Australian Trade Marks Law Blog : Australian Trademarks Lawyer & Attorneys : Nicholas Weston Law Firm : Copyrights, Intellectual Property

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.

Mark Davison

In December 2001, Health World opposed the registration of the ‘HealthPlus’ mark relying on the s60 ground. The Registrar dismissed the opposition and Health World failed on appeal to the Federal Court: Health World Limited v Shin-Sun Australia Pty Ltd [2005] FCA 5; (2005) 64 IPR 495. Following that, in Health World Limited v Shin-Sun Australia Pty Ltd [2006] FCA 647 it was held that the ‘HealthPlus’ mark was not deceptively similar to the ‘Inner Health Plus’ mark.

The Decision

In this proceeding, there were three separate applications before the court:

1.         a rectification proceeding by Health World that sought expungement by Shin-Sun of the HealthPlus mark under ss 88(2)(a) and (c) of the Act; 

2.         a non-use proceeding by Health World that sought removal of Shin-Sun’s HealthPlus trade mark from the register on the grounds of non-use in s 92(4)(a) and s 92(4)(b) of the Act; and

3.         a non-use application by Shin-Sun against Health World’s ‘Inner Health Plus’  mark, also relying on the grounds stated in s 92(4)(a) and s 92(4)(b) of the Act.

The rectification proceeding

By s 88(2)(a) an application for cancellation or removal of a mark may be made on any of the grounds on which the registration of the trade mark could have been opposed. The grounds relied on by Health World, as well as the Courts finding on each, are summarised below:

Under s 42 Health World argued that use of the ‘HealthPlus’ mark was contrary to law because it was misleading or deceptive under s 52 of the Trade Practices Act 1974 (Cth). Health World relied on their reputation under the ‘Inner Health Plus’ brand to establish this ground. The Court acknowledged that at the crux of this question was whether the reputation of the ‘Inner Health Plus’ Capsule was separate and distinct from the reputation of the Inner Health Powder. After a detailed analysis of Health World’s marketing and promotion of the Capsules the Court rejected their submissions on this point:

“the entire thrust of Health World ’s launch of the Inner Health Plus Capsules was to take advantage of the reputation of the Inner Health Powder and the goodwill attaching to it” and “the essential message and reputation of Inner Health Plus remained constant”.

Since Health World’s reputation was specifically linked back to their initial product, the Powder, there could be no misleading or deceptive behaviour by Shin Sun.

Under s 59 Health World argued that on filing Shin Sun did not intend to use, or authorize to use, the 'HealthPlus' mark in Australia. Health World’s evidence pointed to Shin-Sun’s, as well an associated company, Nature’s Hive Pty Ltd, failure to distinguish between the separate identities of those corporations. The Court accepted their submissions on this point and found that the relevant intention for a connection in the course of trade was between Nature’s Hive and the goods, as opposed to with Shin-Sun. As such, the requisite intention was not present.

However, this ground proceeded to fail since Health World were found not to have standing as a ‘person aggrieved’ as required by s 88(1).  The Court said  “the applicant [must] have a desire to use the mark, or be likely to be hampered in some other way by the registration of the mark that the applicant seeks to have expunged”. The court did not find any intention on behalf of Health World to use the ‘HealthPlus’ mark other than as part of its existing ‘Inner Health Plus’ mark. A finding of no deceptive similarity between ‘Inner Health Plus’ and HealthPlus’ meant that Health World had no standing. 

Health World also relied on s 60 as a basis for removal of Shin-Suns “HealthPlus’ mark. On this point, there was a dispute between the parties as to whether s 60 applied in its form as at May 2001 (the relevant date for which the application could have been opposed) or in the form in which it stands at present (as amended on 23 October 2006). Shin-Sun argued that the pre-amended provision applied thus requiring Health World to establish that the marks in question were “substantially identical or deceptively similar”. Health World made submissions to the contrary arguing that the Amendment Act, contains no transitional provision for the application of the amendment to s 60.

The Court found that s 60 applied in its pre-amended form: “it would seem to me to be wrong to suggest that the Act contemplates that an expungement application may be brought upon the basis of a ground of opposition expressed in different terms from those that were applicable when the opposition was, or could have been, brought”.

Regardless, this ground proceeded to fail due to a lack of requisite reputation, as well as a finding against deceptive similarity between “Inner Health Plus’ and ‘HealthPlus’.

Health World’s non-use proceeding

Health World’s non-use application relied principally on the failure of Shin-Sun to use the HealthPlus trade mark in Australia during the three year period following its filing. 

The court found in favour of Health World predominantly on the basis that it was Nature’s Hive that used the mark during the relevant period and at all other times.

However, s 92 in the form in which it stood when Health World filed its non-use application required a person bringing a non-use application be a person aggrieved. For the same reasons mentioned above the Court did not consider that Heath World was such a person. The application failed.

Shin-Sun’s non-use proceeding

Shin-Sun sought partial removal of Health World’s ‘Inner Health Plus’ mark.

The Court did not agree with Shin-Sun that on the day on which the application was made that Health World had no intention to use the mark in relation to all the goods covered in the application (Shin-Sun’s application under s 92(4)(a) failed)

Shin-Sun were successful under s 92(4)(b)in establishing that during at least a three year period, Heath World had only used the trade mark in relation to some of the goods claimed, the Capsules.

However, again, at the time Shin-Sun filed their non-use application,s 92 required the applicant be a person aggrieved. On this point the Court said;

“Shin-Sun does not suggest that it intends to use the Inner Health Plus mark to identify any of its goods. Nor has Shin-Sun established that if Health World were to use the Inner Health Plus mark to identify goods in class 5, other than probiotic products, the mark would be deceptively similar to the Health Plus mark"

Accordingly, it was held that Shin-Sun was not a person aggrieved and that the application must fail.

Interestingly, under the law as it currently stands the non-use applications brought by both parties under s 92 of the Act in this case may well have succeeded. On that basis, non-use applications may well become more popular.