HTX International Pty Ltd v Semco Pty Ltd [1983] FCA 225

Federal Court of Australia|1983-08-26|Before: Fox J

Trade Practices - Misleading or deceotive conduct - Trade Marks -

Infringement - Defences - Validity of original and continuing '

registration - Whether infringing conduct can invalidate

registration - Whether mark lacks or has lost distinctiveness -

Whether use of mark likely to deceive or cause confusion -

Trade Marks Act 1955 - secns. 22, 23, 24, 26, 28, 34, 58, 59, 60, 61, 62, 64, 107(2)(b), 1LO7( 2A).

HTX INTERNATIONAL PTY. LIMITED v. SEMCO PTY. LiMiTED

' iN THE FEDERAL COURT OF AUSTRALIA } ! MEW SOUTH WALES H No. GI97 of 1582 ! GENERAL DIVISTON 1

The apolicant bring in short minur2: af orders, the Minutes to be failed and served no later tnan cwentw-one days before the resumed date of heacind. ary variarions

soucht by the respondent to ne filea and served no tates

The case cto be listed for furtner asaring on a date to

The applicant alleges a breach of s.52 of the Trade Practices Act 1974, and infringement of its registered trade Mark. The respondent, besides denying these allegations, has cross-claimed for breaches of s.52 ana s.53 of that Act, for

passing off and for expungement or removal of the applicant's mark from the reqister. Ac the hearing, the respondent, while contending that the registration of the trade mack was or should now be treated as invalid, abandoned the claims in this Court for

relief by way of orders for -vemoval or expuncement. This

apparently meat method of avoiding what 10 was thouqnt was a

jurisdictional problem has difficulties, not entirely dissimilar

from those which existed when jJurisdzction was a:zvided betveen

State Courts and the High Court (ses, for example, article by G.A. Pape Detence of Invalidity in Trades Mark Infringement Proceedings (1957) 31 A.L.d. 528). I shall return to this matter

after dealing so far as possible with the submissions made to me.

The case will then have to be restored to the i1st for araqumenc

as to 1ts disposition. Aithough pleaded on both sides, passine- off was not discussed in any supmission to mé¢.

The applicant and the respondent sali oaint applicators for textile painting and decorating, and craft items associated therewith. The painting of names and decorations on tee-shirts, apparently rendered indelible by ironing, 1s one of the ends accomplished. The applicant sells direct to customers, without

intervention of a retailer, while the resoondent seils to retailers. The respondent's paint applicators and associated items, the subject of these proceedings, are imported by it from the United States of America. The ovaint, of alfferent colours, 1s extruded by hand from tubes which have a ball point end. $a far as appears, the respondent does not sell its applicators as part of akit. but sells them as sevnarate atems with sucn

associated goods as may be sought br a@ particular purchaser at

the time. The applicant sells similar paint apviicators and other items but usually, 1f not always, as vart of A KIT, In 2B

The respondent's applicators, and 4 number of associated

qaoods, such as items called "bailvoint vaint tube too cleaners

and "transfer pencils", bear the mark "Vodart" prominently on them, alone or in coniunction with other words, such as "Voqart Cratts". The tubes are made by the Vogart Crafts Corporation of New Jersev, while other items bear the name "Vogart Co. Inc. of New York". Some articles, such as tne applicators, are attacned to display cards which also bear the mark '""Vogarr" distinctliv upon them, but in association with the name ""Semco". None of the

Attention in this case has mostiy been directed to the respondent's applicator. As I have said, 1t shows quite plainiv that 1t was made in the United States of America Dy the Vogart Crafts Corporation of New Jersey. After the word Vogart on the

front of the tube, there appear in very smali biock canitais tas

unitials "T.M.", obviously meaning trade mark. No explicit reference is made ta the mark having been registered. Tne

display cards to which the applicators are attached describes

them on the reverse side as ""SEMCG" hail vgoint paint tunes hr

""VOGART", andat fhe foot 1s the notation 'Made in U.S.A. av Vogart Co. Inc. New York N.Y. 10001 for Samco Pty. Lerd., ga

The applicant's paint applicators bear the name of "Hobbytex", and no use is made on them, or on any card or packace

to which they are attached, of the mark ""Vogart". The applicant

sells a variety of kits, apoarently for simziar curnoses, but under different names and with different painrs in tne cubes. One 15 the Vogart kit and the name "Vogart" appears prominently in florid script acvoss the Front and back of the carton, The company name "Hoboytex Fry. Ltd." aopears prominentiv on the cartons and on the articles in the cartons, and "Hobpytex"

appears on those articles - hence ""Hobbytex Fine Line Embroidery

and Decorator Paint", and "Hobbytex Tip Cleaner and Thanner".

The name "Vogart* in block canitals was yrequstered in Australia as a trade mark oan 7 October 1970 ain the name of F.E. Griss Ptv. Limited in respect of paint applicators far textile painting and decorating, and all othar goods in class 16. The mark was assigned on il August 1977 to Hobpvtex Pry. Limited. The case has proceeded on tne basis that this company 15 now the applicant, or, at least, that the applicant should be treated as af it were Hobbytex Pty. fbanited. Ths probabie explanation 15

chat there was a change of name of the sam companv. Hoobytex

The respondent commenced to seil ics goods under tne

trade name Vogart in Australia in November 197¢, anc 1ts use of that name was continuous until May 1987. In 1ts advertising, as well as on the cards to whiren the tupes were attached, tne respondent used the name 'Semca aS well as Yooart'. the

States articles, manufactured by Vogart companies and known uncéar the name Vogart, were being offered for sale by a company whith imported them and traded locaily under the name of Semco. There is no evidence as to when the United States company, using "Vogart" as a part of its name, was formed or began to trade in the subject goods, or to use the name' "Vogart" thereon. The respondent's sales of items under the name "Voqart" have been Much greater in volume than the number of kits the applicant has sold under that name, and the respondent has spent relatively large sums in promoting the "Vogart" goods sold by it. The total number of Vogart kits sold by the applicant has not been great, although comparable with the number of other types orf kit solid by

The predecessor of the applicant as registered proprietor did not use the name Vogart at ail and it was not used by the applicant until August 1977. The use was in Western Australia from August 1977 to February 1979. The name was at that time used by the applicant on the tubes and accompanying brochures, as well as the packaging.

There was, after February 1979, a lapse in the use of

the name by the applicant until November 1981, from which time

its use, except by way of separate advertising, nas only been

the carton containing the kit. The mark has not been used 5

on the tubes or the small boxes contazninq chem since Freor

Some of the boxes and applicators in evidence are,

however, marked "made in U.S.A.". The applicant's catalogue used during the period since November i851, which is in evidence,

refers on one page to a 'Vogart Decorator =mbroidary Kit', invites customers to "Vogqart your clotnes" and has an illustration on the carton with the name "Vogart" readily visible on it. The use of the name by the applicant has, since November 1981, been more widespread throughout Australia than was previously the case. When the use of the name was srecommencec by it at that time, it knew of an extensive usa of the name in Australia by the respondent in respect of the same tvoe af goods. There is no evidence as to whether it knew of the use of the marx

by the respondent, or anyone else, wnen it firsr commenced using

The respondent first became aware in March 1982 tha~ the Mark was being used by the aoplicant. For a short time ait apparently thought that its supplier may be selling the goods to

a competitor. The respondent did not become aware of the

solicitors. It stopped selling articles bearing the trade name in May 1982. However, as it was left with stock on hand bearing the trade name, and because it wanted to force tne applicant ta take action, it recommenced selling in Julv or August i932. Zr ceased again in January 1983, bv whicn time its stock was soia. It has not since Aprii 1982 ordered any fresn stack "irom tne

name on the corporation, although Making commenced for removal

that the respondent is the reqistered proprietor or reqistered user in Australia of the trade mark "Vogart". As already indicated, it seams to me reasonably clear that the mark, as weil

tubes for texrile painting anc registration of "Vogqart" was in respect of On yaper transferable by neat cto any

ee ie a HA Ne eee a ln Ne A er al tee ah ea i el Ra nt a Sa - - -

suitable object, and this was in the name of Vogart Co

company (orf companies) in tne United States bearing

Vogart, it seems to me unlikely that anyone would b

fl) ie] mt t ; fh nt wtwu pl re] 'Od fen p rt is) a wp J fi

[-! he p ire] val 1D ita is) or iD Ze)ia) pA £ n ny int b <q u

misled by the presence of the initials in question. mers is no

evidence that anyone has been. Any infringement of 5.52

Fashions Pty. Limited (1981) 23 A.L.R. 465, and Fencortt

(1983) 46 A.L.R. 41, in which tudqment was delivered a

case was heard). In the present case, there is the cir

additional to those encountered 1n the cases just cited, that 4

relevant provision of the Acer (5.28(b)) has a direce

Registration of a trade marx does not or inviolable base from which to sue for infringement. Tas

that right in s.58(1) of the Act specifically savs thac:

"... the registration of a trade mark..., 1 valid, gives to the reqistered proprietor of the trade mark the riqnt ... to abtain relist in respect of infringement of the trade mark in the manner provided by this Act."

It has qenerally been accepted that validity can he raised in

anfringement proceedings. (See MacRae Knittina Mills Urmitad v. Lowes Limited (1936) 55 C.L.R. 725, ar p.728: James Watr

Constructions Ptv. Limited v. Circte-E Pry. Limited (1970) 3&3

N.S.W.R. 481, at p.491; Suverstar Australia Ptv. Limited v.

Coonan and Denlavyv Ptv. DLimited (1981) 40 A.L.R. 183, ar

pp.186-187; George Wostenholm & Son Limited v. William Woolhouse

& Co. (1888) 14 V.L.R. 963. at p.972. See also Kerlv's thaw of

Trade Marks and Trade Names, (1972) lOth ed., 9.315.) At the

same time it is accepted that the only avenue for rectification

° he «=6reqister, and expungement, 15 5.22, and this section is

generally regarded as containing a discretion, even in cases

ba] mnHy Ol(0 ip no ct i Nn v many sections) seems inescapadle. The English rules of court make special provision for the situation (9.100 r.3), but there is no similar provision in the Rules of the Supreme Court of New South Wales. The English Supreme Court Praccice contains the

"The previous or introduction of the »o 0.98, .7) the voract defendant disputed

requistration WAS that ne applied rectification by motion which was then orde to come on for hearing with the trial of action (Scott Paper Co. v. Drayton Paper Wari Ltd. (1927) 44 R.P.C. 181.'

Although IT will have to return to an aspect. of th2s matter, I

will proceed on the same basis as that on which the ca argued, treating grounds for expungement as constituting a

What I have said about liability to expundement being a

which 25 the discretionary relief nrovided for under 5.23 for

non-user, Counsel for the respondent did put an arqument that

the mark was liabie to expungement pursuant to $5.22 for non-use

arising under =.23(1)(b) and that such a defect sent to tne mark's validity. I disagres with Both asvects of this proposition. Non-user is cured bv for by 5.23 autself (see also, in yrelation to infringement, s.64(1)(c)). It also seems clear in s.€0 cthac ""vemevwal" in

accordance with 5.23 15 differentiaced from any invalidity for

wnich amark may be "expunged" from the register. The same

Infringing conduct does not in this case oresent itself

as a substantial issue; whether thers 1s infringement will be

proceedings in the Supreme Court, 590 far as proceedings there

remain open to it. In the main the attack on validity is based

on non-compliance with the definition of trade mark in s.6 and

The present mark has been cegqistered for over seven

vears., Sections 60 and 61 therefore operate to provide a measure

registration (see also 5.59). These sections are as follows:

"60. In legal proceedings rela trade mark reqistered in Part A ce)

instituted after the expiration of a from the date of registration, the trade ma shall not be removed from the Reqister or be held invalid on the ground that it was not a yegistrable trade mark under section unless it is proved that it was not, ar commencement of the proceedings, distire of the goods or services of the registered proprietor.

61.(1) In legal proceedings relating to a trade mark reqistered in Part A of the Register (including applications under section 22), the original yreqistration of the trade marie under this Act shall, after the expiration of 7 years from tne date of che oriqinal reqistration, be taken to be vaiird in all respects, unless it is shown -

(a) that the oriqinal reqistration was obtained by fraud;

(b) that the trade mask offends against the provisions of section 28; or

(c) tnat the trade mark was not, at the commencement of the oroceedings, distinctive of the goods or services ot the registered proprietor.

sub-section does not apely to ai trade mark registered before the commencement of this Act until after the expiration of 3 years from the commencement of this 4ct,"

For reasons which vill appear as I discuss 5.28 and

Turther discuss distinctiveness, am of the view that no around exists under 5.61 or s.60 for re-examining the validity of ths initial registration. Iwill, nowever, deal brieflv with the

challenges made to initial registration, as if one or more of the

There are two sections of the Act whicn directly govern initial vegistration (tne validity of which nas prascrinorive protection under secns. 60 and 61). They are secns,. 24 ana 78,

tt is only necessary £9 consider priefly the apolication

the word "Vogart" was des ptive and not distinctive, or capabls

of becoming 50, r ssed mv initial view that it was not

descriptive (I used the word and understood 1t generally to be

used as if it had two syllables, the first being "VYo"), The argument on this aspect was not carried further. There is no

adequate basis for finding that the trade mark was not adapted co

and see Clark Equiomert Co. v. Begistrac of Treds Marys (1964:

lll C.L.R. 513, at p.514) so as to lack initial distinctiveness,

and thus contravene 5.24. I shall dsal later with supervenindg

At the time of initial registration, the respondent was not using the name and no question of confusion or deception under s.28 arises as at that date. What is now said in relation to initial registration ic that the definition of trade mark in s.6 was not satisfied. in substance, it is said that there was at that time no bona fide intention to use the mark as a trade mark, and the lapse of time before its use is relied on. Sucha

lapse of time was considerable, but is not umusual (see, for

example, General Electric Co. (of U.S.A.) v. General Electric Co.

Limited (1972) 1 W.L.R. 729; (1973) R.P.C. 297). The evidence

falls far short of establishing the submission. that 1t may be that the submission properly finds 1ts place under

s.23(1)(a), and in that event would not qe 9 valiaity.

There was therefore no initial invalidity, assuming tnat

which 1s referred to in s.61(1)(b). It 15 as follows:

fa) the use of which would be likely to deceive or cause confusion;

14, (ec) which commrises or contains scandalous matter; or {d) which would otherwise be not anctitied to

The closing words of the section have been construed to mean that

an offending mark shall not be reqistered or yesmain registered as

a trade mark. The section 15 given an ambulatory effect, so that

the tests it propounds may be applied, in elation «1. a

reqistered trade mark, at any time. If che tests in s.28 are nor satisfied at the later date, s.22/1)(b) may be applied to secure expungement, on the footing that the registration is an "entry wrongly ... remaining 1n the Register

(1973) 2129 C.L.R. 353, the contest was between twa reqisre

proprietors of trade marks. It was held that the use of ore mark

"would be JLikely to deceive or cause contusion" (vide s.28(a)),

and that it should therefore be expunged. Mason d., at 9.3900, after referring to Re 'Bali" Trade Mark (1968) &.P.C 436, at p.434 and the Generali Electric Case (1972) 1 W.L.P. 729, at p.749, stated the construction to be given to s.28 as follows:

expression of the United Kingdom and Australian provisions, they are not significance as to justify a departur the conclusion, conformably with what na Said, that the words shall not be reqis in s.28 refer not oniy to the act of ma entry in the register put also to parn

the continuance of the entry of a trade mark in the register."

It is apparent that a mark 15 liable to sxpundenenc

wrongly remaining in the reqister if it has become likely deceive or cause confusion and that s.61 has no role to piay in that situation. Two questions arise. One is whether the

liability goes to the mark's validity for the purposes of 5.58.

Mason J. ain Berlei (supra.) did not address thi there are indications in provisions such as s.56 that defects arising after a marx's original yreqistration can cause tne

This leads me to fthe other question. Does the Likelihood of deception or confusion howsoever arising, involve invalidity or attract a liability to expundement? It seems inconsistent with the policy of the Act that the activity af a competing trader which would otherwise be regariad az infringement can bring about a situation wheres the proorzetor use of its mark, because of confusion, leads to its invalzdity.

Windeyer J. in In the Name of Rali Brassieres Co. Inc. and In the

Matter of an Application by Berlei Limited (1965) 118 C.L.R. 122,

was clearly aware of this probiem, and in the General Electric

Case Lord Diplock narrowed the post-registration operation of the United Kingdom equivalent of 5.28(a) to situations where the confusion or deception was brought anout by some blameworthy act

of the registered proprietor ((1972) i W.L.R. 729, at 5.7

eaten eb he ne ae ee we a tt et eee ee ~ - - - - '

In my view, the test propounded by bord Diplock in relation to English legislation 15 equally applicable here, notwithstanding differences in the ieqtslation. If one looks to a wider test, such as whether the respondent has a greater volume

of sales and a wider reputation (resulting in the confusion or

deception), the problem of public volicy 185 raised acutely. I5 a Ylval trader, by using a registered trade mark,

that mark invalid? The Act acknowleds that a rival trader may

unwittingly use an existing registered mark, but provides a process whereby he also may become registered. The provision

concerning honest concurrent use (s.34) picks up the common law

on the subject (see Kerlv, (1972) (supra.) at pp.197-189).

Tt seems £0 me to be contrary to the scheme and oolicw of the Act to allow what Windever J. 1n the Bali Brasszere Case

(supra.) called "the assiduous efforts of an infringer' cat

wo Fe] i % p.133) to anvalidate (tor rander void) aA veqistered trad

unless, at least, there has been '''blameworthy" conduct on th part of the requistered proprietor. Doubtless a reqisteread proprietor is expected toa take dus steps for the vrotection of his mark, but the unfringer must also be expected to take such

steps as the Act allows in order to establish an equal or

superior right to the use of the mark, or tao have the register appropriately rectified. While registration oy no means creates

indefeasibilitv, it gives notice, and encouragement should not be

given to the trader who fails to search it, or disregards the results of a search, and creates a substantial business using the Mark, to the point that the registration is to be regarded as invalid, and liable to be expunged. As IT have already noted,

non-use of the mark by the registered proprietor is deait with

tH oa ct r o ire} Lal i) Wi a a tt n fl 1] n cr fom oY oO a Be Ng mh a un fly or eB Pp pe] g ie} 3] a A. £ f wvrh cr Hs a

applicant would be in the nature of acquiescence, or lack of diligence. There was no argument specifically directed to this point, but the fact is that the respondent used the mark for about four anda half years before 4 protest was made to it on behalf of the applicant. The tlangth of this period is not great when compared with those that have occurred in other cases (see,

evidence relating to relevant circumstances, and to a submission

ry relating directly to the point, I hesitate to draw an in

countervailing circumstance that, according to the evidence which has been accepted, the respondent did not know of any use in

Australia by another trader of the name "Vogart" unti1i March

1982, although, for about twenty-four months of the time since commenced using the mack the applicant was seliing saoods under

- - - - -+- - oe ne a a - ----- - - we eee ee : -

distinctiveness at the commencement of proceedings (see also s.60). Distinctiveness is referred to ain 5.24(l)(e) as 2&2 requisite element, but not in s.28. A legal consideration aris¢s similar to that recently discussed, namely whetner naragrapn (c) applies if loss of distinctiveness is due to "infringing" conduct of someone else, and there is no blameworthy conduct on the part of the registered proprietor. It seems to me that by parity of reasoning with that dealt with in relation to s.2B(a), para. (c) of s.61(1) is to be regarded as subject to a similar limitation. I say this, notwithstanding that the authorities (to which I will return) show that loss of distinctiveness does not bv itself involve invalidity, or expungement, and notwithstanding that its absence at the time referred to in s.61{(1)(c) leads onlv to the examinability of initial registration. I am of the opinion that

To return to s.28, which has such an imvortant seoarate role, two other paragraphs require examination, namely paras. (5} and (d). The only situation referred to in argument (although not, I thank, in relation to elther of these paragraphs) where there would be usage contrary to law (para. (b)) would be if the usage constituted a breach of s.52 or s.53 of the Trade Practices Act. Conduct which causes confusion 1S mot necessarily misleading or deceptive within the meaning of these sections, but, applying the same policy considerations as those already

referred to, 1t would seem to me not epen to a person who brings

about a misleading or deceptive situation by reason of his use of the registered trade mark of another to assert that the other is guilty of conduct which offends against the section. At all events, this is not so in the absence of fault on the part of the registered proprietor. I am therefore of the view that para. (hb)

In relation to para. (d), reliance was placed, ina generalised submission, on matters I have already discussed, but lack of distinctiveness was raised specifically in relation tc

this paragraph, and I should now deal with that topic further.

The scope of para. (d) was dealt with by Windeyer J. in Kimberly-Clark Corporation v. Vereinigte Papierwerke Schikedanz &

"As to this, I would say first that it seems to me that the words of s.28(d) refer ta some characteristic of the mark other than mere lack of distinctiveness or capacity to distinguish and to some characteristic other than a direct reference to the character or quality of the goods. A mark which 'would otherwise be not entitled to protection ina court of justice' refers, I think, toa something intrinsically objectionable which disqualifies a mark otherwise registrable: see In re Imperial Tobacco Co.'s Trade Marks ((1918) 2 Ch. 207, at pp.224, 229)."

His Honour dealt again with s.28(d) in the Baii Brassiere Case (supra.), at p.l4i, and there referred back to what he had said ™~

Distinctiveness is dealt with in s.26 and s.24 of the Act, and not specifically mentioned in 5.28. fin che ordinary case, use by rival traders of the same name in relation to the same goods could be expected to invoive a ioss or distinctiveness, but it is important to determine, in &@ case Such

distinctiveness, or merely confusion. Windeyer J. touched on

this matter in the Bali Brassiere Case (supra.), at p.14l. should note a submission of counsel related to the diff

of the mark by the appellant and the respondent. While the earlier use by the applicant of the mark was on the tubes (and, I assume, associated articles as well) the use since November i981 has been on the carton, and the articles, loose within it, carry

the mark Hobbytex. The respondent sold articles wnich themselves

carried the Vogart mark, put there by the manufacturer. Tuo1 submitted that the aoplicant's rights in scesnect of the trade mark were fully protected and enforceable against the respondent, notwithstanding that use was now (for the time beinag at lease confined to the carton, and advertising. Sections 107(2)(b:) ana 107(2A) were referred to. These sections do nat apply airectly, being related to the provisions enhancing the protection of a

registered trade mark, but they do offer support for a conclusion

which would be reached in any event. In this case the larger box

At a glance

Court

Decision date

Before

Catchwords

Source

Catchwords

Judgment (238 paragraphs)

Cited By (1)