Farley (Aust) Pty Ltd v J R Alexander and Sons (Qld) Pty Ltd [1946] HCA 29

Taylor, for the applicant. vA Windeyer, for the respondent. » for the Registrar of Trade Marks.

J. delivered the following written judgment : - This - sept. 19 ion under s. 71 of the Trade Marks Act to remove from the ' a trade mark consisting of the word " Buz" registered 2 in respect of slow burning sticks and coils for repelling

H.Ceor A. and killing mosquitoes and pests. The trade mark was 1 1946. tered from 19th April 1939, upon the application of the respon ~~ which claimed to be the proprietor of the mark. The noti

of motion was not filed until 15th July 1946, that is to say until a period of more than seyen years had expired from the of the original registration. The respondent has continuously the mark since the date of registration as a trade mark for mosq coils which it has manufactured and sold, so that the registratio if originally valid, is not open to attack under s. 72. The groun taken in the notice of motion as amended at the hearing are tl fore those excepted from the operation of s. 51a, that the ori tration was obtained by fraud and that the mark off against the provisions of s. 114 of the Act.

The motion was heard partly on affidavit and partly on o evidence. The deponent of one of the affidavits filed on behalf the respondent, E. 0. Farley, resides in Melbourne. Counsel the applicant stated that if this affidavit was used he would requi the deponent for cross examination. Counsel for the respon then withdrew the affidavit, and counsel for the applicant ay press for Farley's attendance.

The early history of the word " Buz" is not in dispute. It first used as an unregistered mark for an insecticide-in the form a fly spray sold in tins and for the accompanying atomizer b: company J. F. Moseley & Co. Ltd. about the year 1928, On August 1928 this company applied for the registration of the ¥ as a trade mark in class 2 for chemical substances used for agrict tural, veterinary and sanitary purposes. At this time the comp: had sold about a thousand gross of tins. But the company becam insolvent and went into voluntary liquidation on 4th March 1! and the application lapsed. Another company E. O. Farley purchased the assets and goodwill of the business from the liquidato The assets included a stock of " Buz" Spray and atomizers. ¢ principal business of E. O. Farley Ltd. in insecticides was the loca sale through a subsidiary company of another fly spray known | "Verm-X." But it made each year small sales of " Buz spray for local consumption and larger sales for export. Tow. the end of 1935 E. O. Farley Ltd. made preparations to mosquito coils in Australia under the mark "Buz." It ord a thousand gross of these coils from the respondent was the only manufacturer thereof in Australia. It forw: a plate so that the respondent might have a special made and printed for the new coils, the cost of the cartons included in the price of the goods. While the coils and ei were being manufactured, H. O. Farley Ltd. went into liquidati

voluntarily on 25th October 1935 and then compulsorily on December 1935. The liquidator refused to accept delivery the coils and cartons from the -peaponter, Thereupon the

register of dade marks to be Lattal and having found that the word " Buz" was not registered, altered some of the wording

applicant was incorporated on 30th January 1936. By an ment in writing made on 5th February 1936 the liquidator Farley Ltd. sold the assets of that company to the applicant h certain exceptions for £1,750. The assets sold included, inter a, the goodwill of the business and the patent rights, trade marks

rticularized in the schedule. oh small number of tins of * Buz" spray and atomizers were included in the stock so purchased. applicant made some small local sales of " Buz'? fly spray 1 1936, and it may have made some further sales in subsequent but I am not satisfied of this. Its principal business in cides, like that of its predecessor, was the sale of " Verm-X." ¢ latter half of 1938 Goldman, the managing director of the became aware that the respondent was selling mosquito under the name of " Buz." On 24th October 1938 he wrote addressed to the respondent at Brisbane stating that the ; was the owner of the trade name " Buz" by virtue of its many years as a brand for insecticides manufactured by his and complaining of its use by the respondent. He 'no reply, and on 2Ist November 1938 wrote a further which he registered, enclosing a copy of the previous letter, that no reply had been received, and asking for prompt y the respondent. No reply was received to this letter. . R. Bennetts has been the managing director of the respon- 'many years. He had made the contract for the manufacture 'with E. O. Farley Ltd. and had been responsible for the n of the cartons after the rejection of the goods, and their 0 of his company under the name of " Buz." It was uty to deal with the complaint made in these letters. About ber 1938 an interview took place between Goldman and _ Goldman said that Bennetts telephoned him in Sydney that he had received the letters, that he was on his way ) or from New Zealand, and was pressed for time, and would n go to Bennetts' Sydney office and discuss the matter. said that he went to office, explained that the appli- "iy alin local fly y spray ee name " Buz," that it

cartons and commenced to sell the coils under the name of *

H.C. oF A. had bought the right to use the name from the liquidator of B. 1946.

Farley Ltd., and complained that the action of the respondent in selling its mosquito coils under this name was an infringement of - the applicant's rights. Goldman said that Bennetts explained how he came to use the name, and promised that he would discontinue selling the line immediately the stocks manufactured to the order _ " of E. O. Farley Ltd. were exhausted, and would write and tell - Goldman the position of the stock. Bennetts said in evidence that he could not remember receiving - the letters of 24th October and 21st November 1938 but would not deny that he might have received them. He said that a large portion of his records had been destroyed by a fire in the Brisbane office and that to the best of his recollection the interview took place in his Brisbane office and not in Sydney, He said that at the interview Goldman had said that the applicant was the - proprietor of a registered trade mark for " Buz," and that he then ~ told Goldman that if this was true he would cease using the name _ once he had cleared the original order. He said that after the interview he caused the register of trade marks to be searched and found that Goldman's statement was untrue, and that when he found that he had been deceived he did not think that Goldman was any longer worthy of consideration. He said that he then instructed his patent attorney to apply for the trade mark. The - application claimed that the respondent was the proprietor of the trade mark. Under s. 4 of the Act "' trade mark " includes a mark used or proposed to be used upon or in connection with goods. On 15th March 1939 Goldman, who had not received the promised - ¥ letter from Bennetts, wrote a further letter to Brisbane referring to their conversation at the interview and reminding him of his promise. No reply was received to this letter. In January 1946 - Goldman discovered that the respondent was still selling mosquito coils under the word " Buz" and had registered the word as a trade mark. On 13th February 1946 the patent attorneys for tl applicant wrote to the respondent recapitulating the facts and threatening proceedings unless the respondent ceased using the word and cancelled the trade mark. A reply was eventually

evidently, have very bad memories. We have subject matter our office dealing with this and are satisfied we have comp! answer to any plaint that may be instituted. We have nothi further to say in the matter." When asked in cross examinatio what the subject matter in his office was he said, " our registrat <

plus what I had found out and the details I had gained."

1 have no hesitation in finding that Goldman's account of the jew in December 1938 is substantially correct, and that ' account is a tissue of lies. Bennetts knew from a evious search that "' Buz" was not a registered trade mark.' The jew was about the claim made in the letters in which the ly claim was for an unregistered mark. Goldman knew that the d was not registered so that Bennetts would like the Court to _ believe that Goldman was content to rely on a promise which he ist have known was worthless because it was subject to the condition that "* Buz" was registered. I am satisfied that Bennetts G dman an absolute undertaking that he would cease trading the name '" Buz" as soon as he had sold the coils which had left on his hands by E. O. Farley Ltd. I am also satisfied it Bennetts knew perfectly well that he had received the previous and that Goldman is right when he said that the interview place in Sydney and that the matter discussed was the claim letters. There was only one interview and I do not see how Iman could have known that Bennetts had interests in New and was on his way to or from New Zealand unless Bennetts Id him. At the time of the interview about one-sixth of the been sold. At first they sold at a loss, and at that stage ould no doubt have been satisfied to discontinue the "Buz" as soon as he had disposed of the original order. the line began to show a profit, and Bennetts began to believe

it had a future. At some stage between the date of the and the date of the application for the trade mark, he tly. thought that it would be an advantage if he could the mark for his company. He therefore applied for of the mark behind Goldman's back. At that time in view of Bennetts' Bennetts registered the mark and the ruse had sueceeded. e first question is whether the applicant is an aggrieved person

the meaning of s. 71 of the Trade Marks Act. These ave been given a wide signification. It has been said

common informers or for sentimental reasons. In Powell v. irmingham Vinegar Brewery Co. (1), Lord Watson said that fact that the trader deals in the same class of goods and Id use it, is prima facie sufficient evidence of his being aggrieved, h can only be displaced by the person who registered the ul whom the onus lies, showing that there is no reason-

'ott that the objector would have used it, although

free to do so. That reading of the statute appears to

Fartry (Avsr., Pry. v TR. ALEXANDER & Sons (Q.) Pry. Lap.

me to be in substantial conformity with the construction adopted. by the Court of Appeal in In re Riviére's Trade Mark (1) and also in Inve Apollinaris Co.'s Trade Marks (2)." Tt is true that neither the applicant nor its predecessor in title ever used " Buz" as a trade mark for mosquito coils. It is also true that the respondent's" registration is confined to 'aosquito coils, and that s. 50 of the Act only gives the registered proprietor the exclusive right to the use of the trade mark upon or in connection with the goods in respect of which it is registered. But the applicant is engaged in the same class of business as the respondent. It still ise small stocks of " Buz" fly spray which it will want to dispose of. If it uses the word even for fly spray it would run the risk of being sued for passing off and the registration would materially assist the respo dent in such a suit. The right to use the word was purchased as part of the goodwill of E. O. Farley Ltd., and the applicant may desire to use the word, not only for fly sprays, but also for mosquito coils. Any person who has used a mark prior to registration, ki particularly a person who has used the mark on the same or a similar class of goods and is still in this business is, I should think, plainly an aggrieved person within the meaning of the sectio (In the Matter of Verity's Trade Mark (3)). I am therefore of - opinion that the applicant is an aggrieved person within the meanins placed on these words in the cases, and entitled to bring the Pe ceedings.

Prima facie the words of a statute should be given their ordinary ee grammatical meaning. The ordinary meaning of fraud involves " dishonesty or grave moral culpability " (Zn re whey Patent (4)). It means "actual fraud, dishonesty of some sort." (Waimiha 4 Sawmilling Co. Ltd. v. Waione Timber Co. Ltd. (5)). It was 4 contended that the applicant's claim to " Buz" in the letter of 24th October 1938 on the ground of its use for many years asa brand for insecticides was unfounded, and that it cannot be fraud to ignore threats which are bona fide and on reasonable grounds - believed to be unfounded. I agree that generally speaking it is not fraud to ignore threats whether they are well or ill founded. But the respondent did not ignore the applicant's threat or keep the applicant at arm's length. Bennetts made a definite promise which lulled the applicant into a state of false security. It was con- tended that his subsequent conduct was at most a breach of contract. - But the parties never intended to make a contract. They only intended to make a business arrangement, and the arrangement was

(1) (1883) 26 Ch. D. 48, (4) (1887) 36 Ch. D. 307, at p. 319. (2) (1891 186. (5) (1926) A.C. 101, at p. 106. (3) (1901) 19 R.P.C. 58, at p. 64.

ng guilty of bad faith. When Bennetts was on the eve of g the app lication for the "Bigs of what he called " our

and soon managed to forget that he had ever received it. netts' undertaking was given on the basis that the applicant had | better right to the trade mark than he. The registration of the , mark was intended to deprive the applicant of this right. 'breach of the undertaking was, in all the circumstances, plainly t and Bennetts was guilty of grave moral culpability.

was contended that the fraud referred to in s, 514 was fraud Registrar of Trade Marks. I can find nothing in the section n the Act to limit the meaning of fraud in this way. The Act not give an express statutory right of rectification on the ground of fraud. It merely saves the right in such an event to for rectification after seven years. Fraud is conduct which every transaction known to the law. It even vitiates a ment of the Court. It is an insidious disease, and if clearly spreads to and infects the whole transaction (Jonesco v. (1)). A registration of a trade mark procured by fraud, another trader or the Registrar was defrauded, would be y open to attack. In most cases a registration obtained in id of rights of another trader would also involve a fraud on Registrar. The respondent gave evidence of extensive use of trade mark after the date of registration. But where the registration was procured by fraud, the use to which a ly so obtained was subsequently put could not cure the invalidity (In re Heaton's Trade Mark (2)). The crucial 'is the date of the application for registration (Shredded Wheat Id. vy. Kellog Co. of Great Britain Ltd. (3) ). these reasons I am of opinion that the applicant is entitled sd and I make an order that the register of trade marks be ed by expunging therefrom the trade mark " Buz" numbered and a further order that the respondent J. R. Alexander & (Q'land.) Pty. Ltd. pay the costs of the applicant and of the rar of Trade Marks including any fees payable for obtaining (In the Matter of the Trade Marks of J. Lesquendieu (4) ).

) A.C. 298, at pp. 3 ee » 902, (8) (1999) 67 R-P.C. 137, at pp. 148, 27 Ch, D, 570, at ? (4) (isi) 51 RP

. 273, at p. 277. ch a nature that neither party could secretly go behind it with- ¥- © 0" 4-

Order that the register of trade marks be rectified by eaxpunging therefrom the trade' mark " Buz" numbered 74534 and that the respondent J. R. Alecander & Sons (Q'land.) Pty. Ltd. pay the costs of the applicant and of the Registrar of Trade Marks including any fees payable for obtaining rectification.

Solicitors for the applicant, Owen Jones, McHutchison & Co. Solicitors for the respondent, J. Stuart Thom & Co. Solicitor for the Registrar of Trade Marks, H. F. EZ. Whitlam,