Pioneering Decision on Non-use
Pioneer KK, the makers of quite well known audio, audio-visual and home entertainment products have had a big win in an application against them for non-use of their trade mark on a range of goods. In Pioneer Computers Australia Pty Limited v Pioneer KK [2009] FCA 135 (23 February, 2009), the battle lines were drawn between the applicant for removal, Pioneer Computers (‘the new guys’), which used the sign Pioneer on its computer products and Pioneer KK (‘the old guys’), the company that sells the home entertainment products under the Pioneer brand that most of us are probably familiar with.
The problem here was that the old guy’s original registration in Class 9 for Pioneer was quite broad. It included ‘computers, computer peripheral devices, computer keyboards; computer memories; printer for use with computers… computer software’ as well as the home entertainment equipment for which the old guys are known. The new guys started up in late 1996 and had been selling computers and computer products since then with the knowledge of the old guys but the old guys, it seems, have had enough and wish to enforce their strict statutory rights. While they retain registration in respect of computers, they can require the new guys to cease using selling Pioneer computers by relying on s120(1) of the Trade Marks Act 1995 (Cth). Effectively, the provision is a strict liability provision and the old guys would not have to prove confusion and the new guys would have no defence even if there was proof of a lack of confusion. The other infringement provisions in s120(2) and (3) are more conditional and offer opportunities for consideration of the likelihood of confusion. They apply where the defendant’s use is on goods for which the trade mark owner does not have registration.
The intriguing part of the decision is that the old guys did not use their trade mark for computers during the non-use period and they have absolutely no intention of making or selling computers. Yet Bennett J exercised her discretion to allow the old guys to keep their registration which means the new guys need to stop using Pioneer on their computers.
A few things about the law of non-use generally
The decision makes a few observations about the Australian law of non-use generally and draws some interesting conclusions about the application of those principles to ‘new’ technology or, more relevantly, the convergence of technologies. A few basic points about Australian non-use law can be made. First, the Court has a general discretion under s 101(3) to retain the registration even if there has been non-use. It need only decide that it is reasonable to do so and there does not have to be any special circumstances. Section 101(4) provides that one discretionary factor is whether the trade mark has been used on similar goods. In this context, that means the issue is whether it has been used on goods of the same description.
Convergence issues
These points become of particular significance in the context of technological convergence. Much of the evidence was directed to the proposition that computer technology and home entertainment technology had converged to the point where ‘the public would not draw a distinction’ between computers sold by the new guys and audio-visual equipment sold by the old guys. The basic proposition being put was that things that play music are now computers and computers play music, among other things. Throw in the existing strong reputation of the old guys and the combination of brand extension and technology convergence meant that Bennett J thought it was not in the public interest to remove the old guys’ registration for computers. As a consolation prize to the applicants, she did say that her discretion would only be exercised upon the old guys giving an undertaking not to sue in respect of past use and giving the new guys a reasonable time to wind up the sales of its Pioneer computers. The end result though is that the new guys need to leave the field and that no-one in Australia will ever sell a Pioneer computer because the old guys do not want to, the new guys can not and, after this decision, anyone else who thinks about it would be plain silly.
As an aside, the old guys had a very aptly named marketing expert called Mr Blanket which is entirely appropriate for an expert advocating for retention of registration over a broad range of goods even when there has been no use and is no intention to use the trade mark in respect of a number of those goods.
Consequences
Now I don’t want to be a wet blanket here but there are a few issues to consider. The first is that while there was a fair bit of discussion about s101(4), the relevance of use of the trade mark on goods of the same description, there was, I think, an unnecessary convergence of this issue with another issue. There was no express finding that what the old guys sold were goods of the same description as computers. There was a finding that ‘the public would not draw a distinction between the removal goods and the goods sold by the old guys’ because of technology convergence and the old guys’ reputation. It would be disappointing if likelihood of confusion became the test of goods of the same description. If it did, that would take a lot of the fun out of distinguishing between ss 44 and 60 of the legislation.
Second, the convergence argument is a bit of a worry. Its limits were not fully explored. For example, just about everything that involves electricity these days uses digital technology. While the same manufacturer may well sell all sorts of digital products and computers, I’m not completely convinced that the public is unable to distinguish between them. Just because a computer can perform basically all functions those digital items can does not mean that they are one and the same thing and certainly not goods of the same description. Try this analogy. I’m a parent. I cook, I clean and I drive offspring to and fro. Does this mean that a chef, a cleaner and a limousine driver are the same as parents in the eyes of the public? After all, they do the same thing.
Third, Bennett J considered that there would be no detriment to the public from requiring the old guys to give that undertaking not to sue in respect of past use or future use for a reasonable time. Now, if there was no detriment to the public from the past use and there would be no detriment to the public from future use for a reasonable period of time and the old guys are never going to make a computer called Pioneer, why are they being given a lay down misere cause of action under s120(1)? Why should they not be required to win their action under s120(2) or s120(3) and run the gauntlet of evidence about whether the public really is unable to distinguish between the different products on offer.
Not a very apt analogy I'm afraid.
What if Pioneer computers started selling a computer with a Blu-Ray drive, an audiophile quality 7.1 soundcard and 1080p capable video card. Let's say this came pre-installed with either Linux (but defaulting to XMBC or MythTV at startup) or Windows Media Centre Edition. They might call it a computer
What if Pioneer KK decided to do exactly the same thing? They might call it a PIONEER All-In-One Media Centre Tuner/Receiver/Blu-Ray MEGAPLAYER PD-599838483.
Would this be in the realm of "audio visual" equipment or in the realm of computers?
Your parent doesn't become an Iron Chef after reading a cookbook, nor does the parent become Michael Schumacher after taking a driving lesson.
Without having read the judgement, I suggest that the new guys should have sought to register their own trade mark for "Pioneer" and relied upon the honest and concurrent use approach. Though, of course, had the old guys opposed the registration of the trade mark, the new guys may have stumbled under section 60 of the Act, like Ms McCormack did many moons ago. Still, it would have been cheaper to run the opposition than to engage in full-blown Federal Court litigation.