As you might recall, Energy Beverages is the owner of registered trade marks in Australia for MOTHER in respect of amongst other things, non-acoholic beverages in class 5 and pharmaceutical and veterinary preparations, dietetic substances and food and beverages for babies in class 32.
A New Zealand company, Erbaviva, applied to register KANGAROO MOTHER for a range of goods in classes 5, 29, 30, 31 and 32. Subsequently, the application was assigned to KMA. A Mr Zheng was the sole director and shareholder of both companies.
Energy Beverages’ opposition to the application on the basis of ss 42(b), 44 and 60 of the Trade Marks Act was unsuccessful. Energy Beverages “appealed” the Delegate’s decision to the Federal Court on the basis of s 59, s 44 and s 60.
Section 59 provides:
The registration of a trade mark may be opposed on the ground that the applicant does not intend:
(a) to use, or authorise the use of, the trade mark in Australia; or
(b) to assign the trade mark to a body corporate for use by the body corporate in Australia;
in relation to the goods and/or services specified in the application.
which mirrors s 27.
In very broad terms, this requires demonstration that the applicant does not have “a resolve or settled purpose at the time the application was filed to use the trade mark as a trade mark in relation to the relevant goods or services. A mere ”speculative possibility“ or ”a general intention to use the mark as some future but unascertained time” is not enough.
Before he incorporated Erbaviva and later KMA, Mr Zheng worked as the “Assistant to the Group Chairman” of NZ Skin Care Company. NZ Skin Care Company, as its name suggests, sold a range of skin care products and also home cleaning products.
The Group Chairman Mr Zheng assisted was a Mr Liu. Mr Liu was also the Chairman of a Chinese company, Shanghai Urganic. Mr Liu, however, was not a director of NZ Skin Care Company and Shanghai Urganic was not a shareholder in NZ Skin Care Company (although later it did become the ultimate shareholder of that company).
While he was still working for NZ Skin Care Company, Mr Zheng incorporated Erbaviva to sell “Erbaviva” brand skin care products and, after the trade mark application in issue had been filed, KMA. Neither company, however, has ever traded.
In the course of 2018, Erbaviva applied for and became registered as the owner of trade marks for a “Kangaroo Mother” logo and Kangaroo Mother in respect of a range of goods in classes 3, 5 and 21.
In February 2019, Mr Zheng received an email from a Shanghai Urganic employee, Ms Lim, informing him that Director Liu had “mentioned” we should apply for a food trade mark for “Kangaroo Mother”. Ms Lim supplied a catalogue for another company’s products to illustrate the goods under consideration. This exchange led to the application the subject of the appeal.
After some back and forth, Mr Zheng contacted Erbaviva’s then trade mark attorneys with instructions to file a trade mark application in Australia for a range of goods in classes 5, 29, 30, 31 and 32. (With the exception of “chocolate flavoured cola drinks”, Mr Zheng had simply cut and pasted the specification for another, unrelated company’s trade mark he had found on the IPONZ site.)
The attorney indicated he could file for this range of goods but proposed he amend it to ensure that Erbaviva had “the widest scope of protection in those classes.” So, after Mr Zheng approved that proposal, the application wound up in the form under opposition.
What O’Callaghan J found
As the application was filed in Erbaviva’s name, the relevant intention was Erbaviva’s at the time the application was filed. That is, the question was whether or not Erbaviva had an intention to use the trade mark in any of the ways specified in s 59 when it filed the application.
O’Callaghan J held it did not.
First, the goods specified in the application as filed were much broader than those suggested by Ms Lim or proposed to the attorney by Mr Zheng.
Secondly, in cross-examination Mr Zheng’s evidence was that he did not regard Ms Lim’s report about what Director Liu “mentioned” as an instruction.
Thirdly, there were no documents produced through discovery or evidence of any plan or proposal beyond use for “gel candies, pressed candies, drops, powdered dairy products, solid beverages or capsules”.
Fourthly, Mr Zheng had simply cut and paste the specification he proposed to the attorney in a matter of minutes.
Fifthly, although the application had been made over four years ago, there was no evidence of any use or preparations to use.
Sixthly, there was no evidence to support the contention that Shanghai Urganic, NZ Skin Care Company and Erbaviva were part of a “conglomerate” (see “secondly” above).
Mr Zheng’s evidence unfortunately only went as far as claiming Erbaviva intended to use or authorise another company to use. So submissions that it intended to assign to KMA on its incorporation did not fly.
The evidence also included a non-disclosure agreement with an Australian manufacturer of various goods, but the counterparty was NZ Skin Care, not Erbaviva.
As noted above, successful oppositions under s 59 are not very common in view of the onus – unlike removal actions under s 92 in which s 100 places the onus on the trade mark owner to prove use. And this case seems to have been particularly assisted by Mr Zheng’s problematic evidence and the amorphous nature of the relationship(s) with Director Liu.
That said, the first thing to note is that Energy Beverages did not pursue the ground before the Registrar but only on “appeal” where the Court procedures of discovery and cross-examination were deployed.
Next, it is significant that this was an opposition rather than an application under s 92. This is because O’Callaghan J followed Yates J’s decision in Apple (at ) and accepted that the whole application should be rejected if it failed in respect of any specified goods. At :
There is but one application covering registration of the mark for all the services that have been specified. If the application fails in one respect, it fails as a whole….
In contrast, an application under s 92 may often result in removal of some, but not all, goods or services.
Thirdly, recognising this problem, KMA made an application on the penultimate day of the trial under s 197 to amend the specification of goods for a much more limited scope.
At , O’Callaghan J accepted that he should exercise this power in similar manner to that exercised by the Court when considering amendments to patents under s 105 of the Patents Act. That is, the power to amend was discretionary and required consideration of all the circumstances including when the owner became aware of the need to amend and any explanation for delay.
At  – , O’Callaghan J refused the request. KMA had been aware that Energy Beverages relied on the Apple approach from at least the opening. KMA failed to provide any explanation for its delay or the basis on which it proposed to exclude some goods but not others. Also, Erbaviva had deliberately sought the widest scope of protection possible, much broader than its own instructions.
In that connection, it is unusual to get the communications between the client and the attorney. While it is part of our jobs to ensure the client is getting appropriate protection, this case should serve as a warning against being too enthusiastic.
The question of discovery is also instructive. In October 2022, KMA had made discovery of 5 documents and a number of other documents over which privilege was claimed.
Two days before trial, however, KMA announced it proposed to rely on documents over which it had previously claimed privilege and, in the course of the trial just before Mr Zheng’s cross-examination, KMA sought to rely on a “further, extensive, tranche of documents which ought to have been produced in answer to the order for discovery”. At , O’Callaghan J invoked Aon Risk and refused that attempt on the grounds of prejudice and KMA’s failure to adequately explain the delay.
Energy Beverages LLC v Kangaroo Mother Australia Pty Ltd  FCA 999 (O’Callaghan J)
- The class 32 goods were specified in TM No 1320799 for the “Mother” mark in gothic script. ?
- Because the “appeal” is a hearing de novo, it is possible to raise grounds not raised before the Registrar. ?
- After the trade marks were assigned to KMA, the logo mark has subsequently been removed for non-use under s 92 on application by Energy Beverages. KMA did not seek to defend the non-use application. ?
- Although not an employee of NZ Skin Care Company, she did have the use of a NZ Skin Care Company email account. ?
- Reasons for decision at  – . ?
- S 92(4)(a) can be rebutted by showing use in good faith after the application was filed. And s 92(4)(b) proceedings can be brought only after the expiry of the period specified in s 93 (which is different depending on whether the application was filed before or after the Productivity Commission Implementation Act amendments). ?