Issues on the Appeal
63 Section 8(1) of the Act defines a person who is an authorised user of a trade mark and the key concept in the subsection is that the trade mark is used in relation to goods or services under the control of the owner of the trade mark. Section 8(2) makes it clear that an authorised use only applies to the extent that the trade mark is used under the control of the owner of the trade mark. By reason of s 7(3) an authorised use is taken to be a use of the trade mark by the owner of the trade mark. Subsections 8(3) and (4) provide for two cases where the use of a trade mark is taken to be use under the control of the owner of the trade mark: the owner of the trade mark exercises quality control over the relevant goods or services or the owner exercises financial control over the other person's relevant trading activities. Section 8(5) makes it clear that the meaning of the expression under the control of is not limited to the two cases identified in s 8(3) and (4) of the Act.
64 The concepts of authorised user and authorised use are relevant not only to Part 9 applications for removal of trade marks for non-use. Section 26 of the Act sets out the powers and rights of authorised users of registered trade marks. Part 12 of the Act which deals with the infringement of trade marks and Part 13 which deals with the importation of goods infringing Australian trade marks both include reference to authorised users of trade marks.
65 Section 17 of the Act defines a trade mark in the following terms:
A trade mark is a sign used, or intended to be used, to distinguish goods or services dealt with or provided in the course of trade by a person from goods or services so dealt with or provided by any other person.
66 It is necessary to examine the position under the 1955 Act and the circumstances leading to the enactment of the authorised use provisions in s 8 of the Act.
67 The 1955 Act contained provisions dealing with registered users, that is to say, persons who used a trade mark with the permission of the registered owner or under a licence granted by the registered owner. The 1955 Act did not refer to an authorised user. Part IX of the Act dealt with registered users and provided that they could be registered under the Act. An application was required and the information to be provided to the Registrar included particulars of the degree of control by the registered proprietor over the permitted use (s 74(2)(a)). Section 74(4) provided that the Registrar shall not register a person as a registered user of a trade mark if it appeared to him that "the registration would tend to facilitate trafficking in the trade mark". The effect of the registration of a registered use was addressed in ss 77 (effect of permitted use) and 78 (infringement proceedings). The 1955 Act contained a definition of "trade mark" which was relevantly:
"trade mark" means:
(a) … a mark used or proposed to be used in relation to goods or services for the purpose of indicating, or so as to indicate, a connexion in the course of trade between the goods or services and a person who has the right, either as proprietor or as registered user, to use the mark, whether with or without an indication of the identity of that person; and
…
68 The leading authorities on the 1955 Act made it clear that use by a licensee, whether registered as a user or not, may protect a trade mark from attack on the ground of non-use. In other words, registration as a user was not essential to preserve the mark (Pioneer at 683 per Aickin J; Polo Textile Industries Pty Ltd v Domestic Textile Corporation Pty Ltd (1993) 42 FCR 227 at 238-239 per Burchett J).
69 The English authorities dealing with the Trade Marks Act 1938 (UK) are instructive. The definition of trade mark in the 1955 Act followed that in the English Act. The English cases refer to the connection between the goods and the owner of the trade mark and in that context they refer to the significance of control by the owner of the trade mark. In GE Trade Mark [1969] RPC 418 ("GE Trade Mark") Graham J, after referring to the statutory definition of mark in the English Act, said (at 454):
… In my judgment, however, the statutory definition must now include at least any connection in the course of trade by which the proprietor retains the ability to specify or control the nature or quality of the goods sold under the mark, and the expression "a trade mark denotes the origin of the goods" must now properly be used and understood as including such a connection. It is from such a connection that the proprietor derives his goodwill in the goods and it is this connection, so long as it exists in fact, which enables the public to rely upon the goods of the proprietor being of the nature and quality which he has determined. It should also be added that there is no reason why the proprietor should not from time to time vary or modify the nature or quality of his goods in order to adapt them to variations in trade conditions, in demand or in public taste. The essential requirement is that as a fact he should always be in a position to exercise the necessary control so that in use the mark does not become confusing, and the registered user provisions in section 28 strongly confirm that this is so.
His Lordship then turned to consider if the same principles applied to unregistered marks. He held that they did. His Lordship referred to the circumstances which had led to a broadening of the approach by both the Legislature and the Courts to the use and significance of trade marks. With respect, his Lordship's comments on the development of the law are instructive. He said (at 455):
… the same "connection in the course of trade" which it is now recognised as proper by the registered user provisions of the Act in the case of a registered mark is also proper in the case of an unregistered mark. It is a matter of common knowledge and experience that the conditions of trade and the practices of the trading community have very greatly changed since the middle of the last century when our trade mark law began to assume its present form. The development of the sciences and the application of technology in industry, the growth of great manufacturing and holding companies with large numbers of subsidiaries, the exchange of technical know-how not only between companies in this country but on an international scale and, not the least important, the very great changes which have been and are still being made in the presentation, packaging and methods of marketing goods, have all had their effects on the use and significance of trade marks. These changes have been reflected in our statutory trade mark law in, for example, the broadening of the definition of a trade mark, in the recent provisions for assignment without goodwill and in the recognition in the registered user provisions that a trade mark can be licensed without causing deception or confusion provided the owner of the mark retains control over the character and quality of the goods sold under the mark.
70 The leading English case on the prohibition on registration as a registered user where the granting of the application would tend to facilitate trafficking in the trade mark is Holly Hobbie Trade Mark [1984] RPC 329 ("Holly Hobbie Trade Mark") which is a case concerned with character merchandising. Although the prohibition is no longer part of English trade mark legislation (Trade Marks Act 1994 (UK)) and it is not in the Trade Marks Act 1995 (Cth), Lord Brightman, who delivered the leading speech in the House of Lords, made some observations about the control necessary to establish the required connection. His Lordship acknowledged by reference to the authorities that quality control by the licensor may be sufficient to establish the necessary connection in the course of trade between the licensor and the goods. His Lordship went on to say (at 356):
Such decisions are confined to their own factual circumstances, and I can discern no general rule that the mere ability to control quality is always to be sufficient to establish the required connection. In fact, the quality control exercisable in the cases before us, so far as we have seen examples of the licence agreements, is slight. In the Oneida case it is confined to a right to inspect and to approve if the appellants so wish. In the General Mills (Chad Valley) case, the licensee must submit samples for written approval prior to use or sale.
These observations by Lord Brightman suggest that the mere ability or power to exercise quality control is not sufficient or, at least, that there is no general rule that it is sufficient.
71 Whitford J took a similar approach in McGregor Trade Mark [1979] RPC 36 ("McGregor Trade Mark"). His Lordship discussed the question of control in the context of the registered user provisions in the English Act and suggested that the control required was actual control and not simply the power to control. In a passage which, although lengthy is, with respect, instructive, his Lordship said (at 52-53):
There is no dispute that at all relevant times under the terms of the registered user agreements the registered proprietors had the right and were permitted or should have been permitted to take samples of or to inspect the goods and the methods of manufacturing them though they never did any such thing. The contention of the applicants that there never were any directions given by the registered proprietors as to the materials and methods of manufacture was not challenged. If this be the case, prima facie, in my view the conclusion must be that there never was any use complying with the conditions and restrictions on the register; and accordingly there was no permitted use.
…
Registered trade marks, as is the case with trade marks at common law, serve to protect what may be a very valuable goodwill built up by some commercial enterprise. They also, however, serve as an indication to the public of the origin of the goods. If one buys a dressing gown bearing the trade mark "McGregor", one may never know and may not even be concerned to enquire who in fact made the dressing gown in question; but if one buys a dressing gown and finds it satisfactory one would feel, if one were buying another dressing gown bearing the same brand name at a later stage, that one could reasonably expect it to be of a similar quality to the first dressing gown. In the same way, it is customary for people to make recommendations to their friends by reference to brand names for goods; and, upon a recommendation being made, the purchase is carried out in the confidence that the article purchased will be of a similar quality to that sold to the friend making the original recommendation.
It is for this reason that a bare licence under a trade mark has never been countenanced. A registered usership is accepted because in one way or another, by reason of financial control or express provisions in an agreement, a registered user is going to be subject to the control of the registered proprietor so far as the quality of the article made by the registered user is concerned. In this way, even if two persons are using a mark - the registered proprietor and the registered user - there is only one source controlling the question of quality; and if a member of the public were interested to find out who bore the ultimate responsibility for the quality of the goods, he or she would be able to do so by inspecting the relevant entries on the register.
In this case it is quite plain to me that the public have been misled since 1966. The mark "McGregor" has never been used by any registered proprietor at any relevant time. No registered proprietor has ever exercised any control over the activities of the registered user; and it appears to me that it was never intended that any such control should be exercised; but nonetheless the mark was maintained on the register and the present applicants, together with the registered proprietors, were prepared to present this mark as a registered mark being used by the applicants and their associates subject to the conditions of the registered user agreement. These are facts which, in consideration of the public interest, I must take into consideration.
Although the immediate context of his Lordship's comments was compliance with conditions of a registered user agreement, I think that they have a broader relevance. Use of a trade mark under a bare licence between the owner of the trade mark and the user was not sufficient to establish the necessary connection between the owner and the goods. Some form of control by the owner had to be established. The mere ability or power to control was probably insufficient.
72 I turn now to the extrinsic material which assists in the construction of the authorised use provisions in s 8 of the Act.
73 For present purposes, the key points in the Second Reading Speech for the Act are as follows. First, the Act was designed to implement Australia's obligations under the World Trade Organisation Agreement. Secondly, the Minister explained the reason the Act did not include registered user provisions. He said:
Secondly, the bill does not include provisions relating to registration of the use of a trade mark by a person other than the trade mark owner. The bill provides that where owners of trade marks exercise control over use of their trade marks by other persons, that use can be taken to be use by the owner. This is prescribed by the WTO Agreement and can be used by trade mark owners to defend an action to deregister their trade mark on the basis that they have not used it. The WTO Agreement does not require use under the control of the owner of the trade mark to be registered. Consequently, there is little benefit in retaining additional provisions for the registration of users. This change will simplify the new trade marks legislation significantly. Recent developments in Canada and the UK are consistent with this approach.
74 Thirdly, the Minister said that the "main thrust" of the bill was to implement the government's response to the July 1992 report, "Recommended Changes to the Australian Trade Marks Legislation" as modified by the consultation process which had been undertaken.
75 As to the World Trade Organisation Agreement, article 19(2) of the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS Agreement) provides:
When subject to the control of its owner, use of a trade mark by another person shall be recognised as use of a trade mark for the purpose of maintaining the registration.
76 As to the report referred to by the Minister, the report was prepared by a Working Party established to review the Trade Marks Legislation. The Working Party noted the then draft TRIPS Agreement (p 1). The Working Party addressed the licensing of trade marks and in the course of doing so said (at pp 78-80):
It is now accepted that a registered trade mark may be validly licensed provided the registered proprietor maintains a sufficient connection in the course of trade with the goods or services of the licensee and the use of the mark does not become otherwise deceptive or confusing. The Working Party believes this should remain the law.
Nevertheless, as indicated in the Discussion Paper (chapter 4.1-4.1.7), the key issues here are the need to simplify provisions and procedures which have become too cumbersome and expensive to maintain, and at the same time provide a system which reflects modern licensing principles, including those in relation to character merchandising, and makes relevant information about the use of a trade mark readily available to interested members of the public.
The Industrial Property Advisory Committee (IPAC) concluded, in 1988, that character merchandising had increased to the point where it had become a significant marketing tool, and recommended that the Act should be amended to permit protection of character merchandising, but without changing the fundamental notions of trade mark usage and protection. It recommended that, to meet this objective, the express prohibition of registration of users tending to facilitate trafficking in trade marks (subsection 74(4)) be removed from the legislation, and that provision be made whereby "the exercise of quality control in accordance with a registered user agreement is, for the purposes of the Act, a sufficient "connexion in the course of trade"."
The UK Registry has reached similar conclusions with respect to their legislation, and proposes to simplify the recordal process and to repeal the provisions relating to trafficking.
NZ is proposing to recognise all use by licensees, whether registered or not and to abolish the anti-trafficking provisions in relation to registered users.
The TRIPS Agreement requires that, when subject to the control of the proprietor of the mark, use of a trade mark by another person shall be recognised as use of the trade mark for the purpose of maintaining the registration, with no requirement that such controlled use be the subject of a Register entry as registered use.
Comments received following the release of the Discussion Paper were in accord with the proposals for a simplified recordal only system, the definitions of registered user and authorised user, and the proposal that recordal of a user not be mandatory. Comments received almost unanimously supported the repeal of the trafficking provisions in the Act. While there were no adverse comments relating to the repeal of the retrospectivity provisions of subsection 77(2), one submission focused unfavourably on the right of a registered user to assign or transfer the right to use the mark, and questioned the need to retain any distinction between registered users and authorised users.
(Emphasis added; footnotes omitted).
77 Of course, one should be careful not to read too much into this passage. Nevertheless, the Working Party seem to recognise retention of the basic concept by then well-established in the Australian and English cases of a sufficient connection in the course of trade between the owner of the trade mark and the goods or services of the licensee. The Working Party express the view that the exercise of quality control should be taken to be a sufficient connection.
78 Leaving aside Yau which I will come to, there are three Australian cases which have considered the authorised use provisions of the Act, although not in a way which provides an authoritative statement for the resolution of this case.
79 In E & J Gallo Winery v Lion Nathan Australia Pty Ltd (2010) 241 CLR 144 the High Court considered the provisions of s 8(1) and (3) of the Act. The Court held that there had been authorised use by way of the exercise of quality control over the wine sold under the registered trade mark. The question was whether the evidence established that proposition rather than the proper construction of s 8(1) and (3) of the Act (at 166-167 [55]-[59] per French CJ, Gummow, Crennan and Bell JJ; at 172-174 [74]-[86] per Heydon J). While addressing this case, it is to be noted that the plurality specifically approved (at 163 [43]) the following statement of the Full Court of this Court in Coca-Cola Co v All-Fect Distributors Ltd (1999) 96 FCR 107 at 115 [19] per Black CJ, Sundberg and Finkelstein JJ:
… Use "as a trade mark" is use of mark as a "badge of origin" in the sense that it indicates a connection in the course of trade between goods and the person who applies the mark to the goods … That is the concept embodied in the definition of "trade mark" in s 17 - a sign used to distinguish goods dealt with in the course of trade by a person from goods so dealt with by someone else.
(See also Health World Ltd v Shin-Sun Australia Pty Ltd (2010) 240 CLR 590 at 597 [22]).
80 In Toddler Kindy Gymbaroo Pty Ltd and Others v Gymboree Pty Ltd and Another (2000) 100 FCR 166 Moore J addressed the definition of authorised user in s 8 and said (at 198 [111]):
In my opinion, this definition does not attempt to travel, for present purposes, beyond the bounds of what emerged from English and Australian authorities concerning the effect of licensing surveyed by Aickin J in Pioneer Kabushiki Kaisha v Registrar of Trade Marks (1977) 137 CLR 670 …
81 In CA Henschke & Co and Others v Rosemount Estates Pty Ltd (2000) 52 IPR 42 ("Henschke") the issue was whether the use of a trade mark by a partnership was use under the control of executors under a will. The executors were the owners of the trade mark. The primary judge concluded that in the particular circumstances it was, but in any event he went on to say that he would exercise his discretion under s 101(3) of the Act in favour of not ordering the removal of the trade mark. The Full Court said that there was no basis upon which to interfere with the primary judge's exercise of the discretion. The Full Court's observations on the authorised use provisions in the Act were obiter dicta.
82 The Court started its analysis by noting that there was a revocable authority between the executors and the partnership as to the trade mark. The Court said that "it would perhaps be a bold argument" to suggest that a mere revocable authority was sufficient to ensure that the licensor had "control" for the purpose of s 8 (at 72 [69]).
83 The Full Court said of the authorised use provisions in the Act (at 72-73 [70]):
Broadly, the concept of "authorised user" represents a significant departure from the regime of the earlier legislation. The new statutory scheme has not yet been the subject of substantial consideration by the court; we were referred only to McHattan v Australian Specialised Vehicle Systems Pty Ltd (1996) 34 IPR 537, an interlocutory decision in which the question which arose in this case did not have to be considered. It remains to be decided to what extent those earlier authorities which were concerned with whether use, authorised by the registered owner, by someone other than a registered user, sufficiently indicated a connection with the registered owner remain significant in relation to questions of "control" under s 8. It may be that "control" within s 8(5) has a reach substantially as wide as the "connection" which would be held to be sufficient under the old regime, applying the observations of Aickin J in Pioneer Kabushiki Kaisha v Registrar of Trade Marks (1977) 137 CLR 670 at 680-3; 1A IPR 520 and of Burchett J in Polo Textile Industries Pty Ltd v Domestic Textile Corporation Pty Ltd (1993) 42 FCR 227 at 237-9; 26 IPR 246. Because, in our view, his Honour gave a separate, independent, ground for his decision (to which we shall come) and because argument concerning the effect of the present statutory scheme was relatively brief, we prefer to say no more about this aspect of the case, than that, if the principles stated in Pioneer and Polo remain substantially applicable, there is a good deal to be said for his Honour's conclusion.
84 It is interesting to note that the Full Court in this passage suggest that the regime in s 8 of the Act represents a significant departure from the prior law and questioned whether s 8 has an operation substantially as wide as the prior law. Although the Full Court's observations were tentative, it is perhaps of some significance that the Full Court saw the question as being whether the provisions of s 8 were as wide as the prior law.
85 I turn now to consider the appellant's submission that the primary judge erred in concluding that Yau was authority for the proposition that a mere theoretical possibility of contractual control was sufficient to constitute an authorised use for the purposes of s 8 of the Act.
86 Gyles J sitting at first instance, delivered two decisions in the dispute between Asia Television Ltd and its marketing arm, ATV Enterprises Ltd, (together "ATV") and Yau's Entertainment Pty Ltd ("Yau's Entertainment") and other parties. ATV licensed certain entertainment programs for reproduction and distribution by Yau's Entertainment in Australia and New Zealand as video cassettes. In the first Yau decision, the issue was the validity of a written notice of termination of the agreement given by ATV. That issue was heard first because it required urgent resolution. Gyles J held that the written licence had been validly terminated (Asia Television Ltd and Another v Yau's Entertainment Pty Ltd [2000] FCA 254; (2000) 48 IPR 283). In the second Yau decision, (Asia Television Ltd and Anor v Yau's Entertainment Pty Ltd (No 2) [2000] FCA 838; (2000) 49 IPR 264) Gyles J dealt with ATV's claim that Yau's Entertainment had infringed its trade marks and the latter's cross-claim that the trade marks should be revoked for non-use pursuant to s 92(4)(b) of the Act, and that included a consideration of whether Yau's Entertainment had acted in breach of its licence. Yau's Entertainment relied on its own breach of the licence to negate authorised use within s 8 of the Act. That means, at one level, Yau is a very different case from the present case where the application for removal is made by a competitor, not the licensee. Gyles J rejected the argument advanced by Yau's Entertainment.
87 For reasons which will become clear, it is important to note the facts concerning the licence between ATV and Yau's Entertainment. ATV supplied the master tapes which bore the ATV logo and which Gyles J said (as to the logo) was the equivalent of ATV's trade marks, for copying and sale with the logo in Australia by Yau's Entertainment or its licensees. ATV also provided advertising and promotional material to Yau's Entertainment for use by it in relation to the sale of video tapes in Australia. The Full Court provided further detail as to the relationship between ATV and Yau's Entertainment. Hely J (with whom Sundberg and Finkelstein JJ agreed) said (at 2 [6]-[7]):
The primary judge did not make any specific finding as to the way in which videos or promotional materials were made available by Yau's to its sub-distributors. However, it appears to have been common ground that ATV or ATVE supplied Yau's with master tapes of the programs the subject of the licence arrangements. Yau's copied those tapes onto videograms which it supplied to its sub-licensees. The sub-licensees made copies of the videograms for home video rental purposes. The copies were hired to customers of the sub-licensees for private domestic viewing.
Again, although not the subject of a specific finding, it appears to have been common ground that along with the master tape of programs the subject of the licence arrangements, ATV or ATVE supplied Yau's with colour labels, spines, posters and other promotional items bearing the ATV logo and the relevant programme title. There was evidence from Mr Ng, the marketing manager of ATVE:
If the number of tapes copied from the master tape for rental exceeds the number of spines provided by [ATV, ATVE], the sub-licensee would print copies of the spines with the ATV logo or use labels with store logo or labels without any logo on it.
88 Gyles J was disposed to think that there had been a use in Australia of the trade marks by ATV following Estex Clothing Manufacturers Pty Ltd v Ellis & Goldstein Ltd (1967) 116 CLR 254 and expressing the opinion that the step of the local party reproducing the tape was not a critical distinction. Gyles J said, however, that there was a more fundamental reason for rejecting the non-use application. His Honour described that reason in the second Yau decision in the following terms (at 268 [10]):
… For many years, the logo has been used extensively in relation to goods offered to the public by Yau's Entertainment and its licensees, pursuant to the successive licence agreements which were analysed in the first judgment. In my opinion, Yau's Entertainment was an authorised user of the mark, as it used the mark in relation to the video tapes under the control of the owner of the trade mark within the meaning of s 8(1). Yau's Entertainment would not have had access to the master tapes except under cover of the licences, and would have had no authority to reproduce video tapes including the logo were it not for the licences. In my opinion, this is the very type of control envisaged by the section. The relief which is being sought in this case is a practical illustration of that control.
89 Yau's Entertainment submitted that his Honour's findings in the first Yau decision that it had used the ATV name, logo and reputation without ATV's permission meant that ATV did not control the use by Yau's Entertainment of its trade marks and that ATV "was not exercising the actual control of the kind which was envisaged by the section" (at 268 [11]). His Honour rejected the submission saying that this kind of control was not envisaged by the section. He referred to the well-known passage in the reasons of Aickin J in Pioneer and said that the concept had been carried into the 1995 Act by the definition of trade mark in s 17. In applying the concept of sufficient connection, his Honour said that the reputation of ATV and its programs was significant among the Australian Chinese population and use of the mark ATV was calculated to identify the goods with the proprietor of the mark, even though distributed by Yau's Entertainment and its licensees.
90 Yau's Entertainment appealed against both decisions. As to the non-use application, the Full Court interpreted Gyles J's decision at first instance as being based on two alternative grounds. First, Hely J said that Gyles J had held that there had been use of the trade mark in Australia by ATV and he upheld that conclusion. Secondly, Hely J referred to Gyles J's conclusion that there had been an authorised use of the trade mark by Yau's Entertainment. After referring to the observations of Aickin J in Pioneer and, in particular, that the connection between the use of the mark in the course of trade and the registered proprietor may be slight, Hely J said, in rejecting the appeal as to the non-use application, that the entitlement to use the marks was referrable to the licensing arrangement, one of the terms of which was that title selections were subject to ATV's approval and that that provided a sufficient connection (at 16 [80]). The title selections related to the programs supplied under the licence agreement.
91 It is possible to interpret some of Gyles J's observations as supporting the proposition that a mere contractual power is sufficient to establish control, but the focus must be on the decision of the Full Court. It is necessary to identify the ratio decidendi of the Full Court's decision.
92 In Quinn v Leathem [1901] AC 495 at 506, Lord Halsbury LC said:
[E]very judgment must be read as applicable to the particular facts proved or assumed to be proved, since the generality of the expressions which may be found there are not intended to be expositions of the whole law, but governed and qualified by the particular facts of the case in which such expressions are to be found.
93 This observation of Lord Halsbury was referred to with approval in Burns Philp and Company Limited v Gillespie Brothers Proprietary Limited (1947) 74 CLR 148 at 179 per Rich J. I would only add, respectfully, that the particular facts referred to in this passage are the particular material facts identified by the Court whose decision is being considered.
94 The Full Court in Yau did not analyse in detail the issue of the control necessary to satisfy s 8 of the Act. The Court did not say in express terms that a mere theoretical possibility of contractual control was sufficient to satisfy s 8 of the Act. In my opinion, a particular material fact in Yau was the fact that ATV provided the programs on master tapes from which copies were made and then used by Yau's Entertainment. That was undoubtedly a high degree of control over the goods to which the trade mark was applied and used by Yau's Entertainment. That was control for the purposes of s 8 of the Act. To the extent that the Full Court said that a contractual power of title selection was without more authorised use for the purpose of s 8, I think that was obiter dictum. The respondent submitted that the Full Court's decision in Yau could not be explained by the fact that ATV supplied master tapes to Yau's Entertainment. It submitted that in the relevant passages in the Full Court's reasons (at 16 [75]-[81]) the Court was addressing two matters, namely, use of the trade mark by Yau's Entertainment falling within the Licence Agreement, and use of the trade mark by Yau's Entertainment falling outside the Licence Agreement. The latter category involved use of the trade mark on non ATV programs and on ATV programs which were not supplied by ATV. The respondent submitted that Hely J's observations were made in the context of the latter use not the former use. It followed from that, so the argument went, that the Full Court's observation could not be explained by reference to the supply of master tapes by ATV. I reject this submission. To my mind, the two situations addressed by Hely J at 16 [75]-[81] are use by ATV in Australia as a matter of fact and authorised use in Australia by Yau's Entertainment. Furthermore, it seems clear from the decision of Gyles J in the first Yau decision that there was use by Yau's Entertainment within the Licence Agreement during the relevant period. I respectfully disagree with the primary judge that the Full Court's decision in Yau was such as to bind him to uphold the respondent's case that the use by WGW was an authorised use within s 8 of the Act.
95 The meaning of "under the control of" in s 8 is informed by the principle stated by Aickin J in Pioneer, that is to say, that the trade mark must indicate a connection in the course of trade with the registered owner. The connection may be slight, such as selection or quality control or control of the user in the sense in which a parent company controls a subsidiary. It is the connection which may be slight. Aickin J was not saying the selection or quality control or financial control which may be slight. I think the principle stated by Aickin J informs the meaning of "under the control of" for the following reasons. First, the attribute of control by the registered owner was a key feature of the principle stated by Aickin J as his Honour's remarks make clear. The same may be said of the approach taken in England as the English cases to which I have referred mark clear. Furthermore, two of the examples given by Aickin J in Pioneer of a sufficient connection, namely, quality control and financial control are embodied in s 8 (subs (3) and subs (4)). This suggests to me that Parliament did not intend to effect a major change in the law in enacting s 8 in the Act. This conclusion is supported by the report of the Working Party. The Working Party expressed the view that a sufficient connection in the course of trade between the registered owner and the goods or services of the licensee should remain the law. Finally, I am fortified in reaching this conclusion by the fact that both Gyles J at first instance and the Full Court in Yau took a similar approach.
96 "Control" is defined in the Macquarie Dictionary (6th ed, Macquarie, 2013) to mean the following:
vt 1. to exercise restraint or direction over; dominate; command.
2. to hold in check; curb
n 4. the act or power of controlling; regulation; domination or command.
97 I think control in s 8 means actual control in relation to the use of the trade mark and it means actual control in relation to the trade mark from time to time. I think (as the primary judge did) that that is the primary meaning of the word, and the English cases, so far as they go, support that conclusion. Control involves questions of fact and degree as does the notion of a sufficient connection. There must be control as a matter of substance. For example, I do not think that it could be suggested that the mere fact that the registered owner granted a licence or revocable authority to use the trade mark would be sufficient without more established control within s 8. That would be inconsistent with the approach taken under the 1955 Act and the Trade Marks Act 1938 (UK). Had it been Parliament's intention it could be effected by a much simpler provision than s 8.
98 As I have said, actual control will be a question of fact and degree. A licence agreement may contain a term that sets in detail a quality standard to be achieved. The details in the agreement may be such that it is not necessary for the registered owner to give directions or instructions from time to time. The licensee, aware of its obligations, may faithfully comply with those obligations without any entreaties or demands from the licensor. The primary judge had such a situation in mind when he referred to cases where there was obedience to the trade mark owner "so instinctive and complete that instruction was not necessary".
99 The respondent also sought to gain support for its submissions from the decision of the House of Lords in Scandecor Development AB v Scandecor Marketing AB [2001] UKHL 21; [2001] FSR 7 ("Scandecor"). That case does not support the respondent's submissions. English law as a result of the Trade Marks Act 1994 (UK) and Australian law as a result of the Trade Marks Act 1995 (Cth) have taken different paths. That can be seen clearly from the historical survey by Lord Nicholls of Birkenhead of English law with respect to licences of trade marks. The legislative provisions of the two Acts are quite different. This country's Act has the concept of authorised use in s 8 whereas under the English Act, an application of removal for non-use may be defeated by use by the registered proprietor or by a person with his or her consent (s 46(1)(a)). Under the 1994 Act, bare licences which Lord Nicholls defined as licences without quality control provisions are permitted (at 131 [14], 138 [41]).
100 The respondent submitted that the decision of Sundberg J in Global Brand Marketing Inc v YD Pty Ltd [2008] FCA 605; (2008) 76 IPR 161 supported its submissions. The respondent said that the primary judge was referred to the decision, but that he did not refer to it in his reasons. I do not think the authority advances the respondent's submissions to any great extent. Sundberg J found that quality control sufficient for the purposes of s 8 was made out, having regard to the recitals in an agreement (at 187-188 [128]). It is not possible to discern from the report the extent to which the precise point presently under consideration was debated.
101 Both sides sought to refer to the decisions of courts in countries other than Australia and the United Kingdom. I do not propose to traverse the legislation and authorities to which the Court was referred because I do not think any of the authorities are sufficiently similar to be of assistance. For example, the respondent referred to the European Court of Justice case IHT Internationale Heitztechnik GmbH & Anor v Ideal-Standard GmbH & Anor [1994] 1 ECR 2789 ("Ideal-Standard"). In particular, the respondent referred to the following passages at [37] and [38]:
[37] … In the case of a license, the licensor can control the quality of the licensee's products by including in the contract clauses requiring the licensee to comply with his instructions and giving him the possibility of verifying such compliance.
…
[38] It must further be stressed that the decisive factor is the possibility of control over the quality of goods, not the actual exercise of that control.
Ideal-Standard, however, was an exhaustion of rights case concerning the application of national laws of countries within the European Community. The test for "control" was considered in the context of enforcing a policy of preventing arbitrary discrimination or disguised restrictions of trade between member states within the European Community. It is of limited assistance in interpreting our own legislative provisions.
102 I turn now to apply s 8 as I have interpreted it to the facts of this case. Because the primary judge would have found in favour of the appellant but for Yau, it is the respondent which challenges a number of the primary judge's findings.
103 The respondent submitted that the primary judge erred in not placing weight on the fact that Mr O'Sullivan said that he was conscious and aware of his obligations under the Licence Agreement and of the fact that a breach of the agreement could lead to termination of the agreement and the loss of the right to use the trade marks. It is true that Mr O'Sullivan did say that in his evidence and that there is no reason to think that the primary judge did not accept that evidence. It is also true that the primary judge did not refer to that evidence. However, I do not think that the evidence is of any particular significance. Of significance is the fact that the Licence Agreement, in practical terms, had no effect on the way in which Mr O'Sullivan conducted his business.
104 The respondent submitted that the primary judge erred in not concluding that the prohibition on WGW exporting its wine constituted control. It referred to evidence from Mr O'Sullivan that he considered a proposal to supply his wine to British Airways and that he was conscious that if the proposal went ahead, he would need approval from Austin Nichols. The fact is that the proposal did not go ahead because British Airways wanted too much in terms of quantity. I do not think this evidence advances the respondent's case beyond the fact established by the Licence Agreement itself, namely, that WGW could not sell its wine outside Australia without the approval of Austin Nichols.
105 The respondent submitted that the primary judge erred in finding that the Wild Turkey interests were not in the least interested in what Mr O'Sullivan was bottling or in any way supervising what was being done. They submitted that the primary judge overlooked or failed to place sufficient weight on the following. First, although the objective standard in cl 3 may have emanated from Mr O'Sullivan's side, that is not to say that Austin Nichols did not want a quality control provision. That submission seems to be correct, having regard to the correspondence between the solicitors for the parties during the negotiations leading to the Licence Agreement in evidence before the primary judge. Secondly, the primary judge failed to take into account that no occasion arose for the exercise of quality control during the relevant period because Mr O'Sullivan did not bottle any wine during this period for reasons related to the state of the market and events in his personal life and that, as soon as he did begin bottling again in 2010, he received a request dated 4 April 2011 for samples from the Wild Turkey interests. As to the first of these matters, it may be accepted that Austin Nichols did advance a quality control provision during the negotiations for the Licence Agreement. However, I do not think that the matter of which party advanced the clause is of any great significance. The important matters are the nature of the clause and the conduct of the parties during the non-use period. I make essentially the same point as to the second matter, that is, the Wild Turkey interests request for samples on 4 April 2011. The primary judge referred to this but appears not to have placed any weight on it. I do not think he erred in taking that approach. It was after the Irish Whiskey interests had commenced its application for removal of the trade marks and outside the relevant period. As I have said, to my mind, the critical factors in a case such as the present are the provisions of the Licence Agreement and the conduct of the parties during the relevant period.
106 In addressing the facts, it is convenient to divide the provisions of the Licence Agreement into those dealing with quality control and those dealing with the use of the trade marks.
107 The quality control provision in the Licence Agreement is that the wine be of a sufficient standard to obtain the approval for export of the AWBC. There was no evidence of the precise content of that standard. It was not an exacting standard as the approval rate shows (at [51] above). The primary judge considered that the standard involved no more than a rejection of what he called truly undrinkable wine (at [55]). It is plain that the standard had no effect on Mr O'Sullivan's wine making practices. He was interested in making good to high quality wine. At no time during the relevant period did Austin Nichols contact Mr O'Sullivan about the wine he was making or selling or both. There was never any request by Austin Nichols for samples under cl 3.1 or for the product to be supplied to the Australian Wine Research Institute under cl 3.2. Austin Nichols never asked Mr O'Sullivan for any information about the use of the trade marks or Mr O'Sullivan's wine making operations generally. There was no monitoring by Austin Nichols and nothing to suggest that Austin Nichols took steps to ascertain whether the terms in cl 3 were being complied with. I do not think s 8(3) was satisfied by the existence of cl 3 in the Licence Agreement.
108 The respondent relied on other provisions in the Licence Agreement to establish control within s 8(1). The starting point is, as I have said, the mere fact that WGW was licensed to use the trade marks is not sufficient to establish control. WGW had permission to use the trade marks in relation to the manufacture and distribution of Australian wine sold in Australia. The trade marks were registered in respect of wine. These are restrictions but not ones like controls on quality or manufacturing process which might suggest a connection between the registered owner and the use of the trade marks in connection with the provision or dealing with goods in the course of trade. There is no evidence that Austin Nichols monitored or informed itself as to whether WGW was only selling Australian wine in Australia. These requirements do not give rise to control. WGW was not permitted to amend or abbreviate the trade marks or use them in a scandalous fashion. These provisions seem to me to be standard provisions to be expected in a licence agreement for trade marks. There is no evidence of monitoring by Austin Nichols of these provisions and they do not amount to control within s 8. Finally, the provision about standard liability insurance and Austin Nichols' ability to terminate the Licence Agreement for a material breach is not sufficient to constitute control under s 8 of the Act.
109 In my respectful opinion, the primary judge erred in concluding that he was bound by the Full Court's decision in Yau to hold that the use by WGW was an authorised use within s 8 of the Act. He was not so bound. For the reasons I have given, the use by WGW was not an authorised use within s 8 of the Act.