Austin, Nichols & Co Inc v Lodestar Anstalt [2012] FCAFC 8 (“Austin Nichols v Lodestar”)
The Full Court of the Federal Court of Australia has recently overturned a decision to allow Lodestar’s “Wild Geese” trade mark to remain on the Register of Trade Marks on discretionary grounds, despite the fact it had not been used during the statutory 3 year period. The Full Court’s decision helpfully explains the considerations that a court may take into account in exercising its discretion to allow an “unused” mark to remain on the register, and identifies the qualities of probative evidence of a mark’s reputation in Australia.
The decision at first instance
In June 2009, Austin Nichols appealed against a decision of the Trade Marks Office declining to remove Lodestar’s Wild Geese trade mark for non-use. In the appeal, on 4 February 2011 Justice Cowdroy:
- accepted that the Wild Geese mark had not been used in Australia within the relevant non-use period (2002 to 2005); and
- found that there were no obstacles that prevented Lodestar from using its mark during the non-use period; but
- decided to exercise his discretion under s. 101 (3) of the Trade Marks Act to allow the unused mark to remain on the register, primarily because the reputation of the Wild Geese mark in Australia was such that removal had the potential to cause a degree of public confusion.
The Court’s discretion to allow an ‘unused’ mark to remain on the register of trade marks
Part 9 of the Trade Marks Act sets out the circumstances in which a registered trade mark may be removed for non-use.
Section 92 (4) (b) of the Trade Marks Act provides that a person may apply to have a trade mark removed from the Register if the mark is not used for a specified 3 year period.
However, even if the applicant establishes the mark was not used in Australia during the relevant period, pursuant to s. 101 (3), the court retains a discretion to allow the unused mark to remain on the Register.
The key issues on appeal to the Full Court
On 25 February 2011, Austin Nichols sought leave to appeal Justice Cowdroy’s decision, contending that his Honour had erred in exercising his discretion in favour of Lodestar. Leave to appeal was granted in March 2011.
On Appeal, the Full Court recognised that in order to succeed, Austin Nichols had to demonstrate that Justice Cowdroy:
- acted on a wrong legal principle;
- took into account irrelevant considerations and failed to consider relevant considerations; or
- mistook a fact upon which he relied in reaching his conclusion.
For the reasons that follow, the Full Court concluded that Justice Cowdroy had mistaken a fact upon which he relied in deciding that the Wild Geese mark should remain on the Register, and therefore had erred in the exercise of his discretion.
1. Did Justice Cowdroy act on a wrong legal principle?
The Full Court held that in exercising the discretion under s.101 (3) of the Trade Marks Act, a court is not to determine whether there is “any reason” (the standard allegedly adopted by Justice Cowdroy) or “sufficient justification” (the standard proffered by Austin Nichols) to allow a mark to remain on the Register. Rather, the court must be positively satisfied that at the time it is called to make its decision, it is reasonable not to remove the mark from the Register.
The Full Court considered that Justice Cowdroy applied this test correctly in the exercise of his discretion, and declined to overturn the primary judge’s decision on this ground.
2. Did Justice Cowdroy take into account irrelevant considerations or fail to consider relevant considerations?
The Full Court noted that the discretion under s. 101(3) is broad and limited only by:
- the subject matter, scope and purpose of the Trade Marks Act, which seeks to strike a balance between “various disparate interests” (including private commercial interests); and
- the subject matter, scope and purpose of the non-use provisions of the Trade Marks Act, which also seeks to balance public or consumer interests on the one hand, and the private commercial interests of rights holders on the other. In this respect, the Full Court explained:
The purpose of Part 9 is to provide for the removal of unused trade marks from the Register. In that regard it is plainly designed to protect the integrity of the Register, and in this way, the interests of the consumer. At the same time, however, it seeks to accommodate, where reasonable, the interests of the registered trade mark owners. Otherwise, there would be no need for the discretion.1
Drawing upon these underlying policies, the following considerations were found to be relevant to the exercise of the discretion:
- the public interest in the integrity of the Register (described as the “guiding principle behind the discretion”);
- use of the trade mark at the time the non-use application is filed;
- use of the trade mark after the relevant non-use period (provided that such use “is in good faith and not colourable”2);
- the trade mark owners’ intention to use the mark, together with any evidence of abandonment (such matters may provide evidence to support a finding that the mark would not simply clutter the Register and have no practical use, a factor which is undoubtedly relevant to the key consideration of the purity or integrity of the Register);
- the private commercial interests of the owner of the trade mark;
- the presence or absence of obstacles to use facing the trade mark owner;
- the length of the period of non-use; and
- the likelihood of public confusion that would flow from the removal of the unused mark.
The Full Court found that Justice Cowdroy had taken these relevant factors into account, and had not allowed his decision to be influenced by irrelevant considerations.
The Full Court also recognised that the weight attributed to each of the above relevant factors was purely a matter for the primary judge, and could not be challenged on appeal.
3. Did Justice Cowdroy mistake a determinative fact?
To support its contention that the Wild Geese mark had a reputation (defined in this context as the recognition of the mark by the public generally) in Australia and such that its removal would cause public confusion, Lodestar submitted evidence of its domestic and international promotion and sale of Wild Geese products.
| Reputation Evidence submitted by Lodestar | The Full Court’s criticisms |
|---|---|
| Promotion of the brand at international trade fairs | The nature of Lodestar’s promotion and the number of Australian attendees at these fairs was unclear. |
| Distribution of printed promotional material bearing the Wild Geese marks to three Australian attendees of the international trade fairs during the non-use period | Lodestar did not establish that the brochures were read by the recipients, or that the recipients acknowledged the presence of the mark within the promotional material |
| Distribution of a newspaper featuring the Wild Geese mark on a number of its pages to three Australian businesses | The evidence as to the availability of the newspaper was incomplete. Further, there was no evidence that the newspaper was read by the recipients, or that the recipients acknowledged the presence of the mark within the material. |
| Sales of 1,380 bottles bearing the Wild Geese mark to an Australian distributor after the non-use period | Only 71 bottles were sold by the distributor to retailers. There was no evidence that these bottles were ultimately purchased by consumers in Australia. |
| Promotion of the brand on the internet | There was no evidence as to the number of hits the website received from Australia, nor evidence that persons who accessed the websites acknowledged the presence of the Wild Geese mark |
| The availability of published books and magazines describing products bearing the Wild Geese mark in Australia | Lodestar did not adduce any evidence as to the number of books and magazines sold. The evidence did not show that readers were aware of the presence of the Wild Geese mark in the material |
| The appointment of an Australian sales consultant | The mere fact of the appointment of a sales representative did not establish the mark’s reputation.
Further, the evidence showed that the consultant had only engaged in limited promotional and sales activities in Australia as at the date of the application. |
| Contact with four Australian industry representatives who said they were aware of the Wild Geese mark, and were interested in acquiring products bearing the mark | Evidence in this regard was limited (and arguably hearsay).
The representatives were not named, and the evidence did not explain when or how the expressions of interest were received. |
The exercise of the discretion by the Full Court
Following this analysis, the Full Court concluded that although the evidence showed that there was some brand recognition in Australia, the reputation was limited “to a select few individuals”.3 In the absence of evidence of deceptive similarity between the Wild Geese mark and other unregistered marks, or evidence of actual confusion, the Full Court considered that this limited reputation was insufficient to found an inference that public confusion would result if the Wild Geese mark were to be removed from the Register. On this basis, the Full Court concluded that Justice Cowdroy’s discretion had miscarried.
The Full Court concluded that:
The onus was on Lodestar to show that confusion would or, at least, could result from removal of the WG mark from the Register. In the absence of such evidence, there is no good reason why the WG mark should remain on the Register.4
This conclusion was supported by the fact that:
- Lodestar “did not use its mark for nearly eight years after it had been registered, and then not until three years after the non-use applications had been filed”5; and
- use of the mark in Australia after the non-use period was limited.
Consequently, the Full Court concluded that Austin Nichols’ appeal should be allowed, and ordered removal of the Wild Geese mark from the Register.
Lessons: How to improve the prospects of resisting a removal action
When faced with a non-use removal action, reliance upon the Court’s discretion to allow a mark to remain on the Register under s.101 (3) of the Trade Marks Act is usually the last port of call for trade mark owners. Favourably, the Court’s discretion is broad, and offers trade mark owners an opportunity to raise private commercial considerations in support of their case.
However, when arguing the case for the exercise of the court’s discretion, public interest considerations must also be addressed, typically with evidence showing:
- the trade mark owner’s intention to use its trade mark in Australia (to support a finding that it has not abandoned the registered mark); and
- that confusion would, or at least could, result from the removal of the subject trade mark from the Register.
The importance of reputation evidence
In order to establish that removal could cause confusion, evidence of the mark’s reputation in Australia is usually required. From the Full Court’s criticisms of the reputation evidence in Austin Nichols v Lodestar, it is clear that the best reputation evidence is direct evidence of extensive use and awareness of the mark in Australia.
Reputation evidence based upon material bearing the mark (promotional or otherwise) must not only establish that the material bearing the mark is available in Australia, but that Australians have seen the mark in such material, such that the mark can be said to have entered the consciousness of the Australian public.
Footnotes
- Austin Nichols v Lodestar at [38]
- Austin Nichols v Lodestar at [41]
- Austin Nichols v Lodestar at [66]
- Austin Nichols v Lodestar at [73]
- Austin Nichols v Lodestar at [70]