Mesoblast, Inc v UCP Gen Pharma AG

REASONS FOR JUDGMENT 1 By application made on 5 April 2012, the applicant, Mesoblast, Inc, applies for: (a) an extension of time to seek leave to appeal; (b) leave to appeal pursuant to s 195(2) of the Trade Marks Act 1995 (Cth) ('the Act') from the judgment of Jessup J given on 15 March 2012 in UCP Gen Pharma AG v Mesoblast, Inc [2012] FCA 210; and (c) an order that its application for leave to appeal be heard with the appeal. 2 I have come to the view that leave to appeal should not be granted in this case and I have done so for the following reasons. 3 The parties have agreed that the application for leave is governed by the principles in Décor Corporation Pty Ltd v Dart Industries Inc (1991) 33 FCR 397 at 398-399, which, in summary, provides that leave to appeal should be granted if: (a) in all the circumstances, the decision at first instance is attended by sufficient doubt to warrant its reconsideration by the Full Court; and (b) substantial injustice would result if leave were refused, supposing the decision to be wrong. 4 I have come to the view that the decision at first instance is not attended by sufficient doubt to warrant its reconsideration by the Full Court. In fact, I have come to the view that, when Jessup J's reasons are properly read and considered (to which I will return), the decision is attended by no doubt to warrant any reconsideration by the Full Court. 5 The Court has the advantage of the recent Full Court decision in Austin, Nichols & Co Inc v Lodestar Anstalt [2012] FCAFC 8 (dated 21 February 2012), which considered the relevant principles relating to the discretion exercisable under s 101(3) of the Act. This was the issue before Jessup J, and now before me. At [28] of the Full Court's decision, the Court said that the question to ask is whether it was reasonable not to remove the trade mark from the register, although the trade mark had not been used during the statutory period. At [35], the Court went on to say: 35 As the primary judge pointed out, the discretion under s 101(3) is a broad one. Whilst it might also be true to describe it as "unlimited", as his Honour also did (citing Pioneer Computers Australia Pty Ltd v Pioneer KK (2009) 176 FCR 300 ("Pioneer") at [167], [172] and [173]), in the sense that there are no express limits on it, more correctly it is a discretion limited only by the subject-matter, scope and purpose of the legislation and, in particular, by the subject-matter, scope and purpose of Part 9 of the Act. 6 Undoubtedly, in the context of that decision, the Full Court was looking at the various factors that were taken into account by the primary judge. The attack before the Full Court in Lodestar was made against the primary judge who was alleged to have made errors in relation to the test to be applied. In [31]-[32] the Full Court considered various factors that were brought before the Full Court which were alleged to show error on the primary judge's part. In my view, the discussion and examples in [31]-[32] of Lodestar are not to detract from the Court's primary task at present, which is to look at the statutory discretion in s 101(3) and to take into account the relevant considerations raised by the particular facts of the case which were before Jessup J, the primary judge. 7 In my view, Jessup J clearly analysed the principles relevant to s 101(3) correctly and then applied them to the facts. That this task was undertaken by Jessup J is first demonstrated at [33] and [34] of his Honour's reasons, where his Honour sets out the principles stated in Lodestar said to be relevant to the exercise of the discretion: 33 As it happens, some guidance on the approach to be taken under s 101(3) has recently been given by the Full Court in Austin, Nichols & Co Inc v Lodestar Anstalt [2012] FCAFC 8, to which I was referred by the parties after I had reserved judgment. Their Honours emphasised that the question which arises under the subsection is as stated, namely, whether it is reasonable not to remove the trade mark from the Register, notwithstanding that it had not been used during the statutory period (at [28]). Their Honours accepted (against the facts of the particular case) that it was relevant to ask whether removal of the mark from the Register would lead to deception or confusion (at [31]). Their Honours confirmed that public interest considerations were proper to be taken into account in the exercise of the discretion, but accepted that the private interests of traders also might be considered in an appropriate case. They said (at [38]): The purpose of Part 9 is to provide for the removal of unused trade marks from the Register. In that regard it is plainly designed to protect the integrity of the Register, and in this way, the interests of the consumer. At the same time, however, it seeks to accommodate, where reasonable, the interests of the registered trade mark owners. Otherwise, there would be no need for the discretion. Their Honours accepted that, although the situation existing at the end of the statutory period was relevant, the position had to be assessed as at the time when the discretion came to be exercised. User since the end of the statutory period might be taken into account, at least where that user was "in good faith, and not colourable" (at [41]). Their Honours also accepted that the owner's intention to use the mark, and not to abandon it, was proper to be taken into account in an appropriate case (at [43]). 34 The Full Court did not suggest that these observations covered the whole field with respect to the considerations that arise in the context of the exercise of the discretion for which s 101(3) provides. Rather, they reflected the issues, and the dynamics, of the case that was before it. Nonetheless, their Honours' treatment of the subject is of some assistance in the resolution of the question arising in the present case. 8 As apparent from [34] of Jessup J's reasons, his Honour was aware that the exercise of the s 101(3) discretion would be informed by the issues and general dynamic presented by the particular case. His Honour went on to exercise the discretion accordingly. 9 An attack was made upon his Honour's reasoning found at [38]-[42] inclusive. There, his Honour stated: 38 From the perspective of the public interest, the s 101(3) scales are fairly evenly balanced. The applicant's mark has not, even to the date upon which I reserved judgment, been used in Australia. There is, therefore, a negligible, if any, prospect that anyone will be deceived or confused by the removal of the mark from the Register. Further, it clearly being in the public interest to keep the Register free of marks that bear no relevance to actual trade in goods or services, there is, on one view at least, every reason to pause before arriving at the positive conclusion that it would be reasonable not to remove the mark from the Register. On another view, however, this consideration underlies s 92(4)(b) itself, and is reflected in the direction in which the onus of proof, and of persuasion, lies under ss 100(3)(c) and 101(3). Those provisions allow for a mark which has not been used to be allowed to remain on the Register in the circumstances to which they refer, and effect must be given to their terms. 39 On the other hand, if there is some detriment to the public interest from allowing the applicant's mark to remain on the Register, it is not, in my view, in size or nature a matter of real, practical, concern. There is neither evidence nor suggestion that any other trader desires to use the mark, or anything similar to it. Neither does any member of the public - consumer or professional - stand to be adversely affected if the mark were to be allowed to remain on the Register. Further, if the process under s 92(4)(b) is to be seen as an exercise in good housekeeping, the applicant's mark, being an artefact which is about to be brought into use, would naturally be retained on the shelf rather than dispatched to waste. 40 It is the private interests of the applicant and its proxies - Canyon and Emerge - that stand to derive the most obvious benefit from any decision the court makes that the mark should be allowed to remain on the Register. These interests are proper to be taken into account. Indeed, as the Full Court observed in Austin Nichols, the accommodation of the private interests of trade mark owners seems to be the very point of the discretion arising under s 101(3). In all of the facts of the present case, I have not been able to discern a single circumstance which would cause the court to pause before giving recognition to the reality to which I referred in para 36 above. The respondent's case was not based on any suggestion that its own interests would be detrimentally affected if the mark were to be allowed to remain on the Register. There is no apparent prejudice, or risk of prejudice, to the private interests of any other person. 41 If the applicant's mark were to be removed from the Register, the applicant (and here I include also those by whom REVASC would be distributed in Australia) would seem to have a choice, either to press ahead with its existing arrangements to bring REVASC on to the market as such without the protection provided by registration, to re-brand the product in the way its licensee was obliged to do in the USA or to withdraw from the Australian scene altogether. Each of these outcomes would be obviously detrimental to the applicant. None would deliver any corresponding benefit to any other person. Although the applicant has the onus of proof and of persuasion under s 101(3), I fail to perceive any countervailing justification for the exercise of the court's discretion adversely to the applicant. 42 I also take into account the fact that, if the applicant's mark is allowed to remain on the Register, that need not be the end of the matter for all time. Should it transpire, contrary to all present indications, that the mark is not used in Australia, either the respondent or some other interested party could make application again under s 92(4) by reference to the circumstances existing at the time. 10 It was said that his Honour failed to grapple with the interrelationship between the public and private interests at stake and that his Honour took into account an irrelevant consideration at [42]. 11 In my view, a proper reading of [38]-[42] demonstrates that the primary judge applied the principles enunciated by the Full Court in Lodestar. In saying this, I am particularly mindful of what was said in Lodestar at [38], which was referred to by Jessup J at [34] of his reasons. It is worth repeating that passage from Lodestar: 38 The purpose of Part 9 is to provide for the removal of unused trade marks from the Register. In that regard it is plainly designed to protect the integrity of the Register, and in this way, the interests of the consumer. At the same time, however, it seeks to accommodate, where reasonable, the interests of the registered trade mark owners. Otherwise, there would be no need for the discretion. 12 It is my view that his Honour approached the discretion in s 101(3) with this purpose in mind. This is clear from the structure of his Honour's reasons at [38]-[42]. At [38], his Honour considered that, looking at the public interest, the "scales [were] fairly evenly balanced". His Honour then analysed the balancing that needed to take place. I see nothing in [38] that shows any error or the taking into account of irrelevant considerations. 13 In [39], his Honour went on to consider that if there were some detriment to the public interest, it was not "in size or nature a matter of real, practical concern". His Honour considered that there was neither evidence nor suggestion that another trader desired to use the trade mark opposed, or a similar trade mark. 14 At [40], his Honour discussed the relevant private interests, and referred back to [36] of his reasons. In [36] his Honour set out that "REVASC", (the trade mark the subject of the removal application before Jessup J) was a pharmaceutical product that existed and was traded under that name in Europe, and all necessary arrangements had been made and approvals obtained, for the imminent launch of the product in Australia. On that basis, Jessup J made the conclusions that he did in [40] as to the relevant private interests at stake. 15 I see nothing wrong with that process of reasoning, or the reliance and reference to the Full Court's observation in Lodestar that the accommodation of the private interests of trade mark owners seems to be the very point of the discretion arising under s 101(3). 16 In so approaching the matter as described above, his Honour's reasons did analyse the interplay between public and private interests, taking into account the relevant considerations that were raised by the case before his Honour. 17 I then turn to [42] of Jessup J's reasons, which was said by the applicant to contain an irrelevant consideration. With respect, I do not agree. The opportunity, at a later time, for there to be an application for the removal of a trade mark under s 92(4) of the Act by reference to circumstances then existing, was a possibility that existed at the time Jessup J made his decision. He was entitled to take that into account having regard to the legislative framework. In any event, I do not regard that particular observation at [42] as in any way detracting from the other matters considered by his Honour in exercising the discretion in s 101(3) which, in my view, was exercised correctly. 18 I add, for completeness, that I see no principle of law which needs to be determined by the Full Court in this particular matter. The principles to be applied seem well established. Lodestar is a recent decision of the Full Court of the Federal Court which analysed s 101(3). Nothing arises in this proceeding other than an application of the facts to the established principles of law. 19 For those reasons, the application for leave will be refused. Therefore, I order that: 1. the application for leave to appeal be refused; and 2. the applicant pay the respondent's costs of, and in connection with, the application. I certify that the preceding nineteen (19) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Middleton.