Health World Ltd v Shin-Sun Australia Pty Ltd

Health World Ltd v Shin-Sun Australia Pty Ltd - [2010] HCA 13 - HCA 2010 case summary — Zoe

[17]

The three proceedings arose out of the following circumstances.
Health World's business. In 1991 Health World began manufacturing and supplying a probiotic powder. The powder contains quantities of acidophilus bacteria. It has been marketed under the name "Inner Health". Since 2000 Health World has also manufactured and supplied probiotic capsules. The capsules contain greater quantities of acidophilus than the powder, and other live bacteria as well. They are marketed under the name "Inner Health Plus". The primary judge found that the Inner Health Plus capsules have obtained a measure of success in the marketplace.
Shin-Sun's business. In 2001 Shin-Sun began preparing to manufacture and sell natural health supplements derived from squalene and shark cartilage, and from bees or beeswax, under the label "HealthPlus".
The applications for registration. On 7 May 2001 Shin-Sun applied for registration of "HEALTHPLUS" as a trade mark in class 5 for "[p]harmaceutical products including vitamins and dietary supplements". On 12 September 2001 Health World applied for registration of "INNER HEALTH PLUS" as a trade mark in class 5 for "[p]harmaceutical preparations; dietetic substances adapted for medical use; products in this class sold by pharmacies and/or health food shops including vitamins, minerals, health foods, dietary foods, Chinese and ayurvedic herbs, and nutrition bars included in this class".
Health World's notice of opposition. In December 2001 Health World filed a notice of opposition to Shin-Sun's application to register the "HEALTHPLUS" trade mark. It claimed that Shin-Sun's "HEALTHPLUS" mark was deceptively similar to its "INNER HEALTH PLUS" mark. The opposition failed before the Registrar of Trade Marks. The Federal Court of Australia (Cooper J) dismissed an appeal from the Registrar's decision[4]. The mark "HEALTHPLUS" was entered on the Register on 28 February 2005.
Shin-Sun's notice of opposition. On 15 August 2003 Shin-Sun filed a notice of opposition to the registration of "INNER HEALTH PLUS". Shin-Sun later withdrew its opposition. On 17 February 2005 "INNER HEALTH PLUS" was entered on the Register.
The parties' trading activities. In August 2004, before either mark was entered on the Register, a range of products using the trade mark "HEALTHPLUS" was launched. Though Shin-Sun had applied to register the "HEALTHPLUS" trade mark, its name did not appear on the products. Instead they bore the name of an associated company, Nature's Hive Pty Ltd ("Nature's Hive"). Like items in Health World's "INNER HEALTH PLUS" range of products, which had been in the market for some time, items in the "HEALTHPLUS" range were mainly sold in health stores and were natural health supplements. Many of them were listed in the Australian Register of Therapeutic Goods.
The first proceeding. On 13 February 2006 Health World commenced what may be called "the first proceeding" in the Federal Court. It claimed to be an "aggrieved person", and sought cancellation of the registration of "HEALTHPLUS" under s 88(1) of the Act[5]. It did so on the ground, inter alia, that Shin-Sun did not intend to use the mark "HEALTHPLUS" in Australia. On 31 May 2006 Health World overcame an obstacle raised by Shin-Sun to the first proceeding in relation to another contention: the primary judge held that the decision of Cooper J did not estop Health World from contending that Shin-Sun's mark "HEALTHPLUS" was substantially identical with or deceptively similar to Health World's mark "INNER HEALTH PLUS"[6].
The second proceeding. On 25 July 2006 Health World instituted what may be called "the second proceeding" in the Federal Court. In the second proceeding Health World contended that it was a "person aggrieved" within the meaning of s 92(1) of the Act[7] and sought removal of the "HEALTHPLUS" trade mark under s 92. It claimed that when Shin-Sun filed its application for registration, it had no intention in good faith to use the mark in Australia (s 92(4)(a)(i)) and that the mark had not been used within the period described in s 92(4)(b). The second proceeding rested on the contention that neither Shin-Sun nor Nature's Hive launched the "HEALTHPLUS" range of products into the Australian market until August 2004, which was after the expiration of the three year period referred to in s 92(4)(b).
The third proceeding. On 15 September 2006 Shin-Sun commenced what may be called "the third proceeding" in the Federal Court. The third proceeding sought removal of Health World's mark "INNER HEALTH PLUS" from the Register pursuant to s 92 of the Act, so far as it was registered in respect of goods other than certain probiotic products.
The result of the first proceeding. The three proceedings were heard together. The primary judge dismissed the first proceeding on the ground that Health World was not "an aggrieved person" under s 88(1) of the Act. Had he not done so, the primary judge would have acted on two conclusions favourable to Health World. The first was that Health World had made out the ground for removal of "HEALTHPLUS" under s 59(a) of the Act, namely that at 7 May 2001 Shin-Sun did not intend to use or authorise the use of the mark in Australia. The second was that Health World had made out the ground for removal of "HEALTHPLUS" under s 88(2)(c) in that Shin-Sun had allowed "HEALTHPLUS" to become deceptive or to cause confusion as at the date of the application for rectification, because the mark was used to identify the relevant goods as goods of Nature's Hive, not those of Shin-Sun. The primary judge would have rectified the Register on those grounds.
The result of the second proceeding. The primary judge dismissed the second proceeding on the ground that Health World was not a "person aggrieved" under s 92(1) of the Act. Had he not done so, the primary judge would have acted on the conclusion that it was Nature's Hive, not Shin-Sun, which had used "HEALTHPLUS" during the relevant three year period described in s 92(4)(b), and would have removed the trade mark from the Register.
The result of the third proceeding. The primary judge dismissed the third proceeding. He found that Shin-Sun's reliance on s 92(4)(b) was made out because Health World had only used the "INNER HEALTH PLUS" mark on probiotic products. He would have made the orders sought by Shin-Sun, but for his conclusion that it was not a person aggrieved. Shin-Sun has not appealed. The third proceeding thus has no further significance in the case. But it does highlight the curious character of the Full Court's conclusion, where there are two rival traders who have lost no opportunity to attack each other's attempts to register trade marks both before the Registrar and in four sets of court proceedings which have so far been heard by 10 judges, that neither of them is aggrieved, and each is to be regarded as falling within a class of inter-meddlers, lacking any interest to be protected.
The structure of the appeals to the Full Court. Health World appealed against the primary judge's dismissal of the first two proceedings by contesting his conclusion that it lacked standing. But it did not challenge his conclusion that the marks are not deceptively similar and his consequent rejection of its arguments that the mark should be revoked on the grounds of deceptive similarity.
Shin-Sun filed notices of cross-appeal which were treated as notices of contention challenging the primary judge's conclusions in relation to ss 59 and 88(2)(c) in the first proceeding and s 92(4)(b) in the second.
The outcome of the appeals to the Full Court. The Full Court agreed with the primary judge's conclusions that Health World was not a person aggrieved in either of the first two proceedings. It therefore dismissed the appeals without having to determine the issues raised by the notices of contention. Shin-Sun has protected itself by filing notices of contention in this Court in relation to those issues.

[18]

Before examining the respects in which it is necessary to depart from the Full Court's reasoning, it is desirable to start with some general principles.
First, the meaning of a general expression like "aggrieved" will depend on an examination of the language of the particular statute in which it appears. That examination will reveal the subject, scope and purpose of the statute, and the meaning of "aggrieved" may vary as the subject, scope and purpose varies[8].
Secondly, the legislative scheme reveals a concern with the condition of the Register of Trade Marks. It is a concern that it have "integrity"[9] and that it be "pure"[10]. It is a "public mischief" if the Register is not pure[11], for there is "public interest in [its] purity"[12]. The concern and the public interest, viewed from the angle of consumers, is to ensure that the Register is maintained as an accurate record of marks which perform their statutory function - to indicate the trade origins of the goods to which it is intended that they be applied[13].
This concern and this interest are reflected in the following scheme. If an application is made to have a mark registered which does not meet the criteria for registration, there are two opportunities for registration to be prevented. And if a mark has been registered which does not meet the criteria for remaining on the Register, a further opportunity exists to have the Registrar adjust it.
The first opportunity arises when an application is lodged. Section 31 of the Act creates a duty on the Registrar to examine and report on whether the application has been made in accordance with the Act, and whether there are grounds under Pt 4 Div 2 for rejecting it[14]. 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 it (s 33).
Even if the application is accepted, a second opportunity arises. Section 34 creates a duty on the Registrar to advertise the decision to accept the application in the Official Journal of Trade Marks. This enables those who wish to oppose registration to do so pursuant to s 52 of the Act. Section 52 has no standing requirement. If opposition proceedings are not brought, or if they fail, the trade mark is registered (s 68).
However, a third opportunity to ensure the purity of the Register arises, for recourse can be had to s 88 or s 92. Those sections require applicants under them to be "aggrieved". It is not the case that any applicant who wants the Register rectified or a mark removed is "aggrieved" merely by reason of that desire: the word has a filtering function. But against that legislative background, it is not clear why the word should be construed restrictively rather than liberally.
While the Act offers these facilities for ensuring that the Register is pure in the sense that no mark is to be registered unless valid, and no registration of a mark is to continue if it is not valid, the purpose of ensuring purity exists alongside another purpose. That is the purpose of preventing the security of the Register from being eroded by applications for rectification or removal by busybodies or "common informers or strangers proceeding wantonly"[15] or persons without any interest in the Register or the functions it serves beyond gratifying an intellectual concern or reflecting "merely sentimental motives"[16]. Applications of that kind, by clogging up and causing delay in the courts, would cause an unnecessary cloud to hang over registrations. The purpose of avoiding this outcome is reflected in the standing requirements in ss 88 and 92. Applications by persons who are not aggrieved are positively inimical to the fulfilment of the statutory purposes through the Register.
Despite the importance of preventing applications of that kind, Lord Herschell LC pointed out that the presence on the Register of a mark which should not be on it may affect "many persons … who nevertheless would not be willing to enter upon the risks and expense of litigation."[17] A wider, rather than a narrower, meaning for "aggrieved" ensures that more people are available to procure the removal of a "public mischief" than those reluctant persons to whom Lord Herschell LC referred.
In argument there was some debate about why, while there is a standing requirement for applications to rectify the Register or remove a trade mark from it, s 52(1) creates no standing requirement in relation to opposition proceedings before the grant of a trade mark. Health World submitted that the difference was to be explained by the fact that the only persons likely to bring opposition proceedings are persons assisted by professional advisers whose business it is to keep a close watch on advertisements of acceptance in the Official Journal of Trade Marks; that that is the only means by which members of the public are likely to hear that a trade mark application has been accepted; and that persons of that kind are unlikely to be busybodies. The submission may be correct. A further consideration is that, while there is something to be said for permitting anyone in the world to initiate opposition proceedings before registration, at a time when the Registrar may be relatively ignorant and in need of all the assistance that can be obtained, and when no property right in the form of a registered trade mark has yet been granted, those considerations do not apply once it has been granted. Once it has been granted, the proprietor of the mark and others, including licensees and assignees, are likely to have relied on the grant of registration made after solemn processes have been pursued by a Registrar who is probably better informed than at the time of advertisement. The legislation accommodates the interests of traders "in protecting their goodwill through the creation of a statutory species of property protected by the action against infringement, and in turning this property to valuable account by licensing or assignment."[18] The statutory requirement appears to reflect the desirability, once registration of a mark has been granted, of preserving stability in the grant and preventing doubts about its validity from arising unless they are raised by someone who has an interest in doing so. Someone with that interest is likely to sharpen controversy in a fashion which advances the public interest in the purity of the Register.
It is for these reasons that the authorities call for the word "aggrieved" in the trade mark legislation to be "liberally construed"[19].
The legislation has not defined "aggrieved" in ss 88 and 92, and many courts have eschewed any attempt to do so. Rather they have proceeded to deal with the particular problem before them, leaving it to later courts to deal with different problems in the light of their own peculiar circumstances. It is desirable to employ that technique in this case as well.

[33]

Three points must be made about Powell's case.
The first point is that none of the express language used suggests that any test stated is exhaustive.
The second point is that nothing in the case supported by implication the suggestion that any test stated was exhaustive. In particular, the passage in Kraft's case which the Full Court in this case quoted and relied on to support the "prima facie rule" which Health World failed to satisfy is not derivable from any exhaustive test in Powell's case[31]. In Powell's case in the Court of Appeal Lindley LJ said that though there was no evidence that the respondents "really will or do intend to make Yorkshire Relish", it "may well be that if they can get rid of this mark they will sell [it]."[32] He and the other members of the Court of Appeal concluded that the respondents were therefore "persons aggrieved". The appellant contended to the House of Lords that to be a person aggrieved "the rival trader must actually at the time have an intention or desire to trade in the article in question; that at any rate there must be a reasonable probability of such an intention or desire at some future time"[33]. Lord Watson accepted that submission, and cited two cases for it which counsel had cited[34]. Despite the Court of Appeal's statement that there was no evidence that the respondents wished or intended to sell Yorkshire Relish, both the Court of Appeal and the House of Lords held that the respondents were persons aggrieved. Hence a possibility of use of the mark unsupported by evidence suffices, even where there is no evidence of an actual desire or intention on the applicant's part to use the mark. That is, even an absence of actual desire or intention to use the mark does not exclude the reasonable possibility or probability to which Lord Watson referred. Reliance by the Full Court in the present case on the primary judge's finding that Health World did not intend to use the mark without considering any reasonable possibility or probability unsupported by evidence is inconsistent with the reasoning in Powell's case as it applied to the facts.
Thirdly, McLelland J's test, which the Full Court in this case took from Kraft's case, and which it said Health World failed to satisfy[35], is explicitly stated by Lord Herschell LC in Powell's case not to be exhaustive. The only support that test might find in Lord Herschell LC's speech is in the last sentence quoted from it above - particularly the words "who might desire to make use"[36]. But the second-last sentence quoted from Lord Herschell LC's speech makes it clear that the test is not exhaustive, for in that sentence Lord Herschell LC stated a different test - not a test turning on whether the applicant "might desire" to use the trade mark, but a test turning on whether the trade mark "would or might limit the legal rights of the applicant", whatever future course of conduct the applicant actually had in mind or was likely to embark on.
In short, as Lord Pearce said in "Daiquiri Rum" Trade Mark[37] of Lord Herschell LC's statement:

[41]

"Daiquiri Rum" Trade Mark was cited in the court below[47], and Health World relied on Lord Pearce's test in this Court in the course of written and oral argument. Shin-Sun submitted that Lord Pearce's test was not a necessary step in the conclusion reached by the House of Lords. It submitted that the mark which the applicant desired to expunge was "DAIQUIRI RUM", registered in the face of an established meaning for "Daiquiri" as a Daiquiri cocktail. It submitted that the House of Lords considered that this prior meaning of "Daiquiri" as meaning a Daiquiri cocktail would be likely to hamper or impede the applicant, because whilst it might not wish to call its product Daiquiri Rum in the face of a registration for "DAIQUIRI RUM", it might find that purchasers would buy Daiquiri Rum, rather than its rum, for use in Daiquiri cocktails. Even if that was the House of Lords's reasoning, and even if Lord Pearce's test was not a necessary step in its conclusion, which are questions which need not be decided, the submission does not demonstrate that Lord Pearce's test was incorrect, or inapplicable to the facts of the present appeals. Shin-Sun cited an old case inconsistent with Lord Pearce's test, In the Matter of the Trade Mark No 70,078 of Wright, Crossley & Co[48], but did not otherwise submit that Lord Pearce's test was incorrect, nor why. So far as that case is inconsistent with Lord Pearce's test, it must be regarded as erroneous, for Lord Pearce's test is sound in principle, given the importance of construing "aggrieved" liberally. Shin-Sun submitted that the test required the applicant to establish a reasonable possibility that the trade mark proprietor in maintaining registration was having an adverse impact on the applicant. The test does not require that, beyond proof of trade rivalry.
With respect, then, Lord Pearce correctly stated one test, among others, for ascertaining whether a person is "aggrieved". It is satisfied here, for Health World and Shin-Sun are rivals in selling the health products in question. They are in the same trade, and they each trade in the class of goods in respect of which the challenged mark is registered.

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