19 July 2006
Key Points:
Under the Trade Marks Act 1995, it had been assumed that where a "non-use application" is based on an allegation of bad faith the burden of proof was on the applicants. A recent decision has thrown doubt on this assumption with a broader reading of section 100 of the Act. It now appears that the registered owner must show that its intentions were bona fide in registering the mark initially, when raising an opposition to a non-use application under section 92 of the Act. Owners therefore bear the onus of showing good faith use, in addition to establishing a good faith intention.
A person whose interests are adversely affected by the fact that a trade mark is or may be registered may apply for the trade mark to be removed from the register on one of the following grounds:
The registered owner can oppose the removal by filing a notice of opposition and the Registrar of Trade Marks decides on the evidence whether or not to remove the trade mark registration (in whole or in part) from the Register. It was previously assumed that in so far as such removal applications are based on allegations of bad faith, the burden of proof lies on the removal applicants. However, a recent decision of the Registrar of Trade Marks suggests that the onus has shifted.
Background
The decision in Stuart McDonell &Adrian Maxwell Bunter v Hobarama LLC [2005] ATMO 49 arose from a non-use application lodged by Hobarama LLC regarding the trade mark "BAWLS". The word-mark "BAWLS" was registered in the name of Adrian Maxwell Bunter and Stuart McDonell (the Owners), and covered "mineral and aerated waters and other non-alcoholic drinks, fruit drinks and fruit juices, syrups and other preparations for making beverages and beers" under Class 32 of the Goods & Services classification.
Hobarama LLC is a Miami-based beverages firm that manufactures a highly caffeinated "light refreshing energy drink" which is made up of the Amazonian stimulant guarana. The company has the trade mark "BAWLS" registered overseas in the USA and New Zealand, and additionally uses the mark in numerous other countries in Europe, Asia and the Middle East.
Claiming an expanding use in the Asia-Pacific sphere, Hobarama claimed to be "aggrieved" by the owners of the "BAWLS" mark in Australia. For this claim Hobarama applied under section 92(4)(a) of the Trade Marks Act 1995 for the Australian mark to be removed from the register. Its non-use removal application was filed on 3 June 2003 on the following grounds:
In response to Hobarama's non-use application, the Owners filed a notice of opposition to the removal of the "BAWLS" mark.
Use in Australia
The first issue in the case was whether Hobarama constituted a "person aggrieved" under the Act. Following a series of earlier cases, it is well established that removal applicants must themselves have a bona fide intention to trade in such goods in Australia, making them "appreciably disadvantaged in a legal or practical sense" by the owners' mark; see Woolly Bull Enterprises v Reynolds [2001] FCA 261.
It was decided that Hobarama's intentions with regards to geographically proximate countries such as New Zealand was not sufficient proof of intention in Australia. However, the Owners had discussed distribution in Australia with Hobarama (which was also integral to the issue of good faith). The Registrar's Delegate found that Hobarama's response in offering product marketing and advertising information showed "enough preparedness" on its part causing the Owners to proceed in obtaining a number of quotes on the cost of shipping goods from Miami to Sydney.
This, coupled with Hoborama's correspondence on 24 August 1999 stating "Currently we have no representation in Australia and would be interested in exploring any opportunities that might exist with your company", indicated a definite "intention amounting to preparedness" to use the "BAWLS" mark by Hobarama in Australia.
Bona fide intention and use under the Trade Marks Act 1995
The material issue in the case, however, surrounded the reading of sections 92(4)(a) and 100 of the Act. In order for a "non-use application" for removal to succeed, two elements must be satisfied:
Intention in good faith to use
The Trade Mark Office doesn't require a removal applicant to conduct an inquiry as to the owner's intention, as it would be "to expect the 'virtually impossible' of Hobarama LLC". While the evidentiary onus imposed on the owners in regard to intention at the time of filing for registration is not high, the burden of proof does lie on a removal opponent with respect to intention in challenging the removal. This is the "reversed onus" created by section 100, and simply establishing that an intention existed is considered to suffice.
Non-use / non-good faith use
Dealing with the question of bad faith, the Owners openly conceded that their registration of "BAWLS" in Australia was "sharp business practice". However, robust commercial competition and seeking to position oneself to achieve a commercial advantage do not necessarily establish any basis for exercising a discretion against the party on the basis of bad faith.
There was correspondence in evidence regarding the possibility of an "exclusive distributive agreement", though Hobarama were not made aware that the Owners had filed their registration application one week before this offer. Additionally, the Owners declared that the wider range of goods can be "sourced from a variety of suppliers, not necessarily Hobarama Corp.".
The Delegate, on balance, found the evidence reflected an intention by Bunter and McDonell to do either of two things:
(1) "to engage in sharp but not unlawful business practice (which would establish the owners' case in relation to intention); or
(2) "to import the goods of Hobarama into Australia bearing the trade mark, and to act as a distributor (thereby establishing use, but not use in good faith by the owners)."
He went on to state that as the possibility of the second form of intention (use in bad faith) had not been ruled out or even "rendered unlikely", the Owners had not established positively that they had an intention in good faith to use.
In light of this, the Delegate referred to his own decision in M. and D. Davidson v B. Daisley, D. Wilson, T. Gaze [2003] ATMO 11, in which he had noted that the reversed onus of proof under the Act does not extend to all aspects of the provision: "In so far as the removal application is based on allegations of bad faith, the burden of proof is still on the applicants." This followed substantial authority on the issue including Estex Clothing Manufacturers Pty Ltd v Ellis & Goldstein Ltd (1967) 116 CLR 254 where Justice Windeyer stated: "It is for an applicant who seeks to have a mark removed to prove his case. The onus is on him to show an absence of use in good faith during this period."
However, in a somewhat surprising decision, the Delegate in the present case changed his own previous approach and adopted a broader reading of the section 100 provision. He stated: "I no longer believe that this approach is tenable. Correctly applied, s100 requires the owners to satisfy me that their intentions were bona fide"
It was therefore decided that the Owners had failed to "reasonably exclude an intention to register the trade mark in bad faith, supported by no more than an intention to import the guarana-based goods of Hobarama, bearing the trade mark of Hobarama". The Owners had thus failed to establish this ground of opposition.
Furthermore, he said "Even if I am wrong, and the intention of the owners was to engage in some sharp business practice... that alone will not save their registration. The owners bear the onus of showing good-faith use, in addition to establishing a good-faith intention", thus widening the Opponent's burden of proof in "non-use applications".
Decision
The Delegate therefore found for Hobarama LLC and ordered the removal of the "BAWLS" trade mark from the Australian register (subject to appeal), and for the owners to pay Hobarama's costs.
How does this affect "non-use applications" and oppositions?
Following this decision it now appears that the "reverse onus" of proof under the Trade Mark Act has been extended or re-interpreted.
Where a "non-use application" is based on questions of bad faith, and you as the owner oppose the removal, you will have to bear both the onus of showing good-faith use of your mark in relation to the goods and/or services to which the non-use application relates, as well as establishing a good-faith intention to use when you filed for registration initially. This may mean a more cautious approach be adopted when opposing non-use applications in the future.
For further information, please contact Mary Still.
