08 June 2010

Food Channel - Opponent Fails to Discharge Onus


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                                                  Case: Food Channel Network v Television Food Network GP [2010] FCAFC 58


Venue: Full Federal Court of Australia


Judges: Keane CJ, Stone and Jagot JJ



Concepts
Intent to Use - Onus
Ownership of a trade mark
Deceptive Similarity


Main Issue

In opposition proceedings, does the evidentiary onus shift back to the applicant for registration where an opponent has made out a prima facie ground of opposition to registration?

Finding

If the evidence is not sufficiently clear to enable a finding to be made about whether a ground of opposition has been established, then the opponent must fail on that ground. It bears the onus of proof.



The Trade Marks




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Trade mark number 967804 ("Food Channel")
Owner: Food Channel Network [Channel]
Class 16
Filing date - 28 August 2003
Acceptance advertised - 29 January 2004

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Trade mark number 938228 ("Food Network")
Owner: Television Food Network GP [Television]
Class 41
Filing date - 18 December 2002
Acceptance advertised: 20 July 2006


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Trade mark number 881667 ("Food Network")
Owner: Television 
Classes: 9, 38, 41 and 42
Filing date - 6 July 2001
Acceptance advertised - 27 July 2006


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Trade mark number 881666
Owner: Television
Classes 9, 38, 41
Filing date: 6 July 2001
Acceptance advertised: 27 July 2006


The Opposition

On 29 April 2004, Television lodged a notice of opposition to the registration of the Food Channel trade mark. The grounds included that the applicant did not have ownership of the Food Channel trade mark, the applicant did not have the intention to use the trade mark when filing the application and the Food Channel trade mark was deceptively similar to the Food Network trade marks.

The Delegate of the Registrar of Trade Marks dismissed the opposition proceedings holding, inter alia, that it was not appropriate to draw an inference that Network did not intend to use the mark. The Delegate also said that the trade marks were not deceptively similar.

The Appeal to the Federal Court

Television contended that at the date of application, Network was not the owner of the Food Channel trade mark, that Network had no intention to use the Food Channel trade mark and that the application to register the Food Channel trade mark should have been rejected under s 44(1) because it was substantially identical with, or deceptively similar to, the trade marks registered by Television.

In this court, her Honour decided that it was not possible to conclude who the owner of the Food Channel trade mark was at the time of filing the application. As a result, she decided that neither Network nor Channel used, or intended to use, the Food Channel trade mark. Her honour also said that the Food Channel trade mark was deceptively similar to the Food Network trade mark.

The Case


Network contended (inter alia):
  1. It did not have the onus to disprove any grounds of opposition under ss 58 and 59 of the Act. 
  2. Channel was the owner of the trade mark
  3. Evidence or lack thereof of non-use does not establish lack of intention to use
  4. The trade marks were not substantially identical or deceptively similar
Television contended (inter alia):
  1. An "evidentiary onus" shifts to an applicant for registration after a prima facie case of a ground of opposition is made out
  2. Her honour was entitled to have regard to evidence of actual use after the trade mark application as being relevant to intention to use as the date of the application
  3. Mr Lawrence (for Food Channel) stated that "he did not intend to use the Opposed Mark" but would use an alternative, though somewhat similar mark". Her honour should have found that the additions and alterations substantially affected the identity of the mark
  4. Deceptive similarity is an evaluative decision so an appellate Court must have sufficient doubt relating to an error of principle before intervening to disturb the decision
Onus

The Court said that the issue of onus must begin and end with the Trade Marks Act.

Section 27(1) sets out, inter alia, that a person may apply for the registration of a trade mark in respect of goods and/or services if  "the person claims to be the owner of the trade mark" and if "(i) the person is using or intends to use the trade mark...".

Section 31 sets out that the Registrar must examine the application and report on whether it should be rejected.

Section 33(1) of the Act sets out that the Registrar must accept the application unless satisfied that the application has not been made in accordance with the Act or there are grounds for rejecting the application.

Section 44 sets out that an application must be rejected if the applicant's trade mark is substantially identical with, or deceptively similar to a trade mark that is registered or one in respect of which an application for registration has been filed.

Section 55 sets out that the Registrar must make a decision having regard to the "extent (if any) to which any ground on which the application was opposed has been established."

Section 57 of the Act provides that registration of a trade mark may be opposed on any of the grounds on which an application for the registration of a trade mark may be rejected.

Section 58 of the Act provides that the registration of a trade mark may be opposed on the ground that the applicant is not the owner of the trade mark.

Section 59 of the Act provides that the registration of a trade mark may be opposed on the ground that applicant does not intend to use the trade mark.

Section 88 of the Act provides that an aggrieved person may apply for an order that the Registrar cancel, remove, amend, condition or limit the registration of a trade mark. Such an application may be made only on a  number of grounds, one of them being any of the grounds on which the registration could have been opposed.

Television accepted that s 33 creates a presumption of registrability for examination and report by the Registrar. But it argued that the presumption does not apply to opposition proceedings.

However, the Court pointed out that the terms of ss 58 and 59 "engage the usual rule" that "the party who asserts must prove".  Furthermore, the statutory language framing the opposition grounds does not provide any reason to depart from this rule. Section 55 expressly contemplates that registration may be refused only "to the extent (if any) to which "a relevant ground of opposition "has been established".

Television referred to Kenman Kandy Australia Pty Ltd v Registrar of Trade Marks (2002)122 FCR. In that case, the Court said that the possibility of refusal after a contested opposition opposition with evidence and closer scrutiny remains open. Also, that the acceptance stage is not the time for detailed adversarial examination of the application that might be involved in an opposition. Television suggested that this implied that in opposition proceedings the incidence of the onus of proof was upon the applicant for registration.

But the Court was unable to see such an implication. If his Honour had intended to make such a point he would have addressed the difficulty posed for that viewpoint by the terms of ss 55, 58 and 59 of the Act.

The Court then went on to cite a number of cases supporting its view that the "onus in opposition proceedings lies squarely upon the opponent".

The Issue under Section 58

It appeared from Mr Lawrence's affidavit that he defined Network and The Food Channel and described all activities as being carried out by The Food Channel. Thus, Television submitted that Network, not Channel was the owner of the trade mark.

The full Court noted that Lawrence was attempting to represent Network. He was also the founder and sole shareholder and director of both Channel and Network. His evidence could not be regarded as "the precise and careful utterances which might be expected from a qualified lawyer."

The primary Court appeared to have been distracted by the "shifting onus" argument built by Television. So it held that Network had not discharged its onus of proving that it was the owner of the Food Channel trade mark.

But as the full Court pointed out: "if the evidence was not sufficiently clear to enable a finding of fact to be made about ownership of the mark at the time of registration then Television had to fail on that issue: it bore the onus of proof."

The primary Court made a further interpretative error. The Trade Marks Act allows an applicant to obtain title prior to use provided the requirements of s 27 are met:
  1. an applicant "claims" to be the owner of the mark, and
  2. an applicant is either using or intends to use the mark
The judge in the primary Court interpreted the requirement as being equivalent to proven, rather than claimed ownership. This is clearly incorrect.

The full Court pointed out that from the "admittedly imprecise" affidavit, it could be inferred that each of Mr Lawrence, Network and Channel could "claim" to be the owner of the mark.

The primary Court relied on two of Television's arguments. First that there was evidence that Network was the owner through prior use. Second that there was confusion in relation to ownership at the filing date so that it was not possible to make a positive finding in favour of either Channel or Network as to ownership.

But the full Court said that the "courts should be cautious to allow the legal fiction of the corporate veil to defeat registration in a case where one of a group of companies, all controlled by the same directing mind and will, used the mark prior to the other."

The affidavit did not "negate the possibility that Channel was, in fact, also a user...before registration". The full Court pointed out that there was no evidence as to how the mark was used. Use needs to be in relation to the goods or services claimed. In other words, there was no evidence that Network used the the trade mark in the proper sense exclusively of Network.

The full Court emphasised that the Act provides for registration even without use. What was required for the opposition to succeed was prior use that defeated the applicant's claim to ownership. If the evidence showed no use, then the opposition under that ground must fail.

The Court cited Aston v Harlee Manufacturing Co (1960) 103 CLR where it was held that "..the making of the application itself is, I think, to be regarded as prima facie evidence of an intention to use."

Given the error regarding onus, the lack of clear evidence as to prior use was a fatal deficit in the opponent's case, not in the applicant's.

The Issue under Section 59

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Once an opponent has made out a prima facie case that there was a lack of intention to use a mark, the onus shifts to the applicant to establish the necessary intention.

The Court held that since Mr Lawrence was the sole director of both Network and Channel, his intention determined the companies' intention. The intention must exist at the date of the application and findings relating to use after the date of application may be relevant.

The primary Court referred to the findings of the Delegate that Lawrence intended to use this version of the mark and not the mark as originally filed. So it held that the onus had shifted to Network to establish the intention. Her Honour found that Television had established the lack of intention.

Mr Lawrence had provided recipes to butchers to give out to their customers. Television submitted that it should be inferred that the mark was not used in connection with a trade in printed matter, but in connection with the sale of meat. However, that did not go so far as to destroy Mr Lawrence's evidence that the mark was used in connection with the business of supplying recipes.

So the primary Court could not reasonably conclude that Television had discharged its onus. As set out by the full Court, it was clear that the evidence did not support the conclusion that the use of the mark on recipes distributed by Network was only in connection with a trade in meat or meat products and therefore not in connection with goods in Class 16.

Deceptive Similarity

2010_5802.jpgThis issue was confined to this mark. Both the delegate and the primary Court considered that "publication of printed publications" (class 41) was closely related to the goods for which Network's trade mark was registered, namely "printed matter" (class 16).

I have cited this passage by Lord Parker in In the Matter of an Application by the Pianotist Company Ltd. for the Registration of a Trade Mark (1906) 23 RPC before, but it's worth doing so again:

"You must take the two words.  You must judge of them, both by their look and by their sound.  You must consider the goods to which they are to be applied.  You must consider the nature and kind of customer who would be likely to buy those goods.  In fact, you must consider all the surrounding circumstances; and you must further consider what is likely to happen if each of those trade marks is used in a normal way as a trade mark for the goods of the respective owners of the marks.  If, considering all those circumstances, you come to the conclusion that there will be a confusion – that is to say, not necessarily that one man will be injured and the other will gain illicit benefit, but that there will be a confusion in the mind of the public which will lead to confusion in the goods – then you may refuse the registration, or rather you must refuse the registration in that case.”

The full Court also referred to Crazy Ron’s Communications Pty Ltd v Mobileworld Communications Pty Ltd (2004) 209  in which a number of rules are set out and summarised as follows:
  1. deceptive similarity is not to be judged by a side-by-side comparison
  2. deceptive similarity involves factual issues
  3. it is necessary to show a tangible danger of deception or confusion, although it is enough if an ordinary person entertains a reasonable doubt
  4. the court must allow for imperfect recollection
  5. if a registered trade mark includes words which can be regarded as an essential feature of the mark, another mark that incorporates those words may well infringe the registered trade mark
The full Court said that her Honour erred in not comparing the marks as a whole. She also failed to appreciate that the necessary comparison was of marks used in different trades.

According to the full Court, the following facts are significant:

  1. the marks do not look the same
  2. the marks do not sound the same when spoken
  3. the only common feature of the marks is the word "food"

It was necessary to compare the marks bearing in mind the difference between the trade in class 16 goods and the trade in class 41 services.

Their Honours said that there was such a significant difference between the marks considered in relation to the different trades that they couldn't conclude that Network's mark was likely to deceive or cause confusion that goods bearing its mark originate from Television.

Conclusion

It is clear that the presumption of registrability survives acceptance. As a result, the onus remains firmly upon the opponent to show, at least on a balance of probabilities, that the trade mark should not have been registered.

Based on a reading of this judgement only, it appears that the decision of the primary Court was overly influenced by counsel for Television. A lesson for practitioners - the selection of good counsel is almost as important as having a good case to make.



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