Conquip Holdings Pty Ltd v S & A Restaurant Corp [2000] FCA 256 | Case summary

Conquip Holdings Pty Ltd v S & A Restaurant Corp [2000] FCA 256 | Case summary | Zoe

[8]

Choice of the name Bennigans 11 In late 1992 the directors turned their minds to a name for their proposed restaurant. Mr Bill Lambropoulos, the only director who gave evidence, described the process in the following way. 12 At the time most restaurants and bars in the Chapel Street and South Yarra area had a "European or other ethnically derived or sounding name (e.g. Italian, French, Greek)". The directors wanted to adopt a non-European sounding name to make their establishment stand out from other restaurants and bars in the area. They also wished to select a name which could be easily pronounced and remembered and which suggested "a fun and lively mixed club/bar atmosphere". 13 At the time the directors thought that an Irish sounding name might fit these criteria. Initially they thought of the name Flannigan's which Mr Bill Lambropoulos had seen as the name of a lively bar in the film "Cocktail" starring Tom Cruise. The directors however decided not to adopt that name because of the potential for conflict with the film makers. But they liked the Irish name concept and in particular the ending "-an's". 14 So they decided to call the restaurant Shannigan's. In January 1993 Conquip applied for registration under the Business Names Act 1962 (Vic) of the name Shannigan's. Mr Lambropoulos tendered a certificate issued by the Commissioner for Corporate Affairs (Victoria) showing that the name Shannigan's was registered on 19 January 1993. The nature of the business stated was "food (restaurant)", the address 352/354 Chapel Street, South Yarra and the company carrying on the business to be Conquip. However Conquip subsequently discovered that restaurants in Richmond and Springvale were operating under the name Shanika's. The directors decided not to use the name Shannigan's as they believed that it was too close to Shanika's and might cause confusion. 15 In the words of Mr Lambropoulos, "(p)ursuing the Irish name concept ending in -an's Conquip then decided to adopt the name Bennigans". It applied for a business name registration for the name Bennigans Bar Bistro. The Corporate Affairs Office declined registration because the name Bennigan's was already registered for a restaurant business at 251 Malvern Road, South Yarra, the proprietor being one Lindsay Lawrence Hosking. This address was "around the corner" from Conquip's premises. Mr Lambropoulos went to the address and found no sign of any business operating under the name Bennigans, or any restaurant. The premises were occupied by a Brown Gouge dry cleaner. Mr Lambropoulos took photographs of the address, forwarded them to the Corporate Affairs Office and asked that the Commissioner cancel the Bennigan's business name registration under s 19 of the Business Names Act. This was subsequently done. 16 Mr Lambropoulos tendered a certificate showing that the name Bennigan's was registered under the Business Names Act on 3 November 1989. The nature of the business is stated to be "restaurant" and the date business commenced 1 December 1989. The address given is 251 Malvern Road, South Yarra and the proprietor Lindsay Lawrence Hosking of the same address. The date the business ceased is given as 2 March 1993. Deregistration is said to have been effected under s 19(1)(b) which provides for the Commissioner to cancel registration if a notice of proposed cancellation under s18(1) is sent to the person in relation to whom the name is registered and such person does not satisfy the Commissioner within one month that business is being carried on in Victoria by that person under that name. 17 According to the Corporate Affairs Office certificate tendered in evidence by Mr Lambropoulos, Conquip's business name Bennigans Bar Bistro was registered on 23 March 1994 (sic). The certificate shows the date of commencement as 1 February 1993. 18 Since commencing business in February 1994 Conquip has traded successfully under the name Bennigans. The name appears on large signs on the exterior of the building, on menus, business cards, letterhead, faxes, bills for meals and drinks, order forms and other business documents. The name also appears on hats worn by cooks, bar attendants, waiters and other staff. Complimentary match boxes bearing the name Bennigans are available for patrons at the restaurant tables and at the bar. Pamphlets and fliers advertising special entertainment nights and other events are produced using the name Bennigans. There are also entry accounts and gift vouchers. 19 The name Bennigans Bar and Bistro has since 1994 been listed in the Melbourne White Pages and Yellow Pages Telephone Directories, which are also accessible on the Internet. 20 Since 1994, on the estimate of Mr Lambropoulos, the restaurant has served approximately 2,000 to 3,000 meals per week and hundreds of thousands of alcoholic and non-alcoholic drinks each year. 21 Chapel Street is a popular Melbourne tourist precinct and attracts a significant number of interstate visitors. In particular there is a Chapel Street Festival held on a weekend shortly before the Melbourne Cup. The main strip of Chapel Street is closed to traffic. There are markets, competitions, fashion parades, entertainment, music and dancing. Traders, including Bennigans Bar and Bistro, set up stalls and tables on the footpath and on the road. The festival attracts hundreds of thousands of visitors, many of whom are interstate tourists coming for the Melbourne Cup. 22 Mr Lambropoulos provided retail sales figures on a confidential basis. They are substantial. 23 Conquip advertises Bennigans Bar and Bistro extensively through direct mailouts, pamphlets, advertisements and listings in newspaper and bar and bistro guides, radio commercials and various promotions. It is listed in the current Age Cheap Eats Guide. The review of Bennigans Bistro and Bistro in The 1995 Age Cheap Eats Guide (Anne O'Donovan Pty Ltd, 1995) commences: "Big and brassy with a menu to match, this relative newcomer to groovy Chapel Street is already a hit with locals and shoppers." 24 Bennigans Bar and Bistro is also listed on a number of Internet web sites. 25 As a result of the early success of the business the directors started to think about expansion and replication of the business in other parts of Melbourne and throughout Australia. Their solicitors advised them that it was important to obtain a registered trade mark in order to protect goodwill and rights in the Bennigans name. Prior to filing such an application Conquip's solicitors, on or about 1 March 1995, carried out a search in the Trade Marks office. The search disclosed registration of S & A's Bennigan's mark 376352 and also that S & A had made two further trade mark applications. On 9 March 1995 Conquip's solicitors filed an application for registration. 26 Mr Lambropoulos deposed: "49. At the time Conquip conceived BENNIGANS name in 1993 and opened the BENNIGANS bar & bistro in February 1994, Conquip was not aware of any other person using in Australia, or planning to use in Australia, the same or a similar trade mark in respect of the same or similar business. I only became aware of S & A Restaurant Corp's registered BENNIGANS trade marks when Roussos & Dolkas reported their trade mark search results to me in approximately March 1995. Indeed I had not travelled to the United States nor had I eaten in any of S & A Corp's restaurants, and I still have not done so. At no time before March 1995 was I even aware of any other restaurants in the world operating under the name BENNIGANS. I believed, up to that point, that the name we had chosen was wholly unique in this trade. 50. At no time since February 1994 have I been aware of any instances of deception or confusion arising as a result of Conquip's use of the BENNIGANS trade mark and any use by any other person (including S & A Restaurant Corp). I have also never received any complaint or query from a customer or from any business in the hospitality or food trade to suggest that they were confusing Conquip's BENNIGANS bar & bistro with S & A Restaurant Corp or its foreign BENNIGANS restaurants."

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S & A's business 27 S & A opened its first Bennigan's restaurant in Atlanta, Georgia in 1976. Since then it has progressively opened restaurants so that by December 1998 it operated over 200 Bennigan's restaurants in the United States. S & A also operates another restaurant chain under the name Steak and Ale. 28 S & A has established Bennigan's restaurants outside the United States either by opening its own restaurants or franchising to third parties. The first S & A franchise outside the United States was established in South Korea in 1995. There are currently six Bennigan's restaurants operating in that country under franchise. The first Bennigan's restaurant in the United Kingdom opened in 1996. There are currently three restaurants under franchise. The first Bennigan's franchised restaurant in the Philippines opened in 1998. Also in that year the first Central American Bennigan's restaurant opened in Panama with additional restaurants being planned for Costa Rica, Guatemala, Honduras and El Salvador. In 1998 S & A entered into a franchise agreement for the establishment of Bennigan's restaurants in the United Arab Emirates. There are plans for three restaurants in that country by the year 2000. According to Mr Paul Judson Evans, S & A's Director of Franchise Development, Australia has been "since before 1992 and continues to be one of S & A's top fifteen targeted countries for establishment of Bennigan's restaurants". 29 S & A's Bennigan's restaurants feature "casual dinner-house dining and beverages, with the targeted clientele being younger adults". Bennigan's is one of the top ten "dinner-house" restaurant chains in the United States in terms of number of restaurants and market share. S & A's gross sales through Bennigan's restaurants between 1983 and 1997 have ranged from US$250 million to US$477 million. Promotional expenditure has over the same period been from US$5.9 million to US$18.4 million. 30 S & A is the proprietor of or the applicant for a large number of trade mark registrations in the United States and other countries including Australia.

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(ii) Discussions with Rydge/Radisson 1992-1993 35 Mr Evans deposed that in late 1992 and early 1993 S & A was approached by "a group of prospective franchisees interested in operating Bennigan's restaurants under licence in Australia". 36 On 19 January 1993 a Mr John S Rydge of Rydge Consulting Group wrote to S & A as follows: "Mr. James W. McCarthy S & A Restaurant Corp 12404 Park Central Drive DALLAS TX 75251-1699 Dear Jim, I am returning herewith the Confidentiality Undertaking signed by: (a) Myself as Managing Director of Rydge Consulting Group Pty. Limited. (b) David Boward - Managing Director of Radisson Hotels Pty. Limited. (c) Paul D'Arcy - Finance Director of Radisson Hotels P/L. At this early stage of negotiations we will restrict any information supplied to us to this senior group. As time passes and assuming we are moving forward positively I will wish to add selected executives to the signatories and will complete additional forms for them as and when appropriate. I look forward to receiving the P & L information we discussed, to enable us to proceed with our evaluations and proposals to your corporation. On another issue, I would like to receive copies of the current menu for both Bennigan's and Steak & Ale. Much of the discussion here revolves around the acceptability in Australia of the standard menus for both Steak & Ale and Bennigan's and what variations, if necessary, might be required. Could you please forward this request to Steve's secretary and ask her to expedite examples to me soonest. Best Regards, sgd John S. Rydge." 37 Mr McCarthy replied by letter to Mr Rydge dated 19 January 1995. "Mr. John S. Rydge Managing Director Rydge Consulting Group Pty. Ltd. 6 Venetta Road, Glencrie N.S.W. 2157 Australia Re: Bennigan's P & L's Dear John: Thank you for returning the signed Confidentiality Undertaking. I have enclosed the Bennigan's P & L information which you requested. I am also sending this information by overnight delivery in the event the facsimile copy is not legible. I look forward to hearing from you. Best regards. Sincerely, Sgd James W. McCarthy Vice President and General Counsel" 38 Mr McCarthy wrote again on 21 January 1993 to Mr Rydge at the same address: "Re: Bennigan's and Steak and Ale Menus Dear John: I have enclosed for your review copies of new menus for Steak and Ale and Bennigan's. Use of the new menus for Bennigan's will commence on February 4, 1993 and for Steak and Ale on February 25, 1993. I received your fax with regard to the questions on the P & L statements which I provided to you. I do not know the answers myself, but I will coordinate a response from S & A personnel who are knowledgeable about these issues and will respond to you as soon as possible. Please continue to direct any questions on these matters to me. Sincerely, Sgd James W. McCarthy Vice President and General Counsel" 39 Mr Evans deposed: "The prospective franchisees entered into confidentiality agreements and preliminary discussions took place with these prospective franchisees. … However, the negotiations were unsuccessful and did not result in the opening of BENNIGAN'S restaurants in Australia." 40 Neither Mr Rydge nor any "prospective franchisee" gave evidence, nor did Mr McCarthy.

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Is Conquip a "person aggrieved"? 47 Under both s 23 of the 1955 Act and s 92 of the 1995 Act Conquip must show it is a "person aggrieved". 48 The term "person aggrieved" was discussed by McLelland J in The Ritz Hotel Ltd v Charles of the Ritz Ltd (1988) 15 NSWLR 158 at 193 as follows: "It is sufficient for present purposes to hold that the expression would embrace any person having a real interest in having the Register rectified, or the trade mark removed in respect of any goods, as the case may be, in the matter claimed, and thus would include any person who would be, or in respect of whom there is a reasonable possibility of his being, appreciably disadvantaged in a legal or practical sense by the Register remaining unrectified, or by the trade mark remaining unremoved in respect of any goods, as the case may be, in the manner claimed. In my opinion the concept does not admit of further refinement." 49 This statement was cited with approval by the Full Court of the Federal Court (Sheppard, Tamberlin and Sackville JJ) in Kraft General Foods Inc v Gaines Pet Foods Corporation (1996) 65 FCR 104 at 112. The Court also referred to the following statement by Lord Herschell in Powell v Birmingham Brewery Co Ltd [1894] AC 8 at 12: "I should be very unwilling unduly to limit the construction to be placed upon these words, because, although they were no doubt inserted to prevent officious interference by those who had no interest at all in the register being correct and to exclude a mere common informer, it is undoubtedly of public interest that they should not be unduly limited, inasmuch as it is a public mischief that there should remain upon the register a mark which ought not to be there, and by which many persons may be affected who nevertheless would not be willing to enter upon the risk and expense of litigation. Wherever it can be shewn, as here, that the applicant is in the same trade as the person who has registered the trade mark, and wherever the trade mark if remaining on the register would or might limit the legal rights of the applicant so that by reason of the existence of the entry upon the register he could not lawfully do that which but for the appearance of the mark upon the register he could lawfully do, it appears to me that he has a locus standi to be heard as a 'person aggrieved.'" 50 In Kraft the applicant for removal was held not to be a "person aggrieved". The applicant did not carry on any business but argued unsuccessfully that its own application for registration, accompanied by the statement of user, was sufficient evidence from which to infer that it was using or intending to use the mark. However, in the present case, in relation to the marks for restaurant services, Conquip plainly has an existing and substantial restaurant business under the name Bennigans and would be seriously affected by the continuing registration of S & A's marks. 51 In relation to the goods marks there is evidence of Conquip using the name Bennigans in relation to food and drink on menus and like documents in ways which would give rise to potential liability for infringement of S & A's goods marks were the same to remain registered. The following table summarises the position:

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Has Conquip established a prima facie case of non-use? 54 Counsel for S & A argued that in respect of so much of the proceeding that was governed by the 1955 Act, that is the appeal from the Deputy Registrar's decision in relation to mark 376352, there was a separate threshold issue as to whether Conquip had established a prima facie case of non-use. 55 In Estex Clothing Manufacturers Pty Limited v Ellis and Goldstein Ltd (1967) 116 CLR 254 at 258-259 Windeyer J, sitting at first instance, said: "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 the period. If persons who, by reason of their connexion with the relevant trade, might be expected to have seen or heard of the mark if it were used as a trade mark upon goods for which it is registered, swear that they had not seen or heard of it in use as a trade mark at any time during the relevant period, that is prima facie evidence of the fact which the applicant must prove. Slight evidence may suffice at this stage, for the applicant has the task of proving a negative and the registered proprietor is probably in a better position to prove user than is the applicant to prove non-user. But if evidence be given for the respondent to controvert the applicant's prima facie case, then when all the evidence is complete the question is still, has the applicant proved his case? I do not for a moment accept the proposition of the applicant in these present proceedings that the ultimate burden of proving its case does not rest upon it." 56 S & A did not make any submission of no case to answer at the end of Conquip's case. The argument under consideration was put in final submissions. Thus in making out a prima facie case Conquip can rely on all the evidence, including that tendered by S & A. 57 It is plain from S & A's evidence that it has never operated, or franchised the operation of, a restaurant under the name Bennigan's, or any other name, in Australia. Nor does it suggest it has sold or offered for sale goods in Australia within the classes for which its goods marks are registered, or any other goods. That is sufficient to establish a prima facie case of non-use. 58 In any event, Conquip tendered as part of its own case evidence which would be sufficient to establish a prima facie case. 59 Mr Ciro Pollio has worked with Warramba Pty Ltd since 1987. That company is a wholesale supplier of groceries to restaurants, cafes, bars, hotels and grocery distributors throughout Victoria. It has supplied groceries to Conquip's Chapel Street restaurant since 1994. Mr Pollio is unaware of any restaurant, cafe bar or hotel operating in Victoria under the name Bennigan's or any similar name, nor has he seen or heard of any grocery product named Bennigan's. 60 Mr Joe Garofolo is an employee of Bruno Distributors Pty Ltd which is an importer and distributor of foods and beverages. Its customers include hotels, restaurants, clubs and other food distributors in Victoria. He regularly reads Australian food trade journals and attends Australian food trade shows, both as exhibitor and observer. His company supplies Conquip's Chapel Street restaurant with items such as pasta, canned tomatoes, vinegars, oils, sauces and dairy products. He has never heard of any other restaurant or cafe in Victoria or anywhere else under the name Bennigan's or any similar name. He has quite a good knowledge of the names of food and drink products sold in Australia and has never heard of any food or beverage product named Bennigan's. 61 Mr Peter Aldred is a consultant whose business involves consulting and advising in liquor licensing, town planning and local government matters in Victoria. He has conducted that business since 1992 and acted for hundreds of businesses in the liquor, hospitality and development industries and in particular restaurants, bars, cafes and hotels. He has not heard of any other Bennigan's business. 62 Mr Kevin Frey is the Information Technology Manager of Desktop Marketing Systems Pty Ltd which has a search facility whereby it can locate all entries and telephone numbers for White Pages, Yellow Pages and Mobile telephones throughout Australia from 1996 to 1999. However the exhibit produced with his affidavit does not indicate a search other than in the Melbourne White and Yellow Pages for 1997, 1998 and 1999. These searches only discovered the entry of Conquip's Chapel Street restaurant. 63 Finally Mr David Beard, a solicitor, searched at the State Library of Victoria for the White Pages and Yellow Pages for 1992 to 1998 for each of the capital cities of Australia's States and Territories but found no entry under the name Bennigan other than Conquip's restaurant in South Yarra. 64 At this point I should note that on 2 December 1998 I granted Conquip leave to appeal out of time against the decision of the Deputy Registrar. In the course of my reasons I said (at 2): "As to the question of the merits of the appeal, it is not surprising that the application [to the Deputy Registrar] was dismissed, having regard to the incomplete and inadequate evidence proffered. However, the whole point of a rehearing appeal is that the unsuccessful party has the opportunity to mend its hand. I think it is reasonable to assume that it will have much better evidence available at a rehearing. More to the point, however, as counsel for the respondent frankly conceded, the respondent does not in fact conduct a restaurant in Australia under the name of the mark in suit. Thus expensive proof of this fact should not be necessary." 65 Regrettably that prediction was not borne out. Conquip has obviously gone to substantial expense to prove facts which could not seriously be disputed, viz. that S & A has never operated a Bennigan's restaurant in Australia or sold nor offered for sale goods under or by reference to that name. Such wasteful expenditure should be avoided in modern commercial litigation. A frank appraisal of the issues really in dispute and appropriate formal admissions should have been made.

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If relevant, did Conquip lack bona fides? 67 Plainly Conquip was not a trafficker in marks. Since 1994 it has used the name Bennigans in connection with a genuine business. (Counsel for both parties accepted that nothing turns on the absence of an apostrophe in the name used by Conquip.) As I understand S & A's case, it is put that Conquip deliberately copied the name from S & A's Bennigan's restaurants in the United States. Counsel for S & A put to Mr Lambropoulos that he was "well aware" that S & A carried on "a very successful business in the United States and elsewhere under the name Bennigan's". Mr Lambropoulos answered: "No, I wasn't at the time [of the selection of the name]". Counsel did not further test this denial. 68 It certainly seems unlikely that Conquip, looking for an Irish name ending in "-an", would by chance select a name which just happened to be that used by a 200 restaurant business in the United States. Anyone seeking an Irish name ending in "-an" has an extensive repertoire available: Corrigan, Costigan, Donovan, Hedigan, Hanrahan, Monahan, Shanahan to name but a few. But if Bennigan is an authentic Irish name at all, as distinct from an invented Irish-sounding name, it must be an extremely rare one. It is usually accepted that between a quarter and a third of Australians are of Irish descent, yet the name Bennigan does not appear in any of the capital city telephone directories over an eight year period. By contrast, the name Donovan for example has entries taking up more than two columns of the current Melbourne White Pages. 69 However the account of the earlier steps along the path to selection of the name Bennigans, as deposed to by Mr Lambropoulos, is credible and supported by corroborative documents and circumstances. It would be easy for S & A to establish that there never was a film called "Cocktail" starring Tom Cruise, or that a bar called Flannigan's never featured in such a film, if either were the case. This was not done. Further, there is evidence from the Corporate Affairs Office records confirming Conquip's application for the name Shannigan's in January 1993. This is contemporaneous evidence supporting Conquip's explanation of seeking an Irish sounding name ending in "-an" for reasons unconnected with S & A's business. Further, there is the evidence of Conquip's application for the name Bennigans and, importantly, the documented fact of the registration of the business name Bennigan's in relation to the Malvern Road premises from November 1989. 70 It seems at least plausible that Mr Lambropoulos or one of the other Conquip directors had become aware of the name Bennigans through the name of the Malvern Road restaurant (which of course may itself have been copied from S & A's chain). The name may have stayed in their mind while the source was forgotten. 71 It is an everyday experience for something to stick in our minds even though we forget or honestly misattribute the source. Courts have recognised this. In Bright Times Music Corp v Harrisons Music Ltd 420 F Supp 177 (1976) the plaintiff claimed that George Harrison plagiarised his song "My Sweet Lord" from the plaintiff's "He's So Fine". Judge Owen of the United States Federal District Court for the Southern District of New York upheld the claim notwithstanding his finding that Harrison was not conscious of the fact that he was utilising the "He's So Fine" theme. There was evidence that Harrison had once been aware of "He's So Fine" which was recorded eight years before "My Sweet Lord" and at the time one of the top hits in England. Infringement of copyright had been, in his Honour's words, "subconsciously accomplished" (at 181). 72 Anyway, given the astronomic unlikelihood of sheer chance, the source of Conquip's awareness of the name Bennigan seems to be either the Malvern Road restaurant or S & A's restaurants in the United States. 73 The latter remains possible, notwithstanding the denial of Mr Lambropoulos, but the onus being on S & A, I would not be prepared to make a finding that this is what happened, given the existence of the Malvern Road restaurant. 74 But even if that were so, I do not see that lack of good faith is established in any relevant sense. If the directors of Conquip did knowingly select the name of S & A's American restaurants they were not misappropriating any goodwill existing in Australia. Nor were they opportunistically establishing some right to the name in the hope of being bought out. If all they did was choose the name because it seemed a good name for a restaurant, I do not think that shows lack of good faith.

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What is required to establish use? 76 The leading authority is Moorgate Tobacco Co Ltd v Philip Morris Ltd (No 2) (1984) 156 CLR 414. One of the issues in this case was whether Moorgate or Philip Morris was the proprietor under the 1955 Act of certain trade marks for cigarettes by virtue of being the first user in Australia. Moorgate relied on evidence that, during or in connection with discussions with Philip Morris about the introduction of the relevant brand of cigarettes in Australia, packets of cigarettes and associated advertising material displaying the trade mark were handed personally or were sent by mail to representatives of Philip Morris in Australia. Deane J, with whom all the other members of the Court agreed, said (at 433-434, citations omitted): "The Court was referred to a large number of cases and to some administrative decisions in which consideration has been given as to what constitutes a use or user of a trade mark for the purposes of the statutory notion of proprietorship of the mark before registration. The cases establish that it is not necessary that there be an actual dealing in goods bearing the trade mark before there can be a local use of the mark as a trade mark. It may suffice that imported goods which have not actually reached Australia have been offered for sale in Australia under the mark …or that the mark has been used in an advertisement of the goods in the course of trade … In such cases, however, it is possible to identify an actual trade or offer to trade in the goods bearing the mark or an existing intention to offer or supply goods bearing the mark in trade. In the present case, there was not, at any relevant time, any actual trade or offer to trade in goods bearing the mark in Australia or any existing intention to offer or supply such goods in trade. There was no local use of the mark as a trade mark at all; there were merely preliminary discussions and negotiations about whether the mark would be so used. The cigarette packets and associated advertising material were delivered to Philip Morris to demonstrate what Loew's was marketing in other countries and what Philip Morris might market, under license from Loew's, if it decided to manufacture and trade in the goods in Australia and to use the mark locally at some future time. There was no relevant trade in the goods in Australia and the delivery of the cigarette packets and associated material to Philip Morris did not, in the circumstances, constitute a relevant user or use in Australia of the mark "KENT GOLDEN LIGHTS" for the purpose of indicating or so as to indicate a connexion in the course of trade between the new cigarettes and Loew's". (Emphasis added) 77 In Settef SpA v Riv-Oland Marble Co (Vic) Pty Ltd (1987) 10 IPR 402 McGarvie J said (at 417-418, citations omitted): "I consider that it follows from the authorities that a trade mark is used as a trade mark only if it is used with a view to facilitating or promoting the operation of a trading channel which in a business sense had already been opened to Australia. The mark must be used for the purpose of trade: … The forwarding of samples and brochures is not sufficient to indicate that Settef was ready and willing to fulfil such orders as it received from Australia. The purpose of these items may well have been to ascertain whether there was a market in Australia sufficient for it to be worthwhile for Settef to export here. Use of the mark in such preliminary activities would not be a use in the course of trade …." The decision was affirmed on appeal by the Full Court of the Federal Court: (1988) 12 IPR 321.

[27]

Discretion not to remove mark 86 It is accepted that under the 1955 Act the Registrar, and thus the Court on appeal, has discretion not to remove a mark for non-use. Such a discretion is now explicitly provided for in s 101(3) of the 1995 Act. Shanahan in Australian Law of Trade Marks and Passing-off (second edition at 275) notes that "the public interest in the integrity of the register will generally demand the removal of an unused mark". Similarly in J Lyons & Co. Ltd's Application [1959] RPC 120 at 130 Evershed J treated the discretion as a matter requiring "exceptional circumstances". After the passage just quoted Shanahan goes on to give some examples of the exercise of discretion, namely where the mark, although unused in the statutory sense, is nonetheless well known because of the retention of some "residual reputation" from earlier use, or from advertising or publicity coming from abroad (see Hermes Trade Mark [1982] RPC 425). Similarly there might be refusal of removal where the mark had in fact been used but an assignment or licence had not been recorded: Paragon Shoes Pty Ltd v Paragini Distributors (NSW) Ltd (1988) 13 IPR 323. It is not suggested that any comparable circumstances could be relied upon by S & A in the present case. 87 The prime argument relied upon for the exercise of the discretion is that it would have been "commercially unreasonable" in the light of Conquip's attack on the marks for S & A to have traded itself or secured a franchisee to trade under the marks whilst the validity of the marks remained unresolved. This argument of course would only extend to the time after Conquip's application for removal of the marks in March 1995. This would be after the end of the 1992-95 period. However in relation to both pre and post March 1995 there is a circumstance which is said to excuse or explain S & A's non-use, namely that its marks are "not for a product which can be protected by small transactions". Mr Steed estimates that it would cost S & A over US $1 million plus the cost of land to open a Bennigan's restaurant in Australia and that a franchisee would be required to invest a minimum of between US$1.1 million and $2.2 million, again plus the cost of land. 88 This argument would not be applicable to S & A's marks for goods. If it so wished, it could have sold or offered for sale in Australia relatively small quantities of goods under or by reference to its marks. 89 As to its marks for services, and in particular restaurant services, the fallacy of the argument is that it treats the legal protection conferred by the registered marks as coterminous with the kind of the business which, for reasons of commercial judgment, S & A prefers to conduct. As long as its restaurant services marks remain on the register, S & A could and doubtless would prevent anybody in Australia conducting any restaurant under that name even if it cost far less than US$1 million plus the cost of land to establish. By the same token, if S & A had wanted to establish use to protect its mark it could have made some licensing arrangement with a restaurant of any kind, even if it were much more modest than S & A's preferred model. 90 There is moreover a powerful factor against the exercise of any discretion in favour of S & A. I refer to the very long period, some eighteen years, in which the marks have remained on the register. Such a long period of non-use is destructive of the purpose of trade mark registration. 91 It follows that Conquip's application for removal succeeds. Although not strictly necessary, I shall deal with its alternative ground under s 88(2)(d).

[28]

Removal of non distinctive marks after ten years (1995 Act s 88(2)(d)) 92 Section 88(2)(d) of the 1995 Act provides for the following ground: "(2) An application may be made on any of the following grounds, and on no other grounds: … (d) the following circumstances apply: (i) the Registrar accepted the application for the registration of the trade mark because he or she was satisfied, having regard to the extent to which the trade mark was inherently adapted to distinguish the goods or services of the applicant for registration from the goods or services of any other person and the intended use of the trade mark, that the trade mark would distinguish those goods or services as being those of the applicant (see paragraph 41(5)(a)); (ii) the application for rectification is made at least 10 years after the filing date; (iii) in the intervening period, the trade mark has not been used to an extent sufficient for it to distinguish, in fact, the goods or services of the registered owner from the goods or services of any other person." 93 "(P)aragraph 41(5)(a)" (i.e. paragraph (a) of sub-section (5) of section 41) is best understood in the context of the preceding sub-sections of s 41: "41(1)For the purposes of this section, the use of a trade mark by a predecessor in title of an applicant for the registration of the trade mark is taken to be a use of the trade mark by the applicant. (2) An application for the registration of a trade mark must be rejected if the trade mark is not capable of distinguishing the applicant's goods or services in respect of which the trade mark is sought to be registered (designated goods or services) from the goods or services of other persons. (3) In deciding the question whether or not a trade mark is capable of distinguishing the designated goods or services from the goods or services of other persons, the Registrar must first take into account the extent to which the trade mark is inherently adapted to distinguish the designated goods or services from the goods or services of other persons. (4) Then, if the Registrar is still unable to decide the question, the following provisions apply. (5) If the Registrar finds that the trade mark is to some extent inherently adapted to distinguish the designated goods or services from the goods or services of other persons but is unable to decide, on that basis alone, that the trade mark is capable of so distinguishing the designated goods or services: (a) the Registrar is to consider whether, because of the combined effect of the following: (i) the extent to which the trade mark is inherently adapted to distinguish the designated goods or services; (ii) the use, or intended use, of the trade mark by the applicant; (iii) any other circumstances; the trade mark does or will distinguish the designated goods or services as being those of the applicant; and (b) if the Registrar is then satisfied that the trade mark does or will so distinguish the designated goods or services - the trade mark is taken to be capable of distinguishing the applicant's goods or services from the goods or services of other persons; and (c) if the Registrar is not satisfied that the trade mark does or will so distinguish the designated goods or services - the trade mark is taken not to be capable of distinguishing the applicant's goods or services from the goods or services of other persons." 94 It will be convenient to refer to ss 24 and 25 of the 1955 Act which are as follows: "Registrable trade marks - Part A 24. (1) A trade mark is registrable in Part A of the Register if it contains or consists of: (a) the name of a person represented in a special or particular manner; (b) the signature of the applicant for registration or of some predecessor in his business; (c) an invented word; (d) a word not having direct reference to the character or quality of the goods or services in respect of which registration is sought and not being, according to its ordinary meaning, a geographical name or a surname; or (e) any other distinctive mark. (2) A name, signature or word (not being a name, signature or word described in paragraph (a), (b), (c) or (d) of the last preceding subsection) is not registrable in Part A of the Register unless it is, by evidence, shown to be distinctive. (3) A trade mark may be registered in Part A of the Register in respect of any goods or services notwithstanding the registration of the trade mark or of a part or parts of the trade mark in Part B of the Register, in the name of the same person, in respect of the same goods or services or other goods or services. Registrable trade marks - Part B 25. (1) A trade mark is registrable in Part B of the Register if it is distinctive, or is not distinctive but is capable of becoming distinctive, of goods or services in respect of which registration of the trade mark is sought and with which the applicant for registration is or may be connected in the course of trade. (2) A trade mark may be registered in Part B of the Register in respect of any goods or services notwithstanding the registration of the trade mark or of a part or parts of the trade mark in Part A of the Register, in the name of the same person, in respect of the same goods or services or other goods or services." 95 Section 88(2)(d) of the 1995 Act, if it applies at all, can only apply to S & A's marks registered under the 1955 Act since the ten year period has not expired since registration of the 1995 Act marks. 96 However counsel for S & A submitted, and I accept, that s 88(2)(d) does not apply to marks registered under the 1955 Act. The terms of s 88(2)(d) exactly complement s 41. The specific reference to s 41(5)(a) makes that even more clear. There is no similar interlocking with the 1955 Act. Having specifically mentioned s 41(5)(a)of the 1995 Act, had Parliament intended to refer also to a comparable provision of the 1955 Act it would have been a simple matter to do so. (For an example of explicit reference in the 1995 Act to registration under the 1955 Act see s 234(1).) 97 Thus the language of the statute strongly supports the contention of S & A. Moreover the difference in language goes beyond matters of drafting style. The 1955 and 1995 Acts have adopted quite different mechanisms to deal with a mark seen at the time of application as potentially non-distinctive or non-distinguishing. 98 It was said that this construction would mean that no mark could be removed for a period of ten years after the 1995 Act came into operation. At first blush that may seem odd, but the explanation is that if a mark is registered under the 1955 Act it should not be vulnerable to a form of attack which did not exist in the regime under which it was registered.

Conquip Holdings Pty Ltd v S & A Restaurant Corp

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Judgment (32 paragraphs)

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Legislation Cited (3)

Cases Cited (8)

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