When can an authorised user sue

Following on from my earlier post about the Trade Marks Act 1995 and repackaged goods, it is worth noting that there was also a dispute about the power of an authorised user to bring proceedings under s 26(1)(b) of the Act.

Amongst other things, section s 26(1)(b) provides:

Powers of authorised user of registered trade mark

(1) Subject to any agreement between the registered owner of a registered trade mark and an authorised user of the trade mark, the authorised user may do any of the following:

….

(b) the authorised user may (subject to subsection (2)) bring an action for infringement of the trade mark:

   (i) at any time, with the consent of the registered owner; or

  (ii) during the prescribed period, if the registered owner refuses to bring such an action on a particular occasion during the prescribed period; or

  (iii) after the end of the prescribed period, if the registered owner has failed to bring such an action during the prescribed period;

Scandinavian Tobacco Group Eersel, as the owner of the registered trade marks, had brought the proceeding, but it was joined as an applicant by its local distributor as an authorised user. Trojan argued that the authorised user had no standing to sue in this case. This was not an argument about whether the local distributor was an authorised user. Rather, it was whether or not the formal requirements of s 26(1)(b) had been met.

Allsop CJ confirmed that s 26(1)(b) allowed an authorised user to bring proceedings for trade mark infringement concurrently with the trade mark owner. It was not necessary for the authorised user to call on the registered owner to bring proceedings and then wait 60 days for the owner to fail to take any action.

The power of an authorised user under the Act to bring proceedings is subject to any agreement with the registered owner to the contrary. In that connection Cl 8 of the relevant distribution agreement is in fairly typical terms:

Nothing in this Agreement shall be interpreted or otherwise construed as giving the Distributor any rights to any of the Supplier Trade Marks. The Distributor shall inform the Supplier of any Infringements of the Supplier Trade Marks of which the Distributor becomes aware. Prosecutions for infringements shall be at the Supplier’s discretion and cost, but the Distributor shall offer all reasonable assistance. Any damages received shall be credited to the Supplier.

Allsop CJ considered this did not exclude the authorised user’s powers under s 26(1)(b) but, if it did, his Honour would have inferred the registered owner had given consent in the circumstances of this case: both the registered owner and the authorised user had issued the proceedings as joint applicants.

The question of the local distributor’s standing as an authorised user to bring proceedings is not necessarily an arid debate in cases where the right owner is also an applicant. It might have affected how much damages could be recovered for any infringement by Trojan.

There are of course a number of ways damages could be calculated (assuming damages and not an account of profits were pursued). One way of calculating such damages is the amount of profits that would have been made on sales lost as a result of the infringing activity. If s 123 had not provided Trojan with a defence and the applicants had pursued damages for lost sales, the quantum as measured by any profits lost by reason of the (hypothetical) infringement would probably include the local distributor’s “lost” profits only if it was an authorised user and entitled to join in the proceeding. If STG, as the owner of the registered trade marks, was the only applicant, its damages would probably have been limited only to the profits it lost on sales to its distributor and probably would not include profits on sales “lost” by the distributor.[1]

Scandinavian Tobacco Group Eersel BV v Trojan Trading Company Pty Ltd [2015] FCA 1086[2]


  1. The qualification “probably” is necessary in light of the Full Court’s decision in a copyright case: Insight SRC IP Holdings Pty Ltd v Australian Council for Educational Research Ltd [2013] FCAFC 62  ?
  2. STG’s appeal from the principal decision was heard by the Full Court on 25 November.  ?

Wild Geese survive Wild Turkey attack

Anita Brown, over at IPanz, reports on Cowdroy J’s exercise of discretion to leave the Wild Geese trade mark for whiskey on the Registrar, even though non-use throughout the relevant statutory period was proved, on the basis of the perceived risk of public confusion.

His Honour also addressed the standing requirement for a non-use action.

His Honour’s reasons in full:

Austin, Nichols & Co Inc v Lodestar Anstalt [2011] FCA 39

High Court allows appeal in Health World

The High Court has unanimously allowed Health World’s appeal from the Federal Court’s ruling that it was not an “aggrieved person” and so had no standing to seek rectification of Shin Sun’s HEALTHPLUS trade mark.

Shin Sun had registered HEALTH PLUS for pharmaceutical products including vitamins and dietary supplements in class 5; and Health World was using INNER HEALTH PLUS for the same type of goods and had successfully registered it. Its action for rectification of the Register had failed in the Federal Court on the grounds that it was not an “aggrieved person”.

The High Court ruled that Health World was an aggrieved person as it and Shin Sun were trade rivals, selling the health products in question.

They are in the same trade, and they each trade in the class of goods in respect of which the challenged mark is registered.

French CJ, Gummow, Heydon and Bell JJ noted at [22]

the legislative scheme reveals a concern with the condition of the Register of Trade Marks. It is a concern that it have “integrity”[9] and that it be “pure”[10]. It is a “public mischief” if the Register is not pure[11], for there is “public interest in [its] purity”[12]. The concern and the public interest, viewed from the angle of consumers, is to ensure that the Register is maintained as an accurate record of marks which perform their statutory function – to indicate the trade origins of the goods to which it is intended that they be applied[13].

This objective was balanced by a need to stop the courts being clogged by, and trade mark owners being vexed by, busybodies. At [27], their Honours noted:

While the Act offers these facilities for ensuring that the Register is pure in the sense that no mark is to be registered unless valid, and no registration of a mark is to continue if it is not valid, the purpose of ensuring purity exists alongside another purpose. That is the purpose of preventing the security of the Register from being eroded by applications for rectification or removal by busybodies or “common informers or strangers proceeding wantonly”[15] or persons without any interest in the Register or the functions it serves beyond gratifying an intellectual concern or reflecting “merely sentimental motives”[16]. Applications of that kind, by clogging up and causing delay in the courts, would cause an unnecessary cloud to hang over registrations. The purpose of avoiding this outcome is reflected in the standing requirements in ss 88 and 92. Applications by persons who are not aggrieved are positively inimical to the fulfilment of the statutory purposes through the Register.

The Full Federal Court from which the appeal was brought had erred by adopting the rule laid down in Kraft v Gaines, that the exhaustive test for standing included a requirement that trader could, or might reasonably, wish to use the mark under challenge.

Crennan J delivered a concurring opinion. Her Honour differed from the majority in considering that an aggrieved person must be affected by the wrongly registered trade mark. Her Honour accepted that Health World satisfied that test. However, Crennan J considered at [61] “it is not essential to the resolution of these appeals to decide that it is sufficient for “a person aggrieved” to prove no more than trade rivalry with the registrant of the trade mark sought to be removed.”

As a result of this ruling, it would seem that Shin Sun’s trade mark would be removed from the Register on the trial judge‘s findings that Shin Sun did not intend to use or authorise the use of the trade mark (s 59(a)) and Shin Sun had allowed the trade mark to become deceptive or confusing (s 88(2)(c)). Health World second action for removal for non-use under s 92 would also succeed.

Health World Ltd v Shin-Sun Australia Pty Ltd [2010] HCA 13

Health World v Shin Sun – round 563?

This round of the litigation raise the question ‘Who is a person aggrieved for the purposes of seeking revocation of a registered trade mark?’

Health World isn’t, at least when it comes to Shin Sun’s registration.

Health World uses and has registrations for INNER HEALTH PLUS in respect of probiotic capsules and has a registration for ‘Pharmaceutical preparations; dietetic substances adapted for medical use; products in this class sold by pharmacies and/or health food shops including vitamins, minerals, health foods, dietary foods, Chinese and ayurvedic herbs, and nutrition bars included in class 5’.

Shin Sun uses HealthPlus for products derived from bees, their wax and/or squalene (something to do with sharks) and its Australian trade mark registration is for ‘‘pharmaceutical products including vitamins and dietary supplements’ in class 5′. Shin Sun’s registration had 4 years’ priority over Health World’s.

Health World’s opposition to Shin Sun’s application having failed, it sought revocation on the basis of prior reputation (s 60 or via s 42(b)). This failed because, while anyone could oppose on the grounds of s 60 relying on anyone’s reputation, s 88 required an applicant for revocation to be an aggrieved person and this, in turn, required that the misleading and deceptive nature of the mark sought to be revoked must affect the application for revocation in a meaningful way – the legal or practical effect test from Ritz.

Health World failed this test because its established reputation was in a rather discrete field and there was no risk of overlap with Shin Sun’s own particular, narrow field.

Health World tried a number of arguments to avoid this conclusion, particularly based on the litigious history of the parties including Shin Sun’s own oppositions and other objections to Health World’s trade mark registration. These failed, largely because Shin Sun had withdrawn the objections by the time Health World launched its revocation proceeding or Shin Sun’s actions could be characterised as defensive manoeuvres in response to Health World’s attacks.

I’m not sure what the policy objective being served here is – as the Court notes, the requirement for standing is intended to keep out mere busybodies and officious bystanders. I guess, if there is no overlap in the respective parties’ business fields, the conclusion must follow.

As an aside, the Full Court appeared to endorse the trial judge’s finding that Shin Sun’s registration  was vulnerable on the grounds that it was confusing – because the goods Shin Sun’s trade mark was used on were not Shin Sun’s but some related entities (see [18]). I’m not at all clear why that’s the case, but it seems very bizarre that a ‘confusing’ trade mark can happily be left on the Register?

Health World Limited v Shin-Sun Australia Pty Ltd [2009] FCAFC 14 (Perram J with Emmett and Besanko JJ agreeing)