3) and (4) provide that “control” may be “quality control” or “financial control”, although s 8(5) does provide that s 8(3) and (4) do not limit the meaning of “under the control of”.  ?
  2. The recitals stated that there had been an unwritten licence agreement between them since 2000 and this document reflected the parties’ wish to reduce the terms of their licence to writing. Apparently, in reliance on Film Investment Corporation of New Zealand Ltd (Receiver Appointed) v Golden Editions Pty Ltd [1994] FCA 11; (1994) 28 IPR 1 at 15; Black & Decker Inc at [147] and [148]; Allam at [430] and [431].  ?
  3. HS TM, LLC v Schein Orthopadie-Service KG [2016] ATMO 63 at [23]; heard before Lodestar, but decided afterwards.  ?

Arbitrating IP disputes in Australia

Last year, IPwars reported on Hammerschlag J’s ruling that arbitrators under the Commercial Arbitration Acts 1984 (here and here (repealed and replaced by a 2010 Act)e.g.) can settle disputes about (1) the ownership of improvements under a technology licence agreement and (2) the licence fees payable if the technology be exploited in various ways in the future.

The arbitrator has now made an award finding that the patents owned by Lloyd or its subsidiary Solfast, the Solfast and Asura patents, were improvements covered by the licence and so should be assigned to Larkden.

Larkden has secured from Hammerschlag J orders enforcing that award and so requiring Lloyd to transfer ownership to Larkden.

Section 35 of the Commercial Arbitration Act 2010 (NSW) provides that an arbitrator’s award must be recognised and is enforceable subject to the formal requirements of s 35 and substantive grounds in s 36. The substantive grounds are:

Grounds for refusing recognition or enforcement

(1)Recognition or enforcement of an arbitral award, irrespective of the State or Territory in which it was made, may be refused only:

(a)at the request of the party against whom it is invoked, if that party furnishes to the Court proof that:

(i)a party to the arbitration agreement was under some incapacity, or the arbitration agreement is not valid under the law to which the parties have subjected it or, failing any indication in it, under the law of the State or Territory where the award was made, or

(ii)the party against whom the award is invoked was not given proper notice of the appointment of an arbitrator or of the arbitral proceedings or was otherwise unable to present the party’s case, or

(iii)the award deals with a dispute not contemplated by or not falling within the terms of the submission to arbitration, or it contains decisions on matters beyond the scope of the submission to arbitration, provided that, if the decisions on matters submitted to arbitration can be separated from those not so submitted, that part of the award which contains decisions on matters submitted to arbitration may be recognised and enforced, or

(iv)the composition of the arbitral tribunal or the arbitral procedure was not in accordance with the agreement of the parties or, failing such agreement, was not in accordance with the law of the State or Territory where the arbitration took place, or

(v)the award has not yet become binding on the parties or has been set aside or suspended by a court of the State or Territory in which, or under the law of which, that award was made, or

(b)if the Court finds that:

(i)the subject-matter of the dispute is not capable of settlement by arbitration under the law of this State, or

(ii)the recognition or enforcement of the award would be contrary to the public policy of this State.

Lloyd argued that the award in relation to the Solfast patents fell foul of s 36(1)(a)(iii) because the shares in Solfast, originally owned by Lloyd, had been transferred to GENV. Hammerschlag J found this was untenable: the transfer of shares in Solfast was void and set aside under s 267(1) of the Corporations Act. In addition, although developed by Solfast, the Solfast patents were improvements within the meaning of the licence because Lloyd had developed the patents through the medium of Solfast.

Lloyd’s second argument was predicated on s 36(1)(b)(ii) contending that some of the orders in the award were too vague and uncertain to be enforceable. This allegation included the order that Lloyd take all necessary steps to ensure that [Lardken]’s interests in the prosecution of the Assigned Patent Applications are protected and secured.

Hammerschlag J rejected this ground too. The orders were not vague and uncertain. Further, his Honour doubted they would offend public policy as not sufficiently concerning “the State’s basic notions of morality and justice”.

Larkden Pty Limited -v- Lloyd Energy Systems Pty Limited [2011] NSWSC 1331

The arbitrator.

A case of (un) parallel imports

BTB holds a licence to make and sell “Greg Norman” branded clothing in India from Greg Norman Collection Inc (GNC). GNC is the “head licensor” of the “Greg Norman” trade marks registered in, amongst other places, India and Australia.

By clause 2.4 of the licence agreement, BTB agreed not to sell the branded clothing it made outside India without GNC’s consent:

LICENSEE acknowledges that this License is limited to the TERRITORY defined herein, and agrees not to sell LICENSED PRODUCTS to anyone other than its regular retail customers in the TERRITORY in the normal course of trading, and further agrees that it will not sell LICENSED PRODUCTS destined directly or indirectly for sale outside the TERRITORY without the prior written approval of GNC.

Sunsport operates mainly in Pakistan, but also has a representative in Singapore, Mr Wadhwani. Mr Wadhwani also operates a business, PT International which, amongst other things, supplies product to the second respondent in Australia.

Sunsport told Mr Wadhwani that it could source genuine Greg Norman branded merchandise from BTB. Mr Wadhwani told the principal of the second respondent, Mr Dwyer, this. Mr Dwyer checked out GNC’s website and established that BTB was an authorised licensee of GNC and placed an order with Mr Wadhwani from BTB’s catalogue.

Sunsport placed an order with BTB for a shipment of clothing, apparently to be delivered to Pakistan via Singapore. When the shipment reached Singapore, however, PT International on sold the goods to Mr Dwyer’s company, which imported them into Australia.

Nicholas J has found that in doing so Mr Dwyer’s company infringed the “Greg Norman” trade marks.

One particularly interesting issue is why Mr Dwyer’s company was unable to rely on s 123 of the Trade Marks Act 1995: while BTB was in fact a licensee of the relevant trade marks, Nicholas J still found that the trade marks had not been applied to the particular goods with the trade mark owner’s consent. The main reason for this conclusion was that BTB’s licence was limited to India. Although BTB made and marked the goods in India where it did have a licence, it had no licence to sell “Greg Norman” merchandise outside India. At [78] his Honour said:

Where a registered owner consents to another person applying the registered mark to goods on condition that the goods must not to be supplied outside a designated territory, the registered owner would not usually be regarded as having consented to the application of the mark to goods which the other person knows at the time he or she applies the mark are to be supplied by him or her outside the territory.

However, there may be more to it than that. It would appear that BTB made a special batch of the merchandise to fill the order from Sunsport. Also, the evidence showed that BTB did not include the sale in its royalty reports to GNC. While strictly obiter, his Honour went on to note at [89]:

I would not be prepared to infer that products manufactured by BTB in respect of which GNC had received royalty payments were products to which the second applicant’s marks had been applied without the second applicant’s consent in the absence of convincing evidence to that effect. Of course, as I have previously found, royalties were not paid on the products shipped to Sunsports. ….

and went on to reject an argument that the goods imported were of an inferior quality.

If nothing else, this decision shows just how high the hurdle may be for someone who want to engage in parallel importing. On the other hand, if the receipt of royalties has the significance identified at [89], trade mark owners will need to scrutinise statements from their licensees very carefully to ensure that they are not “implicitly” licensing a parallel importer. The implicit licence, or licence by acquiescence, however,  might seem very hard in cases where royalty reports don’t come in for several months (or longer) unless, perhaps, there be a pattern of acquiescing.

A second interesting point lies in his Honour’s comments on the Champagne Hiedsieck case. In that case, Clauson J had held that there is no use of a trade mark as a trade mark by someone when the goods in question are goods to which the trade mark owner had actually applied the mark. That ruling has been upheld and applied many times.

I had thought the High Court’s references to Champagne Hiedsieck in its Gallo ruling showed its continuing relevance.

Nicholas J points out, however, that the High Court stated that s 123 embodies the principle in Champagne Hiedsieck. As a consequence, applying conventional principles of statutory interpretation, his Honour concluded that the enactment of s 123 has operated as a kind of statutory repeal or displacement of Champagne Hiedsieck. His Honour explained:

[98] The question whether a person who sells goods to which a trade mark has been applied with the consent of the owner of the mark uses the mark as a trade mark was recently left open by the High Court: E & J Gallo Winery v Lion Nathan Australia Pty Ltd [2010] HCA 15; (2010) 265 ALR 645 at [53].

[99] The respondents’ argument before me was that, independently of the question of trade mark use by them (which was, as I have said, conceded by them to have occurred), the applicants were also required to establish that the respondents had engaged in “infringing use” and, for that purpose, had to establish that the marks on the relevant goods had not been applied by or with the licence of their owner. I do not think this is correct. There is no justification for implying any such additional requirement. If the circumstances referred to in s 123 are shown to exist then the respondents will not have infringed the registered trade marks, not because of any additional requirement of the kind now postulated but by operation of s 123 itself. The High Court observed in E & J Gallo Winery at [34] that s 123 reflects the principle established by Champagne Heidsieck.
[100] As a matter of statutory construction, s 123 of the Act, in form and substance, creates an exception to infringement which, in accordance with the relevant principles of statutory construction, leads to the conclusion that it is the person who invokes the section who carries the onus of proof: Avel Pty Ltd v Multicoin Amusements Pty Ltd [1990] HCA 58; (1990) 171 CLR 88 at 119; Vines v Djordjevitch [1955] HCA 19; (1955) 91 CLR 512 at 519.

(Nicholas J did go on to note how lightly the burden on a respondent might shift.)

Arguably, the point was not strictly before his Honour as Mr Dwyer’s company conceded it was using the Greg Norman trade marks “as trade marks”. If right, however, there would appear to have been a significant narrowing of defendants’ “wriggle room”.

Sporte Leisure Pty Ltd v Paul’s International Pty Ltd (No 3) [2010] FCA 1162

Software licensing

IP What’s Up (USA) reviews a book demystifying software licensing (from a US perspective).

OUP’s link.

Singapore Trademark (?) Treaty

IPKat reports that the Singapore Treaty on the Law of Trademarks came into force on 16 December 2008, when Australia became the 10th party to ratify.

Apparently, it should help simplify trade mark applications and licensing.

Wonder if there’s anything in here to do with this?